CompuDyne Announces Acquisition of Signami LLC, Represents Significant Expansion of Signals Intelligence Product Line.

ANNAPOLIS, Md. -- CompuDyne Corporation (Nasdaq:CDCY), an industry leader in sophisticated security products, integration and technology for the public security markets, announced today that it has acquired substantially all of the assets and certain liabilities of Signami LLC, a producer of software and hardware systems for signals intelligence gathering. Martin Roenigk, CEO of CompuDyne, said, "We are pleased to make this strategic acquisition and believe it will significantly enhance our presence in the domestic and international marketplace for these special systems. This is a 'bolt on' type of acquisition that will enhance our technology and will give us a state of the art product line. In an increasingly dangerous world, the ability to gather intelligence on a real-time basis is critical and is in demand by governments around the world."

CompuDyne in recent years has made a significant investment in positioning itself as a major supplier for Homeland Defense. Various divisions supply security integration services, blast and attack resistant windows and doors, vehicle security barriers, computer aided dispatch and related software for first responders, and intrusion detection systems. The Data Control Systems ("DCS") division of CompuDyne's Integrated Electronic Systems ("IES") subsidiary, located in Gaithersburg, Maryland, has spent over 50 years producing signal intercepts and analysis systems used in intelligence gathering applications.

Signami, a 5-year old company headquartered in Severna Park, Maryland, has developed SignalWorks(R), a pre-eminent Windows-based software used worldwide for signals collection and analysis. Signami hardware and software systems are widely used by two of the U.S. national intelligence agencies as well as various components of the Army, Navy, and Air Force. Signami also has supplied such capabilities to the intelligence agencies of 17 foreign governments under Department of State export licensing.

The new business unit will operate under the name Signami DCS and will continue to focus on signal intelligence systems worldwide. Bert Jones, co-founder of Signami, announced his retirement but will remain through a transition period to assure a smooth integration. Jones said, "We see many benefits arising from this merger and believe our customers will be well served by the increased capabilities that will occur within 4-6 months. Also, we believe our strong market presence will increase CompuDyne's exposure to our existing customers for their many security products and services."

"The Signami and DCS technologies are highly complementary," said Phil Blackmon, President of IES. "Integrating these technologies allows us to increase the capabilities of both product lines, enabling us to quickly achieve technical goals previously established at both companies, and saving us considerable amounts of duplicative research and development time and money. Most significantly, the synthesis of Signami's sophisticated, higher-level demodulation algorithms with DCS's comprehensive signals collection and analysis hardware will dramatically increase our real-time signals exploitation capabilities. The result will be a flagship product that is a very robust, highly portable, one-box solution to communications intelligence gathering. The combination will be a product that will outperform anything the industry has to offer today."

Mr. Roenigk reinforced the view that this is a synergistic as well as a strategic acquisition. "We intend to use Signami's existing business relationships with its security conscious domestic and international customers to aggressively introduce CompuDyne's physical security products and services. With the strong financial performance that Signami has experienced throughout their existence, this acquisition is expected to be accretive to both revenue and profits immediately."

Certain statements made in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including those statements concerning the Company's expectations with respect to future operating results and other events. Although the Company believes it has a reasonable basis for these forward-looking statements, these statements involve risks and uncertainties that cannot be predicted or quantified and consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors which could cause actual results to differ from expectations include, among others, capital spending patterns of the security market and the demand for the Company's products, competitive factors and pricing pressures, changes in legislation, regulatory requirements, government budget problems, the Company's ability to secure new contracts, the ability to remain in compliance with its bank covenants, delays in government procurement processes, inability to obtain bid, payment and performance bonds on various of the Company's projects, technological change or difficulties, the ability to refinance debt when it becomes due, product development risks, commercialization difficulties, adverse results in litigation, the level of product returns, the amount of remedial work needed to be performed, costs of compliance with Sarbanes-Oxley requirements and the impact of the failure to comply with such requirements, risks associated with internal control weaknesses identified in complying with Section 404 of Sarbanes-Oxley, the Company's ability to realize anticipated cost savings, the Company's ability to simplify its structure and modify its strategic objectives, and general economic conditions. Risks inherent in the Company's business and with respect to future uncertainties are further described in its other filings with the Securities Exchange Commission, such as the Company's Form 10-K, Form 10-Q, and Form 8-K reports.