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Press release from Marketwire

VIQ Solutions Reports Second Quarter 2012 Results

Tuesday, August 21, 2012

VIQ Solutions Reports Second Quarter 2012 Results17:00 EDT Tuesday, August 21, 2012MARKHAM, ONTARIO--(Marketwire - Aug. 21, 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 and six month periods ended June 30, 2012. Results are reported in Canadian dollars and are prepared in accordance with International Financial Reporting Standards ("IFRS")."While revenue from computer products and services did not meet expectations this quarter, we continue to see a vibrant market for our products and services," said David Outhwaite, President and Chief Executive Officer of VIQ Solutions. "Market activity continues to grow on a global basis in the digital media capture and management industry and we are working to convert these market opportunities into sustainable revenue growth."Financial HighlightsRevenue was $3.7 million and $7.7 million for the three and six month periods ended June 30, 2012 as compared to $3.8 million and $8.2 million for the same periods in 2011, representing a decrease in revenue 3% and 6% respectively. 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; Revenue from our transcription and recording services business unit was $3.3 million and $6.5 million for the three and six month periods ended June 30, 2012, as compared to $3.2 million and $5.9 million for the same periods in 2011 representing an increase of 3% and 11% respectively, due to an increase in business activity from both of our transcription businesses; Selling and administrative expenses were $1.4 million and $2.8 million for the three and six month periods ended June 30, 2012 as compared to $1.4 million and $2.7 million for the same periods in 2011 as the Corporation continues to focus its selling efforts on global enterprise software contracts; EBITDA loss for the three and six month periods ended June 30, 2012 was $189,218 and $15,699 as compared to $134,134 and an EBITDA gain of $910,143 for the same periods in 2011; Net loss for the three and six month periods ended June 30, 2012 was $246,414 and $132,511 as compared to $237,684 and a net income of $693,145 for the same periods in 2011; and Cash flow from operating activities was $115,078 and $4,822 for the three and six month periods ended June 30, 2012 as compared to $1,266,968 and $799,841 for the three and six month periods ended June 30, 2011. 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 second quarter 2012 interim consolidated 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, 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 second 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)June 30, 2012December 31, 2011AssetsCurrent assetsCash$1,645,290$1,646,138Trade and other receivables1,528,3811,330,474Inventories6,9547,025Prepaid expenses133,242123,2283,313,8673,106,865Non-current assetsRestricted cash156,569151,215Property and equipment700,838754,397Goodwill1,621,9811,621,395Deferred tax assets260,175260,001$6,053,430$5,893,873LiabilitiesCurrent liabilitiesTrade and other payables$1,088,934$951,687Provisions586,875584,870Short-term debt75,00075,000Unearned revenue224,251187,179Deferred lease incentives21,78021,766Current portion of obligations under finance lease47,58259,266Current portion of long-term debt22,69222,6922,067,1141,902,460Non-current liabilitiesProvisions189,964165,974Deferred lease incentives40,10850,964Obligations under finance lease31,84445,528Long-term debt59,40870,754Total liabilities2,388,4382,235,680EquityCapital stock11,578,21311,438,947Contributed surplus1,783,7041,781,433Accumulated other comprehensive income156,733158,960Deficit(9,853,658)(9,721,147)3,664,9923,658,193Total equity and liabilities$6,053,430$5,893,873VIQ Solutions Inc.Condensed Consolidated Interim Statements of Comprehensive Income and Loss(Expressed in Canadian dollars)(Unaudited)Three months ended June 30Six months ended June 302012201120122011Revenue$3,697,996$3,809,156$7,667,210$8,183,877Cost of sales2,316,9152,413,9444,603,5044,270,107Gross profit1,381,0811,395,2123,063,7063,913,770ExpensesSelling, general and administrative expenses1,449,4691,401,8152,841,2232,733,747Research and development expenses178,987184,700361,515390,2351,628,4561,586,5153,202,7383,123,982Income (loss) from operations(247,375)(191,303)(139,032)789,788Interest income5,9433,67115,3679,819Interest expense(6,557)(38,920)(15,123)(88,424)Foreign exchange gain (loss)1,575(11,132)6,277(18,038)Net finance income (loss)$961$(46,381)$6,521$(96,643)Net income (loss) for the period$(246,414)$(237,684)$(132,511)$693,145Exchange differences on translating foreign operations13,77366,230(2,227)44,952Comprehensive income (loss) for the period$(232,641)$(171,454)$(134,738)$738,097Net income (loss) per shareBasic and diluted$(0.00)$(0.00)$(0.00)$0.01Weighted average number of common shares outstanding - basic90,957,00088,168,62690,797,76987,851,671Weighted average number of common shares outstanding - diluted90,957,00088,168,62690,797,76991,597,250VIQ Solutions Inc.Condensed Consolidated Interim Statements of Cash Flows(Expressed in Canadian dollars)(Unaudited)Three months ended June 30Six months ended June 302012201120122011Cash provided by (used in):Operating activitiesNet income (loss) for the period$(246,414)$(237,684)$(132,511)$693,145Items not affecting cash:Depreciation50,63964,630101,689128,574Stock-based compensation17,25136,12860,537150,942Provisions15,426(10,802)23,9903,848Interest accretion on bridge loans-2,106-4,190Amortization of deferred lease incentive(4,974)(2,984)(10,842)(9,280)Unrealized foreign exchange loss (gain)(1,999)37,285(6,515)42,564Gain on sale of property and equipment-(4,773)-(4,773)Changes in non-cash operating working capital285,1491,383,062(31,526)(209,369)Cash from operating activities115,0781,266,9684,822799,841Investing activitiesPurchase of property and equipment(25,005)(18,416)(40,442)(53,959)Increase in restricted cash(5,250)(5,089)(5,250)(5,089)Cash used in investing activities(30,255)(23,505)(45,692)(59,048)Financing activitiesAdvances in short-term debt---575,000Repayment of short-term debt---(1,115,000)Repayment of long-term debt(5,673)(5,673)(11,346)(11,346)Proceeds from stock options exercised for cash-2,00081,0002,827Proceeds from private placement, net of issuance costs---1,989,198Finance lease payments(15,997)(19,685)(33,152)(39,852)Cash provided by (used in) financing activities(21,670)(23,358)36,5021,400,827Net increase (decrease) in cash during the period63,1531,220,105(4,368)2,141,620Cash, beginning of period1,577,3031,295,1671,646,138381,544Effect of exchange rate changes on cash4,83415,5773,5207,685Cash, end of period$1,645,290$2,530,849$1,645,290$2,530,849FOR 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