A4S Security Announces Second Quarter Financials

LOVELAND, Colo., Aug. 14 -- A4S Security, Inc., a leading provider of digital video surveillance solutions, today announced financial results for its fiscal 2006 second quarter ended June 30, 2006.

Revenue for the second quarter of 2006 totaled $301,948, an increase of more than six-fold compared to revenue of $46,860 recorded in the second quarter of 2005. Revenue for the six months ended June 30, 2006 totaled $514,783, an increase of more than four-fold compared to revenue of $120,595 for the same period in 2005.

"While our revenue growth in total dollars is modest, we have made significant investment in our product platform and believe we are beginning to see a ramp in sales that will generate continued and sustainable growth going forward," said Tom Marinelli, CEO and President of A4S Security. We continue to attract additional public transportation customers for our core ShiftWatch technology, building on the positive momentum we began generating in the preceding quarter. We were recently selected to install our ShiftWatch TVS systems in the Elk Grove, California E-tran transit system. Since the first quarter of 2006, we have also secured additional customers for initial ShiftWatch installations that include the commuter rail Capitol Corridor Joint Powers Authority, the Northern Nevada Transit System and Southeast Missouri State University. We have also installed demonstration units for evaluation inside the Chicago Transit Authority. Our newest model ShiftWatch TVS 3.0 is experiencing very positive reception. Looking ahead, we continue to be actively involved with key transit agencies across the country and believe our growth momentum will be further enhanced by some key synergies and efficiencies that our recently announced pending acquisition partners will provide," he concluded.

"We are excited with the recent strategic and significant step we have taken toward greatly expanding our addressable markets and diversifying our product portfolio and sales channels through the pending acquisitions of Avurt International and Vizer Group," said Greg Pusey, Chairman of A4S Security. "These acquisitions significantly expand our product and service offerings to include personal protection, commercial facility security and access control and we believe they will enhance our position in high-end mobile digital video surveillance and security integration technologies. The combined annual U.S. market for transportation, law enforcement, facility security and personal protection has been estimated to be a $40 billion opportunity. More importantly, as we continue to build sales traction with our ShiftWatch product, we will also be positioned to pursue additional markets with shorter buying lead times than we have experienced in the government sector. I am personally excited about the potential new opportunities presented by the completion of these acquisitions, especially the Avurt technology. We believe the addition of these companies and their management team and products and services will open significant new market verticals for A4S and enable us to leverage our considerable product technology knowledge base to maximize opportunities with a broad base of potential commercial customers," he concluded.

"We have carefully invested significant resources in building a strong and dynamic technology development team that we believe places us on the leading edge of new products in the mobile DVR market place," stated Dave Desormeaux VP of Engineering at A4S. "Within the next few months, we expect to officially introduce ShiftWatch TVS 3.0, an advanced product configuration with greater benefits and features including wireless download and additional management features. We believe we will be in a position to develop additional proprietary products from this platform, reducing time to market and cost of development. Our core architecture has broad applications beyond the specific use for which it was originally created. Furthermore, our value proposition is focused on superior security information integration and management. We believe we will continue to meet the challenge of staying ahead of the competition by offering effective management of large amounts of video data coming from multiple vehicle based recorders while intelligently accessing that information in a fast and useful manner," he concluded.

A4S Security reported a net loss for the second quarter of 2006 of $1,477,792, or a loss of $0.37 per basic and diluted share, compared to a net loss of $853,640, or a loss of $5.79 per basic and diluted share in the same quarter of 2005. For the first six months ended June 30, 2006, net loss was $2,601,350, or a loss of $0.66 per basic and diluted share, compared to a net loss of 1,408,096, or a loss of $9.55 per share for the same period in 2005. Both 2005 comparative periods include a significant change in shares outstanding, from 147,389 in 2005 to 3,961,498 in 2006, following the July 2005 completion of the Company's initial public offering. Cash balance as of June 30, 2006 was approximately $1.9 million.

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