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
166,667 166,667
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
500,000 500,000
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 ) (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.