Press Release

 

 

QSound Labs Reports Second Quarter Results for 2002

 

 

Calgary, Alberta-May 8, 2002 -- QSound Labs, Inc. (NASDAQ: QSND) a leading developer of audio, e-commerce and multimedia software products, reported revenues for the three months ended March 31, 2002 of $755,000 as compared to $843,000 for the same period in FY2001. The operating profit for the quarter was $168,000 or $0.02 per share as compared to $33,000 or $0.00 per share for the same period last year. Including non-cash items such as depreciation and amortization of goodwill, net income for the period was $88,000 or $0.01 per share as compared to a loss of $(179,000) or $(0.02) per share for the same period in FY2001.

 

The Company reported a working capital surplus of $2,383,000 compared to $2,288,000 as at December 31, 2001. Cash and cash equivalents decreased from $2,048,000 to $1,904,000 during the quarter as funds were expended on fixed asset acquisitions and general working capital.

 

"The Company continues to operate in a stable fashion despite the continuing uncertainty in the technology sector," stated David Gallagher, President and CEO of QSound Labs. "We have maintained an effective cost control program while at the same time continuing with our product development plans. Several new product lines will be delivered in the second quarter, one of which will be the first delivery pursuant to the recently announced agreement with Philips."

 

"The revenue mix by customer for each quarter over the past year has been ever changing. In the latest quarter, royalties received from our hearing aid license increased over previous periods as a result of new product releases by Starkey. This was partially offset by reduced iQfx®3 revenues from RealNetworks caused by reduced exposure of the product to consumers on their site. The uncertainty in the PC and CE markets, when added to this mix, provides an unclear picture of trends for later in the year; however in the short term, management expects financial results to be similar to this quarter."

 

 

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 March 31, 2002 and December 31, 2001                     
(Expressed in United States dollars, prepared using US GAAP)   
                                                                  
                              March 31, 2002         December 31, 2001
				(unaudited)                                                       
ASSETS                                                            
Current assets:                                                   
 Cash and cash equivalents    $   1,904,315             $   2,047,892
 Accounts receivable                581,539                   439,245
 Inventory                           28,195                    28,587
 Deposits and prepaid
  expenses                           91,936                    85,365
----------------------------------------------------------------------
                                  2,605,985                  2,601,089
                                                                  
                                                                  
Capital assets                      933,268                   932,776
Intangible assets                 2,424,765                 2,432,142
----------------------------------------------------------------------
                              $   5,964,018             $   5,966,007
----------------------------------------------------------------------
LIABILITIES AND
 SHAREHOLDERS' EQUITY                                             
Current Liabilities:                                              
 Accounts payable and
  accrued Liabilities         $     187,710             $     304,726
 Deferred Revenue                    34,960                     8,282
----------------------------------------------------------------------
                                    222,670                   313,008
                                                                  
Shareholders' equity:                                             
 Share capital (7,085,574
  common shares)                 43,939,684                43,939,684
 Contributed Surplus              1,114,316                 1,114,316
 Deficit                        (39,312,652)              (39,401,001)
----------------------------------------------------------------------
                                  5,741,348                 5,652,999
----------------------------------------------------------------------
                              $   5,964,018             $   5,966,007
----------------------------------------------------------------------



QSound Labs, Inc.                                                 
Consolidated Statements of Operations and Deficit    
For the 3 month period Ended March 31, 2002 and 2001    
(Expressed in United States dollars, prepared using US GAAP)  
                                                                  
			    
			        For three		 For three
			       months ended		months ended
                              March 31, 2002           March 1, 2001
			       (unaudited)		(unaudited)
			 
REVENUE
 Royalties, license fees
  and product sales           $     755,162             $     842,541
 Cost of product sales		      9,271 		       24,426
----------------------------------------------------------------------
				    745,891		      818,115 
			
EXPENSES:
 Marketing			    194,016		      239,915
 Operations			     81,532		      139,161
 Product engineering		    180,560		      251,780
 Administration			    121,594		      154,593
----------------------------------------------------------------------
				    577,702		      785,449
				    
----------------------------------------------------------------------				    
Operating profit		    168,189		       32,666

Other items
 Depreciation and amortization	    (80,037)		     (234,254)
 Other				        197		       22,518
----------------------------------------------------------------------
				    (79,840)		     (211,736)
				    
----------------------------------------------------------------------
Net income (loss) for the 
 period     			     88,349		     (179,070)
Deficit beginning of period	(39,401,001)		  (38,668,091)

----------------------------------------------------------------------
Deficit end of period         $ (39,312,652)		  (38,847,161)
----------------------------------------------------------------------

Income (loss) per common
 share			      $        0.01		$       (0.02)	    
----------------------------------------------------------------------





QSound Labs, Inc.                                                 
Consolidated Statements of Cash Flows   
For the 3 month period Ended March 31, 2002 and 2001    
(Expressed in United States dollars, prepared using US GAAP)  
                                                                  
			    
			        For three		 For three
			       months ended		months ended
                              March 31, 2002           March 1, 2001
			       (unaudited)		(unaudited)
Cash provided by (used in)

OPERATIONS
 Income (loss) for the 
  period		      $      88,349		$    (179,070)
 Items not requiring 
 (providing) cash:	
  Depreciation and 
   amortization			     80,037		      234,254
 Changes in working capital
  balances			   (238,810)		      162,438
---------------------------------------------------------------------- 
				    (70,424)		      217,622
----------------------------------------------------------------------

FINANCING
 Repurchase of common shares,
  net					  -		     (210,917)
 Repayment of debt			  -		     (275,000)
----------------------------------------------------------------------
					  -		     (485,917)
----------------------------------------------------------------------

INVESTMENTS
 Purchase of capital assets	    (68,152)		      (15,474)
 Purchase of intangible 
  assets			     (5,001)		       (9,153)
----------------------------------------------------------------------
				    (73,153)		      (24,627)
----------------------------------------------------------------------

Increase (decrease) in cash	   (143,577)		     (292,922)
Cash and cash equivalents 
 beginning of period		  2,047,892		    2,264,639
----------------------------------------------------------------------

Cash and cash equivalents 
 end of period		      $   1,904,315		$   1,971,717
 ----------------------------------------------------------------------
 
 
 
/T/

 

 

 

 

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