- Cash Flow Positive from Operations in May & June,
ahead of 2023 plan
- Q2 2023 Gross Margin (non
IFRS)1 up 1150
basis points year over year
- Operating Expenses down $1.3
million (41%) year over year
- Quarterly conference call scheduled for Aug 9, 2023 at 5 pm
ET
TORONTO, Aug 9, 2023
/CNW/ - Newtopia Inc. ("Newtopia" or the "Company")
(TSXV: NEWU) (OTCQB: NEWUF), a tech-enabled whole health platform
creating sustainable healthy habits that prevent, slow, and reverse
chronic disease, today announced its second quarter 2023 financial
results, operational highlights and the filing of the Company's
quarterly financial statements. These results pertain to the three
and six months ended June 30, 2023.
All amounts are expressed in Canadian dollars, unless otherwise
noted.
Second Quarter 2023 Financial Highlights (vs. Q2
2022):
- Revenue of $2.4 million, as
compared to $2.5 million.
- Gross profit margin1 of 58.5%, as compared to
47.0%.
"Newtopia had a very productive second quarter, as we
continued to effectively manage our costs in a challenging macro
environment to achieve cash flow positive from operations well
ahead of our internal plan," said Jeff
Ruby, Founder and CEO of Newtopia. "Top line growth
was slightly down as compared to the prior year largely due to
organic expansion timing and the deepening of our value based
contracting expertise. The proactive efforts we have exerted across
the Company to reduce operating expenses and increase our gross
profit margins are quickly coming to fruition. Our acute
focus on profitability will continue throughout the year as we also
make our way toward EBITDA positive."
Ruby continued, "We anticipate that our recent multi-year
contract renewals with large clients will enhance our revenue and
profitability in the second half of the year. In addition to growth
with existing clients, our pipeline of new business development
with risk-bearing entities, including self-insured employers and
innovative health plans, remains robust. Not only have we made
progress with existing, in-contracting deals, but we've also added
opportunities to the contracting queue. Importantly, our clients
continue to see high participant engagement and satisfaction with
Newtopia, alongside healthy habit change results. Newtopia's
position at the forefront of preventing, slowing and reversing
chronic disease ideally fits with larger healthcare macro trends
including the massive interest and market size for GLP-1
medications for weight loss and the shift by employers and
commercial populations towards value based advanced primary care.
These trends provide fertile ground for continued expansion. To
maintain this positive momentum, we have developed a special
committee within our Board of Directors who will be working to
explore avenues and partnerships to accelerate our growth. We look
forward to sharing our progress along the way."
Second Quarter 2023 Financial Results
Revenue for the three months ended June
30, 2023 was $2.4 million,
compared to $2.5 million in the
prior-year period. Enrollment fee revenue, or revenue from Welcome
Kit sales, totaled 13% of revenue for the quarter, in line with Q2
2022.
Non-IFRS gross profit for the second quarter 2023 totaled
$1.4 million, as compared to
$1.2 million in the prior-year
period. This calculation consists of Newtopia's revenue less
direct expenses, which include the cost of Welcome Kits sold to new
participants and labor costs associated with hiring and training
the Company's coaching team of Inspirators (health coaches). As a
percentage of revenue, gross profit year to date has totaled 59%,
compared to 47% in the prior-year period.
Operating expenses2 for the three months
ended June 30, 2023 totaled
$1.8 million, compared to
$3.1 million in the prior-year period
and $2.3 million in Q1 2023. For the
second quarter, EBITDA3 totaled a loss
of $0.4 million, compared to a loss
of $1.9 million in the
prior-year period and $0.7 million in
Q1 2023.
The Company ended the second quarter 2023 with approximately
$0.3 million in cash, with additional
access to its revolving line of credit with a Canadian Schedule-1
bank and a previously announced $1.5
million debenture issuance that closed in July 2023.
2023 Outlook
Newtopia continues to expect full-year revenue growth in 2023 as
compared to the prior year. Newtopia anticipates that the Company
is also on a clear path to EBITDA and cash flow positivity within
2023 by continuing to exert strategic expense management.
Profitability is anticipated to build throughout the year, with the
bottom line improving incrementally each quarter.
Grants of Stock Options
Newtopia further announced today that its Board of Directors has
approved the grant of 250,000 stock options to certain tenured
employees. The issued options will be at an exercise price of
CAD$0.105 per common share and will
expire five years from the grant date.
Conference Call
The Company will host a conference call today at 5 p.m. Eastern Time to discuss the second quarter
2023 results in further detail. To access the conference call,
please dial (888) 886-7786 (U.S.) or (416) 764-8658 (International)
10 minutes prior to the start time and reference Conference ID
number 03837842. 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
August 30, 2023 which can be accessed
by dialing (844) 512-2921 (U.S.) or (412) 317-6671 (International)
and entering the passcode 03837842. The webcast will also be
archived on the Company's website.
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. To learn more,
visit newtopia.com, LinkedIn or Twitter.
Forward Looking Statements
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. 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. 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. 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 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-IFRS Financial Measures
The Company's financial statements are prepared in accordance
with International Financial Reporting Standards ("IFRS").
Management uses certain non-IFRS 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-IFRS 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 IFRS measures and do not have a
standardized 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 release.
Key Financial Measures and Schedule of Non-GAAP
Reconciliations
Gross Profit Information [1]
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Revenue
|
2,357,034
|
|
2,531,986
|
|
5,005,691
|
|
5,398,700
|
|
Cost of
revenue
|
(1,184,993)
|
|
(1,341,941)
|
|
(2,460,675)
|
|
(2,859,777)
|
|
Gross profit
|
1,172,041
|
|
1,190,045
|
|
2,545,016
|
|
2,538,923
|
|
Add Amortization of
intangible asset
|
206,514
|
|
-
|
|
413,028
|
|
-
|
|
Non-IFRS adjusted gross
profit
|
1,378,555
|
|
1,190,045
|
|
2,958,044
|
|
2,538,923
|
|
|
|
|
|
|
|
|
|
Gross profit
margin
|
50 %
|
|
47 %
|
|
51 %
|
|
47 %
|
|
Non-IFRS adjusted
gross profit margin
|
58 %
|
|
47 %
|
|
59 %
|
|
47 %
|
Reconciliation of Total Operating Expenses to Adjusted
Operating Expenses [2]
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Total
expenses
|
2,403,354
|
|
3,421,786
|
|
5,149,156
|
|
6,398,357
|
|
Add
(Subtract)
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
(215,013)
|
|
(131,290)
|
|
(308,303)
|
|
(263,798)
|
|
Depreciation of
property and equipment
|
(2,030)
|
|
(13,403)
|
|
(3,579)
|
|
(27,783)
|
|
Depreciation of
right-of-use asset
|
-
|
|
(46,192)
|
|
-
|
|
(92,387)
|
|
Interest on lease
obligations
|
(8,973)
|
|
(20,283)
|
|
(21,563)
|
|
(43,262)
|
|
Interest and accretion
expense
|
(177,728)
|
|
(100,431)
|
|
(347,423)
|
|
(197,721)
|
|
Finance
charges
|
(122,318)
|
|
(40,437)
|
|
(231,966)
|
|
(77,547)
|
|
Capitalized borrowing
costs
|
-
|
|
38,000
|
|
-
|
|
67,000
|
|
Foreign exchange loss
(gain)
|
(35,821)
|
|
38,497
|
|
(54,093)
|
|
23,464
|
|
Amortization of
deferred finance charges
|
(33,975)
|
|
(64,970)
|
|
(67,790)
|
|
(123,770)
|
|
Gain on settlement of
related party payable
|
7,203
|
|
-
|
|
7,203
|
|
-
|
|
Adjusted operating
expenses
|
1,814,699
|
|
3,081,277
|
|
4,121,642
|
|
5,662,553
|
EBITDA [3]
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Non-IFRS adjusted gross
profit
|
1,378,555
|
|
1,190,045
|
|
2,958,044
|
|
2,538,923
|
|
Adjusted operating
expenses
|
(1,814,699)
|
|
(3,081,277)
|
|
(4,121,642)
|
|
(5,662,553)
|
|
EBITDA
|
(436,144)
|
|
(1,891,232)
|
|
(1,163,598)
|
|
(3,123,630)
|
NEWTOPIA INC.
Condensed Interim Statements of
Financial Position (Unaudited)
As at June 30, 2023 and December 31, 2022
(Expressed in Canadian Dollars)
|
|
|
June
30,
|
December 31,
|
|
|
|
2023
|
2022
|
|
|
|
(Unaudited)
|
(Audited)
|
|
|
|
$
|
$
|
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash
|
|
|
296,573
|
345,950
|
|
Trade and other
receivables
|
|
|
1,520,374
|
1,557,640
|
|
Contract
asset
|
|
|
-
|
190,000
|
|
Prepaid expenses and
deposits
|
|
|
259,165
|
205,843
|
|
Inventories
|
|
|
140,176
|
325,571
|
|
Deferred
costs
|
|
|
37,639
|
76,269
|
|
|
|
2,253,927
|
2,701,273
|
|
|
|
|
|
|
Property and
equipment
|
|
|
5,572
|
8,052
|
|
Intangible
asset
|
|
|
2,822,335
|
3,235,363
|
|
|
|
5,081,834
|
5,944,688
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Trade and other
payables
|
|
|
2,433,354
|
2,584,039
|
|
Credit
facility
|
|
|
4,809,913
|
4,823,545
|
|
Lease
obligations
|
|
|
209,077
|
544,700
|
|
Deferred
revenue
|
|
|
48,185
|
48,185
|
|
Contract
liability
|
|
|
80,100
|
-
|
|
Debentures
|
|
|
3,730,523
|
2,409,103
|
|
|
|
11,311,152
|
10,409,572
|
|
Debentures
|
|
|
-
|
1,068,772
|
|
|
|
11,311,152
|
11,478,344
|
|
|
|
|
|
|
Equity/Deficit
|
|
|
|
|
|
Common
shares
|
|
|
48,882,767
|
47,978,992
|
|
Contributed
surplus
|
|
|
13,866,152
|
12,861,449
|
|
Deficit
|
|
|
(68,978,237)
|
(66,374,097)
|
|
|
|
(6,229,318)
|
(5,533,656)
|
|
|
|
5,081,834
|
5,944,688
|
NEWTOPIA INC.
Condensed Interim Statements of Loss and
Comprehensive Loss (Unaudited)
Three and Six Months Ended June 30,
2023 and 2022
(Expressed in Canadian Dollars)
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
|
$
|
$
|
|
$
|
$
|
|
Revenue
|
|
|
2,357,034
|
2,531,986
|
|
5,005,691
|
5,398,700
|
|
Cost of
revenue
|
|
|
1,184,993
|
1,341,941
|
|
2,460,675
|
2,859,777
|
|
Gross profit
|
|
|
1,172,041
|
1,190,045
|
|
2,545,016
|
2,538,923
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
Technology and
development
|
|
|
522,707
|
844,105
|
|
1,444,772
|
1,650,400
|
|
Sales and
marketing
|
|
|
351,262
|
868,934
|
|
777,432
|
1,513,145
|
|
General and
administrative
|
|
|
940,730
|
1,368,238
|
|
1,899,438
|
2,499,008
|
|
Share-based
compensation
|
|
|
215,013
|
131,290
|
|
308,303
|
263,798
|
|
Depreciation of
property and equipment
|
|
|
2,030
|
13,403
|
|
3,579
|
27,783
|
|
Depreciation of
right-of-use asset
|
|
|
-
|
46,192
|
|
-
|
92,387
|
|
|
|
2,031,742
|
3,272,162
|
|
4,433,524
|
6,046,521
|
|
Other expenses
(income)
|
|
|
|
|
|
|
|
|
Interest and accretion
expense
|
|
|
177,728
|
100,431
|
|
347,423
|
197,721
|
|
Interest on lease
obligations
|
|
|
8,973
|
20,283
|
|
21,563
|
43,262
|
|
Finance
charges
|
|
|
122,318
|
40,437
|
|
231,966
|
77,547
|
|
Amortization of
deferred finance charges
|
|
|
33,975
|
64,970
|
|
67,790
|
123,770
|
|
Foreign exchange
(gain)/loss
|
|
|
35,821
|
(38,497)
|
|
54,093
|
(23,464)
|
|
Capitalized borrowing
costs
|
|
|
-
|
(38,000)
|
|
-
|
(67,000)
|
|
Gain on settlement of
related party payable
|
|
|
(7,203)
|
-
|
|
(7,203)
|
-
|
|
|
|
371,612
|
149,624
|
|
715,632
|
351,836
|
|
Net loss and
comprehensive loss
|
|
|
(1,231,313)
|
(2,231,741)
|
|
(2,604,140)
|
(3,859,434)
|
NEWTOPIA INC.
Condensed Interim Statements of Changes
in Equity (Deficit) (Unaudited)
Six Months Ended June 30, 2023 and
2022
(Expressed in Canadian Dollars)
|
Common
Shares
|
Contributed
Surplus
|
Deficit
|
Total
|
|
|
$
|
$
|
$
|
$
|
|
Balance, December
31, 2022
|
|
47,978,992
|
12,861,449
|
(66,374,097)
|
(5,533,656)
|
|
Net loss and
comprehensive loss
|
|
-
|
-
|
(2,604,140)
|
(2,604,140)
|
|
Share-based
compensation
|
|
-
|
308,303
|
-
|
308,303
|
|
Settlement of related
party payable
|
|
-
|
132,880
|
-
|
132,880
|
|
March 2023 private
placement offering, net of issuance costs
|
|
930,218
|
537,077
|
-
|
1,467,295
|
|
Compensation
options
|
|
(26,443)
|
26,443
|
-
|
-
|
|
Balance, June 30,
2023
|
|
48,882,767
|
13,866,152
|
(68,978,237)
|
(6,229,318)
|
|
Balance, December
31, 2021
|
|
45,177,120
|
11,652,200
|
(58,673,634)
|
(1,844,314)
|
|
Net loss and
comprehensive loss
|
|
-
|
-
|
(3,859,434)
|
(3,859,434)
|
|
Share-based
compensation
|
|
-
|
263,798
|
-
|
263,798
|
|
Settlement of related
party payable
|
|
-
|
54,522
|
-
|
54,522
|
|
April 2022 private
placement offering, net of issuance costs
|
|
2,624,495
|
511,839
|
-
|
3,136,334
|
|
Compensation options
issued to brokers
|
|
(83,230)
|
83,230
|
-
|
-
|
|
Balance, June 30,
2022
|
|
47,718,385
|
12,565,589
|
(62,533,068)
|
(2,249,094)
|
|
|
|
|
|
|
NEWTOPIA INC.
Condensed Interim Statements of Cash
Flows (Unaudited)
Six Months Ended June 30, 2023 and
2022
(Expressed in Canadian Dollars)
|
|
|
Six Months Ended
June 30,
|
|
|
|
2023
|
2022
|
|
|
|
$
|
$
|
|
Cash flows used in
operating activities:
|
|
|
|
|
|
Net loss and
comprehensive loss
|
|
|
(2,604,140)
|
(3,859,434)
|
|
Items not involving
cash:
|
|
|
|
|
|
Depreciation of
property and equipment
|
|
|
3,579
|
27,783
|
|
Depreciation of
right-of-use asset
|
|
|
-
|
92,387
|
|
Amortization of
intangible asset
|
|
|
413,028
|
-
|
|
Amortization of
deferred finance charges
|
|
|
67,790
|
123,770
|
|
Capitalized borrowing
costs
|
|
|
-
|
(67,000)
|
|
Share-based
compensation
|
|
|
308,303
|
263,798
|
|
Interest and accretion
expense
|
|
|
252,648
|
95,921
|
|
Interest on lease
obligations
|
|
|
21,563
|
43,262
|
|
Gain on settlement of
related party
payable
|
|
|
(7,203)
|
-
|
|
|
|
(1,544,432)
|
(3,279,513)
|
|
Net change in non-cash
working capital
|
|
|
|
|
|
Trade and other
receivables
|
|
|
37,266
|
495,162
|
|
Contract
asset/liability
|
|
|
270,100
|
(287,034)
|
|
Inventories
|
|
|
185,395
|
(145,142)
|
|
Prepaid expenses and
deposits
|
|
|
(53,322)
|
(22,023)
|
|
Trade and other
payables
|
|
|
(10,602)
|
538,112
|
|
Deferred
revenue
|
|
|
-
|
(8,065)
|
|
|
|
(1,115,595)
|
(2,708,503)
|
|
Cash flows used in
investing activities:
|
|
|
|
|
|
Purchase of property
and equipment
|
|
|
(1,099)
|
(3,829)
|
|
Intangible asset
development costs
|
|
|
-
|
(898,895)
|
|
|
|
(1,099)
|
(902,724)
|
|
Cash flows from
(used in) financing activities:
|
|
|
|
|
|
Credit facility
withdrawals
|
|
|
2,864,097
|
5,633,116
|
|
Credit facility
repayments
|
|
|
(2,877,729)
|
(5,074,304)
|
|
Credit facility
financing
costs
|
|
|
(29,160)
|
(45,931)
|
|
Repayment of lease
obligations
|
|
|
(357,186)
|
(187,942)
|
|
Proceeds from private
placement offerings, net of issuance costs
|
|
|
1,467,295
|
3,136,334
|
|
|
|
1,067,317
|
3,461,273
|
|
Decrease in
cash
|
|
|
(49,377)
|
(149,954)
|
|
Cash, beginning of
period
|
|
|
345,950
|
811,584
|
|
Cash, end of
period
|
|
|
296,573
|
661,630
|
|
___________
|
|
1
|
Gross profit is defined
as revenue, which is comprised of onboarding Welcome Kit 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, genetic testing costs and the
amortization of intangible assets. 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. The Company defines Non-IFRS gross profit as gross
profit plus amortization of intangible assets, for a true revenue
less direct cost calculation and an "apples to apples" comparison
vs. prior periods.
|
|
2
|
Adjusted operating
expenses consist of all cash-based technology, sales and marketing
and administrative expenses. 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
|
EBITDA stands for
"earnings before interest, tax, depreciation and amortization".
Although a commonly used financial metric, EBITDA 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.
|
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SOURCE Newtopia Inc.
