LEVIS, QUEBEC announced today the filing of its annual financial
results for the year-ended November 30, 2007. A conference call
will be held on Monday, March 31st at 11am EST to present and
discuss these results. Those interested in participating should
dial (416) 644-3423 or toll free 1 (800) 594-3790. 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. The Consolidated Financial Statements are
available on SEDAR (www.sedar.com) and DEQ's website.
2007 FINANCIAL HIGHLIGHTS:
- 27% increase in recurring revenue to $2.3 M compared to
previous fiscal year
- $2 M increase in cash flow related to operating activities
from a negative $(1.3)M last year to $0.7 M
- 77% gross margin compared to 55% in 2006
- $11.4 M in cash position with no debt compared to $3.6 M in
2006
- Stable annual operating costs at $3.2M compared to $2.8 M in
2006
The 2007 Financial Year saw historic strategic alliances with
former competitors such as Shuffle Master and Paltronics as well as
prestigious casino chains such as Station Casinos and Harrah's in
Nevada as well as StarWorld in Macau and Barona and Pechanga in
California.
Important milestones in the commercial development of the
company were achieved by the commencement of the Nevada field trial
as this was the result of a three (3) year process as well as the
Macao field trial which also was the result of a long certification
process.
2007 results do not include any significant commercialization
revenue from the agreements concluded in the USA and Macau in 2007
as field trials were ongoing at fiscal year-end. Improved financial
results are attributable to the migration from our historical
manufacturing business model to a recurring revenue model. 2008
will see financial results from this new business model in our key
strategic markets: Nevada, the USA and Macau, due to our
distribution channels established in 2007.
"In 2006, DEQ undertook the difficult task of converting its
business model from a technology sale based company to a long-term
recurring revenue company," stated Earle G. Hall, DEQ's CEO. "DEQ's
cash position is very solid as in 2007, the company had a cash
inflow of 9 million dollars from the exercising of warrants. With
DEQ's stable cost base, our 2007 priority was the gross margin to
clearly demonstrate DEQ's future potential."
-------------------------------------------------------------------------
2005 2006 2007
(Audited) (Audited) (Audited)
Revenue Distribution $ $ $
-------------------------------------------------------------------------
Recurring Revenue (2) 1,542,745 1,770,666 2,250,104
Product Sales and patents rights 2,645,744 1,878,796 1,331,046
-------------------------------------------------------------------------
4,188,489 3,649,462 3,581,150
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Gross Margin 1,721,156 2,018,153 2,754,610
% Gross Margin 41% 55% 77%
Operational Cost (3,020,676) (2,755,630) (3,204,744)
-------------------------------------------------------------------------
EBITDA (3) (1,299,520) (737,477) (450,134)
Interest income, net of expenses 14,072 149,203 370,754
Deferred revenue variation (1) - 285,550 381,812
-------------------------------------------------------------------------
Adjusted cash flow from
operations (3) (1,285,448) (302,724) 302,432
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash and Cash Equivalents 131,468 3,591,367 11,364,112
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Note 1: Deferred revenue does not include a one-time payment of
USD$1,000,000 due upon final approval of the G3TM in Nevada by
Station Casinos.
Note 2: Recurring revenue is comprised of Royalties and
Equipment rental.
Note 3: 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.
-------------------------------------------------------------------------
Statement of Earnings Fourth Quarter For the year ended
November 30, November 30,
2007 2006 2007 2006
(unaudited) (unaudited) (Audited) (Audited)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
$ $ $ $
Revenue
Royalties 413,884 306,970 1,961,816 1,230,971
Sale of equipment 480,519 107,729 1,223,886 1,375,194
Equipment rental 59,961 90,285 288,288 539,695
Patent rights - - 107,160 503,602
-------------------------------------------------------------------------
954,364 504,984 3,581,150 3,649,462
Gross Profit 466,141 187,826 2,754,610 2,018,153
Net Loss (868,321) $(1,545,357) (1,706,441) $(2,343,281)
Net loss per share (0.015) (0.040) (0.03) (0.06)
Statement of Cash Flows Fourth Quarter For the year ended
November 30, November 30,
2007 2006 2007 2006
(unaudited) (unaudited) (Audited) (Audited)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
$ $ $ $
Operating Activities
Operating cash flows (371,305) (488,248) (244,199) (602,344)
Change in receivable
of l-t sales 107,012 373,424 458,154 142,213
Change in working
capital 255,499 (474,430) 500,614 (510,741)
-------------------------------------------------------------------------
8,794 (1,336,102) 714,569 (1,255,298)
Investing Activities 387,466 (47,985) (2,647,420) (107,112)
Financing Activities 8,783,921 4,950,361 9,705,596 4,822,309
-------------------------------------------------------------------------
Increase (decrease)
in cash 9,162,593 3,566,274 7,772,745 3,459,899
Cash at beginning 2,201,519 25,093 3,591,367 131,468
-------------------------------------------------------------------------
Cash at end 11,364,112 3,591,367 11,364,112 3,591,367
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Balance Sheets November 30, August 31, November 30, November 30,
2007 2007 2006 2005
(Audited) (unaudited) (Audited) (Audited)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash and cash
equivalents 11,364,112 2,201,519 3,591,367 131,468
Current assets
(other than cash) 2,180,534 2,177,226 2,783,913 1,863,419
Long-term assets 9,187,762 9,347,317 7,329,713 9,348,947
-------------------------------------------------------------------------
Total Assets $22,732,408 $13,726,062 $13,704,993 $11,343,834
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Current liabilities 1,716,162 1,109,018 1,581,378 2,152,972
Long-term liabilities 577,073 701,879 655,896 674,982
Shareholders' equity 20,439,173 11,915,165 11,467,719 8,515,880
-------------------------------------------------------------------------
Total Liabilities
and Equity $22,732,408 $13,726,062 $13,704,993 $11,343,834
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Number of shares
outstanding 69,350,794 54,656,049 53,241,149 38,241,149
-------------------------------------------------------------------------
-------------------------------------------------------------------------
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 that 200
casinos in over 30 countries.
DEQ Systems Corp. has been selected in the TSX Venture 50 in
2007. "2007 Venture 50" is a trademark of TSX inc. and is used
under license.
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.
TSX Venture does not accept any responsibility regarding the
accuracy of the information contained in this press release.
Contacts: DEQ Systems Corp. Earle G. Hall President & CEO
418-839-3012 418-839-5956 (FAX) earle.hall@deq.com DEQ Systems
Corp. Francois Proulx Chief Financial Officer 418-839-3012
418-839-5956 (FAX) francois.proulx@deq.com/info@deq.com
www.deq.com