VIQ Solutions Reports Fourth Quarter and Full Year 2013 Results
MARKHAM, ONTARIO--(Marketwired - Apr 10, 2014) - 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
twelve month periods ended December 31, 2013. Results are reported
in Canadian dollars and, except as otherwise noted herein, are
prepared in accordance with International Financial Reporting
Standards ("IFRS").
"VIQ Solutions
underwent many significant changes in 2013 and emerged as a
stronger and more dynamic company," said David Outhwaite, President
and Chief Executive Officer of VIQ Solutions. "In 2014, with a
healthy and focused sales pipeline and an unmatched suite of
software and service solutions, we are well positioned for growth
and focused on increasing value for our shareholders."
2013 Business
Highlights
- 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;
- Awarded a contract by the Scottish Court Service to provide
digital recording software and services for 148 criminal courtrooms
throughout mainland Scotland and the islands. The contract has a
term of three years with two one year renewal options by the
Scottish Court Service;
- Awarded a contract by the Victoria Police for the provision of
secure transcription services with an estimated revenue to the
Corporation's wholly-owned subsidiary Spark & Cannon, assuming
the options are extended, of up to AUS $8.9 million over the five
year term based on the historical workflow supplied by the Victoria
Police;
- Awarded a contract by the Australian Capital Territory for the
provision of transcription and recording services with an estimated
revenue to Spark & Cannon, assuming the options are extended,
of up to AUS $4.6 million over the five year term based on the
historical workflow supplied by the Australian Capital Territory;
and
- Implemented 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 the company's core
competencies.
Annual Results
Revenue was $12.7
million for the year ended December 31, 2013 as compared to $15.8
million for the year ended December 31, 2012, representing a
decrease in revenue of $3.1 million or 20%. Gross profit for the
year ended December 31, 2013 was $4.9 million as compared to $6.3
million for the year ended December 31, 2012, down 22%. Gross
profit expressed as a percentage of revenues was 39% in 2013 as
compared to 40% in 2012. Net loss was $1,064,397 for the year or
$0.01 per share as compared to $246,445 or $0.00 per share for the
previous year. EBITDA loss for the year ended December 31, 2013 was
$904,887 as compared to positive EBITDA of $130,992 for 2012. Cash
flows used in operating activities were $341,292 for the year ended
December 31, 2013 as compared to $347,911 for the year ended
December 31, 2012.
Fourth Quarter
Results
Revenues decreased
from $4.2 million in the fourth quarter of 2012 to $2.5 million in
the fourth quarter of 2013 or 40% due to the loss of revenue and
associated margin from a material contract in Western Australia for
our Spark & Cannon business in June 2013, partially offset by
an increase in revenue in our computer products and services
business unit. Our gross margin for the quarter was 34%, down from
40% for the same period in 2012 primarily due to the lower margins
from our Spark & Cannon division. Selling and administrative
expenses decreased from $1.5 million for the fourth quarter of 2012
to $1.2 million for the fourth quarter of 2013 due to our second
quarter restructuring initiatives in connection with Spark &
Cannon. EBITDA loss for the fourth quarter ended December 31, 2013
was $247,016 as compared to positive EBITDA $105,902 for the same
period in 2012 due to weaker performance by our transcription
businesses. Net loss was $421,495 for the three month period ended
December 31, 2013 as compared to $89,652 for the three month period
ended December 31, 2012. Cash used in operations was $258,873 for
the fourth quarter of 2013 as compared to $299,494 for the same
period in 2012 as we reduced our investment in working capital in
the fourth quarter of 2013.
Additional
Information
Detailed financial
information and Management's Discussion and Analysis of Results and
Financial Condition for the year ended December 31, 2013 will be
posted on VIQ Solution's website (under Investor Relations) at
www.viqsolutions.com and on the SEDAR website at www.sedar.com. The
financial information included in this news release is qualified in
its entirety and should be read together with 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.
Non-IFRS
Measures
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.
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 and
estimated revenue to Spark & Cannon from the awarded Victoria
Police and Australian Capital Territory contracts.
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, sales and prospects may provide incremental value for
shareholders, the workflow provided by the Victoria Police and the
Australian Capital Territory during the term of the contract to
Spark & Cannon will be consistent (and not less) with past
workflows and the contracts will continue through its initial term
and be extended (without material amendment) for the maximum
renewal periods. 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 which may cause actual results to differ materially
from the forward looking statements or information include, among
other things: the Corporation is not able to realize any increased
value to shareholders, the contracts described herein terminate
prior to their initial term or are not renewed as described herein,
the workflows provided are materially lower than previously
experienced; and the revenues attributable to Spark & Cannon
from these contracts differ from those described herein. Readers
are cautioned that the foregoing list is not exhaustive of all
possible risks and uncertainties.
The forward looking
statements or information contained in this news release are made
as of the date hereof and VIQ Solutions undertakes no obligation to
update publicly or revise any forward looking statements or
information, whether as a result of new information, future events
or otherwise unless required by applicable securities laws. The
forward looking statements or information contained in this news
release are expressly qualified by this cautionary statement.
This press release,
in particular the information in respect of anticipated revenues of
Spark & Cannon from the Victoria Police and Australia Capital
Territory contracts, may contain Future Oriented Financial
Information ("FOFI") within the meaning of applicable securities
laws. The FOFI has been prepared by management of the Corporation
to provide an outlook of the Corporation's activities and results.
The FOFI has been prepared based on a number of assumptions
including the assumptions discussed under the heading
"Forward-Looking Statements". The actual results of operations of
the Corporation and the resulting financial results, including
revenue associated from such contracts, may vary from the amounts
set forth herein, and such variation may be material. The
Corporation and its management believe that the FOFI has been
prepared on a reasonable basis, reflecting the best estimates and
judgments.
VIQ Solutions Inc. |
|
Consolidated Balance Sheets |
|
(Expressed in Canadian dollars) |
|
(Audited) |
|
|
December 31, |
|
|
December 31, |
|
|
|
2013 |
|
|
2012 |
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Cash |
$ |
789,197 |
|
$ |
1,129,107 |
|
|
Trade
and other receivables |
|
1,166,612 |
|
|
1,989,208 |
|
|
Inventories |
|
4,880 |
|
|
6,287 |
|
|
Prepaid expenses |
|
73,913 |
|
|
112,980 |
|
|
|
2,034,602 |
|
|
3,237,582 |
|
Non-current assets |
|
|
|
|
|
|
|
Restricted cash |
|
146,753 |
|
|
155,190 |
|
|
Property and equipment |
|
668,832 |
|
|
700,110 |
|
|
Goodwill |
|
1,543,695 |
|
|
1,614,278 |
|
|
Deferred tax assets |
|
282,993 |
|
|
225,877 |
|
|
$ |
4,676,875 |
|
$ |
5,933,037 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Trade
and other payables |
$ |
983,364 |
|
$ |
1,078,996 |
|
|
Short-term debt |
|
197,994 |
|
|
- |
|
|
Income taxes payable |
|
- |
|
|
128,995 |
|
|
Provisions |
|
434,108 |
|
|
622,727 |
|
|
Unearned revenue |
|
219,769 |
|
|
147,291 |
|
|
Deferred lease incentives |
|
18,685 |
|
|
20,966 |
|
|
Current portion of obligations under finance lease |
|
98,396 |
|
|
60,103 |
|
|
Current portion of long-term debt |
|
22,692 |
|
|
22,692 |
|
|
|
1,975,008 |
|
|
2,081,770 |
|
Non-current liabilities |
|
|
|
|
|
|
|
Provisions |
|
106,752 |
|
|
131,615 |
|
|
Deferred lease incentives |
|
8,485 |
|
|
29,582 |
|
|
Obligations under finance lease |
|
157,502 |
|
|
70,929 |
|
|
Long-term debt |
|
25,370 |
|
|
48,062 |
|
Total liabilities |
|
2,273,117 |
|
|
2,361,958 |
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock |
|
11,578,213 |
|
|
11,578,213 |
|
Contributed surplus |
|
1,865,695 |
|
|
1,818,206 |
|
Accumulated other comprehensive income (loss) |
|
(8,161 |
) |
|
142,252 |
|
Deficit |
|
(11,031,989 |
) |
|
(9,967,592 |
) |
|
|
2,403,758 |
|
|
3,571,079 |
|
Total equity and liabilities |
$ |
4,676,875 |
|
$ |
5,933,037 |
|
|
|
|
|
|
|
|
VIQ Solutions Inc. |
|
Consolidated Statements of Comprehensive Income and
Loss |
|
(Expressed in Canadian dollars) |
|
(Audited) |
|
|
|
2013 |
|
|
2012 |
|
|
|
Revenue |
$ |
12,704,897 |
|
$ |
15,840,411 |
|
|
|
|
|
|
|
|
Cost of sales |
|
7,757,959 |
|
|
9,496,968 |
|
Gross profit |
|
4,946,938 |
|
|
6,343,443 |
|
Expenses |
|
|
|
|
|
|
|
Selling and administrative expenses |
|
5,181,357 |
|
|
5,797,216 |
|
|
Restructuring costs |
|
221,200 |
|
|
- |
|
|
Research and development expenses |
|
690,913 |
|
|
666,815 |
|
|
|
6,093,470 |
|
|
6,464,031 |
|
|
|
|
|
|
|
|
Loss from operations |
|
(1,146,532 |
) |
|
(120,588 |
) |
|
|
|
|
|
|
|
Finance income (loss) |
|
|
|
|
|
|
|
Interest income |
|
26,229 |
|
|
31,664 |
|
|
Interest expense |
|
(37,546 |
) |
|
(37,770 |
) |
|
Foreign exchange gain |
|
16,048 |
|
|
416 |
|
Net finance gain (loss) |
|
4,731 |
|
|
(5,690 |
) |
|
|
|
|
|
|
|
Net loss before income taxes |
|
(1,141,801 |
) |
|
(126,278 |
) |
|
|
|
|
|
|
|
Recovery of (provision for) income taxes |
|
77,404 |
|
|
(120,167 |
) |
|
|
|
|
|
|
|
Net loss |
|
(1,064,397 |
) |
|
(246,445 |
) |
|
|
|
|
|
|
|
Exchange differences on translating foreign
operations |
|
(150,413 |
) |
|
(16,708 |
) |
Comprehensive loss for the year |
$ |
(1,214,810 |
) |
$ |
(263,153 |
) |
|
|
Net loss per share |
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.01 |
) |
$ |
(0.00 |
) |
|
|
Weighted average number of common shares outstanding -
basic |
|
90,957,000 |
|
|
90,877,820 |
|
Weighted average number of common shares outstanding -
diluted |
|
90,957,000 |
|
|
90,877,820 |
|
|
|
|
|
|
|
|
VIQ Solutions Inc. |
|
Consolidated Statements of Cash Flows |
|
(Expressed in Canadian dollars) |
|
(Audited) |
|
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
Cash provided by (used in): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
|
Net loss for the year |
$ |
(1,064,397 |
) |
$ |
(246,445 |
) |
Items not affecting cash: |
|
|
|
|
|
|
|
Depreciation |
|
199,369 |
|
|
219,500 |
|
|
Stock-based compensation |
|
43,918 |
|
|
95,039 |
|
|
Provisions |
|
(24,863 |
) |
|
(34,359 |
) |
|
Loss on disposal of property and equipment |
|
64,877 |
|
|
2,341 |
|
|
Interest accretion on bridge loans |
|
1,565 |
|
|
- |
|
|
Amortization of deferred lease incentive |
|
(23,378 |
) |
|
(20,992 |
) |
|
Deferred income tax benefits |
|
(45,982 |
) |
|
28,966 |
|
|
Unrealized foreign exchange gain |
|
(29,694 |
) |
|
(14,119 |
) |
|
Changes in non-cash operating working capital |
|
537,293 |
|
|
(377,842 |
) |
|
|
|
|
|
|
|
Cash used in operating activities |
|
(341,292 |
) |
|
(347,911 |
) |
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
Purchase of property and equipment, net |
|
(75,776 |
) |
|
(76,466 |
) |
|
Proceeds from disposal of property and equipment |
|
- |
|
|
600 |
|
|
Change in restricted cash |
|
(4,246 |
) |
|
(5,212 |
) |
|
|
|
|
|
|
|
Cash used in investing activities |
|
(80,022 |
) |
|
(81,078 |
) |
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
Advances in short-term debt |
|
200,000 |
|
|
- |
|
|
Repayment of short-term debt |
|
- |
|
|
(75,000 |
) |
|
Repayment of long-term debt |
|
(22,692 |
) |
|
(22,692 |
) |
|
Proceeds from stock options exercised for cash |
|
- |
|
|
81,000 |
|
|
Finance lease payments |
|
(61,365 |
) |
|
(67,016 |
) |
|
|
|
|
|
|
|
Cash provided by (used in) financing activities |
|
115,943 |
|
|
(83,708 |
) |
|
|
|
|
|
|
|
Net decrease in cash during the year |
|
(305,371 |
) |
|
(512,697 |
) |
|
|
|
|
|
|
|
Cash, beginning of year |
|
1,129,107 |
|
|
1,646,138 |
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
(34,539 |
) |
|
(4,334 |
) |
|
|
|
|
|
|
|
Cash, end of year |
$ |
789,197 |
|
$ |
1,129,107 |
|
VIQ SolutionsDavid OuthwaitePresident & CEO(905) 948-8266
ext. 250douthwaite@viqsolutions.comVIQ SolutionsKaren HershChief
Financial Officer(905) 948-8266 ext.
240khersh@viqsolutions.comwww.viqsolutions.com
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