/NOT FOR DISSEMINATION TO U.S. NEWS WIRE
SERVICES OR DISSEMINATION IN THE UNITED
STATES/
TORONTO, July 8, 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 first quarter
2020. All amounts are expressed in Canadian dollars.
First Quarter 2020 Highlights (vs. Q1 2019):
- Revenue increased 119% to $3.86
million; led by an expanding relationship with a highly
innovative Fortune 500 partner
- Gross profit1 increased 142% to
$1.65 million; driven by growth in
engagement fee revenue
- Gross margin percentage improves to 43%; up from 39%
"We are very pleased with our strong start to 2020. Our record
revenue and gross profit in the first quarter is a significant
achievement as we make the transition to a publicly-traded company
in the midst of the COVID-19 pandemic," said Jeff Ruby, founder and CEO of Newtopia Inc.
"This robust start sets the tone for the year, as our expanded
relationships with some of the most innovative Fortune 500 partners
extend into 2020 and add to our growing base of recurring monthly
engagement activity."
While current COVID-19 related health restrictions have limited
consumer mobility and access to a broad range of services,
Newtopia's telehealth enabled platform continues to experience
growing engagement with its existing client base. The platform has
experienced some of its highest levels of engagement to date since
the onset of the pandemic.
"As a personalized virtual engagement and habit change company
we are built to perform in this challenging environment, helping to
mitigate escalating healthcare costs for risk-bearing employers and
insurers," adds Ruby. "Coupled with our one-size-fits-one diabetes
prevention program becoming the first precision health program to
receive full accreditation from the Centers for Disease Control and
Prevention (CDC), it's clear that our unique approach is gaining
traction in the marketplace."
______________________
|
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.
|
First Quarter 2020 Financial Results
Newtopia's revenue during the three months ended
March 31, 2020 was $3.86 million, an increase of 119% over the prior
period ($1.76 million). This growth
was propelled by a Q1 program launch with a highly innovative
existing Fortune 500 partner, which added to a favourable mix of
welcome revenue and a firm base of monthly engagement fee revenue
coming out of 2019.
Gross profit for the three months ended March 31, 2020 increased by 142% to more than
$1.65 million over the prior year
period ($0.68 million). While cost of
sales increased in the period due to higher Inspirator (coach)
costs, overall margin improved to 43% over the prior year level of
39%. Margin growth in the period can be attributed to the move in
revenue mix from 50% monthly engagement fee based in 2019 to over
60% in 2020.
Adjusted operating expenses2 in the three
months ended March 31, 2020 increased
by 55% to $2.35 million over the
prior year period ($1.51 million) as
the company added technology, sales and marketing and
administrative resources during the first quarter. The company has
taken a measured approach to adding expenses to support its rapid
growth, as increases in these line items has been more modest than
growth in revenue and gross profit. Overall, the company had
an adjusted operating loss3 of $0.79 million in the quarter, an improvement from
a loss of $0.83 million in the prior
year period.
______________________
|
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.
|
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.
NEWTOPIA INC.
Key Financial Measures and Schedule of Non-GAAP
Reconciliations
Gross Profit Information [1]
|
Three Months Ended March 31,
|
|
2020
|
|
2019
|
|
$
|
|
$
|
Revenue
|
3,862,986
|
|
1,761,046
|
Cost of
sales
|
(2,208,557)
|
|
(1,076,185)
|
Gross
profit
|
1,654,429
|
|
684,861
|
Gross margin
|
43%
|
|
39%
|
|
[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 March 31,
|
|
2020
|
|
2019
|
|
$
|
|
$
|
Total operating
expenses
|
3,162,510
|
|
2,703,327
|
Add
(Subtract)
|
|
|
|
Stock-based
compensation
|
(134,432)
|
|
(332,108)
|
Depreciation of
property and equipment
|
(21,554)
|
|
(11,553)
|
Depreciation of
right-of-use asset
|
(46,195)
|
|
(46,192)
|
Interest and accretion
expense
|
(233,542)
|
|
(713,663)
|
Interest on lease
obligations
|
(37,849)
|
|
(40,149)
|
Foreign exchange
gain
|
203,111
|
|
3,458
|
Change in value of
convertible debenture derivative liabilities
|
(270,993)
|
|
(43,497)
|
Change in value of
derivative liability
|
(13,628)
|
|
(9,556)
|
Loss on settlement of
debt
|
(167,716)
|
|
-
|
Adjusted operating
expenses
|
2,439,712
|
|
1,510,067
|
[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 March 31,
|
|
2020
|
|
2019
|
|
$
|
|
$
|
Gross
profit
|
1,654,429
|
|
684,861
|
Adjusted operating
expenses
|
(2,439,712)
|
|
(1,510,067)
|
|
(785,283)
|
|
(825,206)
|
[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.
Condensed Interim Statements of Financial Position (Unaudited)
As at March 31, 2020 and December 31, 2019
(Expressed in Canadian Dollars)
|
|
|
|
|
|
|
|
March
31,
|
December
31,
|
|
|
|
2020
|
2019
|
|
|
|
|
|
|
|
|
$
|
$
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash
|
|
|
2,107,272
|
2,386,341
|
Trade and other
receivables
|
|
|
1,382,133
|
1,247,858
|
Prepaid expenses and
deposits
|
|
|
338,588
|
462,605
|
Inventories
|
|
|
356,798
|
604,920
|
|
|
|
4,184,791
|
4,701,724
|
Property and
equipment
|
|
|
176,664
|
186,376
|
Right–of–use
asset
|
|
|
692,877
|
739,072
|
|
|
|
5,054,332
|
5,627,172
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
|
1,996,188
|
2,254,894
|
Lease
obligations
|
|
|
188,501
|
156,340
|
Convertible
debentures
|
|
|
4,227,300
|
3,993,758
|
Convertible debentures
derivative liabilities
|
|
|
2,223,631
|
1,952,638
|
Retractable preferred
shares
|
|
|
7,420,265
|
7,420,265
|
Derivative
liability
|
|
|
192,298
|
178,670
|
|
|
|
16,248,183
|
15,956,565
|
Non–current lease
obligations
|
|
|
824,565
|
883,090
|
|
|
|
17,072,748
|
16,839,655
|
|
|
|
|
|
Equity/Deficit
|
|
|
|
|
Common
shares
|
|
|
4,643,945
|
4,643,945
|
Shares to be
issued
|
|
|
528,168
|
–
|
Preferred
shares
|
|
|
13,011,033
|
13,011,033
|
Special
Warrants
|
|
|
9,164,731
|
9,164,731
|
Contributed
surplus
|
|
|
5,346,172
|
5,172,192
|
Deficit
|
|
|
(44,712,465)
|
(43,204,384)
|
|
|
|
(12,018,416)
|
(11,212,483)
|
|
|
|
5,054,332
|
5,627,172
|
NEWTOPIA
INC. Condensed Interim Statements of Loss and Comprehensive
Loss (Unaudited)
Three Months Ended March 31, 2020 and 2019
(Expressed in Canadian Dollars)
|
|
|
|
|
|
|
|
2020
|
2019
|
|
|
|
|
|
|
|
|
$
|
$
|
|
|
|
|
|
Revenue
|
|
|
3,862,986
|
1,761,046
|
Cost of
revenue
|
|
|
2,208,557
|
1,076,185
|
Gross profit
|
|
|
1,654,429
|
684,861
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
Technology
|
|
|
776,666
|
525,806
|
Sales and
marketing
|
|
|
728,482
|
360,995
|
Administrative
|
|
|
934,564
|
623,266
|
Stock–based
compensation
|
|
|
134,432
|
332,108
|
|
|
|
2,574,144
|
1,842,175
|
|
|
|
|
|
Other
expenses
|
|
|
|
|
Depreciation of
property and
equipment
|
|
|
21,554
|
11,553
|
Depreciation of
right–of–use
asset
|
|
|
46,195
|
46,192
|
Interest and accretion
expense
|
|
|
233,542
|
713,663
|
Interest on lease
obligations
|
|
|
37,849
|
40,149
|
Foreign exchange
gain
|
|
|
(203,111)
|
(3,458)
|
Change in value of
convertible debenture derivative liabilities
|
|
|
270,993
|
43,497
|
Change in value of
derivative
liability
|
|
|
13,628
|
9,556
|
Loss on settlement of
debt
|
|
|
167,716
|
–
|
|
|
|
588,366
|
861,152
|
|
|
|
|
|
Net loss and comprehensive loss
|
|
|
(1,508,081)
|
(2,018,466)
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
Basic and
diluted
|
|
|
(0.10)
|
(0.13)
|
|
|
|
|
|
Weighted average
number of common shares outstanding
|
|
|
|
|
Basic and
diluted
|
|
|
15,535,919
|
15,535,919
|
NEWTOPIA
INC. Condensed Interim Statements of Changes in Equity
(Deficit) (Unaudited)
Three Months Ended March 31, 2020 and 2019
(Expressed in Canadian Dollars)
|
|
|
Common Shares
|
Shares To Be
Issued
|
Preferred Shares
|
Special Warrants
|
Contributed Surplus
|
Deficit
|
Total
|
|
|
$
|
$
|
$
|
$
|
$
|
$
|
$
|
Balance, December 31, 2019
|
|
4,643,945
|
–
|
13,011,033
|
9,164,731
|
5,172,192
|
(43,204,384)
|
(11,212,483)
|
Net loss and
comprehensive loss
|
|
–
|
–
|
–
|
–
|
–
|
(1,508,081)
|
(1,508,081)
|
Stock–based
compensation
|
|
–
|
–
|
–
|
–
|
134,432
|
–
|
134,432
|
Settlement of
debt
|
|
–
|
528,168
|
–
|
–
|
39,548
|
–
|
567,716
|
Balance, March 31, 2020
|
|
4,643,945
|
528,168
|
13,011,033
|
9,164,731
|
5,346,172
|
(44,712,465)
|
(12,018,416)
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2018
|
|
4,643,945
|
–
|
13,011,033
|
–
|
2,701,639
|
(32,799,372)
|
(12,442,755)
|
Net loss and
comprehensive loss
|
|
–
|
–
|
–
|
–
|
–
|
(2,018,466)
|
(2,018,466)
|
Stock–based
compensation
|
|
–
|
–
|
–
|
–
|
332,108
|
–
|
332,108
|
Balance, March 31, 2019
|
|
4,643,945
|
–
|
13,011,033
|
–
|
3,033,747
|
(34,817,838)
|
(14,129,113)
|
NEWTOPIA INC. Condensed Interim
Statements of Cash Flows
Three Months Ended March 31, 2020 and 2019
(Expressed in Canadian Dollars)
|
|
|
|
|
|
|
|
2020
|
2019
|
|
|
|
|
|
|
|
|
$
|
$
|
Cash flows used in
operating activities
|
|
|
|
|
Net loss and
comprehensive loss
|
|
|
(1,508,081)
|
(2,018,466)
|
Depreciation of
property and equipment
|
|
|
21,554
|
11,553
|
Depreciation of
right–of–use asset
|
|
|
46,195
|
46,192
|
Interest and accretion
expense
|
|
|
233,542
|
713,663
|
Interest on lease
obligations
|
|
|
37,849
|
40,149
|
Change in value of
convertible debenture derivative liabilities
|
|
|
270,993
|
43,497
|
Change in value of
derivative
liability
|
|
|
13,628
|
9,556
|
Stock–based
compensation
|
|
|
134,432
|
332,108
|
Loss on settlement of
debt
|
|
|
167,716
|
–
|
|
|
|
(582,172)
|
(821,748)
|
Change in non–cash
working capital
|
|
|
|
|
Trade and other
receivables
|
|
|
(134,275)
|
(844,054)
|
Prepaid expenses and
deposits
|
|
|
124,017
|
36,356
|
Inventories
|
|
|
248,122
|
251,187
|
Accounts payable and
accrued
liabilities
|
|
|
141,294
|
259,313
|
|
|
|
(203,014)
|
(1,118,946)
|
Cash flows used in
investing activities
|
|
|
|
|
Purchase of property
and equipment
|
|
|
(11,842)
|
(14,299)
|
|
|
|
(11,842)
|
(14,299)
|
Cash flows used in
financing activities:
|
|
|
|
|
Repayment of lease
obligation
|
|
|
(64,213)
|
(40,721)
|
|
|
|
(64,213)
|
(40,721)
|
Net change in cash
during the
period
|
|
|
(279,069)
|
(1,173,966)
|
Cash, beginning of
period
|
|
|
2,386,341
|
1,428,558
|
Cash, end of
period
|
|
|
2,107,272
|
254,592
|
|
|
|
|
|
Supplemental cash
flow information
|
|
|
|
|
Non–cash settlement of
debt
|
|
|
400,000
|
–
|
SOURCE Newtopia Inc.