DEQ

LEVIS, QC, March 7 /CNW/ -- LEVIS, QC, March 7 /CNW Telbec/ - DEQ Systems Corp. (TSX-V: DEQ) ("DEQ" or the "Company"), a leading provider of table game bonusing, jackpot and loyalty solutions, announced today that it has entered into an agreement with DEK International, an arm's length party, for the transfer of the remaining slot machine royalties owed by Severn Enterprises S.A. ("Severn") to DEQ in exchange for the balance of remaining payment of the purchase price of the exclusivity agreement from DEK International due in July 2011. This settlement agreement sees DEQ assigning and transferring all amounts payable as royalties by Severn to DEK International for the remainder of the 10 year Agreement that started in 2005. This transfer of the defaulted royalties to DEK International will completely discharge and release DEQ from any and all obligations regarding the final payment of the balance of purchase price of US$883,000 due to DEK International on July 31, 2011. While DEQ has continually disclosed the risks and poor performance of the Severn Project, the total cash flow received from this project since its inception and including this final transaction represents 81% of the total amount of US$5.75 M loaned to Severn by DEQ which means that DEQ has retrieved the vast majority of its investment from this project. Since the early stages of this Guatemala project, the Severn casinos have not developed or performed as expected. DEK International, a major shareholder in Severn, has even paid several of DEQ's royalty payments on behalf of Severn, in a temporary move to avoid default and protect their own investment in the project with the hope that the financial situation would improve. This support ceased during the fourth quarter of 2010, as the economics and outlook of Severn remained dismal. DEQ explored several options with external legal counsel including and not limited to legal action. Based on the legal and other external opinions received, DEQ's management was convinced that the best option was to seek financial relief for the failed Severn Project and commenced negotiations with the parties involved. These negotiations came to a conclusion in March 2011. The transfer of the slot machine royalty due by Severn to DEK does not affect in any way the royalty collected on a monthly basis from DEK International on the operation of approximately 380 tables with the G3 System that are currently in operations in more than 150 casinos located in South America and  Eastern Europe. "While Severn served a clear purpose during the early stages of the financing and structuring of DEQ, the operational shortcomings of this project created a significant business risk that we have done our best to offset by leveraging the defaulted royalties." stated Earle G. Hall, President and CEO of DEQ. "DEQ is now a debt free company with a solid balance sheet. Our product install growth is very significant and looking at Q1 2011, DEQ installed 141 leased products compared to Q1 2010 where DEQ installed 66 for a growth rate of well over 100%. Our accelerated growth will offset this loss of royalties of approximately $200,000 per quarter in the near term and as we look to the future, we are very excited with not only our geographical growth but our product penetration per casino and the new products we are launching in 2011." ABOUT DEQ Founded in 1998, DEQ Systems Corp. (TSXV: 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 300 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. To view this news release in HTML formatting, please use the following URL: http://www.cnw.ca/en/releases/archive/March2011/07/c8724.html table border="0" valign="top"trtdEarle G. Hall     br/ President & CEO    br/ DEQ Systems Corp.    br/ p: (418) 839-3012    br/ e: a href="mailto:earle.hall@deq.com"earle.hall@deq.com/a    /td tdFrancois Proulxbr/ Chief Financial Officerbr/ DEQ Systems Corp.br/ p: (418) 839-3012br/ e: a href="mailto:francois.proulx@deq.com"francois.proulx@deq.c/aa href="mailto:francois.proulx@deq.com"o/aa href="mailto:francois.proulx@deq.com"m/a/td/tr/table

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