EQ Inc.
TSX : EQ

EQ Inc.

November 14, 2014 17:00 ET

EQ Inc. Reports Third Quarter Results

TORONTO, ONTARIO--(Marketwired - Nov. 14, 2014) - EQ Inc. (TSX:EQ) ("EQ Works") a leader in audience targeting for mobile, social, video and display advertising today announced its financial results for the third quarter-ended September 30, 2014. Total revenue from operations for the quarter was $1 million, consistent with the $1.1 million recorded in the previous quarter. The adjusted EBITDA loss for the quarter was approximately $588,000, as compared to a loss of $890,000 in the second quarter of 2014.

"This past quarter we continued to focus on mobile and video as the drivers of growth for our business, while significantly reducing costs over last quarter," said Geoffrey Rotstein, President and CEO. "While it wasn't a growth quarter, it was one where we were able to improve our mobile and video targeting capabilities substantially, which are both strategic imperatives for the company. These efforts allowed us to become the first Canadian company with best-in-class points-of-interest targeting, and our exclusive pre-screened video initiative boosted video advertising results by 70% in the quarter. Our platform is even more robust now with the launch of native advertising opportunities, and our self-serve functionality is in beta with some of our better clients and the results are very encouraging," added Rotstein. "We have the platform and people in place to scale the business, and we are focused squarely on sales and marketing at this point."

Highlights for the Third Quarter ended September 30, 2014

  • Launched the first programmatic in-image native advertising platform
  • Completed integration of data on 2 million places in Canada for domestic point-of-interest targeting, the first in Canada
  • Began testing our self-serve platform in market with advanced reporting and insights

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, and (f) finance income and costs, 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 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 nine months ended September 30, 2014 and 2013
Three months ended Nine months ended
September 30, September 30,
(In thousands of Canadian dollars) 2014 2013 2014 2013
Net loss (925 ) (775 ) (3,252 ) (3,140 )
Add:
Income tax recovery (22 ) (67 ) (22 ) (197 )
Finance (income) cost, net 40 (75 ) 86 137
Depreciation of property and equipment 37 64 147 209
Amortization of domain properties and other intangibles 269 293 813 862
Share-based payments 13 10 38 45
Adjusted EBITDA (588 ) (550 ) (2,190 ) (2,084 )

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)
September 30,
2014
December 31,
2013
Assets
Current assets:
Cash and cash equivalents$649$2,797
Accounts receivable 894 2,231
Other current assets 314 222
1,857 5,250
Non-current assets:
Investment 50 50
Property and equipment 157 281
Domain properties and other intangible assets 865 1,610
1,072 1,941
Total assets$2,929$7,191
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities$1,647$2,316
Deferred lease inducement 22 14
Finance leases 87 122
Deferred revenue 95 602
1,851 3,054
Non-current liabilities:
Deferred lease inducement 78 -
Finance leases - 64
78 64
Shareholders' Equity 1,000 4,073
Total liabilities and Shareholders' equity$2,929$7,191
EQ Inc.
Unaudited Condensed Consolidated Interim Statements of Comprehensive Income (Loss)
(In thousands of Canadian dollars, except per share amounts)
Three and nine months ended September 30, 2014 and 2013
Three months ended
September 30,
Nine months ended
September 30,
2014 2013 2014 2013
Revenue$1,006 $1,906 $4,103 $5,452
Expenses:
Publishing and advertising costs 450 1,018 1,943 2,890
Employee compensation and benefits 664 856 2,438 2,750
Other operating expenses 493 592 1,950 1,941
Depreciation of property and equipment 37 64 147 209
Amortization of domain properties and other intangible assets 269 293 813 862
1,913 2,823 7,291 8,652
Loss from operations (907) (917) (3,188) (3,200)
Finance income 2 81 12 26
Finance cost (42) (6) (98) (163)
Loss before income taxes (947) (842) (3,274) (3,337)
Income taxes recovery:
Current 22 2 22 2
Deferred - 65 - 195
Loss for the period (925) (775) (3,252) (3,140)
Other comprehensive income (loss):
Foreign currency translation adjustments to equity 65 (124) 141 271
Other comprehensive income (loss) for the period, net of tax 65 (124) 141 271
Total comprehensive loss for the period (860) (899) (3,111) (2,869)
Loss per share:
Basic and diluted (0.06) (0.05) (0.20) (0.20)
EQ Inc.
Unaudited Condensed Consolidated Interim Statements of Cash Flows
(In thousands of Canadian dollars)
Nine months ended September 30, 2014 and 2013
2014 2013
Cash flows from operating activities:
Loss for the period (3,252) (3,140)
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation of property and equipment 147 209
Amortization of domain properties and other intangible assets 813 862
Amortization of deferred lease inducement (23) (31)
Share-based payment 38 45
Foreign exchange loss 91 153
Finance income, net (4) (5)
Current income tax recovery (22) (2)
Deferred income tax recovery - (195)
Change in non-cash operating working capital 239 457
Net cash used in operating activities (1,973) (1,647)
Income taxes received 22 40
(1,951) (1,607)
Cash flows from financing activities:
Repayment of finance leases (99) (114)
Interest paid (8) (21)
Net cash used in financing activities (107) (135)
Cash flows from investing activities:
Interest income received 12 26
Addition to property and equipment (11) (65)
Additions to domain properties and other intangible assets - (25)
Net cash from (used in) investing activities 1 (64)
Foreign exchange loss on cash held in foreign currency (91) (153)
Decrease in cash and cash equivalents (2,148) (1,959)
Cash and cash equivalents, beginning of period 2,797 5,419
Cash and cash equivalents, for the period$649 $3,460

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