Press Release
QSound Labs Reports Third Quarter and Nine Month Results
Calgary, Alberta - November 9, 2000 -- QSound Labs, Inc.
(NASDAQ: QSND) reported third quarter revenues of $1,201,000, up 41%
compared to $855,000 in the same quarter in 1999. For the third quarter,
operating profit was $100,000 or $0.01 per share as compared to a loss of
$239,000 or $0.01 in 1999.
Net loss for the quarter, after deducting acquisition-related costs of
$760,000 and other non-operating costs in accordance with generally
accepted accounting principles, was $818,000 or $(0.03) per share as
compared to $1,902,000 or $(0.08) per share in 1999. In 1999, the Company
incurred a one-time charge of $1,489,000 for purchased, in-process
research and development.
Revenues for the nine months ended September 30, 2000 increased by 32% to
$3,236,000 as compared to $2,446,000 for the same period in 1999. The
operating loss was $68,000 as compared to $454,000 in 1999. Net loss for
the nine month period, which includes one-time charges of $ 897,000, was
$2,436,000 or $ (0.09) per share as compared to a net loss of $2,200,000
or $ (0.09), which included one-time charges of $1,489,000, for the
comparable period in 1999.
"We are satisfied with the progress made in the third quarter," stated
David Gallagher, President and CEO, QSound Labs, "the audio business
segment continues to be profitable and has now earned $760,000 in net
income over the past year. With respect to our e-commerce business
segment, we made significant progress in building the marketing team,
implementing our plans and integrating and rationalizing the operations of
our web properties."
Business Outlook
The following statements are based on current expectations. These
statements are forward-looking and actual results may differ materially.
As stated in the previous quarter, management is forecasting revenue
growth for the audio business segment in the second half of FY2000 based
on the existing strategic relationships with Real Networks, Philips,
Starkey and Mitsubishi and the establishment of more distribution channels
and partnerships for our software products. For FY2001, management expects
additional growth contributions from new initiatives targeted at the
exploding digital music revolution and the increasing use and adoption of
soft audio solutions for PC's and Internet appliances.
For the e-commerce business segment, marketing programs have been put in
place to increase the merchant base and management continues to develop
further relationships in order to acquire merchants. The planned launch of
ChoiceWorld.com, an online shopping mall, in the fourth quarter, will
broaden the revenue base for QCommerce, from only ASP ("Application
Service Provider") service income to also include listing, directory and
advertising fee income, while maintaining the existing cost structure.
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, manufacturing uncertainties, uncertainties
relating to product development and commercial introduction, dependence on
intellectual property, rapid technological change and competition,
continued growth of the Internet and other risks that may be detailed from
time to time in the Company's filings 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 September 30, 2000 and 1999
Unaudited
(Expressed in United States Dollars
under United States GAAP) September 30, September 30,
2000 1999
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ASSETS
Current assets:
Cash and cash equivalents $ 2,545,485 $ 1,802,798
Accounts receivable 1,117,561 1,275,622
Inventory 95,308 256,510
Deposits and prepaid expenses 117,479 274,114
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3,875,833 3,609,044
INVESTMENTS 924,800 -
CAPITAL ASSETS 1,279,931 1,015,164
INTANGIBLE ASSETS 8,463,828 5,957,826
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$14,544,392 $10,582,034
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 352,644 $ 568,690
Accrued liabilities 1,523,865 92,428
Deferred revenue 383,908 24,448
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2,260,417 685,566
Long-term liability 1,000,000 -
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3,260,417 685,566
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Shareholders' equity:
Common Shares
(29,051,671 common shares) 44,952,036 38,963,062
Deficit (33,297,161) (29,066,594)
Accumulated other comprehensive income (370,900) -
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11,283,975 9,896,468
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$14,544,392 $10,582,034
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QSOUND LABS, INC.
Consolidated Statements of Operations and Deficit
For the Nine Month Periods Ended September 30, 2000 and 1999
(Expressed in United States Dollars under United States GAAP)
Unaudited For three For three For nine For nine
months ended months ended months ended months ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2000 1999 2000 1999
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REVENUE
Royalties, license
fees and product
sales $ 1,201,357 $ 854,662 $ 3,235,628 $ 2,446,046
Cost of
product sales 71,368 28,872 148,903 242,322
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1,129,989 825,790 3,086,725 2,203,724
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EXPENSES:
Marketing 509,767 506,424 1,268,153 1,149,378
Product
engineering 348,184 334,525 1,304,979 1,070,528
Administration 171,721 223,748 581,811 438,145
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1,029,672 1,064,697 3,154,943 2,658,051
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OPERATING PROFIT
(LOSS) 100,317 (238,907) (68,218) (454,327)
OTHER ITEMS
Depreciation and
amortization (739,170) (180,630) (1,410,710) (314,072)
Write-off of
acquired in-process
research and
development - (1,489,460) (446,639) (1,489,460)
Investment
write-down (200,000) - (450,000) -
Other 21,025 7,382 (60,535) 57,992
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NET INCOME (LOSS)
FOR PERIOD (817,828) (1,901,615) (2,436,102) (2,199,867)
DEFICIT BEGINNING
OF PERIOD (31,380,645) (28,654,439) (30,861,059) (28,356,187)
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DEFICIT END
OF PERIOD $(32,198,473)$(30,556,054)$(33,297,161)$(30,556,054)
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INCOME (LOSS) PER
COMMON SHARE
UNDER UNITED
STATES GAAP (0.03) (0.08) (0.09)$ (0.09)
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NET INCOME (LOSS)
UNDER CANADIAN
GAAP (887,510) (412,154) (2,171,923)$ (710,407)
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INCOME (LOSS) PER
COMMON SHARE
UNDER CANADIAN
GAAP (0.03) (0.02) (0.08)$ (0.03)
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Operating Income
(loss) per share 0.00 (0.01) (0.00)
QSOUND LABS, INC.
Consolidated Statements of Cash Flows
For the Nine Month Periods Ended September 30, 2000 and 1999
(Expressed in United States Dollars under United States GAAP)
Unaudited For three For three For nine For nine
months ended months ended months ended months ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2000 1999 2000 1999
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Cash provided by
(used in)
Operations
Income (loss) for
the period $ (817,828)$ (412,155) $(2,436,102) $ (710,407)
Items not requiring
(providing) cash:
Depreciation and
amortization 739,170 74,241 1,410,710 207,682
Gain on sale of
capital assets (135) - (255) (20,500)
Write-off of
acquired in-process
research and
development - - 446,639 -
Investment
write-down 200,000 - 450,000 -
Options granted
for services - 129,131 - 193,131
Changes in working
capital balances (161,081) 475,334 1,075,483 402,697
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(39,874) 266,551 946,475 72,603
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Financing
Issuance of
shares, net (136,168) 5,331,645 2,604,243 5,830,299
Increase in long-
term liability (500,000) 1,000,000
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(636,168) 5,331,645 3,604,243 5,830,299
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Investments
Purchase of
capital assets (910) (185,817) (451,781) (288,391)
Purchase of
intangible assets (20,103) (5,957,826) (3,078,070) (5,957,826)
Proceeds from sale
of other assets - 743,688 - -
Proceeds from sale
of capital assets 135 - 255 20,500
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(20,878) (5,399,955) (3,529,596) (6,225,717)
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Increase (decrease)
in cash (696,920) 198,241 1,021,122 (322,815)
Cash and cash
equivalents
beginning of
period 3,242,405 1,604,557 1,524,363 2,125,613
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Cash and cash
equivalents end
of period $ 2,545,485 $ 1,802,798 $ 2,545,485 $ 1,802,798
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/T/