CLIFTON, N.J., Nov. 16, 2004 (PRIMEZONE) -- Electronic Control Security Inc., ECSI, (OTCBB:EKCS), 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."
Electronic Control Security Inc.
Consolidated Balance Sheets
September 30, June 30,
2004 2004
---- ----
ASSETS (Unaudited)
Current assets
Cash and cash equivalents $ 49,851 $1,552,575
Marketable securities, available for
sale 646,027 --
Certificates of deposit 101,723 101,723
Accounts receivable, net of allowance
of $100,000 1,353,362 729,070
Loan receivable 141,800 --
Inventories 1,621,840 1,635,305
Other current assets 377,528 318,795
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Total current assets 4,292,131 4,337,468
Property, equipment and software
development costs - net 519,848 549,727
Intangible assets - net 39,300 40,733
Goodwill 50,000 50,000
Deferred income taxes 441,800 441,800
Other assets 77,709 84,709
---------- ----------
$5,420,788 $5,504,437
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 685,760 $ 397,127
Bank line of credit -- 500,000
Short-term loan -- 250,000
Current maturities of long-term debt 191,659 99,996
Obligations under capital leases 2,569 4,396
Payroll taxes payable 3,427 3,012
Income taxes payable -- 2,500
---------- ----------
Total current liabilities 883,415 1,247,545
Noncurrent liabilities
Obligations under capital leases -- --
Long-term debt 525,008 141,671
Due to officers and shareholders 426,391 455,001
Deferred income taxes 48,000 48,000
---------- ----------
Total liabilities 1,882,814 1,901,703
Shareholders' equity
Series A Convertible Preferred stock,
cumulative, $.01 par value; $2.00
liquidation preference; 5,000,000
shares authorized, 587,500 and 587,500
shares issued and outstanding,
respectively 3,625 5,875
Series B 10% Convertible Preferred stock,
cumulative, $.001 par value; $1,000 per
share liquidation preference; 2,000
shares authorized, 2,000 and 2,000
shares issued and outstanding,
respectively 2 2
Common Stock, $.001 par value; 15,000,000
shares authorized; 5,965,038 and
5,555,707 shares issued; 5,865,038 and
5,455,707 shares outstanding,
respectively 5,965 5,556
Additional paid-in capital 8,752,605 8,577,764
Accumulated deficit (5,233,183) (4,990,305)
Accumulated other comprehensive income 18,960 13,842
Treasury stock, at cost, 100,000
shares (10,000) (10,000)
---------- ----------
Total shareholders' equity 3,537,974 3,602,734
---------- ----------
$5,420,788 $5,504,437
========== ==========
Electronic Control Security Inc.
Consolidated Statements of Operations
Three Months
Ended
September 30,
2004 2003
---- ----
(Unaudited) (Unaudited)
Revenues $ 955,465 $ 633,601
Cost of revenues 593,710 241,189
---------- ----------
Gross profit 361,755 392,412
---------- ----------
Research and development 72,948 64,324
Selling, general and administrative
expenses 348,878 466,721
Stock based compensation 120,000 --
---------- ----------
Loss from operations (180,071) (138,633)
Other (income) expense
Interest expense 26,587 19,138
Interest income (2,080) (1,367)
Minority interest in subsidiary loss (11,700) (24,084)
---------- ----------
Total other (income) expense 12,807 (6,313)
---------- ----------
Loss before tax benefit (192,878) (132,320)
Income tax benefit -- (31,300)
---------- ----------
Net loss before dividends (192,878) (101,020)
Dividends related to convertible
preferred stock 50,000 --
---------- ----------
Net loss attributable to common
shareholders $ (242,878) $ (101,020)
========== ==========
Net loss per share:
Basic $ (0.04) $ (0.02)
========== ==========
Diluted $ (0.04) $ (0.02)
========== ==========
Weighted average number of common shares
and equivalents:
Basic 5,681,993 4,415,677
========== ==========
Diluted 5,681,993 4,415,677
========== ==========
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 Amata, Elta Systems, Ltd., ManTech International Co., ADT Federal Systems, ARINC, SRH Marine, Horne Engineering Services, Inc. and other industry leaders. ECSI's corporate office is located at 790 Bloomfield Avenue, Bldg. C-1, Clifton, NJ 07012. Tel: 973-574-8555; Fax: 973-574-8562; or visit http://www.anti-terrorism.com.
Certain statements included in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from such statements expressed or implied as the result of a variety of factors, of which a number could be potentially beyond the Company's control. The Company's actual results and events will be expressed from time to time in the Company's periodic filings with the Securities and Exchange Commission (the ``SEC''). As a result, this press release should be read in conjunction with the Company's periodic filings with the SEC. The forward-reaching statements contained herein are made only as of the date of this press release and the Company assumes or undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.