Mr. David Montpetit reports

D-BOX TECHNOLOGIES REPORTS FOURTH QUARTER AND FISCAL 2023 YEAR END RESULTS

D-Box Technologies Inc. today released its financial results for the fourth quarter and fiscal year ended March 31, 2023. All dollar amounts are expressed in Canadian currency.

"Fiscal 2023 was one of our best years ever and marked the resurgence of D-Box," said Sebastien Mailhot, president and chief executive officer of D-Box. "We had strong revenue growth across the business for both the fourth quarter and the year. In the theatrical market, annual ticket sales for D-Box reached an all-time high and we completed 70 new auditorium installations in the year. System sales revenue for the home entertainment market grew 39 per cent to reach $5.9-million, including $2.2-million in the fourth quarter, and was driven by the traction we are gaining in sim racing."

"In fiscal 2024 we will celebrate our 25th anniversary and there has never been a more exciting time for D-Box," added Mr. Mailhot. "We see significant potential to expand our worldwide install base and industry-leading haptic ecosystem and are poised for growth in multiple strategic markets. We look to further build upon our leadership position in the theatrical market while continuing to add new revenue streams in sim racing and establishing a foothold in video gaming."

"This past year, we invested in growth with the launch of our G5 actuator system in the second quarter and the doubling of our output capacity in the third quarter, some of these investments shouldn't be repeated in the future," said David Montpetit, chief financial officer of D-Box. "Our inventory was higher at year-end as we purposely looked to limit our risk of exposure to geopolitical supply, as well as ramping up to ensure enough supply to deliver on certain orders over the first half of fiscal 2024. As we continue to scale the business, we remain focused on building recurring revenue and continuing to deliver profitable growth."

Fourth quarter overview

Fourth quarter revenues increased 49 per cent to $10.4-million compared with $7.0-million for the same quarter a year earlier. The increase was primarily due to the increase in system sales for both the commercial and home entertainment markets. Systems sales for the commercial market increased 55 per cent to $6.3-million, driven by new screens in the theatrical entertainment market, delivered and installed in the quarter. System sales revenue for the home entertainment market increased by 65 per cent to reach $2.2-million due to expansion and growth in sim racing.

Rights for use, rental and maintenance revenues increased 22 per cent to $1.9-million on strong showings from highly anticipated films like Ant-Man and the Wasp: Quantumania, Avatar: The Way of Water and John Wick: Chapter 4.

Gross profit excluding amortization related to cost of goods sold increased 24 per cent to $5.2-million from $4.2-million for the same period in the previous year. Gross margin excluding amortization decreased to 50 per cent of revenues from 60 per cent. The decrease in gross margin is due to a higher proportion (market mix) of system sales to theatrical exhibitors and themed entertainment system sales over the two periods. Higher theatrical system sales results in a decrease to the corporation's gross margin in the initial year of sale, followed by higher margins from rights for use fees earned in subsequent years. Theatrical exhibitor and themed entertainment system sales accounted for 29 per cent of total system sales in the quarter compared with 6 per cent for the same period in the previous year. Theatrical exhibitor and themed entertainment system sales continued to be impacted by higher logistics costs in the quarter versus the same period in the previous year. Logistics costs have decreased from the previous quarter.

Operating expenses for the quarter were $4.7-million, or 45 per cent of revenues, compared with $3.5-million, or 50 per cent of revenues, in the same quarter a year earlier. Contributing to the variance was a $400,000 increase in research and development expenses due to projects related to the next generation of actuator controllers and software development; a $400,000 increase in selling and marketing expenses due to marketing initiatives and trade shows focused on the theatrical and sim racing markets; a $500,000 increase in administrative expenses and professional fees.

Net loss for the quarter was $100,000 compared with net income of $200,000 in the fourth quarter a year earlier.

Adjusted EBITDA was $600,000 compared with $1.0-million for the same period the prior year.

At year-end, D-Box had a cash position and undrawn credit facilities totalling $5.9-million.

Notice of investor webinar

Management of D-Box will be participating in a Radius research investor webinar on Thursday, June 1, 2023, at 4 p.m. ET. During the webinar, management will discuss D-Box's fiscal 2023 results and recent developments in the video gaming market.

Additional information regarding the fourth quarter and year ended March 31, 2023

The financial information relating to the fourth quarter and fiscal year ended March 31, 2023, should be read in conjunction with the corporation's audited consolidated financial statements and the management's discussion and analysis dated May 31, 2023. These documents are available on SEDAR.

About D-Box Technologies Inc.

D-Box creates and redefines realistic, immersive entertainment experiences by moving the body and sparking the imagination through effects: motion, vibration and texture. D-Box has collaborated with some of the best companies in the world to deliver new ways to enhance great stories. Whether it is movies, video games, music, relaxation, virtual reality applications, metaverse experience, themed entertainment or professional simulation, D-Box creates a feeling of presence that makes life resonate like never before. D-Box (Toronto Stock Exchange: DBO) is headquartered in Montreal with offices in Los Angeles, United States, and Beijing, China.

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