VIQ Solutions Inc T.VQS

First Quarter 2012 Results

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 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. [e-mail]

OR

Karen HershVIQ Solutions Inc.Chief Financial Officer(905) 948-8266 ext. [e-mail]