VIQ Solutions Reports Third Quarter 2013 Results

MARKHAM, ONTARIO--(Marketwired - Nov. 21, 2013) - 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 and nine month periods ended September 30, 2013. Results are reported in Canadian dollars and are prepared in accordance with International Financial Reporting Standards ("IFRS").

"During the quarter, we successfully ramped up operations for our new transcription services contract with the Victoria Police with revenue to Spark & Cannon, assuming the options are extended, of AUS $8.9 million over the five year term based on the historical workflow supplied by the Victoria Police" said David Outhwaite, President and Chief Executive Officer of VIQ Solutions. "We continue to see substantial market activity in the transcription and recording services industry and have started to convert market opportunities into sustainable revenue growth".

Financial Highlights for the Quarter

• Revenue was $2.9 million and $10.2 million for the three and nine month periods ended September 30, 2013 as compared to $4.0 million and $11.6 million for the same periods in 2012, representing a decrease in revenue of 27% and 12% respectively. The decline in revenue relates to the loss of a material contract in Western Australia for our Spark & Cannon business in June 2013;
  
  
• Gross margin was 38% and 40% for the three and nine month periods ended September 30, 2013 as compared to 40% for the same periods in 2012;
  
  
• Selling and administrative expenses were $1.2 million and $4.0 million for the three and nine month periods ended September 30, 2013 as compared to $1.4 million and $4.3 million for the same periods in 2012, representing a decrease of 16% and 7% respectively;
  
  
• Research and development expenses remained relatively unchanged at $168,645 and $525,542 for the three and nine month periods ended September 30, 2013 as compared to $176,132 and $537,647 for the same periods in 2012 as we continue to invest in new and existing products and services;
  
  
• Adjusted EBITDA loss for the three and nine month periods ended September 30, 2013 was $201,203 and $247,493 as compared to positive adjusted EBITDA of $40,789 and $25,090 for the same periods in 2012; and
  
  
• Net loss for the three and nine month periods ended September 30, 2013 was $259,813 and $642,902 as compared to $24,282 and $156,793 for the same periods in 2012.
  

Business Highlights for the Quarter

• Spark & Cannon was awarded a contract by the Victoria Police for the provision of secure transcription services with an estimated revenue to Spark & Cannon, assuming the options are extended, of AUS $8.9 million over the five year term based on the historical workflow supplied by the Victoria Police;
  
  
• The Corporation obtained a short-term bridge loan with a face value of $200,000 bearing interest at a rate of 10% per annum. Included with the loan was the issuance of 200,000 non-transferrable common share purchase warrants which have an exercise price of $0.18 per common share and are exercisable for a one year period. The loan is repayable on the one-year anniversary, being July 2014 and is secured by a general security agreement covering all assets of the Corporation; and
  
  
• The Corporation has been awarded a contract by the Scottish Court Service to provide digital recording software and services for 148 criminal courtrooms throughout mainland Scotland and the islands. The contract has a term of three years with two options to extend for an additional year each by the Scottish Court Service.
  

Non-IFRS Measures

Adjusted EBITDA is a non-IFRS earnings measure which does not have any standardized meaning prescribed by IFRS and therefore may not be comparable to adjusted EBITDA presented by other companies. Adjusted EBITDA represents earnings before interest expense, income taxes, depreciation, amortization and restructuring expenses. 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 third quarter 2013 condensed consolidated interim financial statements and results of operations and Management's Discussion and Analysis of Results and Financial Condition for the three and nine month periods ended September 30, 2013 will be posted on VIQ Solutions' website (under Investor Relations) at www.viqsolutions.com and 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 third quarter 2013 condensed consolidated interim financial statements and the audited consolidated financial statements for the year ended December 31, 2012, 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

Certain statements included in this news release constitute forward looking statements or forward looking information under applicable securities legislation. Such forward looking statements or information are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes. Forward looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook. Forward looking statements or information in this news release include, but are not limited to, estimated revenue to Spark & Cannon from the newly awarded Victoria Police contract in the amount of AUS $8.9 million over the five year term of the contract.

Forward looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although VIQ Solutions believes that the expectations reflected in such forward looking statements or information are reasonable, undue reliance should not be placed on forward looking statements because VIQ Solutions can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this news release, assumptions have been made regarding, among other things, the workflow provided by the Victoria Police during the term of the contract to Spark & Cannon will be consistent (and not less) with past workflows and the contract with Victoria Police will continue through its initial term and be extended (without material amendment) for the two consecutive renewal periods. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used.

Forward looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by VIQ Solutions and described in the forward looking statements or information. These risks and uncertainties which may cause actual results to differ materially from the forward looking statements or information include, among other things: the Victoria Police contract terminates prior to its initial term or is not renewed as described herein, the workflows provided by Victoria Police are materially lower than previously experienced; and the revenues attributable to Spark & Cannon from this contract differ from those described herein. Readers are cautioned that the foregoing list is not exhaustive of all possible risks and uncertainties.

The forward looking statements or information contained in this news release are made as of the date hereof and VIQ Solutions undertakes no obligation to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or otherwise unless required by applicable securities laws. The forward looking statements or information contained in this news release are expressly qualified by this cautionary statement.

This press release, in particular the information in respect of anticipated revenues of Spark & Cannon from the Victoria Police contract, may contain Future Oriented Financial Information ("FOFI") within the meaning of applicable securities laws. The FOFI has been prepared by management of the Corporation to provide an outlook of the Corporation's activities and results. The FOFI has been prepared based on a number of assumptions including the assumptions discussed under the heading "Forward-Looking Statements". The actual results of operations of the Corporation and the resulting financial results may vary from the amounts set forth herein, and such variation may be material. The Corporation and its management believe that the FOFI has been prepared on a reasonable basis, reflecting the best estimates and judgments, and represent, to the best of management's knowledge and opinion.