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SteelCloud Announces Second Quarter 2008 Results
Jun 12, 2008 (08:06 AM EDT)


HERNDON, Va., June 12 /PRNewswire-FirstCall/ -- SteelCloud, Inc. , a developer and manufacturer of compliance-based technology solutions (the "Company" or "SteelCloud"), announced today financial results for its second quarter of fiscal 2008 (ending April 30, 2008).

Second quarter revenues increased seventy-three percent (73%) to approximately $8.4 million in fiscal 2008 compared to $4.8 million in the second quarter in 2007. The net income was approximately $10,000 for the second quarter in 2008 compared to a net loss of ($402,000) or ($.03) per share for the same period in 2007. Revenues for the six month period ending April 30, 2008, increased fifty-three percent (53%) to approximately $14.2 million in fiscal 2008 compared to $9.3 million in the six month period ended April 30, 2007. The net loss for the six month period ended April 30, 2008, was approximately ($666,000) or ($.05) per share compared to a net loss of ($1,374,000) or ($.10) per share for the same period in 2007.

"I am very pleased with our performance in the second quarter of 2008," said Robert Frick, SteelCloud CEO and President. "We are fully executing the strategy that we outlined previously to fuel revenue and profit growth for 2008 and beyond. Our goal for this year remains to grow at a rate greater than our market segment and our first and second quarter results exceed that and represent a significant improvement over the same period in 2007. We remain on target to continue this improvement throughout the fiscal year and to accomplish a profitable 2008. We continue to evolve our business model into more complex technical work and develop additional solutions that meet the challenges of our customers."

Second Quarter Highlights: -- Revenues in the second quarter of 2008 increased more than seventy three (73%) percent compared to the same period in 2007; Core business integrator and ISV revenues increased by one hundred fifteen percent (115%) -- Operating expenses decreased ten percent (10%) -- Generated a net increase in cash of $2.1 million -- Cash balance at April 30, 2008 was $4.7 million -- Working capital was $3.4 million

Quarterly Conference Call

The Company will hold a conference call at 10:00 AM EDT on Thursday, June 12, 2008, to discuss the second quarter results. Mr. Frick will host the call. For investors interested in listening to the earnings call, please dial 866-866-1333, for international calls dial 404-260-1421 and reference SteelCloud. A recording of the earnings call will be available until 11:59 PM EDT, June 22, 2008, and will be accessible by dialing 866-430-1300 (USA) or 404-260-1414 (International) and keying in 4804300#. Press 4 to listen, enter confirmation: 200806062148560#.

About the Company

SteelCloud is a developer and manufacturer of compliance based technology solutions. SteelCloud designs and manufactures specialized servers and appliances for federal integrators, software vendors and volume users. For both the government and commercial markets SteelCloud delivers integration services and software focused on risk management and network management solutions. SteelCloud's ISO 9001:2000 certified Quality Management System provides procedures for continuous quality improvement in all aspects of its business. Over its 20-year history, SteelCloud has won numerous awards for technical excellence and customer satisfaction. SteelCloud can be reached at (703) 674-5500. Additional information is available at info@steelcloud.com E-mail:

"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995

Except for historical information, all of the statements, expectations and assumptions contained in the foregoing are forward looking statements that involve a number of risks and uncertainties. It is possible that the assumptions made by management are not necessarily the most likely and may not materialize. In addition, other important factors that could cause actual results to differ materially include the following: business conditions and the amount of growth in the computer industry and general economy; competitive factors; ability to attract and retain personnel, including key sales and management personnel; the price of the Company's stock; and the risk factors set forth from time to time in the Company's SEC reports, including but not limited to its annual report on Form 10-K and its quarterly reports on Forms 10-Q; and any reports on Form 8K. SteelCloud takes no obligation to update or correct forward-looking statements.

STEELCLOUD, INC. CONDENSED CONSOLIDATED BALANCE SHEET October 31, April 30, 2007 2008 ASSETS (unaudited) Current assets Cash and cash equivalents $2,622,654 $4,707,128 Accounts receivable, net 2,625,372 2,046,124 Inventory, net 1,178,395 1,596,955 Deferred contract costs 83,753 45,123 Prepaid expenses and other current assets 255,924 220,530 Total current assets 6,766,098 8,615,860 Property and equipment, net 802,288 708,678 Equipment on lease, net 323,904 191,696 Other assets 44,053 25,054 Total assets $7,936,343 $9,541,288 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $1,789,329 $4,365,090 Notes payable, current 12,842 8,775 Unearned revenue 98,255 56,466 Accrued expenses and other current liabilities 1,158,641 754,715 Total current liabilities 3,059,067 5,185,046 Long-term liabilities Notes payable, long-term 15,442 11,717 Other, including severance obligations 154,520 129,675 Total long-term liabilities 169,962 141,392 Stockholders' equity Preferred stock, $.001 par value: 2,000,000 shares authorized, no shares issued and outstanding at October 31, 2007 and April 30, 2008 - - Common stock, $.001 par value: 50,000,000 shares authorized, 14,716,934 and 14,731,449 shares issued at October 31, 2007 and April 30, 2008, respectively 14,717 14,731 Additional paid in capital 50,234,099 50,407,777 Treasury stock, 400,000 shares at October 31, 2007 and April 30, 2008 (3,432,500) (3,432,500) Accumulated deficit (42,109,002) (42,775,158) Total stockholders' equity 4,707,314 4,214,850 Total liabilities and stockholders' equity $7,936,343 $9,541,288 STEELCLOUD, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Six Months Ended April 30, April 30, 2007 2008 2007 2008 (restated) (restated) Revenues Products $4,395,910 $7,827,740 $8,286,071 $13,080,767 Services 440,933 556,894 973,839 1,110,339 Total revenues 4,836,843 8,384,634 9,259,910 14,191,106 Cost of revenues Products 3,342,499 6,435,320 6,658,732 11,051,123 Services 283,443 480,204 654,521 920,513 Total cost of revenues 3,625,942 6,915,524 7,313,253 11,971,636 Gross profit 1,210,901 1,469,110 1,946,657 2,219,470 Selling and marketing 336,645 281,718 754,754 601,962 Research and product development 151,770 208,888 294,597 407,113 General and administrative 1,136,276 973,440 2,296,679 1,887,793 (Loss) income from operations (413,790) 5,064 (1,399,373) (677,398) Interest income, net 11,467 4,827 25,690 11,242 (Loss) income before income taxes (402,323) 9,891 (1,373,683) (666,156) Provision for income taxes - - - - Net (loss) income $(402,323) $9,891 $(1,373,683) $(666,156) (Loss)income per share (basic and diluted): Basic and diluted (loss) income per share $(0.03) $0.00 $(0.10) $(0.05) Weighted-average shares outstanding: Basic 14,275,372 14,323,458 14,268,627 14,320,179 Diluted 14,275,372 14,667,606 14,268,627 14,320,179

CONTACT: Media, Dustee Tucker, +1-571-242-6650, dtucker@pstrategies.com,or Investors, Tim Clemensen, +1-212-843-9337, ,both for SteelCloud, Inc.

Web site: http://www.steelcloud.com/