Extreme CCTV Inc.
TSX : EXC

Extreme CCTV Inc.

December 18, 2007 08:00 ET

Extreme CCTV Reports Record Fiscal 2007 Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 18, 2007) - Extreme CCTV Inc. ("Extreme" or "the Company") (TSX:EXC), the global leader in active-infrared night vision surveillance equipment, today reported record revenues of $42.6 million and net income of $2.5 million, increases of 57.5% and 36.5% respectively over its fiscal year ended September 30, 2006. For the fiscal year ending September 30, 2007, basic and fully diluted earnings per share were $0.15 and $0.14 respectively, up from $0.11 for both basic and diluted earnings per share for the same period last year.

"The Company reported its twelfth consecutive quarter of profitability and improved its overall quarterly record of profitability as a public company to 26 out of 27," says Jack Gin, President and CEO of Extreme CCTV. "Our sales growth over the prior year is a reflection of a strong North American market and new product sales including the MIC400, Forward Vision's flagship product, which was included for all of 2007 after being acquired in August of 2006. We are pleased with our results and look forward to the future."

For the fourth quarter, the Company achieved quarterly revenues of $9.9 million, as compared to $8.8 million for the same period of the prior year, an increase of $1.1 million or 12%. Net income for the quarter was $784 compared to $596 in the same period in 2006. Net income in the fourth quarter was positively impacted by $512 of equity income from Obzerv. In addition to revenue from operations, Obzerv received $1,091 during the fourth quarter related to the recovery of taxes for past research and development tax expenditures.

Gross margin for the quarter ended September 30, 2007 was 44.3%, down from 45.6% for the same period of the prior year, but higher than the prior three quarters. For the fiscal year ending September 30, 2007, gross margin decreased 5.9% from the prior year primarily due to changes in the sales mix which included a full year of Forward Vision sales and increased WZ sales, both lower margin product lines at this time. Competitive pricing, the strength of the Canadian dollar relative to the British pound and the United States dollar and production cost increases also contributed to the lower gross margins.

Sales and marketing expenses increased to $4,982 in 2007 from $3,716 in 2006 and the Company continued to see positive results from its sales and marketing strategy of aggressively introducing of new products, developing new alliances and entering into OEM relationships. Cost increases were related to additional personnel and related compensation, tradeshows, advertising and promotional expenditures.

General and administrative expenses increased to $7,069 in 2007 from $5,251 in 2006 due to the inclusion of Forward Vision for a full year, additional personnel and related compensation, transaction, legal and accounting fees related to the marketing of the Company and increased rent and property taxes resulting from an additional operating location.

Research and development increased to $2,594 from $1,381 primarily due to the addition of Forward Vision research and development personnel and associated remuneration and their cost being included for a full year compared to the prior year. Research and development and the introduction of new products will continue to be a key focus for Extreme. "The convergence of technologies in the security space will continue to create opportunities for us and we intend to capitalize on them," said Jack Gin.

The Company's cash position at September 30, 2007, was $3.1 million, compared to $5.1 million at September 30, 2006. The $2.0 million decrease in cash was due to the repayment of notes payable, capital expenditures and increased working capital requirements, offset by cash generated from profitable operations. Working capital at September 30, 2007, increased to $8.6 million, from $7.7 million at September 30, 2006, primarily due to positive cash flows from operations and a decrease in the current portion of the notes payable.

Subsequent to the end of the year on December 14, 2007 the Company announced that it had entered into a combination agreement with Robert Bosch GmbH, ("Bosch") whereby subject to the terms and conditions of the combination agreement, Bosch will acquire all of the outstanding shares of the Company pursuant to a plan of arrangement at $5.00 per share. There is no assurance the transaction will close.

Headquartered in Burnaby, British Columbia, Canada, Extreme CCTV Inc. specializes in the design, development and manufacture 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 16.7 million shares 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 22, 2006, filed with the securities regulatory authorities in British Columbia and Alberta.



EXTREME CCTV INC.
Interim Consolidated Balance Sheets
(Unaudited)

CURRENCY IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
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September 30, September 30,
2007 2006
--------------------------

ASSETS

Current
Cash $ 3,104 $ 5,084
Accounts receivable 7,759 7,289
Inventories 5,078 5,136
Prepaid expenses and other 679 333
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16,620 17,842
Investment in Obzerv Technologies Inc. 4,345 3,772
Property, plant and equipment 1,726 1,508
Intangible assets 5,194 4,734
Goodwill 3,769 3,697
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$ 31,654 $ 31,553
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LIABILITIES

Current
Accounts payable and accrued liabilities $ 6,315 $ 6,101
Income taxes payable 714 996
Notes payable - current portion 967 3,038
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7,996 10,135

Notes Payable - 925
Future income taxes 1,060 1,098
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$ 9,056 $ 12,158
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SHAREHOLDERS' EQUITY

Share Capital 13,082 11,773
Contributed surplus 578 517
Accumulated other comprehensive income (1,469) (851)
Retained Earnings 10,407 7,956
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22,598 19,395
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$ 31,654 $ 31,553
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EXTREME CCTV INC.
Interim Consolidated Statements of Operations
(Unaudited)

CURRENCY IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
--------------------------------------------------------------------------

Three months ended Years ended
September 30, September 30,
2007 2006 2007 2006
-------------------------- --------------------------

Revenue $ 9,886 $ 8,796 $ 42,573 $ 27,031
Cost of sales 5,508 4,782 24,110 13,708
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Gross margin 4,378 4,014 18,463 13,323
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Expenses
Sales and marketing 1,451 1,128 4,982 3,716
General and
administrative 1,658 1,477 7,069 5,251
Research and
development 727 324 2,594 1,381
Amortization of
property, plant
and equipment 256 151 831 583
Amortization of
intangible assets 161 105 629 105
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4,253 3,185 16,105 11,036
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Income before the
following: 125 829 2,358 2,287
Equity earnings
(loss) from
investment in Obzerv 512 (173) 229 (484)
Interest income on
debentures 98 88 382 328
Other interest
income 20 41 123 125
Accretion of discount
on notes payable (25) (40) (161) (40)
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Income before
provision for income
taxes 730 745 2,931 2,216
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Income taxes
Current (295) 192 481 571
Future 241 (43) (1) (150)
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(54) 149 480 421
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Net Income 784 596 2,451 1,795

Basic earnings per
share $ 0.05 $ 0.04 $ 0.15 $ 0.11
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Weighted average
number of shares
outstanding, basic 16,581,409 16,275,612 16,414,151 16,190,713
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Diluted earnings
per share $ 0.05 $ 0.04 $ 0.14 $ 0.11
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Weighted average
number of shares
outstanding, diluted 17,415,910 16,695,344 17,004,070 16,654,013
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EXTREME CCTV INC.
Interim Consolidated Statements of Cash Flows
(Unaudited)

CURRENCY IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
--------------------------------------------------------------------------

Three months ended Years ended
September 30, September 30,
2007 2006 2007 2006
-------------------------- --------------------------

Operating Activities
Net income $ 784 $ 596 $ 2,451 $ 1,795
Adjustments for
non-cash items
Equity (earnings)
loss in investment (512) 173 (229) 484
Interest accrued
on debentures (98) (88) (382) (328)
Stock based
compensation 71 68 222 127
Amortization of
property, plant
and equipment 255 151 831 583
Amortization of
intangible assets 161 105 629 105
Accretion of
discount on notes
payable 25 40 161 40
Future income taxes 242 (43) (38) (150)
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928 1,002 3,645 2,656
Changes in non-cash
working capital (206) 239 (1,344) (470)
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722 1,241 2,301 2,186
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Investing Activities
Investment in Obzerv 38 (255) 38 (255)
Acquisition of
Forward Vision (14) (3,681) (92) (3,681)
Purchase of
property, plant and
equipment (286) (113) (1,050) (484)
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(262) (4,049) (1,104) (4,420)
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Financing Activities
Shares issued on
exercise of options 20 23 47 45
Repayment of notes
payable (2,031) - (3,075) -
--------------------------------------------------------------------------
(2,011) 23 (3,028) 45
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Cash (outflow) (1,551) (2,785) (1,831) (2,189)
Effect of foreign
exchange on cash
held in foreign
currency (89) (1) (149) (19)
Cash, beginning of
period 4,744 7,870 5,084 7,292
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Cash, end of year $ 3,104 $ 5,084 $ 3,104 $ 5,084
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Supplemental cash
flow information:
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Interest paid $ 3 $ 1 $ 9 $ 4
Income taxes paid $ 32 $ (379) $ 764 $ 304
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Non-cash investing
and financing items
not included in cash
flows
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Notes payable issued
to acquire Forward
Vision $ - $ 3,973 $ - $ 3,973
Shares issued to
acquire Forward
Vision $ 303 $ 266 $ 1,102 $ 266
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