Press Release
QSound Labs Reports Third Quarter Results for 2003
Calgary, Alberta – November 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 September 30, 2003 of $466,000 as compared to $1,309,000 for the same period in FY2002. The operating loss for the quarter was $(383,000) or $(0.06) per share as compared to an operating profit of $630,000 or $0.09 per share for the same period last year. After allowing for non-cash items such as depreciation, and foreign exchange losses, the net loss for the period was $(464,000) or $(0.06) per share as compared to net income of $504,000 or $0.07 per share for the same period in FY2002.
Revenues for the nine months ended September 30, 2003 were $1,680,000 compared to $2,934,000 in FY2002. The operating loss was $(606,000) or $(0.09) per share in FY2003 and the operating profit was $992,000 or $0.14 per share in FY2002. Net loss for FY2003 was $(703,000) or $(0.10) per share as compared to net income of $676,000 or $0.10 per share in FY2002.
The Company reported a working capital surplus of $2,774,000 at September 30, 2003 of which cash comprised $2,488,000. Operating activities have utilized $63,000 of cash during this nine month period.
“During this quarter the Company began seeing the results of its marketing efforts in the mobile device and Internet Telephony markets,” stated David Gallagher, President and CEO of QSound Labs. “Specifically, the Company gained its first OEM mobile phone design win for microQ, as well as negotiating partnerships with several semiconductor companies to co-develop and market microQ silicon solutions in 2004. More specific details will be made available as products are released to the market.”
“Revenue from our Internet Telephony product line increased in line with managements’ expectations. The Company also made progress in sourcing a suitable hardware manufacturing partner for the future. It is the Company’s goal to focus on value added software for this growth market while relying on partners for manufacturing expertise.”
“Revenue from other business segments has remained flat as anticipated.
With the extension of our Toshiba license as previously announced and
Philips continued marketing efforts to the PC market, management expects
some growth in 2004 in these areas to complement the mobile and Internet
Telephony markets.”
This release contains forward-looking
statements within the meaning of the Private Securities Litigation Act
of 1995 concerning, among other things, expectation of revenues from customers
for new products for the mobile device and IP telephony markets and from
existing licensees. 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, continued
growth of mobile devices and Internet telephony products, successful product
development, introduction and acceptance, QSound's ability to carry out
its business strategy and marketing plans, dependence on intellectual
property, rapid technological change, competition, general economic and
business conditions, 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 September 30, 2003 and December 31, 2002
(Expressed in United States dollars, prepared using US GAAP)
September 30, 2003 December 31, 2002
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 2,488,449 $ 2,621,205
Accounts receivable 306,459 929,519
Inventory 129,234 16,455
Deposits and prepaid expenses 124,622 58,674
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3,048,764 3,625,853
Note receivable - 500,000
Capital assets 1,204,592 747,553
Goodwill 2,184,589 2,184,589
Intangible assets 190,787 213,771
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$ 6,628,732 $ 7,271,766
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and
accrued liabilities $ 176,863 $ 220,894
Deferred revenue 97,836 120,511
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274,699 341,405
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Shareholders' equity
Share capital
(7,180,844 common shares) 44,214,324 44,088,094
Contributed surplus 1,114,316 1,114,316
Deficit (38,974,607) (38,272,049)
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6,354,033 6,930,361
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$ 6,628,732 $ 7,271,766
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QSound Labs, Inc.
Consolidated Statements of Operations and Deficit
For the periods ended September 30, 2003 and 2002
(Expressed in United States dollars, prepared using US GAAP)
For three For three
months ended months ended
September 30, 2003 September 30, 2002
(unaudited) (unaudited)
REVENUE
Royalties and license fees $ 114,879 $ 898,977
Product sales 350,788 409,750
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465,667 1,308,727
Cost of product sales 136,749 133,684
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328,918 1,175,043
EXPENSES:
Marketing 287,549 217,134
Operations 45,667 49,069
Product engineering 244,753 164,304
Administration 133,723 114,095
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711,692 544,602
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Operating (loss) profit (382,774) 630,441
Other items
Depreciation and amortization (74,904) (135,749)
Interest and other income 11,031 6,006
Gain (loss) on sale of capital assets 179 652
Other (17,048) 2,206
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(80,742) (126,885)
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Net (loss) income for the period (463,516) 503,556
Deficit beginning of period (38,511,091) (39,228,363)
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Deficit end of period $ (38,974,607) $ (38,724,807)
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Income (loss) per common share $ (0.06) $ 0.07
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QSound Labs, Inc.
Consolidated Statements of Operations and Deficit
For the periods ended September 30, 2003 and 2002
(Expressed in United States dollars, prepared using US GAAP)
For nine For nine
months ended months ended
September 30, 2003 September 30, 2002
(unaudited) (unaudited)
REVENUE
Royalties and license fees $ 691,287 $ 1,890,911
Product sales 988,538 1,043,143
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1,679,825 2,934,054
Cost of product sales 283,762 192,320
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1,396,063 2,741,734
EXPENSES:
Marketing 866,796 670,266
Operations 121,921 192,703
Product engineering 598,703 505,021
Administration 414,190 381,874
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2,001,610 1,749,864
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Operating (loss) profit (605,547) 991,870
Other items
Depreciation and amortization (237,628) (306,796)
Interest and other income 34,153 19,298
Gain (loss) on sale of capital assets (1,729) 681
Other 108,193 (28,859)
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(97,011) (315,676)
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Net (loss) income for the period (702,558) 676,194
Deficit beginning of period (38,272,049) (39,401,001)
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Deficit end of period $ (38,974,607) $ (38,724,807)
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Income (loss) per common share $ (0.10) $ 0.10
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QSound Labs, Inc.
Consolidated Statements of Cash Flows
For the periods ended September 30, 2003 and 2002
(Expressed in United States dollars, prepared using US GAAP)
For three For three
months ended months ended
September 30, 2003 September 30, 2002
(unaudited) (unaudited)
Cash provided by (used in)
OPERATIONS
(loss) income for the period $ (463,516) $ 503,556
Items not requiring (providing) cash:
Depreciation and amortization 74,904 135,749
Compensation cost of options
issued to non-employees - -
Loss (gain) on sale of capital Assets - (652)
Changes in working capital balances (154,109) (444,150)
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(542,721) 194,503
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FINANCING
Issuance of common shares, net 1,645 -
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1,645 -
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INVESTMENTS
Purchase of capital assets (40,989) (5,034)
Purchase of intangible assets (11,902) (16,568)
Change in working capital for
investment purposes - (150,000)
Proceeds from sale of capital
assets 179 652
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(52,712) (170,950)
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(Decrease) increase in cash (593,788) 23,553
Cash and cash equivalents
beginning of period 3,082,237 1,608,949
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Cash and cash equivalents end
of period $2,488,449 $1,632,502
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QSound Labs, Inc.
Consolidated Statements of Cash Flows
For the periods ended September 30, 2003 and 2002
(Expressed in United States dollars, prepared using US GAAP)
For nine For nine
months ended months ended
September 30, 2003 September 30, 2002
(unaudited) (unaudited)
Cash provided by (used in)
OPERATIONS
(loss) income for the period $ (702,558) $ 676,194
Items not requiring (providing) cash:
Depreciation and amortization 237,628 306,796
Compensation cost of options
issued to non-employees 5,864 -
Loss (gain) on sale of capital Assets 1,908 (681)
Changes in working capital balances 394,536 (763,135)
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(62,622) 219,174
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FINANCING
Issuance of common shares, net 11,642 -
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11,642 -
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INVESTMENTS
Purchase of capital assets (51,398) (100,002)
Purchase of intangible assets (36,179) (35,243)
Change in working capital for
investment purposes - (500,000)
Proceeds from sale of capital assets 5,801 681
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(81,776) (634,564)
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(Decrease) increase in cash (132,756) (415,390)
Cash and cash equivalents
beginning of period 2,621,205 2,047,892
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Cash and cash equivalents end
of period $ 2,488,449 $ 1,632,502
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/T/