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| QSound
Labs Announces Results For Third Quarter |
| CALGARY, ALBERTA--QSound Labs, Inc.
(NASDAQ: QSNDF - news) today reported revenues of $408,955
and a net loss of $258,415 or $0.02 per share for the third quarter ended September 30,
1998. Total revenues for the 1997 comparative period were $839,356 with a net profit of
$26,776 or $0.00 per share. For the nine months ended September 30, 1998, the Company recorded revenues of $1,505,242 and a loss of $852,191 or $0.04 per share. In the 1997 comparative period, QSound reported a loss of $794,760 or $0.03 per share on revenues of $2,249,822. As at September 30, 1998 QSound had a positive working capital of $3,799,604 and was debt-free. During the quarter, the Company announced a Share Repurchase Program and as at September 30, 1998, had repurchased 150,000 shares. Chief Executive Officer, David Gallagher stated: ``This quarter has been an important transitional period for QSound as we have moved to significantly increase our presence in the consumer/Internet marketplace as well as maintain momentum in the PC/Multimedia sector. Although progress was made in all of our strategic relationships, several new product introductions were delayed and this is reflected in the quarter's financial performance.'' ``Earlier in the quarter, QSound further solidified its partnership with Real Networks (NASDAQ: RNWK - news), the recognized leader in streaming media technology, by entering into an exclusive, longer-term relationship. As part of this agreement, QSound and Real Networks co-developed iQFX(tm), a 3D audio software program that will integrate seamlessly into the revolutionary RealPlayer G2(tm) and the RealPlayer Plus G2(tm) and can be launched directly from the player itself. In September, the Company finalized development of an exciting new software product, QCreator(tm), a consumer audio authoring tool that allows users to create dramatic 3D audio effects using normal mono sound files. Both products will be available in the fourth quarter of 1998.'' ``In the PC industry, Trident (NASDAQ: TRID - news) began shipping their 4DWave PCI audio chip and VLSI (NASDAQ:VLSI - news) received initial purchase orders for the ThunderBird 128(tm) PCI audio accelerator with shipments planned in the fourth quarter. Likewise, Forte Media and LG Semicon plan to commence shipments in the fourth quarter.'' ``During this quarter, QSound increased the number of licensed consumer audio products with new design wins from both AIWA and Sharp. The new 1999 product line now includes mini-component systems from AIWA as well as VCRs from Sharp. Existing products continue to ship at the same levels as in previous quarters. In August, the first QSound-enhanced headphone application began shipping in Dallas, Texas when E-Zone completed the first installation of its entertainment systems, specifically designed for health and fitness clubs. These systems have received very positive reviews and E-Zone has moved forward with further installations in San Francisco.'' ``In August, Starkey Labs, the world's largest hearing aid manufacturer, took delivery of production silicon for the new Cetera(tm) digital hearing aid and is now resolving system-level issues and finalizing the production engineering process. These issues have taken longer than planned to finalize and it is now expected that revenue will commence accruing in the first quarter of 1999.'' About QSound Labs, Inc. Founded in 1988, QSound Labs, Inc. (NASDAQ: QSNDF - news), is an advanced audio technology company specializing in 3D sound placement and audio image enhancement. Based in Calgary, Alberta, the company uses patented 3D audio technologies to serve the home entertainment, PC/Multimedia, consumer electronics and professional audio industries. The technologies provide immersive, realistic sound environments that include positional audio, stereo enhancement and virtual surround sound. PC OEMs and consumer electronic manufacturers who have licensed QSound include Acer, AIWA, Crystal Semiconductor, ESS, IBM, Sharp, Trident Microsystems, VLSI and Yamaha. Electronic Arts, Microsoft, Mindscape, Psygnosis and Sega have all employed QSound technologies in developing video games. Musical artists Sting, Madonna and Janet Jackson have recorded music using the system, and television shows such as The X-Files and Ally McBeal utilize QSound technologies during post-production. All product and brand names are trademarks and/or registered trademarks of their respective owners. Additional news releases may be obtained via the Internet at www.qsound.com/press0.htm or by calling the company directly at 403-291-2492. Forward-looking statements in this release are made pursuant to the
safe harbor provisions of the Private Securities Litigation Act of 1995. Investors are
cautioned that such forward-looking statements involve risk and uncertainties, which could
significantly impact the actual results, performance or achievements of the Company, or
industry results. Such risks and uncertainties include, but are not limited to, risks
associated with the commercialization of the Company's technologies, dependence on
intellectual property, uncertainties relating to product development and commercial
introduction, rapid technological change and competition; manufacturing uncertainties and
other risk's detailed from time to time in the Company's periodic reports filed with the
Securities and Exchange Commission. QSOUND LABS, INC.
Consolidated Balance Sheets
(Unaudited)(Expressed in United States Dollars)
As at September 30, 1998
September 30 September 30
--------------------------------------------------------------
1998 1997
--------------------------------------------------------------
ASSETS
Current assets:
Cash and short term deposits $ 2,343,697 $ 2,214,933
Accounts receivable 364,189 571,708
Accrued revenue 571,058 252,565
Royalties receivable 314,861 123,753
Prepaid expenses 112,435 107,588
Inventory 294,654 422,070
------------------------------------------------------------
4,000,894 3,692,617
Capital Assets 982,181 1,418,792
--------------------------------------------------------------
$ 4,983,075 $ 5,111,409
--------------------------------------------------------------
--------------------------------------------------------------
LIABILITIES, SHARE CAPITAL AND DEFICIT
Current liabilities:
Accounts payable $ 181,323 $ 427,592
Accrued liabilities 19,967 17,791
Interest payable on long term debt - 1,989
Current maturity of long-term debt - 9,613
------------------------------------------------------------
201,290 456,985
Long term debt - 212,049
Deferred revenue - 49,123
Share capital and deficit:
Common shares
(23,789,339 shares) 32,469,494 31,536,965
Preferred shares (108,108 shares) 188,015 188,015
Deficit (27,875,724) (27,331,728)
--------------------------------------------------------------
4,781,785 4,393,252
--------------------------------------------------------------
$ 4,983,075 $ 5,111,409
--------------------------------------------------------------
--------------------------------------------------------------
QSOUND LABS, INC.
Consolidated Statements of Operations and Deficit
(Unaudited) (Expressed in US Dollars)
3 Months 3 Months 9 Months 9 Months
Ended Ended Ended Ended
September September September September
30, 1998 30, 1997 30, 1998 30, 1997
------------------------------------------
Revenues:
Royalties & license
fees $ 185,782 $ 497,003 $ 825,095 $ 1,234,505
Rentals and other 3,333 3,226 9,994 11,335
Product sales 219,840 339,126 670,153 1,003,982
------------------------------------------
408,955 839,355 1,505,242 2,249,822
Cost of products sold (36,088) (173,149) (70,438) (685,653)
------------------------------------------
Gross profit (loss) 372,867 666,206 1,434,804 1,564,169
Expenses:
Marketing 274,525 288,293 989,714 1,153,963
Product engineering 329,582 193,010 927,286 676,914
Administration 130,306 96,314 372,763 368,781
Patent Litigation - 39,019 - 89,336
Depreciation and
amortization 66,528 63,529 199,440 208,081
------------------------------------------
800,941 680,165 2,489,203 2,497,075
------------------------------------------
Operating profit
(loss) (428,074) (13,959)(1,054,399) (932,906)
Interest on long-term
debt 4,081 6,273 12,382 18,729
Foreign exchange
(gain) loss 3,338 (661) 6,670 (28,314)
Interest & other
income (26,189) (46,346) (70,371) (128,561)
Gain on Sale of
Assets (150,889) - (150,889) -
------------------------------------------
(169,659) (40,734) (202,208) (138,146)
------------------------------------------
Net profit (loss)
for the period (258,415) 26,775 (852,191) (794,760)
Deficit, beginning of
period $(27,617,309)$(27,358,503)$(27,023,533)$(26,536,968)
----------------------------------------------------
Deficit, end of
period $(27,875,724)$(27,331,728)$(27,875,724)$(27,331,728)
----------------------------------------------------
----------------------------------------------------
Profit (Loss) per
common share under
Canadian GAAP $ (0.02) $ 0.00 $ (0.04) $ (0.03)
------------------------------------------
------------------------------------------
Profit (Loss) for
the period under
United States GAAP $(258,415) $ 26,775 $(852,191) $(794,760)
------------------------------------------
------------------------------------------
Profit (Loss) per
common share under
United States GAAP $ (0.02) $ 0.00 $ (0.04) $ (0.03)
------------------------------------------
------------------------------------------
QSOUND LABS, INC.
Consolidated Statement of Changes in Financial Position
As at September 30, 1998
(Unaudited) (Expressed in US Dollars)
3 Months 3 Months 9 Months 9 Months
Ended Ended Ended Ended
September September September September
30, 1998 30, 1997 30, 1998 30, 1997
----------------------------------------
OPERATIONS
Gain (Loss) for
period $(258,415) $ 26,775 $(852,191) $(794,760)
Items not requiring
(providing) cash
Deferred revenue - (86,652) - (145,317)
Depreciation &
amortization 66,528 63,528 199,440 208,081
Gain on sale of
capital assets 150,889 - 150,889 -
Changes in working
capital balances
Accounts receivable 256,381 34,348 317,758 718,471
Accrued revenue 2,622 (39,401) 117,330 (346,981)
Royalties receivable (88,072) 15,466 (186,299) 114,173
Prepaid expense (42,790) (32,141) (32,511) (53,082)
Inventory/Work in
progress 38,970 (89,603) 108,635 (44,764)
Accounts payable (10,962) (111,008) (178,873) (197,737)
Accrued liabilities 5,068 (5,249) (28,072) (383,376)
Interest payable on
long term debt (1,335) (15) (1,402) (58)
---------------------------------------
118,884 (223,952) (385,296) (925,350)
FINANCING
Issuance of shares
(net proceeds) (292,007)1,444,437 714,371 1,431,709
Repayment of long
term debt (206,045) (2,218) (218,532) (6,744)
----------------------------------------
(498,052)1,442,219 495,839 1,424,965
INVESTMENTS
Purchase of capital
assets (243,268) (92,417) (424,438) (234,674)
Proceed from sale of
capital assets 567,265 - 567,265 -
----------------------------------------
323,997 (92,417) 142,827 (234,674)
Increase (decrease)
in cash (55,171)1,125,850 253,370 264,941
Cash, beginning
of period 2,398,868 1,089,083 2,090,327 1,949,992
-----------------------------------------
Cash, end of period $2,343,697$2,214,933$2,343,697 $2,214,933
-----------------------------------------
-----------------------------------------
Contact: FOR FURTHER INFORMATION PLEASE QSound Labs, Inc. Debbie Dalen Media Contact (403) 291-2492 (403) 250-1521 (FAX) debbie.dalen@qsound.com http://www.qsound.com or QSound Labs, Inc. Paula Murray Investor Contact (954) 796-8798 (954) 796-9312 (FAX) paula.murray@qsound.com |
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