Change in Sales Focus Improves Gross Margin to 46% From 42% in Year-Ago Quarter; Company Files Three Patent Applications Related to Multi-Shot Stun Gun Designs
YOUNGSVILLE, N.C., Nov. 15 /PRNewswire-FirstCall/ -- 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 third quarter and nine-month period ended September 30, 2006.
Third quarter revenue was $1.9 million versus $1.6 million in this year's second quarter and $2.7 million in the third period a year ago. Gross margin improved to 46% from 35% in the second quarter and 42% in last year's third quarter. The improvement was primarily attributable to the Company's focus on higher-margin product sales and limited use of pricing discounts.
Net income in the third quarter was $125,000, or less than $0.01 per share, versus a second quarter net loss of $61,000, or less than $0.01 per share, and net income of $185,000, or $0.01 per share, in the third quarter a year ago.
Through nine months, revenue was $5.6 million versus $6.6 million at the nine-month mark last year. Gross Margin was 43% versus 39% in the same period last year. Net income was $226,000, or $0.01 per share, versus net income of $27,000, or less than $0.01 per share, in the nine-month period a year ago.
Paul Feldman, president, said, "We continued to focus our sales efforts on a high-margin product mix, which allowed us to achieve profitable results in spite of limited spending within the security and surveillance sector. Monthly order volume fluctuated considerably during the third quarter, but was relatively strong during September, and has remained strong during the first part of Q4. We are hopeful that this indicates a trend toward increased spending by domestic and international law enforcement agencies." Feldman said demand from military and governmental customers also has been gradually increasing, and a series of recent contracts has elevated LEA's order backlog to $1.6 million.
"We continue to pursue options for commercializing our less-lethal MP-1 stun pistol," Feldman said. "During this process, we have maintained an active R&D effort associated with the weapon. We recently filed three patent applications related to the designs of an MP-1 multi-shot model. While we recognize the commercialization process has taken longer than expected, we remain encouraged by the opportunities this product line represents to LEA over the long term." About Law Enforcement Associates Corporation (LEA) 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 http://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 September 30, 2006 and September 30, 2005 Three-months Three-months
ended ended
September 30, September 30,
2006 2005
(Unaudited) (Unaudited) Revenues $1,897,421 $2,661,642 Cost of goods sold 1,030,809 1,551,413 Gross profit 866,612 1,110,229 Research and development 17,400 67,721
Operating expenses 726,763 724,185 Total operating expenses 744,163 791,906 Net income before other income (expense)
and provision for income taxes 122,449 318,323 Other income (expense)
Gain (loss) on retirement of fixed assets -- (2,147)
Interest (expense) (1,102) (3,113)
Other (expense) -- (10,442) Total other income (expense) (1,102) (15,702) Net income before provision for income taxes 121,347 302,621 Provision for income taxes (benefit) (3,418) 118,000 Net income $124,765 $184,621
Net income per weighted average share, basic $0.00 $0.01
Weighted average number of shares 25,251,838 25,152,433 Law Enforcement Associates Corporation
Consolidated Statement of Operations
Nine Months ended September 30, 2006 and September 30, 2005 Nine-months Nine-months
ended ended
September 30, September 30,
2006 2005
(Unaudited) (Unaudited) Revenues $5,579,012 $6,617,834 Cost of goods sold 3,206,926 4,059,523 Gross profit 2,372,086 2,558,311 Research and development 55,601 125,835
Operating expenses 2,022,176 2,361,194 Total operating expenses 2,077,777 2,487,029 Net income before other income (expense)
and provision for income taxes 294,309 71,282 Other income (expense)
Gain (loss) on retirement of fixed assets -- (5,774)
Interest (expense) (6,376) (12,763)
Other (expense) 4,298 (8,419) Total other income (expense) (2,078) (26,956) Net income before provision for income taxes 292,231 44,326 Provision for income taxes 66,126 17,000 Net income $226,105 $27,326
Net income per weighted average share, basic $0.01 $0.00
Weighted average number of shares 25,163,277 25,120,615 Law Enforcement Associates Corporation
Consolidated Balance Sheet September 30, December 31,
2006 2005
Assets (Unaudited) (Audited)
Current assets:
Cash $1,011,333 $778,156
Accounts receivable (net of allowance
for doubtful accounts of $21,509) 717,292 628,825
Inventory 1,298,041 1,092,457
Deferred tax asset-current portion 124,247 213,546
Income tax receivable and other current assets 92,669 253,346
Total current assets 3,243,582 2,966,330
Property and equipment - net 290,454 257,539
Other non-current assets:
Intangibles-net 2,561,966 2,675,860
Deferred tax asset-net of current portion 244,614 195,552
Deferred charges 1,152 5,528
Total other non-current assets 2,807,732 2,876,940
Total assets $6,341,768 $6,100,809 Liabilities and Stockholders' Equity
Current liabilities:
Note payable-current portion $70,000 $120,000
Accounts payable and accruals 544,692 609,867
Customer sales deposits 114,827 3,840
Total current liabilities 729,519 733,707
Long-term liabilities:
Note Payable-net of current portion -- 40,000
Total long term liabilities -- 40,000
Total liabilities 729,519 773,707
Stockholders' equity:
Preferred stock $0.01 par value, 1,000,000
authorized, 0 issued -- --
Common stock, $0.001 par value, 50,000,000
authorized, 25,251,838 issued and outstanding
at Sep 30, 2006, 25,152,433 issued and
outstanding at Dec 31, 2005 25,251 25,152
Paid in capital in excess of par 5,299,755 5,240,812
Retained earnings 287,243 61,138
Total stockholders' equity 5,612,249 5,327,102
Total liabilities and stockholders' equity $6,341,768 $6,100,809
DATASOURCE: Law Enforcement Associates Corporation CONTACT: Geoff High of Pfeiffer High Investor Relations, Inc., +1-303-393-7044, for Law Enforcement Associates Corporation Web site: http://www.leacorp.com/
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