LAS VEGAS, NV and LÉVIS, QC,
July 28, 2016 /CNW Telbec/ - DEQ
Systems Corp. (TSXV: DEQ) ("DEQ" or the "Company")
announced today the filing of its second quarter financial
results for the period ended May 31,
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, August 01, 2016 at 5:30pm
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 August 15,
2016 by dialing 1 (416) 621-4642 or 1 (800)
585-8367. The conference ID # for the replay
is 58303825.
2016 SECOND QUARTER RESULTS AND HIGHLIGHTS:
Financial Metrics
- Revenue
- 2% increase in total revenue to $2,355,000 in Q2-2016 as compared to $2,304,000 in Q2-2015.
- Table systems were flat at $1,469,000 in Q2-2016 as compared to $1,467,000 in Q2-2015.
- 23% increase in proprietary table games to $790,000 in Q2-2016 as compared to $641,000 in Q2-2015.
- Gross profit of $2,142,000 in
Q2-2016, was up from $1,817,000 in
Q2-2015, an increase of 18%.
- Operating Expenses
- Operating and administrative expenses increased by 19%, to
$2,329,000 in Q2-2016 from
$1,951,000 in Q2-2015. This increase
is substantially a result of higher legal and consulting costs
incurred in evaluating strategic alternatives, as announced during
the Company's first quarter, higher licensing and compliance fees
associated with anticipated product placements in new
jurisdictions, incremental legal, compliance, and audit fees, and
an increase in salaries for new personnel. The higher operating and
administrative expenses 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 increased by 16% to
$316,000 in Q2-2016 from $273,000 in Q2-2015. The quarter-over-quarter
expense is consistent with the Company's efforts to expand and
enhance its product offerings.
- EBITDA
- DEQ recorded an EBITDA loss of $324,000 in Q2-2016 compared to EBITDA of
$273,000 in Q2-2015. The change in
EBITDA was a result of higher gross profit of $326,000, offset by:
- $278,000 personnel cost;
- $207,000 professional, consulting
and audit fees;
- $165,000 of incremental legal,
professional, licensing and compliance fees, related to DEQ's
corporate and organizational restructuring;
- $89,000 increase travel and other
expenses.
- Liquidity and Cash Flow
- During Q2-2016 DEQ's reported cash position, after effects of
functional currency exchange, increased by $127,000, from $1,577,000 to $1,704,000. This increase is primarily attributed
to the net collection of $548,000 of
trade accounts receivable offset by $378,000 used in operating activities and
$178,000 used for property, plant and
equipment. Further, cash was favorably impacted by $22,000 during the quarter from conversion to the
Canadian dollar for reporting purposes.
- Product Installs Overview
- As of Q2-2016, DEQ had 2,311 installed products worldwide –
directly and through global distribution partners. This compares to
2,348 installed products as of Q2-2015.
"As we have discussed over the last several quarters, we
continued our planned investments in jurisdictional and product
licenses and sales personnel. These increases to operating costs
are reflective of the necessary staffing in order to drive a
competitive and growing business in regulated marketplaces. The
Company is anticipating higher product placements in Macau, however is experiencing delays in
casino property openings due to the regulatory approvals
process. We do, however, expect these new placements to be
forthcoming, and will provide revenue growth in the upcoming
quarters. Since March of 2016, the company has continued its
corporate and product licensure expansion and investment efforts
and has applied for corporate licenses in 6 new North American
regulated jurisdictions (5 of those non tribal) and has submitted
over 31 approval requests for its recently released and existing
products in both new and existing jurisdictions. I am very
encouraged as we continue to grow our global and North American
footprint, and our presence and reach will be beneficial to our
margins in the future," stated Joe
Bertolone, President and Chief Executive Officer of
DEQ."
|
EBITDA*
|
|
Second
Quarter
|
Six-Month
Period
|
|
|
May
31,
2016
|
|
May
31,
2015
|
|
May
31,
2016
|
|
May
31,
2015
|
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
Net Income
(Loss)
|
(459,000)
|
|
(563,000)
|
|
(936,000)
|
|
(718,000)
|
|
Add/(Subtract):
|
|
|
|
|
|
|
|
|
Interest
Expense
|
6,000
|
|
667
|
|
8,000
|
|
3,000
|
|
Foreign Exchange Loss
(Gain)
|
(49,000)
|
|
155,000
|
|
121,000
|
|
(154,000)
|
|
Depreciation &
Amortization
|
171,000
|
|
636,000
|
|
331,000
|
|
1,287,000
|
|
Stock-Based
Compensation
|
7,000
|
|
45,000
|
|
15,000
|
|
53,000
|
|
EBITDA*
|
(324,000)
|
|
273,000
|
|
(461,000)
|
|
471,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*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
|
|
Second
Quarter
|
Six-Month
Period
|
|
|
May
31,
2016
|
|
May
31,
2015
|
|
May
31,
2016
|
|
May
31,
2015
|
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Table
Systems
|
1,469,000
|
|
1,467,000
|
|
3,046,000
|
|
2,845,000
|
|
Proprietary Table
Games
|
790,000
|
|
641,000
|
|
1,663,000
|
|
1,247,000
|
|
Total recurring
revenue
|
2,259,000
|
|
2,109,000
|
|
4,709,000
|
|
4,092,000
|
|
Non recurring
revenue
|
96,000
|
|
195,000
|
|
124,000
|
|
334,000
|
|
Total
Revenue
|
2,355,000
|
|
2,304,000
|
|
4,833,000
|
|
4,426,000
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
2,142,000
|
|
1,817,000
|
|
4,205,000
|
|
3,625,000
|
|
% Gross
margin
|
91%
|
|
83%
|
|
87%
|
|
82%
|
|
|
|
|
|
|
|
|
|
|
Operating & Administrative
expenses
|
2,329,000
|
|
1,951,000
|
|
4,371,000
|
|
3,897,000
|
|
Research & Development
expenses
|
316,000
|
|
273,000
|
|
641,000
|
|
597,000
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss)
|
(503,000)
|
|
(408,000)
|
|
(807,000)
|
|
(869,000)
|
|
FX & other expenses
(revenue)
|
(44,000)
|
|
155,000
|
|
129,000
|
|
(151,000)
|
|
Net Income
(Loss)
|
(459,000)
|
|
(563,000)
|
|
(936,000)
|
|
(718,000)
|
|
Net Income (Loss) per
share
|
$(0.006)
|
|
$(0.010)
|
|
$(0.013)
|
|
$(0.012)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May
31,
2016
|
|
May
31,
2015
|
|
November
30,
2015
|
|
|
|
|
|
|
|
(unaudited)
|
|
(audited)
|
|
(unaudited)
|
Cash and cash
equivalents
|
|
|
1,704,000
|
|
2,221,000
|
|
2,550,000
|
Current assets (other than
cash)
|
|
|
1,780,000
|
|
1,964,000
|
|
1,716,000
|
Long-term
assets
|
|
|
3,368,000
|
|
4,132,000
|
|
3,302,000
|
Total
Assets
|
|
|
$6,852,000
|
|
$8,317,000
|
|
$7,568,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
2,042,000
|
|
1,490,000
|
|
2,001,000
|
Shareholders'
equity
|
|
|
4,810,000
|
|
6,827,000
|
|
5,567,000
|
Total Liabilities and
Equity
|
|
|
$6,852,000
|
|
$8,317,000
|
|
$7,568,000
|
|
|
|
|
|
|
|
|
Number of shares
outstanding
|
|
|
71,682,000
|
|
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.