Electronic Control Security, Inc. Announces Fiscal 2010 Year-End Profitability

CLIFTON, NJ–(Marketwire – September 22, 2010) –  Electronic Control Security, Inc. (OTCBB: EKCS) (ECSI), a leading provider of a broad line of electronic security system technologies to the government and private sectors, announced financial results for the fiscal year ended June 30, 2010.

Arthur Barchenko, President and CEO, stated, “We achieved our objective during fiscal 2010 to change the direction of the Company’s marketing effort from that of a prime contractor to the Department of Defense to that of a technology manufacturing resource and support service provider to the large system integrators, dealers/installers and, in certain cases, the end user i.e. nuclear power stations.

“To that end, we achieved net revenues of $4,513,737 for fiscal year 2010 as compared to $3,472,696 for fiscal year 2009, representing an increase of approximately 30%. The increase in net revenues during 2010 as compared to 2009 is attributable equally to increases in both government and private-sector related purchase orders.”

Gross margins for 2010 were 55% as compared to 28% of revenue for the 2009 Period. The increase in gross margin for the fiscal year ended June 30, 2010 compared to the corresponding period in 2009 is primarily attributable to a change in the order mix of equipment sales and support services. We experienced an increase in both higher margin equipment sales as well as design and engineering support service billings which, combined, resulted in the increase in gross margins for the Fiscal 2010 Period.

Selling, general and administrative expenses increased approximately 34% in the 2010 Period to $1,771,923 from $1,318,910 in 2009. The increase is partially attributable to costs relating to the U.N. project in Ethiopia where we incurred significant increases in freight and marketing related expenses. However, the major increase in costs related to management’s decision to recognize and write off certain receivables totaling $629,437 related to two overseas projects in Asia and the Middle East and uncollectible Department of Defense (DoD) program-related expenses. Although we attempted to resolve these issues during the past year, we have not been able to collect these receivables. Based on these results, management has made the decision not to seek the award of DoD prime contracts in the future. 

Mr. Barchenko stated that, “I am also pleased to announce that, on July 30, 2010, the Company paid off the principal balance of $100,000 plus interest completing its short and long-term convertible principal debt obligations.

“During fiscal 2010, the Company submitted proposals on projects for Department of Defense facilities and certain nuclear power stations in the United States and southeast Asia valued at approximately $13,650,000. A number of these DoD and nuclear projects amounting to $2.2 million was awarded and partially shipped during the fourth quarter of fiscal 2010. Most of these proposals are still pending and awaiting approval, funding and award. We anticipate decisions relating to these remaining proposals within the first half of fiscal 2011 with deliveries scheduled through the last six months of fiscal 2011 with deliveries scheduled through the last six months of fiscal 2011 and the first half of fiscal 2012.”

About ECSI

ECSI is a global leader in perimeter security and a quality provider to the Department of Defense, Department of Energy, nuclear power stations, and other large commercial-industrial complexes. The Company designs, manufactures and markets physical electronic security systems for high profile, high threat environments utilizing risk assessment and analysis to determine and address the security needs of its customers. Teaming agreements with major system integrators enable ECSI to support the installation and aftermarket of its products in the U.S. and overseas. 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 visit http://www.ecsiinternational.com.

ECSI INTERNATIONAL, INC. SAFE HARBOR STATEMENT: This press release contains forward-looking statements that involve substantial uncertainties and risks. These forward-looking statements are based upon our current expectations, estimates and projections about our business and our industry and reflect our beliefs and assumptions based upon information available to us at the date of this release. We caution readers that forward-looking statements are predictions based on our current expectations about future events. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Our actual results, performance or achievements could differ materially from those expressed or implied by the forward-looking statements as a result of a number of factors, including but not limited to changes in economic conditions generally and in our industry specifically, changes in security technology, legislative or regulatory changes that affect us, the availability of working capital, timing of purchase orders, acceptance of company proposals, changes in costs and the availability of goods and services, the introduction of competing products, changes in our operating strategy or development plans, our ability to attract and retain qualified personnel, changes in our acquisition and capital expenditure plans, sufficiency of cash reserves and the risks and uncertainties discussed under the heading “RISK FACTORS” in Item 1 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2010 and in our other filings with the Securities and Exchange Commission. We undertake no obligation to revise or update any forward-looking statement for any reason.