D-BOX Technologies Inc.

D-BOX Technologies Inc.

February 21, 2007 11:30 ET

D-BOX Improves Sales for its Third Quarter

Highlights of the Third Quarter

    -   Completion of a private placement of $ 2,330,000
    -   Conversion of debentures by institutional investors
    -   12% increase in revenuesLONGUEUIL, QC, Feb. 21  - D-BOX Technologies Inc. (TSX-V: DBO.A)
today released its results for the Third Quarter ended December 31, 2006.
    D-BOX Technologies achieved revenues of $875,484 for the third quarter of
2007 compared to $778,763 a year earlier, a (12% increase). Gross profit
totalled $241,500 (28% of revenues) compared to $277,460 (36% of revenues) for
the same period in 2006. The net loss amounted to $740,126 ($0.0130 per share)
from a net loss of $573,339 ($0.0125 per share) last year. For the nine-month
period ended December 31, 2006, revenues were up by 15% at $2,967,402 compared
to $2,579,597 a year earlier. Gross profit totaled $1,043,023 (35% of
revenues) compared to $955,337 (37% of revenues) for the same period in 2006.
The net loss decreased to $1,658,379 ($0.0299 per share) from a net loss of
$1,789,610 (0,0405 $ per share) last year.
    "The last quarter was driven by two main guidelines: develop our sales
and marketing team and maintain efficient cost controls. Our financial results
reflect the implementation of these directives," said Claude Mc Master,
President and Chief Executive Officer of D-BOX Technologies. "To establish our
technology as a new standard in the industry, we continued to discuss
potential strategic partnerships with major players of the entertainment
industry and increased our R&D expenditures to develop the new Motion Gaming
Chair and offer more affordable products. Combined with our growth strategy,
these efforts should generate higher returns in the coming years."
    As part of its financing activities, D-BOX announced on November 24th,
2006, that it had completed a private placement in the amount of $2,330,000 by
issuing 4,660,000 units to subscribers in Quebec and Ontario at a price of
$0.50 per unit.
    Institutional investors also increased their equity position in the
Company. On December 20th, 2006, an institutional investor exercised its
conversion privilege in respect of $450,000 of a convertible debenture issued
in November 2003 for the principal amount of $850,000. Following the
conversion, D-BOX issued 1,463,414 Class A shares and 1,463,414 Class A Share
purchase warrants. A convertible debenture issued to another institutional
investor in November 2005 in the principal amount of $250,000 was
automatically converted into 892,857 Class A Shares and 446,428 Class A Share
purchase warrants.

    Subsequent events

    At the International Consumer Electronics Show in January 2007, D-BOX
obtained an unprecedented success. Invited by HP (Hewlett Packard) to showcase
the D-BOX Motion Gaming Chair, the Company was acclaimed by many industry
leaders and received significant media coverage. The success enjoyed at the
2007 CES helped reinforce D-BOX's talks with major players from the
entertainment industry. On January 25th, an historical event, the first D-BOX
motion-enhanced Blu-ray movies were released on the North American market by
Twentieth Century Fox Home Entertainment LLC (Fox). The D-BOX logo included on
the DVD covers of three new movie releases will bring a greater visibility to
the Company and is part of its ongoing strategy to becoming an industry
standard.

    Outlook

    The Company deploys all its efforts to elevate the D-BOX technology to a
worldwide standard in the entertainment industry. This objective drives every
aspect of the business plan. By making the technology more accessible to the
general public with innovations such as the UMP platform and by strengthening
marketing efforts in the USA, the Company remains confident that this
objective is within reach.

    About D-BOX

    D-BOX Technologies designs and manufactures high-technology motion
simulators destined mainly for the entertainment industry. Its unique,
patented technology uses motion codes specifically programmed for each film or
video game, resulting in motion perfectly synchronized with on-screen action.
D-BOX is aiming to become the global standard in the entertainment world.
Visit us at www.d-box.com.

    D-BOX(R) is a registered trademark. Odyssee(TM) is a trademark of D-BOX
    Technologies Inc.

    Forward-Looking Statements
    Certain statements included herein, including those that express
management's expectations or estimates of our future performance, constitute
"forward-looking statements" within the meaning of applicable securities laws.
Forward-looking statements are necessarily based upon a number of estimates
and assumptions that, while considered reasonable by management at this time,
are inherently subject to significant business, economic and competitive
uncertainties and contingencies. We caution that such forward-looking
statements involve known and unknown risks, uncertainties and other risks that
may cause our actual financial results, performance, or achievements to be
materially different from our estimated future results, performance or
achievements expressed or implied by those forward-looking statements.
Numerous factors could cause actual results to differ materially from those in
the forward-looking statements, including without limitation, our ability to
achieve increased market acceptance for our product offerings and penetrate
new markets; the existence of undetected errors or similar problems in our
products; our ability to manage our growth; our ability to compete
successfully; potential liabilities; maintaining our intellectual property
rights and litigation involving intellectual property rights; our dependence
on the expertise of our key personnel; and our access to sufficient capital to
fund our future requirements. This list is not exhaustive of the factors that
may affect any of our forward-looking statements. Investors are cautioned not
to put undue reliance on forward-looking statements. All subsequent written
and oral forward-looking statements attributable to D-BOX or persons acting on
our behalf are expressly qualified in their entirety by this notice. We
disclaim any intent or obligation to update publicly these forward-looking
statements, whether as a result of new information, future events or
otherwise. Risks and uncertainties about our business are more fully discussed
in our Annual Report.

    The TSX Venture Exchange has neither approved nor disapproved the
    contents of this press release.D-BOX TECHNOLOGIES INC.
    UNAUDITED CONSOLIDATED INTERIM BALANCE SHEETS

    As of                                           December 31,    March 31,
                                                           2006         2006
                                                    -------------------------
                                                              $            $

    ASSETS
    Current assets
    Cash and cash equivalents                           237,008      699,191
    Short-term investments                            2,520,319    1,950,000
    Accounts receivable                                 669,610      572,557
    Inventories                                       1,137,618      990,737
    Prepaid expenses                                     39,070       31,001
    -------------------------------------------------------------------------
                                                      4,603,625    4,243,486
    -------------------------------------------------------------------------
    Deferred financing costs                             16,921       61,575
    Property, plant and equipment                       410,967      213,903
    Intangible assets                                   184,814      128,729
    Goodwill                                             60,000       60,000
    -------------------------------------------------------------------------
                                                      5,276,327    4,707,693
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
    Bank loan                                            15,000            -
    Accounts payable and accrued liabilities            784,024    1,050,856
    Current portion of long-term debt                    16,055      330,981
    -------------------------------------------------------------------------
                                                        815,079    1,381,837
    Long-term debt                                      730,612    1,349,183
    -------------------------------------------------------------------------
                                                      1,545,691    2,731,020
    -------------------------------------------------------------------------

    Shareholders' equity
    Share capital                                    12,212,509    9,009,548
    Warrants                                            242,689            -
    Contributed surplus                                 235,429      176,875
    Equity component of convertible debentures          239,278      331,140
    Deficit                                          (9,199,269)  (7,540,890)
    -------------------------------------------------------------------------
                                                      3,730,636    1,976,673
    -------------------------------------------------------------------------
                                                      5,276,327    4,707,693
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    D-BOX TECHNOLOGIES INC.
    UNAUDITED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND DEFICIT

                          ---------------------------------------------------
                                   THIRD QUARTER              NINE MONTHS
    Third quarter and     ---------------------------------------------------
     nine-month period    ---------------------------------------------------
     ended December 31,          2006         2005         2006         2005
                          ---------------------------------------------------
                                    $            $            $            $

    Revenues                  875,484      778,763    2,967,402    2,579,597
    Cost of revenues          633,984      501,303    1,924,379    1,624,260
    -------------------------------------------------------------------------
    Gross profit              241,500      277,460    1,043,023      955,337
    -------------------------------------------------------------------------

    Expenses
    Selling                   466,647      332,491    1,065,902    1,181,719
    Administrative            291,327      335,341      949,198    1,015,531
    Financial                  74,739       76,578      246,213      216,323
    Research and
     development              148,913      106,389      440,089      331,374
    -------------------------------------------------------------------------
                              981,626      850,799    2,701,402    2,744,947
    -------------------------------------------------------------------------
    Net loss                 (740,126)    (573,339)  (1,658,379)  (1,789,610)

    Deficit, beginning
     of period             (8,459,143)  (6,419,869)  (7,540,890)  (5,203,598)
    -------------------------------------------------------------------------
    Deficit, end of
     period                (9,199,269)  (6,993,208)  (9,199,269)  (6,993,208)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted
     loss per share           (0.0130)     (0.0125)     (0.0299)     (0.0405)
    -------------------------------------------------------------------------

    Weighted average
     number of common
     shares outstanding    57,889,485  (45,941,547)  55,442,548   44,235,016
    -------------------------------------------------------------------------



    D-BOX TECHNOLOGIES INC.
    UNAUDITED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

                          ---------------------------------------------------
                                   THIRD QUARTER              NINE MONTHS
    Third quarter and     ---------------------------------------------------
     nine-month period    ---------------------------------------------------
     ended December 31,          2006         2005         2006         2005
                          ---------------------------------------------------
                                    $            $            $            $

    OPERATING ACTIVITIES
    Net loss                 (740,126)    (573,339)  (1,658,379)  (1,789,610)
    Items not affecting
     cash
      Amortization of
       property, plant
       and equipment           30,028       14,882       64,757       43,474
      Amortization of
       intangible assets        6,723        4,650       18,220       13,530
      Amortization of
       deferred financing
       costs                    4,964        7,470       18,823       17,963
      Stock-based
       compensation             9,264       25,179       58,554       48,429
      Accreted interest
       and other non-cash
       interest expense
       on convertible
       debentures               8,164       18,749       47,876       68,784
    -------------------------------------------------------------------------
                             (680,983)    (502,409)  (1,450,149)  (1,597,430)
    Net change in
     non-cash working
     capital items           (741,085)    (106,236)    (503,835)    (295,540)
    -------------------------------------------------------------------------
    Cash flows relating
     to operating
     activities            (1,422,068)    (608,645)  (1,953,984)  (1,892,970)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Acquisition of
     property, plant and
     equipment                (94,701)     (20,071)    (261,822)     (62,359)
    Acquisition of
     intangible assets        (43,117)     (24,085)     (74,304)     (42,844)
    Increase in
     short-term
     investments           (1,050,000)    (650,000)    (570,319)    (650,000)
    -------------------------------------------------------------------------
    Cash flows relating
     to investing
     activities            (1,187,818)    (694,156)    (906,445)    (755,203)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Increase in bank
     loan                      15,000            -       15,000            -
    Repayment of
     long-term debt            (3,862)      (2,760)     (48,593)      (8,457)
    Increase in
     long-term debt                 -            -       17,400            -
    Issuance of
     convertible
     debenture                      -      600,000            -      600,000
    Issuance of shares      2,452,788      750,000    2,452,788      853,000
    Share issue costs         (38,349)     (34,847)     (38,349)     (34,847)
    Deferred financing
     costs                          -      (46,408)           -      (46,408)
    -------------------------------------------------------------------------
    Cash flows relating
     to financing
     activities             2,425,577    1,265,985    2,398,246    1,363,288
    -------------------------------------------------------------------------

    Net change in cash
     and cash
     equivalents             (184,309)     (36,816)    (462,183)  (1,284,885)
    Cash and cash
     equivalents,
     beginning of period      421,317      406,032      699,191    1,654,101
    -------------------------------------------------------------------------
    Cash and cash
     equivalents,
     end of period            237,008      369,216      237,008      369,216
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplementary
     information
    Interest paid             145,842        1,052      160,302       18,357
    -------------------------------------------------------------------------%SEDAR: 00012304EF



Contact Information