LEVIS, QC,
March 7, 2013 /PRNewswire/ - DEQ
Systems Corp. (TSX-V: DEQ) ("DEQ" or the "Company") announced today
the filing of its annual financial results for the fiscal year
ended November 30, 2012. The
Consolidated Financial Statements are available on SEDAR
(www.sedar.com) and DEQ's website. A conference call will be held
on Friday, March 8, 2013 at
11am EST to present and discuss these
results. Those interested in participating should dial toll free 1
(800) 743-4304 or (416) 981-9000. A PowerPoint presentation
will be available on DEQ's website in the Investors/Financial
Reports/Presentation section to support the call content.
2012 ANNUAL RESULTS HIGHLIGHTS:
Financial Metrics
- Revenue
-
- 59% increase in product rental revenue from $2,615,000 in 2011 to $4,150,000 in 2012.
- 76% compound annual growth rate of product rental revenue over
the last three years.
- 20% increase in total revenue from $4,647,000 in 2011 to $5,605,000 in 2012
- Operating Costs
-
- 23% increase in operating expenses before non-cash items from
$4,317,000 in 2011 to $5,290,000 in 2012. This increase is due to the
addition of commercialization resources in North America and Asia to adequately accommodate the expected
level of sales and service of DEQ's installed base of products. DEQ
expects its operating expenses to remain stable for 2013 compared
to 2012 as it establishes the infrastructure to support its
expected growth for 2013.
- Operating costs in fourth quarter 2012 include $165,000 for one-time professional fees related
to a corporate project and a special payment to independent
directors of $100,000 ($20,000 to each independent director) to
compensate for the compliance and licensing expenses incurred
during the last five years.
- EBITDA
-
- Negative EBITDA of $(496,000) in
2012 compared to $(536,000) in
2011.
- Adjusted EBITDA, accounting for the one-time items mentioned
above, was $(231,000) for 2012.
- Cash Flow
-
- During fiscal year 2012, DEQ's cash position decreased by
$1,092,000 due primarily to
investment activities in leased equipment and intangible assets for
a total of $715,000 to continue DEQ's
growth and the negative cash flow loss from operating activities of
$387,000.
- DEQ had a cash position of $750,000 as of November
30, 2012.
- DEQ achieved cash flow breakeven in December 2012.
Operational Highlights
- Product Installations
-
- In 2012 DEQ increased its net installation base by 354 units at
an average lease price of $3,500 per
annum, representing an increase of approximately $1,240,000 of new recurring revenue per
year.
- As of November 30, 2012, DEQ had
1,370 directly installed products worldwide and 355 products
installed through distributors worldwide for a total of 1,725
products in operation worldwide.
"Our fiscal year ended November 2012 was a year of continued double
digit growth and an emergence on a global scale" said Earle G. Hall, President and Chief Executive
Officer of DEQ. "DEQ has achieved critical mass in many
international and domestic markets and despite volatility in
certain market segments, DEQ has thrived to produce growth and
increase its market share. Real LinkTM has established
itself as the market leader in table game jackpot linking and
the Hawk baccarat shoe is doing
remarkably well in its initial field testing phase. We are very
proud of the market penetration achieved in 2012 despite uneven
market conditions and our primary goal was achieved in December 2012: a cash flow neutral position. With
positive EBITDA expected going forward, we now have the tools and
the balance sheet to continue to grow and build on our strong
base."
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| Statement of Earnings |
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Fiscal year ended
November 30, |
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|
2010 |
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2011 |
|
2012 |
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| Product rental |
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1,436,000 |
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2,615,000 |
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4,150,000 |
| Royalties from our distributor
(1) |
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1,176,000 |
|
1,366,000 |
|
1,157,000 |
| Total recurring revenue |
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2,612,000 |
|
3,981,000 |
|
5,307,000 |
| Other revenue (2) |
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2,242,000 |
|
667,000 |
|
298,000 |
| Total Revenue |
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4,854,000 |
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4,648,000 |
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5,605,000 |
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| Gross Profit
(3) |
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4,031,000 |
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3,781,000 |
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4,794,000 |
| % Gross margin |
|
83 % |
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81 % |
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86 % |
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| Operating Costs
(3) |
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3,840,000 |
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4,317,000 |
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5,290,000 |
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| EBITDA (4) |
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191,000 |
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(536,000) |
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(496,000) |
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| Stock based compensation |
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349,000 |
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432,000 |
|
50,000 |
| Depreciation and Amortization
expenses |
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2,318,000 |
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2,738,000 |
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2,727,000 |
| Interest (revenue) expenses |
|
77,000 |
|
10,000 |
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13,000 |
| Foreign exchange (gain) loss |
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(8,000) |
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(64,000) |
|
50,000 |
| Other items |
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(296,000) |
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(161,000) |
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- |
| Net loss |
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(2,249,000) |
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(3,491,000) |
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(3,336,000) |
| Net Income (Loss ) per share |
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$(0.032) |
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$(0.050) |
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$(0.048) |
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| Note 1: |
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DEK International - Distributor
located in Panama that covers mostly South America
territories. |
| Note 2: |
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Other revenue included revenue from
the Severn Project that was terminated on February 28, 2011. The
revenue from the Severn Project included in other revenue was
$922,000 in 2010 and $218,000 in 2011. |
| Note 3: |
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Gross profit and operating expenses
excluded non-cash items such as depreciation, amortization, stock
based compensation and gain on balance of purchase price. |
| Note 4: |
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We use EBITDA (Earnings before stock
based compensation, Interest, Taxes, Depreciation and Amortization
and foreign exchange impact), a non-IFRS measure, to evaluate the
Company's operating performance. Securities regulators require that
issuers caution readers that measures adjusted to a basis other
than IFRS do not have standardized meaning under IFRS and are
unlikely to be comparable to similar measures used by other
companies. |
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| Financial Position |
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Dec. 1, 2010 |
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Nov. 30, 2011 |
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Nov. 30, 2012 |
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(Audited) |
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(Audited) |
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(Audited) |
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| Cash and cash equivalents |
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3,933,000 |
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1,843,000 |
|
751,000 |
| Current assets (other than cash) |
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2,001,000 |
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2,001,000 |
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1,883,000 |
| Long-term assets |
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12,533,000 |
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10,901,000 |
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8,884,000 |
| Total Assets |
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$18,467,000 |
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$14,745,000 |
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$11,518,000 |
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| Current liabilities |
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1,852,000 |
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1,243,000 |
|
1,278,000 |
| Shareholders' equity |
|
16,615,000 |
|
13,502,000 |
|
10,240,000 |
| Total Liabilities and
Equity |
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$18,467,000 |
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$14,745,000 |
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$11,518,000 |
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| Number of shares outstanding |
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69,182,000 |
|
69,182,000 |
|
69,182,000 |
ABOUT DEQ
DEQ Systems Corp. (TSXV: DEQ) is a customer
centric company that delivers best of breed table game technology
related products to the global gaming industry that adds value and
increases client revenue. DEQ provides table game bonusing
technology, table games, table game results tracking and jackpot
connectivity solutions to more than 275 casinos in 30 countries.
DEQ is an intellectual property focused company that has an
extensive patent portfolio of more than 20 patents recognized in 50
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.
SOURCE DEQ SYSTEMS CORP.