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EQ Inc. Reports Second Quarter Results

V.EQ | August 28, 2015

Quarterly revenue growth increases by 7 percent

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 second quarter ended June 30, 2015. Total revenue for the quarter was approximately $1 million, relatively consistent with the $1.1 million recorded in the second quarter of 2014 and an increase of 7% from the first quarter of 2015. The adjusted EBITDA loss for the quarter was approximately $0.4 million, representing a 55% improvement from the second quarter of 2014 and 42% improvement when compared the first quarter of 2015.

Highlights for the Second Quarter ended June 30, 2015

Sequential revenue growth of 7%
Launched “ATOM”, a new self-service digital media buying solution for small businesses
Signed eight new agency partners during the quarter

“In addition to adding new clients and delivering great campaign results for our existing clients, we are extremely proud of the launch of ATOM, a media buying tool for small businesses” said Geoffrey Rotstein, President and CEO. “With the launch of ATOM, we have provided small businesses with a powerful media buying solution that allows them to compete with larger brands.”

The Company continued its cost reduction efforts during the quarter and is confident that as sales continue to climb, positive earns and cash flow will be achieved. “Although we know that sustained growth is essential, by continuing to add new clients and grow our existing relationships we know we are on the right path. This progress on the financial side of the business, together with our expertise and leading solutions for mobile distribution, is expected to shape our progress for the coming quarters”.

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 six months ended June 30, 2015 and 2014
	Three months ended June 30,		Six months ended June 30,
(In thousands of Canadian dollars)	2015	2014	2015	2014

Net loss	(476)	(1,168)	(1,271)	(2,327)
Add:

Finance costs, net	29	(57)	65	46
Depreciation of property and equipment	38	50	80	110
Amortization of domain properties and other intangible assets	27	270	55	544
Share-based payments	-	14	5	25
Income tax recovery	(18)	-	(18)	-
Adjusted EBITDA	(400)	(891)	(1,084)	(1,602)

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.

1255 Bay Street, Suite 400| Toronto, Ontario |M5R 2A9

p: 416.597.8889 f: 416.597.2345

press@eqworks.com

www.eqworks.com

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

	June 30, 2015	December 31, 2014

Assets

Current assets:
Cash and cash equivalents	$216	$311
Accounts receivable	746	722
Other current assets	216	196

	1,178	1,229

Non-current assets:
Investment	50	50
Property and equipment	52	124
Domain properties and other intangible assets	272	324

	374	498

Total assets	$1,552	$1,727


Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable and accrued liabilities	$1,785	$1,480
Loan and borrowings	906	-
Deferred lease inducement	22	22
Finance lease	16	64
Deferred revenue	41	90
	2,770	1,656

Non-current liabilities:
Deferred lease inducement	62	73

	62	73

Shareholders' Equity	(1,280)	(2)

Total liabilities and Shareholders' equity	$1,552	$1,727

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, 2015 and 2014

		Three months ended June 30,		Six months ended June 30,

		2015	2014	2015	2014

Revenue		$986	$1,082	$1,907	$3,097

Expenses:
	Publishing and advertising costs	422	439	940	1,493
	Employee compensation and benefits	496	785	1,077	1,774
	Other operating expenses	468	763	979	1,457
	Depreciation of property and equipment	38	50	80	110
	Amortization of domain properties and other intangible assets	27	270	55	544
		1,451	2,307	3,131	5,378

Loss from operations		(465)	(1,225)	(1,224)	(2,281)

Finance income		5	59	4	10
Finance costs		(34)	(2)	(69)	(56)

Loss for the period		(494)	(1,168)	(1,289)	(2,327)

Income tax recovery		$18	-	$18	-

Loss for the period		(476)	(1,168)	(1,271)	(2,327)

Other comprehensive income (loss):
	Foreign currency translation
	adjustments to equity	6	(81)	(12)	76

Other comprehensive income (loss), net of tax		6	(81)	(12)	76


Comprehensive loss for the period		(470)	(1,249)	(1,283)	(2,251)

Loss per share:
	Basic and diluted	(0.03)	(0.07)	(0.08)	(0.14)

EQ Inc.
Unaudited Condensed Consolidated Interim Statements of Cash Flows
(In thousands of Canadian dollars)
Six months ended June 30, 2015 and 2014

			Six months ended June 30,
			2015	2014

Cash flows from operating activities:
	Loss for the period		(1,271)	(2,327)
	Adjustments to reconcile net loss to net cash flows
	from operating activities:
		Depreciation of property and equipment	80	110
		Amortization of domain properties and other intangible assets	55	544
		Amortization of deferred lease inducement	(11)	(17)
		Share-based payment	5	25
		Foreign exchange loss	22	53
		Finance (income) loss, net	11	(4)
	Change in non-cash operating working capital		202	169
	Cash used in operating activities		(907)	(1,447)
	Income taxes received		18	-
	Net cash used in operating activities		(889)	(1,447)

Cash flows from financing activities:
	Repayment of finance lease		(48)	(77)
	Loan and borrowings		875	-
	Interest paid		(15)	(6)
	Net cash from (used in) financing activities		812	(83)

Cash flows from investing activities:
	Interest income received		4	10
	Addition to property and equipment		-	(6)
	Net cash from investing activities		4	4

Foreign exchange loss on cash held in foreign currency			(22)	(53)

Increase (Decrease) in cash and cash equivalents			(95)	(1,579)

Cash and cash equivalents, beginning of period			311	2,797

Cash and cash equivalents, end of the period			$216	$1,218

To view this press release as a PDF file, click onto the following link:
public://news_release_pdf/EQIncPRAug282015_0.pdf

Source: EQ Inc. (TSX:EQ) http://www.eqworks.com/

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