VIQ Solutions Reports Second Quarter 2014 Results

MARKHAM, ONTARIO--(Marketwired - Aug. 18, 2014) - 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 six month periods ended June 30, 2014. Results are reported in Canadian dollars and are prepared in accordance with International Financial Reporting Standards ("IFRS").

"With the recent increase in business activity in the global market for large-scale integrated digital recording and management projects, our Q2 results continue the performance trend established in the first quarter, with year-over-year revenue growth in our computer products and services business unit," said David Outhwaite, Chief Executive Officer of VIQ Solutions. "With this momentum and our strengthening sales pipeline, we are well-positioned to deliver a strong second half of 2014."

Financial Highlights for the Quarter

• Revenue was $3.1 million and $6.1 million for the three and six month periods ended June 30, 2014 as compared to $3.4 million and $7.3 million for the same periods in 2013, representing a decrease in revenue of 9% and 16% respectively primarily due to the loss of a material contract in Western Australia for our Spark & Cannon business in June 2013;
  
  
• Revenue from the computer products and services business unit was $0.5 million and $1.2 million for the three and six month periods ended June 30, 2014 as compared to $0.3 million and $0.8 million for the same periods in 2013, representing an increase of 31% and 41% respectively;
  
  
• Gross margin from computer products and services was 77% and 75% for the three and six month periods ended June 30, 2014 as compared to 58% and 68% for the same periods in 2013. Gross margin from our transcription and reporting services business unit was 29% for the three and six month periods ended June 30, 2014 as compared to 37% for the same periods in 2013;
  
  
• Selling and administrative expenses were $1.1 million and $2.3 million for the three and six month periods ended June 30, 2014 as compared to $1.4 million and $2.8 million from the same periods in 2013 due to the operational efficiencies that were implemented in 2013;
  
  
• Research and development expenses were $148,204 and $268,602 for the three and six month periods ended June 30, 2014 as compared to $173,273 and $356,897 for the previous year representing a decrease of 15% and 25% respectively due to offsetting research and development tax credits received in 2014;
  
  
• EBITDA loss for the three and six month periods ended June 30, 2014 was $109,561 and $125,489 as compared to $438,666 and $267,490 for the same periods in 2013. Adjusted EBITDA loss for the three and six month periods ended June 30, 2014 was $109,561 and $125,489 as compared to $217,466 and $46,290 for the same periods in 2013;
  
  
• Net loss for the three and six month periods ended June 30, 2014 was $179,778 and $260,859 as compared to $496,572 and $383,089 for the same periods in 2013; and
  
  
• During the period, the Corporation obtained a short-term bridge loan with a face value of $700,000 bearing interest at a rate of 13% per annum. The loan is repayable on the one-year anniversary and is secured by a general security agreement covering all assets of the Corporation. A portion of the proceeds were used to retire the principal and interest owing on the existing $200,000 secured bridge loan.
  
  

Non-IFRS Measures

EBITDA and Adjusted EBITDA are non-IFRS earnings measures which do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to EBITDA or adjusted EBITDA presented by other companies. These measures are important to management since they are 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 these non-IFRS financial measures should not be construed as an alternative to other measures of financial performance calculated in accordance with IFRS. For a reconciliation of EBITDA and Adjusted EBITDA, please refer to Management's Discussion & Analysis of Results and Financial Condition for the three and six month periods ended June 30, 2014.

Additional Information

The unaudited second quarter 2014 condensed consolidated interim financial statements and results of operations and Management's Discussion and Analysis of Results and Financial Condition for the three and six month periods ended June 30, 2014 will be posted 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 second quarter 2014 condensed consolidated interim financial statements and the audited consolidated financial statements for the year ended December 31, 2013, 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, management's targets for the Corporation's growth in 2014.

Forward looking statements or information is 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 Corporation's recent initiatives, and that sales and prospects may provide incremental value for shareholders. 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 may cause actual results to differ materially from the forward looking statements or information. Readers are cautioned that the foregoing list is not exhaustive of all possible risks and uncertainties.