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Ensec International Inc – ‘10-Q’ for 6/30/99

On: Friday, 8/13/99 · For: 6/30/99 · Accession #: 1042910-99-1036 · File #: 0-21361

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/13/99  Ensec International Inc           10-Q        6/30/99    2:29K                                    Global Fin’l Press/FL/FA

Quarterly Report — Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      16     57K 
 2: EX-27       Financial Data Schedule                                1      6K

10-Q — Quarterly Report
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Exhibits and Reports on Form 8-K Financial Statements Forward-Looking Statements Management's Discussion and Analysis of Financial Condition and Results of Operations Manager's Discussion and Analysis of Financial Condition and Results of Operations
1	1st Page - Filing Submission
2	Item 1. Financial Statements
"	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
"	Item 3. Exhibits and Reports on Form 8-K
9	Item 2. Manager's Discussion and Analysis of Financial Condition and Results of Operations
14	Forward-Looking Statements

10-Q 1st Page of 16 TOC ↑Top Previous Next ↓Bottom Just 1st
 
 As filed with the Securities and Exchange Commission on August 13, 1999
 =======================================================================
Washington, D.C. 20549

F O R M 10-QSB

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
SECURITIES EXCHANGE ACT OF 1934 

for the quarterly period ended June 30, 1999

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to           
                                  ---------------    -------------

Commission File Number 0-21361

 ENSEC INTERNATIONAL, INC.
 -------------------------
 (Exact name of small business issuer as specified in its charter)

    Florida                                   65-0654330
    -------                                   ----------
     (State or other Jurisdiction of           (IRS Employer Identification No.)
Incorporation or Organization)                                        

352 Seventh Avenue, Suite 1040, New York, NY 10001
 (Address of principal executive offices) (zip code)

(212) 967-6611
--------------
Registrant's telephone number, including area code

Not applicable
   ---------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last      
report)                                                                         

Indicate by check mark whether the issuer (1) has filed all reports required to 
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during   
the preceding 12 months (or for such shorter period that the registrant was     
required to file such reports), and (2) has been subject to such filing         
requirements for the past 90 days.                                              

YES [ X ] NO [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS

As of August 13, 1999 the registrant had 6,016,250 shares of common stock issued
and outstanding.                                                                

 Transitional Small Business Disclosure Format: Yes [ ] No [ X ]

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 ENSEC INTERNATIONAL, INC.
INDEX TO FORM 10-QSB

PART I  -  FINANCIAL INFORMATION                                                

Item 1.  Financial Statements.                                        

                   Consolidated Balance Sheets as of June 30, 1999 (unaudited)
and December 31, 1998                   

              Consolidated Statement of Operations for the six month
        periods ended June 30, 1999 and 1998 (unaudited)

               Consolidated Statements of Cash Flows for the six month
        periods ended June 30, 1999 and 1998 (unaudited)

              Notes to Consolidated Financial Statements (unaudited)

Item 2.  Management's Discussion and Analysis of Financial Condition  
and Results of Operations.                          

PART II - OTHER INFORMATION                                                     

Item 3.  Exhibits and Reports on Form 8-K                             

PART I - FINANCIAL INFORMATION                                                  

Item 1.       Financial Statements.                                             

See attached pages.                                 

Page 2 of 18

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INTERNATIONAL, INC. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS

ASSETS

                                                        [Enlarge/Download Table]

                                                               June 30,     December 31, 
                                                                 1999           1998     
                                                            -------------  ------------- 
                                                             (un-audited)                
                                                                                         
Current assets                                                                           
     Cash and cash equivalents                              $     25,905    $     58,055 
     Accounts receivable                                         778,418       1,107,618 
     Social taxes and other receivables                                                  
     Inventory                                                   328,563         594,006 
     Prepaid expenses & other assets                             100,917         154,022 
                                                            ------------    ------------ 

               Total current assets                            1,233,803       1,913,701 

Property and equipment, net                                    1,564,567       1,668,711 

Other assets                                                   1,024,200       1,022,418 

               Total assets                                 $  3,822,570    $  4,604,830 
                                                            ============    ============ 

                      LIABILITIES AND STOCKHOLDERS' EQUITY                               

Current liabilities                                                         $            
     Short term loans                                            558,430         166,185 
     Accounts payable                                          1,361,441       1,358,440 
     Accrued and other liabilities                               836,496       1,132,449 
     Current portion of long term debt                           781,047       1,120,782 
                                                            ------------    ------------ 

               Total current liabilities                       3,537,414       3,777,856 

Long term debt - net of current portion                        1,094,791       1,884,997 

Stockholders' Equity                                                                     
Additional paid-in capital                                    13,896,110      13,896,108 
Accumulated other comprehensive gain (loss)                      865,073        (132,036)
Retained Earnings (Accumulated deficit)                      (15,630,981)    (14,882,258)
Common Stock                                                      60,163          60,163 
               Total stockholders' equity                       (809,635)     (1,058,023)
                                                            ------------    ------------ 

               Total liabilities and stockholders' equity      3,822,570    $  4,604,830 
                                                            ============    ============ 


See notes to consolidated financial statements                                  

Page 3 of 18

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ENSEC INTERNATIONAL, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS
(Un-audited)

                                                        [Enlarge/Download Table]

                                          Six Months Ended                  Three Months Ended         
                                               June 30                             June 30             

                                    ------------------------------    ------------------------------   
                                        1999               1998            1999                 1998   
                                        ----               ----            ----                 ----   
                                                                                                       
Sales                               $   974,070         $ 3,643,416        393,479           1,734,499 

Cost of goods sold                      579,664           2,174,047        224,083           1,080,751 

                                    -----------         -----------    -----------         ----------- 
Gross profit                            394,406           1,469,369        169,396             653,748 
                                    -----------         -----------    -----------         ----------- 

Selling, general and                                                                                   
   administrative expenses            1,057,052           1,630,919        511,471             807,893 

Translation loss (gain)                 (59,195)            (46,195)                                   

                                    -----------         -----------    -----------         ----------- 
Income (Loss) from Operations          (662,646)           (102,355)      (342,075)           (107,950)
                                    -----------         -----------    -----------         ----------- 

Commission (Income)                                                                                    
Other (income) expenses                                                                                
Interest income                         (55,736)             (4,865)       (47,627)               (304)
Interest expense                        486,014             425,667        357,891             215,407 
Other Income                           (344,204)           (774,364)       (63,867)           (389,876)
                                    -----------         -----------    -----------         ----------- 
                                         86,074            (353,562)       246,397            (174,773)
                                    -----------         -----------    -----------         ----------- 

Income (loss) from operations                                                                          
before income taxes                    (748,720)            251,207       (589,472)             66,823 

Net  Income (loss)                  $  (748,720)        $   251,207       (589,472)             66,823 
                                    -----------         -----------    -----------         ----------- 

Net Income (loss) per common share                                                                     
                                          (.124)        $      0.05         (0.098)               0.01 

Comprehensive Gain (loss)                                                                              

     Net Income (loss)                 (748,720)            251,207       (589,472)             66,823 
     Other comprehensive gain                                                                          
     (loss)                                                                                            
          Foreign currency              865,073             170,066                                    
          translation adjustment                                                                       
Comprehensive Gain (loss)               116,353             251,207       (419,406)             66,823 
                                    -----------         -----------    -----------         ----------- 

See notes to consolidated financial statements                                  

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ENSEC INTERNATIONAL, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF CASH FLOWS
(Un-audited)

                                                        [Enlarge/Download Table]

                                                                                       Six Months Ended        
                                                                                            June 30            
                                                                              -------------------------------- 
                                                                                    1999                1998   
                                                                                    ----                ----   
                                                                                                               
Cash flows from operating activities:                                                                          
     Net income (loss)                                                         $  (748,721)        $   251,207 
     Foreign Currency Translation gain (loss)                                      997,109                     
      Net cash (used in) operating activities:                                                                 
          Depreciation and amortization expense                                    132,024             116,488 
          Changes in assets and liabilities                                                                    
               Decrease (increase) in accounts receivable                          329,200             (14,451)
               Decrease (increase) in inventories                                  265,443             155,379 
               Decrease (increase) in interest receivable                                0                   0 
               Decrease (increase) in Prepaid & Other current assets                53,105            (751,003)
               Decrease (Increase) in other assets                                  (1,782)            250,307 
               Increase (decrease) in accounts payable                               3,001            (107,687)
               Increase (decrease) in short term loans                             392,245                   0 
               Increase (decrease) in accrued and other liabilities               (295,953)             16,643 
                                                                               -----------         ----------- 
                         Net cash (used in) operating activities                 1,125,671             (83,207)
                                                                               -----------         ----------- 

Cash flows from investing activities:                                                                          
     Purchase of fixed assets                                                                                  
     Decrease in equipment under capital lease                                     (27,880)             (9,218)
     Proceeds on sale of fixed assets                                                    0              22,013 
                                                                               -----------         ----------- 
                         Net cash (used in) investing activities                  ((27,880)             12,795 
                                                                               -----------         ----------- 

Cash flows from financing activities:                                                                          
     Net borrowings (repayments) under credit line agreements Net borrowings                                   
     under short Term loan agreements                                                                          
     Repayment of long term debt                                                (1,129,941)                  0 
     Issuance of common stock                                                            0             180,000 
     Decrease in capital lease obligation                                                0             (16,418)
     Offering Costs                                                                      0                   0 
                                                                               -----------         ----------- 
                         Net cash provided by financing activities              (1,129,941)            163,582 
                                                                               -----------         ----------- 

Net (decrease) increase in cash and cash equivalents                               (32,150)             93,170 

Translation (loss) gain on cash and cash equivalents                                     0            (161,600)

Cash and cash equivalents at beginning of year                                      58,055             211,803 

                                                                               -----------         ----------- 
Cash and cash equivalents at end of the end of the period                      $    25,905         $   143,373 
Cash paid during the period for income tax. Interest expenses and consultant                                   
services:                                                                                                      
                                                                               $         0         $   180,680 
                                                                               ===========         =========== 


See notes to consolidated financial statements.                                 

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ENSEC INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)

1.      Significant Accounting Policies                                         

  The quarterly consolidated financial statements herein have been
prepared by Ensec International, Inc., a Florida corporation (the "Company"),   
without audit, pursuant to the rules and regulations of the Securities and      
Exchange Commission and in accordance with the requirements of Regulation S-B   
promulgated under the Securities Exchange Act of 1934, as amended. Certain      
information and footnote disclosures which would otherwise be included in       
financial statements prepared in accordance with generally accepted accounting  
principles have been condensed or omitted pursuant to such rules and            
regulations. Although the Company's management believes the disclosures are     
sufficient to make the information not misleading, it is suggested that these   
quarterly consolidated financial statements be read in conjunction with the     
Company's audited annual consolidated financial statements and footnotes thereto
contained in its Form 10-KSB/A, as filed with the Commission on April 15, 1999. 

     Principles of Consolidation - The consolidated financial statements
include the accounts of Ensec International and its wholly-owned subsidiaries.  
All significant inter-company balances and transactions have been eliminated in 
consolidation.                                                                  

         Foreign Currency Translation - The consolidated financial statements of
Ensec S.A. have been translated into U.S. dollars in accordance with Statement  
of Financial Accounting Standards ("SFAS") No. 52, "Foreign Currency            
Translation". SFAS No 52 provides that all balance sheet accounts are translated
at year-end exchange rates, except for equity accounts which are translated at  
historical rates, if the local currency is the functional currency. Income and  
expense accounts and cash flows are translated at the average currency exchange 
rates in effect during the year.                                                

      Prior to January 1, 1998, Ensec S.A. regarded the U.S. dollar as its
functional currency as per the prescribed accounting method for companies       
subject to hyper-inflationary economies. As a result, a combination of current  
and historical currency exchange rates were used in translating assets and      
liabilities. The resulting translation adjustments were included in operations. 

         Beginning on January 1, 1998, Ensec S.A. was no longer considered to be
operating in a hyper-inflationary economy and thus the Company began to         
translate the financial statements of Ensec S.A. using the local currency as the
functional currency. The resulting translation adjustments are included in      
accumulated other comprehensive income.                                         

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ENSEC INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)

         The accompanying unaudited interim of consolidated financial statements
include all adjustments (consisting only of those of a normal recurring nature) 
necessary for a fair statement of the results of the interim period.            

2.       Earnings Per Common Share                                              

Financial Accounting Standards Board recently issued Statement No. 128,         
"Earnings Per Share" ("SFAS No. 128"). This statement is effective for periods  
ending after December 15, 1998 and supersedes APB Opinion No. 15. The effect of 
the adoption of SFAS No. 128 on the Company's earnings per share for each of the
periods presented has not been determined.                                      

3.       Long-term Debt                                                         

  Commencing in December 1998, the Company started to amortize the
principal amount of $3.0 million of long term due to FINEP, a Brazilian         
Financial Institution. On April 15, 1999, the Company initiated negotiations to 
amendment the Loan Agreement covering such debt, whereby the original principal 
repayments will be paid during the same time frame, with a reduction of the     
principal amounts by 80% through September 1999. The interest rate remains the  
same on the loan and no other terms of the agreement were amended. The Company  
has not incurred any cost in renegotiating the agreement.                       

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ENSEC INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)

4.       Issuing the Common stock                                               

 No common stock was issued in the quarter ending June 30, 1999.

5.       Working Capital Requirements                                           

    Deficit working capital at June 30, 1999, reached $ 2.3 million, a
deficit increase of $ 0.4 million, up from a deficit working capital of $ 1.9   
million at December 31, 1998. This increase is attributable to the companies    
results for the period.. The Company is actively seeking additional sources of  
capital to permit the Company to regain it's growth of operations in Brazil. The
only credit lines made available are those where receivables or contracts are   
put up in collateral, thus reducing the Companies ability to invest over and    
above the normal growth of sales.                                               

     Should the Company become unable to obtain additional financing, it
would result in additional financial difficulties in Brazil.                    

        The Company has no commitments for capital expenditures as of June 30,
1999.                                                                           

Page 8 of 18

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 ENSEC INTERNATIONAL, INC.

PART I - FINANCIAL INFORMATION                                                  

Item 2.  Manager's Discussion and Analysis of Financial Condition and Results of
Operations.                                                   

Page 9 of 18

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 ENSEC INTERNATIONAL, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     Amounts presented herein have generally been rounded to the nearest
hundred thousand dollars and the related dollar and percentage fluctuations are 
calculated based on such rounding.                                              

       This Management's Discussion and Analysis contains certain statements
which are forward-looking and the accuracy of which are based upon certain      
uncertainties in the Company's future operations and results. For a discussion  
of important factors that could cause the actual results to differ materially   
from those contained in such forward-looking statements, see "Forward-Looking   
Statements" below.                                                              

Overview                                                                        

        The Company, through its operating company Ensec Engenharia e Sistemas
de Seguranca, S.A. (Ensec, S.A.), a Brazilian subsidiary, designs, develops,    
assembles, sells, installs and services security systems for large commercial or
governmental facilities ranging from single function installations to high-end  
integrated security systems. The Company's high-end integrated systems are based
on its proprietary software and related hardware which permit multiple devices  
or systems to be combined into a unified system covering multiple sites. Since  
its inception, the Company has installed approximately 400 systems, nearly all  
of which have been in Brazil, for large corporations (such as Bosch, EDS,       
Caterpillar, IBM and Texaco) and government agencies (such as the Brazilian     
Bureau of Mint and Engraving, the Central Bank of Brazil and the NY & NJ Port   
Authority).                                                                     

         The Company is a Florida corporation which was formed in April of 1996,
as a holding company for Ensec Inc., a Florida corporation ("Ensec Inc."), and  
Ensec Engenharia e Sistemas de Seguranca, S.A. ("Ensec, S.A."), a Brazilian     
corporation.                                                                    

      While the Company believes that the security systems market presents
many opportunities for the sale of its EnWork family products in the U.S., it   
has experienced tremendous difficulty overcoming the cost of market entry       
primarily as a result of insufficient capital required for the sales and        
marketing efforts that create customer knowledge, sales opportunities and       
product acceptability.                                                          

 The Company is party to various legal actions involving alleged
employment law claims. In the opinion of the Company's management, based upon   
their experience with these types of claims, the resolution of these matters    
will not have a material adverse effect on the financial position, results of   
operations or cash flow of the Company.                                         

Page 10 of 18 

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         The Company is actively seeking sources of capital to allow the Company
to continue its operations in Brazil. The Company renegotiated and signed a new 
letter of intent on October 28, 1998, with the underwriter's Donald & Company   
Securities Inc., for a merger and other combinations among Ensec International  
and SenTech EAS Corp., and a new Public Offering expected to be underwritten by 
Donald & Co., during the third quarter of 1999. There is no assurance that this 
financing will be completed. Should the Company become unable to complete such  
merger, it would result in additional financial difficulties in Brazil.         

The proposed company resulting from the merge, Global Security
Technologies, Inc., has had it's form S-4 registration statement filed with the 
SEC on June 28, 1999, and currently is awaiting for the SEC's comments on said  
registration statement.                                                         

      The Company's business strategy is based on two objectives which the
Company believes will allow it to better serve each of its geographic markets:  

      In Brazil, in addition to selling the EnWorks family of products the
Company also sells a broad range of security products and services such as, data
security, time and attendance and CCTV. These products are being marketed to the
existing customer base, the general market and the Brazilian market through     
Ensec S.A.'s established direct sales force and indirect sales channels. The    
Company's sales, services and maintenance of the third party products has not   
resulted as expected, and some third party products has been discountinued and  
due to the devaluation of the Real, our proprietary system, the En2000 has      
become more competitive. The Company has experienced a high renewal rate of     
maintenance contracts and sales of one particular type of product may in any    
given quarterly period account for a significant majority of sales and decreases
thereafter.                                                                     

       In the United States, the Company intends to complete the merger with
SenTech EAS Corp. that will bring not only a penetration in the Electronic Asset
Surveillance /EAS market in the U.S., as well as internationally, but will also 
get Donald & Co. underwriting support for the new Company's stock and a new     
financial structure will be implemented for the future of our operations in the 
U.S.A.                                                                          

        The Company has no commitments for capital expenditures as of June 30,
1999.                                                                           

Year 2000 Compliance                                                            

    Many existing computer systems and applications, and other control
devices, use only two digits to identify a year in the date code field, and were
not designed to account for the upcoming change in the century. As a result,    
such systems and applications could fail or create erroneous results unless     
corrected so that they can process data related to the year 2000. The Company   

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relies on its systems, applications and devices in operating and monitoring all 
major aspects of its business, including financial systems (such as general     
ledger, accounts payable and accounts receivable modules), inventory and        
receivables systems, customer services, infrastructure, embedded computer chips,
networks and telecommunications equipment and end products. The Company also    
relies, directly and indirectly, on systems of external business enterprises    
such as distributors, suppliers, creditors, financial organizations, and        
governmental entities, for accurate exchange of data. Although the Company is in
contact with its suppliers to assess their compliance, there can be no assurance
that there will not be a material adverse affect on the Company if third parties
do not convert their systems in a timely manner and in a way that is compatible 
with the Company's systems, as the Company could be affected through disruptions
in the operation of the enterprises with which the Company interacts. Based on  
the information currently available, the Company believes that the costs        
associated with the year 2000 issue, and the consequences of incomplete or      
untimely resolution of the year 2000 issue, will not have a material adverse    
effect on its business, financial condition and results of operations in any    
given year; however, there can be no assurance that year 2000 issues will not   
have a material adverse effect on the Company's business, financial condition or
results of operations.                                                          

Results of Operations                                                           

Second Quarter 1999 Compared with the Second Quarter 1998                       

        Sales. Total sales for the three months ended June 30, decreased $ 1.3
million, or 77.3%, to $ 0.4 million from $1.7 million in the prior year period. 
This decrease was largely attributable to the first quarter economic crisis     
Brazil suffered, with a 58% devaluation of the currency. This crisis postponed  
most investments during the first half of this fiscal year. The Company         
anticipates that its overall 1999 sales in Brazil will be lower than those      
obtained in 1998.                                                               

        Cost of Goods Sold. Cost of goods sold for the three months ended June
30, 1999 decreased $ 0.9 million, or 79.3%, to $ 0.2 million from $ 1.1 million 
in the prior year's period. The decrease in the cost of goods sold resulted     
primarily from the decrease in sales. The resulting gross profit and gross      
profit percentage for the three months ended June 30, 1999, were $ 0.2 million  
and 43.1%, compared to $ 0.7 million and 37.7%, respectively for the prior year 
period.                                                                         

   Selling, General and Administrative Expenses. Selling general and
administrative expenses for the three months ended June 30, 1999, decreased $   
0.3 million or 36.7%, to $ 0.5 million from $ 0.8 million in the prior year     
period. As a percentage of Net Sales, SGA expenses in the second quarter of 1999
represented 130% of net sales, compared to 46.6% in the same period of 1998.    
This increase in the level of SGA expenses as a percentage compared to net sales
is due to the decrease of sales during the period.                              

Other Income and Expenses                                     

      Interest Income for the second quarter of 1999 increased by 1,556.7%
from $ 304.00                                                                   

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to $47,627.00 in 1999. This increase was the result of a stricter policy of     
charging interest on late payments by customers.                                

   Interest Expenses increased $ 0.1 million or 66,1%, up from $ 0.2
million during the second quarter of 1998. This increase was the result of      
having to increase the Company's borrowings. Borrowings during the second       
quarter of 1999 was $ 0.6 as compared to $ 0.2 in 1998.                         

        Other Income decreased during the second quarter of 1999 when compared
to the second quarter of 1998 by $ 0.3 million or 83.6%, mostly due to the      
termination of the commissions contract between De La Rue Limitada - Brazil and 
Ensec S/A - Brazil.                                                             

Liquidity and Capital Resources                                                 

       Net cash used in operating activities for the three months ended June
30, 1999, was $ 0,2 million, which resulted primarily from the Company's results
from operations, a decrease in accruals and other liabilities, a decrease in    
inventories, and a decrease in accounts receivables.                            

 The Company currently does not have any line of credit or other
short-term credit facilities established with U.S. banks. In Brazil, the Company
has a credit line of $ 500,000 with Banco Bradesco, a Brazilian bank. Another   
credit line of $ 300,000, but not fully used, was renewed by Banco Union, a     
Venezuelan bank. Both lines of credit are guaranteed with collateral of the     
companies accounts receivables or open sales contracts. The Company obtained    
it's long-term debt financing from a Brazilian bank. This loan bears interest at
a rate of 12% per annum, plus an inflation adjustment, which in 1997 was around 
8%.                                                                             

       Working capital deficit at June 30, 1999, increased to $ 2,3 million,
up from $ 1,9 million in the same period of 1998.                               

         The Company is actively seeking sources of capital to allow the company
to continue to grow it's operation in Brazil. The only credit lines made        
available thus far are those where receivables or sales contracts are put up as 
collateral, thus reducing the companies ability to invest over and above its    
normal sales growth.                                                            

        The Company received an ongoing concern qualification from its outside
independent auditors on its fiscal 1998 audit financial statements. Management  
believes the Company's ability to continue as a going concern is dependent upon 
securing adequate financing to fund it's operations until the time the Company  
is able to generate sufficient revenues to be self sustaining. There can be no  
assurance the Company will be successful in achieving these goals.              

       As of June 30, 1999, the Company has 13 outstanding labor claims, all
originating in Brazil, in the aggregate amount of $1,330,000. The Company has   
accrued $200,000 to cover future                                                

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losses from such claims and although there can be no assurance as to the outcome
of such claims, the Company believes the ultimate resolution of these claims    
will not materially adversely effect the Company.                               

Forward-Looking Statements                                                      

 The foregoing Management's Discussion and Analysis of Financial
Condition and Results of Operations contains various "forward-looking           
statements" within the meaning of Section 27A of the Securities Act of 1933, as 
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,    
which represent the Company's expectations or beliefs concerning future events, 
including without limitation the following: the possibility of fluctuations in  
the Brazilian economy and currency and the effects thereof, if any, on the      
Company; the ability of the Company to sell it's Brazilian real estate facility,
maintain the size of Brazilian workforce in conjunction with sales; the ability 
to maintain or surpass past or current levels of profitability; the Company's   
ability to secure additional credit facilities, sources of financing, investment
capital or complete other transactions in the U.S. and Brazil and the           
sufficiency of the Company's cash provided by operating, investing and financing
activities for the Company's future liquidity and capital resource needs.       

     The Company cautions that these statements are further qualified by
important factors that could cause actual results to differ materially from     
those in the forward-looking statements, including without limitation the       
following: general economic conditions; specific economic conditions relating to
the production of integrated security systems (including software); the         
economic, social and political conditions in Brazil; the demand for the         
Company's products; the size and timing of future orders and new contracts;     
specific feature requests by customers; production delays or manufacturing      
inefficiencies; management decisions to commence or discontinue product lines;  
the Company's ability to procure and introduce new products on a cost-effective 
and timely basis; the maintenance of present and the availability of future     
strategic alliances and joint marketing or servicing agreements; the ability to 
complete the proposed merger between Ensec International and SenTech EAS Corp.; 
the introduction of new products and product enhancements by the Company or its 
competitors; the budgeting cycle of customers; changes in the proportion of     
revenues attributable to license fees and maintenance and support services;     
changes in the level of operating expenses; and the present and future level of 
competition in the industry. Results actually achieved thus may differ          
materially from expected results included in these statements.                  

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PART II - OTHER INFORMATION                                                   

Item 3.   Exhibits and Reports on Form 8-K.                                   

None                                                          

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SIGNATURES

         In accordance with the requirements of the Exchange Act, the Registrant
has caused this feport to be signed on its behalf by the undersigned, thereunto 
duly authorized.                                                                

 ENSEC INTERNATIONAL, INC.
--------------------------------------- 
(Registrant)

DATE:  August 13, 1999                   By: /s/ Charles N. Finkel              
                                        --------------------------------
                           Charles N. Finkel
                                            Chairman and Chief Executive Officer

DATE:  August 13, 1999                   By: /s/ Theodore O. Pemberton          
                                          ----------------------------------
                             Theodore O. Pemberton
                               Chief Financial Officer
                                    Principal Accounting Officer

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10-Q’ Filing	Date	First	Last	Other Filings

Filed on:	8/13/99	1	16
For Period End:	6/30/99	1	13
	6/28/99	11
	4/15/99	6	7	10KSB
	12/31/98	2	8	10KSB, NT 10-K
	12/15/98	7
	10/28/98	11		10QSB, 8-K
	6/30/98	2		10QSB
	1/1/98	6
				List all Filings

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Filing Submission 0001042910-99-001036 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Ensec International Inc – ‘10-Q’ for 6/30/99

On: Friday, 8/13/99 · For: 6/30/99 · Accession #: 1042910-99-1036 · File #: 0-21361

Quarterly Report — Form 10-QFiling Table of Contents

10-Q — Quarterly ReportDocument Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Quarterly Report — Form 10-Q
Filing Table of Contents

10-Q — Quarterly Report
Document Table of Contents