Mr. Sebastien Mailhot reports

D-BOX TECHNOLOGIES REPORTS RECORD REVENUE FOR SECOND QUARTER OF FISCAL 2024

D-Box Technologies Inc. has released financial results for the second quarter ended Sept. 30, 2023. All dollar amounts are expressed in Canadian currency.

"We are proud of the record quarterly revenue we achieved in the second quarter," said Sebastien Mailhot, president and chief executive officer of D-Box. "Most of the growth came from higher system sales to theatrical customers as we continued to increase our global footprint in that key market. We also completed the purchase order from Cooler Master, delivering $1-million in haptic systems for their Motion 1 gaming chair. However, our financial results were tempered by a lower gross margin due to differences in our product and market mix compared to the second quarter of last year.

"While our financial results for the first two quarters have us on track to surpass our fiscal 2023 numbers, we do expect a softer second half to fiscal 2024 -- due in part to the work stoppages this year in Hollywood, the lack of an apparent and impactful blockbuster on the horizon for the holiday movie season, and uncertain economic conditions."

Second quarter overview

Second quarter revenues increased 77 per cent to $10.9-million compared with $6.1-million for the same quarter a year ago.

Systems sales revenue increased 99 per cent to $8.7-million, with the majority of the growth coming from a $2.3-million increase in sales to theatrical customers. Over that same period, net new screen installations were 23, as compared with four for the same period last year, bringing the total number of active D-Box screens to 879 as at Sept. 30, 2023. Also contributing to the growth in system sales, D-Box haptic systems for the Cooler Master Motion 1 gaming chair were delivered during the period, resulting in an increase of $1-million in entertainment revenues, and D-Box completed its delivery of haptic systems related to the Vibe chair during the period.

Rights for use, rental and maintenance revenues increased 21 per cent to $2.1-million, with the growth being attributable to the corporation's larger footprint in theaters compared with the same quarter last year.

Gross profit excluding amortization increased to $5.2-million from $3.3-million for the same period last year. However, gross margin excluding amortization decreased to 48 per cent from 54 per cent for the same period last year due to sales mix, including the addition of system sales to video gaming customers, and a higher proportion of system sales versus rights for use, rental and maintenance revenues during the period as compared with the same period last year. Rights for use, rental and maintenance revenues generate a higher margin than system sales.

Operating expenses for the quarter were $4.3-million, or 40 per cent of revenues, compared with $3.7-million, or 61 per cent of revenues, in the same quarter a year earlier. Contributing to the variance was a $400,000 increase in selling and marketing expenses due to a higher head count, a reduction of $122,000 in government assistance, and the result of marketing initiatives and participation in trade shows, business development events and travel focused on the entertainment and gaming markets. Administrative expenses were $300,000 higher due to an increase in amortization expense related to leasehold improvements that are amortized over the remaining life of the lease.

Net profit for the quarter was $402,000 compared with a net loss of $743,000 a year earlier. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased to $1.1-million from $38,000 in the second quarter of last year.

At quarter-end, D-Box had a cash position and undrawn credit facilities totalling $5.7-million.

Notice of investor video presentation

Management of D-Box will be publishing a video presentation to investors on the corporation's website on Tuesday, Nov. 14, 2023, at 9 a.m. ET. During the presentation, management will discuss the corporation's second quarter results, its renewed focus on the professional simulation and training market, and its outlook. Investors are invited to submit relevant questions in advance by e-mail to investors@D-Box.com.

Additional information regarding the second quarter ended Sept. 30, 2023

The financial information relating to the second quarter ended Sept. 30, 2023, should be read in conjunction with the corporation's audited consolidated financial statements and the management's discussion and analysis dated Nov. 9, 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 is headquartered in Montreal with offices in Los Angeles, United States, and Beijing, China.

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