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Press release from CNW Group

NexJ Systems Reports Second Quarter Fiscal 2012 Financial Results

Thursday, August 02, 2012

NexJ Systems Reports Second Quarter Fiscal 2012 Financial Results16:01 EDT Thursday, August 02, 2012TORONTO, Aug. 2, 2012 /CNW/ - NexJ Systems Inc., (TSX: NXJ), a leading provider of next-generation enterprise customer relationship management solutions (CRM), today announced financial results for its second quarter ended June 30, 2012.Recent HighlightsNamed Canada's Fastest-Growing Company by PROFIT Magazine based on five year revenue growthAppointed Robert Courteau to the Board of DirectorsNexJ Disease Screening went live at Eastern HealthQ2 2012 Financial ResultsSecond quarter revenue was $7.1 million, down 8% Y/Y.Adjusted EBITDA (as defined below) was a loss of $2.9 million or $0.15 per share (basic and diluted) for the quarter ended June 30, 2012 as compared to an adjusted EBITDA loss of $0.9 million or $0.05 per share (basic and diluted) for the comparative period in 2011.Net loss was $3.1 million or $0.16 per share (basic and diluted) for the quarter ended June 30, 2012, as compared to a net loss of $1.5 million or $0.08 per share (basic and diluted) for the comparative period in 2011."Following on being recognized as the fastest growing company in Canada by PROFIT Magazine, we are disappointed with the level of sales we've generated year-to-date.  As such we have made a change in our sales leadership," said William M. Tatham, Chief Executive Officer of NexJ.  "I am pleased to welcome Robert Courteau to our Board of Directors.  Robert will play a Board level role in helping optimize the effectiveness of our sales organization."NexJ will be hosting an earnings report conference call today at 5:00 p.m. ET. The call can be accessed via webcast or by phone by dialing 647-427-7450 (Toronto local or international) or 1-888-231-8191 (North America Toll Free).  Investors should dial in approximately 10 minutes before the teleconference is scheduled to begin.A replay of the call will be available beginning today at 8:00 p.m. ET through 11:59 p.m. on August 2, 2012 and can be accessed by dialing 416-849-0833 (Toronto local) or toll free at 1-855-859-2056 and using password 12297950.Non-IFRS MeasuresThis news release includes certain measures that have not been prepared in accordance with International Financial Reporting Standards ("IFRS") such as Adjusted EBITDA and Adjusted EBITDA margin which are used to evaluate the Company's operating performance as a complement to results provided in accordance with IFRS.  The Company believes that Adjusted EBITDA is useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset depreciation and the other items listed below.The term "Adjusted EBITDA" refers to net income/loss before deducting share-based payment expense, finance income, finance costs, foreign exchange gain/loss, depreciation and income taxes.  "Adjusted EBITDA margin" refers to the percentage that Adjusted EBITDA for any period represents as a portion of total revenue for that period.The term Adjusted EBITDA and Adjusted EBITDA margin are not measures recognized by IFRS and do not have standardized meanings prescribed by IFRS.  Therefore, Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similar measures presented by other issuers.  Investors are cautioned that Adjusted EBITDA and Adjusted EBITDA margin should not be construed as an alternative to net income (loss) as determined in accordance with IFRS.The following table reconciles Adjusted EBITDA to net loss: Three months ended June 30, Six months ended June 30,2012 2011 2012 2011 (in thousands of dollars, exceptpercentages) (in thousands of dollars, exceptpercentages)        Total revenue $7,119 $7,698 13,255 $15,443        Net loss (3,128) (1,453) (7,635) (3,879)Add back:       Share-based payment expense 355 340 725 1,294Depreciation 283 185 572 367Foreign exchange loss (gain) (300) 110 (132) 625Finance income (141) (67) (298) (110)Finance costs 1 4 2 5        Adjusted EBITDA (2,930) (881) (6,766) (1,698)Adjusted EBITDA margin (41%) (11%) (51%) (11%)About NexJ Systems Inc.NexJ is a leading provider of enterprise private cloud software, delivering customer relationship management (CRM) solutions for financial services, insurance, and healthcare.  Our next-generation, people-centered software combines industry-specific functionality with information from multiple applications and data stores to provide comprehensive knowledge of the individual.  Organizations use this knowledge to provide superior sales and service by enabling proactive interactions that influence behavior.NexJ Forward-looking StatementCertain statements in this press release, including statements about the financial conditions, and results of operations and earnings, may contain words such as "could", "expects", "may", "should", "will", "anticipates", "believes", "intends", "estimates", "targets", "plans", "envisions", "seeks" and other similar language and are considered forward-looking statements or information under applicable securities laws. These statements are based on the Company's current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which the Company operates. These statements are subject to important assumptions, risks and uncertainties that are difficult to predict, and the actual outcome may be materially different. The Company's assumptions, although considered reasonable by the Company at the date of this press release, may provide to be inaccurate and consequently the Company's actual results could differ materially from the expectations set out herein.Actual results or events could differ materially from those contemplated in forward-looking statements as a result of the following: (i) the future performance, financial and otherwise, of NexJ; (ii) the ability of NexJ to protect, maintain and enforce its intellectual property rights; (iii) the acceptance by the Company's customers and the marketplace of new technologies and solutions; (iv) the Company's growth and profitability prospects; (v) the estimated size and growth prospects of the CRM market; (vi) the Company's competitive position in the CRM market and its ability to take advantage of future opportunities in this market; (vii) the Company's ability to attract new customers and develop and maintain existing customers; and (viii) the demand for the Company's product and the extent of deployment of the company's products in the CRM marketplace. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances.The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) our dependence on a limited number of customers and large project size; (ii) fluctuation in our quarterly operating results; (iii) our dependence on key personnel and our compensation structure; (iv) risks associated with managing large and complex software implementation projects; (v) uncertainties and assumptions in our sales forecasts, including the extent to which sales proposals are converted into sales; (vi) risks associated with our ability to design, develop, test, market, license and support our software products on a timely basis; (vii) market acceptance of our products and services; (viii) commercial success of products resulting from our investment in research and development; (ix) our success in expanding sales into new international markets; * risks associated with expansion into healthcare and other new industry verticals; (xi) competition in our industry; (xii) failure to protect our intellectual property or infringement of intellectual property rights of third parties; (xiii) reliance upon a limited number of third-party software products to develop our products; (xiv) defects or disruptions in our products and services; (xv) currency exchange rate fluctuations; (xvi) lengthy sales cycles for our software; (xvii) global financial market conditions; and (xviii) failure to manage our growth successfully.For additional information with respect to risks and other factors which could occur, see the Company's Management's Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2011 dated March 8, 2012, and other securities filings with the Canadian securities regulators available on www.sedar.com.  Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligations to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.NEXJ SYSTEMS INC.Condensed Interim Statements of Financial Position(Expressed in thousands of Canadian dollars)(Unaudited)  June 30, December 31, 2012 2011Assets  Current assets:   Cash and cash equivalents $ 54,615 $ 56,218 Short-term investments - 4,068 Accounts receivable 9,276 4,128 Investment and other tax credits receivable 3,182 2,801 Prepaid expenses and other assets 1,053 1,323 Total current assets 68,126 68,538Non-current assets:   Property and equipment  4,255 4,596 Other assets  260 260 Total non-current assets 4,515 4,856   Total assets $ 72,641 $ 73,394   Liabilities and Shareholders' Equity     Current liabilities:   Accounts payable and accrued liabilities $ 5,622 $ 4,805 Current portion of obligations under capital leases 6 41 Deferred revenue 5,911 2,097 Total current liabilities 11,539 6,943   Non-current liabilities:   Accrued liabilities 713 1,053 Deferred revenue 1,076 - Total non-current liabilities 1,789 1,053   Total liabilities 13,328 7,996   Shareholders' equity:   Share capital 80,701 79,831 Share purchase loans (3,622) (3,803) Contributed surplus 4,533 4,034 Deficit (22,299) (14,664) Total shareholders' equity 59,313 65,398   Total liabilities and shareholders' equity $ 72,641 $ 73,394NEXJ SYSTEMS INC.Condensed Interim Statements of Comprehensive Loss(Expressed in thousands of Canadian dollars)(Unaudited)       Three-months  Six-months  ended ended   June 30, June 30,   2012  2011  2012  2011         Revenue:         License fees $ 1,525 $ 2,129 $ 2,174 $ 5,865 Professional services  4,321  4,686  8,624  8,187 Maintenance and support  1,273  883  2,457  1,391  7,119  7,698  13,255 15,443         Expenses*:         Professional service costs  2,558  2,397 5,237 4,521 Research and development, net  3,646  3,154  7,358  6,460 Sales and marketing  2,165  1,669  4,227  4,098 General and administrative  2,318  1,884  4,496  3,723  10,687  9,104  21,318  18,802         Loss from operations  (3,568)  (1,406) (8,063)  (3,359)         Foreign exchange gain (loss)  300  (110)  132  (625)Finance income  141  67  298  110Finance costs  (1)  (4)  (2)  (5)  440  (47)  428 (520)         Loss before income taxes  (3,128) (1,453)  (7,635)  (3,879)         Income taxes  - -  -  -         Loss and comprehensive         loss for the period $ (3,128) $ (1,453) $ (7,635) $ (3,879)         Loss per share:         Basic and diluted $ (0.16) $ (0.08) $ (0.39) $ (0.24)          *Share-based payment expense hasbeen included in expenses as follows:         Professional service costs $ 64 $ 46 $ 127 $ 162 Research and development, net  108  86  222 307 Sales and marketing  88  81  166  441 General and administrative  95  127  210  384           $ 355 $ 340 $ 725 $ 1,294 NEXJ SYSTEMS INC.Condensed Interim Statements of Cash Flows(Expressed in thousands of Canadian dollars)(Unaudited)    Six-months Ended June 30, 2012 2011   Cash flows from operating activities:   Loss and comprehensive loss for the period $ (7,635) $ (3,879) Adjustments for:    Depreciation 572 367  Share-based payment expense 7251,294  Finance income (298) (110)  Finance costs 2 5  Foreign exchange loss (gain) (91)425 Change in non-cash operating working capital:    Accounts receivable (5,148) (42)  Prepaid expenses and other assets 270 (492)  Investment and other tax credits receivable (381)892  Accounts payable and accrued liabilities 401 (1,087)  Deferred revenue 4,890 (2,342) Net cash flows used in operating activities (6,693) (4,969)   Cash flows from financing activities:   Obligations under capital leases (35) (33) Exercise of employee stock options 4722 Exercise of agent stock options 635- Repayment of share purchase loans 143 16 Issuance of common shares -43,650 Financing costs -(3,905) Interest paid (2)(5) Net cash flows from financing activities 78839,745   Cash flows from investing activities:   Purchase of property and equipment (155)(589) Redemption of short-term investments 4,005 5,090 Interest received 298110 Increase in other assets -(54) Net cash flows from investing activities 4,1484,557   Effects of exchange rates on cash and cash equivalents 154 (445)   Increase (decrease) in cash and cash equivalents (1,603)38,888Cash and cash equivalents, beginning of period 56,218 23,942   Cash and cash equivalents, end of period $ 54,615 $ 62,830   Supplemental cash flow information:   Acquisition of property and equipment not yet paid for $ 76$ 927          SOURCE: NexJ Systems Inc.For further information: Media Contact: Matthew Bogart 416-222-5611 matt.bogart@nexj.com