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Message: Releases its 2009 First Quarter Results

Releases its 2009 First Quarter Results

posted on Apr 23, 2009 12:32PM
April 23, 2009
DEQ Releases its 2009 First Quarter Results
LEVIS, QUEBEC--(Marketwire - April 23, 2009) - DEQ Systems Corp. (TSX VENTURE:DEQ) announced today the filing of its 2009 first quarter financial results for the period ended February 28, 2009. The Consolidated Financial Statements are available on SEDAR (www.sedar.com) and DEQ's website.

A conference call will be held on Friday, April 24, 2009 at 11am EST to present and discuss these results. Those interested in participating should dial (416) 644-3414 or toll free 1 (800) 733-7560. 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.

2009 FIRST QUARTER HIGHLIGHTS:

Financial

  - Revenue

    - 58% growth in recurring revenue in first quarter
      compared to previous year
    - 75% increase in gross profit in first quarter from
      $658,000 to $1,152,000
    - 88% gross margin compared to 71% in 2008 due to increase
      in recurring revenue
    - 26% average annual growth in recurring revenue over the
      last three years

  - EBITDA

    - Positive EBITDA of $342,000 in first quarter of 2009
      compared to a loss of $153,000 in 2008

  - Cash Flow and Cash position

    - Positive adjusted cash flows from operations of $177,000
      in first quarter of 2009 as compared to a loss of
      $100,000 in 2008
    - Solid stable cash position of $6.2M

  - Operating Costs

    - Decreased annualized operating costs by 9% from $3.76M in
      2008 to $3.45M in 2009

  - Share purchase buy back

    - DEQ has repurchased a total of 826,500 shares at an avg.
      price of $0.29 as of April 23, 2009

Operational

  - Operating licenses were obtained in Indiana and Iowa
  - EZ Baccarat(TM) and EZ Trak(TM) Products were introduced
    in Las Vegas at MGM Grand and Wynn
  - G3(TM) Linked Jackpot 6 game configuration was deployed
    at Monte Carlo in Las Vegas
  - DEQ retained Rob Ziems as Intellectual Property Advisor to
    explore new ways to generate revenue from our extensive
    patent portfolio
  - Lucky Player Jackpot(TM) was installed in South Africa
    with TCS JohnHuxley and in Columbia with Shuffle Master
  - EZ Baccarat and EZ Trak systems were installed in Indiana
    at Ameristar
  - EZ Baccarat installation on four (4) tables at Wynn Casino
    in Macau
"We have completed the very hard task we set out to achieve in 2006: that of converting DEQ from a sale of equipments to a recurring revenue company," stated Earle G. Hall, President & CEO of DEQ. "We are very proud of this achievement and Q1 2009 was a solid quarter for us in this promising business model. We now have four product lines generating recurring revenue and USA penetration is growing at a solid pace. Please note that our revenue included non recurring patent rights of $126,000 that was received in 2008. Our operating costs have decreased as we have found new and innovative ways to create efficiencies and we continue our focus on our core competencies."

Financial Results

                        First Quarter      Twelve Month Period
                 Feb. 29,     Feb. 28,    Feb. 29,     Feb. 28,
                    2008         2009        2008         2009
              (unaudited)  (unaudited) (unaudited)  (unaudited)
--------------------------------------------------------------
                       $            $           $            $
Revenue
 Royalties       535,131      810,838   1,855,943    2,521,313
 Sale of
  equipment      312,577      213,421     928,764      578,154
 Equipment
  rental          76,013      154,235     277,971      447,762
 Patent rights         -      126,000     107,160      920,300
--------------------------------------------------------------
                 923,721    1,304,494   3,169,839    4,467,529

Gross Profit     658,311    1,151,523   2,251,690    3,703,114
 % Gross margin       71%          88%         71%          83%

Operating
 Costs (1)       811,679      809,216   3,064,331    3,447,791
--------------------------------------------------------------

EBITDA (2)      (153,368)     342,307    (812,641)     255,322

Interest
 income, net of
 expenses        171,606       46,315     453,594      243,727
Deferred
 revenue
 variation      (118,286)    (212,181)    549,076      140,358
--------------------------------------------------------------

Adjust.
 Operational
 Cash Flow (2) $(100,048)    $176,441    $190,029     $639,408
--------------------------------------------------------------
--------------------------------------------------------------

Additional
 Information:
Recurring
 Revenue (3)    $611,144     $965,073  $2,133,914   $2,969,075
Lease Table
 Equivalent
 (LTE)(Recurring
  Rev. / $3,000) 815 LTE     1287 LTE         n/a          n/a

Net loss ($)    (183,933)    (423,395) (1,958,062)  (1,749,077)
Net loss per
 share ($)        (0.003)      (0.006)     (0.034)      (0.025)


Note 1:  Operating costs excluded stock option based compensation.

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.

Note 3:  Recurring revenue is comprised of Royalties and Equipment
         rental.

LTE:     LTE is Leased Table Equivalent: DEQ receives an average of
         $3000 per table per year of patent royalties. This metric
         is used to standardize the amount of leased table
         royalties. Actual tables may vary as royalties may be
         derived from the usage of the patents without the physical
         machine in use.



Balance Sheets           February 29,     November 30,  February 28,
                                2008             2008          2009
                          (Unaudited)        (Audited)   (Unaudited)
-------------------------------------------------------------------
Cash and cash
 equivalents              10,316,664        6,593,357     6,235,437
Current assets (other
 than cash)                2,649,097        1,860,176     2,280,104
Long-term assets           9,174,872       17,139,836    16,499,267
-------------------------------------------------------------------
Total Assets             $22,140,633      $25,593,369   $25,014,808
-------------------------------------------------------------------
-------------------------------------------------------------------

Current liabilities        1,074,818        2,734,291     2,589,898
Long-term liabilities        577,073        2,725,668     2,821,226
Shareholders' equity      20,488,741       20,133,410    19,603,684
-------------------------------------------------------------------
Total Liabilities
 and Equity              $22,140,633      $25,593,369   $25,014,808
-------------------------------------------------------------------
-------------------------------------------------------------------

Number of shares
 outstanding              69,907,919       70,416,315    69,760,315
-------------------------------------------------------------------
-------------------------------------------------------------------
ABOUT DEQ

Founded in 1998, DEQ Systems Corp. (TSX VENTURE:DEQ) is a leader in the table game bonusing technology field. DEQ's patents, products and features include side bet bonusing games with progressive and random jackpot prizes, slot machine style mystery bonusing, multiple credit and denomination betting flexibility, dealer hand betting, electronic credit bank, electronic rake, baccarat hand tracking, 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. For further information, please visit www.deq.com
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