D-BOX Technologies Inc.

D-BOX Technologies Inc.

May 29, 2007 04:04 ET

D-BOX increases sales and forms important alliances in 2007

Fiscal 2007 Highlights

    -  Annual revenue increase of almost 20%
    -  Secured financings totalling $2.3M; cash and cash equivalents
       of $2.7M at year end
    -  Completed a licensing agreement with Twentieth Century Fox
    -  Formed an important partnership with Deluxe Digital Studios
    -  Unveiled, in partnership with HP, the new high-end gaming chair
       at the 2007 CES
    -  Initiated commercialisation of the new Universal Motion Platform for
       home theatres
    -  Strengthened management teamLONGUEUIL, QC, May 28  - D-BOX Technologies Inc. (TSX-V: DBO.A) ("D-
BOX" or "the Company") a leading provider of motion technology offering a
complete immersive experience in entertainment, today released its financial
and operating results for the fiscal year ended March 31, 2007.
    "We are very proud to announce an increase in our revenues that confirm
the Company's progress, but most importantly, we are pleased to see that all
the efforts we have put towards developing and implementing our new sales
strategy have started to bear fruit" said Claude Mc Master, President and
Chief Executive Officer of D-BOX Technologies. "I am now able to count on
three new accomplished members of our management team that will support me in
this endeavour. We remain confident that the alliances we have formed will
enable our technology to become a new world standard in the entertainment
industry".
    The Company is focusing on the execution of its two-pronged growth
strategy: i) by developing strong relationships with worldwide leaders of the
entertainment industry that has translated into two signed agreements with FOX
and Deluxe during 2007 and ii) by strengthening its sales force, now led by a
new Vice-President. The adoption of a new technology in this industry is
intimately tied to acceptance from the centers of influence that represent
movie and video game producers. They are constantly looking for technologies
that provide an increasingly realistic and immersive experience for the
consumer. This is why D-BOX continues to invest in research and development in
order to increase its product offering and lower its fabrication costs. These
efforts should lead to a larger target market in the years to come.
    D-BOX Technologies achieved revenues of $4,088,140 for fiscal 2007,
compared to $3,438,765 during the previous year, an increase of 19%.
    Gross profit totalled $1,768,353 (42% of revenue) compared to $1,455,821
(43% of revenues) in 2006. Cost of goods sold includes the cost of raw
material, assembly of systems as well as general, related manufacturing costs.
In order to increase revenue growth, the Company is actively working to lower
component costs while maintaining the products' optimal level of performance.
    Administration expenses were $1,356,698 (33% of revenues) compared to
$1,410,094 (41% of revenues) during the previous year. Sales and marketing
expenses amounted to $1,885,574 (46% of revenues) compared to $1,751,678 (51%
of revenues) for 2006. The increase in marketing expenses reflected the hiring
of a new Vice-President, Sales, costs related to motion code programming, the
operation of the new mobile home theater demonstration unit as well as the
reorganization of the sales strategy. Research and Development expenses were
$413,870 (10% of revenues) against $297,432 (9% of revenues) for the same
period in 2006. This increase is a result of additional efforts dedicated to
lowering manufacturing costs and expanding the product offering. The Company
expects these costs will continue to increase in the coming year to reflect
the implementation of this strategy.
    Net loss amounted to $2,118,535 (0.0368$ per share), an improvement
compared to a net loss of $2,337,292 ($0.0510 per share) for the previous
fiscal year.
    For the three month period ended March 31, 2007, operating revenues
increased 30% or $1,120,738, compared to $859,168 for the fourth quarter of
2006. During the last quarter of 2007, the gross profit margin improved after
an increase in sales compared to the same period in the previous year. Gross
profit amounted to $461,070 (41% of revenue) versus $257,317 (29% of revenue)
for the corresponding period in 2006. Net loss was $460,156 ($0.007 per share)
versus a net loss of $547,682 ($0.0125 per share) last year.
    D-BOX announced on November 24, 2006, a private placement for proceeds of
$2,330,000 following the issuance of 4,660,000 units, at the price of $0.50
each, to subscribers located in Quebec and Ontario.
    During the last fiscal year, 1,300,000 options were exercised according
to the Company's share option plan for gross proceeds of $138,550. 1,035,900
warrants were also exercised and 1,035,900 Class A common shares issued for
gross proceeds of $362,566.
    Institutional investors have also increased their equity position in the
Company. On August 31, 2006, debentures with a nominal value of $300,000 and
accumulated interest of $15,000 were converted to 984,375 common Class A
shares and an amount of $315,000 was added to the share capital. On December
20, 2006, an institutional investor exercised part of a conversion privilege
related to debentures of a nominal value of $450,000 issued in November 2003,
for $850,000 of capital against 1,463,414 common Class A shares and 1,463,414
warrants for common Class A shares. Also, the entire conversion privilege
linked to a debenture with a nominal value of $250,000 was exercised and the
institutional investor received 892,857 common Class A shares and 446,428
warrants for common Class A shares.

    Subsequent events

    As a result of D-BOX's goal to develop strong relationships with
influential figures in the entertainment industry, the Company announced in
May 2007, that it had equipped one of EFILM's state of the art digital
screening rooms with the D-BOX motion technology. A division of Deluxe
Entertainment Group, EFILM maintains close ties with key industry
professionals and is at the cutting edge of digital cinema. This technology is
one of the latest and most promising developments to hit the movie industry
and is enjoying recognition and adoption in the United-States as well as
worldwide. By showcasing the D-BOX technology at EFILM, the Company is well-
positioned to demonstrate its state of the art motion technology to major film
studios, producers, movie directors and other industry professionals.

    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 and developing a solid distribution network in
North America, the Company remains confident that this objective is within
reach. The nomination of Mr Normand Chartrand as Chief Financial Officer will
help the Company focus its efforts on developing other key agreements and to
develop its line of products. D-BOX will benefit from Mr Chartrand's extensive
experience in managing and securing financing for emerging companies.

    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.


                         CONSOLIDATED BALANCE SHEETS

    As at March 31

                                                        2007          2006
                                                          $             $
    -------------------------------------------------------------------------

    ASSETS
    Current assets
    Cash and cash equivalents                          931,163       699,191
    Short-term investments                           1,799,873     1,950,000
    Accounts receivable                                917,559       572,557
    Inventories                                      1,226,925       990,737
    Prepaid expenses                                    34,028        31,001
    -------------------------------------------------------------------------
                                                     4,909,548     4,243,486
    -------------------------------------------------------------------------
    Deferred debt security issue costs                  14,573        61,575
    Property, plant and equipment                      429,320       213,903
    Intangible assets                                  190,044       128,729
    -------------------------------------------------------------------------
                                                     5,543,485     4,647,693
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
    Accounts payable and accrued liabilities         1,168,123     1,050,856
    Current portion of long-term debt                   24,573       330,981
    -------------------------------------------------------------------------
                                                     1,192,696     1,381,837
    -------------------------------------------------------------------------
    Long-term debt                                     747,499     1,349,183
    -------------------------------------------------------------------------
                                                     1,940,195     2,731,020
    -------------------------------------------------------------------------

    Shareholders' equity
    Share capital                                   12,324,101     8,796,796
    Warrants                                           517,620       112,752
    Contributed surplus                                291,716       176,875
    Equity component of convertible debentures          89,278       331,140
    Deficit                                         (9,619,425)   (7,500,890)
    -------------------------------------------------------------------------
                                                     3,603,290     1,916,673
    -------------------------------------------------------------------------
                                                     5,543,485     4,647,693
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    On behalf of the Board,


       Jean-Pierre De Montigny                         Claude McMaster
              Director                                     Director



    D-BOX Technologies Inc.


                         CONSOLIDATED STATEMENTS OF
                           OPERATIONS AND DEFICIT

    For the years ended March 31

                                                        2007          2006
                                                          $             $
    -------------------------------------------------------------------------

    Revenues                                         4,088,140     3,438,765
    Cost of goods sold                               2,319,787     1,982,944
    -------------------------------------------------------------------------
    Gross profit                                     1,768,353     1,455,821
    -------------------------------------------------------------------------

    Expenses
    Selling and marketing                            1,885,574     1,751,678
    Administrative                                   1,356,698     1,410,094
    Research and development                           413,870       297,432
    Financial                                          227,118       333,909
    -------------------------------------------------------------------------
                                                     3,883,260     3,793,113
    -------------------------------------------------------------------------
    Loss before income taxes                        (2,114,907)   (2,337,292)
    Income taxes                                         3,628             -
    -------------------------------------------------------------------------
    Net loss                                        (2,118,535)   (2,337,292)
    -------------------------------------------------------------------------

    Deficit, beginning of year
    As previously reported                          (7,500,890)   (5,203,598)
    Restatement                                              -        40,000
    -------------------------------------------------------------------------
    As restated                                     (7,500,890)   (5,163,598)
    -------------------------------------------------------------------------
    Deficit, end of year                            (9,619,425)   (7,500,890)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Loss per share - basic and diluted                 (0.0368)      (0.0510)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average number of shares outstanding   57,532,292    45,824,518
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    D-BOX Technologies Inc.


                    CONSOLIDATED STATEMENTS OF CASH FLOWS

    For the years ended March 31 mars

                                                        2007          2006
                                                          $             $
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
    Net loss                                        (2,118,535)   (2,337,292)
    Items not affecting cash:
      Amortization of property, plant and equipment     96,397        58,076
      Amortization of intangible assets                 25,415        18,647
      Amortization of deferred debt security
       issue costs                                      21,171        19,804
      Stock-based compensation                         114,841       119,455
      Accrued interest and other non-cash interest
       expense on convertible debentures                53,420       188,144
    -------------------------------------------------------------------------
                                                    (1,807,291)   (1,933,166)
    Net change in non-cash working capital items
      Accounts receivable                             (345,002)      411,215
      Inventories                                     (236,188)      (91,793)
      Prepaid expenses                                  (3,027)      (14,981)
      Accounts payable and accrued liabilities         132,267      (161,109)
    -------------------------------------------------------------------------
                                                      (451,950)      143,332
    -------------------------------------------------------------------------
    Cash flows relating to operating activities     (2,259,241)   (1,789,834)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Additions to property, plant and equipment        (311,814)      (76,990)
    Additions to intangible assets                     (86,730)      (51,622)
    Decrease (increase) in short-term investments      150,127    (1,950,000)
    -------------------------------------------------------------------------
    Cash flows relating to investing activities       (248,417)   (2,078,612)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Repayment of long-term-debt                        (52,540)      (11,279)
    Increase in long-term debt                          41,207             -
    Issuance of convertible debentures                       -       600,000
    Shares issued                                    2,831,116     2,426,000
    Share issue costs                                  (80,153)      (55,389)
    Deferred debt security issue costs                       -       (45,796)
    -------------------------------------------------------------------------
    Cash flows relating to financing activities      2,739,630     2,913,536
    -------------------------------------------------------------------------

    Net change in cash and cash equivalents            231,972      (954,910)
    Cash and cash equivalents, beginning of year       699,191     1,654,101
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of year             931,163       699,191
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplementary information
    Interest paid                                      225,399        34,339
    -------------------------------------------------------------------------%SEDAR: 00012304EF



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