Perimeter Security Company ECSI Announces Q1 Financials

Electronic Control Security Inc., ECSI, a leader in perimeter security solutions for governments and corporations worldwide, today announced financial results for its fiscal first quarter 2005.

For the three months ended September 30, 2004 the company reported a 51% increase in revenues to $955,465 as compared to revenues of $633,601 for the 2003 comparable period. Of the revenues reported in the 2004 period, approximately 98% was domestic and 2% was related to international projects. The increase in sales in the 2004 period is primarily attributable to the IBDSS contract award on Tinker AFB and nuclear facility security upgrades.

Gross margins for the 2004 period were 37.86% of revenue as compared to 61.93% of revenue for the 2003 period. The decrease in the 2004 period is primarily due to an increase in the fulfillment of orders for lower gross margin products compared to the 2003 period which was for higher gross margin engineering and design services.

SG&A expenses decreased about 25% in the 2004 period to $348,878 from $466,721 in the 2003 period. The decrease in 2004 is primarily the result of management's aggressive action to reduce fixed overhead and payroll costs commencing January 1, 2004.

Net loss before deemed dividends for the 2004 and 2003 periods was $(192,878) and $(101,020), respectively.

At September 30, 2004, the company reported working capital of $3.4 million compared to $3.09 million at June 30, 2004. The increase is primarily a result of converting our $500,000 line of credit into a five year term loan. Net cash used by operating activities for the 2004 period was $407,291 as compared to net cash used by operating activities of $224,006 for the 2003 period.

Arthur Barchenko Chairman and CEO states, ``We are very pleased with our performance over the fiscal q1 period. We announced a $4.3 million contract to secure Tinker Air Force base under our $500 million IBDSS program, and received orders to upgrade the security at several nuclear power stations. Our backlog is the greatest in company history. We look forward to reporting continued progress over the coming quarters.''