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VIQ Solutions Reports Third Quarter 2012 Results

MARKHAM, ONTARIO -- (Marketwire) -- 11/21/12 -- 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 and nine month periods ended September 30, 2012. Results are reported in Canadian dollars and are prepared in accordance with International Financial Reporting Standards ("IFRS").

"After two relatively slow quarters for the computer products and services industry, we have started to see a resurgence in business activity in the global market due to the increased market demand for digital recording in various market verticals including the medical, insurance, law enforcement, military and transportation industries," 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


--  Revenue was $4.0 million and $11.6 million for the three and nine month
    periods ended September 30, 2012 as compared to $3.7 million and $11.9
    million for the same periods in 2011; 
    
--  Revenue from our transcription and recording services business unit was
    $3.5 million and $10.0 million for the three and nine month periods
    ended September 30, 2012, as compared to $3.0 million and $8.9 million
    for the same periods in 2011 representing an increase of 17% and 13%
    respectively, due to an increase in business activity from both of our
    transcription businesses; 
    
--  Selling and administrative expenses were $1.4 million and $4.3 million
    for the three and nine month periods ended September 30, 2012 as
    compared to $1.4 million and $4.1 million for the same periods in 2011
    as the Corporation continues to focus its selling efforts on global
    enterprise software contracts; 
    
--  EBITDA(1) for the three and nine month periods ended September 30, 2012
    was $40,789 and $25,090 as compared to $1,839 and $911,982 for the same
    periods in 2011; 
    
--  Net loss for the three and nine month periods ended September 30, 2012
    was $24,282 and $156,793 as compared to $89,771 and a net income of
    $603,374 for the same periods in 2011; and 
    
--  Cash flow used in operating activities was $53,238 and $48,416 for the
    three and nine month periods ended September 30, 2012 as compared to
    $254,825 and an inflow of $545,016 for the three and nine month periods
    ended September 30, 2011. 

Notes

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 third quarter 2012 condensed consolidated interim financial statements and results of operations and Management's Discussion and Analysis of Results and Financial Condition for the three and nine month periods ended September 30, 2012 will be posted on VIQ Solutions' website (under Investor Relations) at www.viqsolutions.com and on SEDAR's website at www.sedar.com. The financial information included in this release is qualified in its entirety and should be read together with the unaudited third quarter 2012 consolidated 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)                                                                 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                September 30,  December 31, 
                                                         2012          2011 
----------------------------------------------------------------------------
                                                                  (Audited) 
                                                                            
Assets                                                                      
                                                                            
Current assets                                                              
  Cash                                          $   1,538,219 $   1,646,138 
  Trade and other receivables                       1,700,381     1,330,474 
  Inventories                                           7,672         7,025 
  Prepaid expenses                                    143,831       123,228 
----------------------------------------------------------------------------
                                                    3,390,103     3,106,865 
Non-current assets                                                          
  Restricted cash                                     153,389       151,215 
  Property and equipment                              706,585       754,397 
  Goodwill                                          1,604,230     1,621,395 
  Deferred tax assets                                 254,888       260,001 
----------------------------------------------------------------------------
                                                $   6,109,195 $   5,893,873 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Liabilities                                                                 
                                                                            
Current liabilities                                                         
  Trade and other payables                      $   1,149,992 $     951,687 
  Provisions                                          595,456       584,870 
  Short-term debt                                      75,000        75,000 
  Unearned revenue                                    230,700       187,179 
  Deferred lease incentives                            21,338        21,766 
  Current portion of obligations under finance                              
   lease                                               55,823        59,266 
  Current portion of long-term debt                    22,692        22,692 
----------------------------------------------------------------------------
                                                    2,151,001     1,902,460 
Non-current liabilities                                                     
  Provisions                                          184,504       165,974 
  Deferred lease incentives                            33,958        50,964 
  Obligations under finance lease                      66,392        45,528 
  Long-term debt                                       53,735        70,754 
----------------------------------------------------------------------------
Total liabilities                                   2,489,590     2,235,680 
----------------------------------------------------------------------------
                                                                            
Equity                                                                      
                                                                            
Capital stock                                      11,578,213    11,438,947 
Contributed surplus                                 1,800,955     1,781,433 
Accumulated other comprehensive income                118,377       158,960 
Deficit                                            (9,877,940)   (9,721,147)
----------------------------------------------------------------------------
                                                    3,619,605     3,658,193 
----------------------------------------------------------------------------
Total equity and liabilities                    $   6,109,195 $   5,893,873 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
VIQ Solutions Inc.                                                          
Condensed Consolidated Interim Statements of Comprehensive Income and Loss  
(Expressed in Canadian dollars)                                             
(Unaudited)                                                                 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                            Three months ended        Nine months ended     
                                 Sept. 30                  Sept. 30         
                                2012         2011         2012         2011 
----------------------------------------------------------------------------
                                                                            
Revenue                  $ 3,963,228  $ 3,667,248  $11,630,438  $11,851,125 
                                                                            
Cost of sales              2,383,505    2,289,592    6,987,009    6,559,699 
----------------------------------------------------------------------------
Gross profit               1,579,723    1,377,656    4,643,429    5,291,426 
----------------------------------------------------------------------------
                                                                            
Expenses                                                                    
  Selling, general and                                                      
   administrative                                                           
   expenses                1,420,900    1,402,707    4,262,123    4,136,454 
  Research and                                                              
   development expenses      176,132      131,070      537,647      521,305 
----------------------------------------------------------------------------
                           1,597,032    1,533,777    4,799,770    4,657,759 
----------------------------------------------------------------------------
                                                                            
Income (loss) from                                                          
 operations                  (17,309)    (156,121)    (156,341)     633,667 
                                                                            
  Interest income              9,631        5,595       24,998       15,414 
  Interest expense            (8,827)     (34,556)     (23,950)    (122,980)
  Foreign exchange gain                                                     
   (loss)                     (7,777)      95,311       (1,500)      77,273 
----------------------------------------------------------------------------
Net finance income                                                          
 (loss)                       (6,973)      66,350         (452)     (30,293)
                                                                            
                                                                            
Net income (loss) for                                                       
 the period              $   (24,282) $   (89,771) $  (156,793) $   603,374 
                                                                            
Exchange differences on                                                     
 translating foreign                                                        
 operations                  (38,356)     (69,639)     (40,583)     (24,687)
----------------------------------------------------------------------------
Comprehensive income                                                        
 (loss) for the period   $   (62,638) $  (159,410) $  (197,376) $   578,687 
----------------------------------------------------------------------------
                                                                            
                                                                            
Net income (loss) per                                                       
 share                                                                      
  Basic and diluted      $     (0.00) $     (0.00) $     (0.00) $      0.01 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
Weighted average number                                                     
 of common shares                                                           
 outstanding - basic      90,957,000   90,155,533   90,851,234   88,628,064 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Weighted average number                                                     
 of common shares                                                           
 outstanding - diluted    90,957,000   90,155,533   90,851,234   90,814,242 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
VIQ Solutions Inc.                                                          
Condensed Consolidated Interim Statements of Cash Flows                     
(Expressed in Canadian dollars)                                             
(Unaudited)                                                                 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                         Three months ended          Nine months ended      
                               Sept. 30                   Sept. 30          
                              2012         2011         2012           2011 
----------------------------------------------------------------------------
                                                                            
Cash provided by (used                                                      
 in):                                                                       
Operating activities                                                        
Net income (loss) for                                                       
 the period             $  (24,282)  $  (89,771)  $ (156,793)  $    603,374 
Items not affecting                                                         
 cash:                                                                      
  Depreciation              56,244       57,054      157,933        185,628 
  Stock-based                                                               
   compensation             17,251       36,128       77,788        187,070 
  Provisions                (5,460)      12,917       18,530         16,765 
  Interest accretion                                                        
   on bridge loans               -        2,130            -          6,320 
  Amortization of                                                           
   deferred lease                                                           
   incentive                (5,161)      (7,089)     (16,003)       (16,369)
  Unrealized foreign                                                        
   exchange loss                                                            
   (gain)                   13,049      (28,198)       6,534         14,365 
  Gain on sale of                                                           
   property and                                                             
   equipment                 2,341          (30)       2,341         (4,803)
  Changes in non-cash                                                       
   operating working                                                        
   capital                (107,220)    (237,966)    (138,746)      (447,334)
----------------------------------------------------------------------------
                                                                            
Cash from operating                                                         
 activities                (53,238)    (254,825)     (48,416)       545,016 
----------------------------------------------------------------------------
                                                                            
Investing activities                                                        
  Purchase of property                                                      
   and equipment            (8,573)     (24,904)     (49,015)       (78,863)
  Decrease (increase)                                                       
   in restricted cash          102          106       (5,148)        (4,983)
----------------------------------------------------------------------------
                                                                            
Cash used in investing                                                      
 activities                 (8,471)     (24,798)     (54,162)       (83,846)
----------------------------------------------------------------------------
                                                                            
Financing activities                                                        
  Advances in short-                                                        
   term debt                     -            -            -        575,000 
  Repayment of short-                                                       
   term debt                     -     (575,000)           -     (1,690,000)
  Repayment of long-                                                        
   term debt                (5,673)    (205,673)     (17,019)      (217,019)
  Proceeds from stock                                                       
   options exercised                                                        
   for cash                      -      394,250       81,000        397,075 
  Proceeds from                                                             
   private placement,                                                       
   net of issuance                                                          
   costs                         -            -            -      1,989,200 
  Finance lease                                                             
   payments                (17,849)     (16,348)     (51,001)       (56,200)
----------------------------------------------------------------------------
                                                                            
Cash provided by (used                                                      
 in) financing                                                              
 activities                (23,522)    (402,771)      12,980        998,056 
----------------------------------------------------------------------------
                                                                            
Net increase                                                                
 (decrease) in cash                                                         
 during the period         (85,231)    (682,394)     (89,598)     1,459,226 
                                                                            
Cash, beginning of                                                          
 period                  1,645,290    2,530,849    1,646,138        381,544 
                                                                            
Effect of exchange                                                          
 rate changes on cash      (21,840)      (4,561)     (18,321)         3,124 
                                                                            
----------------------------------------------------------------------------
Cash, end of period     $1,538,219   $1,843,894   $1,538,219   $  1,843,894 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

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