Electronic Control Security, Inc. Announces Results for the Fiscal Year 2014

CLIFTON, NJ — (Marketwired) — 11/18/14 — 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 year ended June 30, 2014.

Arthur Barchenko, President and CEO, stated, „We had net revenues of $656,135 for the Fiscal 2014 Period, as compared to revenues of $981,700 for the Fiscal 2013 Period, representing a decrease of approximately 33%. All of the revenues reported in the Fiscal 2014 period are attributable to domestic projects. The decrease in revenues in the Fiscal 2014 Period is attributable to the delays encountered by the Government related contract awards, Requests for Proposals („RFP–s“) and task order awards.

„Gross margins for the Fiscal 2014 Period were a negative 17% of revenue as compared to a positive 17% of revenue for the Fiscal 2013 Period. The decrease in gross margins is primarily attributable to the lower revenues in Fiscal 2014 and to an increase in the inventory reserve for obsolescence of $81,000 in Fiscal 2014 (none in Fiscal 2013), which were partially offset by reductions in personnel costs in Fiscal 2014.

„Our Selling, general and administrative expenses decreased in the Fiscal 2014 Period to $807,914 from $1,149,050 in the Fiscal 2013 Period primarily because of reductions in personnel costs in Fiscal 2014. The Fiscal 2014 Period included an allowance for doubtful accounts in the amount of $15,238 as compared to $200,000 in Fiscal 2013. The Company wrote off goodwill in the Fiscal 2013 Period totaling $196,962.

„Interest expense in the Fiscal 2014 Period was $115,945 as compared to $84,032 for the Fiscal 2013 Period. The increase in Fiscal 2014 is due to increases in interest-bearing advances from officers, shareholders and affiliates.

„We recognized a net $164,274 deferred income tax benefit in Fiscal 2014 and a $194,681 deferred tax benefit Fiscal 2013. The deferred income tax benefits were recorded based on the expectations that we will utilize a portion of our existing net operating loss carryforwards with future operating earnings. The Company and its subsidiaries have net operating loss carryforwards for federal income tax purposes of about $6.8 million, of which about $120,000 expire in 2017 – 2021, and the remainder in later years.

„Our net loss before dividends for the Fiscal 2014 period was $927,501 as compared to a net loss before dividends of $1,221,153 in Fiscal 2013.“

Arthur stated further, „In Fiscal 2013 and 2014, we were awarded, as the prime contractor or as a subcontractor, seven contracts from units of the Department of Defense. These awarded contracts provide that task orders under the contracts will require competitive bids to be submitted by us as those task orders are issued. There is no assurance that ECSI will be awarded work under any task orders on these contracts. It should be noted that these awarded contracts are in addition to our sales of products directly to our long-time customers. Through Fiscal 2012, 2013 and 2014, we have also sought to expand our business both domestically and internationally by continuing to submit responses to Request for Proposals („RFP–s“).“

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, 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.

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 .

For contact:
Daryl Holcomb

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