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| CALGARY, Alberta--(BUSINESS
WIRE)--Oct. 29, 2002--QSound Labs, Inc. (NASDAQ:QSND), a leading developer of audio,
e-commerce and multimedia software products, reported revenues for the three months ended
September 30, 2002 of $1,309,000 as compared to $765,000 for the same period in FY2001.
The operating profit for the quarter was $636,000 or $0.09 per share as compared to
$109,000 or $0.02 per share for the same period last year. Including non-cash items such
as depreciation and amortization of goodwill, net income for the period was $504,000 or
$0.07 per share as compared to a loss of $(95,000) or $(0.01) per share for the same
period in FY2001. Revenues for the nine months ending September 30, 2002 were $2,934,000 compared to $2,429,000 for the same period in FY2001. The operating profit was $992,000 or $0.14 per share in FY2002 and $201,000 or $0.03 per share in FY2001. Net income for the nine month period in FY2002 was $676,000 or $0.10 per share in FY2002 as compared to a loss of $(434,000) or $(0.06) per share in FY2001. The Company reported a working capital surplus of $3,136,000 compared to $2,288,000 as at December 31, 2001. The Company continues to generate cash flow from operations and as at September 30, 2002 had cash and cash equivalents of $1,633,000. "FY2002 has certainly highlighted the effectiveness of our licensing business model," stated David Gallagher, President and CEO of QSound Labs. "Earlier in the year we were able to contain costs at a level that provided us with profitable operations and now third quarter revenue growth falls straight to the bottom line. For the second quarter in a row, royalties received from our hearing aid license and RealNetworks partnership were strong. Also, during the quarter our technology began shipping in Toshiba's new DVD players. All of this resulted in the Company exceeding previous guidance. Management believes that the Company will sustain these revenue levels throughout the remainder of this year." "Even within the framework of our cost containment program, we have continued to develop new business and product opportunities for FY2003 reducing dependency on existing revenue streams," Mr. Gallagher continued. "Specifically, as previously outlined in the presentation to the shareholders at the AGM, the Company has focussed most of its development resources on complete software solutions for audio and voice applications. The Company is now exploiting opportunities for these solutions and as a first step, Philips entered the market with its new soundcard product based on QSound's software solutions at the end of the quarter. Management believes that this will be the first of several opportunities for our new technology." This release contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995 concerning, among other things, expectation of continuing royalties from existing licensees including Starkey, RealNetworks and Toshiba, new business and product opportunities, potential revenues from Philips and continued cost containment. Investors are cautioned that such forward-looking statements involve risk and uncertainties, which could cause actual results, performance or achievements of QSound, or industry results to differ materially from those reflected in the forward-looking statements. Such risks and uncertainties include, but are not limited to, risks associated with loss of relationships with companies that do business with QSound, successful product development, introduction and acceptance, QSound's ability to carry out its business strategy and marketing plans, including availability of sufficient resources to do so timely and cost effectively, dependence on intellectual property, rapid technological change, competition, general economic and business conditions, continued growth of the Internet and other risks detailed from time to time in QSound's periodic reports filed with the Securities and Exchange Commission. Forward-looking statements are based on the current expectations, projections and opinions of QSound's management, and QSound undertakes no obligation to publicly release the results of any revisions to such forward-looking statements which may be made, for example to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. QSound Labs, Inc.
Consolidated Balance Sheets
As at September 30, 2002 and December 31, 2001
(Expressed in United States dollars, prepared using US GAAP)
September 30, 2002 December 31, 2001
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,632,502 $ 2,047,892
Accounts receivable 1,228,845 439,245
Note receivable 500,000 -
Inventory 27,728 28,587
Deposits and prepaid expenses 58,412 85,365
----------------------------------------------------------------------
3,447,487 2,601,089
Capital assets 893,099 932,776
Intangible assets 2,408,993 2,432,142
----------------------------------------------------------------------
$ 6,749,579 $ 5,966,007
----------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabiltiies:
Accounts payable and accrued
Liabiltiies $ 158,736 $ 304,726
Deferred Revenue 152,925 8,282
----------------------------------------------------------------------
311,661 313,008
Shareholders' equity:
Share capital (7,085,574 common
shares) 44,048,409 43,939,684
Contributed Surplus 1,114,316 1,114,316
Deficit (38,724,807) (39,401,001)
----------------------------------------------------------------------
6,437,918 5,652,999
----------------------------------------------------------------------
$ 6,749,579 $ 5,966,007
----------------------------------------------------------------------
QSound Labs, Inc.
Consolidated Statements of
Operations and Deficit
For the periods Ended September 30, 2002 and 2001
(Expressed in United States dollars, prepared using US GAAP)
For three For nine
months ended months ended
September 30, September 30,
2002 2001 2002 2001
(unaudited) (unaudited) (unaudited) (unaudited)
REVENUE
Royalties, license
fees and product
sales $ 1,308,727 $ 765,188 $ 2,934,054 $ 2,429,180
Cost of product
sales 133,684 7,754 192,320 44,083
----------------------------------------------------------------------
1,175,043 757,434 2,741,734 2,385,097
EXPENSES:
Marketing 217,134 240,665 670,266 819,917
Operations 49,069 52,259 192,703 234,618
Product engineering 164,304 212,544 505,021 683,381
Administration 108,740 142,762 381,874 446,623
----------------------------------------------------------------------
539,247 648,230 1,749,864 2,184,539
----------------------------------------------------------------------
Operating profit 635,796 109,204 991,870 200,558
Other items
Depreciation and
amortization (135,749) (207,728) (306,796) (676,045)
Gain on sale of capital
assets 652 - 681 6,515
Other 2,857 3,343 (9,561) 34,502
----------------------------------------------------------------------
(132,240) (204,385) (315,676) (635,028)
----------------------------------------------------------------------
Net income (loss) for
the period 503,556 (95,181) 676,194 (434,470)
Deficit beginning of
period (39,228,363) (39,007,380) (39,401,001) (38,668,091)
----------------------------------------------------------------------
Deficit end of
period $(38,724,807)$(39,102,561)$(38,724,807)$(39,102,561)
----------------------------------------------------------------------
Income (loss) per
common share $ 0.07 $ (0.01)$ 0.10 $ (0.06)
----------------------------------------------------------------------
QSound Labs, Inc.
Consolidated Statements of
Cash Flows
For the periods Ended September 30, 2002 and 2001
(Expressed in United States dollars, prepared using US GAAP)
For three For nine
months ended months ended
September 30, September 30,
2002 2001 2002 2001
(unaudited) (unaudited) (unaudited) (unaudited)
Cash provided by (used in)
OPERATIONS
Income (loss) for
the period $ 503,556 $ (95,181) $ 676,194 $ (434,470)
Items not requiring
(providing) cash:
Depreciation and
amortization 135,749 207,728 306,796 676,045
Gain on sale of capital
assets (652) - (681) (6,515)
Changes in working
capital balances (444,150) 123,431 (763,135) 179,330
----------------------------------------------------------------------
194,503 235,978 219,174 414,390
----------------------------------------------------------------------
FINANCING
Repurchase of common
shares, net - (56,755) - (350,494)
Repayment of debt - - - (550,000)
----------------------------------------------------------------------
- (56,755) - (900,494)
----------------------------------------------------------------------
INVESTMENTS
Purchase of capital
assets (10,447) (16,165) (119,089) (61,382)
Purchase of
intangible assets (11,155) - (16,156) -
Change in working
capital for investment
purposes (150,000) - (500,000) -
Proceeds from sale
of capital assets 652 - 681 6,515
----------------------------------------------------------------------
(170,950) (16,165) (634,564) (54,867)
----------------------------------------------------------------------
Increase (decrease)
in cash 23,553 163,058 (415,390) (540,971)
Cash and cash
equivalents beginning
of period 1,608,949 1,560,610 2,047,892 2,264,639
----------------------------------------------------------------------
Cash and cash
equivalents end of
period $ 1,632,502 $ 1,723,668 $ 1,632,502 $ 1,723,668
----------------------------------------------------------------------
Contact: QSound Labs, Inc.
Paula Murray, 954/796-8798
Email: paula.murray@qsound.com
Website: www.qsound.com
Source: QSound Labs, Inc. |
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