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VIQ Solutions Reports First Quarter 2014 Results

MARKHAM, ONTARIO -- (Marketwired) -- 05/22/14 -- 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, 2014. Results are reported in Canadian dollars and are prepared in accordance with International Financial Reporting Standards ("IFRS").

"We have started to see an increase in business activity in the global market for digital recording and management for large-scale integrated projects which capture, manage and store digital records," said David Outhwaite, President and Chief Executive Officer of VIQ Solutions. "Our pipeline of opportunities continues to grow on a global basis in the digital media capture and management industry and we are working to convert these market opportunities into significant contract wins."

Financial Highlights for the Quarter

--  Revenue was $3.0 million for the three month period ended March 31, 2014
    as compared to $3.9 million for the same period in 2013, representing a
    decrease in revenue of 22% primarily due to the loss of a material
    contract in Western Australia for our Spark & Cannon business in June

--  Revenue from the computer products and services business unit was $0.6
    million for the three month period ended March 31, 2014 as compared to
    $0.5 million for the same period in 2013, representing an increase of

--  Selling and administrative expenses were $1.1 million for the three
    month period ended March 31, 2014 as compared to $1.4 million from the
    three month period ended March 31, 2013 due to the operational
    efficiencies that were implemented in 2013;

--  Research and development expenses were $120,398 for the three month
    period ended March 31, 2014 as compared to $183,624 for the previous
    year representing a decrease of $63,226 or 35%;

--  EBITDA(1) loss for the three month period ended March 31, 2014 was
    $15,928 as compared to positive EBITDA of $171,176 for the same period
    in 2013;

--  Net loss for the three month period ended March 31, 2014 was $81,081 as
    compared to net income of $113,483 for the same period in 2013.
    Comprehensive income for the three month period ended March 31, 2014 was
    $47,638 as compared to $159,916 for the same period in 2013;

--  Cash flow used in operating activities was $118,465 for the three month
    period ended March 31, 2014 as compared to a cash inflow of $447,757 for
    the same period in 2013. The decrease in cash from operations relates
    primarily due to a decline in net income and changes in our investment
    in working capital; and

--  Subsequent to the period, the Corporation obtained a short-term bridge
    loan with a face value of $700,000 bearing interest at a rate of 13% per
    annum. The loan is repayable on the one-year anniversary and is secured
    by a general security agreement covering all assets of the Corporation.
    A portion of the proceeds were used to retire the principal and interest
    owing on the existing $200,000 secured bridge loan.


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 2014 condensed consolidated interim 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, 2014 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 2014 condensed consolidated interim financial statements and the audited consolidated financial statements for the year ended December 31, 2013, 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

Certain statements included in this news release constitute forward looking statements or forward looking information under applicable securities legislation. Such forward looking statements or information are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes. Forward looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook. Forward looking statements or information in this news release include, but are not limited to, management's targets for the Corporation's growth in 2014.

Forward looking statements or information is based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although VIQ Solutions believes that the expectations reflected in such forward looking statements or information are reasonable, undue reliance should not be placed on forward looking statements because VIQ Solutions can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this news release, assumptions have been made regarding, among other things, the Corporation's recent initiatives, and that sales and prospects may provide incremental value for shareholders. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used.

Forward looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by VIQ Solutions and described in the forward looking statements or information. These risks and uncertainties may cause actual results to differ materially from the forward looking statements or information. Readers are cautioned that the foregoing list is not exhaustive of all possible risks and uncertainties.

The forward looking statements or information contained in this news release are made as of the date hereof and VIQ Solutions undertakes no obligation to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or otherwise unless required by applicable securities laws. The forward looking statements or information contained in this news release are expressly qualified by this cautionary statement.

VIQ Solutions Inc.
Condensed Consolidated Interim Balance Sheets
(Expressed in Canadian dollars)
                                                   March 31,   December 31,
                                                        2014           2013


Current assets
 Cash                                          $     696,670  $     789,197
 Trade and other receivables                       1,632,147      1,166,612
 Inventories                                           3,697          4,880
 Prepaid expenses                                     56,601         73,913
                                                   2,389,115      2,034,602
Non-current assets
 Restricted cash                                     113,870        146,753
 Property and equipment                              674,557        668,832
 Goodwill                                          1,606,826      1,543,695
 Deferred tax assets                                 305,465        282,993
                                               $   5,089,833  $   4,676,875


Current liabilities
 Trade and other payables                      $   1,307,274  $     983,364
 Short-term debt                                     198,875        197,994
 Provisions                                          426,753        434,108
 Unearned revenue                                    252,428        219,769
 Deferred lease incentives                            19,552         18,685
 Current portion of obligations under finance
  lease                                              102,620         98,396
 Current portion of long-term debt                    22,692         22,692
                                                   2,330,194      1,975,008
Non-current liabilities
 Provisions                                          127,391        106,752
 Deferred lease incentives                             4,888          8,485
 Obligations under finance lease                     138,716        157,502
 Long-term debt                                       19,697         25,370
Total liabilities                                  2,620,886      2,273,117


Capital stock                                     11,578,213     11,578,213
Contributed surplus                                1,883,246      1,865,695
Accumulated other comprehensive income (loss)        120,558         (8,161)
Deficit                                          (11,113,070)   (11,031,989)
                                                   2,468,947      2,403,758
Total equity and liabilities                   $   5,089,833  $   4,676,875

VIQ Solutions Inc.
Condensed Consolidated Interim Statements of Comprehensive Income
(Expressed in Canadian dollars)
                                                Three months ended March 31
                                                        2014           2013

Revenue                                        $   3,049,774  $   3,906,662

Cost of sales                                      1,856,796      2,246,161
Gross profit                                       1,192,978      1,660,501

 Selling, general and administrative expenses      1,140,148      1,354,314
 Research and development expenses                   120,398        183,624
                                                   1,260,546      1,537,938

Income (loss) from operations                        (67,568)       122,563

Finance loss
 Interest income                                       2,879          7,484
 Interest expense                                    (15,459)        (7,699)
 Foreign exchange loss                                  (933)        (8,865)
Net finance loss                                     (13,513)        (9,080)

Net income (loss) for the period               $     (81,081) $     113,483

Item that may be reclassified to profit or

 Exchange differences on translating foreign
  operations                                         128,719         46,433
Comprehensive income for the period            $      47,638  $     159,916

Net income (loss) per share
 Basic and diluted                             $       (0.00) $        0.00

Weighted average number of common shares
 outstanding - basic                              90,957,000     90,638,538
Weighted average number of common shares
 outstanding - diluted                            90,957,000     90,707,886

VIQ Solutions Inc.
Condensed Consolidated Interim Statements of Cash Flows
(Expressed in Canadian dollars)
                                                Three months ended March 31
                                                        2014           2013

Cash provided by (used in):
Operating activities
Net income (loss) for the period               $     (81,081) $     113,483
Items not affecting cash:
 Depreciation                                         49,694         49,994
 Stock-based compensation                             17,551         21,655
 Provisions                                           20,639         13,659
 Interest accretion on bridge loan                       881              -
 Amortization of deferred lease incentive             (2,730)        (4,305)
 Unrealized foreign exchange gain                    (25,594)          (819)
 Changes in non-cash operating working capital       (97,825)       254,090

Cash from (used in) operating activities            (118,465)       447,757

Investing activities
 Purchase of property and equipment                  (14,162)       (16,257)
 Change in restricted cash                            44,300              -

Cash from (used in) investing activities              30,138        (16,257)

Financing activities
 Repayment of long-term debt                          (5,673)        (5,673)
 Finance lease payments                              (31,521)       (15,958)

Cash used for financing activities                   (37,194)       (21,631)

Net increase (decrease) in cash during the
 period                                             (125,521)       409,869

Cash, beginning of period                            789,197      1,129,107

Effect of exchange rate changes on cash               32,994         13,679

Cash, end of period                            $     696,670  $   1,552,655

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