Quarterly Revenue and gross profit
increased 99% and 182% year-over-year; expanding client list and
leadership team
TORONTO, Nov. 12, 2020 /CNW/ - Newtopia Inc.
("Newtopia" or the "Company") (TSXV: NEWU), a
tech-enabled disease prevention company focused
on healthy habit change, today reported financial
results for its third quarter 2020.
"2020 has been a monumental year for Newtopia. We've seen
continued adoption with Fortune 50 and Fortune 500 innovators,
added important talent in both leadership and data science roles
and delivered strong revenue and gross margin growth," said
Jeff Ruby, Founder & CEO,
Newtopia Inc. "On a year to date basis, revenue and gross profit
are up 96% and 133% respectively over 2019. We are incredibly
pleased with our growth to date and feel that the talent we have
added strengthens us operationally in key areas of the
Company."
All amounts are expressed in Canadian dollars.
Third Quarter 2020 Financial Highlights (vs. Q3
2019):
- Revenue increased 99% to $2.4
million
- Gross profit1 increased 182%, to $1.2 million
- Gross margin percentage improves to 49%, up from 35%
Recent Operational Highlights:
- Announced closing of an oversubscribed and upsized $7.5 million bought deal offering, and signed
binding agreement for $5 million
operating facility with a leading Canadian schedule 1 bank
- Released product suite to prevent, reverse and slow the
progression of chronic disease with large employer and health plan
populations
- Expanded client list with addition of new Fortune 50
innovator
- Added multiple data science experts to deepen strength in
analytics and outcomes measurement, and key leaders to the Newtopia
team, board and advisory board
"We're continuing to see strong engagement levels as our client
organizations and their employees recognize the value of our
tech-enabled service and habit-changing platform throughout the
pandemic, with over 90% of our revenue coming from engagement fees
in the quarter," adds Ruby. "With both an oversubscribed and
upsized bought deal offering completed and a substantial new
operating facility recently secured, Newtopia has bolstered its
balance sheet with the financial resources to continue to innovate
for our clients and their employees."
|
|
|
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.
|
Newtopia's platform leverages genetic, social and behavioral
insights to create individualized prevention programs with a focus
on type 2 diabetes, heart disease, stroke and weight. The Company's
individualized approach combines virtual care, digital tools,
connected devices and actionable data science to deliver
sustainable clinical and financial outcomes.
Third Quarter 2020 Financial Results
Newtopia's revenue during the three months ended September 30, 2020 was $2.4 million, an increase of 99% over the prior
period ($1.2 million). This growth
reflected a continuation of strong engagement fee revenue from the
Q1 program launch with a highly innovative existing Fortune 500
partner.
Gross profit for the three months ended September 30, 2020 increased by 182% to
$1.2 million over the prior year
period ($0.4 million). Strong
engagement revenue in the quarter offset cost of sales coming from
higher Inspirator (coach) costs, as overall margin improved to 49%
over the prior year level of 35%. Engagement fee revenue made up
over 90% of the revenue mix in the current year quarter as compared
to approximately 85% in the same period for 2019, accounting for
the overall improvement in margin.
Adjusted operating expenses2 in the three months
ended September 30, 2020 increased by
52% to $2.5 million over the prior
year period ($1.7 million) as the
Company continued to add technology, sales and marketing and
administrative resources in support of longer-term company growth.
The Company continues to take a measured approach to adding
expenses in support of 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
$1.4 million in the quarter, compared
to a loss of $1.3 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 tech-enabled disease
prevention company focused
on healthy habit change. Newtopia's platform
leverages genetic, social and behavioral insights to
create individualized prevention programs with a focus on type
2 diabetes, heart disease, stroke and weight. Our
person-centered approach combines virtual care, digital tools,
connected devices and actionable data science to
deliver sustainable clinical and financial outcomes. We
serve some of the largest nationwide employers and health plans. To
learn more, visit newtopia.com.
Forward Looking Information
This press 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 or other variations thereof, or comparable
terminology have been used to identify forward-looking statements.
All statements other than statements of historical fact may be
forward-looking information. Such statements reflect Newtopia's
current views and intentions with respect to future events, based
on information available to Newtopia, and are subject to certain
risks, uncertainties and assumptions, including without
limitation, the Company's successful completion of the bank
financing and current financial trends remaining at or above the
current levels in respect of revenue, gross profit, gross margin
percentage and adjusted operating expenses. Material factors or
assumptions were applied in providing forward-looking information.
While forward-looking statements are based on data, assumptions and
analyses that Newtopia believes are reasonable under the
circumstances, whether actual results, performance or developments
will meet Newtopia's expectations and predictions depends on a
number of risks and uncertainties that could cause the actual
results, performance and financial condition of Newtopia to differ
materially from its expectations. These forward-looking statements
include, among other things, clients continuing to offer Newtopia's
platform pursuant to agreements entered into, the timing and
ability of the Company to complete the bank credit facility, the
Company being confident that it will continue to increase its
revenue, gross profit, gross margin percentage and adjusted
operating expenses among other financial metrics and current
financial trends remaining at or above current levels.
Forward-looking statements are not a guarantee and are based on a
number of estimates and assumptions management believes to be
relevant and reasonable, whether actual results, performance or
developments will meet Newtopia's expectations and predictions
depends on a number of risks and uncertainties that could cause the
actual results, performance and financial condition of Newtopia to
differ materially from its expectations. Certain of the "risk
factors" that could cause actual results to differ materially from
Newtopia's forward-looking statements in this press release
include, without limitation: the termination of contracts by
clients, risks related to COVID-19 including various
recommendations, orders and measures of governmental authorities
to try to limit the pandemic, including travel restrictions, border
closures, non-essential business closures, quarantines,
self-isolations, shelters-in-place and social distancing,
disruptions to markets, economic activity, financing, supply
chains and sales channels, and a deterioration of general
economic conditions including a possible national or global
recession; and other general economic, market and business
conditions and factors, including the risk factors discussed or
referred to in Newtopia's disclosure documents, filed with the
securities regulatory authorities in certain provinces of
Canada and available at
www.sedar.com including Newtopia's final long form prospectus dated
March 30, 2020.
Should any factor affect Newtopia's in an unexpected manner, or
should assumptions underlying the forward- looking information
prove incorrect, the actual results or events may differ materially
from the results or events predicted. Any such forward-looking
information is expressly qualified in its entirety by this
cautionary statement. Moreover, Newtopia does not assume
responsibility for the accuracy or completeness of such
forward-looking information. The forward-looking information
included in this press release is made as of the date of this press
release, and Newtopia undertakes no obligation to publicly update
or revise any forward-looking information, other than as required
by applicable law.
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
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
$
|
|
$
|
|
$
|
|
$
|
Revenue
|
|
2,389,374
|
|
1,201,893
|
|
8,939,415
|
|
4,571,597
|
Cost of
sales
|
|
(1,213,393)
|
|
(784,342)
|
|
(4,698,576)
|
|
(2,749,430)
|
Gross
profit
|
|
1,175,981
|
|
417,551
|
|
4,240,839
|
|
1,822,167
|
Gross
margin
|
|
49%
|
|
35%
|
|
47%
|
|
40%
|
|
[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
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
$
|
|
$
|
|
$
|
|
$
|
Total operating
expenses
|
|
2,931,316
|
|
2,737,399
|
|
9,044,293
|
|
7,883,485
|
Add
(Subtract)
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
(120,528)
|
|
(226,848)
|
|
(376,619)
|
|
(564,574)
|
Depreciation of
property and equipment
|
|
(19,012)
|
|
(13,827)
|
|
(61,905)
|
|
(37,396)
|
Depreciation of
right-of-use asset
|
|
(46,192)
|
|
(46,192)
|
|
(138,578)
|
|
(138,576)
|
Interest and accretion
expense
|
|
-
|
|
(718,609)
|
|
(233,542)
|
|
(2,162,526)
|
Interest on lease
obligations
|
|
(35,269)
|
|
(39,591)
|
|
(109,967)
|
|
(119,867)
|
Interest on promissory
note
|
|
(8,219)
|
|
-
|
|
(8,219)
|
|
-
|
Finance
charges
|
|
(10,995)
|
|
-
|
|
-
|
|
-
|
Foreign exchange
gain
|
|
(39,778)
|
|
22,593
|
|
56,713
|
|
358
|
Change in value of
convertible debenture derivative liabilities
|
|
-
|
|
(19,980)
|
|
(448,656)
|
|
(86,097)
|
Change in value of
derivative liability
|
|
(111,680)
|
|
(25,398)
|
|
(63,804)
|
|
(27,874)
|
Loss on settlement of
debt
|
|
-
|
|
-
|
|
(167,716)
|
|
-
|
Adjusted operating
expenses
|
|
2,539,643
|
|
1,669,547
|
|
7,492,000
|
|
4,746,933
|
|
|
|
|
|
|
|
|
|
|
[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
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
$
|
|
$
|
|
$
|
|
$
|
Gross
profit
|
1,175,981
|
|
417,551
|
|
4,240,839
|
|
1,822,167
|
Adjusted operating
expenses
|
(2,539,643)
|
|
(1,669,547)
|
|
(7,492,000)
|
|
(4,746,933)
|
|
(1,363,662)
|
|
(1,251,996)
|
|
(3,251,161)
|
|
(2,924,766)
|
|
[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 September 30,
2020 and December 31, 2019
(Expressed in
Canadian Dollars)
|
|
September
30,
2020
|
December
31,
2019
|
|
$
|
$
|
Assets
|
|
|
Current
assets
|
|
|
Cash
|
660,845
|
2,386,341
|
Trade and other
receivables
|
838,860
|
1,247,858
|
Prepaid expenses and
deposits
|
509,749
|
462,605
|
Inventories
|
223,662
|
604,920
|
|
2,233,116
|
4,701,724
|
|
|
|
Property and
equipment
|
140,196
|
186,376
|
Right–of–use
asset
|
600,494
|
739,072
|
|
2,973,806
|
5,627,172
|
Liabilities
|
|
|
Current
liabilities
|
|
|
Accounts
payable and accrued liabilities
|
1,689,224
|
2,254,894
|
Lease
obligations
|
203,523
|
156,340
|
Promissory
note
|
500,000
|
–
|
Convertible
debentures
|
–
|
3,993,758
|
Convertible debentures
derivative liabilities
|
–
|
1,952,638
|
Retractable preferred
shares
|
–
|
7,420,265
|
Derivative
liability
|
242,474
|
178,670
|
|
2,635,221
|
15,956,565
|
Non–current lease
obligations
|
731,828
|
883,090
|
|
3,367,049
|
16,839,655
|
Equity/Deficit
|
|
|
Common
shares
|
38,804,666
|
4,643,945
|
Shares to be
issued
|
528,168
|
–
|
Preferred
shares
|
–
|
13,011,033
|
Special
warrants
|
–
|
9,164,731
|
Contributed
surplus
|
8,369,411
|
5,172,192
|
Deficit
|
(48,095,488)
|
(43,204,384)
|
|
(393,243)
|
(11,212,483)
|
|
2,973,806
|
5,627,172
|
NEWTOPIA
INC.
Condensed Interim
Statements of Loss and Comprehensive Loss (Unaudited)
Three and Nine Months
Ended September 30, 2020 and 2019
(Expressed in
Canadian Dollars)
|
|
Three Months
Ended
|
Nine Months
Ended
|
|
September
30,
|
September
30,
|
|
2020
|
2019
|
2020
|
2019
|
|
$
|
$
|
$
|
$
|
Revenue
|
2,389,374
|
1,201,893
|
8,939,415
|
4,571,597
|
Cost of
revenue
|
1,213,393
|
784,342
|
4,698,576
|
2,749,430
|
Gross
profit
|
1,175,981
|
417,551
|
4,240,839
|
1,822,167
|
Operating
expenses
|
|
|
|
|
Technology and
development
|
812,228
|
582,666
|
2,382,216
|
1,686,016
|
Sales and
marketing
|
781,307
|
407,963
|
2,324,985
|
1,195,733
|
Administrative
|
946,108
|
678,918
|
2,773,804
|
1,865,184
|
Share–based
compensation
|
120,528
|
226,848
|
376,619
|
564,574
|
|
2,660,171
|
1,896,395
|
7,857,624
|
5,311,507
|
Other expenses
(income)
|
|
|
|
|
Depreciation of
property and equipment
|
19,012
|
13,827
|
61,905
|
37,396
|
Depreciation of
right–of–use asset
|
46,192
|
46,192
|
138,578
|
138,576
|
Interest and accretion
expense
|
–
|
718,609
|
233,542
|
2,162,526
|
Interest on lease
obligations
|
35,269
|
39,591
|
109,967
|
119,867
|
Interest on promissory
note
|
8,219
|
–
|
8,219
|
–
|
Finance
charges
|
10,995
|
–
|
10,995
|
–
|
Foreign exchange
gain
|
39,778
|
(22,593)
|
(56,713)
|
(358)
|
Change in value of
convertible debentures derivative liabilities
|
–
|
19,980
|
448,656
|
86,097
|
Change in value of
derivative liability
|
111,680
|
25,398
|
63,804
|
27,874
|
Loss on settlement of
debt
|
–
|
–
|
167,716
|
–
|
|
271,145
|
841,004
|
1,186,669
|
2,571,978
|
Net loss and
comprehensive loss
|
(1,755,335)
|
(2,319,848)
|
(4,803,454)
|
(6,061,318)
|
Loss per
share
|
|
|
|
|
Basic and
diluted
|
(0.02)
|
(0.15)
|
(0.09)
|
(0.39)
|
Weighted average
number of common shares outstanding
|
|
|
|
|
Basic and
diluted
|
91,010,143
|
15,535,919
|
56,464,872
|
15,535,919
|
NEWTOPIA
INC.
Condensed Interim
Statements of Changes in Equity (Deficit) (Unaudited)
Nine Months Ended
September 30, 2020 and 2019
(Expressed in
Canadian Dollars)
|
|
Note
|
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
|
|
–
|
–
|
–
|
–
|
–
|
(4,803,454)
|
(4,803,454)
|
Share–based
compensation
|
|
–
|
–
|
–
|
–
|
376,619
|
–
|
376,619
|
Conversion of
Convertible Debentures
|
6
|
6,039,000
|
–
|
–
|
–
|
589,594
|
–
|
6,628,594
|
Modification of
warrants
|
8(e)
|
–
|
–
|
–
|
–
|
87,650
|
(87,650)
|
–
|
Conversion of
retractable preferred shares
|
7
|
7,420,265
|
–
|
–
|
–
|
–
|
–
|
7,420,265
|
Conversion of
preferred shares
|
8(c)
|
13,011,033
|
–
|
(13,011,033)
|
–
|
–
|
–
|
–
|
Conversion of Special
warrants
|
9
|
6,812,648
|
–
|
–
|
(9,164,731)
|
2,352,083
|
–
|
–
|
Settlement of
debt
|
11,12
|
–
|
528,168
|
–
|
–
|
39,548
|
–
|
567,716
|
Exercise of
warrants
|
8(e)
|
877,775
|
–
|
–
|
–
|
(248,275)
|
–
|
629,500
|
Balance, September
30, 2020
|
|
38,804,666
|
528,168
|
–
|
–
|
8,369,411
|
(48,095,488)
|
(393,243)
|
Balance, December
31, 2018
|
|
4,643,945
|
–
|
13,011,033
|
–
|
2,701,639
|
(32,799,372)
|
(12,442,755)
|
Net loss and
comprehensive loss
|
|
–
|
–
|
–
|
–
|
–
|
(6,061,318)
|
(6,061,318)
|
Share–based
compensation
|
|
–
|
–
|
–
|
–
|
564,574
|
–
|
564,574
|
Issuance of Special
Warrants, net of cash issuance costs
|
9
|
–
|
–
|
–
|
7,771,513
|
–
|
–
|
7,771,513
|
Special Broker
Warrants issued
|
9
|
–
|
–
|
–
|
(181,351)
|
181,351
|
–
|
–
|
Balance, September
30, 2019
|
|
4,643,945
|
–
|
13,011,033
|
7,590,162
|
3,447,564
|
(38,860,690)
|
(10,167,986)
|
NEWTOPIA
INC.
Condensed Interim
Statements of Cash Flows (Unaudited)
Nine Months Ended
September 30, 2020 and 2019
(Expressed in
Canadian Dollars)
|
|
Nine Months Ended
September 30,
|
|
2020
|
2019
|
Cash flows used in
operating activities:
|
$
|
$
|
Net loss and
comprehensive loss
|
(4,803,454)
|
(6,061,318)
|
Items not involving
cash:
|
|
|
Depreciation of
property and equipment
|
61,905
|
37,396
|
Depreciation of
right–of–use asset
|
138,578
|
138,576
|
Share–based
compensation
|
376,619
|
564,574
|
Interest and accretion
expense
|
233,542
|
2,162,526
|
Interest on lease
obligations
|
109,967
|
119,867
|
Interest on promissory
note
|
8,219
|
–
|
Loss on settlement of
debt
|
167,716
|
–
|
Change in value of
convertible debentures derivative liabilities
|
448,656
|
86,097
|
Change in value of
derivative
liability
|
63,804
|
27,874
|
|
(3,194,448)
|
(2,924,408)
|
Net change in non–cash
working capital
|
|
|
Trade and other
receivables
|
408,998
|
(716,821)
|
Inventories
|
381,258
|
100,137
|
Prepaid expenses and
deposits
|
(47,144)
|
(111,359)
|
Accounts payable and
accrued
liabilities
|
(173,889)
|
116,176
|
|
(2,625,225)
|
(3,536,275)
|
Interest
paid
|
–
|
(1,944)
|
|
(2,625,225)
|
(3,538,219)
|
Cash flows used in
investing activities
|
|
|
Purchase of
property and equipment
|
(15,725)
|
(21,636)
|
|
(15,725)
|
(21,636)
|
Cash flows from
(used in) financing activities:
|
|
|
Repayment of lease
obligations
|
(214,046)
|
(142,525)
|
Issuance of Special
Warrants, net of cash issuance costs and settlement of
Debentures
|
–
|
7,021,513
|
Proceeds from
promissory note
|
500,000
|
–
|
Proceeds from exercise
of non–broker warrants
|
629,500
|
–
|
|
915,454
|
6,878,988
|
(Decrease) increase
in cash
|
(1,725,496)
|
3,319,133
|
Cash, beginning of
period
|
2,386,341
|
1,428,558
|
Cash, end of
period
|
660,845
|
4,747,691
|
Supplemental
disclosure of cash flow information
|
|
|
Non–cash settlement of
secured debentures
|
–
|
750,000
|
SOURCE Newtopia Inc.