DEQ reports its 2010 annual results

On its 2010 Annual Results report, DEQ Systems highlights:

Revenue
- 90% increase in recurring revenue from $757,000 in 2009 to $1,436,000 in 2010.
- 10% increase in total revenue $4,419,000 in 2009 to $4,854,000 in 2010.
- 6% increase in gross profit from $3,796,000 in 2009 to $4,031,000 in 2010.
- 83% gross margin in 2010 which was comparable to previous year.
- Loss of $210,000 of royalties explained by Station Casinos’ bankruptcy.
- Termination of the Paltronics revenue recognition in 2010 that affected our revenue by $120,000.
- Settlement agreement on the Severn Project concluded on March 3, 2011 that will affect our recurring revenue by approximately $200,000 starting on March 1, 2011.

Operating Costs
- Operating costs increased to $3,840,000 in 2010 compared to $3,263,000 in 2009. This is explained by the Asian commercialisation and the increased number of products installed in North America, mostly from G3 systems in California.

EBITDA
- EBITDA of $191,000 in 2010 compared to $533,000 in 2009. This is explained by the loss of $575,000 of royalties in 2010 from Station Casinos and Paltronics as well as the revenue recognized in 2009 before the Russian casino closures.

Cash Flow
- In 2010, DEQ generated $423,000 of cash flow from operating activities before change in non-cash working capital items.

-During the fiscal year, our cash position decreased by $1,896,000 explained mostly by our $698,000 payment to DEK International on our balance of territorial exclusivity purchase price and the change in non-cash working capital items for an amount of $929,000, explained by the late payment of Severn Enterprises for an amount of $469,000 as well as an increase in inventory of $250,000 to meet our new level of projected quarterly installations.

Operational Highlights
Product Installations
- In 2010 DEQ directly installed 341 new products in North America.
- As of November 30, 2010, DEQ had 533 directly installed products in North America, 81 products installed in Asia and 389 products installed through distributors worldwide for a total of 1,003 products in operation worldwide.

Operating Costs
DEQ’s operating costs have increased over the course of the past 12 months due to:
Many G3 installations in California
Asia and Australia commercialization and new jurisdictional licenses
 
“DEQ’s products have proven acceptance and viability in 2010”, stated Earle G. Hall, President & CEO of DEQ. “With over 340 new installations this year and our first major installation in Asia we are more than confident in the potential growth of all of our product lines. 2010 was a turbulent year with the Station Casinos bankruptcy, the end of the Paltronics royalties and the Severn project.”

“That being said when we look at the 141 installations in our first quarter of 2011, we are very encouraged by the speed at which DEQ’s core business is growing and we believe that our accelerated growth will offset these lost royalty streams in the near term. As we look to the future, we are very excited with not only our geographical growth but our product penetration per casino and the new products we are launching in 2011,” Hall concluded.