Eq Inc.TSXV: EQ

EQ Inc. Fourth Quarter Revenue Increases by 37%

Apr 28, 2017 at 11:00 PM UTC · Issued by Eq Inc.

Toronto, Ontario (FSCwire) - EQ Inc. (TSXV: EQ) (“EQ Works”), a leader in audience targeting for mobile, social, video, and display advertising today announced its financial results for the fourth quarter and fiscal year ended December 31, 2016.

After a year of investing in a mobile targeting platform unique to the Canadian market, the year ended strong. EQ’s proprietary location based audience platform creates the ideal target audience by combining location with specific demographic and other first or third party data sets. Utilizing machine learning and AI to optimize these audience groups, EQ provides the most targeted form of digital advertising. New clients and numerous sales and marketing opportunities have already resulted from the launch of this platform which translated into momentum and improved fourth quarter results.

Revenue for the fourth quarter of 2016, which ended on December 31, 2016, was approximately $1.0 million, up 37% sequentially and 18% year over year. The adjusted EBITDA loss for the quarter was significantly reduced to approximately $0.2 million, an improvement of 55% over the same period a year ago and 28% when compared to the third quarter of 2016.

Total revenue for the year was $3.4 million, relatively consistent with the $3.7 million recorded in the previous year and the adjusted EBITDA loss for the year was approximately $1.3 million an improvement of 33% from the previous year.

Highlights of 2016:

Number of new campaigns over the year increased by 137%

Number of new self-service clients increased by 300%

Gross Margin (revenue less media costs) remained stable at 50%

Recognized as a leader in location based marketing by the Digiday and the Canadian Association of Marketing Professionals

Non-IFRS Financial Measures

We measure the success of our 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 domain properties and other intangible assets; (b) share-based payments, (c) restructuring, (d) impairment of goodwill and domain properties and other intangible assets, (e) Income tax expense and recovery, (f) finance income and costs, net, (g) gain from extension of loan and borrowings (h) loss on derivative liability . Management uses Adjusted EBITDA as a measure of the Company's operating performance because it provides information related to 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 year ended December 31, 2016 and 2015
(In thousands of Canadian dollars)	2016	2015

Net loss	(1,495)	(2,296)
Add:

Finance costs, net	438	55
Depreciation of property and equipment	13	119
Amortization of domain properties and other intangible assets	121	112
Share-based payments	2	59
Gain from extension of loan and borrowings	(179)	-
Realized gain on sale of investment	(201)	-
Loss on sale of domain properties and other intangible assets	-	1
Loss on derivative liability - warrants	-	24
Income tax recovery	-	(18)

Adjusted EBITDA	(1,301)	(1,944)

About EQ Works

EQ Works (www.eqworks.com) provides a smarter way to target customers. The Company uses its real-time technology and advanced analytics to detect the actionable data that boosts performance for all web, mobile, social and video initiatives. EQ Works balances the many components that comprise the complex advertising ecosystem and establishes equilibrium for reaching the right audience at the right time through any web or mobile device.

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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

This news release may contain forward-looking statements that are based on management’s current expectations and are subject to known and unknown uncertainties and risks, which could cause actual results to differ materially from those contemplated or implied by such forward-looking statements. EQ Inc. is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.

EQ Inc.

1235 Bay Street, Suite 401| Toronto, Ontario |M5R 3K4

p: 416.597.8889 f: 416.597.2345

press@eqworks.com

www.eqworks.com

EQ Inc.
Unaudited Consolidated Statements of Financial Position
(In thousands of Canadian dollars)

	December 31, 2016	December 31, 2015

Assets

Current assets:
Cash	$ 151	$ 115
Accounts receivable	890	677
Other current assets	138	202

	1,179	994

Non-current assets:
Investment	-	251
Property and equipment	8	16
Domain properties and other intangible assets	121	242

	129	509

Total assets	$ 1,308	$ 1,503


Liabilities and Shareholders' Deficiency

Current liabilities:
Accounts payable and accrued liabilities	$ 1,892	$ 2,050
Deferred lease inducement	63	20
Loans and borrowings	268	1,323
Derivative liability - warrants	-	259
Deferred revenue	7	22
	2,230	3,674

Non-current liabilities:

Loans and borrowings	2,421	-
Deferred lease inducement	-	63
	2,421	63


Shareholders' deficiency	(3,343)	(2,234)

Total liabilities and Shareholders' deficiency	$ 1,308	$ 1,503

EQ Inc.
Unaudited Consolidated Statements of Loss and Comprehensive Loss
(In thousands of Canadian dollars, except per share amounts)
Years ended December 31, 2016 and 2015


		2016	2015

Revenue		$ 3,414	$ 3,684

Expenses:
	Publishing costs	1,702	1,977
	Employee compensation and benefits	1,667	1,978
	Other operating costs	1,348	1,733
	Depreciation of property and equipment	13	119
	Amortization of domain properties and other intangible assets	121	112
		4,851	5,919

Loss from operations		(1,437)	(2,235)

Finance income		12	92
Realized gain on sale of investment		201	-
Loss on derivative liability - warrants		-	(24)
Gain from extension of loan and borrowings		179	-
Finance costs		(450)	(147)

Loss before income taxes		(1,495)	(2,314)

Income tax recovery		-	18

Loss for the period		(1,495)	(2,296)

Other comprehensive income reclassified
to profit or loss in Subsequent periods, (net of tax):
	Net income (loss) on sale of investment	(201)	201
	Foreign currency translation
	of foreign operations		(196)

Other comprehensive income (loss), net of tax		(201)	5


Total Comprehensive loss		(1,696)	(2,291)

Loss per share:
	Basic and diluted	(0.09)	(0.14)

EQ Inc.
Unaudited Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
Years ended December 31, 2016 and 2015


			2016	2015

Cash flows from operating activities:
	Net loss		(1,495)	(2,296)
	Adjustments to reconcile net loss to net cash flows
	from operating activities:
		Depreciation of property and equipment	13	119
		Amortization of domain properties and other intangible assets	121	112
		Amortization of deferred lease inducement	(20)	(12)
		Gain on derivative liability - warrants	-	24
		Gain on extension of loan and borrowings	(179)	-
		Share-based payments	2	59
		Unrealized foreign exchange (gain) loss	(33)	44
		Finance costs, net	450	55
		Current income tax recovery	-	(18)
		Loss on sale of domain properties and other intangible assets	-	1
		Gain on sale of investment	(201)	-
	Change in non-cash operating working capital		(259)	389
	Cash used in operating activities		(1,601)	(1,523)
	Income taxes received		-	18
	Net cash used in operating activities		(1,601)	(1,505)

Cash flows from financing activities:
	Repayment of finance lease		-	(64)
	Advance of term-loan		-	175
	Repayment of term-loan		(102)	(73)
	Issuance of promissory notes		1,500	1,335
	Interest paid		(10)	(25)
	Net cash from financing activities		1,388	1,348

Cash flows from investing activities:
	Interest income received		-	5
	Purchase of property and equipment		(5)	-
	Proceeds from disposal of investment		251	-
	Net cash from investing activities		246	5

Increase (decrease) in cash			33	(152)

Foreign exchange gain (loss) on cash held in foreign currency			3	(44)

Cash, beginning of year			115	311

Cash, end of the year			$ 151	$ 115

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Source: EQ Inc. (TSX Venture:EQ)

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