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| CALGARY, Alberta--(BUSINESS
WIRE)--May 12, 2003--QSound Labs, Inc. (NASDAQ:QSND) a leading developer of audio,
e-commerce and multimedia software products, reported revenues for the three months ended
March 31, 2003 of $831,000 as compared to $755,000 for the same period in FY2002. The
operating profit for the quarter was $178,000 or $0.02 per share as compared to $168,000
or $0.02 per share for the same period last year. Including non-cash items such as
depreciation, net income for the period was $88,000 or $0.01 per share as compared to
$88,000 or $0.01 per share for the same period in FY2002. The Company reported a working capital surplus of $3,423,000 compared to $3,284,000 as at December 31, 2002. During the quarter, cash and cash equivalents increased from $2,621,000 to $2,870,000. "For the most part, the quarter's financial performance was as expected," stated David Gallagher, President and CEO of QSound Labs. "Royalties from consumer electronics and PC audio licensees were lower than expected, resulting in a slightly lower than expected net income. Revenues from RealNetworks sales of iQfx®3 remained steady. The North American portion of our license with Starkey Labs expired at the end of February so royalties were lower than the previous quarter." "During the quarter, we announced microQ, an audio software solution for the mobile and handheld device markets. Marketing efforts for the balance of the year will be directed at gaining design wins for this product." "In the short term, our financial results will reflect the recent license expiration, but management expects this revenue to be replaced during the balance of this year, as new licenses and products come to market." "Subsequent to the quarter ending, the Company acquired all of the assets of a private corporation, in which it had previously held an investment. As at March 31, this investment totaled $525,000 and this was the consideration for the purchase. The assets consist primarily of software for Internet Telephony applications. Management expects to provide updates regarding this opportunity in the very near future." About QSound Labs, Inc. Since its inception in 1988, QSound Labs, Inc. has evolved into one of the world's leading audio technology companies and an e-commerce solution provider. The Company has developed proprietary audio solutions that include virtual surround sound, positional audio and stereo enhancement for the consumer electronics, PC/multimedia, Internet and healthcare markets. The Company's cutting-edge audio technologies create rich 3D audio environments allowing consumers to enjoy stereo surround sound from two, four or 5.1 speaker systems. To hear 3D audio demos and learn more about QSound, visit our web site at http://www.qsound.com. This release contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995 concerning, among other things, expectation of revenues and development and commercial introduction of new products. Investors are cautioned that such forward-looking statements involve risk and uncertainties, which could cause actual results, performance or achievements of the Company, 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 the Company, successful product development, introduction and acceptance, dependence on the performance of third parties that have licensed the Company's technologies, the Company'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 the Company's periodic reports filed with the Securities and Exchange Commission. Forward-looking statements are based on the current expectations, projections and opinions of the Company's management, and the Company 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 March 31, 2003 and December 31, 2002
(Expressed in United States dollars, prepared using US GAAP)
March 31, 2003 December 31, 2002
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 2,869,954 $ 2,621,205
Accounts receivable 709,626 929,519
Inventory 32,765 16,455
Deposits and prepaid expenses 61,991 58,674
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3,674,336 3,625,853
Note receivable 525,000 500,000
Capital assets 796,577 747,553
Goodwill 2,184,589 2,184,589
Intangible assets 205,530 213,771
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$ 7,386,032 $ 7,271,766
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and
accrued Liabilities $ 137,955 $ 220,894
Deferred Revenue 113,277 120,511
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251,232 341,405
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Shareholders' equity:
Share capital (7,159,074
common shares) 44,204,092 44,088,094
Contributed Surplus 1,114,316 1,114,316
Deficit (38,183,608) (38,272,049)
---------------------------------------------------------------------
7,134,800 6,930,361
---------------------------------------------------------------------
$ 7,386,032 $ 7,271,766
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QSound Labs, Inc.
Consolidated Statements of Operations and Deficit
For the three month periods ended March 31, 2003 and 2002
(Expressed in United States dollars, prepared using US GAAP)
2003 2002
(unaudited) (unaudited)
REVENUE
Royalties and license fees $ 480,655 $ 420,516
Product sales 350,195 334,646
---------------------------------------------------------------------
830,850 755,162
Cost of product sales 82,737 9,271
---------------------------------------------------------------------
748,113 745,891
EXPENSES:
Marketing 256,798 194,016
Operations 36,069 81,532
Product engineering 151,654 180,560
Administration 125,212 121,594
---------------------------------------------------------------------
569,733 577,702
---------------------------------------------------------------------
OPERATING PROFIT 178,380 168,189
OTHER ITEMS
Depreciation and amortization (80,265) (80,037)
Interest and other income 5,931 -
Other (15,605) 197
---------------------------------------------------------------------
(89,939) (79,840)
---------------------------------------------------------------------
NET INCOME FOR PERIOD 88,441 88,349
DEFICIT BEGINNING OF PERIOD (38,272,049) (39,198,943)
---------------------------------------------------------------------
DEFICIT END OF PERIOD $ (38,183,608) $ (39,110,594)
---------------------------------------------------------------------
INCOME PER COMMON SHARE $ 0.01 $ 0.01
---------------------------------------------------------------------
QSound Labs, Inc.
Consolidated Statements of Cash Flows
For the three month periods ended March 31, 2003 and 2002
(Expressed in United States dollars, prepared using US GAAP)
2003 2002
(unaudited) (unaudited)
Cash provided by (used in)
OPERATIONS
Income for the period $ 88,441 $ 88,349
Items not requiring (providing) cash:
Depreciation and amortization 80,265 80,037
Changes in working capital balances 85,093 (238,811)
---------------------------------------------------------------------
253,799 (70,425)
---------------------------------------------------------------------
FINANCING
Issuance of common shares, net 1,410 -
---------------------------------------------------------------------
1,410 -
---------------------------------------------------------------------
INVESTMENTS
Purchase of capital assets (844) (73,152)
Purchase of intangible assets (11,480) -
---------------------------------------------------------------------
(12,324) (73,152)
---------------------------------------------------------------------
Increase (decrease) in cash 242,885 (143,577)
Cash and cash equivalents
beginning of period 2,621,205 2,047,892
---------------------------------------------------------------------
Cash and cash equivalents
end of period $ 2,864,090 $ 1,904,315
---------------------------------------------------------------------
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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