Extreme CCTV Inc.
TSX : EXC

Extreme CCTV Inc.

August 13, 2007 08:00 ET

Extreme CCTV Third Quarter Revenues Increase 76.4% to $10.4 Million

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 13, 2007) - Extreme CCTV Inc. ("Extreme" or "the Company") (TSX:EXC), a global leader in active-infrared night vision surveillance equipment, today reported third quarter revenues of $10.4 million, a 76.4% increase over the same quarter last year, and earnings of $0.02 per share basic and $0.02 diluted. The increase in quarterly revenue over the same period of the prior year was due to both organic growth and the continued success of Forward Vision.

"Our third quarter results represent the second largest revenue quarter in corporate history," stated Jack Gin, President and CEO of Extreme. "We continued to execute on our business plan in the quarter and delivered two new innovative products, Black Diamond™ and REG X™ to the market place with very encouraging results. The recognition, during the quarter, of the three operating divisions, Derwent, Forward Vision and Extreme, as Centers of Excellence is aimed at driving innovation and profitability and we are already seeing positive results."

Extreme's organic sales growth at 24.3% in the third quarter, exclusive of Forward Vision sales, resulted in third quarter organic sales of $7.3 million. Forward Vision, acquired July 31, 2006, achieved sales of $3.1 million for the third quarter, a 7.1% increase over the same period of the prior year and a 35.1% increase on a year to date basis. The Company achieved consolidated quarterly revenues of $10.4 million for the quarter, a 76.4% increase over the same period last year. On a year to date basis, the Company reported revenues of $32.7 million, 79.3% higher than last year.

Gross margin at $4.6 million is 51.7% above the same period last year. Gross margin percentage for the third quarter, at 43.9%, is a 2.2% improvement from the first quarter of 2007 and a decrease of 7.2% from the same quarter last year. The decrease in the gross margin percentage, when compared to the prior year, is due primarily to the sales mix, competitive pricing and increased cost of sales. Efforts to improve overall gross margin have been successful and will continue.

Net income for the third quarter was $396,000 or $0.02 per share basic and diluted, as compared to $219,000 or $0.01 per share basic and diluted last year. Net income for the nine-month period ended June 30, 2007 was $1,667,000 or $0.10 per share basic and diluted compared to net income of $1,199,000 and $0.07 basic and diluted for the same period last year.

Sales and marketing expenses were $1.2 million and $3.5 million for the three and nine month periods ended June 30, 2007, compared to $1.0 million and $2.7 million in the comparable periods last year. The increases were due primarily to the expansion of the sales force and the acquisition of Forward Vision.

For the quarter ended June 30, 2007, general and administrative expenses increased from $1.3 million to $1.8 million. On a year to date basis, general and administrative expenses at $5.4 million increased $1.9 million. The increases on a quarter and year to date basis were due primarily to the addition of Forward Vision, increased personnel and compensation costs, integration costs and termination and legal and public reporting costs.

Research and development expense increased $336,000 to $672,000 for the quarter and $808,000 to $1.9 million for the nine months ended June 30, 2007. The increases were due primarily to the acquisition of Forward Vision and increased research and development personnel.

Equity losses recorded on the Company's 31% investment in Obzerv of $105,000 in the current quarter, offset by $95,000 in interest income on the convertible debenture held by Extreme.

The Company's cash position at June 30, 2007 remained stable at $4.7 million compared to $4.8 million at March 31, 2007.

"We are very pleased with our year over year growth this quarter," says Gin. "CCTV is recognized to be a highly valued component of security and we continue to strengthen our position in an industry that is converging, consolidating and driven by the demand for high performance products. We are building on our global brand presence, engineering expertise and sales channels. All of these factors bode well for Extreme CCTV."

Conference Call

A conference call to review the results will take place on August 13, 2007 at 2:00pm EDT (11:00am PDT). 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 416-641-6125, or toll-free 1-866-542-4236, approximately 10 minutes before the conference call. A live Webcast of this conference call will also be available on the Extreme Website at http://www.extremecctv.com. The Webcast will be archived there for later reviewing.

A recording of the conference call will also be available by telephone through August 20, 2007. If you wish to listen to the rebroadcast, please dial 416-695-5800 or 1-800-408-3053 and enter passcode 3231535.

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 16.5 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
----------------------------------------------------------------------
June 30, September 30,
2007 2006
-------------------------
ASSETS

CURRENT
Cash $ 4,744 $ 5,084
Accounts receivable 8,308 7,289
Inventories 4,949 5,136
Prepaid expenses and other 803 333
----------------------------------------------------------------------
18,804 17,842
INVESTMENT IN OBZERV TECHNOLOGIES INC. 3,774 3,772
PROPERTY, PLANT AND EQUIPMENT 1,696 1,508
INTANGIBLE ASSETS 4,572 4,734
GOODWILL 3,789 3,697
----------------------------------------------------------------------
$ 32,635 $ 31,553
----------------------------------------------------------------------
----------------------------------------------------------------------
LIABILITIES

CURRENT
Accounts payable and accrued liabilities $ 6,092 $ 6,101
Income taxes payable 1,040 996
Notes payable - current portion 2,123 3,038
----------------------------------------------------------------------
9,255 10,135
NOTES PAYABLE 1,000 925
FUTURE INCOME TAXES 819 1,098
----------------------------------------------------------------------
$ 11,074 $ 12,158
----------------------------------------------------------------------
SHAREHOLDERS' EQUITY

SHARE CAPITAL 12,235 11,773
CONTRIBUTED SURPLUS 534 517
ACCUMULATED OTHER COMPREHENSIVE INCOME (831) (851)
RETAINED EARNINGS 9,623 7,956
----------------------------------------------------------------------
21,561 19,395
----------------------------------------------------------------------
$ 32,635 $ 31,553
----------------------------------------------------------------------
----------------------------------------------------------------------


EXTREME CCTV INC.
Interim Consolidated Statements of Operations and
Retained Earnings
(Unaudited)

CURRENCY IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
--------------------------------------------------------------------------
Three months ended Nine months ended
June 30, June 30,
------------------------------------------------------
2007 2006 2007 2006

REVENUE $ 10,417 $ 5,904 $ 32,687 $ 18,235
COST OF SALES 5,844 2,890 18,602 9,039
--------------------------------------------------------------------------
GROSS MARGIN 4,573 3,014 14,085 9,196
--------------------------------------------------------------------------

EXPENSES
Sales and
marketing 1,243 1,022 3,531 2,734
General and
administrative 1,750 1,313 5,413 3,514
Research and
development 672 336 1,867 1,059
Amortization of
property, plant
and equipment 261 182 575 433
Amortization of
intangible assets 141 - 468 (85)
--------------------------------------------------------------------------
4,067 2,853 11,854 7,655
--------------------------------------------------------------------------

INCOME BEFORE
THE FOLLOWING: 506 161 2,231 1,541
Equity in loss
of investment (105) (53) (283) (311)
Interest income
on debentures 95 80 284 240
Other interest
income 35 34 104 -
Accretion of
discount on notes
payable (Note 5) (46) - (136) -
--------------------------------------------------------------------------
INCOME BEFORE
PROVISION FOR
INCOME TAXES 485 222 2,200 1,470
--------------------------------------------------------------------------
INCOME TAXES
Current 130 33 776 378
Future (41) (30) (243) (107)
--------------------------------------------------------------------------
89 3 533 271
--------------------------------------------------------------------------
NET INCOME 396 219 1,667 1,199
RETAINED EARNINGS,
BEGINNING OF PERIOD 9,227 7,141 7,956 6,161
--------------------------------------------------------------------------
RETAINED EARNINGS,
END OF PERIOD $ 9,623 $ 7,360 $ 9,623 $ 7,360
--------------------------------------------------------------------------

BASIC EARNINGS PER
SHARE (NOTE 8) $ 0.02 $ 0.01 $ 0.10 $ 0.07
--------------------------------------------------------------------------

WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING, BASIC 16,411,781 16,167,777 16,357,785 16,162,103
--------------------------------------------------------------------------

DILUTED EARNINGS
PER SHARE (NOTE 8) $ 0.02 $ 0.01 $ 0.10 $ 0.07
--------------------------------------------------------------------------

WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING,
DILUTED 17,037,056 16,662,804 16,892,608 16,661,326
--------------------------------------------------------------------------


EXTREME CCTV INC.
Interim Consolidated Statements of Shareholders' Equity
(Unaudited)

CURRENCY IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
--------------------------------------------------------------------------
Accum Total
ulated- Retain-
Common Other ed
Shares Contri- Retain- Compreh- Earn- Total
Issued and buted ed ensive ings Shareh-
Outstanding Surp- Total Earn- Income and olders'
# $ lus Capital ings ("AOCI") AOCI Equity
--------------------------------------------------------------------------
Balance,
September
30,
2005 16,157,277 $11,462 $ 390 $11,852 $6,161 $ (874) $5,287 $17,139

Comprehensive
income:
Net income
for the
period 1,795 - 1,795 1,795
Effect of
exchange rate
variation on
translation
of net
assets of
self-sustaining
foreign
operations - 23 23 23
-------------------------------
Comprehensive
income
for the
period 1,795 23 1,818 1,818
Stock
options
exercised 55,500 45 - 45 - - - 45
Shares
issued on
acquisition
of Forward
Vision 102,400 266 - 266 - - - 266
Stock
based
compensation - - 127 127 - - - 127
--------------------------------------------------------------------------
Balance,
September
30,
2006 16,315,177 $11,773 $ 517 $12,290 $7,956 $ (851) $7,105 $19,395

Comprehensive
income:
Net income
for the
period 1,667 1,667 1,667
Effect of
exchange rate
variation on
translation
of net
assets of
self-sustaining
foreign
operations - 20 20 20
-------------------------------
Comprehensive
income
for the
period 1,667 20 1,687 1,687
Stock
options
exercised 53,000 159 (133) 26 26
Stock
issued -
Forward
Vision 102,298 303 303 303
Stock based
compensation 150 150 - - - 150
--------------------------------------------------------------------------
Balance,
June 30,
2007 16,470,475 $12,235 $ 534 $12,769 $9,623 $ (831) $8,792 $21,561
--------------------------------------------------------------------------
--------------------------------------------------------------------------


EXTREME CCTV INC.
Interim Consolidated Statements of Cash Flows
(Unaudited)

CURRENCY IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
--------------------------------------------------------------------------
Three months ended Nine months ended
June 30, June 30,
----------------------------------------------------
2007 2006 2007 2006
----------------------------------------------------

OPERATING ACTIVITIES
Net income $ 396 $ 219 $ 1,667 $ 1,199
Adjustments for
non-cash items
Equity in loss of
investment 105 53 283 311
Interest accrued
on debentures (95) (80) (284) (240)
Stock based
compensation 52 8 150 59
Amortization of
property, plant
and equipment 261 182 575 433
Amortization of
intangible assets 141 - 468 -
Accretion of
discount on
notes payable 46 - 136 -
Future income taxes (77) (30) (279) (107)
--------------------------------------------------------------------------
829 352 2,716 1,655
Changes in non-cash
working capital (250) (740) (1,138) (759)
--------------------------------------------------------------------------
579 (388) 1,578 896
--------------------------------------------------------------------------

INVESTING ACTIVITIES
Additional transaction
costs on acquisition
of Forward Vision (6) - (77) -
Purchase of property,
plant and equipment (344) (148) (764) (371)
--------------------------------------------------------------------------
(350) (148) (841) (371)
--------------------------------------------------------------------------

FINANCING ACTIVITIES
Shares issued on
exercise of options 8 - 27 22
Repayment of
notes payable - - (1,044) -
--------------------------------------------------------------------------
8 - (1,017) 22

--------------------------------------------------------------------------
CASH (OUTFLOW) INFLOW 237 (536) (280) 547
EFFECT OF FOREIGN
EXCHANGE ON CASH HELD
IN FOREIGN CURRENCY (313) 23 (60) 31
CASH,
BEGINNING OF PERIOD 4,820 8,383 5,084 7,292
--------------------------------------------------------------------------
CASH, END OF PERIOD $ 4,744 $ 7,870 $ 4,744 $ 7,870
--------------------------------------------------------------------------
--------------------------------------------------------------------------

SUPPLEMENTAL CASH
FLOW INFORMATION:
Interest paid $ 3 $ 1 $ 6 $ 3
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Income taxes paid $ 536 $ 677 $ 732 $ 696
--------------------------------------------------------------------------
--------------------------------------------------------------------------

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