Electronic Control Security, Inc. Announces Quarterly Operating Profit

CLIFTON, N.J. , May 9 /PRNewswire-FirstCall/ -- Electronic Control Security, Inc. (OTC Bulletin Board: EKCS) (ECSI), a leading provider of a broad line of electronic security system technologies to the government and private sectors, today...


CLIFTON, N.J. , May 9 /PRNewswire-FirstCall/ -- Electronic Control Security, Inc. (OTC Bulletin Board: EKCS) (ECSI), a leading provider of a broad line of electronic security system technologies to the government and private sectors, today announced financial results for the nine months ended March 31, 2008 ("2008 Period") compared to the nine months ended March 31, 2007 ("2007 Period") and three months ended March 31, 2008 compared to the three months ended March 31, 2007 .

(Photo: http://www.newscom.com/cgi-bin/prnh/20080509/CLF005 )

Arthur Barchenko , President and CEO, stated, "We had net revenues of $1,891,508 for the 2008 Period as compared to $4,473,518 for the 2007 Period, representing a decrease of approximately 58%. Net revenues for the three months ended March 31, 2008 were $437,133 as compared to $702,574 for the corresponding three-month period in 2007. The decrease in net revenues during the 2008 Period as compared to the 2007 Period is primarily attributable to management's decision to pursue commercial-industrial sales, which afford higher gross margins, rather than the DoD prime contract sales that afford greater sales volume but significantly lower gross margins. Further, task orders awarded on contracts now in-house for the U.S. Air Force IBDSS and ATFP-NAVFAC programs have been delayed due to the governmental approval process and/or lack of funding."

"Gross margins for the 2008 Period were 36.79% as compared to 25.49% of revenue for the 2007 Period. Gross margins were 66.53% of revenue for the three months ended March 31, 2008 compared to 37.21% for the corresponding three-month period in 2007. The increase in gross margins for the three months ended March 31, 2008 compared to the corresponding period in 2007 is primarily attributable to an increase in the order mix of higher gross margin products and design and engineering support services and a decrease in material costs."

"Equally important is the fact that, although the net loss from operations increased from $170,714 in the 2007 Period to $458,293 in the 2008 Period, the three months ended March 31, 2008 yielded a net income from operations of $64,456 compared to a net loss of $119,148 for the corresponding period in 2007. This quarter's profitability reflects the results of management's commitment to controlled profitable sales growth as stated previously."

Mr. Barchenko further stated that, "The Company's selling, general and administrative expenses for the 2008 Period and for the three months ended March 31, 2008 were $937,899 and $200,634, respectively, as compared to $1,181,634 and $343,639, respectively, for each of the corresponding periods in 2007. The decrease is primarily attributable to a concerted effort by management to reduce SG&A including a reduction in personnel to maintain a relationship with the reduction in sales."

"During the quarter ended March 31, 2008 , the Company submitted proposals on major projects in the Kingdom of Saudi Arabia , South Korea and Ethiopia and to nuclear power stations, the Department of Energy and Department of Defense facilities in the United States valued at approximately $3,750,000. Of these proposals, $2,250,000 were awarded, and we anticipate approval and funding by the end of the first quarter or early second quarter of fiscal 2009.

Between October and December 2007 , the Company was awarded purchase orders for over $675,000 to develop security system solutions for various projects in North Africa and the United States . In January 2008 , the Company received a contract for a United Nations facility in North Africa for over $1,500,000 to be delivered over a ten (10) month period against which we began billing in the current quarter. Further, we have started production on the various nuclear power station and Department of Energy projects. The Company received notice from Lockheed Martin that a task order for over $650,000 would be released against the $7.0 million I/D I/Q order previously issued to ECSI by Lockheed Martin on the ATFP NAVFAC contract for delivery in October of 2008. The Company will supply three of its premiere product lines integrated with other technologies and support services to prevent unauthorized entry or access."

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