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 six months ended December 31, 2011.

Arthur Barchenko, President and CEO, stated, "We had net revenues of $1,667,000 for the six months ended December 31, 2011 compared to $1,881,963 for the corresponding six month period in 2010. Net revenues for the three months ended December 31, 2011 were $552,569 compared to $1,080,411 for the corresponding period in 2010. The decrease in net revenues during each of the six and three month periods ended December 31, 2011 compared to the corresponding periods in 2010 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. An article in the February 12th New York Times indicates that, while spending in the private sector has been on the increase, spending by government agencies has decreased. We are optimistic that these budgetary constraints will be addressed within the third and fourth quarters of fiscal 2012. Further, we are concentrating our marketing and sales efforts more toward the private sector going forward in order to achieve a more diversified customer base.

"Gross margins for the six months ended December 31, 2011 were 47% as compared to 62% for the corresponding period in 2010. Gross margins were 16% for the three months ended December 31, 2011 compared to 58% for the three months ended December 31, 2010. The decrease in gross margins for each of the six and three months ended December 31, 2011 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 $860,011 for the six months ended December 31, 2011 compared to $680,580 for the corresponding six months in 2010. Selling, general and administrative expenses were $336,876 for the three months ended December 31, 2011 compared to $338,765 for the corresponding three months in 2010. The increase in selling, general and administrative expenses during the six months ended December 31, 2011 as compared to the corresponding six months in 2010 is primarily attributable to an increase in our allowance for doubtful accounts in the amount of $200,000, which more than offset a 3% reduction in other components of the selling, general and administrative expenses.

"We had a loss from operations for the six months ended December 31, 2011 of $(225,813) which included non-cash costs of an allowance for bad debts of $200,000 and cost of stock based compensation of $96,815 and compared to a profit of $391,741 for the same period in 2010. For the three months ended December 31, 2011, we had loss from operations of $(357,822) (which included the cost of stock based compensation of $(96,815)) compared to a profit of $243,100 for the corresponding three months in 2010. The decrease in income from operations during the 2011 periods compared to the 2010 periods was attributable to the 2011 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."

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, payment policy of the Department of Defense, 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, 2011 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