SOURCE: Law Enforcement Associates

Law Enforcement Associates

March 31, 2011 16:05 ET

Law Enforcement Associates Reports Fiscal 2010 Results; Provides Operational Update

RALEIGH, NC--(Marketwire - March 31, 2011) - Law Enforcement Associates Corporation (LEA) (OTCBB: LAWE), a leading U.S.-based developer and manufacturer of electronic surveillance equipment, today announced financial results for its fiscal year ended December 31, 2010. The Company also provided an update on recent operational achievements.

The Company reported full-year net sales of $5.6 million. In fiscal 2009, net sales were $11.9 million, but included a non-recurring $5.9 million order from a large government agency. Full-year gross margin was 23% versus 28% in fiscal 2009. The Company reported a loss from operations of $3.2 million versus operating income of $382,000 in fiscal 2009. This year's operating loss included $1.5 million in impairment charges on previously acquired property, including the Advanced Vehicle Systems (AVS) trade name, AVS marketing list, AID trade name, and Electronic Discharge Weapon patents. Full-year net loss, which included approximately $2.4 million in one-time, non-cash charges, was $4.2 million, or $0.17 per share, versus net income of $127,000, or less than $0.01 per share, in 2009.

Income tax expense was $951,000 versus $114,000 in 2009. As a result of prior net operating losses, LEA has accumulated net operating loss (NOL) carryforwards of approximately $1.4 million. However, due to the uncertainty of the ultimate realization of these NOLs, the Company recorded a 100% valuation allowance against its net deferred tax assets during the 2010 third quarter. LEA will continue to hold the $1.4 million in NOL carryforwards, which still can be used to offset future tax liabilities.

"Despite a challenging environment brought on by sluggish spending among many domestic law enforcement agencies, we made important progress during 2010 to streamline our balance sheet, strengthen our product technologies, and enhance our sales force," said Paul Briggs, president and CEO.

"We made critical improvements to our digital audio and video product offering during the past year, and are now much less reliant on legacy products for which we believe there may be limited market opportunity," Briggs added. "This is reflected in the $1.5 million in non-cash impairment charge we took on certain long-lived assets. We believe our future success will be built largely on the sophisticated new digital surveillance devices we have introduced during the past year, and on certain stalwarts in our portfolio such as our recently enhanced Under Vehicle Inspection System.

"Sales of our Live-Link (formerly "Previews") portable video surveillance system continue to accelerate, and the demand for this offering is meeting the high expectations we had established when we launched the product in September of last year. Sales of our Scorpion digital micro cameras are actually exceeding expectations, thanks in part to the decision by Galls, Inc. to feature the product in its catalog and online store. Galls, one of the largest domestic distributors of law enforcement products, recently certified LEA as an Approved Vendor, and has already taken orders for more 3,000 Scorpions and related accessories. Roughly 2,300 of these orders have come in the last three weeks.

"Internally, we have taken a number of steps to strengthen our sales and marketing programs," Briggs said. "We have recently added four seasoned sales professionals and have broadly expanded our domestic sales territories. We also have launched a completely redesigned corporate website and online store, which we believe will simplify our customers' ability to establish web-based accounts and procure products online.

"We entered fiscal 2011 with what we believe is the strongest product offering in Company history," Briggs added. "We also have a much more efficient cost structure and a highly motivated sales team. Much of our focus during the coming year will be directed at more deeply penetrating our domestic markets, and further expanding our international reach. We also hope to successfully resolve the legal issues associated with the contested asset purchase agreement we have discussed previously. The trial date for this case has been set for June 6, 2011.

"As I noted following the third quarter, if we can maintain the operational momentum we have established in recent months, we believe LEA could achieve much improved operating and financial results during fiscal 2011."

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 and Cautionary Statements

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 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 2009, and other reports from time to time filed 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
             Condensed Consolidated Statements of Operations
          For the Fiscal Year Ended December 31, 2010 and 2009

                                                    2010          2009
                                                ------------  ------------ 

 Net sales                                      $  5,575,872  $ 11,945,501

 Cost of sales                                     4,307,897     8,559,876
                                                ------------  ------------ 

     Gross profit                                  1,267,975     3,385,625
                                                ------------  ------------ 

 Research and development                            254,858       296,667
 Loss on impairment of long-lived assets           1,469,569        21,228
 Operating expenses                                2,761,733     2,686,063
                                                ------------  ------------ 

     Total operating expenses                      4,486,160     3,003,958
                                                ------------  ------------ 


Operating income (loss)                           (3,218,185)      381,667
                                                ------------  ------------ 

Other income (expense)
   Loss on sale of assets                            (27,320)      (10,373)
   Other income                                        9,044        14,005
   Interest income                                       365         1,276
   Interest expense                                     (312)     (145,188)
                                                ------------  ------------ 

     Total other income (expense)                    (18,223)     (140,280)
                                                ------------  ------------ 

 Net income (loss) before income taxes            (3,236,408)      241,387

 Income tax expense                                 (951,011)     (114,155)
                                                ------------  ------------ 

 Net income (loss)                              $ (4,187,419) $    127,232
                                                ============  ============ 

 Weighted average number of common shares
  subject to redemption                            1,200,000     1,200,000
 Net income (loss) per share common shares
  subject to redemption, basic and diluted      $       0.00  $       0.05
 Weighted average number of common shares
  outstanding, excluding shares subject to
  redemption                                      24,582,436    24,582,436
 Net income (loss) per common share, excluding
  shares subject to redemption, basic and
  diluted                                       $      (0.17) $       0.00





                  LAW ENFORCEMENT ASSOCIATES CORPORATION
                  Condensed Consolidated Balance Sheets

                                                      2010         2009
                                                  -----------  ----------- 
                      Assets
 Current Assets
   Cash                                           $    79,128  $   480,148
   Trade accounts receivable (net of allowance
    for doubtful accounts of $57,113 at December
    31, 2010 and $55,000 at December 31, 2009)        423,336      982,505
   Refundable income taxes                                  -      150,000
   Inventories                                      1,267,512    1,505,777
   Prepaid expenses and other current assets           52,309       43,946
   Deferred tax asset - current                             -      246,368
                                                  -----------  ----------- 

     Total current assets                           1,822,285    3,408,744
                                                  -----------  ----------- 

 Property and Equipment - net                          80,183      150,971
                                                  -----------  ----------- 

 Other Assets
   Intangibles - net                                  643,506    2,324,809
   Deferred tax asset, less current portion                 -      704,643
                                                  -----------  ----------- 

     Total other assets                               643,506    3,029,452
                                                  -----------  ----------- 

 Total assets                                     $ 2,545,974  $ 6,589,167
                                                  ===========  =========== 

                                                      2010         2009
                                                  -----------  ----------- 
       Liabilities and Stockholders' Equity
 Current Liabilities
   Trade accounts payable                         $   772,610  $   490,646
   Accrued expenses:
     Accrued salaries, wages and benefits              57,699      116,288
     Contract settlement                               20,000      100,000
     Warranty provision                                48,719       50,271
     Other accrued expenses                            14,116       65,072
     Customer deposits                                 73,359       20,000
                                                  -----------  ----------- 

     Total current liabilities, before shares
      subject to redemption                           986,503      842,277

   Common stock, subject to redemption,
   1,200,000 shares, at redemption value            1,500,000    1,500,000
                                                  -----------  ----------- 

     Total current liabilities                      2,486,503    2,342,277
                                                  -----------  ----------- 

     Total liabilities                              2,486,503    2,342,277
                                                  -----------  ----------- 

 Stockholders' Equity
   Common stock, $0.001 par value, 50,000,000
    authorized, 25,782,436 (including 1,200,000
    shares subject to redemption) issued and
    outstanding at December 31, 2010 and
    December 31, 2009                                  25,782       25,782
   Treasury stock at cost, 595 shares of common
    stock                                                (625)        (625)
   Paid in capital in excess of par                 4,995,595    4,995,595
   Retained earnings/(accumulated deficit)         (4,961,281)    (773,862)
                                                  -----------  ----------- 

     Total stockholders' equity                        59,471    4,246,890
                                                  -----------  ----------- 

 Total liabilities and stockholders' equity       $ 2,545,974  $ 6,589,167
                                                  ===========  =========== 

Contact Information

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