SOURCE: Brekford Corp.

Brekford Corp.

March 28, 2014 17:31 ET

Brekford Announces 2013 Operating Results

Company Anticipates Renewed Growth in 2014

HANOVER, MD--(Marketwired - Mar 28, 2014) - Brekford Corp. (the "Company") (OTCBB: BFDI) (OTCQB: BFDI), a leading public safety technology service provider of fully integrated traffic safety solutions, parking enforcement citation collections and an end-to-end suite of technology equipment for public safety vehicle services, today announced its operating results for the year ended December 31, 2013.

The Company generated annual revenue of $13,619,306 for the year ended December 31, 2013, compared to $18,295,906 for the year ended December 31, 2012. Gross margin percentage increased significantly to 25.2% for the year ended December 31, 2013, compared to 19.6% for the year ended December 31, 2012, as automated traffic safety enforcement ("ATSE") services represented a higher percentage of the overall business. A net loss for the year of $1,419,586 was primarily due to increased expenses related to the expansion of ATSE programs without corresponding increases in revenue as certain program implementations were delayed or terminated.

Management Comments:

"During 2013, we made significant strides in shoring up our product and service offerings in support of current and prospective clients within the public safety industry," stated C. B. Brechin, Chief Executive Officer of Brekford Corp. "The decision to mutually terminate our largest ATSE contract in December, 2013 was appropriate considering the political pressure and uncertainty in terms of when the program would ultimately begin live enforcement. Fortunately, the resources dedicated in 2013 to this project resulted in extreme refinement of our ATSE hardware and backend software, and we believe we have an industry leading turnkey solution as we seek to expand nationwide in 2014. Our full year results were impacted by these efforts; however, with the investments we have made in innovative ATSE and parking citation management solutions we are excited about our prospects for the coming year."

"We are aggressively marketing our ATSE programs and the recently released School Safety Zone SpeedAlert system, which combines speed warning radar with an optional enforcement camera," commented Rod Hillman, President and Chief Operating Officer of Brekford. "In the coming months we will be introducing handheld and mobile automated photo speed enforcement products as well as a pole mounted red light photo enforcement system. Additionally, we continue to work with other technology partners as we build an array of solutions customized to fit nearly any customer application. Our citation management application suite integrates with all of our hardware to provide a seamless and intuitive program for municipalities, no matter how small or large."

"As a result of the financial challenges of 2013, we have implemented a plan to make significant changes in 2014 with cost containment and restructuring measures that will continue for several months," continued Mr. Hillman. "Among other changes, we have significantly reduced the overall workforce and revamped our sales and marketing team with a renewed emphasis on nationwide growth beyond our traditional Maryland client base. While we have reduced operating expenses dramatically, we still anticipate losses in the near term as we focus on strong results in the latter half of 2014 in conjunction with adding recurring revenue from new clients. We are encouraged by the increase in our gross margin percentage in 2013 which we expect to continue as ATSE represents an increasing percentage of our overall business moving forward."

"Supplemental to our efforts with ATSE, we also continue to pursue contracts to provide parking citation services and collection of past-due receivables for municipalities. Our initial contracts with the Cities of Asheville, North Carolina and Huntington, New York have provided a solid foundation for expansion in this large national market. Additionally, we anticipate renewed growth in our legacy vehicle services business with a primary focus on rugged mobile technology vehicle installations for state and federal agencies," concluded Hillman.

Financial highlights for year ended December 31, 2013:

Net revenue decreased 25.6% to $13,619,306 for the twelve months ended December 31, 2013, compared with $18,295,906 in the previous year. The decrease in total net revenue was primarily due to lower sales of rugged IT products offset in part by an 80% increase in ATSE revenue.

As of December 31, 2013, the Company's total assets approximated $6.7 million, compared with approximately $9.3 million on December 31, 2012. Cash on hand approximated $2.1 million at the end of 2013, versus approximately $1.4 million at the end of 2012. The total amount outstanding against the Company's bank line of credit as of December 31, 2013 was $1,470,533. 

Gross profit declined to $3,436,228 (25.2% of net revenue) in the year ended December 31, 2013, from $3,589,808 (19.6% of net revenue) in 2012. The increased gross profit margin percentage was primarily due to a higher proportion of ATSE services in relation to the overall business.

Total operating expenses decreased from $4,708,291 in 2012 to $4,678,290 in 2013. Salaries and related expenses increased 25.9% to $1,956,640, versus $1,554,377 in 2012 due to increased staffing to support growth in the Company's ATSE products. Selling, general and administrative expenses decreased 13.7%, primarily due to a decrease of $827,441 in bad debt expense partially offset by an increase in depreciation expense related to additional investments in Brekford's intellectual property, hardware, and software.

The Company recorded a net loss of $1,419,586, or $0.03 per diluted share, in 2013, versus a net loss of $1,266,671, or $0.03 per diluted share, for the year ended December 31, 2012. Management primarily attributes the net loss in 2013 to increased expenses related to salaries, benefit programs, and associated support costs for the expansion of ATSE programs without corresponding increases in revenue as certain program implementations were delayed or terminated.

About Brekford Corp.

Brekford Corp. provides state-of-the art public safety technology and automated traffic enforcement solutions to municipalities, the U.S. military, various federal entities and other public safety agencies throughout the United States. Its services include automated speed and red light camera enforcement programs, parking enforcement citation collections and an end-to-end suite of technology and equipment for public safety vehicle up-fitting. Brekford's combination of up-fitting services, cutting-edge technology, and automated traffic enforcement services offers a unique 360-degree solution for law enforcement agencies and municipalities.

The Company is headquartered in Hanover, Maryland, and its common stock is traded on the OTC Bulletin Board and the OTCQB under the symbol "BFDI". Additional information on Brekford can be accessed online at www.brekford.com.

Forward-Looking Statements

Forward-Looking Statements. This press release contains "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 (the "Exchange Act") (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Statements preceded by, followed by or that otherwise include the words "believe," "anticipate," "estimate," "expect," "intend," "plan," "project," "prospects," "outlook," and similar words or expressions, or future or conditional verbs such as "will," "should," "would," "may," and "could" are generally forward-looking in nature and not historical facts. These forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the Company's actual results, performance or achievements to be materially different from any anticipated results, performance or achievements. The Company disclaims any intention to, and undertakes no obligation to, revise any forward-looking statements, whether as a result of new information, a future event, or otherwise. For additional risks and uncertainties that could impact the Company's forward-looking statements, please see the Company's Annual Report on Form 10-K for the year ended December 31, 2013, including but not limited to the discussion under "Risk Factors" therein, which the Company has filed with the SEC and which may be viewed at http://www.sec.gov.

             
             
BREKFORD CORP.  
   
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
($000, except per-share figures)  
             
    Years Ended December 31,  
    2013     2012  
                 
Net revenue   $ 13,619     $ 18,296  
                 
Gross profit     3,436       3,590  
                 
Loss from operations     (1,242 )     (1,118 )
                 
Total other expense     (178 )     (148 )
                 
Net loss   $ (1,420 )   $ (1,267 )
                 
Loss per share - basic and diluted   $ (0.03 )   $ (0.03 )
                 
Weighted average shares outstanding                
  Basic     44,283       44,129  
  Diluted     44,283       44,129  
                 
                 
                 
CONDENSED CONSOLIDATED BALANCE SHEETS
($000, except per-share figures)
         
    December 31,   December 31,
    2013   2012
             
Cash   $ 2,052   $ 1,415
             
Current assets     4,880     6,593
             
Total assets     6,660     9,346
             
Current liabilities     4,759     5,426
             
Total liabilities     5,545     6,869
             
Stockholders' equity   $ 1,115   $ 2,477
             
             

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