SOURCE: Brekford Corp.

Brekford Corp.

March 24, 2016 17:05 ET

Brekford Announces 2015 Operating Results

Revenue Increases 12% to a Record $19.8 Million; Photo Enforcement Drives Margin Growth

HANOVER, MD--(Marketwired - Mar 24, 2016) - Brekford Corp. (OTCQX: BFDI), a leading public safety and security technology service provider of automated traffic safety enforcement ("ATSE") solutions, parking enforcement solutions, 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, 2015.

FINANCIAL HIGHLIGHTS FOR 2015

  • Total revenue increased by 12% to $19.83 million in 2015, compared to $17.66 million in 2014
  • Gross profit increased by 30% to $4.06 million in 2015, compared to $3.13 million in 2014
    • Overall gross margin increased to 20.5% in 2015, compared to 17.7% in 2014
    • ATSE services gross margin increased to 71.4%, compared to 55.2% in 2014
    • Vehicle services gross margin remained flat at 12.1% in 2015
  • Operating expenses decreased by 17% to $3.71 million in 2015, compared to $4.46 million in 2014
  • Income from operations was $346,016 in 2015, compared to a loss of $1.33 million in 2014, an improvement of $1.68 million
  • Net loss decreased by 75% to $371,171, or $0.01 per fully diluted share in 2015, compared to a net loss of $1.50 million, or $0.03 per fully diluted share in 2014

OPERATIONAL HIGHLIGHTS FOR 2015

  • Completed $715,000 convertible note financing to support international ATSE expansion efforts
  • Signed multi-year contract extensions for existing ATSE clients
  • Implemented first international ATSE program in Saltillo, Mexico resulting in dramatic traffic safety improvements; 39,207 collected citations from 16 live cameras
  • Completed major enhancements to industry leading iP360 citation management software
  • Introduced "green" solar powered wireless ATSE speed and red light camera systems, with near 100% capture rates and uptime, and high definition image quality
  • Increased sales of in-vehicle technology products (Panasonic Toughbook; Panasonic Arbitrator HD cameras; e-ticketing solutions)
  • Launched program offering for Panasonic's Arbitrator BWC (body-worn camera) and conducted initial pilot programs
  • Expanded USA ATSE business development efforts in multiple states including New York, Ohio, Tennessee, Georgia, Virginia, and Alabama
  • Expanded Latin America ATSE business development efforts with direct presence in Colombia and Paraguay
  • Qualified to trade on the OTCQX® Best Market with easier access and greater visibility to institutional and retail investors

Management Comments:

"We are very pleased with our 2015 results, showing that Brekford's turnaround efforts over the past two years have set the stage for solid growth in 2016," stated Rod Hillman, President and Chief Operating Officer of Brekford Corp. "Record revenue, driven by growth in both ATSE and vehicle services, combined with improved gross margins and reduced expenses, enabled us to achieve positive operating income for the first time since 2011. In cooperation with our Mexican partner company, we implemented our first international ATSE program in Saltillo, Mexico, and despite some challenges with collection efforts, the program has delivered solid financial results and has become a model for the country in terms of traffic safety improvements. Because of this success, we are in advanced discussions with several major cities not only in Mexico, but also in Colombia and Paraguay, where we have provided extensive live data collection and assessments of speeding and red light violation problems. We hope to begin adding ATSE program contracts at a more regular pace in 2016 now that all infrastructures is in place and various in-country challenges have been addressed. We are also continuing to work with officials from the City of Saltillo to implement more effective collection efforts for past due fines."

"In the U.S. market we recently began operations in Ohio and New York, where we will soon be going live with our red light program in New Rochelle," continued Hillman. "We also learned just this week that Brekford was awarded the contract for photo speed enforcement services in Calvert County, Maryland. Earlier this year we realigned the Company to more efficiently develop new business while seamlessly implementing and supporting newly added programs. As a result, we are targeting several hundred ATSE prospects in various key states such as Maryland, New York, Ohio, Tennessee, Georgia, Virginia, and Alabama."

"While Brekford is focused on ATSE services to provide significant high margin growth, we are also encouraged by the continuing growth of our vehicle services offerings, specifically with respect to rugged technology installations and video evidence capture solutions. In 2015, we announced our entry into the body camera market as a reseller of Panasonic's Arbitrator BWC, along with Microsoft's Azure Government Cloud storage solution. Currently we are in discussion with several longtime Panasonic in-car video customers who are evaluating rollout plans for their body worn camera programs. We have also made inroads with body camera pilot programs in South Carolina and Colorado, and are hoping to expand our offerings nationwide in 2016," concluded Hillman.

C.B. Brechin, Brekford's Chief Executive Officer, added, "With our significant growth initiatives in place, Brekford is now at an inflection point. Each newly added ATSE program moving forward has the potential to contribute significantly to our bottom line. We are optimistic that 2016 will be a breakout year as customers in the U.S. and Latin America begin to benefit from our leading edge technology and advanced ATSE program management. With a successful execution strategy, Brekford is prepared to create long-term value for our shareholders."

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 solutions 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 Markets 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.

   
   
CONSOLIDATED STATEMENTS OF OPERATIONS  
AND COMPREHENSIVE LOSS  
   
    Years Ended December 31,  
    2015     2014  
                 
Net Revenue   $ 19,833,681     $ 17,659,533  
Cost of Revenue     15,773,184       14,527,646  
Gross profit     4,060,497       3,131,887  
                 
Operating expenses:                
  Salaries and related expenses     2,038,644       1,878,671  
  Selling, general and administrative expenses     1,675,837       2,585,302  
Total operating expenses     3,714,481       4,463,973  
Income (Loss) from operations     346,016       (1,332,086 )
Other (expense) income:                
  Interest expense     (676,950 )     (170,561 )
  Change in fair value in derivative liability     14,784       --  
  Loss on extinguishment of debt     (55,021 )     --  
Total other (expense) income     (717,187 )     (170,561 )
Loss before income taxes     (371,171 )     (1,502,647 )
Income tax expense     --       --  
Net loss   $ (371,171 )   $ (1,502,647 )
Other comprehensive loss - foreign currency translation     (1,462 )     --  
Comprehensive loss   $ (372,633 )   $ (1,502,647 )
                 
Loss per share - basic and diluted   $ (0.01 )   $ (0.03 )
Weighted average shares outstanding used in computing per share amounts:                
  Basic     44,690,550       44,499,610  
  Diluted     44,690,550       44,499,610  
                 
   
   
CONSOLIDATED BALANCE SHEETS
 
   
    December 31,
2015
    December 31,
2014
 
ASSETS                
CURRENT ASSETS                
  Cash   $ 580,400     $ 1,112,881  
  Accounts receivable, net of allowance $0 at December 31, 2015 and 2014, respectively     3,781,263       1,706,704  
  Unbilled receivables     304,470       198,725  
  Prepaid expenses     122,914       146,569  
  Inventory     606,471       681,948  
Total current assets     5,395,518       3,846,827  
Property and equipment, net     223,347       284,322  
Other non-current assets     179,208       112,132  
TOTAL ASSETS   $ 5,798,073     $ 4,243,281  
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY                
CURRENT LIABILITIES                
  Accounts payable and accrued expenses   $ 2,979,131     $ 1,842,892  
  Accrued payroll and related expenses     98,000       23,252  
  Line of credit     1,421,800       1,169,558  
  Term loan - current portion     166,667       250,000  
  Deferred revenue     95,233       255,405  
  Customer deposits     36,070       137,826  
  Obligations under capital lease - current portion     --       140,209  
  Obligations under other notes payable - current portion     29,277       28,602  
  Derivative liability     99,036       --  
  Other liabilities     46,979       48,669  
Total current liabilities     4,972,193       3,896,413  
                 
LONG - TERM LIABILITIES                
  Notes payable - stockholders     500,000       500,000  
  Other notes payable - net of current portion     21,660       48,371  
  Deferred rent, net of current portion     44,923       --  
  Convertible promissory notes, net of debt discounts of $386,976 and $0 at December 31, 2015 and 2014, respectively     253,023       --  
  Term notes payable, net of current portion     --       166,667  
Total long-term liabilities     819,606       715,038  
TOTAL LIABILITIES     5,791,799       4,611,451  
                 
STOCKHOLDERS' (DEFICIT) EQUITY                
  Preferred stock, par value $0.0001 per share; 20,000,000 sharesauthorized; none issued and outstanding     --       --  
  Common stock, par value $0.0001 per share; 150,000,000 shares authorized; 45,151,254 and 44,500,569 issued and outstanding, at December 31, 2015 and December 31, 2014, respectively     4,515       4,450  
  Additional paid-in capital     10,951,491       10,204,479  
  Treasury Stock, at cost 10,600 shares at December 31, 2015 and 2014 respectively     (5,890 )     (5,890 )
  Accumulated deficit     (10,942,380 )     (10,571,209 )
  Other comprehensive loss     (1,462 )     --  
    TOTAL STOCKHOLDERS' (DEFICIT) EQUITY     6,274       (368,170 )
    TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY   $ 5,798,073     $ 4,243,281  
                 

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