Brekford Announces Third Quarter 2016 Operating Results

HANOVER, MD / ACCESSWIRE / November 14, 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 third quarter of 2016.

Third Quarter Financial Highlights

Revenue decreased to approximately $3.0 million, compared to $5.8 million in the same period of 2015;
Gross profit margin increased to 22.9%, compared to 15.4% in the same period of 2015;
ATSE services gross margin increased to 72.7%, compared to 64.5% in the same period of 2015;
Vehicle services gross margin increased to 16.4%, compared to 8.5% in the same period of 2015;
Operating expenses decreased to $820,449, compared to $883,213 in the same period of 2015;
Operating income increased to $56,523, compared to $6,350 in the same period of 2015;
Net loss increased to $270,556, compared to a loss of $248,997 in the same period of 2015.

Third Quarter Operational Highlights

Cameras in Calvert County, Maryland completed a warning period and began issuing live citations;
Terminated exclusive distribution agreement with local Mexico partner and initiated discussions for a direct agreement with the city of Saltillo, Mexico;
Furthered discussions with several cities in Mexico that have expressed a desire to implement photo enforcement programs using proprietary U.S. technology;
Won competitive solicitation with major federal agency for 5-year upfitting contract; RFP stipulated up to $7.5 million, non-guaranteed;
Made significant process and operational improvements for vehicle services starting with new leadership in August 2016.

Management Comments

“Operating results for the third quarter of 2016 were mixed, with a decline in revenues that was offset by improved gross margins,” commented Rod Hillman, President and Chief Operating Officer of Brekford Corp. “Although we had a significant revenue decrease as compared to the same quarter in 2015, gross profit was down only 1.4%, mainly due to improved gross margins driven by a higher concentration of e-ticketing and vehicle upfitting purchase orders. We are working toward reducing volatility of results for these products and services by expanding into adjacent markets in Washington D.C., Virginia, and federal government agencies. Just recently, we hired two industry veterans to bolster our business development and shop operations, to grow the sales order pipeline and improve throughput in the coming months.”

“ATSE turnkey photo enforcement services continue to maintain high margins, with increased revenues in some of our existing U.S. contracts, despite lower revenues and continued challenges with our Saltillo, Mexico contract. Due to extended delays with implementation of enforcement procedures and other concerns regarding uncollected fine amounts, we elected to terminate the exclusive distribution agreement with our local representative in Saltillo. The Company has initiated discussions with the City of Saltillo in order to establish a direct contract to support operation of the cameras through the original term of the program, which expires at the end of 2017.”

“Although our third quarter results fell short of internal expectations, we are pleased with the progress of existing ATSE contracts, with two systems installed just recently, and approximately 16 more systems planned for implementation in the coming months. Additionally, we are pursuing a number of new initiatives in the U.S. and Latin America, some of which are now in contract negotiation and others that have indicated vendor selection decisions will be made before year-end. Unfortunately we cannot control the timing of the decision making process, especially with larger cities and agencies,” concluded Hillman.

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.

Contact:

C. B. Brechin, CEO
(443) 557-0200
investors@brekford.com

Brekford Corp.

Condensed Consolidated Statements of Operations and Comprehensive loss (unaudited)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2016

2015

2016

2015

NET REVENUE

3,035,153

5,776,862

10,748,006

14,586,453

COST OF REVENUE

2,158,181

4,887,299

8,201,217

11,711,852

GROSS PROFIT

876,972

889,563

2,546,789

2,874,601

OPERATING EXPENSES

Salaries and related expenses

484,783

485,740

1,489,311

1,482,003

Selling, general and administrative expenses

335,666

397,473

1,122,333

1,264,458

TOTAL OPERATING EXPENSES

820,449

883,213

2,611,644

2,746,461

INCOME (LOSS) FROM OPERATIONS

56,523

6,350

(64,855

)

128,140

OTHER (EXPENSE) INCOME

Interest expense

(207,062

)

(194,061)

(528,039

)

(487,287

)

Change in fair value of derivative liability

10,500

(54,936

)

80,808

(39,228

)

Loss on extinguishment of debt

(130,517

)

–

(291,912

)

–

TOTAL OTHER (EXPENSE) INCOME

(327,079

)

(248,997

)

(739,143

)

(526,515

)

NET LOSS

(270,556

)

(242,647

)

(803,998

)

(398,375

)

OTHER COMPREHENSIVE LOSS – foreign currency translation

(499

)

(4,383

)

(499

)

(4,383

)

COMPREHENSIVE LOSS

(271,055

)

(247,030

)

(804,497

)

(402,758

)

LOSS PER SHARE – BASIC AND DILUTED

(0.01

)

(0.01

)

(0.02

)

(0.01

)

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING – BASIC

48,360,299

44,632,569

46,710,189

44,630,151

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING – DILUTED

48,360,299

44,632,569

46,710,189

44,630,151

Brekford Corp.

Condensed Consolidated Balance Sheets (unaudited)

September 30,

2016

December 31,

2015

ASSETS

CURRENT ASSETS

Cash

$
593,806

$
580,400

Accounts receivable, net of allowance of $0 at September 30, 2016 and December 31, 2015

1,677,923

3,781,263

Unbilled receivables

762,718

304,470

Prepaid expenses

38,133

71,740

Inventory

472,000

606,471

Total current assets

3,544,580

5,344,344

Property and equipment, net

269,104

223,347

Other non-current assets

81,402

179,208

TOTAL ASSETS

$
3,895,086

$
5,746,899

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

CURRENT LIABILITIES

Accounts payable and accrued expenses

$
1,741,872

$
2,979,131

Accrued payroll and related expenses

74,773

98,000

Line of credit, net of fees

836,813

1,402,380

Term loan – current portion, net of fees

166,667

Deferred revenue

72,080

95,233

Customer deposits

31,863

36,070

Obligations under other notes payable – current portion

24,392

29,277

Derivative liability

18,228

99,036

Other liabilities

46,179

46,979

Total current liabilities

3,012,867

4,952,773

LONG – TERM LIABILITIES

Notes payable – stockholders

500,000

Other notes payable – net of current portion, net of fees

4,409

21,660

Deferred rent, net of current portion

43,937

44,923

Term notes payable, net of current portion

333,358

Convertible promissory notes, net of debt discounts and issuance costs of $90,207 and $418,731 at September 30, 2016 and December 31, 2015 , respectively

249,794

221,269

Total long-term liabilities

1,131,498

787,852

TOTAL LIABILITIES

4,144,365

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; 49,177,264 and 45,151,254 issued and outstanding, at September 30, 2016 and December 31, 2015, respectively

4,918

4,515

Additional paid-in capital

11,498,570

10,951,491

Treasury Stock, at cost 10,600 shares at September 30, 2016 and December 31, 2015 respectively

(5,890
)

Accumulated deficit

(11,746,378
)

(10,942,380
)

Other comprehensive loss

(499
)

(1,462
)

TOTAL STOCKHOLDERS’ (DEFICIT) EQUITY

(249,279
)

6,274

TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

$
3,895,086

$
5,746,899

SOURCE: Brekford Corp.

ReleaseID: 448954

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