SOURCE: Law Enforcement Associates

May 15, 2008 08:00 ET

Law Enforcement Associates Reports First Quarter Financial Results

RALEIGH, NC--(Marketwire - May 15, 2008) - Law Enforcement Associates Corporation (LEA) (AMEX: AID), the largest U.S. developer and manufacturer of undercover surveillance equipment, today reported financial results for its first quarter ended March 31, 2008.

Revenue increased 12% to $2.0 million from $1.8 million in the first quarter last year. First quarter gross margin was 41% versus 44% in last year's first quarter. The decrease in gross margin was partially attributable to costs associated with the initiation of operations at LEA's new surveillance vehicle division. Net income was $19,000, or less than $0.01 per share, versus net income of $55,000, or less than $0.01 per share, in the same period a year ago.

LEA's 2008 first quarter earnings were impacted by expenses associated with the relocation of its headquarters, as well as consulting fees related to the launch of its Graffiti Cam surveillance product. Results also were affected by an increase of approximately $40,000 in non-cash amortization and interest accretion expense associated with LEA's fourth quarter 2007 acquisition of select assets of Advanced Vehicle Systems LLC (AVS).

"We achieved our first-quarter sales objectives and returned to quarterly profitability, despite a number of expenses associated with the advancement of our long-term growth objectives," said Paul Feldman, president. "Our first quarter revenue growth was primarily driven by continued strong sales of our BirdDog™ GPS tracking system and by an encouraging level of activity within our new AVS surveillance vehicle division.

"We are pursuing a significant order opportunity for our Smith & Wesson-branded SWIFT Under-Vehicle Inspection System, and also are optimistic that improving weather in the Denver market will provide a favorable environment for more active testing by local law enforcement of our Graffiti Cam offering. Initial Graffiti Cam sales and widespread customer interest in this product indicate there is a sizable end-market opportunity, and we are working hard to capitalize on it."

Feldman added, "Our objective for the balance of 2008 is to build on the sales momentum we established for our core business during the first quarter. We also are pursuing various strategic opportunities designed to enhance our top-line growth prospects over the long-term. We hope to provide more detail on these efforts in the coming quarters."

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. The company enjoys close working relationships with other prominent players in the security and surveillance industry, such as Smith & Wesson (NASDAQ: SWHC), one of the world's largest manufacturers of quality firearms and firearm safety/security products; and FLIR Systems, Inc., a world leader in the design, manufacture and marketing of thermal imaging and stabilized camera systems. 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), Smith & Wesson-branded UVIS Swift, 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 Youngsville, N.C., the company has been featured in many industry publications and websites. For more information, please visit www.leacorp.com.

Forward-Looking Information:

The statements in this news release contain forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that use words such as "believe," "anticipate," "estimate," "intend," "could," "plan," "expect," "project," "predict," "forecast," "outlook," "potential," "continue," "may," "future," "can," "enhance," and "should," or the negative of these, as well as similar expressions, can be used to identify forward-looking statements. Such forward-looking statements involve certain risks, assumptions and uncertainties, including the inability to generate and secure the necessary product sales, or the lack of acceptance of the company's products by its customers. In each case actual results may differ materially from such forward-looking statements. The company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results (expressed or modified) will not be realized.

                 Law Enforcement Associates Corporation
                   Consolidated Statement of Operations


                                                  March 31,     March 31,
                                                    2008          2007
                                                 (Compiled)    (Compiled)
                                                 -----------   -----------

Net sales                                        $ 1,979,659   $ 1,765,054

Cost of sales                                      1,172,651       989,862
                                                 -----------   -----------

    Gross profit                                     807,008       775,192
                                                 -----------   -----------

Research and development                               9,204        24,072
Operating expenses                                   744,306       679,756
                                                 -----------   -----------

    Total operating expenses                         753,510       703,828
                                                 -----------   -----------

Net income before other income (expense)
 and provision for income taxes                       53,498        71,364
                                                 -----------   -----------

Other income (expense):
  Interest income (expense), net                     (23,508)         (372)
                                                 -----------   -----------

    Total other income (expense)                     (23,508)         (372)
                                                 -----------   -----------

Net income before provision for income taxes          29,990        70,992

Provision for income taxes                            11,396        16,089
                                                 -----------   -----------

Net income                                            18,594        54,903

Retained earnings beginning of period               (972,947)       58,091
                                                 -----------   -----------

Retained earnings end of period                  $  (954,353)  $   112,994
                                                 ===========   ===========

Net income per weighted average share, basic     $      0.00   $      0.00
                                                 ===========   ===========

Weighted average number of shares                 25,782,433    25,252,433
                                                 ===========   ===========



                 Law Enforcement Associates Corporation
                       Consolidated Balance Sheet


                                                   March 31,     March 31,
                                                     2008          2007
   Assets                                         (Compiled)    (Audited)
   ------                                        -----------   -----------
Current assets:
  Cash                                           $    48,229   $   325,244
  Trade accounts receivable (net of allowance
   for doubtful accounts of $20,000 at March 31,
   2008 and $33,205 at December 31, 2007)          1,204,622       713,067
  Inventories                                      1,591,211     1,256,346
  Prepaid expenses                                    31,740        19,083
  Prepaid insurance                                   43,832        19,104
  Deferred tax asset-current                         757,943       769,338
                                                 -----------   -----------
      Total current assets                         3,677,577     3,102,182
                                                 -----------   -----------
Property and equipment, net                          250,765       257,025
                                                 -----------   -----------
Other assets:
  Intangibles, net                                 2,826,892     2,883,542
  Deferred tax asset less current portion            296,147       296,147
                                                 -----------   -----------
      Total other assets                           3,123,039     3,179,689
                                                 -----------   -----------
      Total assets                               $ 7,051,381   $ 6,538,896
                                                 ===========   ===========

  Liabilities and Stockholders' Equity
  ------------------------------------
Current liabilities:
  Trade accounts payable                             685,393       593,515
  Line of credit                                     525,000       200,000
  Accrued expenses:
    Compensation and payroll taxes                    93,298       120,304
    Profit sharing plan                               80,422        61,796
    Warranty provision                                54,591        59,911
    Professional fees                                112,250        92,862
  Customer deposits                                   70,307        24,533
                                                 -----------   -----------
    Total current liabilities                      1,621,261     1,152,921
                                                 -----------   -----------
    Total liabilities                              1,621,261     1,152,921
                                                 -----------   -----------

Common stock, subject to possible redemption
1,200,000 shares, at redemption value              1,363,721     1,338,170

Stockholders' equity:
  Common stock, $0.001 par value, 50,000,000
   authorized, 25,782,433 issued and
   outstanding at March 31, 2008 and
    December 31, 2007                                 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)           (954,353)     (972,947)
                                                 -----------   -----------
    Total stockholders' equity                     4,066,399     4,047,805
                                                 -----------   -----------
    Total liabilities and stockholders' equity   $ 7,051,381   $ 6,538,896
                                                 ===========   ===========

Contact Information

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