EKCS Electronic Control Security Inc (CE)

Electronic Control Security, Inc. (ECSI) (OTCBB: EKCS), a leading provider of integrated entry control and perimeter security system technologies to the government and private sectors, announced its results of operations for the three and nine month periods ended March 31, 2012.

Arthur Barchenko, President and CEO, stated, "We had net revenues of $2,010,970 for the nine months ended March 31, 2012 compared to $2,888,625 for the corresponding nine month period in 2011. Net revenues for the three months ended March 31, 2012 were $343,970 compared to $1,006,662 for the corresponding period in 2011. The decreases in net revenues during the nine and three month periods ended March 31, 2012 compared to the corresponding periods in 2011 are primarily attributable to a decrease in deliverable products and support services billings resulting from delays in release of funding at the Department of Defense and Department of Energy on projects on which we serve as a subcontractor as well as at other customers. The budget constraints and budget uncertainty at the U.S. government agencies have significantly reduced the issuance of orders and delayed projects for all participants in our industry. We anticipate that these budgetary constraints at our customers will be addressed within the remainder of fiscal 2012 and in fiscal 2013.

"Gross margins for the nine months ended March 31, 2012 were 32% as compared to 57% for the corresponding period in 2011. Gross margins were negative for the three months ended March 31, 2012 compared to 48% for the three months ended March 31, 2011. The decrease in gross margins for each of the nine and three month periods ended March 31, 2012 is primarily attributable to the decrease in revenues caused by the budgetary constraints in the U.S. government discussed above, a change in the order mix of equipment sales and support services billings and an increase in the cost of certain materials and components."

Further, "Our selling, general and administrative expenses were $1,169,343 for the nine months ended March 31, 2012 compared to $1,098,224 for the corresponding nine months in 2011. Selling, general and administrative expenses $309,332 the three months ended March 31, 2012 compared to $417,644 for the corresponding three months in 2011. The increase in selling, general and administrative expenses during the nine months ended March 31, 2012 as compared to the corresponding nine months in 2011 is primarily attributable to an increase in our allowance for doubtful accounts in the amount of $200,000, which more than offset a 12% reduction in other components of the selling, general and administrative expenses, primarily lower selling expenses. The decrease of 25% in selling, general and administrative expenses during the three months ended March 31, 2012, is primarily due to lower selling expenses because of the lower revenues.

"We had a loss from operations for the nine months ended March 31, 2012 of $(733,192) which included non-cash costs of an allowance for bad debts of $200,000 and stock based compensation of $96,815 and compared to a profit of $422,845 for the 2011 Period. For the three months ended March 31, 2012, we had loss from operations of $(487,379) (which included the cost of stock based compensation of $(96,815)) compared to a profit of $31,104, for the corresponding three months in 2011. The decrease in income from operations during the 2012 periods compared to the 2011 periods was attributable to the 2012 allowance for doubtful accounts and cost of stock-based compensation discussed above and to the receipt of lower gross margin orders, a less profitable mix of design and engineering support services billings, and a reduction in funded and released backlog."

Subsequent Event - Contract Award On May 4, 2012, ECSI was advised that a contract was awarded to a team, of which ECSI is a member, for support and technology services to the Department of Defense ("DoD"). The cumulative contract ceiling of the award to include five prime contractors and their respective subcontractors is $228,700,000 over five years. The contract ceiling for the ECSI team in the base year is $39,800,740. The contract is an Indefinite Delivery Indefinite Quantity ("IDIQ") contract, and the work to be performed under it will be awarded to the five teams on individual task orders on a competitive basis.

There is no assurance that ECSI will be awarded work under any task orders on the contract. The contract is in response to initiatives promulgated by the DoD and other Government agencies, require engineering development, design, procurement, fabrication of entry control and perimeter detection technologies, installation, information assurance, logistics, maintenance, and life cycle support services for Infrastructure Protection purposes. These systems will support the operational requirements of high value DOD and other Government agencies where security is of high or vital interest.

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.

ELECTRONIC CONTROL SECURITY, 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, timing as to release of funds by DoD, the likelihood that we will be awarded purchase orders or work under any contract, 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.

For contact: Natalie Schneider 973-574-8555