DEQ Systems Corp.
TSX VENTURE : DEQ

DEQ Systems Corp.

April 23, 2009 16:01 ET

DEQ Releases its 2009 First Quarter Results

LEVIS, QUEBEC--(Marketwire - April 23, 2009) - DEQ Systems Corp. (TSX VENTURE:DEQ) announced today the filing of its 2009 first quarter financial results for the period ended February 28, 2009. The Consolidated Financial Statements are available on SEDAR (www.sedar.com) and DEQ's website.

A conference call will be held on Friday, April 24, 2009 at 11am EST to present and discuss these results. Those interested in participating should dial (416) 644-3414 or toll free 1 (800) 733-7560. 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.

2009 FIRST QUARTER HIGHLIGHTS:



Financial

- Revenue

- 58% growth in recurring revenue in first quarter
compared to previous year
- 75% increase in gross profit in first quarter from
$658,000 to $1,152,000
- 88% gross margin compared to 71% in 2008 due to increase
in recurring revenue
- 26% average annual growth in recurring revenue over the
last three years

- EBITDA

- Positive EBITDA of $342,000 in first quarter of 2009
compared to a loss of $153,000 in 2008

- Cash Flow and Cash position

- Positive adjusted cash flows from operations of $177,000
in first quarter of 2009 as compared to a loss of
$100,000 in 2008
- Solid stable cash position of $6.2M

- Operating Costs

- Decreased annualized operating costs by 9% from $3.76M in
2008 to $3.45M in 2009

- Share purchase buy back

- DEQ has repurchased a total of 826,500 shares at an avg.
price of $0.29 as of April 23, 2009

Operational

- Operating licenses were obtained in Indiana and Iowa
- EZ Baccarat™ and EZ Trak™ Products were introduced
in Las Vegas at MGM Grand and Wynn
- G3™ Linked Jackpot 6 game configuration was deployed
at Monte Carlo in Las Vegas
- DEQ retained Rob Ziems as Intellectual Property Advisor to
explore new ways to generate revenue from our extensive
patent portfolio
- Lucky Player Jackpot™ was installed in South Africa
with TCS JohnHuxley and in Columbia with Shuffle Master
- EZ Baccarat and EZ Trak systems were installed in Indiana
at Ameristar
- EZ Baccarat installation on four (4) tables at Wynn Casino
in Macau


"We have completed the very hard task we set out to achieve in 2006: that of converting DEQ from a sale of equipments to a recurring revenue company," stated Earle G. Hall, President & CEO of DEQ. "We are very proud of this achievement and Q1 2009 was a solid quarter for us in this promising business model. We now have four product lines generating recurring revenue and USA penetration is growing at a solid pace. Please note that our revenue included non recurring patent rights of $126,000 that was received in 2008. Our operating costs have decreased as we have found new and innovative ways to create efficiencies and we continue our focus on our core competencies."




Financial Results

First Quarter Twelve Month Period
Feb. 29, Feb. 28, Feb. 29, Feb. 28,
2008 2009 2008 2009
(unaudited) (unaudited) (unaudited) (unaudited)
--------------------------------------------------------------
$ $ $ $
Revenue
Royalties 535,131 810,838 1,855,943 2,521,313
Sale of
equipment 312,577 213,421 928,764 578,154
Equipment
rental 76,013 154,235 277,971 447,762
Patent rights - 126,000 107,160 920,300
--------------------------------------------------------------
923,721 1,304,494 3,169,839 4,467,529

Gross Profit 658,311 1,151,523 2,251,690 3,703,114
% Gross margin 71% 88% 71% 83%

Operating
Costs (1) 811,679 809,216 3,064,331 3,447,791
--------------------------------------------------------------

EBITDA (2) (153,368) 342,307 (812,641) 255,322

Interest
income, net of
expenses 171,606 46,315 453,594 243,727
Deferred
revenue
variation (118,286) (212,181) 549,076 140,358
--------------------------------------------------------------

Adjust.
Operational
Cash Flow (2) $(100,048) $176,441 $190,029 $639,408
--------------------------------------------------------------
--------------------------------------------------------------

Additional
Information:
Recurring
Revenue (3) $611,144 $965,073 $2,133,914 $2,969,075
Lease Table
Equivalent
(LTE)(Recurring
Rev. / $3,000) 815 LTE 1287 LTE n/a n/a

Net loss ($) (183,933) (423,395) (1,958,062) (1,749,077)
Net loss per
share ($) (0.003) (0.006) (0.034) (0.025)


Note 1: Operating costs excluded stock option based compensation.

Note 2: We use EBITDA (Earnings before interest, taxes,
depreciation and amortization) and Adjusted Cash Flow from
Operations 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.

Note 3: Recurring revenue is comprised of Royalties and Equipment
rental.

LTE: LTE is Leased Table Equivalent: DEQ receives an average of
$3000 per table per year of patent royalties. This metric
is used to standardize the amount of leased table
royalties. Actual tables may vary as royalties may be
derived from the usage of the patents without the physical
machine in use.



Balance Sheets February 29, November 30, February 28,
2008 2008 2009
(Unaudited) (Audited) (Unaudited)
-------------------------------------------------------------------
Cash and cash
equivalents 10,316,664 6,593,357 6,235,437
Current assets (other
than cash) 2,649,097 1,860,176 2,280,104
Long-term assets 9,174,872 17,139,836 16,499,267
-------------------------------------------------------------------
Total Assets $22,140,633 $25,593,369 $25,014,808
-------------------------------------------------------------------
-------------------------------------------------------------------

Current liabilities 1,074,818 2,734,291 2,589,898
Long-term liabilities 577,073 2,725,668 2,821,226
Shareholders' equity 20,488,741 20,133,410 19,603,684
-------------------------------------------------------------------
Total Liabilities
and Equity $22,140,633 $25,593,369 $25,014,808
-------------------------------------------------------------------
-------------------------------------------------------------------

Number of shares
outstanding 69,907,919 70,416,315 69,760,315
-------------------------------------------------------------------
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ABOUT DEQ

Founded in 1998, DEQ Systems Corp. (TSX VENTURE: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 than 200 casinos in over 30 countries. For further information, please visit www.deq.com

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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