VIQ Solutions earns $113,902 in Q1 2012

Press release from Marketwire

VIQ Solutions Reports First Quarter 2012 Results

Profitable quarter builds upon positive 2011 performance

Thursday, May 24, 2012

MARKHAM, ONTARIO--(Marketwire - May 24, 2012) - VIQ Solutions Inc. ("VIQ Solutions" or the "Corporation") (TSX VENTURE:VQS), a world leader in computer-based digital audio and video capture and management, today reported its financial results for the three month period ended March 31, 2012. Results are reported in Canadian dollars and are prepared in accordance with International Financial Reporting Standards ("IFRS").

"In Q1, VIQ Solutions converted numerous global opportunities into significant contract wins, resulting in a positive net income, EBITDA1 and cash flow," said David Outhwaite, President and Chief Executive Officer of VIQ Solutions. "With a full pipeline and growing reputation around the world, we look to continue to build on the momentum we established in 2011."

Financial Highlights for the Quarter

  • Achieved strong financial results with positive EBITDA of $173,518 and net income of $113,902 for the three month period ended March 31, 2012;



  • Revenue from our transcription and recording services business units was $3.2 million for the three month period ended March 31, 2012, as compared to $2.6 million for the same period in 2011 representing an increase of
    .6 million or 20%, primarily due to an increase in business activity from our Australian transcription services business unit;



  • Revenue from the computer products and services business unit was
    .82 million for the three month period ended March 31, 2012 as compared to $1.75 million for the same period in 2011. The Corporation earned approximately $1.5 million of software revenue from one contract in the first quarter of 2011 in connection with the national rollout in the United Kingdom; and



  • Cash flows used in operating activities were $110,255 for the three month period ended March 31, 2012 as compared to $467,127 for the same period in 2011.

Business Highlights for the Quarter

  • Successfully implemented the national roll-out of 536 installations of our multi-year digital audio recording and storage project in the United Kingdom with Atos Origin and Logica. The Corporation continues to earn on-going revenue from the UK project from related software support, installation and professional development services;



  • Awarded a contract for digital audio and video capture in Mexico with local reseller Dyntra, S.A de C.V. to provide Encompass RPC software and Cisco hardware to the federal courthouse in Mérida in the Mexican state of Yucatán and successfully installed the pilot system in the quarter;



  • Awarded a Canadian contract for digital audio capture and management by the Courts Administration Service to supply bilingual digital audio recording software and hardware for 48 fixed and mobile recording workstations for the Federal Court and Tax Court of Canada across the country; and



  • Awarded a contract to provide digital audio capture and management software with local reseller Digital Voice Processing for the Botswana High Court in Gaborone, Botswana.

Notes

1. EBITDA is a non-IFRS earnings measure which does not have any standardized meaning prescribed by IFRS and therefore may not be comparable to EBITDA presented by other companies. EBITDA represents earnings before interest expense, income taxes, depreciation and amortization. This measure is important to management since it is used by potential investors to evaluate the Corporation's operating performance and ability to incur and service debt, and as a valuation metric. Investors are cautioned that this non-IFRS financial measure should not be construed as an alternative to other measures of financial performance calculated in accordance with IFRS.

Additional Information

The unaudited first quarter 2012 interim consolidated financial statements and results of operations and Management's Discussion and Analysis of Results and Financial Condition for the three month period ended March 31, 2012 will be posted on VIQ Solutions' website (under Investor Relations) at www.viqsolutions.comand on SEDAR's website at www.sedar.com. The financial information included in this release is qualified in its entirety and should be read together with the unaudited first quarter 2012 interim financial statements and the audited consolidated financial statements for the year ended December 31, 2011, including the notes thereto.

About VIQ Solutions Inc.

VIQ Solutions is a global leader in computer-based digital audio and video capture and management. We develop software solutions that capture, digitize, and compress audio and video data, which is securely stored in a multi-tiered server system where it is easily searchable and shareable. Our innovative media processor technology allows users to remotely control audio-video capture in multiple locations from a single satellite location, allowing large-scale and complex installations to be managed efficiently by fewer resources. VIQ Solutions' technologies are installed in courts, legislative assemblies, law enforcement and hearing rooms around the world.

Forward-looking Statements

This release contains forward-looking statements and other statements concerning the Corporation's objectives and strategies and management's beliefs, plans and intentions about our achievements, goals, performance and other future events. These statements involve risks and uncertainties, which may cause actual results to differ materially from the statements made. When used in this press release, the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "will," "would" and similar expressions are intended to identify forward-looking statements. Such statements reflect VIQ Solutions' current views with respect to future events and are subject to such risks and uncertainties. Many factors could cause our actual results to differ materially from the statements made due to a number of factors including risks related to our ability to successfully execute our business plan which includes our revenue growth, our liquidity, our operating results, our technology and products. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated or expected. VIQ Solutions does not intend and does not assume any obligation to update these forward-looking statements.

VIQ Solutions Inc.  
Condensed Consolidated Interim Balance Sheets  
(Expressed in Canadian dollars)  
(Unaudited)  
  March 31,   December 31,  
  2012   2011  
         
Assets        
         
Current assets        
  Cash $ 1,577,303   $ 1,646,138  
  Trade and other receivables   1,934,161     1,330,474  
  Inventories   6,775     7,025  
  Prepaid expenses   79,236     123,228  
    3,597,475     3,106,865  
Non-current assets            
  Restricted cash   150,260     151,215  
  Property and equipment   716,742     754,397  
  Goodwill   1,615,869     1,621,395  
  Deferred tax assets   258,353     260,001  
  $ 6,338,699   $ 5,893,873  
Liabilities            
             
Current liabilities            
  Trade and other payables $ 1,171,753   $ 951,687  
  Provisions   549,087     584,870  
  Short-term debt   75,000     75,000  
  Unearned revenue   245,666     187,179  
  Deferred lease incentives   21,628     21,766  
  Current portion of obligations under finance lease   51,461     59,266  
  Current portion of long-term debt   22,692     22,692  
    2,137,287     1,902,460  
Non-current liabilities            
  Provisions   174,538     165,974  
  Deferred lease incentives   45,234     50,964  
  Obligations under finance lease   36,178     45,528  
  Long-term debt   65,081     70,754  
Total liabilities   2,458,318     2,235,680  
Equity            
             
Capital stock   11,578,213     11,438,947  
Contributed surplus   1,766,453     1,781,433  
Accumulated other comprehensive income   142,960     158,960  
Deficit   (9,607,245 )   (9,721,147 )
    3,880,381     3,658,193  
Total equity and liabilities $ 6,338,699   $ 5,893,873  
   
   
VIQ Solutions Inc.  
Condensed Consolidated Interim Statements of Comprehensive Income  
(Expressed in Canadian dollars)  
(Unaudited)  
  Three months ended March 31  
  2012   2011  
         
Revenue $ 3,969,214   $ 4,374,721  
             
Cost of sales   2,286,589     1,856,163  
Gross profit   1,682,625     2,518,558  
             
Expenses            
  Selling, general and administrative expenses   1,391,754     1,331,932  
  Research and development expenses   182,528     205,535  
    1,574,282     1,537,467  
             
Income from operations   108,343     981,091  
             
  Interest income   9,424     6,148  
  Interest expense   (8,566 )   (49,504 )
  Foreign exchange gain (loss)   4,701     (6,906 )
Net finance gain (loss) $ 5,559   $ (50,262 )
             
Net income for the period $ 113,902   $ 930,829  
             
Exchange differences on translating foreign operations   (16,000 )   (21,278 )
Comprehensive income for the period $ 97,902   $ 909,551  
             
             
Net income per share            
  Basic and diluted $ 0.00   $ 0.01  
             
             
Weighted average number of common shares outstanding - basic   90,638,538     87,531,195  
Weighted average number of common shares outstanding - diluted   90,707,886     91,085,570  
   
   
VIQ Solutions Inc.  
Condensed Consolidated Interim Statements of Cash Flows  
(Expressed in Canadian dollars)  
(Unaudited)  
  Three months ended March 31  
  2012   2011  
             
Cash provided by (used in):            
Operating activities            
Net income for the period $ 113,902   $ 930,829  
Items not affecting cash:            
  Depreciation   51,050     63,944  
  Stock-based compensation   43,286     114,814  
  Provisions   8,564     14,650  
  Interest accretion on bridge loans   -     2,084  
  Amortization of deferred lease incentive   (5,868 )   (6,296 )
  Unrealized foreign exchange loss (gain)   (4,514 )   5,277  
  Changes in non-cash operating working capital   (316,675 )   (1,592,429 )
             
Cash used in operating activities   (110,255 )   (467,127 )
             
Investing activities            
  Purchase of property and equipment   (15,437 )   (35,542 )
             
Cash used in investing activities   (15,437 )   (35,542 )
             
Financing activities            
  Advances in short-term debt   -     575,000  
  Repayment of short-term debt   -     (1,115,000 )
  Repayment of long-term debt   (5,673 )   (5,673 )
  Proceeds from stock options exercised for cash   81,000     826  
  Proceeds from private placement, net of issuance costs   -     1,989,199  
  Finance lease payments   (17,155 )   (20,167 )
             
Cash provided by financing activities   58,172     1,424,185  
             
Net increase (decrease) in cash during the period   (67,520 )   921,516  
             
Cash, beginning of period   1,646,138     381,544  
             
Effect of exchange rate changes on cash   (1,315 )   (7,893 )
             
Cash, end of period $ 1,577,303   $ 1,295,167  

FOR FURTHER INFORMATION PLEASE CONTACT:

David OuthwaiteVIQ Solutions Inc.President & CEO(905) 948-8266 ext. 250douthwaite@viqsolutions.com
OR
Karen HershVIQ Solutions Inc.Chief Financial Officer(905) 948-8266 ext. 240khersh@viqsolutions