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EQ Inc. Reports Second Quarter Financial Results

V.EQ | August 29, 2018

Second quarter revenue increases by 51% over the first quarter of 2018

Toronto, Ontario (FSCwire) - EQ Inc. (TSXV: EQ) (“EQ Works” or the “Company”), North America’s leader in location behaviour data and intelligence, announced its financial results today for the quarter ended June 30, 2018.

Revenue for the second quarter increased by over 51% from the first quarter of 2018, to over $1.3 million, with revenue from data analytics growing for the fourth sequential quarter. As the Company continues to focus on projects that leverage its proprietary location based data and insights tools, as opposed to more commodity based campaigns, this change in composition resulted in a small revenue decrease from the same period last year. The adjusted EBITDA loss for the second quarter was approximately $0.4 million, consistent with the previous quarter, and an increase from the same period a year ago as investments into proprietary data and geospatial tools continued.

Data is expected to account for several billions of dollars of investment over the next few years, as companies realize the enormous impact it will have on the success of their overall business. EQ Works is well positioned to take a leadership role in this area as it proprietary tools and technologies gather, analyze and execute on unique data sets that empower companies of all sizes. “As we continue to focus on combining real world behaviors with digital channels, data revenue increased by over 900% compared to the same period a year ago,” said Geoffrey Rotstein, President and CEO of EQ Works. “We are providing clients with insights and data that has not been available in the past. Real-time insights into where people go in the real world, provided through LOCUS, our unique proprietary platform, arms our partners with information allowing them to make the best online and offline decisions for media, growth and overall strategy.”

LOCUS, EQ’s proprietary platform for location data and insights, was launched a little over a year ago and has already generated hundreds of unique audience profiles for many of Canada’s leading companies. The investments this past quarter were in response to customer demand and resulted in enhanced geospatial mapping technology, machine learning and AI capabilities all of which will make it easier for companies to understand and measure the location behavior of their audiences. LOCUS utilizes almost half a petabyte of proprietary device location data to enable companies to better understand and measure their customers and deliver insights.

Highlights for the Second Quarter ended June 30, 2018

Data revenue increased over 900% as compared to the same period a year ago and for the fourth sequential quarter

LOCUS audience profiles increased by 29% in the quarter

Nine new high-value clients were added during the second quarter of 2018

Completed an equity financing of $0.9 million

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) 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, 2018 and 2017
(In thousands of Canadian dollars)	Three months ended June 30,		Six months ended June 30,
	2018	2017	2018	2017
Net loss	(590)	(259)	(1,158)	(709)
Add:

Finance costs, net	151	143	317	285
Depreciation of property and equipment	10	8	20	10
Amortization of domain properties and other intangible assets	-	38	-	76
Share-based payments	3	6	6	13
Gain on extension of loans and borrowings	-	(80)	-	(80)
Adjusted EBITDA	(426)	(144)	(815)	(405)

About EQ Works

EQ Works (www.eqworks.com) provides a smarter way to target customers. Using first-party, location-based behaviour signals, advanced data analytics, and proprietary software, EQ creates and targets customized, performance-boosting audience segments. Proprietary algorithms and data generate attribution models that connect consumer behavior in the physical world to consumer behavior in the digital world, solving complex challenges for brands and agencies.

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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

press@eqworks.com

www.eqworks.com

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

	June 30, 2018	December 31, 2017

Assets

Current assets:
Cash	$ 431	$ 891
Accounts receivable	1,209	1,292
Other current assets	131	64
	1,771	2,247

Non-current assets:
Property and equipment	131	137


Total assets	$ 1,902	$ 2,384


Liabilities and Shareholders' Deficiency

Current liabilities:
Accounts payable and accrued liabilities	$ 1,355	$ 1,494
Loans and borrowings	764	3,132
Deferred revenue	3	10
	2,122	4,636

Non-current liabilities:
Loans and borrowings	1,383	-


Shareholders' deficiency	(1,603)	(2,252)

Total liabilities and Shareholders' deficiency	$ 1,902	$ 2,384

EQ Inc.
Unaudited Consolidated Interim Statements of Loss
(In thousands of Canadian dollars, except per share amounts)
Three and six months ended June 30, 2018 and 2017
		Three months ended June 30,		Six months ended June 30
		2018	2017	2018	2017

Revenue		$ 1,330	$ 1,430	$ 2,212	$ 2,320

Expenses:
	Publishing costs	773	799	1,231	1,245
	Employee compensation and benefits	560	501	1,059	965
	Other operating expenses	426	280	743	528
	Depreciation of property and equipment	10	8	20	10
	Amortization of domain properties and other intangible assets	-	38	-	76
		1,769	1,626	3,053	2,824

Loss from operations		(439)	(196)	(841)	(504)

Finance income		-	24	1	30
Gain from extension of loans and borrowings		-	80	-	80
Finance costs		(151)	(167)	(318)	(315)

Loss before income taxes		(590)	(259)	(1,158)	(709)

Net loss		(590)	(259)	(1,158)	(709)

Loss per share:
	Basic and diluted	(0.01)	(0.01)	(0.03)	(0.04)

EQ Inc.
Unaudited Consolidated Interim Statements of Cash Flows
(In thousands of Canadian dollars)
Six months ended June 30, 2018 and 2017


			2018	2017

Cash flows used in operating activities:
	Net loss		(1,158)	(709)
	Adjustments to reconcile net loss to net cash flows
	from operating activities:
		Depreciation of property and equipment	20	10
		Amortization of domain properties and other intangible assets	-	76
		Amortization of deferred lease inducement	-	(63)
		Gain on extension of loans and borrowings	-	(80)
		Share-based payments	6	13
		Unrealized foreign exchange (gain) loss	(5)	10
		Finance costs, net	290	302
	Change in non-cash operating working capital		(131)	(183)
	Net cash used in operating activities		(978)	(624)

Cash flows from financing activities:
	Repayment of loans and borrowings		(2,184)	(765)
	Issuance of promissory notes		1,534	765
	Proceeds from exercise of warrants		616	588
	Proceeds from equity financing, net of issuance costs		914	1,057
	Interest paid		(354)	(8)
	Net cash from financing activities		526	1,637

Cash flows used in investing activities:
	Interest income received		1	-
	Leasehold improvements		-	(91)
	Purchase of property and equipment		(14)	(41)
	Net cash used in investing activities		(13)	(132)

Increase (decrease) in cash			(465)	881
Foreign exchange gain (loss) on cash held in foreign currency			5	(10)
Cash, beginning of the period			891	151

Cash, end of period			$ 431	$ 1,022