MARKHAM, ONTARIO -- (Marketwired) -- 11/20/14 -- 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, 2014. Results are reported in Canadian dollars and are prepared in accordance with International Financial Reporting Standards ("IFRS").
Financial Highlights for the Quarter
-- Revenue was $3.1 million and $9.3 million for the three and nine month
periods ended September 30, 2014 as compared to $2.9 million and $10.2
million for the same periods in 2013, representing an increase in
revenue of 8% and a decrease in revenue of 9% for the three and nine
month periods respectively;
-- Revenue from the computer products and services business unit was $0.5
million and $1.6 million for the three and nine month periods ended
September 30, 2014 as compared to $0.8 million and $1.6 million for the
same periods in 2013, representing a decrease of 40% for the three month
period and a slight increase of 2% for the nine month period;
-- Gross margin from computer products and services was 75% for the three
and nine month periods ended September 30, 2014 as compared to 70% and
69% for the same periods in 2013. Gross margin from our transcription
and recording services business unit was 28% and 29% for the three and
nine month periods ended September 30, 2014 as compared to 27% and 35%
for the same periods in 2013;
-- Selling and administrative expenses were $1.2 million and $3.5 million
for the three and nine month periods ended September 30, 2014 as
compared to $1.2 million and $4.0 million from the same periods in 2013.
The decrease in selling and administrative expenses for the nine month
period can be attributed to the operational efficiencies that were
implemented in 2013 by both business units;
-- Research and development expenses were $172,726 and $441,328 for the
three and nine month periods ended September 30, 2014 as compared to
$168,645 and $525,542 for the previous year representing a slight
increase of 2% and a decrease of 16% for the three and nine month
periods respectively. The decrease in research and development expenses
can be attributed to the timing of offsetting research and development
tax credits received in 2014;
-- EBITDA loss for the three and nine month periods ended September 30,
2014 was $202,660 and $328,149 as compared to $201,203 and $468,693 for
the same periods in 2013. Adjusted EBITDA loss for the three and nine
month periods ended September 30, 2014 was $202,660 and $328,149 as
compared to $201,203 and $247,493 for the same periods in 2013; and
-- Net loss for the three and nine month periods ended September 30, 2014
was $280,811 and $541,671 as compared to $259,813 and $642,902 for the
same periods in 2013.
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 nine month periods ended September 30, 2014.
Additional Information
The unaudited third 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 nine month periods ended September 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 third 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.
VIQ Solutions Inc.
Condensed Consolidated Interim Balance Sheets
(Expressed in Canadian dollars)
(Unaudited)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
September 30, December 31,
2014 2013
---------------------------------------------------------------------------
Assets
Current assets
Cash $ 934,579 $ 789,197
Trade and other receivables 1,330,032 1,166,612
Inventories 1,780 4,880
Prepaid expenses 86,552 73,913
---------------------------------------------------------------------------
2,352,943 2,034,602
Non-current assets
Restricted cash 112,549 146,753
Property and equipment 594,326 668,832
Goodwill 1,568,311 1,543,695
Deferred tax assets 291,756 282,993
---------------------------------------------------------------------------
$ 4,919,885 $ 4,676,875
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Liabilities
Current liabilities
Trade and other payables $ 1,150,070 $ 983,364
Short-term debt 700,000 197,994
Provisions 495,044 434,108
Unearned revenue 268,695 219,769
Deferred lease incentives 14,006 18,685
Current portion of obligations under
finance lease 101,747 98,396
Current portion of long-term debt 22,692 22,692
---------------------------------------------------------------------------
2,752,254 1,975,008
Non-current liabilities
Provisions 109,192 106,752
Deferred lease incentives - 8,485
Obligations under finance lease 102,911 157,502
Long-term debt 8,351 25,370
---------------------------------------------------------------------------
Total liabilities 2,972,708 2,273,117
---------------------------------------------------------------------------
Equity
Capital stock 11,578,213 11,578,213
Contributed surplus 1,898,824 1,865,695
Accumulated other comprehensive income
(loss) 43,800 (8,161)
Deficit (11,573,660) (11,031,989)
---------------------------------------------------------------------------
1,947,177 2,403,758
---------------------------------------------------------------------------
Total equity and liabilities $ 4,919,885 $ 4,676,875
---------------------------------------------------------------------------
---------------------------------------------------------------------------
VIQ Solutions Inc.
Condensed Consolidated Interim Statements of Comprehensive Income and Loss
(Expressed in Canadian dollars)
(Unaudited)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Three months ended Sept. 30 Nine months ended Sept. 30
2014 2013 2014 2013
---------------------------------------------------------------------------
Revenue $ 3,131,829 $ 2,897,130 $ 9,279,478 $ 10,214,210
Cost of sales 2,032,077 1,781,996 5,840,766 6,126,019
---------------------------------------------------------------------------
Gross profit 1,099,752 1,115,134 3,438,712 4,088,191
---------------------------------------------------------------------------
Expenses
Selling and
administrative
expenses 1,186,104 1,195,183 3,475,426 3,972,497
Restructuring
expenses - - - 221,200
Research and
development
expenses 172,726 168,645 441,328 525,542
---------------------------------------------------------------------------
1,358,830 1,363,828 3,916,754 4,719,239
---------------------------------------------------------------------------
Loss from
operations (259,078) (248,694) (478,042) (631,048)
Finance income
(loss)
Interest income 3,464 5,667 9,311 22,623
Interest expense (32,230) (12,305) (70,216) (26,251)
Foreign exchange
gain (loss) 7,033 (4,481) (2,724) (8,226)
---------------------------------------------------------------------------
Net finance income
(loss) (21,733) (11,119) (63,629) (11,854)
---------------------------------------------------------------------------
Net loss for the
period $ (280,811) $ (259,813) $ (541,671) $ (642,902)
Item that may be
reclassified to
profit or loss:
Exchange
differences on
translating
foreign operations (46,991) (7,093) 51,961 (138,801)
---------------------------------------------------------------------------
Comprehensive loss
for the period $ (327,802) $ (266,906) $ (489,710) $ (781,703)
---------------------------------------------------------------------------
Net loss per share
Basic and diluted $ (0.00) $ (0.00) $ (0.01) $ (0.01)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Weighted average
number of common
shares outstanding
- basic 90,957,000 90,957,000 90,957,000 90,957,000
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Weighted average
number of common
shares outstanding
- diluted 90,957,000 90,957,000 90,957,000 90,957,000
---------------------------------------------------------------------------
---------------------------------------------------------------------------
VIQ Solutions Inc.
Condensed Consolidated Interim Statements of Cash Flows
(Expressed in Canadian dollars)
(Unaudited)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Sept. 30 Nine months ended Sept. 30
2014 2013 2014 2013
---------------------------------------------------------------------------
Cash provided
by (used in):
Operating
activities
Net loss for
the period $ (280,811) $ (259,813) $ (541,671) $ (642,902)
Items not
affecting
cash:
Depreciation 45,922 46,305 143,306 147,958
Stock-based
compensation 9,866 7,850 33,129 36,598
Loss (gain) on
disposal of
property and
equipment - (703) - 64,877
Provisions 9,253 9,471 2,440 (13,797)
Interest
accretion on
bridge loan - 665 2,006 665
Amortization
of deferred
lease
incentive (5,195) (4,982) (13,164) (18,479)
Unrealized
foreign
exchange loss
(gain) 2,476 (13,122) (18,301) (7,570)
Changes in
non-cash
working
capital 365,383 (278,096) 105,965 350,232
---------------------------------------------------------------------------
Cash from (used
in) operating
activities 146,894 (492,425) (286,290) (82,418)
---------------------------------------------------------------------------
Investing
activities
Purchase of
property and
equipment (9,000) (15,406) (26,575) (43,655)
Change in
restricted
cash (3,443) - 38,747 -
---------------------------------------------------------------------------
Cash from (used
in) investing
activities (12,443) (15,406) 12,172 (43,655)
---------------------------------------------------------------------------
Financing
activities
Advances of
short-term
debt - 200,000 700,000 200,000
Repayment of
short-term
debt - - (200,000) -
Repayment of
long-term
debt (5,673) (5,673) (17,019) (17,019)
Finance lease
payments (25,008) (16,447) (83,783) (46,587)
---------------------------------------------------------------------------
Cash provided
by (used in)
financing
activities (30,681) 177,880 399,198 136,394
---------------------------------------------------------------------------
Net increase
(decrease) in
cash during
the period 103,770 (329,951) 125,080 10,321
Cash, beginning
of period 836,380 1,414,575 789,197 1,129,107
Effect of
exchange rate
changes on
cash (5,571) 10,131 20,302 (44,673)
---------------------------------------------------------------------------
Cash, end of
period $ 934,579 $ 1,094,755 $ 934,579 $ 1,094,755
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Contacts:
VIQ Solutions Inc.
David Outhwaite
Chief Executive Officer
(905) 948-8266 ext. 250
douthwaite@viqsolutions.com
VIQ Solutions Inc.
Karen Hersh
Chief Financial Officer
(905) 948-8266 ext. 240
khersh@viqsolutions.com
