Press Release
QSound Labs Reports Fourth Quarter Results for 2001
CALGARY, CANADA - February 21, 2002 - QSound Labs, Inc. (NASDAQ: QSND) a leading developer of audio,
e-commerce and multimedia software products, reported revenues for
the three months ended December 31, 2001 of $597,000 as compared to
$1,233,000 for the same period in FY2000. The operating loss for the
quarter was $(164,000) or $(0.02) per share as compared to a profit
of $180,000 or $0.02 per share for the same period last year.
Including non-cash items such as depreciation and amortization of
goodwill, the net loss for the period was $(298,000) or $(0.04) per
share as compared to $(5,523,000) or $(0.75) per share for the same
period in FY2000.
Revenues for the year ended December 31, 2001 were $3,026,000
compared to $4,469,000 for the same period in 2000. The operating
profit for the year was $37,000 or $0.00 per share as compared to
$112,000 or $0.01 for FY2000. Net loss for the year was $(733,000)
or $(0.10) per share in 2001 and $(7,807,000) or $(1.06) per share
in 2000.
The Company reported a working capital surplus of $2.3 million and
continues to generate positive cash flow from operations. During the
year, the Company generated $789,000 of cash flow from operations as
opposed to utilizing $483,000 of cash in FY2000 operations. The
Company retired all of its debt during the year, repurchased 241,615
of its common stock and cancelled 56,250 common shares previously
held in escrow. During the quarter, the Company netted additional
funds of $219,000 from the sale of investments and expended $189,000
on the acquisition of technology for use in both the audio and
e-commerce business units.
"Revenue from our audio licensing business unit was down 19% for the
year reflecting the economic problems besetting our customers,"
stated David Gallagher, President and CEO of QSound Labs. "We were
able to mitigate the effect of this downturn through an effective
cost control program, which resulted in a reduction of 30% year over
year in total expenditures. Since the beginning of FY2002 we have
seen the introduction of several QSound-enhanced products from our
audio business partners and expect this trend to continue. Despite
the challenges encountered in FY2001, the Company has continued to
broaden its technology portfolio thereby positioning itself to
introduce several new products in the first half of FY2002."
"In FY 2002 our e-commerce business unit plans to build on the
formula established last year, namely, the continuing growth in
recurring revenue and the consolidation of operations in Calgary
thereby taking advantage of the inherent cost advantage of a weaker
Canadian dollar."
This release contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995 concerning, among other things, continued positive cash flow, growth in recurring e-commerce revenue, and product development and introduction. 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 continued product development, introduction and acceptance, loss of relationships with companies that do business with the Company, dependence on the performance of current and future third party licensees, 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.
/T/
QSound Labs, Inc.
Consolidated Balance Sheets
As at December 31, 2001 and 2000
(Expressed in United States dollars, prepared using US GAAP)
December December
31, 2001 31, 2000
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 2,047,892 $ 2,264,639
Accounts receivable 439,245 1,166,941
Inventory 28,587 48,431
Deposits and prepaid expenses 85,365 108,752
------------------------------
2,601,089 3,588,763
Investments - 42,557
Capital assets 932,776 1,071,618
Intangible assets 2,432,142 2,873,946
------------------------------
$ 5,966,007 $ 7,576,884
------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabiltiies:
Accounts payable and accrued
Liabilities $ 304,726 $ 352,865
Consideration payable on
acquisition - 550,000
Deferred Revenue 8,282 9,253
------------------------------
313,008 912,118
------------------------------
Shareholders' equity:
Share capital (7,085,574
common shares) 43,939,684 45,479,152
Contributed Surplus 1,114,316 5,648
Deficit (39,401,001) (38,668,091)
Accumulated other comprehensive
income (151,943)
------------------------------
5,652,999 6,664,766
------------------------------
$ 5,966,007 $ 7,576,884
------------------------------
QSound Labs, Inc.
Consolidated Statements of Operations and Deficit
For the Periods Ended December 31, 2001 and 2000
(Expressed in United States dollars, prepared using US GAAP)
For three For three For the For the
months ended months ended year ended year ended
December December December December
31, 2001 31, 2000 31, 2001 31, 2000
(unaudited) (unaudited) (unaudited)
REVENUE
Royalties, license
fees and product
sales $ 596,814 $ 1,233,374 $ 3,025,994 $ 4,469,002
Cost of product
sales 47,355 59,395 91,438 208,298
---------------------------------------------------
549,459 1,173,979 2,934,556 4,260,704
---------------------------------------------------
EXPENSES:
Marketing 254,222 317,545 1,074,139 1,360,698
Operations 40,459 150,000 275,077 375,000
Product engineering 267,636 305,457 951,017 1,610,436
Administration 151,062 220,771 597,685 802,582
---------------------------------------------------
713,379 993,773 2,897,918 4,148,716
---------------------------------------------------
Operating profit
(loss) (163,920) 180,206 36,638 111,988
Other items
Depreciation and
amortization (155,148) (1,125,146) (831,193) (2,535,856)
Gain (loss) on
sale of capital
assets (23) (34,889) 6,492 (34,634)
Gain on sale of
investments 24,327 - 24,327 -
Write-down of
investments (8,300) (1,216,526) (8,300) (1,515,568)
Impairment of
assets - (3,317,048) - (3,762,702)
Other 4,624 (9,470) 39,126 (70,260)
---------------------------------------------------
Net income (loss)
for the period (298,440) (5,522,873) (732,910) (7,807,032)
Deficit beginning
of period (39,102,561) (33,145,218) (38,668,091) (30,861,059)
---------------------------------------------------
Deficit end of
period $(39,401,001)$(38,668,091)$(39,401,001)$(38,668,091)
---------------------------------------------------
Income (loss) per
common share $ (0.04)$ (0.75)$ (0.10)$ (1.06)
---------------------------------------------------
QSound Labs, Inc.
Consolidated Statements of Cash Flows
For the Periods Ended December 31, 2001 and 2000
(Expressed in United States dollars, prepared using US GAAP)
For three For three For the For the
months ended months ended year ended year ended
December December December December
31, 2001 31, 2000 31, 2001 31, 2000
(unaudited) (unaudited) (unaudited)
Cash provided by (used in)
OPERATIONS
Income (loss) for
the period $ (298,440)$ (5,522,873)$ (732,910)$ (7,807,032)
Items not requiring
(providing) cash:
Depreciation and
amortization 155,148 1,125,146 831,193 2,535,856
Gain on sale of
capital assets 6,538 34,889 (6,492) 34,634
Gain on sale of
investments (24,327) (24,327)
Impairment of
assets - 3,317,048 - 3,762,702
Write-down of
investments 8,300 1,216,526 8,300 1,515,568
Changes in working
capital balances 534,187 (200,810) 713,517 (524,678)
---------------------------------------------------
381,406 (30,074) 789,281 (482,950)
---------------------------------------------------
FINANCING
Issuance of common
shares, net - - - 2,757,233
Repurchase of
common shares,
net (80,306) - (430,800) (152,989)
Repayment
of debt - (250,000) (550,000) (750,000)
---------------------------------------------------
(80,306) (250,000) (980,800) 1,854,244
---------------------------------------------------
INVESTMENTS
Investments, net - 23,638 - 23,638
Purchase of
capital assets (154,909) (29,530) (216,291) (529,863)
Purchase of
intangible assets (34,418) - (34,418) (130,168)
Proceeds from sale
of capital assets 139 5,120 6,654 5,375
Proceeds from sale
of investments 218,827 - 218,827 -
---------------------------------------------------
29,639 (772) (25,228) (631,018)
---------------------------------------------------
Increase (decrease)
in cash 330,739 (280,846) (216,747) 740,276
Cash and cash
equivalents
beginning
of period 1,723,668 2,545,485 2,264,639 1,524,363
---------------------------------------------------
Cash and cash
equivalents
end of
period $ 2,054,407 $ 2,264,639 $ 2,047,892 $ 2,264,639
---------------------------------------------------
/T/