Press Release

 

 

QSound Labs Reports Second Quarter Results for 2003

 

 

Calgary, Alberta - August 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 June 30, 2003 of $383,000 as compared to $870,000 for the same period in FY2002. The operating loss for the quarter was $(401,000) or $(0.06) per share as compared to an operating profit of $188,000 or $0.03 per share for the same period last year. After allowing for non-cash items such as depreciation, and foreign exchange gains, the net loss for the period was $(327,000) or $(0.05) per share as compared to net income of $84,000 or $0.01 per share for the same period in FY2002.

Revenues for the six months ended June 30, 2003 were $1,214,000 compared to $1,625,000 in FY2002. The operating loss was $(223,000) or $(0.03) per share in FY2003 and the operating profit was $356,000 or $0.05 per share in FY2002. Net loss for FY2003 was $(239,000) or $(0.03) per share as compared to net income of $173,000 or $0.02 per share in FY2002.

The Company reported a working capital surplus of $3,214,000 at June 30, 2003 of which cash comprised $3,082,000. Cash flow from operations totaled $480,000 for the six month period, most of which was retained, resulting in a cash increase of $461,000 for the period.

"This was an important quarter for the Company as we made significant progress with the initiatives announced at our shareholder meeting in June," stated David Gallagher, President and CEO of QSound Labs. "As anticipated, the financial performance for this quarter was weak. However as planned, the combination of new revenue streams and our strong balance sheet will ensure an improved performance in the coming periods."

"Specifically our microQ product suite for the mobile and handheld market has been well received and we will have designs wins in the near future. Royalty revenue from these design wins would start in FY2004. Also, we are now ready to ship our first VoIP products under the QTelNet brand and this will contribute financially during the third quarter and is expected to grow moving forward."


This release contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995 concerning, among other things, expectation of increasing royalties from existing licensees including Philips, continued self-sustainment from QSound's audio and e-commerce businesses, and QSound's business relationship with a private company including planned development and commercial introduction of new products for telephony and networking industries. 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.

 

 

/T/
QSound Labs, Inc.			
Consolidated Balance Sheets			
As at June 30, 2003 and December 31, 2002			
(Expressed in United States dollars, prepared using US GAAP)			
                                                                  
                              June 30, 2003         December 31, 2002
				(unaudited)                           
ASSETS                                                            
Current assets:                                                   
 Cash and cash equivalents    $   3,082.237             $   2,621,205
 Accounts receivable                248,773                   929,519
 Inventory                          127,309                    16,455
 Deposits and prepaid
  expenses                           74,083                    58,674
----------------------------------------------------------------------
                                  3,532,402                  3,625,853
                                                                  
                                                                  
Note receivable			          -		      500,000
Capital assets                    1,218,965                   747,553
Goodwill			  2,184,589		    2,184,589
Intangible assets                   198,606                   213,771
----------------------------------------------------------------------
                              $   7,134,562             $   7,271,766
----------------------------------------------------------------------
LIABILITIES AND
 SHAREHOLDERS' EQUITY                                             
Current Liabilities:                                              
 Accounts payable and
  accrued Liabilities         $     219,180             $     220,894
 Deferred Revenue                    99,478                   120,511
----------------------------------------------------------------------
                                    318,658                   341,405
                                                                  
Shareholders' equity:                                             
 Share capital (7,177,344
  common shares)                 44,212,679                44,088,094
 Contributed Surplus              1,114,316                 1,114,316
 Deficit                        (38,511,091)              (38,272,049)
----------------------------------------------------------------------
                                  6,815,904                 6,930,361
----------------------------------------------------------------------
                              $   7,134,562             $   7,271,766
----------------------------------------------------------------------



QSound Labs, Inc.				
Consolidated Statements of Operations and Deficit	
For the periods ended June 30, 2003 and 2002	
(Expressed in United States dollars, prepared using US GAAP)

                                                                 
			    
                          For three  For three    For six    For six
                             months     months      months     months
                             ended      ended       ended      ended 
                            June 30,   June 30,    June 30,   June 30,
                              2003       2002        2003       2002
                          (unaudited)(unaudited)(unaudited)(unaudited)
REVENUE                                                           
 Royalties, license fees
  and product sales      $   95,723 $  571,418 $  576,408  $  991,934
 Product Sales	            287,555    298,747    637,750     633,393
----------------------------------------------------------------------
			    383,308    870,165  1,214,158   1,625,327
 Cost of Product Sales	     64,276     49,365    147,013      58,636
----------------------------------------------------------------------
                            319,032    820,800  1,067,145   1,566,691
                                                                  
EXPENSES:                                                         
 Marketing                  322,449    259,116    579,247     453,132
 Operations                  40,185     62,102     76,254     143,634
 Product engineering        202,296    160,157    353,950     340,717
 Administration             155,255    147,384    280,467     267,779
----------------------------------------------------------------------
                            720,185    628,759  1,289,918   1,205,262
----------------------------------------------------------------------
Operating (LOSS) profit    (401,153)   192,041   (222,773)    361,429
                                                                  
Other items                                                       
 Depreciation and
  amortization              (82,459)   (91,010)  (162,724)   (171,047)
 Interest and other          17,191	 6,806	   23,122      13,292
  Income
 Gain on sale of capital
  assets                     (1,908)        29     (1,908)         29
 Other                      140,846    (23,577)   125,241     (31,065)
----------------------------------------------------------------------
                             73,670   (107,752)   (16,269)   (188,791)
----------------------------------------------------------------------
Net income (loss) for the
 period                    (327,486)    84,289   (239,042)    172,638
Deficit beginning of
 period                 (39,312,652)          (39,401,001)
                                   (38,847,161)           (38,668,091)
----------------------------------------------------------------------
Deficit end of period  $(38,183,608)         $(38,272,049)
                                  $(39,312,652)          $(39,401,001)
----------------------------------------------------------------------
Income (loss) per
 common share               $ (0.05)   $  0.01    $ (0.03)    $  0.02
----------------------------------------------------------------------



QSound Labs, Inc.				
Consolidated Statements of Cash Flows	
For the periods ended June 30, 2003 and 2002	
(Expressed in United States dollars, prepared using US GAAP)

                                                                  
                           For three  For three    For six    For six
                             months     months      months     months
                             ended      ended       ended      ended 
                            June 30,   June 30,    June 30,   June 30,
                              2003       2002        2003       2002
                          (unaudited)(unaudited)(unaudited)(unaudited)
                                                                  
Cash provdided by
 (used in)

OPERATIONS                                                        
 Income (loss) for the
  period                  $(327,483)$   84,289 $ (239,042) $  172,638
 Items not requiring
  (providing) cash:                                                
   Depreciation and
    amortization             82,459     91,010     162,724    171,047
   Compensaation cost of	  -	     -	     5,864	    -
    options issued to
    non-employees
 Loss (gain) on sale 
  of capital assets           1,908        (29)      1,908        (29)
 Changes in working capital
  balances                  463,552    (80,174)    548,645   (318,985)
----------------------------------------------------------------------
                            220,436     95,096     480,099     24,671
----------------------------------------------------------------------
FINANCING                                                         

 Issuance of common	      8,587	     -	     9,997	    -
  shares. net
----------------------------------------------------------------------
			      8,587	     -	     9,997	    -
----------------------------------------------------------------------
INVESTMENTS                                                       
 Purchase of capital assets  (9,565)   (29,336)    (10,409)   (97,487)
 Purchase of intangible
  assets                    (12,797)   (11,155)    (24,277)   (16,156)
 Change in working capital
  for investment purposes  	  -   (350,000)		 -   (350,000)
 Proceeds from sale of
  capital assets              5,622         29       5,622         29
----------------------------------------------------------------------
                            (16,740)  (390,462)    (29,064)  (463,614)
----------------------------------------------------------------------
Increase (decrease) in
 cash                       212,283   (295,366)    461,032   (438,943)
Cash and cash equivalents
 beginning of period      2,869,954  1,904,315   2,621,205  2,047,892
----------------------------------------------------------------------
Cash and cash
 equivalents
 end of period          $ 3,082,237            $ 3,082,237
                                   $ 1,608,949            $ 1,608,949
----------------------------------------------------------------------
 
/T/

 

 

 

 

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