DEQ Systems Corp.
TSX VENTURE : DEQ

DEQ Systems Corp.

July 11, 2008 17:08 ET

DEQ Releases its 2008 Second Quarter Results

LEVIS, QUEBEC--(Marketwire - July 11, 2008) - DEQ Systems Corp. (TSX VENTURE:DEQ) announced today the filing of its 2008 second quarter financial results for the period ended May 31, 2008.

A conference call will be held on Monday, July 14,th at 11am EST to present and discuss the results. Those interested in participating should dial (416) 644-3417 or toll free 1 (800) 732-9303. A visual presentation (Powerpoint) will be available on DEQ's website (www.deq.com) in the Invest/Financial Reports/PowerPoint section to support the call content. The Consolidated Financial Statements are available on SEDAR (www.sedar.com) and DEQ's website.

2008 SECOND QUARTER HIGHLIGHTS:

Financial

- Increase from 815 to 1033 in the number of systems in Leased Table Equivalent ("LTE") Patent Royalties in the second quarter compared to the first quarter

- 49% increase in recurring revenue from $519,000 in Q2 2007 to $775,000 in Q2 2008

- 48% increase in gross profit for the second quarter from $529,000 in 2007 to $785,000 in 2008

- 86% gross margin in Q2 2008

- 28% average annual growth in recurring revenue in the last three years

- $1M one-time royalty payment received from Station Casinos for G3™ approval in Nevada

- Continued stability in the operating costs at $850,000 per quarter or $3.4 M per year

Operational

- G3™ System Approval in Nevada

- Real Link™ Wireless Table Game Linking System released

- Mike Telesmanic named Chairman of the Board

- DEQ wins a Top 20 USA Gaming Innovation Award

- Philippines Remote Betting Patent granted

- Pechanga Casino converts over 60% of its Baccarat tables to EZ Baccarat™ with EZTRAK™


"During the second quarter of 2008, our efforts were focused on completing and obtaining our Nevada certification which was the kick-off of our USA commercialization," stated Earle G. Hall. "Also, in conjunction with the Nevada certification, we completed numerous individual state and jurisdictional operating licence applications to begin commercialization and installations outside of Nevada. Our financial performance in the quarter is starting to yield results in the United States and we are very proud that all the hard work is paying off."





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Balance Sheet Nov. 30, Nov. 30, Feb. 29, May 31,
2006 2007 2008 2008
(Audited) (Audited) (unaudited) (unaudited)
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Cash and cash
equivalents 3,591,367 11,364,112 10,316,664 10,559,478
Current assets
(other than cash) 2,783,913 2,180,534 2,649,097 3,341,568
Long-term assets 7,329,713 9,187,762 9,174,871 9,301,495
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Total Assets $13,704,993 $22,732,408 $22,140,633 $23,202,541
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Current liabilities 1,581,378 1,716,162 1,074,818 2,108,458
Long-term
liabilities 655,896 577,073 577,073 577,073
Shareholders' equity 11,467,719 20,439,173 20,488,741 20,517,010
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Total Liabilities
and Equity $13,704,993 $22,732,408 $22,140,633 $23,202,541
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Number of shares
outstanding 53,241,149 69,350,794 69,907,919 69,907,919
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Additional financial information
Second Quarter Six Month Period
May. 31, May 31, May. 31, May 31,
2007 2008 2007 2008
(unaudited) (unaudited) (unaudited) (unaudited)
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$ $ $ $
Revenue Distribution
Recurring revenue 518,984 775,605 1,246,317 1,385,748
Product sales and
patents rights 72,621 138,132 680,320 450,708
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591,604 912,736 1,926,637 1,836,457
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Gross Profit 529,074 785,142 1,690,305 1,443,453

Operating Cost(1) 720,969 856,873 1,673,061 1,668,551
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EBITDA(2) (191,895) (71,731) 17,244 (225,098)

Interest income, net
of expenses 82,328 167,084 171,095 338,691
Deferred revenue
variation 807,687 1,057,755 522,137 939,468
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Adjust. Operational
Cash Flow(2) $698,122 $1,153,108 $710,476 $1,053,061
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Note 1: Operating Cost is excluding stock-option based compensation.

Note 2: We use EBITDA (Earnings before interest, taxes, depreciation and
amortization) and Adjusted Operational Cash Flow as performance
measurements in our financial disclosure. These measurements are
not recognized under generally accepted accounting principles.
The reconciliations above demonstrate how we calculate such
measurements from our financial statements.



--------------------------------------------------------------------------
Statement of Earnings
Second Quarter Six Month Period
May. 31, May. 31, May. 31, May. 31,
2007 2008 2007 2008
(unaudited) (unaudited) (unaudited) (unaudited)
--------------------------------------------------------------------------
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$ $ $ $
Revenue
Royalties 439,697 691,424 1,080,701 1,226,555
Sale of equipment 72,621 138,132 680,319 450,708
Equipment rental 79,287 83,182 165,615 159,193
Patent rights - - - -
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591,604 912,736 1,926,636 1,836,457

Gross Profit 529,074 785,142 1,690,305 1,443,453
% Gross margin 89% 86% 88% 79%

Net Loss $(583,971) $(268,241) $(516,286) $(452,175)
Net Loss) per share $(0.011) $(0.004) $(0.010) $(0.006)


ABOUT DEQ

Founded in 1998, DEQ Systems Corp. (TSXV: DEQ) is a leader in the table game bonusing technology field. DEQ's patents, products and features include side bet bonusing games with progressive and random jackpot prizes, slot machine style mystery bonusing, multiple credit and denomination betting flexibility, dealer hand betting, electronic credit bank, electronic rake, baccarat hand tracking, multimedia animation and sound effects. DEQ has an extensive patent portfolio that is recognized in more than 50 countries such as the USA, Macau, Australia and Canada. DEQ's bonusing solutions and products are present in more that 200 casinos in over 30 countries.

DEQ Systems Corp. has been selected in the TSX Venture 50 in 2008. "2008 Venture 50" is a trademark of TSX inc. and is used under license.

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.

TSX Venture does not accept any responsibility regarding the accuracy of the information contained in this press release.

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