DEQ Reports Revenue of $2.5 Million for the 2016 Third Quarter of 2016

LAS VEGAS, NV and LÉVIS, QC, Oct. 31, 2016 /CNW Telbec/ - DEQ Systems Corp. (TSXV: DEQ) ("DEQ" or the "Company") announced today the filing of its third quarter financial results for the period ended August 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.

2016 THIRD QUARTER RESULTS AND HIGHLIGHTS:

Financial Metrics

REVENUE HIGHLIGHTS:

  • Overall revenue growth of 9% from $2,307,000 in the third quarter of 2015, as compared to $2,514,000 in the third quarter of 2016.
  • Revenues grew 7% on a sequential quarter basis from $2,354,000 in the second quarter of 2016 to $2,514,000 in the third quarter of 2016.
  • 30% increase in Proprietary Table Games from $700,000 in the third quarter of 2015 to $908,000 in the third quarter of 2016.
  • Equipment sales grew 8% from $90,000 in the third quarter of 2015 to $97,000 in the third quarter of 2016.
  • Gross Profits increased 6% in gross profit on a year over year basis from $2,054,000 in the third quarter of 2015 to $2,184,000 in the third quarter of 2016.

OPERATING HIGHLIGHTS:

  • Operating and administrative expenses increased to $2,355,000 for the third quarter of 2016, as compared to $2,067,000 in the third quarter of 2015.
  • The increase in year‐over‐year comparative third quarter operating expenses are a result of a reduction in amortization totaling $321,000 offset by
    • $138,000 in incremental salary for sales staff
    • $134,000 in legal fees, professional fees and shareholder communication related to the strategic alternative process
    • $82,000 in sales and personal property taxes
    • $70,000 in sales related travel costs
    • $66,000 in outsourced fees

EBITDA:

  • DEQ recorded an EBITDA loss of $317,000 in Q3‐2016 compared to EBITDA of $225,000 in the third quarter of 2015. The change in EBITDA was a result of the following:
    • $138,000 in incremental salaries for sales staff;
    • $134,000 (composed of legal fees of $96,000, professional fees of $23,000 and
    • $15,000 in shareholder communications);
    • $82,000 in personal property taxes;
    • $70,000 in incremental sales related travel costs;
    • $66,000 in outsourced development fees associated with new product;
    • $30,000 in additional insurance costs associated general business growth requirements; and
    • $22,000 associated with new products licensing.

LIQUIDITY AND CASH FLOW

  • During the third quarter of 2016, DEQ's reported cash position decreased by $243,000, from $1,704,000 in the second quarter of 2016 to $1,461,000 in the third quarter of 2016. This decrease is primarily attributed to payroll and travel costs related to the additional sales team and payment of personal property taxes.

KEY PERFORMANCE INDICATOR

  • Installed unit base grew to 2,386 with a net installation total of 64 units in the third quarter of 2016, up 3% from 2,322 units in the third quarter of the prior year.

"DEQ continues to execute our strategy of leveraging our service team, premium content and products features to our existing and new customers. As our new and existing content and PRSM progressive system growth continues throughout the increased base of regulated jurisdictions, our investments in sales, licensing and distribution continue to pay off with steady year‐ over‐year and sequential quarter revenue growth. Our dedicated team continues to focus on product placement and marketplace penetration." stated Joe Bertolone, President and Chief Executive Officer of DEQ.

 



 EBITDA*





THIRD QUARTER

NINE‐MONTH Period


August 31,

2016

(unaudited)

August 31,

2015

(unaudited)

August 31,

2016

(unaudited)

August 31,

2015

(unaudited)

Net Income (Loss)

(526,000)

(424,000)

(1,461,000)

(1,142,000)

Add/(Subtract):





Interest Expense

5,000

0

12,000

4,000

Foreign Exchange Loss (Gain)

1,000

125,000

122,000

(29,000)

Depreciation & Amortization

204,000

497,000

535,000

1,785,000

Stock‐Based Compensation

(0)

27,000

14,000

79,000

EBITDA*

(316,000)

225,000

(778,000)

697,000






*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




THIRD QUARTER


NINE-MONTH Period


August 31,

August 31,


August 31,

August 31,


2016

2015


2016

2015


(unaudited)

(unaudited)


(unaudited)

(unaudited)







Table Systems

1,510,000

1,517,000


4,556,000

4,362,000

Proprietary Table Games

908,000

700,000


2,571,000

1,948,000

Total recurring revenue

2,418,000

2,217,000


7,127,000

6,310,000

Non recurring revenue

97,000

90,000


221,000

423,000

Total Revenue

2,515,000

2,307,000


7,348,000

6,733,000







Gross Profit

2,184,000

2,054,000


6,388,000

5,680,000

% Gross margin

87%

89%


87%

84%







Operating & Administrative expenses

2,355,000

2,067,000


6,726,000

5,964,000

Research & Development expenses

349,000

287,000


990,000

884,000







Operating Income (Loss)

(520,000)

(300,000)


(1,328,000)

(1,168,000)

FX & other expenses (revenue)

5,000

126,000


134,000

(25,000)

Net Income (Loss)

(525,000)

(424,000)


(1,462,000)

(1,143,000)

Net Income (Loss) per share

$(0.007)

$(0.006)


$(0.020)

$(0.018)

 



Financial Position







August 31,


August 31,

November 30,


2016


2015

2015


(unaudited)


(audited)

(unaudited)






Cash and cash equivalents

1,461,000


2,733,000

2,550,000

Current assets (other than cash)

2,242,000


1,839,000

1,716,000

Long‐term assets

3,573,000


3,703,000

3,302,000

Total Assets

$7,276,000


$8,275,000

$7,568,000

 

Current liabilities

 

2,689,000


1,544,000

2,001,000

Shareholders' equity

4,587,000


6,731,000

5,567,000

Total Liabilities and Equity

$7,276,000


$8,275,000

$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 August 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.

For further information: Joseph Bertolone, President & Chief Executive Officer DEQ Systems Corp., p: (775) 450‐0115, e: Joe. Bertolone@DEQ.com; Libby Lamm, Chief Financial Officer & Treasurer, DEQ Systems Corp. p: (702) 533‐4431, email: Libby.Lamm@DEQ.com

RELATED LINKS
http://www.deq.com/en/

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