Press Release

 

 

QSound Labs Reports Second Quarter Results for 2002

 

 

CALGARY, CANADA - August 13, 2002 - 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, 2002 of $870,000 as compared to $821,000 for the same period in FY2001. The operating profit for the quarter was $188,000 or $0.03 per share as compared to $59,000 or $0.01 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 $84,000 or $0.01 per share as compared to a loss of $(160,000) or $(0.02) per share for the same period in FY2001. 

Revenues for the six months June 30, 2002 were $1,625,000 compared to $1,664,000 for the same period in FY2001. The operating profit was $356,000 or $0.05 per share in FY2002 and $91,000 or $0.01 per share in FY2001. Net income for the six month period in FY2002 was $173,000 or $0.02 per share in FY2002 as compared to a loss of $(339,000) or $(0.05) per share in FY2001.

The Company reported a working capital surplus of $2,518,000 compared to $2,288,000 as at December 31, 2001. The Company continues to generate cash flow from operations and as at June 30, 2002 had cash and cash equivalents of $1,609,000 on hand.

"In line with guidance provided three months ago, the Company produced similar results to the first quarter," stated David Gallagher, President and CEO of QSound Labs. "In the latest quarter, royalties received from our hearing aid license continued to be strong and iQfx(R)3 sales picked up in June as RealNetworks returned to a more aggressive marketing strategy."

"We expect royalties from Philips to be more material in the second half of this year, although the third quarter will likely produce similar results to the previous two. Our cost containment program continues to be effective as operating expenses are down 21% in FY2002 versus FY2001. Both our business units continue to be self-sustaining and we are endeavoring to build upon this platform by developing new audio and voice solutions for higher growth markets."

"As outlined in the recent presentation to the shareholders at the AGM, the Company is focussing most of its development resources on complete software solutions for audio and voice applications. To complement these activities, QSound has entered into a strategic relationship with a private corporation that provides cost saving network solutions for the small and medium enterprise telephony market. The companies intend to work together by leveraging their software development expertise to co-develop software applications for the converging telephony and network industries. As a part of this co-operation, QSound has advanced funds totaling $350,000 as at June 30, 2002 and are secured by the assets of the private company."


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, 2002 and December 31, 2001                      
(Expressed in United States dollars, prepared using US GAAP)   
                                                                  
                              June 30, 2002         December 31, 2001
(unaudited)                                                       
ASSETS                                                            
Current assets:                                                   
 Cash and cash equivalents    $   1,608,949             $   2,047,892
 Accounts receivable                654,537                   439,245
 Note receivable                    350,000                         -
 Inventory                           27,980                    28,587
 Deposits and prepaid
  expenses                          113,396                    85,365
----------------------------------------------------------------------
                                  2,754,862                 2,601,089
                                                                  
                                                                  
Capital assets                      892,322                   932,776
Intangible assets                 2,415,192                 2,432,142
----------------------------------------------------------------------
                              $   6,062,376             $   5,966,007
----------------------------------------------------------------------
LIABILITIES AND
 SHAREHOLDERS' EQUITY                                             
Current Liabilities:                                              
 Accounts payable and
  accrued Liabilities         $     205,524             $     304,726
 Deferred Revenue                    31,215                     8,282
----------------------------------------------------------------------
                                    236,739                   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                        (39,228,363)              (39,401,001)
----------------------------------------------------------------------
                                  5,825,637                 5,652,999
----------------------------------------------------------------------
                              $   6,062,376             $   5,966,007
----------------------------------------------------------------------



QSound Labs, Inc.                                                 
Consolidated Statements of Operations and Deficit    
For the periods Ended June 30, 2002 and 2001     
(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,
                              2002       2001        2002       2001
                          (unaudited)(unaudited)(unaudited)(unaudited)
REVENUE                                                           
 Royalties, license fees
  and product sales      $  870,165 $  821,451 $1,625,327  $1,663,992
 Cost of product sales       49,365     11,903     58,636      36,329
----------------------------------------------------------------------
                            820,800    809,548  1,566,691   1,627,663
                                                                  
EXPENSES:                                                         
 Marketing                  259,116    339,337    453,132     579,252
 Operations                  62,102     43,198    143,634     182,359
 Product engineering        160,157    219,057    340,717     470,837
 Administration             151,540    149,268    273,134     303,861
----------------------------------------------------------------------
                            632,915    750,860  1,210,617   1,536,309
----------------------------------------------------------------------
Operating profit            187,885     58,688    356,074      91,354
                                                                  
Other items                                                       
 Depreciation and
  amortization              (91,010)  (234,063)  (171,047)   (468,317)
 Gain on sale of capital
  assets                         29      6,515         29       6,515
 Other                      (12,615)     8,641    (12,418)     31,159
----------------------------------------------------------------------
                           (103,596)  (218,907)  (183,436)   (430,643)
----------------------------------------------------------------------
Net income (loss) for the
 period                      84,289   (160,219)   172,638    (339,289)
Deficit beginning of
 period                 (39,312,652)          (39,401,001)
                                   (38,847,161)           (38,668,091)
----------------------------------------------------------------------
Deficit end of period  $(39,228,363)         $(39,228,363)
                                  $(39,007,380)          $(39,007,380)
----------------------------------------------------------------------
Income (loss) per
 common share                $ 0.01    $ (0.02)    $ 0.02     $ (0.05)
----------------------------------------------------------------------



QSound Labs, Inc.                                                 
Consolidated Statements of Cash Flow
For the periods Ended June 30, 2002 and 2001     
(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,
                              2002       2001        2002       2001
                          (unaudited)(unaudited)(unaudited)(unaudited)
                                                                  
OPERATIONS                                                        
 Income (loss) for the
  period                   $ 84,289 $ (160,219) $  172,638 $ (339,289)
 Items not requiring
  (providing) cash:                                                
   Depreciation and
    amortization             91,010    234,063     171,047    468,317
 Gain on sale of capital
  assets                        (29)    (6,515)        (29)    (6,515)
 Changes in working capital
  balances                  (80,174)  (106,539)   (318,985)    55,899
----------------------------------------------------------------------
                             95,096    (39,210)     24,671    178,412
----------------------------------------------------------------------
FINANCING                                                         
 Repurchase of common
  shares, net                     -    (82,822)          -   (293,739)
 Repayment of debt                -   (275,000)          -   (550,000)
----------------------------------------------------------------------
                                  -   (357,822)          -   (843,739)
----------------------------------------------------------------------
INVESTMENTS                                                       
 Purchase of capital assets (29,336)   (20,590)    (97,487)   (36,064)
 Purchase of intangible
  assets                    (11,155)         -     (16,156)    (9,153)
 Change in working capital
  for investment purposes  (350,000)         -    (350,000)         -
 Proceeds from sale of
  capital assets                 29      6,515          29      6,515
----------------------------------------------------------------------
                           (390,462)   (14,075)   (463,614)   (38,702)
----------------------------------------------------------------------
Increase (decrease) in
 cash                      (295,366)  (411,107)   (438,943)  (704,029)
Cash and cash equivalents
 beginning of period      1,904,315  1,971,717   2,047,892  2,264,639
----------------------------------------------------------------------
Cash and cash
 equivalents
 end of period          $ 1,608,949            $ 1,608,949
                                   $ 1,560,610            $ 1,560,610
----------------------------------------------------------------------

/T/

 

 

 

 

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