NexJ Systems Reports First Quarter 2022 Results

TORONTO, May 12, 2022 /CNW/ - NexJ Systems Inc. (TSX: NXJ), delivering intelligent customer management software to the financial services industry, today announced financial results for its first quarter ended March 31, 2022.

First Quarter Summary

• The Company continued its planned transition from a perpetual license model to a more predictable subscription license model generating $691K in license and subscription revenue for the first quarter, an increase of $645K as compared to $43K in the first quarter of the previous year
• Continued to increase the recurring subscription license revenue by delivering new subscription license product to a leading US wealth management firm that supports real-time data streaming for enhanced analytics and reporting
• Unbilled contracted subscription license revenue of $954K will be recognized as revenue in future quarters as compared to zero in the first quarter of the previous year
• $4.03M of revenue for the first quarter as compared to $3.93M in the first quarter of the previous year
• $406K in Adjusted EBITDA loss for the first quarter as compared to $96K profit in the first quarter of the previous year
• $565K of net loss for the first quarter as compared to $283K of net loss in the first quarter of the previous year
• The Company has rationalized its real estate requirements during the quarter which will result in significant cost savings commencing in the second half of 2022

"Our focus on building subscription-based license revenue continued, delivering 17% of total revenue for the quarter and contributing strongly to an overall increase in revenue versus the same period last year. With over 85% recurring revenues and continued prudent expense management, we have established a strong foundation for future growth", said Paul O'Donnell, CEO. "As the market responds to increasing demand for a more cohesive, data-rich advisor experience, NexJ's core technology and domain expertise in delivering a truly integrated advisor workstation positions us well to further capitalize on that demand."

NexJ Systems Inc.
First Quarter Financial Results
(Expressed in thousands of Canadian dollars)
(Unaudited)
		Quarter ended		Quarter ended
		March 31, 2022		March 31, 2021
Revenue		$		$
License and subscription fees		691		43
Professional services		1,444		1,800
Maintenance and support		1,899		2,093
		4,034		3,936
Cost of revenue		1,250		1,063
Gross profit		2,784		2,873
Operating Expenses
Research and development		1,668		1,395
Sales and marketing		544		565
General and administrative		978		817
		3,190		2,777
Adjusted EBITDA		(406)		96
Share-based payment expense		7		37
Depreciation and amortization		411		218
Loss from operations		(824)		(159)
Foreign exchange loss		29		100
Finance income		(15)		(3)
Finance expense		(273)		27
Net Loss		(565)		(283)

Non-IFRS Measures

This 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 and Adjusted EBITDA margin are 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 adjusting for share-based payment expense, depreciation and amortization, deferred share unit expense, restructuring costs, foreign exchange gain (loss), finance income, finance costs, 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.

About NexJ Systems Inc.
NexJ Systems provides Intelligent Customer Management to the financial services industry. Our award-winning CRM is designed to help Wealth Management, Private Banking, Corporate and Commercial Banking, and Insurance firms revolutionize their business. Powered by artificial intelligence, our products help drive productivity, boost client engagement, and increase revenue. With users in over 60 countries, our customers benefit from our deep expertise across financial services verticals, strategic investment in innovation, and commitment to their success.

Based in Toronto, NexJ has clients throughout North America, Asia Pacific and in Europe. For more information about NexJ visit www.nexj.com, e-mail [email protected], or call 416-222-5611. Join us on LinkedIn, follow us on Twitter, subscribe to our YouTube channel, or like us on Facebook.

NexJ Forward-looking Statement
Certain statements in this press release, including statements about the financial conditions, and results of operations and earnings, may contain words such as "may", "will", "expect", "anticipate", "aim", "estimate", "intend", "plan", "seek", "believe", "potential", "continue", "is/are likely to", "could", "should", "target", "envision", 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; * competition in our industry; (xi) failure to protect our intellectual property or infringement of intellectual property rights of third parties; (xii) reliance upon a limited number of third-party software products to develop our products; (xiii) defects or disruptions in our products and services; (xiv) currency exchange rate fluctuations; (xv) lengthy sales cycles for our software; (xvi) general economic conditions; (xvii) failure to manage our growth successfully; (xviii) failure to successfully manage and integrate acquisitions; (xix) breach of our security measures and unauthorized access to data; (xx) employee retention and (xxi) litigation, including commercial, product liability, employment, class action and other litigation and claims.

For additional information with respect to risks and other factors which could occur, see the Company's most recently filed Annual Information Form for the year ended December 31, 2020 dated February 18, 2021, 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
Condensed Interim Statements of Financial Position
(Expressed in thousands of Canadian dollars)
(Unaudited)
	March 31, 2022		December 31, 2021
Assets
	$		$
Current assets:
Cash and cash equivalents	5,923		5,489
Accounts receivable	3,269		5,457
Prepaid expenses and other assets	1,339		1,334
Total current assets	10,531		12,280
Non-current assets:
Property and equipment	570		612
Right-of-use assets	724		951
Goodwill	1,753		1,753
Contract assets	62		88
Total non-current assets	3,109		3,404
Total assets	13,640		15,684
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities	1,719		2,023
Deferred revenue	6,161		6,592
Lease liabilities	665		1,152
Total current liabilities	8,545		9,767
Non-current liabilities:
Accrued liabilities	53		62
Deferred revenue	14		328
Lease liabilities	142		83
Total non-current liabilities	209		473
Total liabilities	8,754		10,240
Shareholders' equity:
Share capital	83,485		83,485
Share purchase loans	(3,598)		(3,598)
Contributed surplus	8,742		8,735
Accumulated other comprehensive loss	751		751
Deficit	(84,494)		(83,929)
Total shareholders' equity	4,886		5,444
Total liabilities and shareholders' equity	13,640		15,684

NexJ Systems Inc.
Condensed Interim Statements of Comprehensive Loss
(Expressed in thousands of Canadian dollars, except per share amounts)
(Unaudited)
	Quarter ended		Quarter ended
	March 31, 2022		March 31, 2021
Revenue	$		$
License and subscription fees	691		43
Professional services	1,444		1,800
Maintenance and support	1,899		2,093
	4,034		3,936
Cost of revenue	1,251		1,068
Gross profit	2,783		2,868
Expenses:
Research and development	1,668		1,403
Sales and marketing	544		566
General and administrative	1,395		1,058
	3,607		3,027
Loss from operations	(824)		(159)
Foreign exchange loss	(29)		(100)
Finance income	15		3
Finance expense	273		(27)
	259		(124)
Loss for the period	(565)		(283)
Other comprehensive loss:
Items that will not be reclassified to profit or loss:
Unrealized loss on equity securities	-		(3)
Loss for the period                 and comprehensive loss
Loss per share
Basic and diluted	(0.03)		(0.01)
Weighted average number of common shares
outstanding, in thousands
Basic and diluted	21,076		21,055

NexJ Systems Inc.
Condensed Interim Statements of Cash Flows
(Expressed in thousands of Canadian dollars)
(Unaudited)
	Quarter ended		Quarter ended
	March 31, 2022		March 31, 2021
Cash flows from (used in) operating activities:	$		$
Loss for the period	(565)		(283)
Adjustments for:
Depreciation and amortization of property and equipment	42		56
Depreciation of right-of-use assets	369		162
Changes in contract assets	26		8
Share-based payment expense	7		37
Finance income	(15)		(3)
Finance expense	(273)		27
Foreign exchange loss	19		54
Change in non-cash operating working capital:
Accounts receivable	2,188		2,458
Prepaid expenses and other assets	(5)		(13)
Accounts payable and accrued liabilities	(313)		(117)
Deferred revenue	(745)		461
Net cash flows from operating activities	735		2,847
Cash flows used in financing activities:
Payment of lease liabilities	(295)		(276)
Interest paid	(2)		(1)
Net cash flows used in financing activities	(297)		(277)
Cash flows from investing activities:
Interest received	15		3
Net cash flows from investing activities	15		3
Effects of exchange rates on cash and cash equivalents	(19)		(54)
Increase in cash and cash equivalents	434		2,519
Cash and cash equivalents, beginning of period	5,489		5,426
Cash and cash equivalents, end of period	5,923		7,945
Supplemental cash flow information:
Acquisition of property and equipment not yet paid	-		32

SOURCE NexJ Systems Inc.

Media Contact: Matthew Bogart, 416-227-3708, [email protected]