SOURCE: Law Enforcement Associates

August 20, 2007 12:13 ET

Law Enforcement Associates Reports Second Quarter Financial Results

Q2 Revenue Up 25% Versus Year-Ago Quarter; Company Reports Strong Demand for New Product Offerings

YOUNGSVILLE, NC--(Marketwire - August 20, 2007) - Law Enforcement Associates Corporation (LEA) (AMEX: AID), a leading provider of surveillance and security products to the global law enforcement, military, security and corrections markets, today reported financial results for the second quarter ended June 30, 2007.

Revenue advanced 25% to $2.0 million from $1.6 million in the second quarter last year. Management attributed the improvement to increased demand for the company's expanding line of security and surveillance products, as well as a solid performance by LEA's restructured direct sales force. Second quarter gross margin was 35% versus 39% in last year's second quarter. The decline is primarily attributable to normal fluctuations in the mix of products sold.

LEA reduced its net loss to $14,884, or $0.00 per share, from a net loss of $61,632, or $0.00 per share, in the second quarter a year ago. This year's net loss included a charge of $84,240 related to the issuance of 130,000 shares of restricted common stock to a third party. LEA would have reported second quarter net income of $69,356 without the expense.

Paul Feldman, president, said, "We have introduced a number of cutting-edge surveillance products in recent months, and are encouraged by the level of interest they are generating among both new and existing customers. Our new Raptor body wire and our Birddog GPS tracking systems are performing especially well within our traditional surveillance markets, and we also are seeing strong interest in our Smith & Wesson-branded SWIFT Under Vehicle Inspection System. We are pursuing several significant order opportunities that we believe could materialize during the current fiscal year.

"We recently presented at two large industry conferences and received very positive feedback regarding our expanding product portfolio and the direction we have charted for future equipment offerings. As we recently noted, we soon expect to introduce a new video-based surveillance product that could give us exposure to a large and untapped domestic market."

Feldman said LEA's strong second quarter sales performance came in spite of a delay in the renewal of a sizeable government contract that was expected during the quarter. He added that management is confident the contract will be awarded to LEA at some point during the second half of the year.

During the second quarter, LEA launched a web-based storefront that allows customers to make on-line procurements of select, non-secure surveillance and security products. "We are optimistic this new procurement tool will streamline the purchasing process for our customers, and strengthen sales volumes of certain smaller-ticket items," Feldman said.

LEA ended the second quarter with working capital of $2.6 million, up 10% from December 31, 2006. Total assets at June 30, 2007, were $6.3 million and the company had no long-term debt.

Through six months, LEA reported revenue of $3.8 million versus $3.7 million in the comparable period a year ago. Gross margin was 39% versus 41% in the year-ago period. The company reported net income of $40,019, or $0.00 per share, versus net income of $101,340, or $0.00 per share, through the first six months of last year.

"We still hold the patents and prototypes for our MP-1 electronic discharge weapon, and continue to seek opportunities to leverage these assets," Feldman added. "However, the numerous legal and insurance-related issues surrounding this product category remain a significant concern to both LEA and the prospective partners with whom we have met. We will continue to monitor developments in the marketplace, and will proceed appropriately when and if we see viable prospects for capitalizing on these assets. Of course our primary focus will be on the broad range of opportunities emerging for our core technologies within traditional and ancillary market segments."

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 also 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 GPS Tracking System, 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. 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

                                                    Three months ended
                                                    June 30,     June 30,
                                                     2007         2006
                                                  (Compiled)   (Compiled)
                                                  -----------  -----------

Net sales                                         $ 2,011,982  $ 1,607,685

Cost of sales                                       1,308,175      984,305
                                                  -----------  -----------

      Gross profit                                    703,807      623,380
                                                  -----------  -----------

Research and development                               16,548       37,100
Operating expenses                                    709,619      673,701
                                                  -----------  -----------

      Total operating expenses                        726,167      710,801
                                                  -----------  -----------

Net loss before other income (expense) and
 benefit from income taxes                            (22,360)     (87,421)
                                                  -----------  -----------

Other income (expense):
   Interest income (expense), net                         706       (3,460)
                                                  -----------  -----------

      Total other income (expense)                        706       (3,460)
                                                  -----------  -----------

Net loss before benefit from income taxes             (21,654)     (90,881)

Benefit from income taxes                              (6,770)     (29,749)
                                                  -----------  -----------

Net loss                                          $   (14,884) $   (61,132)
                                                  ===========  ===========

Net loss per weighted average share, basic        $     (0.00) $     (0.00)
                                                  ===========  ===========

Weighted average number of shares                  25,336,719   25,152,433
                                                  ===========  ===========



                  Law Enforcement Associates Corporation
                   Consolidated Statement of Operations

                                                      Six months ended
                                                      2007        2006
                                                   (Compiled)   (Compiled)
                                                  ------------ -----------

Net sales                                         $  3,777,036 $ 3,681,591

Cost of sales                                        2,298,037   2,185,275
                                                  ------------ -----------

      Gross profit                                   1,478,999   1,496,316
                                                  ------------ -----------

Research and development                                40,620      38,201
Operating expenses                                   1,389,375   1,286,255
                                                  ------------ -----------

      Total operating expenses                       1,429,995   1,324,456
                                                  ------------ -----------

Net income before other income (expense) and
 provision for income taxes                             49,004     171,860
                                                  ------------ -----------

Other income (expense):
   Interest income (expense), net                          334        (976)
                                                  ------------ -----------

      Total other income (expense)                         334        (976)
                                                  ------------ -----------

Net income before provision for income taxes            49,338     170,884

Provision for income taxes                               9,319      69,544
                                                  ------------ -----------

Net income                                        $     40,019 $   101,340
                                                  ============ ===========

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

Weighted average number of shares                   25,294,809  25,152,433
                                                  ============ ===========



                  Law Enforcement Associates Corporation
                        Consolidated Balance Sheet

                                                   June 30,   December 31,
                                                     2007         2006
             Assets                               (Compiled)    (Audited)
                                                 ------------ ------------
 Current assets:
   Cash                                          $    542,592 $    452,124
   Trade accounts receivable (net of allowance
    for doubtful accounts of $20,000 at
    June 30, 2007 and December 31, 2006)            1,043,101      984,996
   Inventories                                      1,414,595    1,241,558
   Refundable income taxes                             52,194       62,264
   Prepaid expenses                                    56,734       20,505
   Deferred tax asset-current                         238,539      242,480
                                                 ------------ ------------
      Total current assets                          3,347,755    3,003,927
                                                 ------------ ------------
 Property and equipment, net                          296,810      309,185
                                                 ------------ ------------
 Other assets:
   Intangibles, net                                 2,438,328    2,520,753
   Deferred tax asset less current portion            188,187      193,747
   Deferred charges                                         -          413
                                                 ------------ ------------
      Total other assets                            2,626,515    2,714,913
                                                 ------------ ------------
      Total assets                               $  6,271,080 $  6,028,025
                                                 ============ ============
   Liabilities and Stockholders' Equity
 Current liabilities:
   Current maturities of long-term debt          $          - $     40,000
   Trade accounts payable                             497,075      377,553
   Accrued expenses:                                  203,696      177,553
   Customer deposits                                   49,220       36,089
                                                 ------------ ------------
      Total current liabilities                       749,991      631,195
                                                 ------------ ------------
      Total liabilities                               749,991      631,195
                                                 ------------ ------------
 Stockholders' equity:
   Common stock, $0.001 par value, 50,000,000
    authorized, 25,382,433 and 25,252,433 issued
    and outstanding at June 30, 2007 and December
    31, 2006, respectively                             25,382       25,252
   Treasury stock at cost, 595 shares of common
    stock held by the Company                            (625)        (625)
   Paid in capital in excess of par                 5,398,222    5,314,112
   Retained earnings                                   98,110       58,091
                                                 ------------ ------------
      Total stockholders' equity                    5,521,089    5,396,830
                                                 ------------ ------------
      Total liabilities and stockholders'
       equity                                    $  6,271,080 $  6,028,025
                                                 ============ ============

Contact Information

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