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VIQ Solutions Reports First Quarter 2012 Results

Profitable quarter builds upon positive 2011 performance (May 24, 2012)

MARKHAM, ONTARIO -- (Marketwire) -- 05/24/12 -- VIQ Solutions Inc. ("VIQ Solutions" or the "Corporation") (TSX VENTURE:VQS), a world leader in computer-based digital audio and video capture and management, today reported its financial results for the three month period ended March 31, 2012. Results are reported in Canadian dollars and are prepared in accordance with International Financial Reporting Standards ("IFRS").

"In Q1, VIQ Solutions converted numerous global opportunities into significant contract wins, resulting in a positive net income, EBITDA(1) and cash flow," said David Outhwaite, President and Chief Executive Officer of VIQ Solutions. "With a full pipeline and growing reputation around the world, we look to continue to build on the momentum we established in 2011."

Financial Highlights for the Quarter

-- Achieved strong financial results with positive EBITDA of $173,518 and net income of $113,902 for the three month period ended March 31, 2012; -- Revenue from our transcription and recording services business units was $3.2 million for the three month period ended March 31, 2012, as compared to $2.6 million for the same period in 2011 representing an increase of $0.6 million or 20%, primarily due to an increase in business activity from our Australian transcription services business unit; -- Revenue from the computer products and services business unit was $0.82 million for the three month period ended March 31, 2012 as compared to $1.75 million for the same period in 2011. The Corporation earned approximately $1.5 million of software revenue from one contract in the first quarter of 2011 in connection with the national rollout in the United Kingdom; and -- Cash flows used in operating activities were $110,255 for the three month period ended March 31, 2012 as compared to $467,127 for the same period in 2011.

Business Highlights for the Quarter

-- Successfully implemented the national roll-out of 536 installations of our multi-year digital audio recording and storage project in the United Kingdom with Atos Origin and Logica. The Corporation continues to earn on-going revenue from the UK project from related software support, installation and professional development services; -- Awarded a contract for digital audio and video capture in Mexico with local reseller Dyntra, S.A de C.V. to provide Encompass RPC software and Cisco hardware to the federal courthouse in Merida in the Mexican state of Yucatan and successfully installed the pilot system in the quarter; -- Awarded a Canadian contract for digital audio capture and management by the Courts Administration Service to supply bilingual digital audio recording software and hardware for 48 fixed and mobile recording workstations for the Federal Court and Tax Court of Canada across the country; and -- Awarded a contract to provide digital audio capture and management software with local reseller Digital Voice Processing for the Botswana High Court in Gaborone, Botswana.


1. EBITDA is a non-IFRS earnings measure which does not have any standardized meaning prescribed by IFRS and therefore may not be comparable to EBITDA presented by other companies. EBITDA represents earnings before interest expense, income taxes, depreciation and amortization. This measure is important to management since it is used by potential investors to evaluate the Corporation's operating performance and ability to incur and service debt, and as a valuation metric. Investors are cautioned that this non-IFRS financial measure should not be construed as an alternative to other measures of financial performance calculated in accordance with IFRS.

Additional Information

The unaudited first quarter 2012 interim consolidated financial statements and results of operations and Management's Discussion and Analysis of Results and Financial Condition for the three month period ended March 31, 2012 will be posted on VIQ Solutions' website (under Investor Relations) at and on SEDAR's website at The financial information included in this release is qualified in its entirety and should be read together with the unaudited first quarter 2012 interim financial statements and the audited consolidated financial statements for the year ended December 31, 2011, including the notes thereto.

About VIQ Solutions Inc.

VIQ Solutions is a global leader in computer-based digital audio and video capture and management. We develop software solutions that capture, digitize, and compress audio and video data, which is securely stored in a multi-tiered server system where it is easily searchable and shareable. Our innovative media processor technology allows users to remotely control audio-video capture in multiple locations from a single satellite location, allowing large-scale and complex installations to be managed efficiently by fewer resources. VIQ Solutions' technologies are installed in courts, legislative assemblies, law enforcement and hearing rooms around the world.

Forward-looking Statements

This release contains forward-looking statements and other statements concerning the Corporation's objectives and strategies and management's beliefs, plans and intentions about our achievements, goals, performance and other future events. These statements involve risks and uncertainties, which may cause actual results to differ materially from the statements made. When used in this press release, the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "will," "would" and similar expressions are intended to identify forward-looking statements. Such statements reflect VIQ Solutions' current views with respect to future events and are subject to such risks and uncertainties. Many factors could cause our actual results to differ materially from the statements made due to a number of factors including risks related to our ability to successfully execute our business plan which includes our revenue growth, our liquidity, our operating results, our technology and products. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated or expected. VIQ Solutions does not intend and does not assume any obligation to update these forward-looking statements.

VIQ Solutions Inc. Condensed Consolidated Interim Balance Sheets (Expressed in Canadian dollars) (Unaudited) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- March 31, December 31, 2012 2011 ---------------------------------------------------------------------------- Assets Current assets Cash $ 1,577,303 $ 1,646,138 Trade and other receivables 1,934,161 1,330,474 Inventories 6,775 7,025 Prepaid expenses 79,236 123,228 ---------------------------------------------------------------------------- 3,597,475 3,106,865 Non-current assets Restricted cash 150,260 151,215 Property and equipment 716,742 754,397 Goodwill 1,615,869 1,621,395 Deferred tax assets 258,353 260,001 ---------------------------------------------------------------------------- $ 6,338,699 $ 5,893,873 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Liabilities Current liabilities Trade and other payables $ 1,171,753 $ 951,687 Provisions 549,087 584,870 Short-term debt 75,000 75,000 Unearned revenue 245,666 187,179 Deferred lease incentives 21,628 21,766 Current portion of obligations under finance lease 51,461 59,266 Current portion of long-term debt 22,692 22,692 ---------------------------------------------------------------------------- 2,137,287 1,902,460 Non-current liabilities Provisions 174,538 165,974 Deferred lease incentives 45,234 50,964 Obligations under finance lease 36,178 45,528 Long-term debt 65,081 70,754 ---------------------------------------------------------------------------- Total liabilities 2,458,318 2,235,680 ---------------------------------------------------------------------------- Equity Capital stock 11,578,213 11,438,947 Contributed surplus 1,766,453 1,781,433 Accumulated other comprehensive income 142,960 158,960 Deficit (9,607,245) (9,721,147) ---------------------------------------------------------------------------- 3,880,381 3,658,193 ---------------------------------------------------------------------------- Total equity and liabilities $ 6,338,699 $ 5,893,873 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- VIQ Solutions Inc. Condensed Consolidated Interim Statements of Comprehensive Income (Expressed in Canadian dollars) (Unaudited) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months ended March 31 2012 2011 ---------------------------------------------------------------------------- Revenue $ 3,969,214 $ 4,374,721 Cost of sales 2,286,589 1,856,163 ---------------------------------------------------------------------------- Gross profit 1,682,625 2,518,558 ---------------------------------------------------------------------------- Expenses Selling, general and administrative expenses 1,391,754 1,331,932 Research and development expenses 182,528 205,535 ---------------------------------------------------------------------------- 1,574,282 1,537,467 ---------------------------------------------------------------------------- Income from operations 108,343 981,091 Interest income 9,424 6,148 Interest expense (8,566) (49,504) Foreign exchange gain (loss) 4,701 (6,906) ---------------------------------------------------------------------------- Net finance gain (loss) $ 5,559 $ (50,262) Net income for the period $ 113,902 $ 930,829 Exchange differences on translating foreign operations (16,000) (21,278) ---------------------------------------------------------------------------- Comprehensive income for the period $ 97,902 $ 909,551 ---------------------------------------------------------------------------- Net income per share Basic and diluted $ 0.00 $ 0.01 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Weighted average number of common shares outstanding - basic 90,638,538 87,531,195 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Weighted average number of common shares outstanding - diluted 90,707,886 91,085,570 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- VIQ Solutions Inc. Condensed Consolidated Interim Statements of Cash Flows (Expressed in Canadian dollars) (Unaudited) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months ended March 31 2012 2011 ---------------------------------------------------------------------------- Cash provided by (used in): Operating activities Net income for the period $ 113,902 $ 930,829 Items not affecting cash: Depreciation 51,050 63,944 Stock-based compensation 43,286 114,814 Provisions 8,564 14,650 Interest accretion on bridge loans - 2,084 Amortization of deferred lease incentive (5,868) (6,296) Unrealized foreign exchange loss (gain) (4,514) 5,277 Changes in non-cash operating working capital (316,675) (1,592,429) ---------------------------------------------------------------------------- Cash used in operating activities (110,255) (467,127) ---------------------------------------------------------------------------- Investing activities Purchase of property and equipment (15,437) (35,542) ---------------------------------------------------------------------------- Cash used in investing activities (15,437) (35,542) ---------------------------------------------------------------------------- Financing activities Advances in short-term debt - 575,000 Repayment of short-term debt - (1,115,000) Repayment of long-term debt (5,673) (5,673) Proceeds from stock options exercised for cash 81,000 826 Proceeds from private placement, net of issuance costs - 1,989,199 Finance lease payments (17,155) (20,167) ---------------------------------------------------------------------------- Cash provided by financing activities 58,172 1,424,185 ---------------------------------------------------------------------------- Net increase (decrease) in cash during the period (67,520) 921,516 Cash, beginning of period 1,646,138 381,544 Effect of exchange rate changes on cash (1,315) (7,893) ---------------------------------------------------------------------------- Cash, end of period $ 1,577,303 $ 1,295,167 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

VIQ Solutions Inc.
David Outhwaite
President & CEO
(905) 948-8266 ext. 250
[email protected]

VIQ Solutions Inc.
Karen Hersh
Chief Financial Officer
(905) 948-8266 ext. 240
[email protected]

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