News Press Releases

EQ Inc. Reports Second Quarter Results

V.EQ | August 29, 2016

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, 2016.

Total revenue from operations for the quarter, which ended on June 30, 2016, was approximately $0.7 million, lower than the $1.0 million recorded in the same period of 2015.

The adjusted EBITDA loss for the quarter was approximately $0.4 million, consistent over the same period of 2015. The Company implemented cost-saving measures to better align its cost structure with its strategic focus and was able to reduce the overall operating and compensation expenses for the second quarter of 2016.

Subsequent to the second quarter, the Company announced that, subject to final TSX Venture Exchange approval, the Corporation completed a debt financing (the “Debt Financing”). The Debt Financing consisted of approximately $1.2 million non-convertible secured promissory notes (the “Promissory Notes”). The Debt Financing rolled over approximately $350,000 of the outstanding demand loan. The Company expects to use the proceeds from the issuance of the Debt financing to build its sales and marketing team, execute its strategic goals for the second half of 2016.

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, and (g) gain (loss) on derivative liability-warrants. 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 the three and six months ended June 30, 2016 and 2015
(In thousands of Canadian dollars)	Three months ended June 30,		Six months ended June 30,
	2016	2015	2016	2015

Net loss	(489)	(476)	(631)	(1,271)
Add:
Finance (income) costs, net	81	29	75	65
Depreciation of property and equipment	3	38	7	80
Amortization of domain properties and other intangible assets	28	27	58	55
Share-based payments	-	-	-	5
Gain on derivative liability - warrants	(44)	-	(259)	-
Income tax recovery	-	(18)	-	(18)
Adjusted EBITDA	(421)	(400)	(750)	(1,084)

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.

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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, 2016	December 31, 2015

Assets

Current assets:
Cash	$ 109	$ 115
Accounts receivable	563	677
Other current assets	171	202

	843	994

Non-current assets:
Investment	-	251
Property and equipment	8	16
Domain properties and other intangible assets	170	242

	178	509

Total assets	$ 1,021	$ 1,503


Liabilities and Shareholders' Deficiency

Current liabilities:
Accounts payable and accrued liabilities	$ 2,079	$ 2,050
Deferred lease inducement	20	20
Loans and borrowings	1,761	1,323
Derivative liability - warrants	-	259
Deferred revenue	20	22
	3,880	3,674

Non-current liabilities:
Deferred lease inducement	52	63

	52	63


Shareholders' deficiency	(2,911)	(2,234)

Total liabilities and Shareholders' deficiency	$ 1,021	$ 1,503

EQ Inc.
Unaudited Condensed Consolidated Interim Statements of Loss and Comprehensive Loss
(In thousands of Canadian dollars, except per share amounts)
Three and six months ended June 30, 2016 and 2015
		Three months ended June 30,		Six months ended June 30,

		2016	2015	2016	2015

Revenue		$ 724	$ 986	$ 1,678	$ 1,907

Expenses:
	Publishing cost	345	422	826	940
	Employee compensation and benefits	422	496	825	1,077
	Other operating expenses	378	468	777	979
	Depreciation of property and equipment	3	38	7	80
	Amortization of domain properties and other intangible assets	28	27	58	55
		1,176	1,451	2,493	3,131

Loss from operations		(452)	(465)	(815)	(1,224)

Finance income		11	5	201	4
Gain on derivative liability - warrants		44	-	259	-
Finance costs		(92)	(34)	(276)	(69)

Loss before income taxes		(489)	(494)	(631)	(1,289)

Income tax recovery		-	18	-	18

Loss for the period		(489)	(476)	(631)	(1,271)

Other comprehensive income (loss), net of tax:
Items that maybe reclassified to net income (loss)
	Net change in fair value for available-for-sale financial assets	-	-	(201)	-
	Foreign currency translation
	adjustments to equity	(13)	6	155	(12)

Other comprehensive income (loss), net of tax		(13)	6	(46)	(12)


Comprehensive loss for the period		(502)	(470)	(677)	(1,283)

Loss per share:
	Basic and diluted	(0.03)	(0.03)	(0.04)	(0.08)

EQ Inc.
Unaudited Condensed Consolidated Interim Statements of Cash Flows
(In thousands of Canadian dollars)
Six months ended June 30, 2016 and 2015


			2016	2015

Cash flows from operating activities:
	Net loss		(631)	(1,271)
	Adjustments to reconcile net loss to net cash flows
	from operating activities:
		Depreciation of property and equipment	7	80
		Amortization of domain properties and other intangible assets	58	55
		Amortization of deferred lease inducement	(11)	(11)
		Gain on derivative liability - warrants	(259)	-
		Share-based payments	-	5
		Unrealized foreign exchange (gain) loss	(7)	22
		Finance costs, net	276	11
		Gain on sale of available-for-sale financial assets	(201)	-
	Change in non-cash operating working capital		248	202
	Net cash used in operating activities		(520)	(907)
	Income tax received		-	18
			(520)	(889)
Cash flows from financing activities:
	Repayment of finance lease		-	(48)
	Repayment of term loan		(87)	-
	Loans and borrowings		350	875
	Interest paid		(7)	(15)
	Net cash from financing activities		256	812

Cash flows from investing activities:
	Interest income received		-	4
	Net proceeds from disposal of available-for-sale financial assets		251	-
	Net cash from investing activities		251	4

Decrease in cash			(13)	(73)

Foreign exchange gain (loss) on cash held in foreign currency			7	(22)

Cash, beginning of period			115	311

Cash, end of the period			$ 109	$ 216