- Record quarterly participant engagements of 38,000, up 27%
year-over-year
- Q1 2022 revenue of $2.9
million, up 9.5% year-over-year
- Outstanding 24-month outcomes of Behavioral Economic Medical
Trial with Fortune 50 Financial Services Client
- Q1 2022 conference call scheduled for May 18, 2022 at 5 PM
ET
TORONTO, May 18, 2022
/CNW/ - Newtopia Inc. ("Newtopia" or the
"Company") (TSXV: NEWU) (OTCQB: NEWUF), a tech-enabled habit
change provider focused on preventing, slowing and reversing
chronic disease, today announced its first quarter 2022 financial
results and operational highlights. These results pertain to the
three months ended March 31, 2022 and
are expressed in Canadian dollars, unless otherwise noted.
First Quarter 2022 Financial Highlights (vs. Q1
2021):
- Revenue of $2.9 million, as
compared to $2.6 million.
- Gross profit margin1 of 47%, as compared to 50%.
Decline in gross margin resulting from the increase in Welcome Kits
sold during the quarter which carry a lower margin.
"Newtopia had a strong start to 2022, with revenue of
$2.9 million, up 9.5% from the
prior-year period and up 19.3% sequentially," said Jeff Ruby, Founder and CEO of Newtopia. "In
addition, we saw strong momentum in our participant engagement,
with the total number of engagements reaching an all-time high of
38,000, a new company record. Importantly, with churn rates
remaining low and customer stickiness high, we are delivering some
of the best engagement levels in our history."
Mr. Ruby continued, "Just post the first quarter, we
successfully closed on a $3.5 million
private placement, strengthening our balance sheet and providing us
with the working capital to continue to promote our long-term
growth plan. We also recently received the green light to expand
our partnership with one of our long-standing Fortune 50 financial
services clients into their employee base in Florida. This expansion follows the successful
delivery of outcomes from a 24-month novel behavioral economic
trial, all of which remarkably took place during the pandemic. I am
very proud of our team's accomplishments this past quarter and
remain confident that our business is very well positioned to
achieve full year revenue growth in 2022."
First Quarter 2022 Financial Results
Revenue for the three months ended March
31, 2022 was $2.9 million, as
compared to $2.6 million in the
prior-year period. This increase in revenue was largely the result
of strong enrollment and engagement numbers during the quarter.
Engagement fee revenue totaled $2.5
million for the first quarter, up from $2.0 million in the prior-year period.
Gross profit for the first quarter 2022 totaled $1.3 million, relatively consistent with the
prior-year period. Gross profit is comprised of Newtopia's revenue
less direct expenses, which include the cost of Welcome Kits sold
to new participants as well as labor costs associated with hiring
and training of the Company's coaching team of Inspirators. As a
percentage of revenue, gross profit totaled 47%, compared to 50% in
the prior-year period. Please note, that Welcome Kits carry lower
margins, so as participant enrollment increases, margins tend to
decline. Nevertheless, as Welcome Kit sales translate into
recurring engagement fee revenue, gross margins improve over
time.
|
______________
|
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 costs, compensation expense for
Inspirators and care specialists and genetic testing costs. Gross
margin percentage is calculated by dividing gross profit by total
revenue for the defined period. 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.
|
Adjusted operating expenses2 for the three months
ended March 31, 2022 totaled
$2.6 million, compared to
$2.9 million in the prior-year
period. This decline in adjusted operating expenses is the result
of a reduction in headcount and compensation costs tied to an
expense right-sizing effort initiated by the Company in the fourth
quarter of 2021.
For the quarter, the Company had an adjusted operating
loss3 of $1.2 million, or
a loss of $0.02 per diluted share,
compared to an adjusted operating loss of $1.6 million, also a loss of $0.02 per diluted share, in the prior-year
period.
The Company ended the first quarter 2022 with $1.05 million in cash and an outstanding loan
balance of $3.8 million against its
$7.5 million credit facility.
Post-quarter end, the Company successfully closed on a brokered
private placement facility offering of 16,950,000 units at a price
of $0.20 per Unit, for aggregate
proceeds of $3,390,000. The Company
also currently completed a non-brokered private placement of
550,000 units for aggregate gross proceeds of $110,000.
2022 Outlook
The Company continues to anticipate achieving full year revenue
growth for 2022 over 2021. Revenue growth will be more heavily
weighted towards the second half of the year as Newtopia rolls out
new customer phases onto its platform in the third and fourth
quarters, including the recent expansion in Florida with a Fortune 50 financial services
client.
Newtopia continues to expect approximately $0.5 million in capex for 2022. A
significant portion of this capital expenditure will be directly
related to the launch of a new version of the Newtopia platform on
the Company's own architecture in the second half of this year.
Once the migration to this new platform is complete, an annual
licensing cost associated with the existing CRM platform of
approximately $450,000 per year will
be eliminated. Newtopia also anticipates that the Company will see
improved gross profit margins over time after the launch of its new
platform. These expenditures will be capitalized and amortized over
their lifetime. Newtopia takes a measured approach to adding
expenses in support of growth, and, as such, with the anticipated
top line growth, the Company continues to strive to be cash flow
positive from operations as it exits 2022.
Grants of Stock Options
Newtopia further announced today that its Board of Directors has
approved the grant of 1,140,000 stock options to certain tenured
employees and newly hired employees. The options issued to newly
hired employees will expire five years from the date such employees
complete their probationary period, and the exercise price will be
based on the closing price of Newtopia's common shares on the
trading day prior to the day these employees complete their
probationary period. The options granted to tenured employees will
be at an exercise price of CAD$0.235
per common share and will expire five years from the grant
date.
Conference Call
The Company will host a conference call today at 5:00 p.m. Eastern Time to discuss the first
quarter 2022 results in further detail. To access the conference
call, please dial (877) 407-3982 (U.S.) or (201) 493-6780
(International) ten minutes prior to the start time and reference
Conference ID number 13729573. The call will also be available via
live webcast on the investor relations portion of the Company's
website located at investor.newtopia.com.
A replay of the conference call will be available through
Wednesday, June 1, 2022 which can be
accessed by dialing (844) 512-2921 (U.S.) or (412) 317-6671
(International) and entering the passcode 13729573. The
webcast will also be archived on the Company's website.
|
____________
|
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 habit change provider focused on
disease prevention and reducing the cost of care for health
insurers. As a provider of whole person care, we prevent, reverse
and slow the progression of chronic disease while enriching mental
health, resilience and overall human performance. Newtopia's
programs leverage genetic, social and behavioral insights to create
individualized prevention programs with a focus on type 2 diabetes,
heart disease, stroke and weight. With a person-centered approach
that combines virtual care, digital tools, connected devices and
actionable data science, Newtopia delivers sustainable clinical and
financial outcomes. Newtopia serves some of the largest nationwide
employers and health plans and is currently listed on the Toronto
Stock Exchange and quoted on the OTC Venture Market in the U.S.
(TSXV: NEWU) (OTCQB: NEWUF). To learn more,
visit newtopia.com, LinkedIn or Twitter.
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 its strategic technology projects
(including on budget), continued and sustained high levels of
client engagement and low client churn, the expansion of client
relationships, the rollout of new clients, the conversion of pilot
projects into full blown rollouts, the Company's ability to
continue to grow its sales pipeline, 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.
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.
Should any factor affect Newtopia 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 the 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 news release.
Key Financial Measures and Schedule of Non-GAAP
Reconciliations
|
|
Three Months Ended
March 31,
|
|
|
2022
|
|
2021
|
|
|
$
|
|
$
|
Revenue
|
|
2,866,714
|
|
2,619,171
|
Cost of sales
|
|
(1,517,836)
|
|
(1,300,867)
|
Gross profit
|
|
1,348,878
|
|
1,318,304
|
Gross
margin
|
|
47%
|
|
50%
|
Reconciliation of Total Operating Expenses to Adjusted
Operating Expenses [2]
|
|
Three Months Ended
March 31,
|
|
|
2022
|
|
2021
|
|
|
$
|
|
$
|
Total
expenses
|
|
2,976,571
|
|
3,594,792
|
Add
(Subtract)
|
|
|
|
|
Share-based compensation
|
|
(132,508)
|
|
(549,820)
|
Depreciation of property and equipment
|
|
(14,380)
|
|
(17,972)
|
Depreciation of right-of-use asset
|
|
(46,195)
|
|
(46,195)
|
Interest on lease obligations
|
|
(22,979)
|
|
(31,268)
|
Interest and accretion expense
|
|
(97,290)
|
|
-
|
Finance charges
|
|
(37,110)
|
|
(5,136)
|
Amortization of deferred finance charges
|
|
(58,800)
|
|
(38,916)
|
Foreign exchange loss
|
|
(15,033)
|
|
(27,796)
|
Change in value of derivative liability
|
|
-
|
|
44,519
|
Capitalized borrowing costs
|
|
29,000
|
|
-
|
|
|
|
|
|
Adjusted operating
expenses
|
|
2,581,276
|
|
2,922,208
|
Adjusted Operating Loss
[3]
|
|
Three Months Ended
March 31,
|
|
|
2022
|
|
2021
|
|
|
$
|
|
$
|
Gross profit
|
|
1,348,878
|
|
1,318,304
|
Adjusted operating
expenses
|
|
(2,581,276)
|
|
(2,922,208)
|
|
|
(1,232,398)
|
|
(1,603,904)
|
NEWTOPIA INC.
Condensed Interim Statements of
Financial Position (Unaudited)
As at March 31, 2022 and December 31, 2021
(Expressed in Canadian Dollars)
|
March 31,
2022
|
December 31,
2021
(Audited)
|
|
|
|
|
|
|
$
|
$
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash
|
|
1,048,427
|
811,584
|
Trade and other receivables
|
|
1,572,541
|
1,381,977
|
Prepaid expenses and deposits
|
|
256,354
|
330,992
|
Inventories
|
|
199,233
|
131,000
|
Deferred costs
|
|
119,453
|
162,872
|
|
|
3,196,008
|
2,818,425
|
Property and equipment
|
|
53,555
|
66,147
|
Right‑of‑use asset
|
|
323,343
|
369,538
|
Intangible asset
|
|
2,728,951
|
2,251,852
|
|
|
6,301,857
|
5,505,962
|
|
|
|
|
Liabilities
|
|
|
|
Current
liabilities
|
|
|
|
Trade and other payables
|
|
2,610,657
|
1,965,420
|
Credit facility
|
|
3,845,302
|
2,331,314
|
Lease obligations
|
|
316,250
|
300,555
|
Contract liability
|
|
281,588
|
144,034
|
Deferred
revenue
|
|
54,967
|
59,549
|
|
|
7,108,764
|
4,800,872
|
|
|
|
|
Non‑current lease obligations
|
|
280,314
|
367,001
|
Debentures
|
|
2,228,793
|
2,182,403
|
|
|
9,617,871
|
7,350,276
|
Equity/Deficit
|
|
|
|
Common shares
|
|
45,177,120
|
45,177,120
|
Contributed surplus
|
|
11,808,193
|
11,652,200
|
Deficit
|
|
(60,301,327)
|
(58,673,634)
|
|
|
(3,316,014)
|
(1,844,314)
|
|
|
6,301,857
|
5,505,962
|
NEWTOPIA INC.
Condensed Interim Statements of Loss and Comprehensive Loss
(Unaudited)
Three Months Ended March 31, 2022 and
2021
(Expressed in Canadian Dollars)
|
2022
|
2021
|
|
|
|
|
$
|
$
|
|
|
|
Revenue
|
2,866,714
|
2,619,171
|
Cost of
revenue
|
1,517,836
|
1,300,867
|
Gross
profit
|
1,348,878
|
1,318,304
|
|
|
|
Operating
expenses
|
|
|
Technology and development
|
806,295
|
730,007
|
Sales and marketing
|
644,211
|
976,482
|
General and administrative
|
1,130,770
|
1,215,719
|
Share‑based compensation
|
132,508
|
549,820
|
|
2,713,784
|
3,472,028
|
|
|
|
Other expenses
(income)
|
|
|
Depreciation of property and
equipment
|
14,380
|
17,972
|
Depreciation of right‑of‑use
asset
|
46,195
|
46,195
|
Interest and accretion
expense
|
97,290
|
-
|
Interest on lease
obligations
|
22,979
|
31,268
|
Finance
charges
|
37,110
|
5,136
|
Amortization of deferred finance
charges
|
58,800
|
38,916
|
Foreign exchange
loss
|
15,033
|
27,796
|
Capitalized borrowing
costs
|
(29,000)
|
-
|
Change in value of derivative
liability
|
-
|
(44,519)
|
|
262,787
|
122,764
|
|
|
|
Net loss and
comprehensive loss
|
(1,627,693)
|
(2,276,488)
|
NEWTOPIA INC.
Condensed Interim Statements of Changes
in Equity (Unaudited)
Three Months Ended March 31, 2022 and
2021
(Expressed in Canadian Dollars)
|
Common
Shares
|
Shares To
Be Issued
|
Contributed
Surplus
|
Deficit
|
Total
|
|
|
$
|
$
|
$
|
$
|
$
|
|
Balance, December
31, 2021
|
45,177,120
|
‑
|
11,652,200
|
(58,673,634)
|
(1,844,314)
|
|
Net loss and
comprehensive loss
|
‑
|
‑
|
‑
|
(1,627,693)
|
(1,627,693)
|
|
Share‑based
compensation
|
‑
|
‑
|
132,508
|
‑
|
132,508
|
|
Settlement of related
party payable
|
‑
|
‑
|
23,485
|
‑
|
23,485
|
|
Balance, March 31,
2022
|
45,177,120
|
‑
|
11,808,193
|
(60,301,327)
|
(3,316,014)
|
|
|
|
|
|
|
|
Balance, December
31, 2020
|
44,648,952
|
528,168
|
10,046,621
|
(51,023,880)
|
4,199,861
|
Net loss and
comprehensive loss
|
‑
|
‑
|
‑
|
(2,276,488)
|
(2,276,488)
|
Share‑based
compensation
|
‑
|
‑
|
549,820
|
‑
|
549,820
|
Settlement of related
party payable
|
‑
|
‑
|
70,886
|
‑
|
70,886
|
Issuance of
shares
|
528,168
|
(528,168)
|
‑
|
‑
|
‑
|
Balance, March 31,
2021
|
45,177,120
|
‑
|
10,667,327
|
(53,300,368)
|
2,544,079
|
NEWTOPIA INC.
Condensed Interim Statements of Cash
Flows
Three Months Ended March 31, 2022 and
2021
(Expressed in Canadian Dollars)
|
2022
|
2021
|
|
|
|
|
$
|
$
|
Cash flows used in
operating activities
|
|
|
Net loss and
comprehensive loss
|
(1,627,693)
|
(2,276,488)
|
Items not
involving cash:
|
|
|
Depreciation of property and equipment
|
14,380
|
17,972
|
Depreciation of right‑of‑use asset
|
46,195
|
46,195
|
Capitalized borrowing costs
|
(29,000)
|
-
|
Amortization of deferred finance charges
|
58,800
|
38,916
|
Accretion expense
|
46,390
|
-
|
Interest on lease
obligations
|
22,979
|
31,268
|
Change in value of derivative
liability
|
-
|
(44,519)
|
Stock‑based
compensation
|
132,508
|
549,820
|
|
(1,335,441)
|
(1,636,836)
|
Change in
non‑cash working capital
|
|
|
Trade and other
receivables
|
(190,564)
|
(26,551)
|
Prepaid expenses and
deposits
|
74,638
|
(129,371)
|
Inventories
|
(68,233)
|
1,137
|
Trade and other
payables
|
668,722
|
(48,209)
|
Contract
liability
|
137,554
|
367,000
|
Deferred
revenue
|
(4,582)
|
-
|
|
(717,906)
|
(1,472,830)
|
Cash flows used in
investing activities
|
|
|
Purchase of property and equipment
|
(1,788)
|
-
|
Intangible asset development costs
|
(448,099)
|
(471,493)
|
|
(449,887)
|
(471,493)
|
Cash flows provided
by (used in) financing activities:
|
|
|
Credit facility withdrawals
|
2,318,568
|
-
|
Credit facility repayments
|
(804,580)
|
-
|
Credit facility financing costs
|
(15,381)
|
(10,990)
|
Repayment of lease obligations
|
(93,971)
|
(89,795)
|
|
1,404,636
|
(100,785)
|
Net change in cash
during the
period
|
236,843
|
(2,045,108)
|
Cash, beginning of
period
|
811,584
|
4,673,683
|
Cash, end of
period
|
1,048,427
|
2,628,575
|
|
|
|
Supplemental cash
flow information
|
|
|
Non‑cash settlement of related party
payable
|
23,485
|
70,886
|
Interest
paid
|
84,264
|
-
|
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SOURCE Newtopia Inc.