Electronic Control Security, Inc. Announces Quarterly Results

CLIFTON, N.J., Feb. 15 /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 six months ended December 31, 2007 ("2007 period") compared to six months ended December 31, 2006 ("2006 period") and three-months ended December 31, 2007 compared to three months ended December 31, 2006 .

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Arthur Barchenko, President and CEO, stated, "We had net revenues of $1,454,375 for the 2007 Period as compared to $3,770,944 for the 2006 Period, representing a decrease of approximately 61%. Net revenues for the three- months ended December 31, 2007 were $326,804 as compared to $1,051,266 for the corresponding three-month period in 2006. The decrease in net revenues during the 2007 Period as compared to the 2006 Period is primarily attributable to task orders awarded on contracts now in-house for the U.S. Air Force IBDSS and ATFP-NAVFAC programs whose releases have been delayed due to the governmental approval process and/or lack of funding.

Further, "Gross margins for the 2007 Period were 27.85% as compared to 23.30% of revenue for the 2006 Period. Gross margins were 40.96% of revenue for the three-months ended December 31, 2007 compared to 50.92% for the corresponding three-month period in 2006. The decrease in gross margins for the three-months ended December 31, 2007 period compared to the corresponding period in 2006 is primarily attributable to an increase in the order mix of lower gross margin products and an increase in material costs along with lower design and engineering support service billings."

"The Company's selling, general and administrative expenses for the 2007 Period and for the three-months ended December 31, 2007 were $737,265 and $380,098, respectively, as compared to $837,995 and $418,269 for each of the corresponding periods in 2006. The decrease is primarily attributable to a concerted effort by management to reduce SG&A including a reduction in personnel commensurate with the reduction in sales."

Net loss before deemed dividends related to preferred stock for the 2007 and 2006 Periods was $(837,292) and $(229,370), respectively and $(407,239) and $(24,814) for the three-months ended December 31, 2007 and 2006, respectively. The increase in net loss for the 2007 period is partially attributable to a one-time charge of $220,000 that the company absorbed in respect to a legal settlement with a subcontractor on a government project.

Mr. Barchenko stated that, "During the quarter ended December 31, 2007 , the Company submitted proposals on major projects in the Kingdom of Saudi Arabia , Korea, Ethiopia and Department of Defense facilities in the United States valued at approximately $109,750,000. These proposals are pending and awaiting approval, funding and award. We anticipate decisions relating to these proposals within the third quarter of fiscal 2008.

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 $1.5 million to be delivered over a ten (10) month period. The Company received notice that a task order would be released against Lockheed Martin's $7.0 million order for over $650,000 on the ATFP-NAVFAC contract for delivery in October of 2008. The Company will supply three of its premier product lines integrated with other technologies and support services to prevent unauthorized entry or access."

Further, "The Company was an integral part of the Raytheon Services team responsible for sustainment on the ATFP-NAVFAC proposals 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 million. The contract for sustainment of these facilities is scheduled to be implemented in the October 2008-2011 time frame."

ABOUT ECSI

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.

ECSI INTERNATIONAL, INC. SAFE HARBOR STATEMENT:

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.



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