LAS VEGAS, NV and
LEVIS, QC, April 29, 2016 /CNW Telbec/ - 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,
2016
|
|
February
28,
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,
2016
|
|
February
28,
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.
###
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.