SteelCloud Announces First Quarter 2008 Results and Conference Call

Company Posts Significant Improvement Over Q1 2007

HERNDON, VA -- (MARKET WIRE) -- 03/20/08 -- SteelCloud, Inc. (NASDAQ: SCLD), a manufacturer of embedded integrated computing systems for the industrial automation marketplace, today reported financial results for its first quarter 2008 which ended January 31, 2008.

First quarter revenues increased 31% to approximately $5.8 million in fiscal 2008 compared to $4.4 million in the first quarter in 2007. The net loss was approximately ($676,000) or ($.05) per share for the first quarter in 2008 compared to a net loss of ($971,000) or ($.07) per share for the same period in 2007.

"Our first quarter is typically our most challenging and cyclic," said Bob Frick, SteelCloud CEO and President. "Revenue growth is our highest priority and focus for fiscal 2008. As I have previously discussed, our goal for 2008 is to grow at a rate greater than our market segment which is 8 to 10% annually. Our first quarter results exceed that goal and are a significant improvement over Q1 2007. We remain on plan to continue this improvement throughout the fiscal year and to accomplish a profitable 2008."

First Quarter Highlights:

-- Revenues increased over 31%; Core business integrator and ISV revenues increased by 59% -- Operating expenses decreased 17% -- Generated a net increase in cash of $43,000 -- Cash balance at January 31, 2008 was $2.7 million -- Working capital was $3.2 million

Quarterly Conference Call

The Company will hold a conference call at 10:00 AM EDT on Monday March 24, 2008 to discuss the first quarter results. Robert Frick, SteelCloud President and Chief Executive Officer, will host the call. For investors interested in listening to the earnings call, please dial 866-901-2585, for international calls dial 404-835-7099 and reference SteelCloud. A recording of the earnings call will be available until 11:59 PM EDT, April 4, 2008, and will be accessible by dialing 866-211-4755 (USA) or 404-835-7050 (International) and keying in 4804300#. Press 4 to listen, enter confirmation: 200803183105370#.

About the Company

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

"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, January 31, 2007 2008 ----------- ----------- ASSETS (unaudited) Current assets Cash and cash equivalents $ 2,622,654 $ 2,665,204 Accounts receivable, net 2,625,372 2,446,242 Inventory, net 1,178,395 2,930,519 Prepaid expenses and other current assets 255,924 231,227 Deferred contract costs 83,753 71,078 ----------- -----------Total current assets 6,766,098 8,344,270

Property and equipment, net 802,288 740,774 Equipment on lease, net 323,904 250,144 Other assets 44,053 50,456 ----------- ----------- Total assets $ 7,936,343 $ 9,385,644 =========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 1,789,329 $ 3,260,459 Accrued expenses 1,158,641 1,789,674 Notes payable, current 12,842 10,808 Unearned revenue 98,255 70,021 ----------- -----------Total current liabilities 3,059,067 5,130,962

Long-term liabilities Notes payable, long-term 15,442 13,591 Other, including severance obligations 154,520 146,556 ----------- -----------Total long-term liabilities 169,962 160,147

Stockholders' equity Preferred stock, $.001 par value: 2,000,000 shares authorized, no shares issued and outstanding at October 31, 2007 and January 31, 2008 - - Common stock, $.001 par value: 50,000,000 shares authorized, 14,716,934 and 14,716,934 shares issued at October 31, 2007 and January 31, 2008, respectively 14,717 14,717 Additional paid in capital 50,234,099 50,297,367 Treasury stock, 400,000 shares at October 31, 2007 and January 31, 2008 (3,432,500) (3,432,500) Accumulated deficit (42,109,002) (42,785,049) ----------- -----------Total stockholders' equity 4,707,314 4,094,535 ----------- ----------- Total liabilities and stockholders' equity $ 7,936,343 $ 9,385,644 =========== ========== STEELCLOUD, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended January 31, ------------------------ 2007 2008 (restated) ----------- ----------- Revenues Products $ 3,890,161 $ 5,253,027 Services 532,906 553,445 ----------- -----------Total revenues 4,423,067 5,806,472 ----------- ----------- Cost of revenues Products 3,316,233 4,615,803 Services 371,078 440,309 ----------- -----------Total cost of revenues 3,687,311 5,056,112 ----------- ----------- Gross profit 735,756 750,360

Selling and marketing 418,109 320,244 Research and product development 142,827 198,225 General and administrative 1,160,403 914,353 ----------- ----------- (Loss) from operations (985,583) (682,462)

Interest income (expense), net 14,223 6,415 ----------- ----------- (Loss) before income taxes (971,360) (676,047)

Provision for income taxes - - ----------- ----------- Net (loss) (971,360) (676,047) =========== ========== (Loss) per share (basic and diluted): Basic and diluted (loss) per share $ (0.07) $ (0.05)

Weighted-average shares outstanding, basic and diluted 14,262,176 14,316,934

2008-03-20 17:39:06 0317660 MARKETWIRE