Mr. Jeff Ruby reports

NEWTOPIA REPORTS SECOND QUARTER 2023 FINANCIAL RESULTS

Newtopia Inc. has released its second quarter 2023 financial results and operational highlights, and has filed its quarterly financial statements. These results pertain to the three and six months ended June 30, 2023.

Second quarter 2023 financial highlights (versus Q2 2022):

• Revenue of $2.4-million, as compared with $2.5-million.
• Gross profit margin of 58.5 per cent, as compared with 47 per cent.

"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 chief executive officer 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 pro-active 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 [earnings before interest, taxes, depreciation and amortization] positive."

Mr. Ruby continued: "We anticipate that our recent multiyear 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 health care 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 with $2.5-million in the prior-year period. Enrolment fee revenue, or revenue from Welcome Kit sales, totalled 13 per cent of revenue for the quarter, in line with Q2 2022.

Non-IFRS (international financial reporting standards) gross profit for the second quarter 2023 totalled $1.4-million, as compared with $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 labour 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 totalled 59 per cent, compared with 47 per cent in the prior-year period.

Operating expenses for the three months ended June 30, 2023, totalled $1.8-million, compared with $3.1-million in the prior-year period and $2.3-million in Q1 2023. For the second quarter, EBITDA totalled a loss of $400,000, compared with a loss of $1.9-million in the prior-year period and $700,000 in Q1 2023.

The company ended the second quarter 2023 with approximately $300,000 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.

Two thousand twenty-three outlook

Newtopia continues to expect full-year revenue growth in 2023 as compared with 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 10.5 cents 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. ET to discuss the second quarter 2023 results in further detail. To access the conference call, please dial 888-886-7786 (United States) or 416-764-8658 (international) 10 minutes prior to the start time and reference conference ID No. 03837842. The call will also be available via live webcast on the investor relations portion of the company's website.

A replay of the conference call will be available through Aug. 30, 2023, which can be accessed by dialling 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 Inc.

Newtopia is a technology-enabled habit change provider focused on disease prevention and reducing the cost of care for health insurers. As a provider of whole person care, it prevents, reverses and slows the progression of chronic disease while enriching mental health, resilience and overall human performance. Newtopia's programs leverage genetic, social and behavioural insights to create individualized prevention programs with a focus on Type 2 diabetes, heart disease, stroke and weight. With a person-centred approach that combines virtual care, digital tools, connected devices and actionable data science, Newtopia delivers sustainable clinical and financial outcomes.

We seek Safe Harbor.