SOURCE: Brekford Corp.

Brekford Corp.

May 16, 2016 10:50 ET

Brekford Announces First Quarter Operating Results

HANOVER, MD--(Marketwired - May 16, 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 first quarter of 2016.

First Quarter Financial Highlights

  • Revenue declined to approximately $3.1 million, compared to $5.1 million in the same period of 2015;
  • Gross profit margin increased to 19.9%, compared to 18.0% in the same period of 2015;
    • ATSE services gross margin increased to 70.0%, compared to 68.0% in the same period of 2015;
    • Vehicle services gross margin decreased to 7.4%, compared to 10.6% in the same period of 2015;
  • Operating expenses decreased to $891,201, compared to $1.0 million in the same period of 2015;
  • Net loss increased to $554,285, compared to $127,108 in the same period of 2015.

First Quarter Operational Highlights

  • Initiated ATSE operations in Brice, Ohio and New Rochelle, New York;
  • Deployed next generation solar powered portable red light camera system in New Rochelle, New York;
  • Awarded contract from Calvert County, Maryland to provide turnkey automated speed enforcement services;
  • Submitted proposals to provide ATSE services in Washington D.C., Bogota Colombia, Asuncion Paraguay, San Pedro Mexico and Monterrey Mexico;
  • Launched first Panasonic Arbitrator® BWC (body-worn camera) program in the state of Maryland (St. Mary's County, Maryland);
  • Initiated body camera pilot project in Charleston, South Carolina.

Management Comments

"Operating results for the first quarter of 2016 were below expectations, following the excellent progress on our turnaround plan in 2015," commented Rod Hillman, President and Chief Operating Officer of Brekford Corp. "Lower sales of rugged IT and electronic ticketing products, coupled with couple lower gross margins in our overall vehicle services portfolio, contributed to the reported net loss. Some key purchase orders were not completed due to timing of product supply, and we experienced delays in executing our plan for new customer acquisition designed to offset the cyclical nature of existing customer repeat orders. Our vehicle services sales order pipeline remains strong with a backlog exceeding $2.5 million, despite the reduced first quarter revenues. We expect renewed growth in vehicle services as our expanded market strategy targets new clients in Washington D.C., Virginia, Delaware, and federal government agencies."

"Brekford has continued to make significant progress on our overall execution strategy with respect to ATSE services, body cameras, technology development, and expansion of our vehicle services sales order pipeline. We launched ATSE operations in Brice, Ohio and New Rochelle, New York, and were recently awarded a speed camera contract in Calvert County, Maryland that will begin operations in the second quarter. We are also awaiting results on a number of submitted ATSE proposals in both the U.S. and Latin America, including the capital cities of Colombia and Paraguay, two large cities in Mexico, and Washington, D.C. The sales cycle for ATSE programs can be very long; however, we are confident that our contracted recurring revenue model will lead to sustained growth for the Company. We are driving these efforts with a strong focus on proprietary technology development including a solar powered portable red light camera, a compact mobile speed camera, licensed versions of our industry leading iP360 citation management system and the industry's first commercially viable distracted driving camera," concluded Hillman.

C.B. Brechin, Brekford's Chief Executive Officer, added, "Our first quarter results are not indicative of the solid strides Brekford has made in laying the framework for growth. As a leading public safety and security solutions provider, I am confident that broadening our geographic footprint, expanding our product and service offerings, and focusing on business development efforts will lead to long-term value for our customers and 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.

   
   
Brekford Corp.  
Condensed Consolidated Statements of Operations (Unaudited)  
   
    Three Months Ended March 31,  
    2016     2015  
                 
NET REVENUE   $ 3,081,126     $ 5,146,179  
                 
COST OF REVENUE     2,468,870       4,220,587  
                 
GROSS PROFIT     612,256       925,592  
                 
OPERATING EXPENSES                
  Salaries and related expenses     479,860       540,221  
  Selling, general and administrative expenses     411,341       461,385  
                 
TOTAL OPERATING EXPENSES     891,201       1,001,606  
                 
LOSS FROM OPERATIONS     (278,945 )     (76,014 )
                 
OTHER (EXPENSE) INCOME                
  Interest expense     (152,028 )     (97,882 )
  Change in fair value in derivative liability     (840 )     46,788  
  Loss on extinguishment of debt     (122,472 )     --  
TOTAL OTHER (EXPENSE) INCOME     (275,340 )     (51,094 )
                 
NET LOSS   $ (554,285 )   $ (127,108 )
OTHER COMPREHENSIVE LOSS - foreign currency translation     (1,473 )     --  
COMPREHENSIVE LOSS     (555,758 )     (127,108 )
                 
LOSS PER SHARE - BASIC   $ (0.01 )   $ (0.00 )
LOSS PER SHARE - DILUTED   $ (0.01 )   $ (0.00 )
WEIGHTED AVERAGE NUMBER OF SHARESOUTSTANDING - BASIC     45,297,869       44,625,236  
WEIGHTED AVERAGE NUMBER OF SHARESOUTSTANDING - DILUTED     45,297,869       44,625,236  
                 
                 
Brekford Corp.  
Condensed Consolidated Balance Sheets (Unaudited)  
   
    March 31,
2016
    December 31,
2015
 
ASSETS                
CURRENT ASSETS                
  Cash   $ 544,514     $ 580,400  
  Accounts receivable, net of allowance $0 at March 31, 2016 and December 31, 2015, respectively     2,548,823       3,781,263  
  Unbilled receivables     385,721       304,470  
  Prepaid expenses     53,258       71,740  
  Inventory     554,246       606,471  
Total current assets     4,086,562       5,344,344  
Property and equipment, net     216,066       223,347  
Other non-current assets     103,828       179,208  
TOTAL ASSETS   $ 4,406,456     $ 5,746,899  
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                
CURRENT LIABILITIES                
  Accounts payable and accrued expenses   $ 1,698,999     $ 2,979,131  
  Accrued payroll and related expenses     78,924       98,000  
  Line of credit, net of fees     1,762,160       1,402,380  
  Term loan - current portion, net of fees     104,167       166,667  
  Deferred revenue     127,208       95,233  
  Customer deposits     10,071       36,070  
  Obligations under other notes payable - current portion     29,477       29,277  
  Derivative liability     99,876       99,036  
  Other liabilities     46,979       46,979  
Total current liabilities     3,957,861       4,952,773  
                 
LONG - TERM LIABILITIES                
  Notes payable - stockholders     500,000       500,000  
  Other notes payable - net of current portion, net of fees     14,187       21,660  
  Deferred rent, net of current portion     44,874       44,923  
  Convertible promissory notes, net of debt discounts and issuance costs of $284,484 and $418,730 at March 31, 2016 and December 31, 2015, respectively     255,517       221,269  
Total long-term liabilities     814,578       787,852  
TOTAL LIABILITIES     4,772,439       5,740,625  
                 
STOCKHOLDERS' (DEFICIT) EQUITY                
  Preferred stock, par value $0.0001 per share; 20,000,000 shares authorized; none issued and outstanding     --       --  
  Common stock, par value $0.0001 per share; 150,000,000 shares authorized; 46,138,064 and 45,151,254 issued and outstanding, at March 31, 2016 and December 31, 2015, respectively     4,614       4,515  
  Additional paid-in capital     11,133,431       10,951,491  
  Treasury Stock, at cost 10,600 shares at March 31, 2016 and December 31, 2015 respectively     (5,890 )     (5,890 )
  Accumulated deficit     (11,496,665 )     (10,942,380 )
  Other comprehensive loss     (1,473 )     (1,462 )
    TOTAL STOCKHOLDERS' (DEFICIT) EQUITY     (365,983 )     6,274  
    TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY   $ 4,406,456     $ 5,746,899  
                 

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