Revenue Increases 10%; Gross Profit Increases 57%; Mexico Photo Enforcement Begins Official Operations

HANOVER, MD / ACCESSWIRE / May 14, 2015 / Brekford Corp. (the "Company") (OTC: BFDI), a leading public safety technology service provider of fully integrated automated traffic safety enforcement ("ATSE") 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 first quarter of 2015.

First Quarter Highlights

-  Revenue increased 10% year-over-year reaching $5.15 million, compared to $4.66 million in the same period of 2014;
-  Gross profit increased 57% year-over-year reaching $926 thousand, compared to $588 thousand in the same period of 2014;
-  Gross margin percentage increased to 18.0%, compared to 12.6% in the same period of 2014;
-  Operating expenses decreased 11% year-over-year to $1.00 million, compared to $1.12 million in the same period of 2014;
-  Net loss decreased 78% year-over-year to $127 thousand, compared to $572 thousand in the same period of 2014;
-  Sales of rugged IT and electronic ticketing products remained strong with several large installations as clients continue to upgrade their in-car technology;
-  Body camera demand increased dramatically and the Company has had discussions with a number of clients who are awaiting the release of Panasonic's next generation Arbitrator(R) BWC (body-worn camera) system;
-  Certain existing ATSE contracts in Maryland previously converted to a fixed fee basis and extended have resulted in both higher revenues and gross margins;
-  The Company entered a $715,000 note and warrant purchase agreement with the primary use of proceeds to fund equipment purchases for our international expansion;
-  Our first international ATSE program in Mexico launched in April, with the deployment of our next generation self-sustaining solar speed cameras;
-  Brekford was announced as the selected vendor to provide turnkey red light photo enforcement services in New Rochelle, New York, with implementation expected by the third quarter of this year.

Management Comments

"We are excited about Brekford's prospects for the remainder of 2015, as the first quarter operating results have shown significant improvement over last year," commented Rod Hillman, President and Chief Operating Officer of Brekford Corp. "With increases in revenue, gross profit, and gross profit margin we believe the Company is beginning to demonstrate the vast potential of our technology and service offerings for public safety agencies. Demand for our emergency and law enforcement vehicle services offerings, including rugged IT products, electronic ticketing, and in-car video systems, is on the rise as we expand sales efforts beyond our traditional mid-Atlantic borders. With the dramatic increase in nationwide demand for body cameras, Brekford is uniquely positioned to deliver, unlike other competitors who are technology manufacturers. Our 18 year history as a public safety solutions provider enables us to provide customized total program solutions encompassing not only the cameras, but also the software, storage, evidence management, and administrative oversight in support of municipalities and law enforcement agencies. As a prime reseller of Panasonic technology, we will be offering what we believe to be the best and most trusted solution in the industry when the new Arbitrator(R) BWC (body-worn camera) is introduced publicly next week."

"We are also pleased to report that our ATSE and parking enforcement solutions are gaining traction both in the United States and Mexico. Our first international program in Saltillo, Mexico began operations in April. Brekford has teamed with a Mexican company, Grupo Canviso, to offer a leading edge photo enforcement program that will include up to 150 speed cameras, 60 red light cameras, cell phone usage cameras, parking citations, and automated license plate readers for the enforcement of unpaid fines. This program provides a complete turnkey solution unlike any other in the country. Currently there are 10 speed cameras in live operation with an additional 20 slated for installation this June. In just one month we have seen dramatic decreases in speeding and a 40% reduction in Saltillo's accident rate, proving the public safety benefits of ATSE. In addition to Saltillo, we have provided test demonstrations and proposals to several other cities with hopes to add more contracts in the near future."

"In the U.S. Brekford was recently selected as the vendor to provide a turnkey red light photo enforcement system for the City of New Rochelle, New York. Once contract negotiations are completed, we anticipate launching the program in the third quarter of this year. Other notable developments include ATSE and parking enforcement proposal submissions for a number of major U.S. municipalities, and we intend to convey information about those potential projects as vendors are selected," concluded Hillman.

C.B. Brechin, Brekford's Chief Executive Officer, added, "Brekford's focus on public safety and security solutions continues as we strive to diversify our portfolio of services within the industry. I am very pleased with our overall strategic direction, and I am particularly excited about our prospects for national and international expansion of body cameras, video evidence systems, and ATSE solutions. We believe that we are well positioned in 2015 for sustainable revenue growth, increased margins, and a return to profitability."

First Quarter Financial Results

Revenues for the three months ended March 31, 2015 were $5,146,179 compared to $4,662,287 for the three months ended March 31, 2014, an increase of $483,892 or 10.38%, primarily due to increased sales of professional upfitting services for our Vehicle Services product line, electronic ticketing and ATSE services.

Cost of revenues for the three months ended March 31, 2015 amounted to $4,220,587 as compared to $4,074,128 for the three months ended March 31, 2014, an increase of $146,459 or 3.59%. The change was primarily due to increased cost for electronic ticketing and vehicle upfitting services.

Gross profit for the three months ended March 31, 2015 amounted to $925,592 as compared to $588,159 for the three months ended March 31, 2014, an increase of $337,431 or 57.37%. The increase was primarily due to profit margins from increased sales related to ATSE services. Gross margin percentage for the three months ended March 31, 2015 was 17.99% as compared to 12.62% for the three months ended March 31, 2014. The gross margin increase was primarily attributable to increased revenue and gross profit from ATSE services.

Salaries and related expenses for the three months ended March 31, 2015 amounted to $540,221 as compared to $487,629 for the three months ended March 31, 2014, an increase of $52,592 or 10.79%. The increase was due to staffing for ATSE, engineering, and information technology for certain ATSE programs. The Company has reduced overall labor costs, specifically with respect to direct labor categorized as cost of goods; however, management believes that certain infrastructure costs associated with sales and marketing efforts are a key to renewed growth. As such, the Company intends to continue focusing on these efforts through a coordinated international strategy in regaining sustained profitability.

Selling, general and administrative expenses for the three months ended March 31, 2015 amounted to $461,385 as compared to $636,284, for the three months ended March 31, 2014, a decrease of $174,899 or 27.49%. The decrease was primarily driven by lower depreciation expense as certain obsolete assets had been disposed of in 2014.

Total other expenses increased for the three months ended March 31, 2015 to $51,094 compared to $35,859 for the three months ended March 31, 2014. The increased expenses were due primarily to an increase in financing cost of $48,273 which includes $18,300 of non-cash interest expense related to the debt discount amortization offset by the change in warrant liability of $46,788 related to the issuance of the convertible notes payable in March 2015. 

The Company recorded a net loss of $127,108 for the three months ended March 31, 2015, compared to a net loss of $571,613 for the three months ended March 31, 2014. The decreased net loss when compared to the same period of last year was primarily driven by higher gross profit and lower overall operating expenses.

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.

Contact:

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

Brekford Corp
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SOURCE: Brekford Corp.