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Law Enforcement Associates Announces Second Quarter Financial Results

RALEIGH, NC -- (Marketwire) -- 08/16/10 -- Law Enforcement Associates Corporation (LEA) (OTCBB: LAWE), a leading U.S.-based developer and manufacturer of electronic surveillance equipment, filed its second quarter Form 10-Q with the Securities and Exchange Commission August 16, 2010 and provided an update on its year-to-date performance.

Second quarter net sales were approximately $1.7 million versus approximately $6.8 million in the same quarter last year. The decrease in revenue from the same period last year is a result of the Company shipping approximately $5.2 million of its nonrecurring U.S. Census Bureau order in the second quarter of 2009. Gross margin was 28% versus 33% in the comparable quarter a year ago. This quarter's gross margin decreased as compared to the same quarter last year due to the Company taking advantage of purchase discounts relating to the nonrecurring order with the U.S. Census Bureau. Additionally, the Company increased its reserve for finished goods inventory by approximately $17,000 during the three months ended June 30, 2010.

The Company reported a second quarter net loss of $237,631, or approximately $0.01 per share, versus net income of $789,258, or approximately $0.03 per share, in the second quarter last year. The decline was primarily due to the nonrecurring U.S. Census Bureau order in 2009 and increases in legal and professional fees in 2010.

Total operating expenses were $862,619, or 50% of revenue, versus $821,737, or 12% of revenue in the second quarter last year. Professional fees associated with the Wortley and Feldman & Perry lawsuits negatively impacted operating results. Professional fees increased by approximately $97,000 over the same period in the prior year. Approximately $46,000 of the increase in operating expenses resulted from amortization of certain patents the Company owns which were previously classified as assets held for sale. The patents were reclassified in the second quarter and subject to all of the amortization that would have been taken while they were classified as held for sale.

"The first half of 2010 has certainly been a struggle for LEA with regards to personnel changes and our ongoing litigation," said Paul Briggs, President and CEO. He continued, "However, we have seen sales increases in the second quarter of approximately 39% over our first quarter this year. We have also seen an increase in our gross margin percentage in the second quarter at 28%, up from 26% in the first quarter of this year." Briggs added, "There is no doubt we have some challenges in front of us in order to bring LEA back to profitability."

Briggs said that the Company has experienced significant change since he began serving as President and CEO in January and that his outlook for the latter half of the year is positive. "We have restructured our sales and production departments and have seen increases in sales and gross margin in the last few months. We have some exciting new technology that we intend to bring to market during the third quarter which we have been working to integrate into our product line this year. We are also excited about some new dealer and distributor arrangements which we hope to have in place this quarter as well." Briggs stated that management is currently in negotiations with a number of potential dealers and distributors familiar with the law enforcement market in a variety of states and internationally. Briggs concluded, "We are optimistic that our efforts will translate into sales increases in the third quarter as they did in the second quarter and we are expecting to see our gross margin continue to improve as well."

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

Forward-Looking Information:
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 a 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 with 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.

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