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Press release from Marketwire

VIQ Solutions Reports First Quarter 2012 Results

Profitable quarter builds upon positive 2011 performance

Thursday, May 24, 2012

VIQ Solutions Reports First Quarter 2012 Results17:15 EDT Thursday, May 24, 2012MARKHAM, 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 QuarterAchieved 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 $0.6 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 $0.82 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 QuarterSuccessfully 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.Notes1. 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 InformationThe 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.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 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 StatementsThis 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 31,20122011AssetsCurrent assetsCash$1,577,303$1,646,138Trade and other receivables1,934,1611,330,474Inventories6,7757,025Prepaid expenses79,236123,2283,597,4753,106,865Non-current assetsRestricted cash150,260151,215Property and equipment716,742754,397Goodwill1,615,8691,621,395Deferred tax assets258,353260,001$6,338,699$5,893,873LiabilitiesCurrent liabilitiesTrade and other payables$1,171,753$951,687Provisions549,087584,870Short-term debt75,00075,000Unearned revenue245,666187,179Deferred lease incentives21,62821,766Current portion of obligations under finance lease51,46159,266Current portion of long-term debt22,69222,6922,137,2871,902,460Non-current liabilitiesProvisions174,538165,974Deferred lease incentives45,23450,964Obligations under finance lease36,17845,528Long-term debt65,08170,754Total liabilities2,458,3182,235,680EquityCapital stock11,578,21311,438,947Contributed surplus1,766,4531,781,433Accumulated other comprehensive income142,960158,960Deficit(9,607,245)(9,721,147)3,880,3813,658,193Total equity and liabilities$6,338,699$5,893,873VIQ Solutions Inc.Condensed Consolidated Interim Statements of Comprehensive Income(Expressed in Canadian dollars)(Unaudited)Three months ended March 3120122011Revenue$3,969,214$4,374,721Cost of sales2,286,5891,856,163Gross profit1,682,6252,518,558ExpensesSelling, general and administrative expenses1,391,7541,331,932Research and development expenses182,528205,5351,574,2821,537,467Income from operations108,343981,091Interest income9,4246,148Interest 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$930,829Exchange differences on translating foreign operations(16,000)(21,278)Comprehensive income for the period$97,902$909,551Net income per shareBasic and diluted$0.00$0.01Weighted average number of common shares outstanding - basic90,638,53887,531,195Weighted average number of common shares outstanding - diluted90,707,88691,085,570VIQ Solutions Inc.Condensed Consolidated Interim Statements of Cash Flows(Expressed in Canadian dollars)(Unaudited)Three months ended March 3120122011Cash provided by (used in):Operating activitiesNet income for the period$113,902$930,829Items not affecting cash:Depreciation51,05063,944Stock-based compensation43,286114,814Provisions8,56414,650Interest accretion on bridge loans-2,084Amortization of deferred lease incentive(5,868)(6,296)Unrealized foreign exchange loss (gain)(4,514)5,277Changes in non-cash operating working capital(316,675)(1,592,429)Cash used in operating activities(110,255)(467,127)Investing activitiesPurchase of property and equipment(15,437)(35,542)Cash used in investing activities(15,437)(35,542)Financing activitiesAdvances in short-term debt-575,000Repayment of short-term debt-(1,115,000)Repayment of long-term debt(5,673)(5,673)Proceeds from stock options exercised for cash81,000826Proceeds from private placement, net of issuance costs-1,989,199Finance lease payments(17,155)(20,167)Cash provided by financing activities58,1721,424,185Net increase (decrease) in cash during the period(67,520)921,516Cash, beginning of period1,646,138381,544Effect of exchange rate changes on cash(1,315)(7,893)Cash, end of period$1,577,303$1,295,167FOR FURTHER INFORMATION PLEASE CONTACT: David OuthwaiteVIQ Solutions Inc.President & CEO(905) 948-8266 ext. 250douthwaite@viqsolutions.comORKaren HershVIQ Solutions Inc.Chief Financial Officer(905) 948-8266 ext. 240khersh@viqsolutions.comwww.viqsolutions.com