Press Release

 

 

QSound Labs Reports First Quarter Results for 2005 at Annual Shareholders Meeting

 

 

Calgary, Alberta - April 29, 2005 -- QSound Labs, Inc. (NASDAQ: QSND), a leading developer of audio and voice software products, today reported its first quarter financial results at its 2005 Annual Shareholders meeting. Revenues for the three months ended March 31, 2005 were $477,000 as compared to $510,000 for the same period in FY2004. The net loss for the period was $(375,000) or $(0.04) per share as compared to a net loss of $(643,000) or $(0.09) per share for the same period in FY2004.

 

The Company reported a working capital surplus of $3,111,000 at March 31, 2005 of which cash comprised $2,747,000.

 

All proposed motions were carried at the shareholder meeting, including the election of directors, who as their first order of business appointed Grant Thornton LLP to act as auditors of the Company following the resignation, at the Company's request, of KPMG LLP as part of new initiatives related to containment of higher regulatory compliance costs in the Sarbanes-Oxley era.

 

In reviewing the status of the Company, David Gallagher, President of QSound Labs noted the following achievements during the previous year:

The license of QXpanderTM stereo enhancement and Q3D® positional audio to Qualcomm Incorporated, the world leader in CDMA technology, for use in their new enhanced multimedia chipsets, was an excellent launching pad and endorsement for the Company's microQTM product suite. Qualcomm is now shipping sample quantities of these chipsets to their customer base, for use in 3G enhanced mobile products.

These same technologies were licensed by Vodafone for use in its VFX reference implementation for 3G products.

The incorporation of microQ software in SmartPhones manufactured by MiTAC, E-TEN and Wistron is an indicator of the future trend towards using cost effective software solutions for audio rather than hardware specific solutions. This trend will result in semiconductor companies incorporating new features into their products thus opening up the market for our technology to larger volume product shipments.

The Company has successfully integrated its microQ software into platforms from most of the world's leading semiconductor companies and expects to have shipped technology on chipsets from Texas Instruments, Qualcomm and Intel by mid-2005. Additionally during that time, the Company's first Symbian phone design win will have shipped. By the end of 2005, the Company expects its technology to be shipping on solutions from ACD (a division of UTStarcom), ATI, Broadcom, LSI, PacketVideo, Pulsus Technology and Samsung Semiconductors. All of these relationships were established in 2004 but given the complex nature of these custom baseband and multimedia chipsets, design cycles are much longer than the Company has experienced in the consumer electronics and PC markets previously.

In the PC market, the Company has licensed its technology to VIA and Sony VAIO and in the DVD market has expanded its license with Toshiba to include DVD-R products.

The Company has also made progress in developing a new VoIP product line for the small business market and expects to conclude regulatory testing in time for a product launch later this year.

In conclusion, Mr. Gallagher stated "Management has been keenly aware that revenue from our legacy licenses would decline through 2004 and 2005 and had targeted the mobile market to not only replace these revenues but to also grow them. The efforts of the past eighteen months, although not yet reflected in the financial statements, have gone a long way towards achieving this goal."

 



This release contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995 concerning, among other things, expectation in 2005 of revenues from existing audio design wins, new microQ licenses and sales of new VoIP products, and little or no increase in expenses. 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, dependence on intellectual property, rapid technological change, competition, general economic and business conditions, continued growth of multimedia usage in the mobile devices market 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, 2005 and December 31, 2004
(Expressed in United States dollars, prepared using US GAAP)

                                              March 31,  December 31,
                                                  2005          2004

ASSETS
Current assets:
 Cash and cash equivalents                 $ 2,746,529   $ 3,327,543
 Accounts receivable                           462,677       210,967 
 Inventory                                     121,012       162,568
 Deposits and prepaid expenses                 135,479        61,438
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                                             3,465,697     3,762,516


Capital assets                               1,298,159     1,302,598
Intangible assets                              163,019       162,720
---------------------------------------------------------------------

                                           $ 4,926,875   $ 5,227,834
---------------------------------------------------------------------
---------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
 Accounts payable and accrued liabilities  $   285,897   $   245,664
 Deferred revenue                               68,696        59,745
---------------------------------------------------------------------
                                               354,593       305,409
---------------------------------------------------------------------
---------------------------------------------------------------------

Shareholders' equity:
 Share capital (8,437,585 common shares)    46,017,097    45,792,526
 Warrants                                    1,502,331     1,502,331
 Contributed surplus                         1,331,627     1,329,136
 Deficit                                   (44,278,773)  (43,701,568)
---------------------------------------------------------------------
                                             4,572,282     4,922,425
---------------------------------------------------------------------

                                           $ 4,926,875   $ 5,227,834
---------------------------------------------------------------------
---------------------------------------------------------------------


QSound Labs, Inc.
Consolidated Statements of Operations and Deficit
For the three month periods ended March 31, 2005 and 2004
(Expressed in United States dollars, prepared using US GAAP)


                                                  2005          2004
					    (unaudited)   (unaudited)
REVENUE
 Royalties and
  license fees				   $   337,648   $   205,467
 Product sales				       139,096       304,781
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					       476,744       510,248
 Cost of
  product sales					46,806       138,663
---------------------------------------------------------------------
					       429,938       371,585
EXPENSES:
 Marketing				       230,974       350,476
 Operations				        43,230        71,536
 Product
  engineering				       227,025       224,517
 Administration				       192,601       255,467
 Foreign
  exchange loss					 1,971           150
 Depreciation and
  amortization				       101,684       107,629
---------------------------------------------------------------------
					       797,485     1,009,775

---------------------------------------------------------------------
OPERATING
 (LOSS) PROFIT				      (367,547)     (638,190)

OTHER ITEMS
 Interest and
  other income					11,453         1,139
 Other					       (19,053)       (5,527)
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						(7,600)       (4,388)

---------------------------------------------------------------------
NET (LOSS)
 INCOME FOR
 PERIOD					      (375,147)     (642,578)
DEFICIT
 BEGINNING
 OF PERIOD				   (43,903,626)  (41,977,680)
---------------------------------------------------------------------
DEFICIT END
 OF PERIOD				  $(44,278,773) $(42,620,258)
---------------------------------------------------------------------
---------------------------------------------------------------------

INCOME PER
 COMMON SHARE				  $      (0.04) $      (0.09)
---------------------------------------------------------------------
---------------------------------------------------------------------


QSound Labs, Inc.
Consolidated Statements of Cash Flows
For the three month periods ended March 31, 2005 and 2004
(Expressed in United States dollars, prepared using US GAAP)

						  2005          2004
					    (unaudited)   (unaudited)

Cash provided
 by (used in)

OPERATIONS
 (Loss) Income
 for the period				   $  (375,147) $   (642,578)
 Items not
  requiring
  (providing)
  cash:
  Depreciation
   and
   amortization				       101,684       107,629
  Compensation
   cost of
   options issued				22,037       108,307
  Changes in
   working capital
   balances				      (249,903)      263,361
---------------------------------------------------------------------
					      (501,329)     (690,003)

FINANCING
 Issuance of
  common shares,
  net					        17,859        35,070
---------------------------------------------------------------------
					        17,859        35,070

INVESTMENTS
 Purchase of
  capital assets			       (82,654)      (31,666)
 Purchase of
  intangible
  assets				       (14,890)      (15,861)
 ---------------------------------------------------------------------
					       (97,544)      (47,527)

---------------------------------------------------------------------
Increase
 (decrease)
 in cash				      (581,014)     (702,460)
Cash and cash
 equivalents
 beginning of
 period					     3,327,543     2,061,093
---------------------------------------------------------------------
---------------------------------------------------------------------

Cash and cash
 equivalents
 end of period				   $ 2,746,529   $ 1,358,633
---------------------------------------------------------------------
---------------------------------------------------------------------
/T/

 

 

 

 

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