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DEQ Reports Revenue of $1.9 Million and EBITDA of $354,000 for the 2014 Second Quarter

  (July 10, 2014)

LEVIS, QC, July 10, 2014 /PRNewswire/ - DEQ Systems Corp. (TSXV: DEQ) ("DEQ" or the "Company") announces the filing of its second quarter financial results for the period ended May 31, 2014. The Consolidated Financial Statements are available on SEDAR (www.sedar.com) and DEQ's website. A conference call will be held on Friday, July 11, 2014 at 11am EST to present and discuss these results. Those interested in participating in the call should dial toll free 1 (877) 223-4471 or +1 (647) 788-4922. A presentation will be available on DEQ's website in the Investors/Financial Reports/Presentation section to support the call content.

2014 Second Quarter Results:

Financial Metrics


- Revenue
   



Second Quarter:
  • 19% increase in product rental revenue to $1,602,000 in Q2-2014.
  • 13% increase in total recurring revenue to $1,853,000 in Q2-2014.
  • 12% increase in total revenue to $1,926,000 in Q2-2014.



Six-Month Period:
  • 24% increase in product rental revenue to $3,149,000 in 2014.
  • 19% increase in total recurring revenue to $3,690,000 in 2014.
  • 15% increase in total revenue to $3,803,000 in 2014.
  23% increase in recurring revenue for the twelve-month period ended May 31, 2014 to $7,223,000 compared to $5,880,000 for the same period ended May 31, 2013.
   

- Operating Expenses before non-cash items

  • 1% decrease in operating expenses to $1,355,000 in Q2-2014.
  • 1% increase in operating expenses for the six-month period to $2,783,000 in 2014.
  • Operating costs should remain relatively stable in 2014.

- EBITDA

  • EBITDA of $354,000 in Q2-2014 compared to $79,000 in Q2-2013, an increase of $275,000.
  • EBITDA of $555,000 for the six-month period in 2014 compared to $122,000 for the same period in 2013, an increase of $433,000.
   
  For the twelve-month period ended May 31, 2014, EBITDA reaches $1,038,000 compared to an EBITDA of $2,000 for the twelve-month period ended May 31, 2013, an increase of $1,036,000.
 

- Cash Flow

  • Positive cash flow from operating activities before working capital items of $300,000 in Q2-2014 compared to $75,000 in Q2-2013, mainly explained by the increase in EBITDA.


Second Quarter Highlights and Subsequent Events

  • As of May 31, 2014, DEQ had 2,065 units worldwide compared to 1,933 units as of May 31, 2013.

  • On July 2, 2014, the company announced that Mr. Joseph E. Bertolone has been named as its new President and CEO, effective July 21st, 2014, subject to regulatory approval. Mr. Bertolone will be based in Nevada, USA.

"We are very pleased to present our financial statements for the 2014 second quarter with an EBITDA of $354,000 and a quarterly recurring revenue of $1,853,000", stated François Proulx, Chief Financial Officer of DEQ. "Even though this quarter has been affected by a decrease of 24 units due to a highly competitive market environment, we have a solid installation base of 2,065 units currently in operation worldwide, generating approximately $7.4 million in annual recurring revenue. The recent nomination of our President and CEO, Joe Bertolone, also opens a new chapter for DEQ.  We believe that his experience of the gaming industry and his leadership are major assets for DEQ to continue to deliver innovations and growth going forward."

Statement of Earnings
(unaudited) Second Quarter   Six-Month Period
  May 31, 2013   May 31, 2014   May 31, 2013   May 31, 2014
               
Product rental 1,341,000   1,602,000   2,536,000   3,149,000
Royalties 294,000   251,000   572,000   541,000
Total recurring revenue 1,635,000   1,853,000   3,108,000   3,690,000
Non-recurring revenue 79,000   73,000   205,000   113,000
Total Revenue 1,714,000   1,926,000   3,313,000   3,803,000
               
Gross Profit (1) 1,442,000   1,708,000   2,869,000   3,338,000
% Gross margin 84%   89%   87%   88%
               
Operating expenses (1) 1,363,000   1,354,000   2,747,000   2,824,000
               
EBITDA (2) 79,000   354,000   122,000   555,000
               
Stock based compensation 136,000   6,000   147,000   13,000
Amortization expenses 694,000   671,000   1,380,000   1,332,000
Interest expenses 4,000   3,000   8,000   5,000
Foreign exchange (gain) loss 27,000   110,000   (14,000)   77,000
Net Income (Loss) (782,000)   (436,000)   (1,399,000)   (872,000)
Net Income (Loss ) per share $(0.011)   $(0.006)   $(0.020)   $(0.012)
     
Note 1:   Gross profit and operating expenses excluded non-cash items such as depreciation, amortization and stock based compensation.
     
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.


Financial Position
  November 30,
2013
  February 28,
2014 
  May 31,
2014
  (audited)   (unaudited)   (unaudited)
           
Cash and cash equivalents 1,565,000   1,451,000   1,332,000
Current assets (other than cash) 2,175,000   2,360,000   2,571,000
Long-term assets 6,576,000   6,019,000   5,447,000
Total Assets 10,316,000   9,830,000   9,350,000
           
Current liabilities 1,244,000   1,170,000   1,100,000
Shareholders' equity 9,072,000   8,660,000   8,250,000
Total Liabilities and Equity 10,316,000   9,830,000   9,350,000
           
Number of shares outstanding 71,682,000   71,682,000   71,682,000


ABOUT DEQ

DEQ Systems Corp. (TSXV: DEQ) is a customer-centric company that delivers to the global gaming industry best-of-breed table-game technology-related products that add value and increase client revenue. DEQ provides table-game-bonusing technology, table games, baccarat 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.

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