EQ Inc.
TSX : EQ

EQ Inc.

August 07, 2013 17:00 ET

EQ Inc. Reports Second Quarter 2013 Results

TORONTO, ONTARIO--(Marketwired - Aug. 7, 2013) - EQ Inc. (TSX:EQ) ("EQ Works"), a leader in targeted mobile, social, video and display advertising, today announced its financial results for the second quarter ended June 30, 2013. Total revenue from continuing operations for the quarter was $1.9 million, an increase from the $1.6 million recorded in the previous quarter, and adjusted EBITDA loss for the quarter was approximately $591,000 as compared to a loss of $942,000 in the previous quarter.

Highlights for the second quarter ended June 30, 2013

  • At June 30, the Company had cash on hand of $4 million and no debt
  • The Company's overall revenue increased 17% from the previous quarter
  • The Company relaunched under its new brand EQ Works and gained significant momentum for its real-time advertising solutions
  • Five new agency/clients were added during the quarter.

"During the second quarter, we began seeing results," said Geoffrey Rotstein, President and CEO. "We are now seeing more demand for our product and a greater share of our clients' advertising budgets as we continue to demonstrate the effectiveness of our real-time advertising solution," added Rotstein. "The largest growth area has been right here in Canada, where brands and agencies have been very receptive to our unique advantages and the results we deliver. We expect to see continued growth through the remainder of 2013."

Non-IFRS Financial Measures

This press release includes a discussion of "Adjusted EBITDA," which is a non-IFRS financial measure. The Company defines Adjusted EBITDA as net loss from operations before; (a) depreciation of property and equipment and amortization of domain properties and other intangibles; (b) share-based payments, (c) restructuring and acquisition costs, (d) impairments of goodwill and intangible assets and other items, net. 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 acquisitions, capital expenditures and working capital requirements. 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 accordance with 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 continuing operations and Adjusted EBITDA for the periods presented:

Adjusted EBITDA for three and six months ended 2013 and 2012
Three months ended
June 30,
Six months ended
June 30,
(In thousands of Canadian dollars) 2013 2012 2013 2012
Net loss from operations $ (962 ) $ (1,041 ) $ (2,283 ) $ (2,214 )
Add:
Depreciation of property and equipment 70 66 145 151
Amortization of domain properties and other intangibles 286 278 569 554
Share-based payments 15 (2 ) 36 (15 )
Adjusted EBITDA $ (591 ) $ (699 ) $ (1,533 ) $ (1,524 )

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.

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.
Unaudited Condensed Consolidated Interim Statements of Financial Position
(In thousands of Canadian dollars)
June 30, 2013 and December 31, 2012
June 30,
2013
December 31,
2012
Assets
Current assets:
Cash and cash equivalents$4,004$5,419
Accounts receivable 1,540 2,425
Other current assets 264 303
Income taxes recoverable 42 40
5,850 8,187
Non-current assets:
Investment 50 50
Property and equipment 387 460
Domain properties and other intangible assets 2,515 2,889
Goodwill 377 357
3,329 3,756
Total assets$9,179$11,943
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities$2,120$2,703
Deferred lease inducement 34 41
Finance leases 156 155
Deferred revenue 537 549
2,847 3,448
Non-current liabilities:
Finance leases 110 186
Deferred lease inducement - 14
Deferred tax liabilities 107 244
217 444
Shareholders' Equity 6,115 8,051
Total liabilities and Shareholders' equity$9,179$11,943
EQ Inc.
Unaudited Condensed Consolidated Interim Statements of Comprehensive Income (Loss)
(In thousands of Canadian dollars, except per share amounts)
Three and six months ended June 30, 2013 and 2012
Three months ended
June 30,
Six months ended
June 30,
2013 2012 2013 2012
Revenue$1,909 $3,890 $3,546 $7,422
Expenses:
Publishing and advertising costs 1,036 2,357 1,872 4,337
Employee compensation and benefits 858 1,301 1,894 2,759
Other operating expenses 621 929 1,349 1,835
Depreciation of property and equipment 70 66 145 151
Amortization of domain properties and other intangible assets 286 278 569 554
2,871 4,931 5,829 9,636
Loss from operations (962) (1,041) (2,283) (2,214)
Finance income 6 27 21 27
Finance cost (117) (214) (234) (246)
Loss before income taxes (1,073) (1,228) (2,496) (2,433)
Income taxes recovery 65 106 130 161
Loss for the period from continuing operations (1,008) (1,122) (2,366) (2,272)
Discontinued Operation:
Income for the period from discontinued operation, net of tax - 7,377 - 5,129
Income (loss) for the period (1,008) 6,255 (2,366) 2,857
Other comprehensive income:
Foreign currency translation adjustments to equity, net of tax 213 261 394 160
Other comprehensive income for the period 213 261 394 160
Total comprehensive income (loss) for the period$(795)$6,516 $(1,972)$3,017
Income (loss) per share:
Basic (0.06) 0.39 (0.15) 0.19
Diluted (0.06) 0.39 (0.15) 0.19
Loss per share from continuing operations:
Basic (0.06) (0.07) (0.15) (0.14)
Diluted (0.06) (0.07) (0.15) (0.14)
EQ Inc.
Unaudited Condensed Consolidated Interim Statements of Cash Flows
(In thousands of Canadian dollars)
Six months ended June 30, 2013 and 2012
2013 2012
Cash flows from operating activities:
Income (loss) for the period$(2,366)$2,857
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation of property and equipment 145 418
Amortization of domain properties and other intangible assets 569 2,727
Amortization of deferred lease inducement (20) (45)
Share-based payments 36 (15)
Foreign exchange loss (gain) 227 (34)
Finance cost, net 219 217
Deferred income taxes recovery (130) (109)
Restructuring cost - 221
Gain on sale of Tsavo - (7,402)
Change in non-cash operating working capital 278 (2,945)
Cash used in operating activities (1,042) (4,110)
Income taxes received - 31
Net cash used in operating activities (1,042) (4,079)
Cash flows from financing activities:
Repurchase of common shares under NCIB - (10)
Repayment of finance leases (76) (30)
Interest paid (15) (272)
Net cash used in financing activities (91) (312)
Cash flows from investing activities:
Interest income received 21 17
Net proceeds from sale of available-for-sale investments - 200
Decrease in restricted cash and short-term investments - 201
Proceeds on sale of Tsavo, net of cash disposed - 6,293
Additions to domain properties and other intangible assets (26) -
Additions to property and equipment (50) (208)
Net cash from (used in) investing activities (55) 6,503
Foreign exchange gain (loss) on cash held in foreign currency (227) 34
Increase (decrease) in cash and cash equivalents (1,415) 2,146
Cash and cash equivalents, beginning of period 5,419 4,050
Cash and cash equivalents, end of period$4,004 $6,196

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