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EQ Inc. Reports Second Quarter Financial Results

AccessWire - Thu Aug 27, 2020

Data revenue increases for the 6th consecutive quarter

TORONTO, ON / ACCESSWIRE / August 27, 2020 / EQ Inc. (TSXV:EQ) ("EQ Works" or the "Company"), a leader in geospatial data and intelligence, announced its financial results today for the second quarter ended June 30, 2020.

The Company is pleased to show continued growth in its data revenue for the 6th consecutive quarter as it continues to focus on data, and incorporate artificial intelligence ("AI") and machine learning solutions to first and third party data sets. Data revenue for the quarter was up 38% compared to the same period a year ago, as demand continued to increase for proprietary data solutions provided by the Company. Total revenue for the quarter was impacted due to a reduction in client spending for media as a result of the COVID-19 pandemic. Revenue of $1.7 million was a decrease of 22% from the $2.2 million recorded in same period a year ago and 21% from the previous quarter. The adjusted EBITDA loss for the quarter was approximately $0.6 million.

The Company realized significantly improved business conditions during the quarter, with an increase in month over month revenue continuing through May and June. Currently, at the mid-point of the third quarter, the Company expects revenue to be at least 50% higher than what was generated in the second quarter.

Highlights for the Second Quarter ended June 30, 2020

  • 38% increase in data revenue compared to the same period last year
  • Additional financing of $3.7 million as a result of the early exercise of warrants issued as part of a previous financing
  • New credit facility of $1.6 million with one of Canada's major banks
  • Cash balance at the end of the quarter was $5 million and net working capital was $3.3 million providing the Company with an extremely strong financial position
  • Multi-year engagement with one of Canada's largest out-of-home advertising companies
  • Partnership with Opta Information Intelligence to deliver advanced solutions to the insurance and financial services verticals
  • Partnership with TRADER Corporation to improve customer profiling of intent based consumers as the automotive industry rebounds
  • Partnership with Media City to improve attribution and measurement capabilities for digital out of home placements
  • Partnership between EQ Works and Caddle, to understand the COVID-19 impact on consumer behavior and how EQ data segments can help businesses address these challenges

"In what was a very surreal quarter, I was extremely pleased with the resilience of our data business and with the effort and dedication by the entire EQ team" said Geoffrey Rotstein, President and CEO of EQ Works. "In addition to our continued investment and development in our proprietary data platform and its machine learning and AI systems, our team also dedicated a significant amount of time assisting government and academic organizations with solutions to better inform and educate Canadians in the fight against COVID-19. This work included significant investments of their personal time and for that, I am very proud of our team and what we were able to accomplish."

"As with most other industries, the second quarter was challenging as our media business had campaigns paused or reduced due to COVID-19. Our response to the pandemic, in terms of investments, cost saving measures and productivity has been strong resulting in significantly improved results through May and June and into the third quarter."

Subsequent to quarter-end, the Company granted 125,000 Restricted Share Units (each unit an "RSU") to an Officer of the Company in accordance with the Company's shareholder approved RSU plan. Each RSU is exercisable into one common share of the Company. This is a normal-course grant that comprises part of the long-term compensation and employee retention incentive provided by the Company. The RSU will vest over 3 years and will expire on August 24, 2025.

Non-IFRS Financial Measures

EQ Works measures the success of the Company's strategies and performance based on Adjusted EBITDA, which is outlined and reconciled with net income (loss) in the section entitled "Reconciliation of Net Loss for the period to Adjusted EBITDA" in the MD&A. The Company defines Adjusted EBITDA as net income (loss) from operations before: (a) depreciation of property and equipment and amortization of intangible assets, (b) share-based payments, (c) finance income and costs, net, (d) depreciation of right-of-use assets, and (e) transaction costs of acquisition. Management uses Adjusted EBITDA as a measure of the Company's operating performance because it provides information on the Company's ability to provide operating cash flows for working capital requirements, capital expenditures, and potential acquisitions. The Company also believes that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies in its industry.

The non-IFRS financial measure is used in addition to, and in conjunction with, results presented in the Company's consolidated financial statements prepared in accordance with IFRS and should not be relied upon to the exclusion of IFRS financial measures. Management strongly encourages investors to review the Company's consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-IFRS financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-IFRS financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-IFRS adjustments described above, and exclusion of these items from the Company's non-IFRS measures should not be construed as an inference that these costs are unusual, infrequent, or non-recurring.

The table below reconciles net loss from operations and Adjusted EBITDA for the periods presented:

Adjusted EBITDA for three and six months ended June 30, 2020 and 2019

 

 

(In thousands of Canadian dollars)

Three months ended June 30,

Six months ended June 30,

 

2020

2019

2020

2019

Net loss

(949)

(302)

(1,601)

(827)

Add:

 

 

 

 

 

 

 

 

 

Finance costs, net

123

136

249

191

Transaction costs of acquisition

-

-

23

-

Depreciation of property and equipment

19

14

35

27

Amortization of intangible assets

71

11

82

22

Share-based payments

125

13

134

42

Depreciation of right-of-use asset

17

43

35

85

Adjusted EBITDA

(594)

(85)

(1,043)

(460)

     

About EQ Works

EQ Works (www.eqworks.com) enables businesses to understand, predict, and influence customer behaviour. Using unique data sets, advanced analytics, machine learning and artificial intelligence, EQ Works creates actionable intelligence for businesses to attract, retain, and grow the customers that matter most. The Company's proprietary SaaS platform mines insights from movement and geospatial data, enabling businesses to close the loop between digital and real-world consumer actions.

Neither the TSX-V nor its Regulation Services Provider (as that term is defined in policies of the TSX-V) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements

Certain statements contained in this press release constitute "forward-looking statements". All statements other than statements of historical fact contained in this press release, including, without limitation, those regarding the Company's ability to adjust to customer needs in light of COVID-19, the delivery of acceleration notices to the holders of Warrants and the exercise of the Warrants by holders, future financial position and results of operations, strategy, plans, objectives, goals and targets, and any statements preceded by, followed by or that include the words "believe", "expect", "aim", "intend", "plan", "continue", "will", "may", "would", "anticipate", "estimate", "forecast", "predict", "project", "seek", "should" or similar expressions, or the negative thereof, are forward-looking statements. These statements are not historical facts but instead represent only the Company's expectations, estimates, and projections regarding future events. These statements are not guarantees of future performance and involve assumptions, risks, and uncertainties that are difficult to predict. Therefore, actual results may differ materially from what is expressed, implied, or forecasted in such forward-looking statements. Additional factors that could cause actual results, performance, or achievements to differ materially include, but are not limited to, the risk factors discussed in the Company's MD&A for the three months ended June 30, 2020. Management provides forward-looking statements because it believes they provide useful information to investors when considering their investment objectives but cautions investors not to place undue reliance on forward-looking information. Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and any other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company. These forward-looking statements are made as of the date of this press release, and the Company assumes no obligation to update or revise them to reflect subsequent information, events, or circumstances or otherwise, except as required by law.

EQ Inc.
Peter Kanniah, Chief Financial Officer
416-260-4326
1235 Bay Street, Suite 401| Toronto, Ontario |M5R 3K4
press@eqworks.com
www.eqworks.com

EQ Inc.
      
Unaudited Consolidated Statements of Financial Position
      
(In thousands of Canadian dollars)
      
 
      
 
 June
30, 2020
  December
31, 2019
 
 
      
Assets
      
 
      
Current assets:
      
Cash
 $4,982  $3,691 
Accounts receivable
  2,235   2,060 
Other current assets
  334   197 
 
  7,551   5,948 
 
        
Non-current assets:
        
Property and equipment
  133   102 
Right-of-use asset
  111   146 
Intangible asset
  1,062   537 
Goodwill
  1,260   535 
 
  2,566   1,320 
 
        
Total assets
 $10,117   $7,268  
 
        
 
        
Liabilities and Shareholders' Equity
        
 
        
Current liabilities:
        
Accounts payable and accrued liabilities
 $1,819  $1,705 
Lease liability
  70   70 
Loans and borrowings
  1,876   - 
Contract liabilities
  119   24 
Earn-out
  354   256 
 
  4,238   2,055 
 
        
Non-current liabilities:
        
Lease liability
  54   88 
Loans and borrowings
  -   1,603 
 
  54   1,691 
 
        
Shareholders' equity
  5,825   3,522 
 
        
Total liabilities and shareholders' equity
 $10,117   $7,268  
 
        
EQ Inc.
                   
Unaudited Consolidated Interim Statements of Loss
                   
(In thousands of Canadian dollars, except per share amounts)
                   
Three and six months ended June 30, 2020 and 2019
                   
 
  Three months ended
June 30,
    Six months ended
June 30,
 
 
                   
 
  2020    2019    2020    2019 
 
                   
Revenue
  1,726    2,207    3,924    3,613 
 
                               
Expenses:
                               
Publishing costs
    1,093      1,127      2,351      1,807 
Employee compensation and benefits
    904      705      1,866      1,438 
Other operating expenses
    448      473      884      870 
Depreciation of property and equipment
    19      14      35      27 
Depreciation of right-of-use asset
    17      43      35      85 
Amortization of intangible assets
    71      11      82      22 
 
    2,552      2,373      5,253      4,249 
 
                               
Loss from operations
    (826)      (166)      (1,329)      (636) 
 
                               
Transaction costs of acquisition
    -      -      (23)    - 
Finance income
    15      1      24      9 
Finance costs
    (138)    (137)    (273)    (200)
 
                               
Loss before income taxes
    (949)    (302)    (1,601)    (827)
 
                               
Net loss
    (949)    (302)    (1,601)    (827)
 
                               
Loss per share:
                               
Basic and diluted
    (0.02)    (0.01)    (0.03)    (0.02)
 
                               
EQ Inc.
      
Unaudited Consolidated Statements of Cash Flows
      
(In thousands of Canadian dollars)
      
Six months ended June 30, 2020 and 2019
      
 
      
 
      
 
 2020  2019 
 
      
Cash flows from operating activities:
      
Net loss
  (1,601)  (827)
Adjustments to reconcile net loss to net cash flows
        
from operating activities:
        
Depreciation of property and equipment
  35   27 
Depreciation of right-of-use asset
  35   85 
Amortization of intangible assets
  82   22 
Share-based payments
  134   42 
Unrealized foreign exchange loss (gain)
  (31)  8 
Finance cost, net
  272   191 
Change in non-cash operating working capital
  (233)  (21)
Net cash used in operating activities
  (1,307)  (473)
 
        
Cash flows from financing activities:
        
Repayment of obligations under property lease
  (93)  (85)
Loans and borrowings
  80   284 
Proceeds from private placement
  -   180 
Share issuance costs
  -   (4)
Proceeds from exercise of warrants
  3,658   - 
Proceeds from exercise of stock options
  112   1 
Interest paid
  (2)  (6)
Net cash from financing activities
  3,755   370 
 
        
Cash flows from investing activities:
        
Interest income received
  1   2 
Investment in GIC
  -   (30)
Acquisition of Juice Mobile
  (850)  - 
Purchases of property and equipment
  (64)  (10)
Addition of intangible asset
  (275)  (125)
Net cash used in investing activities
  (1,188)  (163)
 
        
Decrease in cash
  1,260   (266)
Foreign exchange gain (loss) on cash held in foreign currency
  31   (8)
Cash, beginning of the period
  3,691   584 
 
        
Cash, end of the period
 $4,982   $310  
 
        

SOURCE: EQ Inc.



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https://www.accesswire.com/603583/EQ-Inc-Reports-Second-Quarter-Financial-Results

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