Electronic Control Security (EKCS)

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During the recently completed quarter, we revised and updated certain agreements that can potentially result in significant business for us. In December 2006 we entered into an agreement with Hyundai Syscomm Corp., a California based company (“Hyundai”) engaged in wireless mobile communications equipment, pursuant to which Hyundai is to provide to us at least $25 million of purchase orders for security worthy assets (including video surveillance systems) on terms beneficial to both parties on or prior to June 30, 2008. We entered into the agreements with Hyundai to explore the possibilities open to us in the Asian markets, where we do not have a significant presence.

In addition to the agreements with Hyundai, in April 2007 we received notice from Lockheed Martin Information and Technology Services that we have been awarded one of four prime contracts by the U.S. Navy on the Anti-Terrorism Force Protection (ATFP) NAVFAC Program to secure 54 United States naval bases over five (5 years. This program includes a 40% “Qualified Small Business Set Aside.” The Department of Defense has earmarked $100,000,000 in funding under this program for fiscal 2008. Task orders are expected to be issued in the quarter beginning July 1, 2007. Lockheed Martin has already submitted subcontract agreements to ECSI as a key small business team member on this five-year security upgrade program.

Further, the Company has entered into a NDA as a Small Business technology supplier with Raytheon Corp. on the U.S. Navy Five (5) year ATFP- NAVFAC program addressing CONUS-OCONUS facilities. The Company has also entered into a NDA and Technology Supply Agreement with Vindicator, a wholly owned subsidiary of Honeywell Corp. for two of its proprietary product lines.

The United States Air Force has issued additional task orders to the Company in excess of $1 million under the existing IBDSS contract which we anticipate will be shipped and invoiced toward the end of our 2007 fourth fiscal quarter (which began on April 1, 2007) and the first quarter of our fiscal year 2008 (which will begin on July 1, 2007).

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We entered into a teaming agreement with KBR - E2 - SGE to pursue the DoE-NNSE Second Line of Defense program for installation of our core security technologies for port security worldwide. In addition, we also entered into a teaming agreement with Secure Global Engineering (SEG) to supply security technologies for United States embassies worldwide.