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TORONTO, ONTARIO -- (Marketwired) -- 08/07/13 -- EQ Inc. (TSX: EQ) ("EQ Works"), a leader in targeted mobile, social, video and display advertising, today announced its financial results for the second quarter ended June 30, 2013. Total revenue from continuing operations for the quarter was $1.9 million, an increase from the $1.6 million recorded in the previous quarter, and adjusted EBITDA loss for the quarter was approximately $591,000 as compared to a loss of $942,000 in the previous quarter.

Highlights for the second quarter ended June 30, 2013

--  At June 30, the Company had cash on hand of $4 million and no debt
--  The Company's overall revenue increased 17% from the previous quarter
--  The Company relaunched under its new brand EQ Works and gained
    significant momentum for its real-time advertising solutions
--  Five new agency/clients were added during the quarter.

"During the second quarter, we began seeing results," said Geoffrey Rotstein, President and CEO. "We are now seeing more demand for our product and a greater share of our clients' advertising budgets as we continue to demonstrate the effectiveness of our real-time advertising solution," added Rotstein. "The largest growth area has been right here in Canada, where brands and agencies have been very receptive to our unique advantages and the results we deliver. We expect to see continued growth through the remainder of 2013."

Non-IFRS Financial Measures

This press release includes a discussion of "Adjusted EBITDA," which is a non-IFRS financial measure. The Company defines Adjusted EBITDA as net loss from operations before; (a) depreciation of property and equipment and amortization of domain properties and other intangibles; (b) share-based payments, (c) restructuring and acquisition costs, (d) impairments of goodwill and intangible assets and other items, net. Management uses Adjusted EBITDA as a measure of the Company's operating performance because it provides information related to the Company's ability to provide operating cash flows for acquisitions, capital expenditures and working capital requirements. The Company also believes that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies in its industry.

The non-IFRS financial measure is used in addition to and in conjunction with results presented in accordance with the Company's consolidated financial statements prepared in accordance with IFRS and should not be relied upon to the exclusion of IFRS financial measures. Management strongly encourages investors to review the Company's consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-IFRS financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-IFRS financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-IFRS adjustments described above, and exclusion of these items from the Company's non-IFRS measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

The table below reconciles net loss from continuing operations and Adjusted EBITDA for the periods presented:

Adjusted EBITDA for three and six months ended 2013 and 2012
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                                     Three months ended    Six months ended
                                               June 30,            June 30,
(In thousands of Canadian dollars)       2013      2012      2013      2012
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Net loss from operations             $   (962) $ (1,041) $ (2,283) $ (2,214)
Add:
Depreciation of property and
 equipment                                 70        66       145       151
Amortization of domain properties
 and other intangibles                    286       278       569       554
Share-based payments                       15        (2)       36       (15)
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Adjusted EBITDA                      $   (591) $   (699) $ (1,533) $ (1,524)
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About EQ Works

EQ Works (www.eqworks.com) provides a smarter way to target customers. The Company uses its real-time technology and advanced analytics to detect the actionable data that boosts performance for all web, mobile, social and video initiatives. EQ Works balances the many components that comprise the complex advertising ecosystem and establishes equilibrium for reaching the right audience at the right time through any web or mobile device.

Forward-Looking Statements

This news release may contain forward-looking statements that are based on management's current expectations and are subject to known and unknown uncertainties and risks, which could cause actual results to differ materially from those contemplated or implied by such forward-looking statements. EQ Inc. is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.

EQ Inc.
Unaudited Condensed Consolidated Interim Statements of Financial Position
(In thousands of Canadian dollars)
June 30, 2013 and December 31, 2012

                                                     June 30,   December 31,
                                                         2013           2012
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Assets

Current assets:
Cash and cash equivalents                       $       4,004  $       5,419
Accounts receivable                                     1,540          2,425
Other current assets                                      264            303
Income taxes recoverable                                   42             40
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                                                        5,850          8,187

Non-current assets:
Investment                                                 50             50
Property and equipment                                    387            460
Domain properties and other intangible assets           2,515          2,889
Goodwill                                                  377            357
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                                                        3,329          3,756

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Total assets                                    $       9,179  $      11,943
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Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable and accrued liabilities        $       2,120  $       2,703
Deferred lease inducement                                  34             41
Finance leases                                            156            155
Deferred revenue                                          537            549
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                                                        2,847          3,448

Non-current liabilities:
Finance leases                                            110            186
Deferred lease inducement                                   -             14
Deferred tax liabilities                                  107            244
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                                                          217            444

Shareholders' Equity                                    6,115          8,051

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Total liabilities and Shareholders' equity      $       9,179  $      11,943
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EQ Inc.
Unaudited Condensed Consolidated Interim Statements of Comprehensive Income
(Loss)
(In thousands of Canadian dollars, except per share amounts)
Three and six months ended June 30, 2013 and 2012

                                     Three months ended    Six months ended
                                               June 30,            June 30,
                                         2013      2012      2013      2012
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Revenue                              $  1,909  $  3,890  $  3,546  $  7,422

Expenses:
  Publishing and advertising costs      1,036     2,357     1,872     4,337
  Employee compensation and benefits      858     1,301     1,894     2,759
  Other operating expenses                621       929     1,349     1,835
  Depreciation of property and
   equipment                               70        66       145       151
  Amortization of domain properties
   and other intangible assets            286       278       569       554
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                                        2,871     4,931     5,829     9,636
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Loss from operations                     (962)   (1,041)   (2,283)   (2,214)

Finance income                              6        27        21        27
Finance cost                             (117)     (214)     (234)     (246)
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Loss before income taxes               (1,073)   (1,228)   (2,496)   (2,433)

  Income taxes recovery                    65       106       130       161
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Loss for the period from continuing
 operations                            (1,008)   (1,122)   (2,366)   (2,272)

Discontinued Operation:
Income for the period from
 discontinued operation, net of tax         -     7,377         -     5,129
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Income (loss) for the period           (1,008)    6,255    (2,366)    2,857

Other comprehensive income:
  Foreign currency translation
   adjustments to equity, net of tax      213       261       394       160
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  Other comprehensive income for the
   period                                 213       261       394       160

Total comprehensive income (loss)
 for the period                      $   (795) $  6,516  $ (1,972) $  3,017
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Income (loss) per share:
  Basic                                 (0.06)     0.39     (0.15)     0.19
  Diluted                               (0.06)     0.39     (0.15)     0.19

Loss per share from continuing
 operations:

  Basic                                 (0.06)    (0.07)    (0.15)    (0.14)
  Diluted                               (0.06)    (0.07)    (0.15)    (0.14)

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EQ Inc.
Unaudited Condensed Consolidated Interim Statements of Cash Flows
(In thousands of Canadian dollars)
Six months ended June 30, 2013 and 2012

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                                                             2013      2012
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Cash flows from operating activities:
  Income (loss) for the period                           $ (2,366) $  2,857
  Adjustments to reconcile net loss to net cash flows
   from operating activities:
    Depreciation of property and equipment                    145       418
    Amortization of domain properties and other
     intangible assets                                        569     2,727
    Amortization of deferred lease inducement                 (20)      (45)
    Share-based payments                                       36       (15)
    Foreign exchange loss (gain)                              227       (34)
    Finance cost, net                                         219       217
    Deferred income taxes recovery                           (130)     (109)
    Restructuring cost                                          -       221
    Gain on sale of Tsavo                                       -    (7,402)
  Change in non-cash operating working capital                278    (2,945)
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  Cash used in operating activities                        (1,042)   (4,110)
  Income taxes received                                         -        31
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  Net cash used in operating activities                    (1,042)   (4,079)

Cash flows from financing activities:
  Repurchase of common shares under NCIB                        -       (10)
  Repayment of finance leases                                 (76)      (30)
  Interest paid                                               (15)     (272)
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  Net cash used in financing activities                       (91)     (312)

Cash flows from investing activities:
  Interest income received                                     21        17
  Net proceeds from sale of available-for-sale
   investments                                                  -       200
  Decrease in restricted cash and short-term investments        -       201
  Proceeds on sale of Tsavo, net of cash disposed               -     6,293
  Additions to domain properties and other intangible
   assets                                                     (26)        -
  Additions to property and equipment                         (50)     (208)
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  Net cash from (used in) investing activities                (55)    6,503

Foreign exchange gain (loss) on cash held in foreign
 currency                                                    (227)       34
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Increase (decrease) in cash and cash equivalents           (1,415)    2,146

Cash and cash equivalents, beginning of period              5,419     4,050

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Cash and cash equivalents, end of period                 $  4,004  $  6,196
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