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DEQ Reports First Quarter 2012 Financial Results


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27 April 2012Printer Friendly VersionPost a CommentTell a Friend about this Article

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LEVIS, QC, April 26, 2012 /PRNewswire/ - DEQ Systems Corp. (TSXV: DEQ) ("DEQ" or the "Company") announcesthe filing of its first quarter financial results for the period ended February 29, 2012. The Consolidated Financial Statements are available on SEDAR (www.sedar.com) and DEQ's website. A conference call will be held on Friday, April 27, 2012 at 11am EST to present and discuss these results. Those interested in participating in the call should dial toll free 1 (800) 736-4594 or (416) 981-9000. A presentation will be available on DEQ's website in the Investors/Financial Reports/Presentation section to support the call content.

2012 FIRST QUARTER RESULTS HIGHLIGHTS:

Financial Metrics

         --  Revenue       o 90% increase in direct leasing revenue from $480,000 in Q1-2011 to         $914,000 in Q1-2012.       o 55% increase in total recurring revenue from $792,000 in Q1-2011 to         $1,227,000 in Q1-2012.       o 27% increase in gross profit from $836,000 in Q1-2011 to $1,060,000         in Q1-2012.       o Gross profit margin increased from 81% in Q1-2011 to 85% in         Q1-2012.         --  Operating Costs       o 10% increase in operating costs excluding amortization and stock         option expenses from $1,146,000 in 2011 to $1,259,000 in 2012,         explained by the installations in Asia, as well as         commercialization efforts in Asia and Australia. We foresee the         costs as remaining stable in the second quarter of 2012.         --  EBITDA       o EBITDA improved by $111,000 from a loss of $310,000 to a loss of         $199,000 in the prior year period explained by our growth in our         direct leasing.       o Excluding the Severn revenue recognized in 2011, we have improved         our EBITDA by $330,000.       o Based on our current installations which we recently announced and         our backlog of orders, we are expecting to be near EBITDA         break-even next quarter (Q2-2012).         --  Cash Flow       o During the first quarter of 2012, the cash position decreased by         $397,000, compared to a decrease of $767,000 for the same period in         2011. This decrease in cash position is mostly explained by the         investment of $432,000 in new installations and inventory to meet         our projected installation pipeline.  
Operational Highlights

         --  As of February 29, 2012, DEQ had 1,409 units worldwide             currently in operation generating an average recurring net             lease of $3,400 per unit compared to 1,100 units as of February             28, 2011, an increase of 309 units.         --  First installation completed in Australia at Crown Casino for             20 units as well as the increase in all our key markets such as             Macau, Nevada and California.         --  Real Link installation in Macau linking 4 properties of Las             Vegas Sands and in Nevada linking 2 properties of Cannery             Group.         --  Financial Statements migrated to the International Financial             Reporting Standards ("IFRS").  
"The trends presented in this quarter's financial statements are clear: our install base and recurring revenue is growing by leaps and bounds while our cost base is remaining strictly controlled" stated Earle G. Hall, President & CEO of DEQ. "We have built an extensive inventory to meet our short term needs to support the growth of the company and we now can clearly calculate the number of units required for profitability. Q1 saw the successful launch and broad range acceptance of Real Link while our R&D team did an amazing job completing our second new product that we plan to launch no later than Q3 of this year. Finally, our financial statements have been migrated to the new IFRS accounting principles and we are working hard to clearly communicate our success in Q1 and the tremendous potential before us."

                                                                        Statement of Earnings                                                        (unaudited)                                            FirstQuarter                                                  Feb.28, 2011   Feb.29, 2012                                                    (3 months)     (3 months)                                                                                   Direct leasing                                   480,000        914,000      Royalties (excluding Severn Enterprises)                       (1)                                              312,000        313,000      Total recurring revenue                          792,000      1,227,000      Royalties (Severn Enterprises) (1)               218,000              -      Non recurring revenue                             24,000         14,000      Total Revenue                                  1,034,000      1,241,000                                                                                   Gross Profit                                     836,000      1,060,000      % Gross margin                                      81 %           85 %                                                                                   Operating Costs                                1,146,000      1,259,000                                                                                   EBITDA(2)                                      (310,000)      (199,000)                                                                                   Stock based compensation                          26,000         24,000      Amortization expenses                            626,000        689,000      Interest (revenue) expenses                       13,000          1,000      Foreign exchange (gain) loss                      84,000         27,000      Future income taxes                             (21,000)              -      Other items                                    (170,000)              -      Net Income (Loss)                              (868,000)      (940,000)      Net Income (Loss ) per share                    $(0.013)       $(0.014)    




                     Note 1: On March 3, 2011, the Company entered into a settlement             agreement with DEK International on the Severn Project and the             royalty from Severn Enterprises was terminated as of February             28, 2011.      Note 2: We use EBITDA (Earnings before Stock option based compensation,             Interest, Taxes, Depreciation, Amortization and Foreign             exchange) as performance measurements in our financial             disclosure. This measure is not recognized under IFRS. The             reconciliations above demonstrate how we calculate such             measurements from our financial statements.    


                                                                                   Balance Sheet                                                                                                       November 30,                           December 1, 2010          2011    February 29, 2012                               (unaudited)    (unaudited)         (unaudited)                                                                                   Cash and cash                                             equivalents                3,933,000      1,843,000           1,445,000      Current assets                                            (other than cash)          2,001,000      2,001,000           2,077,000      Long-term assets          12,679,000     10,961,000          10,490,000      Total Assets              18,613,000     14,805,000          14,012,000                                                                                   Current                                                   liabilities                1,852,000      1,243,000           1,365,000      Shareholders'                                             equity                    16,761,000     13,562,000          12,647,000      Total Liabilities                                         and Equity                18,613,000     14,805,000          14,012,000                                                                                   Number of shares                                          outstanding               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 add value and increase 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.



------------------------------

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.

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