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Clifton, NJ- Sept. 19, 2005 - Electronic
Control Security Inc. (OTC:EKCS) a
leading , manufacturer of perimeter
security solutions for the Department
of Defense (DoD), the Department of
Energy (DoE) and nuclear power stations,
today announced financial results
for Fiscal 2005 ending June 30, 2005.
Arthur Barchenko, President and CEO
stated “The Company reported
revenues of $5,967,469 for Fiscal
2005 as compared to revenues of $2,061,412
for Fiscal 2004, an increase of approximately
190%. Of the revenues reported in
Fiscal 2005, approximately 95% was
domestic and 5% was related to international
projects. The increase in sales for
Fiscal 2005 is primarily attributable
to the award of Tinker Air Force Base
by the DoD and release of other projects
related to nuclear power stations.
“Our gross margins for Fiscal
2005 were 40.82% of revenue as compared
to 54.95% of revenue for Fiscal 2004.
The decrease in Fiscal 2005 is primarily
due to an increase in the order mix
for lower gross margin subcontractor
services related to the Tinker A.F.B.
We believe our margins will improve
in Fiscal 2006 based on the sale of
higher margin products.”
Selling, General and Administrative
(SG&A). SG&A expenses increased
about 17.89% in Fiscal 2005 to $2,101,435
from $1,782,534 in Fiscal 2004. The
increase in Fiscal 2005 is primarily
the result of management's action
to increase certain fixed overhead
and payroll costs commencing January
1, 2005 to support higher revenues
through expanded market coverage.
Net Profit (Loss). An operating profit
of $50,000 was achieved before stock
based compensation. Net loss before
dividends for Fiscal 2005 was $(122,196)
as compared to a loss of $(1,118,656)
for the same period in Fiscal 2004.
Liquidity and Capital Resources
At June 30, 2005, the Company had
working capital of $3.20 million compared
to $3.01 million at June 30, 2004.
Net cash used by operating activities
for Fiscal 2005 was $923,953 as compared
to net cash used by operating activities
of $1,411,859 for Fiscal 2004.
Investing activities for Fiscal 2005
included the cash used for the Clarion
acquisition. In addition the Company
purchased $95,683 of equipment and
software required to upgrade two major
product lines. The Company does not
have any material commitments for
capital expenditures going forward.
The Company realized net proceeds
of $783,850 from the exercise of outstanding
stock options and warrants in Fiscal
2005. In addition, financing activities
in Fiscal 2005 included the repayment
of a short-term loan in the amount
$250,000 from the proceeds of the
June 2004 private placement.
Arthur Barchenko further stated,
“We believe we are well positioned
for economic success during Fiscal
2006 and beyond. A number of factors
contribute to this outlook.
- “The influx of cash from
the private placement we completed
in June 2004 will allow us to invest
in revenue generating activities
such as sales and marketing efforts,
the maintenance and growth of existing
strategic alliances and the identification
of new strategic partners, the development
of new products and software to
enhance our product offerings and
the retention of critical new personnel.
- “Our selection by the United
States Air Force, Force Protection
Office, as one of four companies,
among two multinational and two
small business organizations, entitling
us to submit proposals to obtain
contracts to supply and install
security system upgrades for thirty-four
(34) military facilities worldwide
over a five year period with a total
value in excess of $540 million,
which, since the date of such award,
has increased to two hundred thirteen
(213) fixed and two hundred (200)
tactical bases and over $1.3 billion
in total value.
- “We estimate that orders
recently received including nuclear
power station security upgrades,
Hanscom A.F. tactical equipment
purchases and IDF – MOD P.O.
purchase order commitments, and
a multi-million dollar classified
border security project in Eastern
Europe (which is awaiting release)
and the U.S. Air Force IBDSS contract
will amount to $8,500,000 and,
- “The conclusion of agreements
with new strategic partners that
we anticipate will be a source for
material orders in the years ahead.”
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 ADT Federal Systems,
ARINC, Hudson Marine Inc., Lockheed
Martin Transportation & Security
Solutions, Parsons Infrastructure
& Technology Group, SERCO, Inc.,
SRH Marine Electronics S.A./Radio
Holland Greece, STS International,
Tetra Tech, Inc. and other industry
leaders. 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 go to http://www.anti-terrorism.com.
ECSI INTERNATIONAL, INC. SAFE HARBOR
STATEMENT: Statements in this press
release, including the statements
relating to projected future financial
performance, are considered forward-looking
statements under the federal securities
laws. Sometimes these statements will
contain words such as "anticipates,"
"expects," "plans,"
"projects," "estimates,"
"outlook," "forecast,"
"guidance," "assumes,"
and other similar words. These statements
are not guarantees of the Corporation's
future performance and are subject
to risks, uncertainties and other
important factors that could cause
the Corporation's actual performance
or achievements to be materially different
from those the Corporation may project.
The Corporation's actual results
will likely be different from those
projected due to the inherent nature
of projections and may be better or
worse than projected. Given these
uncertainties, you should not rely
on forward-looking statements. Forward-looking
statements also represent the Corporation's
estimates and assumptions only as
of the date that they were made. The
Corporation expressly disclaims a
duty to provide updates to forward-looking
statements, and the estimates and
assumptions associated with them,
after the date of this press release
to reflect the occurrence of subsequent
events, changed circumstances or changes
in the Corporation's expectations.
In addition to the factors set forth
in the Corporation's 2004 Form 10-K
and quarterly reports filed on Form
10-Q with the Securities and Exchange
Commission, the following factors
could affect the Corporation's forward-looking
statements: the ability to obtain
or the timing of obtaining future
government awards; the availability
of government funding and customer
requirements both domestically and
internationally; changes in government
or customer priorities due to program
reviews or revisions to strategic
objectives (including changes in priorities
in response to terrorist threats or
to improve homeland security); the
competitive environment; economic
business and political conditions
domestically and internationally;
program performance; the timing and
customer acceptance of product deliveries;
performance issues with key suppliers
and subcontractors; customer and other
regulatory reaction to the proposed
acquisition and the outcome of contingencies
(including completion of any acquisitions
and divestitures, litigation and environmental
remediation efforts). These are only
some of the numerous factors that
may affect the forward-looking statements
contained in this press release.
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