DEQ Systems Corp. (TSX VENTURE:DEQ) announced today the filing of its 2009
second quarter financial results for the period ended May 31, 2009. The
Consolidated Financial Statements are available on SEDAR (www.sedar.com) and
DEQ's website.
A conference call will be held on Thursday, July 16, 2009 at 11am EST to present
and discuss these results. Those interested in participating should dial toll
free 1 (800) 733-7560 or (416) 644-3414. A visual presentation (Powerpoint) will
be available on DEQ's website (www.deq.com) in the Invest/Financial
Reports/PowerPoint section to support the call content.
2009 SECOND QUARTER HIGHLIGHTS:
Financial Metrics
- Revenue
- 70% growth in recurring revenue in second quarter compared to previous
year
- 23% increase in gross profit in second quarter from $785,000 in 2008 to
$966,000 in 2009
- 90% gross margin compared to 86% in 2008 due to increase in recurring
revenue
- 29% average annual growth in recurring revenue over the last three
years
- EBITDA
- Positive EBITDA of $171,000 in second quarter of 2009 compared to a
loss of $72,000 in 2008
- Cash Flow and Cash position
- Positive adjusted cash flows from operations of $442 000 in second
quarter of 2009
- Increased cash from $6.2M in Q1 to $6.6M in Q2
- Operating Costs
- 7% decrease in quarterly operating costs from $857,000 in 2008 to
$794,000 in 2009
- Share purchase buy back
- DEQ has repurchased a total of 826,500 shares at an avg. price of $0.29
as of July 15, 2009
Operational Highlights
- LTE
- LTE for Q2 was 1,249 as compared to Q1's LTE of 1,287. While there was
an increase in product installations (65 new installations in Q2),
severe currency losses (14%) negatively affected the LTE by 57
- Product Installations
- During the second quarter, DEQ had 65 new installations. In Q1 the
company achieved 67 new installations. This total of 132 new
installations in Q1 and Q2 is more than the number of installations for
the entire year 2008 where DEQ had 112 new installations.
- Licenses & Approvals
- In the second quarter the Company was granted a gaming license in
Mississippi and had its for EZ baccarat game approved in New Jersey and
Macau
- News Releases and Information of Interest
- EZ Baccarat was introduced in Macau at the Wynn and at City of Dreams
- EZ Baccarat and EZ Trak systems were installed at Ameristar Casinos in
Indiana and Missouri, as well as in British Columbia.
"DEQ has yet again delivered another solid quarter of product penetration and
growth as well as overall company performance," stated Earle G. Hall, President
& CEO of DEQ. "The trend is clear; we obtain an operating license and we see
product penetration almost immediately. In these very difficult economic times
we can say that we are doing quite well. With increased recurring revenue by
70%, a gross margin of 90%, positive cash flows and a solid bank account, we are
in a very envious position. Our promised cost control measures have yielded
results and we have seen a 7% decrease in our operating expenses. Our focus now
turns to increasing our operational penetration while increasing our scope of
products. As well, it goes without saying that we plan to maintain a lean
business model that produces hallmark results such as a 90% margin."
Financial Results
Second Quarter Six Month Period
May 31, May 31, May 31, May 31,
2008 2009 2008 2009
(unaudited) (unaudited) (unaudited) (unaudited)
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$ $ $ $
Revenue
Royalties 469,426 757,038 1,004,557 1,567,876
Sale of equipment 138,132 55,268 450,708 268,689
Equipment rental 83,181 180,057 159,193 334,291
Patent rights 221,998 84,000 221,998 210,000
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912,736 1,076,363 1,836,457 2,380,857
Gross Profit 785,142 965,535 1,443,453 2,118,058
% Gross margin 86 % 90 % 79 % 89 %
Operating Costs (1) 856,873 794,313 1,668,551 1,603,530
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EBITDA (2) (71,731) 171,222 (225,099) 514,528
Interest income,
net of expenses 167,084 30,912 338,690 77,227
Deferred revenue
variation 1,057,755 239,601 939,468 27,420
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Adjust. Operational
Cash Flow (2) $1,153,108 $441,735 $1,053,060 $619,175
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Additional
Information:
Recurring
Revenue (3) $552,607 $937,095 $1,163,750 $1,902,167
Lease Table
Equivalent (LTE)
(Recurring Rev.
/ $3,000) 737 LTE 1249 LTE N/A N/A
Net loss ($) (268,241) 26,554 (452,175) (396,842)
Net loss per
share ($) (0.004) 0.000 (0.007) (0.006)
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Note 1: Operating costs excluded stock option based compensation.
Note 2: We use EBITDA (Earnings before interest, taxes, depreciation and
amortization) and Adjusted Cash Flow from Operations as performance
measurements in our financial disclosure. These measurements are
not recognized under generally accepted accounting principles. The
reconciliations above demonstrate how we calculate such
measurements from our financial statements.
Note 3: Recurring revenue is comprised of Royalties and Equipment rental.
LTE: LTE is Leased Table Equivalent: DEQ receives an average of $3,000
per table per year of patent royalties. This metric is used to
standardize the amount of leased table royalties. Actual tables may
vary as royalties may be derived from the usage of the patents
without the physical machine in use.
Balance Sheets
May 31, November 30, May 31,
2008 2008 2009
(Unaudited) (Audited) (Unaudited)
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Cash and cash equivalents 10,559,478 6,593,357 6,567,097
Current assets (other than cash) 3,341,568 1,860,176 2,268,562
Long-term assets 9,301,495 17,139,836 15,716,446
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Total Assets $23,202,541 $25,593,369 $24,552,105
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Current liabilities 2,108,458 2,734,291 2,331,600
Long-term liabilities 577,073 2,725,668 2,557,424
Shareholders' equity 20,517,009 20,133,410 19,663,081
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Total Liabilities and Equity $23,202,541 $25,593,369 $24,552,105
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Number of shares outstanding 69,907,919 70,416,315 69,589,815
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ABOUT DEQ
Founded in 1998, DEQ Systems Corp. (TSX VENTURE:DEQ) is a leader in the table
game bonusing technology field. DEQ's patents, products and features include
side bet bonusing games with progressive and random jackpot prizes, slot machine
style mystery bonusing, multiple credit and denomination betting flexibility,
dealer hand betting, electronic credit bank, electronic rake, baccarat hand
tracking, multimedia animation and sound effects. DEQ has an extensive patent
portfolio that is recognized in more than 50 countries such as the USA, Macau,
Australia and Canada. DEQ's bonusing solutions and products are present in more
than 200 casinos in over 30 countries. For further information, please visit
www.deq.com
TSX Venture does not accept any responsibility regarding the accuracy of the
information contained in this press release.
Forward-looking statements contained in this Press Release involve known and
unknown risks, uncertainties and other factors that may cause actual results,
performance and achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by the said
forward-looking statements.
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