Extreme CCTV Inc.
TSX : EXC

Extreme CCTV Inc.

August 14, 2006 13:08 ET

CORRECTION FROM SOURCE: Extreme CCTV Reports Fiscal 2006 Q3 Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 14, 2006) -

The following corrects and replaces the press release issued earlier today on behalf of Extreme CCTV Inc. In the tables for Interim Consolidated Statements of Operations and Retained Earnings and Interim Consolidated Statements of Cash Flows, the columns for Six months ended should have been labeled Nine months ended. Also the Revenue for the Nine months ended June 30, 2006 in the table for Interim Consolidated Statements of Operations and Retained Earnings should have been $18,235 and not $8,235. The corrected release follows.

Extreme CCTV Inc. ("Extreme" or "the Company") (TSX:EXC), the global leader in active-infrared night vision surveillance equipment, today reported its financial results for its fiscal third quarter ended June 30, 2006, reporting increased revenues and strong gross margins.

For Extreme's quarter ended June 30, 2006, the Company reported revenues of $5.9 million, 2.9% higher than revenues of $5.7 million for the quarter ended June 30, 2005. On a year to date basis, the Company reported revenues of $18.2 million, 4.9% higher than comparative period of the prior year. The strong Canadian dollar continued to have a negative effect on revenue. Revenue would have been higher by approximately $700,000 for the three months ended June 30, 2006 and $1.7 million year to date had the exchange rates held steady compared to the same period last year.

Gross margin increased to 51.8% of revenue from 47.2% in the quarter to June 30, 2005. For the nine month period ended June 30, 2006 gross margin increased to 51.1%, an improvement of 3.3%. The Company has continued to improve gross margins through pricing initiatives and programs to improve productivity and lower component costs.

Expenses for the three months ended June 30, 2006 and 2005 were $2,864,000 and $2,288,000 respectively. Expenses for the nine month periods ended June 30, 2006 and 2005 were $7,769,000 and $7,135,000 respectively. The increase for the three and nine month periods was due to foreign exchange losses, higher promotional activity, travel and tradeshow costs, legal, public reporting, research and development and recruiting and employee costs.

Net income for the quarter ended June 30, 2006 was $219,000 or $0.01 per share basic and diluted, as compared to $0.02 per share basic and $0.01 per share diluted for the quarter ended June 30, 2005. Net income for the nine month period ended June 30, 2006 was $1,199,000 or $0.07 per share basic and diluted, as compared to $0.04 per share basic and diluted for the comparative period of the prior year.

As of June 30, 2006, cash increased to $7.9 million from $7.3 million at September 30, 2005. Working capital was $12.4 million at June 30, 2006 and the Company remains debt free. Subsequent to the end of the quarter, Extreme utilized a portion of its cash resources to finance the acquisition of Forward Vision Systems Ltd. ("Forward Vision"), a leading UK designer, developer and manufacturer of intelligent mechanical pan/tilt/zoom cameras.

With the completion of the Forward Vision acquisition, the Company plans to continue to work with Canaccord but has concluded the previously announced engagement with Canaccord to evaluate strategic alternatives.

"In the third quarter, we made some strategically significant government-level security sales in Australia, Mexico and South Africa," stated Jack Gin, president & CEO of Extreme. "Capturing an increasing share of the critical infrastructure security markets around the world is testimony to the reputation and market reach Extreme has established for its advanced engineered products."

In Australia, Extreme is supplying products to the national government to strengthen their ability to combat a growing terrorist threat. In Mexico, Extreme is providing explosion protected surveillance equipment to help protect that country's critical oil infrastructure. And in South Africa, a significant order from one of the largest security providers in the world for two hundred UF500 infrared illuminators has been delivered for undisclosed government security use.

In North America, a new program to increase sales volumes with the Company's largest security product distributors had immediate success. This program will also be introduced in Europe where markets were flat in the third quarter but continue to be ahead of the prior year to date.

The Company's alliance with Forward Vision, a design-manufacturer of electro-mechanical surveillance products, led to the recent acquisition of that company. The unique and complementary product line of Forward Vision significantly increases the Company's total product offering for the same vertical markets that Extreme has targeted. Forward Vision has historically focused its marketing efforts in the UK where greater than 90% of its sales originate. The completion of the acquisition will result in a broadening of sales efforts to Extreme's established and developing markets worldwide.

Forward Vision's expertise in multiple engineering disciplines will result in the acceleration of new product releases. New product models that will further innovate the security surveillance industry will be released in future quarters. The first new product release, the "Moondance Thermal 1", is expected to be a mechanical pan-tilt-zoom camera with an embedded thermal sensor, provided by L-3 Communications, and will have a dual-sensor operation for Homeland Security markets.

To further support the introduction of an expanded new product roll-out plan, the Company has strengthened its product management discipline and is further developing personnel in both its marketing and sales departments. Further announcements in these areas will be made in the months ahead.

Conference Call

A conference call to review the results will take place on August 14, 2006 at 2:00pm EST (11:00am PST). Jack Gin, President & CEO and Jonathan Jackson, Chief Financial Officer, will speak on behalf of the Company. A question-and-answer forum will follow a review of the financial results and an update on the Company's growth strategies and progress within its target markets.

To participate, please dial 416-695-7848, or toll-free 1-877-888-4483, approximately 10 minutes before the conference call. A live Webcast of this conference call will also be available on the Extreme CCTV Website at http://www.extremecctv.com. The Webcast will be archived there for later reviewing. A recording of the conference call will be available through August 21, 2006. If you wish to listen to the rebroadcast by telephone please dial 416-695-6031 or 1-800-293-3630 and enter pass code 9192.

Based in Burnaby, British Columbia, Extreme CCTV Inc. (www.ExtremeCCTV.com) specializes in the design, development, and manufacturing of advanced infrared illuminators and precision-engineered video surveillance products. The Company's common shares trade on The Toronto Stock Exchange under the trading symbol "EXC", with approximately 16.3 million outstanding.

Note: Certain of the statements contained in this news release may contain forward-looking statements which involve known and unknown risk, uncertainties and other factors which may cause the actual results, performance or achievements of Extreme, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Extreme does not expect to update forward-looking statements continually as conditions change and you are referred to the full discussion of Extreme's business and the risk factors associated with Extreme's business contained in Extreme's Annual Information Form dated December 16, 2005, filed with the securities regulatory authorities in British Columbia and Alberta.



EXTREME CCTV INC.
Interim Consolidated Statements of Operations and Retained Earnings
(Unaudited)
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
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Three months ended Nine months ended
June 30 June 30
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2006 2005 2006 2005
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REVENUE $ 5,904 $ 5,740 $ 18,235 $ 17,386
COST OF SALES 2,845 3,029 8,925 9,080
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GROSS MARGIN 3,059 2,711 9,310 8,306
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EXPENSES
Sales and marketing 1,215 1,135 3,403 3,206
General and
administrative 1,165 824 2,959 2,648
Research and
development 336 213 1,059 941
Amortization of
capital assets 182 122 433 344
Financing (34) (6) (85) (4)
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2,864 2,288 7,769 7,135
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INCOME BEFORE INCOME
TAXES & NET EQUITY
LOSS 195 423 1,541 1,171
Interest income
on debenture 80 75 240 224
Equity in loss
of investment (53) (151) (311) (452)
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INCOME BEFORE
INCOME TAXES 222 347 1,470 943
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INCOME TAXES
Current 33 4 378 160
Future (30) 99 (107) 149
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3 103 271 309
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NET INCOME 219 244 1,199 634
RETAINED EARNINGS,
BEGINNING OF PERIOD 7,141 5,483 6,161 5,093
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RETAINED EARNINGS,
END OF PERIOD $ 7,360 $ 5,727 $ 7,360 $ 5,727
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BASIC EARNINGS
PER SHARE $ 0.01 $ 0.02 $ 0.07 $ 0.04
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WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING, BASIC 16,167,777 15,987,026 16,162,103 15,854,715
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DILUTED EARNINGS
PER SHARE $ 0.01 $ 0.01 $ 0.07 $ 0.04
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WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING, DILUTED 16,662,804 16,483,875 16,661,326 16,404,838
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EXTREME CCTV INC.
Interim Consolidated Balance Sheets
(Unaudited)
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
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June 30, September 30,
2006 2005
--------- ------------
ASSETS
CURRENT
Cash $ 7,870 $ 7,292
Accounts receivable 4,268 4,348
Inventories 3,200 2,776
Prepaid expenses and other 619 199
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15,957 14,615
INVESTMENT IN AND ADVANCES TO OBZERV
TECHNOLOGIES INC. 3,602 3,673
CAPITAL ASSETS 1,468 1,529
GOODWILL 748 732
FUTURE INCOME TAXES 167 60
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$ 21,942 $ 20,609
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LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 3,500 $ 3,106
Income taxes payable 46 364
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3,546 3,470
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SHAREHOLDERS' EQUITY

SHARE CAPITAL 11,484 11,462
CONTRIBUTED SURPLUS 449 390
CUMULATIVE TRANSLATION ADJUSTMENT (897) (874,306)
RETAINED EARNINGS 7,360 6,161
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18,396 17,139
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$ 21,942 $ 20,609
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EXTREME CCTV INC.
Interim Consolidated Statements of Cash Flows
(Unaudited)
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Three months ended Nine months ended
June 30 June 30
----------------------------------------------
2006 2005 2006 2005
----------------------------------------------

OPERATING ACTIVITIES
Net income $ 219 $ 244 $ 1,199 $ 634
Items not affecting
cash:
Equity in loss of
investment 53 151 311 452
Interest accrued
on debenture (80) (75) (240) (224)
Stock based
compensation 8 16 59 106
Amortization of
capital assets 182 122 433 344
Future income taxes (30) 99 (107) 149
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352 557 1,655 1,461
Changes in non-cash
working capital (740) 663 (759) 445
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(388) 1,220 896 1,906
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INVESTING ACTIVITIES
Purchase of capital
assets (148) (65) (371) (293)
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(148) (65) (371) (293)
FINANCING ACTIVITIES
Shares issued on
exercise of options - 79 22 225
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CASH INFLOW (OUTFLOW) (536) 1,234 547 1,838
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EFFECT OF FOREIGN
EXCHANGE ON CASH HELD
IN FOREIGN CURRENCIES 23 (21) 31 (51)
CASH,
BEGINNING OF PERIOD 8,383 4,523 7,292 3,949
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CASH, END OF PERIOD $ 7,870 $ 5,736 $ 7,870 $ 5,736
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SUPPLEMENTAL CASH
FLOW INFORMATION:
Interest paid $ 1 $ 2 $ 3 $ 8
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Income taxes paid
(refunded) $ 677 $ 244 $ 696 $ (484)
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