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 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 .

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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."

The Company is a sub-contractor to Raytheon Services responsible for the sustainment portion on the ATFP-NAVFAC program for the southwest and northwest naval facilities. Raytheon Services has been awarded the contract for these facilities, and the sustainment portion of the contract is valued at over $2,200,000. The contract for sustainment of these facilities is scheduled to be implemented in the October 2008 through 2011 time frame.


ECSI is recognized as a global leader in perimeter security and an effective quality provider for both the Department of Defense and Homeland Security programs. The Company designs, manufactures and markets physical electronic security systems for high profile, high threat environments. The employment of risk assessment and analysis allows ECSI to determine and address the security needs of government and commercial-industrial installations. The Company has teaming agreements with major system integrators in both the United States and overseas to support the installation and aftermarket. ECSI is located at 790 Bloomfield Avenue, Bldg. C-1, Clifton, NJ 07012. Tel: 973-574-8555; Fax: 973-574-8562. For more information on ECSI and its customers, please visit http://www.anti-terrorism.com .


This press release contains forward-looking statements that involve substantial uncertainties and risks. These forward-looking statements are based upon our current expectations, estimates and projections about our business and our industry and reflect our beliefs and assumptions based upon information available to us at the date of this release. We caution readers that forward-looking statements are predictions based on our current expectations about future events. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Our actual results, performance or achievements could differ materially from those expressed or implied by the forward-looking statements as a result of a number of factors, including but not limited to changes in economic conditions generally and in our industry specifically, changes in security technology, legislative or regulatory changes that affect us, the availability of working capital, changes in costs and the availability of goods and services, the introduction of competing products, changes in our operating strategy or development plans, our ability to attract and retain qualified personnel, changes in our acquisition and capital expenditure plans, and the risks and uncertainties discussed under the heading "RISK FACTORS" in Item 1 of our Annual Report on Form 10-KSB for the fiscal year ended June 30, 2007 and in our other filings with the Securities and Exchange Commission. We undertake no obligation to revise or update any forward-looking statement for any reason.

SOURCE Electronic Control Security, Inc.