SOURCE: Law Enforcement Associates

Law Enforcement Associates

November 16, 2009 15:57 ET

Law Enforcement Associates Reports Year-to-Date and Third Quarter Financial Results

RALEIGH, NC--(Marketwire - November 16, 2009) - Law Enforcement Associates Corporation (LEA) (OTCBB: LAWE), a leading U.S.-based developer and manufacturer of electronic surveillance equipment, today announced financial results for the nine-month period and third quarter ended September 30, 2009.

Net sales at the nine-month mark were $10.5 million, up 68% versus net sales of $6.2 million in the comparable period a year ago. The increase was due primarily to strong product shipments during the second fiscal quarter when the Company was completing deliveries on a major order from a federal customer. Gross margin for the nine-month period was 32% versus 37% in the same period last year. Operating income was $1.1 million, up from operating income of $45,000 at the nine-month mark a year ago. Net income was $593,000, or $0.02 per share, versus a net loss of $52,000, or less than $0.01 per share, in the comparable period last year.

Third quarter net sales were $1.9 million versus $2.4 million in the comparable year-ago quarter. Net sales in last year's third quarter benefitted from a significant non-recurring order valued at approximately $714,000. Gross margin was 33% versus 39% in the comparable quarter a year ago. This year's gross margin was negatively impacted in part by higher freight expenses associated with product shipments to a major trade show, as well as product mix.

The Company reported a third quarter operating loss of $156,000 versus operating income of $163,000 in the comparable year-ago quarter. The decline was due to increases in research and development costs and higher operating expenses as a percentage of net sales. Development work on new products and upgrades to existing equipment lines resulted in a $51,000 increase in R&D expense, which was $64,000, or 3% of net sales, versus $13,000, or less than 1% of net sales, in the third quarter last year.

Increased legal fees related to management turnover, as well as litigation associated with a put option obligation also negatively impacted operating results. Total operating expenses were $788,000, or 41% of revenue, versus $784,000, or 33% of revenue in the third quarter last year. Third quarter net loss was $99,000, or less than $0.01 per share, versus net income of $96,000, or less than $0.01 per share, in the third quarter last year.

Alan Terry, interim president and CEO, said, "The third quarter was marked by a series of developments, many of which have enhanced LEA's prospects for improved performance. New management has been intensely focused on expanding our customer network, re-energizing our sales organization, launching new products and resolving certain legal and administrative matters that slowed our progress and hindered our financial results during the third quarter."

"We are on schedule to introduce two new product offerings in the fourth quarter," Terry added. "We also have been much more aggressive at leveraging the insight and professional connections of our board of directors. These efforts have already opened doors to several new business prospects. Our long-range objective is to deliver revenue growth, sustained profitability and improved value for our shareholders. We are encouraged by our recent progress toward this end."

About Law Enforcement Associates Corporation

LEA is a leading security and surveillance technology Company that manufactures and markets a diverse product line to the worldwide law enforcement, military, security and corrections markets. The Company's Audio Intelligence Devices (AID) division has been serving the law enforcement sector for more than 30 years and is one of the most respected names in the surveillance equipment industry. LEA's products are used by a wide variety of government and non-governmental agencies, as well as public and private companies. These include military bases, nuclear facilities, embassies, government installations, oil refineries, United Nations and NATO locations. LEA's products have been used at high-profile events such as the Summer & Winter Olympics, Super Bowl, U.S. Golf Championship, and the Democratic and Republican National Conventions. Its products include the Under Vehicle Inspection System (UVIS), EDK123 (Explosive Detection Kit), Bloodhound and Birddog GPS Tracking Systems, Graffiti Cam, Letter-bomb Visualizer Spray, and a wide variety of Audio & Video Surveillance Equipment. Headquartered in Raleigh, N.C., the Company has been featured in many industry publications and websites. For more information, please visit www.leacorp.com.

Forward-Looking Information:

This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Among other things, these statements relate to our financial condition, results of operations and future business plans, operations, opportunities and prospects. In addition, we and our representatives may from time to time make written or oral forward-looking statements, including statements contained in filings with the Securities and Exchange Commission and in our reports to stockholders. These forward-looking statements are generally identified by the words or phrases "may," "could," "should," "expect," "anticipate," "plan," "believe," "seek," "estimate," "predict," "project" or words of similar import. These forward-looking statements are based upon our current knowledge and assumptions about future events and involve risks and uncertainties that could cause our actual results, performance or achievements to be materially different from any anticipated results, prospects, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are not guarantees of future performance. Many factors are beyond our ability to control or predict. You are accordingly cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date that we make them. For a description of factors that may cause actual results to differ materially from such forward-looking statements, see the Company's Annual Report on Form 10-K for the year ended 2008, and other reports from time to time filed with or furnished to the Securities and Exchange Commission. We do not undertake to update any forward-looking statement that may be made from time to time by us or on our behalf.

                 LAW ENFORCEMENT ASSOCIATES CORPORATION
                  Consolidated Statements of Operations
          for the Three Months Ended September 30, 2009 and 2008

                                                      2009         2008
                                                  (Unaudited)  (Unaudited)
                                                  -----------  -----------
Net sales                                         $ 1,920,551  $ 2,397,224
Cost of sales                                       1,288,833    1,450,593
                                                  -----------  -----------
  Gross profit                                        631,718      946,631
                                                  -----------  -----------
Research and development                               63,762       12,509
Operating expenses                                    723,980      771,035
                                                  -----------  -----------
  Total operating expenses                            787,742      783,544
                                                  -----------  -----------
Income (loss) from operations                        (156,024)     163,087
                                                  -----------  -----------
Other income (expense)
 Loss on sale of assets                                     0            0
 Other income                                           1,287        5,329
 Interest income                                          787          119
 Interest expense                                      (8,524)     (28,042)
                                                  -----------  -----------
  Total other income (expense)                         (6,450)     (22,594)
                                                  -----------  -----------
Net income (loss) before income taxes                (162,474)     140,493
Income tax (expense) benefit                           63,501      (44,092)
                                                  -----------  -----------
Net income (loss)                                 $   (98,973) $    96,401
                                                  ===========  ===========
Net income (loss) per weighted average share,
 basic and diluted                                $     (0.00) $      0.00
                                                  ===========  ===========
Weighted average number of shares, basic and
 diluted                                           25,782,436   25,782,436
                                                  ===========  ===========


                 LAW ENFORCEMENT ASSOCIATES CORPORATION
                  Consolidated Statements of Operations
          for the Nine Months Ended September 30, 2009 and 2008

                                                      2009         2008
                                                  (Unaudited)  (Unaudited)
                                                  -----------  -----------
Net sales                                         $10,458,950  $ 6,225,583
Cost of sales                                       7,143,142    3,950,503
                                                  -----------  -----------
  Gross profit                                      3,315,808    2,275,080
                                                  -----------  -----------
Research and development                              239,861       52,401
Operating expenses                                  1,969,723    2,177,579
                                                  -----------  -----------
  Total operating expenses                          2,209,584    2,229,980
                                                  -----------  -----------
Income from operations                              1,106,224       45,100
                                                  -----------  -----------
Other income (expense)
 Loss on sale of assets                                (8,361)     (43,666)
 Other income                                          11,625       11,935
 Interest income                                          812        1,439
 Interest expense                                    (145,188)     (90,087)
                                                  -----------  -----------
  Total other income (expense)                       (141,112)    (120,379)
                                                  -----------  -----------
Net income (loss) before income taxes                 965,112      (75,279)
Income tax (expense) benefit                         (372,045)      23,336
                                                  -----------  -----------
Net income (loss)                                 $   593,067  $   (51,943)
                                                  ===========  ===========
Net income (loss) per weighted average share,
 basic and diluted                                $      0.02  $     (0.00)
                                                  ===========  ===========
Weighted average number of shares, basic and
 diluted                                           25,782,436   25,782,436
                                                  ===========  ===========


                  LAW ENFORCEMENT ASSOCIATES CORPORATION
                        Consolidated Balance Sheets

                                                   September     December
                                                       30,          31,
                                                      2009         2008
Assets                                            (Unaudited)   (Audited)
                                                  -----------  -----------
Current assets:
 Cash                                             $   747,255  $   254,705
 Trade accounts receivable (net of allowance for
  doubtful accounts of $30,000 at September 30,
  2009 and December 31, 2008, respectively)         1,021,583    2,011,293
 Accounts receivable - other                           49,253            0
 Refundable income taxes                               32,500            0
 Inventories                                        1,598,132    1,368,049
 Prepaid expenses                                     235,282       45,629
 Deferred tax asset-current                           244,626      244,741
                                                  -----------  -----------
   Total current assets                             3,928,631    3,924,417
                                                  -----------  -----------
Property and equipment, net                          166,599      170,027
                                                  -----------  -----------
Other assets:
 Intangibles, net                                   2,051,364    2,174,564
 Assets held for sale                                 335,505      335,505
 Deferred tax asset less current portion              565,995      820,425
                                                  -----------  -----------
  Total other assets                                2,952,864    3,330,494
                                                  -----------  -----------
  Total assets                                    $ 7,048,094  $ 7,424,938
                                                  ===========  ===========


                  LAW ENFORCEMENT ASSOCIATES CORPORATION
                        Consolidated Balance Sheets

                                                   September     December
                                                       30,          31,
                                                      2009         2008
Liabilities and Stockholders' Equity              (Unaudited)   (Audited)
                                                  -----------  -----------
Current liabilities:
 Trade accounts payable                           $   506,790  $   331,451
 Line of credit                                             0    1,038,809
 Accrued expenses:
  Compensation and payroll taxes                      103,350      126,695
  Profit sharing plan                                  30,263       76,769
  Warranty provision                                   52,426       58,809
  Other accrued expenses                              109,686       97,205
  Deferred expenses                                    27,897      104,628
 Customer deposits                                      4,957       30,540
                                                  -----------  -----------
  Total current liabilities, before shares
   subject to redemption                              835,369    1,864,906
                                                  -----------  -----------
 Common stock, subject to redemption of
  1,200,000 shares, at redemption value             1,500,000            0
    Total current liabilities                       2,335,369    1,864,906
                                                  -----------  -----------
    Total liabilities                               2,335,369    1,864,906
                                                  -----------  -----------
Commitments and Contingencies
Common stock, subject to possible redemption of
 1,200,000 shares, at redemption value                      0    1,440,374
                                                  -----------  -----------
Stockholders' equity:
 Common stock, $0.001 par value, 50,000,000
  authorized, 25,782,436 issued and outstanding
  at September 30, 2009 and December 31, 2008          25,782       25,782
 Treasury stock at cost, 595 shares of common
  stock held by the Company                              (625)        (625)
 Paid in capital in excess of par                   4,995,595    4,995,595
 Retained earnings/(accumulated deficit)             (308,027)    (901,094)
                                                  -----------  -----------
  Total stockholders' equity                        4,712,725    4,119,658
                                                  -----------  -----------
  Total liabilities and stockholders' equity      $ 7,048,094  $ 7,424,938
                                                  ===========  ===========

Contact Information

  • Contact:
    Pfeiffer High Investor Relations, Inc.
    Geoff High
    303-393-7044