DEQ releases its 2010 third quarter results

2010 third quarter result highlights are the following:

Financial Metrics

It had an 80% increase in direct leasing revenue in third quarter from us$ 0.19 million in 2009 to us$ 0.35 million in 2010, as well as a  24% increase in total revenue in third quarter from us$ 0.92 million in 2009 to us$ 1.14 million in 2010. Besides, it had a 24% increase in gross profit in third quarter from us$ 0.84 million in 2009 to us$ 1.05 million in 2010 and a  92% gross margin in third quarter 2010 which was comparable to previous year.

Operating costs increased to us$ 964,000 in the third quarter of 2010 compared to us$ 679,000 in 2009 but stable when compared to first and second quarter 2010.

EBITDA and net loss

Positive EBITDA of us$ 84,000 in the third quarter and a net loss of us$ 270,000 attributable to amortization of us$ 589,000 but offset by a gain on a balance of purchase price of us$ 210,000. For the nine-month period, DEQ had a positive EBITDA of us$ 293,000 and a net loss of us$ 1.2 million, which is mostly attributable to amortization of us$ 1.7 million.

Cash Flow

In the third quarter 2010, DEQ generated us$ 292,000 of cash flow from operating activities before change in non-cash working capital items. For the nine-month period, DEQ has generated us$ 688,000 from operating cash flow before change in non-cash working capital items. During the third quarter, their cash position has decreased by us$ 333,000 explained by the annual payment on its balance of purchase price of us$ 698,000.

Operational Highlights

With regards to product installations, during the third quarter 2010, DEQ installed directly 111 new products in North America. As of August 31, DEQ has 463 products directly installed in North America, 45 products directly installed in Asia and 336 installed through distributors worldwide for a total of 844 products currently in operation worldwide.

Operating Costs

DEQ’s operating costs have increased over the course of the past 12 months due to:
Major installations completed in California for the G3 Systems. New market penetration in commercialization in Asia and Australia regions. Direct commercialization effort in recently obtained jurisdictions licenses as well as the important roll out of our recent new product EZ Pai Gow.
 
The firm expects these costs to stabilize at approximately the same level for the next twelve months as they have achieved a new level of economy of scale.
 
“The third quarter was tangible proof of the results of our investments over the past three quarters in sales and commercialization” stated Earle G. Hall, President & CEO of DEQ.

“With more than 100 new installations generating long term recurring revenue, our sales efforts are finally paying off. The team has reacted in an incredible way to this sharp increase in the popularity of our products and we do not see this as a surge or a peak in business but more as a trend. With all the recent contracts signed recently that have not been installed at this time, our fourth quarter looks very promising as all our products are gaining momentum in the USA and abroad.”