DEQ SYSTEMS CORP. LAS VEGAS, NV and LEVIS, QC, April 29, 2016 /PRNewswire/ - DEQ Systems Corp. (TSXV: DEQ) ("DEQ" or the "Company") announced today the filing of its first quarter financial results for the period ended February 29, 2016. The consolidated financial statements are available on SEDAR (www.sedar.com) and DEQ's website and should be read in conjunction with this press release. A conference call will be held on Monday, May 2, 2016 at 4:30pm EDT to present and discuss these results. Those interested in participating should dial toll free 1 (877) 223-4471 or 1 (647) 788-4922. Please note that the conference call replay will be available until May 16, 2016 by dialing 1 (416) 621-4642 or 1 (800) 585-8367. The conference ID # for the replay is 3068213.
2016 FIRST QUARTER RESULTS AND HIGHLIGHTS:
Financial Metrics
-- Revenue
-- 17% increase in total revenue to $2,479,000 in Q1-2016 as compared
to $2,122,000 in Q1-2015.
-- 15% increase in table systems to $1,577,000 in Q1-2016 as compared
to $1,377,000 in Q1-2015.
-- 44% increase in proprietary table games to $873,000 in Q1-2016 as
compared to $606,000 in Q1-2015.
-- Gross profit of $2,063,000 in Q1-2016, was up from $1,809,000 in
Q1-2015, an increase of 14%.
-- Operating Expenses
-- Operating and administrative expenses increased by 5%, to $2,042,000
in Q1-2016 from $1,946,000 in Q1-2015. This increase is
substantially comprised of higher costs related to licensing and
compliance, legal and consulting, incremental audit fees, increase
in salaries for new personnel, and incremental reserves related to
potential sales and/or use tax exposure. These increases were mostly
offset by lower amortization expense relative to the expiration of
amortization associated with the Company's purchase of distribution
rights in 2008.
-- Research and development expenses were essentially flat in Q1-2016
compared to Q1-2015. The quarter-over-quarter expense is consistent
with the Company's efforts to expand and enhance its products.
-- EBITDA
-- DEQ recorded an EBITDA loss of $137,000 in Q1-2016 compared to
EBITDA of $199,000 in Q1-2015.
-- Q1-2016 EBITDA was impacted by $578,000 of higher Operating and R&D
expenses, offset by a higher gross profit of $254,000. The increase
in expenses was primarily attributed to additional sales and
corporate personnel, higher professional and audit fees, and other
administrative costs as follows:
-- $190,000 personnel cost;
-- $120,000 professional, consulting and audit fees;
-- $77,000 of incremental legal, licensing and compliance fees,
related to DEQ's corporate and organizational restructuring;
-- $58,000 associated with a reserve for potential sales and/or use
tax related to uncollected sales and/or use tax on lease
equipment revenue in certain jurisdictions; and
-- $80,000 increase travel and other expenses.
-- Liquidity and Cash Flow
-- During Q1-2016 DEQ's reported cash position, after effects of
foreign currency translation, decreased by $973,000, from $2,550,000
to $1,577,000. This reduction is primarily attributed to $267,000
used in operating activities, fluctuations in the Company's working
capital (higher accounts receivable and prepaid expenses of $631,000
and lower accounts payable of $44,000), net investment in fixed
assets deployed of $57,000 and costs associated with the Company's
office relocation of $86,000. Further, as a result of currency
translation, cash was favorably impacted by $116,000.
-- Operational Highlights
-- As of Q1-2016, DEQ had 2,295 installed products worldwide - directly
and through global distribution partners. This compares to 2,251
installed products as of Q1-2015.
"During the quarter, we continued our planned investments in jurisdictional and product licenses, sales, marketing personnel and additional infrastructure to grow our company. Our ability to maintain and upgrade our installed base is dependent on these additional investments. We are very focused on maintaining our existing market placements and opening new markets, while balancing the additional costs to achieve this growth. We have a solid plan for growth, and our continued investment into DEQ's premium brand recognition positions us well in this competitive marketplace," stated Joe Bertolone, President and Chief Executive Officer of DEQ.
EBITDA*
======
Three-Month Period
February 29, February 28,
2016 2015
(unaudited) (unaudited)
Net Income (Loss) (477,000) (154,000)
Add/(Subtract):
Interest Expense 3,000 2,000
Foreign Exchange
Loss (Gain) 170,000 (309,000)
Depreciation &
Amortization 160,000 652,000
Stock-Based
Compensation 7,000 8,000
----- -----
EBITDA* (137,000) 199,000
-------- -------
*Note: DEQ uses an adjusted calculation
of EBITDA (Earnings before
Interest, Taxes, Depreciation and
Amortization and stock based
compensation 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.
Statement of Earnings
=====================
First Quarter
February 29, February 28,
2016 2015
(unaudited) (unaudited)
========== ==========
Table Systems 1,577,000 1,377,000
Proprietary Table Games 873,000 606,000
------- -------
Total recurring revenue 2,450,000 1,983,000
Non recurring revenue 29,000 139,000
Total Revenue 2,479,000 2,122,000
Gross Profit 2,063,000 1,809,000
% Gross margin 83% 85%
Operating & Administrative
expenses 2,042,000 1,946,000
Research & Development
expenses 325,000 324,000
------- -------
Operating Income (Loss) (304,000) (461,000)
FX & other expenses (revenue) 173,000 (307,000)
Net Income (Loss) (477,000) (154,000)
======== ========
Net Income (Loss) per share $(0.007) $(0.002)
Financial Position
==================
Feb. 29, 2016 Nov. 30, 2015
(unaudited) (audited)
========== ========
Cash and cash equivalents 1,577,000 2,550,000
Current assets (other than
cash) 2,348,000 1,716,000
Long-term assets 3,327,000 3,302,000
--------- ---------
Total Assets $7,252,000 $7,568,000
========== ==========
Current liabilities 1,957,000 2,001,000
Shareholders' equity 5,295,000 5,567,000
--------- ---------
Total Liabilities and Equity $7,252,000 $7,568,000
========== ==========
Number of shares outstanding 71,682,000 71,682,000
========== ==========
ABOUT DEQ
DEQ Systems Corp. (TSXV: DEQ) is one of the market leaders in Table Game Systems, Proprietary Table Games, and Utility solutions. DEQ's systems and games are installed in over 300 casinos, in 30 countries around the world. The combination of our services, industry leading products and revenue generation capabilities make DEQ a leader for innovation in the table game bonusing segment of the global gaming market. For further information, please visit www.deq.com.
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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.
