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Message: DEQ Releases its 2008 Financial Statements
| February 25, 2009 | |
| DEQ Releases its 2008 Financial Statements | |
|
LEVIS, QUEBEC--(Marketwire - Feb. 25, 2009) - DEQ Systems Corp. (TSX VENTURE:DEQ) announced today the filing of its annual financial results for the year-ended November 30, 2008. A conference call will be held on Thursday, February 26th at 11am EST to present and discuss these results. Those interested in participating should dial (416) 915-5762 or toll free 1 (800) 814-4861. 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. 2008 ANNUAL HIGHLIGHTS: Financial - 95% growth in recurring revenue in United States in 2008 - 16% increase in total recurring revenue from $2.25 M to $2.62 M in 2008 - 16% increase in gross profit from $2.75 M to $3.21 M in 2008 - 79% gross margin compared to 77% in 2007 due to increase in recurring revenue - 27% average annual growth in recurring revenue over the last three years - Positive adjusted cash flows from operations of $362,000 comparable to previous year - Stable operating costs at $3.45 M - Solid cash position of $6M Operational - Acquisition of DEK International exclusive distribution license - EZ Baccarat(TM) and EZ Trak(TM) products had successfully been introduced in more than 10 casinos during the year with more than 45 units of each products in the field - Nevada Gaming Control Board Approval for the G3(TM) and the successful deployment of the G3 in Nevada in reputed casinos such as the Wynn, the Bellagio, the Venetian, Harrah's and MGM - DEQ added key international industry and financial board members in the course of the year - DEQ ranks among TOP 10 Best Technology Companies for 2008 on TSX Venture "2008 was a year of license applications and approvals, trial tests and initial product rollout in the USA", stated Earle G. Hall, President & CEO of DEQ. "We have successfully broadened our product base with the new EZ Baccarat/EZ Trak product line that is now operational in its first 10 casinos that include the Wynn in Las Vegas. The G3 is installed in the Wynn, the Venetian and Palazzo, the Bellagio as well as many other world class casinos. 2008 was the year where we applied to more than 18 jurisdictions for operating licenses and product licenses to begin our expansion in Las Vegas as well as in the rest of the United States. 2008 was a year of uncertainty, economic crisis and many obstacles. DEQ has thrived during this year of constant turbulence and obstacles and we have laid the framework for widespread commercialization in 2009. At the same time, we have undertaken a very cautious approach to spending and have revised our entire cost base to ensure that we are creating the maximum amount of value for our shareholders. Our focus is on our core business; leasing systems in target rich markets and controlling cost to ensure we create the maximum value possible for our shareholders in these times of economic uncertainty." Statement of Earnings
November 30, November 30, November 30,
2006 2007 2008
(Audited) (Audited) (Audited)
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Revenues
Royalties (1) 1,230,971 1,961,816 2,245,604
Sale of equipment 1,375,194 1,223,886 677,310
Equipment rental (1) 539,695 288,288 369,540
Patents rights 503,602 107,160 794,300
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3,649,462 3,581,150 4,086,754
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Gross Margin 2,018,153 2,754,610 3,208,901
% Gross Margin 55% 77% 79%
% Annual Growth 17% 36% 16%
Operational Costs (2,755,630) (3,204,744) (3,450,253)
EBITDA (2) (737,477) (450,134) (241,352)
Interest income,
net of expenses 149,203 370,754 369,019
Deferred revenue variation 285,550 381,812 234,253
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Adjusted cash flow
from operations (2) (302,724) 302,432 361,920
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Additional information
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Recurring Revenue 1,770,666 2,250,104 2,615,144
Lease Table Equivalent (LTE)
(Recurring Rev. / $3,000) 590 750 871
% Annual Growth 15% 27% 16%
Net Income (2,343,281) (1,706,441) (1,509,617)
Net income per share $(0.060) $(0.030) $(0.022)
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Note 1: Recurring revenue is comprised of Royalties and Equipment rental.
Note 2: 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.
Balance Sheets
November 30, November 30, November 30,
2006 2007 2008
(Audited) (Audited) (Audited)
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Cash and cash equivalents 3,591,367 11,364,112 6,593,357
Current assets
(other than cash) 2,783,913 2,180,534 1,860,176
Long-term assets 7,329,713 9,187,762 17,139,836
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Total Assets $13,704,993 $22,732,408 $25,593,369
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Current liabilities 1,581,378 1,716,162 2,734,291
Long-term liabilities 655,896 577,073 2,725,668
Shareholders' equity 11,467,719 20,439,173 20,133,410
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Total Liabilities and Equity $13,704,993 $22,732,408 $25,593,369
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Number of shares outstanding 53,241,149 69,350,794 70,416,315
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Statement of Cash Flows
November 30, November 30, November 30,
2006 2007 2008
(Audited) (Audited) (Audited)
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Operating Activities
Operating cash flows (602,344) (244,199) 452,970
Change in receivable
of l-t sales (142,213) 458,154 (1,072,264)
Change in working capital (510,741) 500,614 (167,916)
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(1,255,298) 714,569 (787,210)
Investing Activities (107,112) (2,647,420) (4,370,381)
Financing Activities 4,822,309 9,705,596 386,836
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Increase (decrease) in cash 3,459,899 7,772,745 (4,770,755)
Cash at beginning 131,468 3,591,367 11,364,112
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Cash at end 3,591,367 11,364,112 6,593,357
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- Royalties and Patent rights: Please note that an amount of royalties recognized in second quarter for $222,000 and in third quarter for $87,000 was reclassified as patent rights in our audited financial statements. This reclassification has no impact on the amount of total revenue disclosed in our second and third quarter of 2008. This revenue is related to US$1M cash inflow received from Station Casinos in May 2008. Therefore, the number of LTE disclosed in second quarter was readjusted to 737 (instead of 1,025) and at 905 in the third quarter (instead in 1,021). The number of LTE disclosed in the fourth quarter was 1,029, an increase of 14% compare to the third quarter of 2008. - Sale of equipment: Low margin (under 10%) as this is not core business related. As mentioned in previous years, sales of equipment are being reduced as much as possible. - Operating Costs: Travel and commercialization costs were higher than previous years as R&D as initial product approvals and rollout was commenced. These costs were reduced at the end of the year now that product momentum has started. - Cash Flow: The change in the cash position in DEQ was positive in 2008 for the operations at $361,920. Major fluctuations in our cash position are attributable to acquisition of licensing rights from DEK International ($4.0M) and an investment project ($1.1M) that will yield a 25% IRR (Internal rate of return). Outside of these two events totalling more than $5.1M, our cash position has been stable. - Share Buyback Program: As of February 24th , 2009, DEQ has purchased a total of 656,000 shares at an average weighted price of $0.297 as part of the approved normal course issuers bid. ABOUT DEQ Founded in 1998, DEQ Systems Corp. (TSX VENTURE:DEQ) is a leader in the table game bonusing technology field. DEQ's patents and products include side bet bonusing with progressive and random jackpot prizes and slot machine style mystery bonusing, multiple credit betting on the player's and dealer's hand, denomination betting flexibility, electronic credit bank, electronic rake, as well as baccarat and blackjack hand tracking. All DEQ solutions are enhanced by 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 than 200 casinos in over 30 countries. DEQ Systems Corp. has been selected in the TSX Venture 50 in 2008. "2008 Venture 50" is a trademark of TSX inc. and is used under license. TSX Venture does not accept any responsibility regarding the accuracy of the information contained in this press release. |
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