Engagement Labs Releases FY 2019 Audited Results
MONTREAL, Quebec — May 14, 2020 — Engagement Labs Inc. (TSXV: EL) released results for its fiscal year ended December 31, 2019, and announces that due to COVID 19 circumstances it will delay filing its first quarter interim financial statements and its management discussion and analysis report for the three-month period ended March 31, 2020 until on or about June 19, 2020. Audited consolidated Financial Statements and Management Report are available on SEDAR’s website at www.sedar.com.
Fiscal year 2019 Audited Results Released
- TotalSocial® revenue was $4,016,667 for the year ended December 31, 2019, an increase of 16% compared to $3,451,300 for the year ended December 31, 2018.
- Total revenue, including both TotalSocial® and EL legacy products, was $4,083,497 for the year ended December 31, 2019, an increase of 3% compared to $3,973,704 for the year ended December 31, 2018
- Gross profit was $2,006,774 for the year ended December 31, 2019, an increase of 10% compared to $1,818,527 for the year ended December 31, 2018. As a percentage of revenue, the gross margin was 49% for the year ended December 31, 2019, an increase of 7% compared to 46% for the year ended December 31, 2018.
- Non-GAAP Adjusted EBITDA(1) loss was -$2,070,568 for the year ended December 31, 2019, an improvement of 36% compared to -$3,214,308 for the year ended December 31, 2018.
- EBITDA(1) loss was -$4,174,041 for the year ended December 31, 2019, an increase of 4% compared to -$4,030,950 for the year ended December 31, 2018.
- Operating expenses were $6,813,918 for the year ended December 31, 2019, an increase of 4% compared to $6,533,005 for the year ended December 31, 2018. Excluding impairment loss on goodwill and gain on extinction of debt and equity components of convertible debentures, the non-GAAP operating expenses were $5,664,698 for the year ended December 31, 2019, a decrease of 13% compared to $6,533,005 for the year ended December 31, 2018.
- The net loss for the year ended December 31, 2019 decreased to -$5,290,087, down 4% or $222,577 from -$5,512,664 for the year ended December 31, 2018. Basic and diluted loss per share was ($0.03) for the year ended December 31, 2019, compared to ($0.06) for the year ended December 31, 2018.
- As at December 31, 2019, the Company was holding cash of $844,107 ($906,455 as at December 31, 2018) and had no cash in escrow ($200,793 as at December 31, 2018).
Fourth Quarter Financial Highlights
- Revenue of $1,167,785 for Q4 2019 increased 12% from $1,042,909 in Q3 2019, and increased by 3%, from $1,139,156 for Q4 2018.
- Gross margin for Q4 2019 remained stable from Q3 2019 at 52%, and it decreased from 54% in Q4 2018.
- Operating expenses, before non-operational expenses, have decreased to $1,088,424 in Q4 2019, down 43% or $818,562 from $1,906,986 in Q3 2019, and down 39% or $685,820 from $1,774,244 in Q4 2018.
- Excluding non-operational expenses, the net loss before income taxes has decreased to -$421,241 in Q4 2019, down 69% or $945,805 from -$1,367,046 in Q3 2019, and down 70% or $990,056 from -$1,411,297 in Q4 2018.
- Non-GAAP Adjusted EBITDA(1) loss of -$270,072 for Q4 2019, representing an improvement of $649,273 from -$919,345 for Q3 2019, and an improvement of $490,340 from -$760,412 for Q4 2018.
- EBITDA(1) loss of -$1,732,637 for Q4 2019, representing an increase of -$529,616 from -$1,203,021 for Q3 2019, and an increase of $695,780 from -$1,036,857 for Q4 2018.
1 EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. Number for comparative periods were revised to exclude SRED credit tax, variation on exchange, and bank charges in EBITDA. Adjusted EBITDA is a non-GAAP financial measure defined as EBITDA to which the Company adds stock-based compensation including the grant of stock options, restricted shares units, and restricted share awards as these expenses do not result in any use of operating cash flows by the Company, severance payments, impairment loss on goodwill, write-off of intangible assets, change in fair value of investment in shares, expenses related to acquisition or disposal of business, and loss on extinction of debt and equity components of convertible debentures, which are extraordinary and non-recurrent expenses, and Board remuneration, which is paid in shares units. EBITDA and non-GAAP adjusted EBITDA are provided as a supplementary earning measure to assist readers in determining the ability of ENGAGEMENT LABS INC. to generate cash from operations and to cover financial charges. They are also widely used for business valuation purposes. These measures do not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.
“I am pleased with TotalSocial revenue growth of 16% in FY 2019, which reflects continuing acceptance of our platform among our Fortune 500 client base. Also, we were successful at reducing our operating expenses by 13% and continue to focus on cost reduction in order to achieve cash flow break even,” said Ed Keller, CEO.
In order to preserve cash, the Company implemented a salary deferral program for employees and management that took affect March 15, 2020. In connection with this and in accordance with its Stock Option Plan and RSA Plan, the Company granted 3,350,000 stock options and 3,200,000 RSAs to employees and management of the Company, of which 2,300,000 stock options and 2,200,000 RSAs were granted to four officers of the Company. The stock options have an exercise price of $0.05 per share and a term of five years.
2020 First Quarter Interim Financial Statements
The Company announces that due to COVID 19 circumstances it will delay filing its first quarter interim financial statements and its management discussion and analysis report for the three-month period ended March 31, 2020 until on or about June 19, 2020. EL is relying upon temporary relief granted by the Autorité des marches financiers (AMF) allowing reporting issuers to extend certain continuous disclosure filing deadlines occurring during the period March 23, 2020 to June 1, 2020 by 45 days.
Management and other insiders of the company are subject to an insider trading black-out policy until the delayed filings are completed, reflecting the principles in section 9 of National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions.
About Engagement Labs
Engagement Labs (TSXV: EL) is an industry-leading data and analytics firm that provides social intelligence for Fortune 500 brands and companies.
To learn more visit www.engagementlabs.com
Disclaimer in regard to Forward-looking Statements
Certain statements included herein constitute "forward-looking statements" within the meaning of applicable securities laws. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management at this time, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Investors are cautioned not to put undue reliance on forward-looking statements. Except as required by law, Engagement Labs does not intend, and undertakes no obligation, to update any forward-looking statements to reflect, in particular, new information or future events.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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