/NOT FOR DISSEMINATION TO U.S. NEWS WIRE SERVICES OR
DISSEMINATION IN THE UNITED
STATES/
- Full year Revenue up 99% to $6.11
million
- Full year Gross Profit up 119% to $1.97 million
TORONTO, June 11, 2020 /CNW/ - Newtopia Inc.
("Newtopia" or the "Company") (TSX-V: NEWU), a
telehealth enabled habit change platform focused on disease
prevention, today reported financial results for its fourth quarter
and year ended December 31,
2019. All amounts are expressed in Canadian dollars.
Fourth Quarter 2019 Highlights (vs. Q4 2018):
- Revenue increased 159% to $1.54
million
- Gross profit1 increased 30% to $0.15 million
- Expanded relationship with an existing Fortune 500 partner
drives Q4 revenue growth
Full Year 2019 Financial Highlights (vs. 2018):
- Revenue increased 99% to $6.11
million
- Gross profit increased 119% to $1.97
million
- Addition of two new Fortune 500 partners and expansion of
existing Fortune 500 partner which will drive continued growth in
2020
"We are very pleased to report strong performance in fiscal
2019, which positions us for continued growth in 2020," said
Jeff Ruby, founder and CEO of
Newtopia Inc. "Our strong Q4 results reflect an expanding
relationship with one of our Fortune 500 partners with revenue in
both fiscal 2019 and setting the stage for a strong start to 2020.
Our ongoing investment in smart technology will allow us to
continually improve engagement by providing the optimal combination
of live coaching and mobile engagement throughout our multi-year
agreements with our Fortune 500 clients."
"As COVID-19 continues to reshape the world's relationship with
health and well-being, our telehealth-enabled business continues to
be focused on disease prevention. A focus on disease prevention is
even more relevant today as chronic disease causes complications
with recovery from COVID-19," adds Ruby. "For this reason, we
are providing a one-time outlook on Q1 2020, as we anticipate
year-over-year revenue growth of more than 100% Q1 2019's
$1.76 million".
Fourth Quarter 2019 Financial Results
Newtopia's revenue during the three months ended December 31, 2019 increased by 159% over the
prior period to $1.54 million with
growth in Newtopia's customer base and expansion in participant
enrollment among its existing customers contributed to this strong
performance. In particular, the onboarding of additional
participants occurred during the quarter in preparation for a Q1
2020 program launch with an existing Fortune 500 client, adding to
onboarding-related revenue.
Gross profit in the three months ended December 31, 2019, increased by 30% to more than
$148,000 over the prior year period.
The Company includes the cost for its Inspirators (coaches) as part
of cost of sales. As such, the cost to onboard and train additional
Inspirators during the quarter was incurred in the period as the
company prepared for a significant program launch in Q1 2020. This
increase in Inspirator talent was unusually high compared to other
periods and not reflective of normal hiring requirements, resulting
in final gross profit being more than 20% lower than average for
the period at 10% in Q4.
Adjusted operating expenses2 in the three months
ended December 31, 2019 increased by
44% to $2.69 million over the prior
year period ($1.87 million) as the
company added technology, sales and marketing resources during the
quarter. Related expenses during the quarter were in line with
Newtopia's full year strategy to build on its existing talent pool.
Overall, the company had an adjusted operating loss[3] of
$2.54 million in the quarter, up from
a loss of $1.76 million in the prior
year period.
Full Year 2019 Financial Results
For the full year ended December 31,
2019, revenue increased 99% to $6.1
million over the prior period. The growth in
Newtopia's existing participant base along with the addition of two
new Fortune 500 partner clients and expanded relationship with an
existing Fortune 500 partner contributed to the strong growth in
the year.
Gross Profit for the full year ended December 2019 improved to $1.97 million, an increase of 119% over the prior
year period ($0.90 million).
The company continues to improve efficiency with participants by
increasing its use of smart technology to engage activity and
achieve longer-term clinical results for participants.
Overall adjusted operating expenses increased 23% in 2019 to
$7.44 million over the prior year
($6.07 million). Increased spending
in technology, sales and marketing accounted for the majority of
this increase as the company focuses on building a strong
foundation for future growth. For the year, the company had an
adjusted operating loss of $5.47
million, up slightly (6%) from $5.17
million.
One-time Outlook for Q1 2020
The recent COVID-19 virus outbreak has created an uncertain
business environment around the world. As a newly-public
entity issuing its first performance release in the COVID-19 era,
Newtopia is providing a one-time outlook on future performance to
provide meaningful information beyond required historical results.
The Company anticipates Q1 2020 revenue to grow by more than 100%
over Q1 2019 levels of $1.76 million.
At this time the Company has not experienced any adverse impact of
this outbreak with engagement levels with participants remaining
strong in Q1 2020. The company does not intend to regularly provide
preliminary revenue or financial results in the future.
Investor Relations Consultant
The Company also announced that, effective June 1, 2020, it has retained BND Projects Inc.
("BND") to provide strategic investor relations services.
BND, based in the Greater Toronto
Area, was founded by Christina
Cameron. Ms. Cameron, a life sciences capital markets expert
with over 20 years of experience in investor relations and
investment banking, will be providing the services. BND will aid
the Company in building awareness in the financial community by
introducing, maintaining and protecting relationships between the
Company's and investors.
Under the terms of the consulting agreement with BND (the "BND
Agreement"), the Company has agreed to pay BND a monthly fee of
$8,500. The Agreement is subject
to the approval of the TSX Venture Exchange. The BND
Agreement has an initial term of six months but may be extended by
mutual agreement of the parties. The Company and BND act at arm's
length and BND does not currently hold directly or indirectly, any
of the Company's securities. The fees paid by the Company to
BND are for its services only
About Newtopia
Newtopia is a telehealth enabled habit change platform focused
on disease prevention that delivers a 1:1 individualized approach
for at-risk individuals by looking at social, psychological, and
genetic insights. Newtopia's approach is proven to deliver value on
investment for risk bearing employers and insurers. Clients
experience reduced clinical risk factors, medical claims savings
and increased quality of life, productivity and morale for their
at-risk individuals. Newtopia's mission is to inspire people to
live healthier. To learn more, visit newtopia.com.
Forward Looking Information
This news release contains forward-looking information and
forward-looking statements, within the meaning of
applicable Canadian securities legislation, and forward looking statements, within the meaning of applicable
United States securities
legislation (collectively, "forward-looking statements"),
which reflects management's expectations regarding Newtopia's
future growth, results from operations (including,
without limitation, future production and capital expenditures), performance (both operational and financial)
and business prospects and opportunities. Wherever possible, words
such as "predicts", "projects",
"targets", "plans", "expects", "does not expect", "budget", "scheduled", "estimates", "forecasts", "anticipate"
or "does not anticipate", "believe", "intend" and similar
expressions or statements that certain actions, events or results
"may", "could", "would", "might" or "will" be taken, occur or be
achieved, or the negative or grammatical variation thereof or other
variations thereof, or comparable terminology have been used to
identify forward-looking statements. These forward-looking
statements include, among other things, statements relating to: the
expected filing date of the Annual Filings and Newtopia's business
plans and outlook. Forward-looking statements are not a guarantee
and are based
on a number of estimates and assumptions management believes to be relevant and reasonable. For more
information on these risks please see the "Risk Factors" in
Newtopia's final long-form prospectus dated March 30, 2020.
Non-GAAP Financial Measures
The Company's financial statements are prepared in accordance
with International Financial Reporting Standards ("IFRS").
Management uses certain non-GAAP measures, which are defined in the
appropriate sections of this press release, to better assess the
Company's underlying performance. These measures are reviewed
regularly by management and the Company's Board of Directors in
assessing the Company's performance and in making decisions about
ongoing operations. In addition, we use certain non-GAAP measures
to determine the components of management compensation. We believe
that these measures are also used by investors as an indicator of
the Company's operating performance. Readers are cautioned that
these terms are not recognized GAAP measures and do not have a
standardized GAAP meaning under IFRS and should not be construed as
alternatives to IFRS terms, such as net income.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
____________________________________
1 Gross profit is defined as revenue which is comprised
of onboarding welcome revenue, ongoing engagement fees and success
fees, less cost of sales which is comprised of welcome kit,
compensation expense for inspirators and care specialists and
genetic testing costs. Gross profit is considered by
management to be an integral measure of financial performance and
represents the amount of revenues retained by the Company after
incurring direct costs. However, gross profit is not a
recognized measure of profitability under IFRS.
|
2 Adjusted
operating expenses consist of all cash-based technology, sales and
marketing and administrative expenses including employment expenses
for these functions excluding equity-settled share-based
compensation. Adjusted operating expense is not a measure of
financial performance under IFRS and should not be considered a
substitute for total operating expenses, which we believe to be the
most directly comparable IFRS measure.
|
3 Adjusted
Operating Loss consists of Gross profit less adjusted operating
income. Adjusted operating loss is not a measure of financial
performance under IFRS and should not be considered a substitute
for Loss from Operations which we believe to be the most directly
comparable IFRS measure.
|
NEWTOPIA INC.
Key Financial Measures and Schedule of Non-GAAP Reconciliations
Gross Profit Information 1]
|
Three Months Ended
December 31, (In thousands)
|
|
Years Ended
December 31, (In
thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
$
|
|
$
|
|
$
|
|
$
|
Revenue
|
1,538
|
|
593
|
|
6,109
|
|
3,074
|
Cost of
sales
|
(1,390)
|
|
(478)
|
|
(4,139)
|
|
(2,175)
|
Gross
profit
|
148
|
|
115
|
|
1,970
|
|
899
|
Gross
margin
|
10%
|
|
19%
|
|
32%
|
|
29%
|
|
[1] Gross
profit is defined as revenue which is comprised of onboarding
welcome revenue, ongoing engagement fees and success fees, less
cost of sales which is comprised of welcome kit, compensation
expense for inspirators and care specialists and genetic testing
costs. Gross profit is considered by management to be an
integral measure of financial performance and represents the amount
of revenues retained by the Company after incurring direct
costs. However, gross profit is not a recognized measure of
profitability under IFRS
|
Reconciliation of Total Operating Expenses to Adjusted
Operating Expenses [2]
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
(In
thousands)
|
|
(In
thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
$
|
|
$
|
|
$
|
|
$
|
Total operating
expenses
|
4,227
|
|
2,825
|
|
12,111
|
|
7,288
|
Subtract
(Add)
|
|
|
|
|
|
|
|
Stock-based
compensation
|
(1,460)
|
|
(262)
|
|
(2,025)
|
|
(249)
|
Depreciation of
property and equipment
|
(19)
|
|
(12)
|
|
(56)
|
|
(46)
|
Depreciation of
right-of-use assets
|
(46)
|
|
(46)
|
|
(185)
|
|
(185)
|
Interest and accretion
expense
|
(478)
|
|
(545)
|
|
(2,640)
|
|
(633)
|
Interest on lease
obligations
|
(39)
|
|
(40)
|
|
(159)
|
|
(160)
|
Finance
charges
|
(7)
|
|
(213)
|
|
(7)
|
|
(213)
|
Foreign
exchange
|
(43)
|
|
27
|
|
(42)
|
|
30
|
Change in value of
convertible debentures derivative liabilities
|
140
|
|
40
|
|
54
|
|
40
|
Gain on extinguishment
of convertible debentures
|
409
|
|
-
|
|
409
|
|
-
|
Change in value of
derivative liability
|
7
|
|
100
|
|
(21)
|
|
197
|
Adjusted Operating
Expenses
|
2,691
|
|
1,874
|
|
7,439
|
|
6,069
|
|
[2] Adjusted
operating expenses consist of all cash-based technology, sales and
marketing and administrative expenses including employment expenses
for these functions excluding equity-settled share-based
compensation. Adjusted operating expense is not a measure of
financial performance under IFRS and should not be considered a
substitute for total operating expenses, which we believe to be the
most directly comparable IFRS measure.
|
NEWTOPIA INC.
Key Financial Measures and Schedule of Non-GAAP Reconciliations
Adjusted Operating Loss [3]
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
(In
thousands)
|
|
(In
thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
$
|
|
$
|
|
$
|
|
$
|
Gross
Profit
|
148
|
|
115
|
|
1,970
|
|
899
|
Adjusted Operating
Expenses
|
(2,691)
|
|
(1,874)
|
|
(7,439)
|
|
(6,069)
|
Adjusted Operating
Loss
|
(2,543)
|
|
(1,759)
|
|
(5,469)
|
|
(5,170)
|
|
[3] Adjusted
Operating Loss consists of Gross profit less adjusted operating
income. Adjusted operating loss is not a measure of financial
performance under IFRS and should not be considered a substitute
for Loss from Operations which we believe to be the most directly
comparable IFRS measure.
|
NEWTOPIA INC.
Statements of Financial Position
As at December 31, 2019 and 2018
(Expressed in Canadian Dollars)
|
|
|
|
|
|
|
|
2019
|
2018
|
|
|
|
$
|
$
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash
|
|
|
2,386,341
|
1,428,558
|
Trade and other
receivables
|
|
|
1,247,858
|
592,791
|
Prepaid expenses and
deposits
|
|
|
462,605
|
258,292
|
Inventories
|
|
|
604,920
|
399,373
|
|
|
|
4,701,724
|
2,679,014
|
Property and
equipment
|
|
|
186,376
|
79,424
|
Right–of–use
asset
|
|
|
739,072
|
923,838
|
|
|
|
5,627,172
|
3,682,276
|
Liabilities
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
|
2,254,894
|
1,204,054
|
Lease
obligations
|
|
|
156,340
|
44,963
|
Secured
debentures
|
|
|
–
|
1,900,000
|
Interest
payable
|
|
|
–
|
202,373
|
Convertible
debentures
|
|
|
3,993,758
|
2,149,793
|
Convertible debentures
derivative liabilities
|
|
|
1,952,638
|
2,006,719
|
Retractable preferred
shares
|
|
|
7,420,265
|
7,420,265
|
Derivative
liability
|
|
|
178,670
|
157,433
|
|
|
|
15,956,565
|
15,085,600
|
Non–current lease
obligations
|
|
|
883,090
|
1,039,431
|
|
|
|
16,839,655
|
16,125,031
|
Equity/Deficit
|
|
|
|
|
Common
shares
|
|
|
4,643,945
|
4,643,945
|
Preferred
shares
|
|
|
13,011,033
|
13,011,033
|
Special
Warrants
|
|
|
9,164,731
|
–
|
Contributed
surplus
|
|
|
5,172,192
|
2,701,639
|
Deficit
|
|
|
(43,204,384)
|
(32,799,372)
|
|
|
|
(11,212,483)
|
(12,442,755)
|
|
|
|
5,627,172
|
3,682,276
|
NEWTOPIA INC.
Statements of Loss and Comprehensive Loss
Years Ended December 31, 2019 and
2018
(Expressed in Canadian Dollars)
|
|
|
|
|
|
|
|
2019
|
2018
|
|
|
|
$
|
$
|
Continuing
operations
|
|
|
|
|
Products and services
revenue
|
|
|
6,109,282
|
3,073,901
|
Costs of
sales
|
|
|
4,138,939
|
2,174,926
|
|
|
|
1,970,343
|
898,975
|
Operating
expenses
|
|
|
|
|
Technology
|
|
|
2,512,631
|
2,196,506
|
Sales and
marketing
|
|
|
1,709,794
|
1,357,210
|
Administrative
|
|
|
3,216,507
|
2,515,417
|
Stock–based
compensation
|
|
|
2,024,780
|
248,922
|
|
|
|
9,463,712
|
6,318,055
|
Other
expenses
|
|
|
|
|
Depreciation of
property and
equipment
|
|
|
56,437
|
46,166
|
Depreciation of
right–of–use
asset
|
|
|
184,766
|
184,766
|
Interest and accretion
expense
|
|
|
2,640,030
|
633,111
|
Interest on lease
obligations
|
|
|
158,642
|
160,251
|
Finance
charges
|
|
|
6,724
|
212,623
|
Foreign exchange
loss/(gain)
|
|
|
42,244
|
(29,987)
|
Change in value of
convertible debenture derivative liabilities
|
|
|
(54,081)
|
(39,751)
|
Gain on extinguishment
of convertible debentures
|
|
|
(408,778)
|
–
|
Change in value of
derivative
liability
|
|
|
21,237
|
(197,422)
|
|
|
|
2,647,221
|
969,757
|
Net loss and
comprehensive loss
|
|
|
(10,140,590)
|
(6,388,837)
|
Loss per
share
|
|
|
|
|
Basic and diluted loss
per share
|
|
|
(0.65)
|
(0.41)
|
Weighted average
number of common shares outstanding
|
|
|
|
|
Basic and
diluted
|
|
|
15,535,919
|
15,535,919
|
|
|
|
|
|
NEWTOPIA INC.
Statements of Changes in Equity (Deficit)
Years Ended December 31, 2019 and
2018
(Expressed in Canadian Dollars)
|
|
|
|
|
|
|
|
|
Note
|
Common Shares
|
Preferred Shares
|
Special Warrants
|
Contributed Surplus
|
Deficit
|
Total
|
|
|
$
|
$
|
$
|
$
|
$
|
$
|
Balance, December 31, 2017
|
|
4,639,503
|
13,011,033
|
–
|
2,378,190
|
(26,410,535)
|
(6,381,809)
|
Net loss for the
year
|
|
–
|
–
|
–
|
–
|
(6,388,837)
|
(6,388,837)
|
Compensation
options
|
|
–
|
–
|
–
|
75,821
|
–
|
75,821
|
Shares to be issued
on exercise of stock options
|
|
4,442
|
–
|
–
|
(1,294)
|
–
|
3,148
|
Stock–based
compensation
|
|
–
|
–
|
–
|
248,922
|
–
|
248,922
|
Balance, December 31, 2018
|
|
4,643,945
|
13,011,033
|
–
|
2,701,639
|
(32,799,372)
|
(12,442,755)
|
Net loss for the
year
|
|
–
|
–
|
–
|
–
|
(10,140,590)
|
(10,140,590)
|
Modified
warrants
|
|
–
|
-
|
–
|
264,422
|
(264,422)
|
–
|
Issuance of Special
Warrants, net of cash issuance costs
|
|
–
|
–
|
9,346,082
|
–
|
–
|
9,346,082
|
Special Broker
Warrants issued
|
|
–
|
–
|
(181,351)
|
181,351
|
–
|
–
|
Stock–based
compensation
|
|
–
|
–
|
–
|
2,024,780
|
–
|
2,024,780
|
Balance, December 31, 2019
|
|
4,643,945
|
13,011,033
|
9,164,731
|
5,172,192
|
(43,204,384)
|
(11,212,483)
|
|
|
|
|
|
|
|
|
NEWTOPIA INC.
Statements of Cash Flows
Years Ended December 31, 2019 and
2018
(Expressed in Canadian Dollars)
|
|
|
|
|
|
|
|
2019
|
2018
|
|
|
|
$
|
$
|
Cash flows used in
operating activities
|
|
|
|
|
Net loss and
comprehensive loss
|
|
|
(10,140,590)
|
(6,388,837)
|
Depreciation of
property and equipment
|
|
|
56,437
|
46,166
|
Depreciation of
right–of–use asset
|
|
|
184,766
|
184,766
|
Finance
charges
|
|
|
–
|
212,623
|
Interest and accretion
expense
|
|
|
2,640,030
|
633,111
|
Interest on lease
obligations
|
|
|
158,642
|
160,251
|
Change in value of
convertible debenture derivative liabilities
|
|
|
(54,081)
|
(39,751)
|
Change in value of
derivative
liability
|
|
|
21,237
|
(197,422)
|
Stock–based
compensation
|
|
|
2,024,780
|
248,922
|
Gain on extinguishment
of convertible
debentures
|
|
|
(408,778)
|
–
|
|
|
|
(5,517,557)
|
(5,140,171)
|
Change in non–cash
working capital
|
|
|
|
|
Trade and other
receivables
|
|
|
(655,067)
|
(57,694)
|
Prepaid expenses and
deposits
|
|
|
(204,313)
|
88,108
|
Inventories
|
|
|
(205,547)
|
(326,958)
|
Accounts payable and
accrued
liabilities
|
|
|
1,050,840
|
116,084
|
|
|
|
(5,531,644)
|
(5,320,631)
|
Interest
paid
|
|
|
–
|
(31,508)
|
|
|
|
(5,531,644)
|
(5,352,139)
|
Cash flows used in
investing activities
|
|
|
|
|
Purchase of property
and equipment
|
|
|
(163,389)
|
(42,346)
|
|
|
|
(163,389)
|
(42,346)
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from secured
debentures
|
|
|
–
|
2,600,000
|
Repayment of secured
debentures
|
|
|
–
|
(700,000)
|
Proceeds from issuance
of convertible debentures, net of issuance costs
|
|
|
–
|
3,660,231
|
Repayment of
convertible
debentures
|
|
|
(160,500)
|
–
|
Repayment of lease
obligation
|
|
|
(203,606)
|
(184,461)
|
Exercise of stock
options
|
|
|
–
|
3,148
|
Issuance of Special
Warrants, net of issuance costs and settlement of
Debentures
|
|
|
7,016,922
|
–
|
|
|
|
6,652,816
|
5,378,918
|
Net change in cash
during the
year
|
|
|
957,783
|
(15,567)
|
Cash, beginning of
year
|
|
|
1,428,558
|
1,444,125
|
Cash, end of
year
|
|
|
2,386,341
|
1,428,558
|
Supplemental cash
flow information
|
|
|
|
|
Non–cash settlement of
secured
debentures
|
|
|
2,329,160
|
-
|
SOURCE Newtopia Inc.