SOURCE: Brekford Corp.

Brekford Corp.

March 27, 2015 13:10 ET

Brekford Announces 2014 Operating Results and Completes Capital Raise

Revenue Increases 30%; Mexico Photo Enforcement Set to Launch in 2nd Quarter of 2015

HANOVER, MD--(Marketwired - Mar 27, 2015) - 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, 2014 in addition to a recently completed private placement of convertible notes in the aggregate principal amount of $715,000. The securities sold in the private placement have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), and any converted shares are restricted from resale for a minimum of six months from the date of issuance."

The Company generated annual revenue of $17,659,533 for the year ended December 31, 2014, compared to $13,619,306 for the year ended December 31, 2013, an increase of $4,040,227 or 29.7%, primarily due to increased sales of rugged IT products and professional upfitting services. Gross margin percentage decreased to 17.7% for the year ended December 31, 2014, compared to 25.2% for the year ended December 31, 2013, as vehicle services product lines represented a higher percentage of the overall business. A net loss for the year of $1,502,647 was primarily due to ongoing business development expenses related to automated traffic safety enforcement ("ATSE") as the Company prepares to launch new programs in the U.S. and Mexico. On March 17, 2015 the Company entered a $715,000 note and warrant purchase agreement with the primary use of proceeds to fund equipment purchases for its international expansion.

Management Comments:

"We are encouraged by the significant revenue growth we were able to achieve in 2014, primarily through expansion of rugged mobile technology installations for public safety vehicles," stated Rod Hillman, President and Chief Operating Officer of Brekford Corp. "Our foundation as a leading service provider to law enforcement agencies, municipalities, and various federal entities has enabled us to navigate financial challenges and implement growth initiatives for our turnkey ATSE services. Despite the overall loss incurred in 2014, we are encouraged by future prospects as we embark on international expansion with the launch of our first large-scale photo enforcement program in Saltillo, Mexico in the second quarter of 2015. When completed, this initial project will represent an increase of more than five times our currently installed revenue generating camera units. Additionally, we are in discussions with a number of other cities in Mexico and the U.S. as we have aggressively expanded our sales pipeline supported by new technology offerings and what we believe is the best turnkey software solution in the industry, our iP360 Citation Management System."

"In Mexico we have installed significant ATSE technology and infrastructure resources in preparation for the first program startup, and we believe that we are fully prepared for a rapid scaling of operations as new clients are added by our partner company, Grupo Canviso," continued Mr. Hillman. "We have also made inroads for similar arrangements in other Latin American countries, where demand is very high for the technology and operational expertise of our turnkey solutions. While we are pursuing a number of international opportunities, we remain focused on the U.S. market as well, as we were recently named as the selected vendor for red light photo enforcement in New Rochelle, New York and are awaiting responses on several other ATSE and parking enforcement proposals."

"While the demand for ATSE services continues to rise, we are also encouraged by the increased sales of our legacy vehicle services offerings, specifically with respect to rugged technology installations. With the increased nationwide urgency for police departments to deploy wearable camera systems, Brekford is well positioned to support this demand with Panasonic's recent release of its next generation body-worn evidence capture system. Our sales force is currently working with a number of agencies to assist in development of policies and procedures prior to deployment," concluded Hillman.

C.B. Brechin, Brekford's Chief Executive Officer, added, "Brekford has always been a leading provider of public safety and security solutions. We believe that efforts to control operating costs in 2014, with a significant commitment of resources to business development, will enable us to get back to sustained growth and profitability in 2015. Our newly added ATSE recurring revenue contracts and our recently completed financing will allow us to accelerate growth both organically and through strategic acquisitions. Our management team is more motivated than ever to expand Brekford's presence within the industry, and to translate that into long-term value for our customers and shareholders."

Financial highlights for year ended December 31, 2014:

Revenues for the year ended December 31, 2014 were $17,659,533 compared to $13,619,306 for the year ended December 31, 2013, an increase of $4,040,227 or 29.67%, primarily due to increased sales of rugged IT products as well as professional upfitting services for our Vehicle Services product line. ATSE sales experienced a modest decrease year over year as existing programs continue to mature, resulting in improved driver behavior and lower violation rates within communities served. The Company continues to focus on generating efficient and stable growth in our Vehicle Services offerings, while building a pipeline of future recurring revenue streams for ATSE. We anticipate increasing contributions from our ATSE product line as new clients and contracts are added.

Gross profit for the year ended December 31, 2014 amounted to $3,131,887 as compared to $3,436,228 for the year ended December 31, 2013, a decrease of $304,341 or 8.86%. Gross margin percentage for the year ended December 31, 2014 was 17.7% as compared to 25.2% for the year ended December 31, 2013. Gross margin for ATSE increased year over year while gross margin for Vehicle Services was down slightly. The overall gross margin decrease is attributable to a higher proportion of revenues generated by Vehicle Services.

Total operating expenses decreased from $4,678,290 in 2013 to $4,363,973 in 2014. Salaries and related expenses decreased 4.0% to $1,878,671, versus $1,956,640 in 2013. Selling, general and administrative expenses decreased 5.0% to $2,585,302, versus $2,721,650 in 2013. Decreases in operating expenses were primarily due to a net reduction of employees and lower depreciation costs.

The Company recorded a net loss of $1,502,647 for the year ended December 31, 2014 compared to a net loss of $1,419,586 for the year ended December 31, 2013, an increase of $83,061 or 5.85%. The increase was primarily due to lower gross profit margins based on the sales mix contributions of Vehicle Services and ATSE as referenced above. Despite the increased loss year over year, growth in Vehicle Services and a renewed focus on the ATSE pipeline should enable the Company to mitigate losses moving forward as newly added contracts begin generating revenue in the second quarter of 2015. Basic and diluted net loss per common share were $0.03 for both 2014 and 2013.

As of December 31, 2014, the Company's total assets approximated $4.3 million, compared with approximately $6.7 million on December 31, 2013. Cash on hand approximated $1.1 million at the end of 2014, versus approximately $2.1 million at the end of 2013. The total amount outstanding against the Company's senior line of credit as of December 31, 2014 was $1,191,353.

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 upfitting. Brekford's combination of upfitting 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

This press release contains forward-looking statements within the meaning of that term in Section 21E of the Securities Exchange Act of 1934, as amended. Words such as "anticipate," "expect," "project," "intend," "plan," "believe," "target," "aim," "should" and words and terms of similar substance and any financial projections used in connection with any discussion of future plans, strategies, objectives, actions, or events identify forward-looking statements. Forward-looking statements include, among others, those concerning our expected financial performance and strategic and operational plans, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. These statements are based on the beliefs of our management as well as assumptions made by and information currently available to us and reflect our current views concerning future events. As such, they are subject to risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, among many others: the risk that any projections, including earnings, revenues, expenses, synergies, margins or any other financial items that form the basis for management's plans and assumptions are not realized; a reduction in industry profit margin; requirements or changes affecting the business in which we are engaged; our ability to successfully implement new strategies; operating hazards; competition and the loss of key personnel; changing interpretations of generally accepted accounting principles; continued compliance with government regulations; changing legislation and regulatory environments; and the general volatility of the market prices of our securities and general economic conditions. Readers are referred to the documents filed by Brekford Corp. with the SEC, specifically the Company's most recent reports filed on Form 10-K and Forms 10-Q, which further identify important risks, trends and uncertainties which could cause actual results to differ materially from the forward-looking statements in this press release. Brekford Corp. expressly disclaims any obligation to update any forward-looking statements.

   
 (Financial Highlights Follow)  
   
   
   
BREKFORD CORP.  
   
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
($000, except per-share figures)  
   
    Years Ended December 31,  
    2014     2013  
                 
Net revenue   $ 17,660     $ 13,619  
                 
Gross profit     3,132       3,436  
                 
Loss from operations     (1,332 )     (1,242 )
                 
Total other expense     (171 )     (178 )
                 
Net loss   $ (1,503 )   $ (1,420 )
                 
Loss per share - basic and diluted   $ (0.03 )   $ (0.03 )
                 
Weighted average shares outstanding                
  Basic     44,499,610       44,283,364  
  Diluted     44,499,610       44,283,364  
                   
 
 
CONDENSED CONSOLIDATED BALANCE SHEETS
($000, except per-share figures)
 
    December 31,     December 31,
    2014     2013
               
Cash   $ 1,113     $ 2,052
               
Current assets     3,847       4,880
               
Total assets     4,265       6,660
               
Current liabilities     3,918       4,759
               
Total liabilities     4,633       5,545
               
Stockholders' (deficit) equity   $ (368 )   $ 1,115

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