VIQ Solutions Reports First Quarter 2013 Results

MARKHAM, ONTARIO--(Marketwired - May 22, 2013) - VIQ Solutions Inc. (TSX VENTURE:VQS) ("VIQ Solutions" or the "Corporation"), 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, 2013. Results are reported in Canadian dollars and are prepared in accordance with International Financial Reporting Standards ("IFRS").

"VIQ Solutions achieved solid financial results in the quarter resulting in 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 2012."

Financial Highlights for the Quarter

• Revenue was $3.9 million for the three month period ended March 31, 2013 as compared to $4.0 million for the same period in 2012, representing a decrease in revenue of 2%;

• Selling and administrative expenses were $1.4 million three month period ended March 31, 2013, unchanged from the same period in 2012;

• Research and development expenses were $183,624 for the three month period ended March 31, 2013 as compared to $182,528 for the previous year as we continue to invest in new and existing products and services;

• EBITDA for the three month period ended March 31, 2013 was $171,176 as compared to $173,518 for the same period in 2012;

• Net income for the three month period ended March 31, 2013 was $113,483 as compared to $113,902 for the same period in 2012; and

• Cash flows from operating activities were $447,757 for the three month period ended March 31, 2013 as compared to a cash use of $110,255 for the same period in 2012 primarily due to changes in investment in working capital.

Business Highlights for the Quarter

• Improved ranking on the 2013 Branham300 list of Top 250 Canadian Information and Communication Technology (ICT) companies, rising 16 spots in this years' edition to rank 149^th;

• Released our new product VIQ Infinit, an innovative digital media capture and management platform which offers seamless integration with advanced high-definition digital video systems, along with easily accessible industry and language profiles for expanded market coverage worldwide; and

• Announced plans to implement cost efficiencies to reduce Spark & Cannon's general and administrative expenses by approximately 33%, through a combination of staff count reductions and decreasing the amount of office space to be leased by Spark & Cannon while preserving all of the strategic initiatives surrounding our core competencies.

Note

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 2013 condensed consolidated interim 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, 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 first 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

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, 2013	December 31, 2012
Assets
Current assets
	Cash	$ 1,552,655	$ 1,129,107
	Trade and other receivables	2,102,705	1,989,208
	Inventories	6,008	6,287
	Prepaid expenses	75,393	112,980
		3,736,761	3,237,582
Non-current assets
	Restricted cash	158,945	155,190
	Property and equipment	679,131	700,110
	Goodwill	1,635,210	1,614,278
	Deferred tax assets	231,339	225,877
		$ 6,441,386	$ 5,933,037
Liabilities
Current liabilities
	Trade and other payables	$ 1,329,303	$ 1,078,996
	Income taxes payable	132,114	128,995
	Provisions	556,202	622,727
	Unearned revenue	293,230	147,291
	Deferred lease incentives	21,314	20,966
	Current portion of obligations under finance lease	59,455	60,103
	Current portion of long-term debt	22,692	22,692
		2,414,310	2,081,770
Non-current liabilities
	Provisions	145,274	131,615
	Deferred lease incentives	24,929	29,582
	Obligations under finance lease	61,834	70,929
	Long-term debt	42,389	48,062
Total liabilities		2,688,736	2,361,958
Equity
Capital stock		11,578,213	11,578,213
Contributed surplus		1,839,861	1,818,206
Accumulated other comprehensive income		188,685	142,252
Deficit		(9,854,109)	(9,967,592)
		3,752,650	3,571,079
Total equity and liabilities		$ 6,441,386	$ 5,933,037

VIQ Solutions Inc. Condensed Consolidated Interim Statements of Comprehensive Income (Expressed in Canadian dollars) (Unaudited)
		Three months ended March 31
		2013	2012
Revenue		$ 3,906,662	$ 3,969,214
Cost of sales		2,246,161	2,286,589
Gross profit		1,660,501	1,682,625
Expenses
	Selling, general and administrative expenses	1,354,314	1,391,754
	Research and development expenses	183,624	182,528
		1,537,938	1,574,282
Income from operations		122,563	108,343
	Interest income	7,484	9,424
	Interest expense	(7,699)	(8,566)
	Foreign exchange gain (loss)	(8,865)	4,701
Net finance income (loss)		(9,080)	5,559
Net income for the period		$ 113,483	$ 113,902
Item that may be reclassified to profit or loss:
	Exchange differences on translating foreign operations	46,433	(16,000)
Comprehensive income for the period		$ 159,916	$ 97,902
Net income per share
	Basic and diluted	$ 0.00	$ 0.00
Weighted average number of common shares outstanding - basic		90,957,000	90,638,538
Weighted average number of common shares outstanding - diluted		90,957,000	90,707,886

VIQ Solutions Inc. Condensed Consolidated Interim Statements of Cash Flows (Expressed in Canadian dollars) (Unaudited)
		Three months ended March 31
		2013	2012
Cash provided by (used in):
Operating activities
Net income for the period		$ 113,483	$ 113,902
Items not affecting cash:
	Depreciation	49,994	51,050
	Stock-based compensation	21,655	43,286
	Provisions	13,659	8,564
	Amortization of deferred lease incentive	(4,305)	(5,868)
	Unrealized foreign exchange loss (gain)	(817)	(4,514)
	Changes in non-cash operating working capital	254,088	(316,675)
Cash from (used in) operating activities		447,757	(110,255)
Investing activities
	Purchase of property and equipment	(16,257)	(15,437)
Cash used in investing activities		(16,257)	(15,437)
Financing activities
	Repayment of long-term debt	(5,673)	(5,673)
	Proceeds from stock options exercised for cash	-	81,000
	Finance lease payments	(15,958)	(17,155)
Cash provided by (used for) financing activities		(21,631)	58,172
Net increase (decrease) in cash during the period		409,869	(67,520)
Cash, beginning of period		1,129,107	1,646,138
Effect of exchange rate changes on cash		13,679	(1,315)
Cash, end of period		$ 1,552,655	$ 1,577,303