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Press release from Marketwire

VIQ Solutions Reports Third Quarter 2012 Results

Wednesday, November 21, 2012

VIQ Solutions Reports Third Quarter 2012 Results17:00 EST Wednesday, November 21, 2012MARKHAM, ONTARIO--(Marketwire - Nov. 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 nine month periods ended September 30, 2012. Results are reported in Canadian dollars and are prepared in accordance with International Financial Reporting Standards ("IFRS")."After two relatively slow quarters for the computer products and services industry, we have started to see a resurgence in business activity in the global market due to the increased market demand for digital recording in various market verticals including the medical, insurance, law enforcement, military and transportation industries," said David Outhwaite, President and Chief Executive Officer of VIQ Solutions. "Our pipeline of opportunities 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 significant contract wins."Financial HighlightsRevenue was $4.0 million and $11.6 million for the three and nine month periods ended September 30, 2012 as compared to $3.7 million and $11.9 million for the same periods in 2011; Revenue from our transcription and recording services business unit was $3.5 million and $10.0 million for the three and nine month periods ended September 30, 2012, as compared to $3.0 million and $8.9 million for the same periods in 2011 representing an increase of 17% and 13% respectively, due to an increase in business activity from both of our transcription businesses; Selling and administrative expenses were $1.4 million and $4.3 million for the three and nine month periods ended September 30, 2012 as compared to $1.4 million and $4.1 million for the same periods in 2011 as the Corporation continues to focus its selling efforts on global enterprise software contracts; EBITDA1 for the three and nine month periods ended September 30, 2012 was $40,789 and $25,090 as compared to $1,839 and $911,982 for the same periods in 2011; Net loss for the three and nine month periods ended September 30, 2012 was $24,282 and $156,793 as compared to $89,771 and a net income of $603,374 for the same periods in 2011; and Cash flow used in operating activities was $53,238 and $48,416 for the three and nine month periods ended September 30, 2012 as compared to $254,825 and an inflow of $545,016 for the three and nine month periods ended September 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 third quarter 2012 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, 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 third quarter 2012 consolidated 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)September 30,December 31,20122011(Audited)AssetsCurrent assetsCash$1,538,219$1,646,138Trade and other receivables1,700,3811,330,474Inventories7,6727,025Prepaid expenses143,831123,2283,390,1033,106,865Non-current assetsRestricted cash153,389151,215Property and equipment706,585754,397Goodwill1,604,2301,621,395Deferred tax assets254,888260,001$6,109,195$5,893,873LiabilitiesCurrent liabilitiesTrade and other payables$1,149,992$951,687Provisions595,456584,870Short-term debt75,00075,000Unearned revenue230,700187,179Deferred lease incentives21,33821,766Current portion of obligations under finance lease55,82359,266Current portion of long-term debt22,69222,6922,151,0011,902,460Non-current liabilitiesProvisions184,504165,974Deferred lease incentives33,95850,964Obligations under finance lease66,39245,528Long-term debt53,73570,754Total liabilities2,489,5902,235,680EquityCapital stock11,578,21311,438,947Contributed surplus1,800,9551,781,433Accumulated other comprehensive income118,377158,960Deficit(9,877,940)(9,721,147)3,619,6053,658,193Total equity and liabilities$6,109,195$5,893,873VIQ Solutions Inc.Condensed Consolidated Interim Statements of Comprehensive Income and Loss(Expressed in Canadian dollars)(Unaudited)Three months ended Sept. 30Nine months ended Sept. 302012201120122011Revenue$3,963,228$3,667,248$11,630,438$11,851,125Cost of sales2,383,5052,289,5926,987,0096,559,699Gross profit1,579,7231,377,6564,643,4295,291,426ExpensesSelling, general and administrative expenses1,420,9001,402,7074,262,1234,136,454Research and development expenses176,132131,070537,647521,3051,597,0321,533,7774,799,7704,657,759Income (loss) from operations(17,309)(156,121)(156,341)633,667Interest income9,6315,59524,99815,414Interest expense(8,827)(34,556)(23,950)(122,980)Foreign exchange gain (loss)(7,777)95,311(1,500)77,273Net finance income (loss)(6,973)66,350(452)(30,293)Net income (loss) for the period$(24,282)$(89,771)$(156,793)$603,374Exchange differences on translating foreign operations(38,356)(69,639)(40,583)(24,687)Comprehensive income (loss) for the period$(62,638)$(159,410)$(197,376)$578,687Net income (loss) per shareBasic and diluted$(0.00)$(0.00)$(0.00)$0.01Weighted average number of common shares outstanding - basic90,957,00090,155,53390,851,23488,628,064Weighted average number of common shares outstanding - diluted90,957,00090,155,53390,851,23490,814,242VIQ Solutions Inc.Condensed Consolidated Interim Statements of Cash Flows(Expressed in Canadian dollars)(Unaudited)Three months ended Sept. 30Nine months ended Sept. 302012201120122011Cash provided by (used in):Operating activitiesNet income (loss) for the period$(24,282)$(89,771)$(156,793)$603,374Items not affecting cash:Depreciation56,24457,054157,933185,628Stock-based compensation17,25136,12877,788187,070Provisions(5,460)12,91718,53016,765Interest accretion on bridge loans-2,130-6,320Amortization of deferred lease incentive(5,161)(7,089)(16,003)(16,369)Unrealized foreign exchange loss (gain)13,049(28,198)6,53414,365Gain on sale of property and equipment2,341(30)2,341(4,803)Changes in non-cash operating working capital(107,220)(237,966)(138,746)(447,334)Cash from operating activities(53,238)(254,825)(48,416)545,016Investing activitiesPurchase of property and equipment(8,573)(24,904)(49,015)(78,863)Decrease (increase) in restricted cash102106(5,148)(4,983)Cash used in investing activities(8,471)(24,798)(54,162)(83,846)Financing activitiesAdvances in short-term debt---575,000Repayment of short-term debt-(575,000)-(1,690,000)Repayment of long-term debt(5,673)(205,673)(17,019)(217,019)Proceeds from stock options exercised for cash-394,25081,000397,075Proceeds from private placement, net of issuance costs---1,989,200Finance lease payments(17,849)(16,348)(51,001)(56,200)Cash provided by (used in) financing activities(23,522)(402,771)12,980998,056Net increase (decrease) in cash during the period(85,231)(682,394)(89,598)1,459,226Cash, beginning of period1,645,2902,530,8491,646,138381,544Effect of exchange rate changes on cash(21,840)(4,561)(18,321)3,124Cash, end of period$1,538,219$1,843,894$1,538,219$1,843,894FOR FURTHER INFORMATION PLEASE CONTACT: Contact Information: VIQ Solutions Inc.David OuthwaitePresident & CEO(905) 948-8266 ext. 250douthwaite@viqsolutions.comVIQ Solutions Inc.Karen HershChief Financial Officer(905) 948-8266 ext. 240khersh@viqsolutions.comwww.viqsolutions.com