EQ Inc. Reports Second Quarter Financial Results

Revenue growth of 65% sequentially and on track to profitability

TORONTO, ON / ACCESSWIRE / August 22, 2024 / EQ Inc. (TSXV:EQ) ("EQ Works" or the "Company"), a leader in AI and data driven software and solutions, announced its financial results today for the second quarter ended June 30, 2024.

EQ is pleased to report that revenue for the second quarter increased by over 65% from the previous quarter, to approximately $2.6 million, as clients continued to look for ways to optimize their investments in AI, data and media solutions. EQ's focus on AI and data driven insights is a significant differentiator in the market and continues to generate interest from companies across multiple verticals. The need for unique, user opt-in, real time data is an essential component of EQ's value proposition and is critical for every company looking to integrate AI solutions into their business. EQ's suite of products and its proprietary data assets position it very well to take advantage of this market.

Gross margin for the quarter increased to 43%, an improvement when compared to both the previous quarter and the same period a year ago. The adjusted EBITDA also improved significantly during the quarter, resulting in an adjusted EBITDA loss of $0.2 million, an improvement of 67% sequentially and over 53% from the same period a year ago. These improvements are the result of very focused efforts by the Company to drive more recurring revenue and better align costs and investments with its overall revenue composition.

"We continue to make significant strides with our data and AI led solutions" said Geoffrey Rotstein, President and CEO of EQ Works. "Our proprietary network of first party data continues to grow and combined with our strategic partnerships we have software and solutions that utilize AI to make data actionable. Data led solutions are an essential tool for all businesses and we are very well positioned to take advantage of opportunities across multiple verticals with enormous market potential."

Subsequent to the quarter end, the Company announced that it had closed a $1 million non-revolving subordinated secured debt financing (the "BDC Loan") with the Business Development Bank of Canada ("BDC").

The BDC Loan will bear interest at a floating rate equal to the BDC base rate plus a margin of 2.50 %. The current BDC base rate as of the date hereof was 9.050% per annum.

After the quarter ended, the Company received $1.25 million of cash from a legal settlement that was initiated a couple of years ago. Excluding legal and filing fees associated with the lawsuit, the settlement generated $1.0 million of cash for the Company.

Non-IFRS Financial Measures

EQ Works measures the success of the Company's strategies and performance based on Adjusted EBITDA, which is outlined and reconciled with net 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 loss from operations before: (a) depreciation of property and equipment and amortization of intangible assets, (b) share-based payments, (c) finance income and costs, net, (d) restructuring costs. Management uses Adjusted EBITDA as a measure of the Company's operating performance because it provides information on 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, 2024 and 2023

(In thousands of Canadian dollars)		Three months ended June 30,								Six months ended June 30,
		2024				2023				2024				2023
Net loss			(475	)			(639	)			(1,355	)			(2,027	)
Add:
Finance (income) costs, net			37				(1	)			84				6
Depreciation of property and equipment			6				8				13				19
Amortization of intangible assets			233				204				465				449
Share-based payments			3				8				6				30
Restructuring costs			-				-				-				122
Adjusted EBITDA			(196	)			(420	)			(787	)			(1,401	)

About EQ Works

EQ Works (www.eqworks.com) enables businesses to understand, predict, and influence customer behaviour. Using unique data sets, advanced analytics, machine learning and artificial intelligence, EQ Works creates actionable intelligence for businesses to attract, retain, and grow the customers that matter most. The Company's proprietary SaaS platform mines insights from movement and geospatial data, enabling businesses to close the loop between digital and real-world consumer actions.

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

Certain statements contained in this press release constitute "forward-looking statements". All statements other than statements of historical fact contained in this press release, including, without limitation, those regarding the Company's future financial position and results of operations, strategy, plans, objectives, goals and targets, and any statements preceded by, followed by or that include the words "believe", "expect", "aim", "intend", "plan", "continue", "will", "may", "would", "anticipate", "estimate", "forecast", "predict", "project", "seek", "should" or similar expressions, or the negative thereof, are forward-looking statements. These statements are not historical facts but instead represent only the Company's expectations, estimates, and projections regarding future events. These statements are not guarantees of future performance and involve assumptions, risks, and uncertainties that are difficult to predict. Therefore, actual results may differ materially from what is expressed, implied, or forecasted in such forward-looking statements. Additional factors that could cause actual results, performance, or achievements to differ materially include, but are not limited to, the risk factors discussed in the Company's MD&A for the three and six months ended June 30, 2024. Management provides forward-looking statements because it believes they provide useful information to investors when considering their investment objectives but cautions investors not to place undue reliance on forward-looking information. Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and any other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company. These forward-looking statements are made as of the date of this press release, and the Company assumes no obligation to update or revise them to reflect subsequent information, events, or circumstances or otherwise, except as required by law.

EQ Inc.
Peter Kanniah, Chief Financial Officer
1235 Bay Street, Suite 401| Toronto, Ontario |M5R 3K4
[e-mail]

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

		June 30, 2024				December 31, 2023
Assets
Current assets:
Cash		$	205			$	381
Restricted cash			48				48
Accounts receivable			2,703				3,962
Other current assets			161				206
			3,117				4,597
Non-current assets:
Property and equipment			17				25
Intangible assets			820				985
			837				1,010
Total assets		$	3,954			$	5,607
Liabilities and Shareholders' Deficiency
Current liabilities:
Accounts payable and accrued liabilities		$	3,139			$	3,237
Rewards payable			1,522				1,387
Loans and borrowings			1,227				1,568
			5,888				6,192
Shareholders' deficiency			(1,934	)			(585	)
Total liabilities and shareholders' deficiency		$	3,954			$	5,607

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, 2024 and 2023

		Three months ended June 30,								Six months ended June 30,
		2024				2023				2024				2023
Revenue		$	2,568			$	2,541			$	4,124			$	4,232
Expenses:
Publishing costs			1,469				1,485				2,387				2,528
Employee compensation and benefits			816				941				1,572				2,024
Other operating expenses			482				543				958				1,111
Depreciation of property and equipment			6				8				13				19
Amortization of intangible assets			233				204				465				449
Restructuring costs			-				-				-				122
			3,006				3,181				5,395				6,253
Loss from operations			(438	)			(640	)			(1,271	)			(2,021	)
Finance income			1				7				3				5
Finance costs			(38	)			(6	)			(87	)			(11	)
Net loss			(475	)			(639	)			(1,355	)			(2,027	)
Total comprehensive loss			(475	)			(639	)			(1,355	)			(2,027	)
Loss per share:
Basic and diluted			(0.01	)			(0.01	)			(0.02	)			(0.03	)

EQ Inc.
Unaudited Condensed Consolidated Interim Statements of Cash Flows
(In thousands of Canadian dollars)
Six Months ended June 30, 2024 and 2023

		2024				2023
Cash flows from operating activities:
Net loss			(1,355	)			(2,027	)
Adjustments to reconcile net loss to net cash flows
from operating activities:
Depreciation of property and equipment			13				19
Amortization of intangible assets			465				449
Share-based payments			6				30
Unrealized foreign exchange loss (gain)			(1	)			1
Finance costs (income), net			61				(5	)
Change in non-cash operating working capital			1,341				1,008
Net cash from (used) in operating activities			530				(525	)
Cash flows from financing activities:
Repayment of loans borrowings			(341	)			-
Proceed from exercise of stock options			-				26
Interest paid			(64	)			-
Net cash from (used) in financing activities			(405	)			26
Cash flows from investing activities:
Interest income received			3				5
Purchase of property and equipment			(5	)			-
Addition of intangible assets			(300	)			(300	)
Net cash used in investing activities			(302	)			(295	)
Decrease in cash			(177	)			(794	)
Foreign exchange gain (loss) on cash held in foreign currency			1				(1	)
Cash, beginning of the period			381				1,253
Cash, end of the period		$	205			$	458

SOURCE: EQ Inc.

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