Department 13 records first cash flow positive result

Department 13 International Limited (ASX: D13) has posted its quarterly results, demonstrating that it was cash flow positive for the first time since the company listed.

Department 13, founded by former military operators and scientists, develops software and communications systems to be applied in drone defence and mobile phone IT security, among other endeavours.

One of the company’s products, the MESMER system, is designed to “prevent drones from physically harming people, damaging and disrupting critical infrastructure, and stealing intellectual property”.

And it appears to be a driver behind Department 13’s positive quarterly result.

The company booked receipts from customers totalling about $2.3 million for the quarter as it settled on the sale of seven MESMER units.

As such, the company was able to record positive operating cash flow for the quarter.

Department 13’s CEO, Jonathan Hunter, said his company will enter the March quarter with “solid momentum” and believes it is well equipped to continue to drive an “established pipeline of opportunities”.

“The expansion of the sales and distribution network for MESMER provides us with confidence that the shape of the sales curve will continue to take an upward trajectory over 2018,” Mr Hunter said.

Department 13 recently signed an agreement with Japanese technology and equipment distributor Nippon Kaiyo in which Nippon Kaiyo will distribute Department 13’s technology in Japan, a move which investors responded to enthusiastically as the company’s share price rose by more than 11 per cent on the day of the announcement.

While Department 13’s shares are trading for around 9.7 cents they are still a long way off the 23.5 cents they were going in late 2012.

But it appears the company’s share price is poised to start heading back up, should Department 13 continue to increase sales.

While D13 does represent opportunity, I still think there are stronger companies in the tech sector with proven histories and strong customer bases, such as Altium Limited (ASX: ALU) and Cochlear Limited (ASX:COH) that would be worth considering before jumping on Department 13.

If you’re looking for other opportunities in the tech sector, it may be worth your time having a read of this…

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Motley Fool contributor Steve Holland has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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