Press Release

 

 

QSound Labs Reports First Quarter Results for 2000

 

 

Calgary, Alberta-May 18, 2000 -- QSound Labs, Inc. (NASDAQ: QSND) reported revenues for the three months ended March 31, 2000 of $835,351 as compared $799,406 for the same period in 1999. The operating loss for the quarter was $(270,791) or $(0.01) as compared to an operating profit of $23,313 or $0.00 for the same period last year. Including depreciation and amortization of goodwill, the net loss for the period was $(554,375) or $(0.02) per share as compared to net income of $3,809 or $0.00 for the same period in 1999.

Overall, product margins increased from 81% to 93% over the same period last year and the Company has working capital of $4.2 million, with no long-term debt.

"The financial results are reflective of a transitional period for the Company as it focuses on developing new opportunities for its technology base on the Internet," said David Gallagher, President and CEO, QSound Labs. "Our distribution relationships with RealNetworks and LookSmart are key to the Company's plan to maximize return on our principal product categories for the rest of this year. Downloadable software sales are already a large component of our total revenue base and we plan to grow this category through new soft-audio products and increased distribution. Similarly, our QCommerce revenue base will grow as we gain wider distribution for our innovative product offerings."

During the first quarter, the Company continued to pursue opportunities for leveraging its technologies and core competencies by finding suitable acquisition and/or merger opportunities that would provide synergistic technologies and increased revenue potential for QSound.

 

  • In March, the Company announced its intent to acquire StreamMagic, Inc. After careful review the Company is advising its shareholders that StreamMagic and QSound have mutually agreed that they will no longer pursue the acquisition because of current market conditions.
  • Negotiations with Choicemall.com were ongoing throughout the first quarter and the purchase of Choicemall.com from LookSmart Ltd. (NASDAQ: LOOK) was finalized during the second quarter.

 

As well, during the first quarter the Company signed agreements in the following areas:

 

  • PC/Multimedia:
    The Company was very pleased to announce Boston Acoustics as the first licensee of its soft audio technology. Boston Acoustics (NASDAQ: BOSA) introduced their new BA735 USB speaker to OEMs in January, 2000.
  • Internet Audio:
    RealNetworks (NASDAQ: RNWK) continues to be a major marketing force for the Company's Internet software audio products and in January QSound announced that its iQ™ software would be available to RealJukebox™ and RealJukeBox Plus™ users.
  • QSound licensed its new High Definition Audio for the Internet, QHD™ to Earjam.com in March. The technology will be included in Earjam's deluxe version of its Internet Music Player (IMP™).



This release contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995 concerning, among other things, future financial results. 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 the Company's ability to carry out its business strategy and marketing plans, including availability of sufficient resources for the Company to do so timely and cost effectively, commercialization of the Company's technologies, , consumer acceptance of the Company's products and services, dependence on the performance of third parties who have licensed 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 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 Sheet        
As at March 31, 2000        
Unaudited        
(Expressed in United States Dollars under United States GAAP)
                                   March 31, 2000    March 31, 1999
---------------------------------------------------------------------
        
ASSETS        
        
Current assets:        
 Cash and cash equivalents    $         3,769,280 $       1,762,976 
 Accounts receivable                    1,012,082         1,515,600 
 Short term investmenets                        -           100,000 
 Inventory                                164,564           140,253 
 Deposits and prepaid expenses            396,244           245,474 
---------------------------------------------------------------------

                                        5,342,170         3,764,303 
        
INVESTMENTS                             1,374,800                 -   
CAPITAL ASSETS                            992,234           888,927 
INTANGIBLE ASSETS                       4,321,571           284,221 
---------------------------------------------------------------------
        
                              $        12,030,775  $      4,937,451
---------------------------------------------------------------------
--------------------------------------------------------------------- 
        
LIABILITES AND SHAREHOLDERS' EQUITY        
        
Current liabilities:        
 Accounts payable and accrued
 liabilities                 $            304,430 $         146,311 
 Deferred revenue                         885,167                 - 
---------------------------------------------------------------------
  
                                        1,189,597           146,311
--------------------------------------------------------------------- 
        
Shareholders' equity:        
 Common shares (27,794,449)            42,592,723        33,143,518 
 Deficit                              (31,380,645)      (28,352,378)
 Accumulated other comprehensive
  income                                 (370,900)                -
---------------------------------------------------------------------
   
                                       10,841,178         4,791,140
--------------------------------------------------------------------- 
        
                             $         12,030,775  $      4,937,451
---------------------------------------------------------------------
--------------------------------------------------------------------- 

        
QSound Labs Inc.        
Consolidated Statements of Operations and Deficit        
For the Three Month Period Ended March 31, 2000        
Unaudited        
(Expressed in United States Dollars under United States GAAP)
                                   March 31, 2000    March 31, 1999
---------------------------------------------------------------------
        
REVENUE        
 Royalties, license fees and
  product sales                $          835,351 $         799,406 
 Cost of product sales                     52,748           147,593 
---------------------------------------------------------------------

                                          782,603           651,813
--------------------------------------------------------------------- 
        
EXPENSES:        
 Marketing                                342,791           259,702 
 Product engineering                      505,028           304,277 
 Administration                           205,575            64,521 
---------------------------------------------------------------------

                                        1,053,394           628,500
--------------------------------------------------------------------- 
        
OPERATING PROFIT (LOSS)                  (270,791)           23,313 
        
OTHER ITEMS        
 Depreciation and amortization           (268,443)          (59,201)
 Interest and other income                 19,528            24,697 
 Gain on sale of capital assets               120            15,000 
---------------------------------------------------------------------
        
NET INCOME (LOSS) FOR PERIOD             (519,586)            3,809 
        
DEFICIT BEGINNING OF PERIOD           (30,861,059)      (28,356,187)
---------------------------------------------------------------------
        
DEFICIT END OF PERIOD     $           (31,380,645) $    (28,352,378)
---------------------------------------------------------------------
---------------------------------------------------------------------
        
INCOME (LOSS) PER COMMON SHARE UNDER 
 UNITED STATES GAPP                       (0.02)               0.00
 ---------------------------------------------------------------------
---------------------------------------------------------------------

NET INCOME (LOSS) UNDER CANADIAN GAAP    (554,375)            3,809
---------------------------------------------------------------------
--------------------------------------------------------------------- 
        
INCOME (LOSS) PER COMMON SHARE UNDER
 CANADIAN GAAP                              (0.02)             0.00 
---------------------------------------------------------------------
---------------------------------------------------------------------


QSound Labs Inc.        
Consolidated Statement of Cash Flows         
For the Three Month Period Ended March 31, 2000        
Unaudited        
(Expressed in United States Dollars under United States GAAP)     
                                   March 31, 2000    March 31, 1999
---------------------------------------------------------------------
        
Cash provided by (used in)        
        
Operations        
 Income (loss) for the period    $       (519,586) $          3,809 
 Items not requiring (providing) cash:       
  Depreciation and amortization           268,443            59,201 
  Gain on sale of capital assets             (120)          (15,000)
 Changes in working capital balances     (237,879)         (331,636)
---------------------------------------------------------------------

                                         (489,142)         (283,626)
---------------------------------------------------------------------

Financing        
 Issuance of shares, net                2,755,202           203,886
---------------------------------------------------------------------
 
                                        2,755,202           203,886
--------------------------------------------------------------------- 
        
Investments        
 Purchase of capital assets               (16,300)          (32,897)
 Purchase of intangible assets             (4,963)                - 
 Purchase of other assets                       -          (265,000)
 Proceeds from sale of capital assets         120            15,000 
---------------------------------------------------------------------

                                          (21,143)         (282,897)
---------------------------------------------------------------------
        
Increase (decrease) in cash             2,244,917          (362,637)
Cash and cash equivalents beginning
 of period                              1,524,363         2,125,613
---------------------------------------------------------------------
        
                               $        3,769,280  $      1,762,976
---------------------------------------------------------------------
---------------------------------------------------------------------

/T/

 

 

 

 

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