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CLIFTON, N.J., November 15, 2005
-- Electronic Control Security Inc.
(OTC BB: 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 the first quarter of fiscal
2006 ending September 30, 2005.
Arthur Barchenko, President and CEO
stated, “Revenues are up strongly
and reflected the growing demand for
our products. The Company reported
revenues of $1,523,314 for the quarter
ending Sept. 30, 2005 as compared
to revenues of $955,465 for the period
in 2004, an increase of approximately
59%. Substantially all of the revenue
in the just completed quarter was
domestic. The increase in sales in
the 2005 period is primarily attributable
to the award of Tinker Air Force Base
by the DoD and release of other certain
projects that were awaiting funding
and/or the approval of submittal drawings.”
Gross margins for the 2005 period
were 17.82% of revenue as compared
to 37.86% of revenue for the 2004
period. The decrease in the 2005 period
is primarily due to an increase in
the order mix for lower gross margin
products and subcontractor services
related to the wrap up of the Tinker
A.F.B. contract, as compared to the
2004 period, where the fulfillment
of orders mostly entailed the shipment
of higher gross margin products and
services. Typically, the revenue mix
from the wrap up phase of projects
is more heavily skewed to lower margin
goods and services.
Mr. Barchenko continued, “Selling,
General and Administrative expenses
increased about 61% in the 2005 period
to $561,818 from $348,878 in the 2004
period. The increase in the 2005 period
is primarily the result of management's
action to increase certain fixed overhead
and payroll costs. We have increased
our marketing and sales management
team to effectively penetrate the
global security market. The increase
was also partially due to the additional
general and administrative costs incurred
by our new wholly owned subsidiary,
Clarion.”
Net Profit (Loss). Net loss before
dividends for the 2005 period was
$(361,822) as
compared to a loss of $(192,878)
for the same period in 2004.
Liquidity and Capital Resources.
At September 30, 2005, we had working
capital of $2.8 million compared to
$3.20 million at June 30, 2005. Net
cash used by operating activities
for the 2005 period was $116,653 as
compared to net cash used by operating
activities of $407,291 for the 2004
period.
Mr. Barchenko also stated, “This
was a very good quarter for ECSI.
Spending in the security industry
has increased over the last several
months as Congress has continued to
allocate money to fund Homeland Security
initiatives. We expect this trend
will continue for the foreseeable
future.
“Let’s discuss how these
acquisitions and new product initiatives
will benefit ECSI going forward.
* We acquired the assets of Clarion
Sensing Systems, a provider of proprietary
nuclear, bio-chemical and radiological
remote monitoring sensor systems for
air and water applications. We believe
that the remote environmental monitoring
sensor systems we can offer as a result
of this acquisition enhance our product
line and we expect to see rapid growth
in sales of these products over the
next several years. Following the
completion of the quarter, we moved
ahead with the integration of Clarion
into our product line and launched
the Water Infrastructure Security
Environmental (WISE) initiative that
provides a complete, end-to-end, total
security envelope that protects and
monitors water supply infrastructure
and quality from source to faucet.
* We entered into a letter of intent
to acquire Phone-Or, an Israeli company
which provides proprietary acoustic
monitoring sensor systems designed
for detection sensing applications.
We currently are completing a due
diligence investigation of Phone-Or
which we expect to complete in the
second quarter of fiscal 2006. Phone-Or
is an innovative technology leader
in acoustic communications and monitoring
systems with sales in Canada, Russia,
China, Malaysia, Japan, Thailand,
Taiwan, Singapore, India, Australia,
Italy, the U.K., Scandinavia and Romania.
We plan to introduce our technologies
through Phone-Or’s channel of
distribution.”
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 ISO 9001 Registered 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
and those contained in the 10KSB and
10QSB’s 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.
These are only some of the numerous
factors that may affect the forward-looking
statements contained in this press
release.
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