Highest Quarterly ATSE Revenue Since 2013; Merger with KeyStone Anticipated to Close in August
HANOVER, MD / ACCESSWIRE / August 15, 2017 / Brekford Traffic Safety, Inc. (OTCQX: BFDI), a leading public safety technology service provider of fully integrated automated traffic safety enforcement ("ATSE") solutions, including speed and red-light enforcement cameras, and a comprehensive citation management software suite, yesterday announced its operating results for the second quarter of 2017.
Highlights for Quarter Ended June 30, 2017
- Revenue increased 37.6% to $835,822 in the quarter ended June 30, 2017, compared with $607,252 for the quarter ended June 30, 2016. The increase was attributable to the addition of new contracts and the expansion of existing programs, of which most have been renewed for multiple years.
- Gross profit margin improved to 65% in the quarter ended June 30, 2017, compared with 60% in the quarter ended June 30, 2016. The margin increase was primarily due to economies of scale and reduced proportional costs related to printing, mailing, wireless communications, and maintenance parts.
- Net loss from continuing operations decreased 43.5% to $147,394 in the quarter ended June 30, 2017, compared with a loss of $261,921 for the quarter ended June 30, 2016. The improvement was primarily driven by the significant revenue and gross margin increases combined with flat operating expenses and lower other expenses.
- Working capital surplus increased to approximately $1.9 million at June 30, 2017, compared with a working capital surplus of approximately $0.55 million at June 30, 2016. The increase was attributable to cash proceeds from the sale of our vehicle services business in the first quarter of 2017. In addition to cash reserves, we have a $2 million note receivable, with quarterly principal and interest payments starting September 30, 2017. There are no long-term debt obligations as of June 30, 2017.
- Significant progress was made toward closing of the Company's previously announced merger with Keystone Solutions. The Securities and Exchange Commission ("SEC") declared our amended Form S-4 Registration Statement effective August 3, 2017, and we anticipate final closing of the merger to occur on or about August 25, 2017. At the closing, Brekford Traffic Safety and Keystone Solutions will become wholly owned subsidiaries of a new company, Novume Solutions, Inc.
- With exclusive focus on our ATSE business, we've established a targeted growth plan in several U.S. states as well as Canada and Latin America. New programs were launched in Chesapeake Beach, Maryland and Wetaskiwin, Alberta Canada, and the Company has signed multi-year contract extensions with most of its existing customers. We expect final decisions in the coming months by municipalities on several of our open proposals in the U.S., Canada, and several Latin America countries.
- Global Public Safety, who acquired 80% of our vehicle services business in the first quarter of 2017, continues to expand, with increased sales efforts in the mid-Atlantic region and the acquisition of a large upfitting business in the Southeast.
Management Comments
"We are pleased with the second quarter operating results and the significant progress Brekford has made since the sale of our vehicle services business and the announced merger with Keystone Solutions," commented Rod Hillman, President and COO of Brekford. "We achieved our highest quarterly ATSE revenue since 2013 and our gross margin remains steady in the 60-70% range. Most of our existing customers have signed multi-year contract extensions, validating the benefits of our technology and services. With new programs launching in the second quarter and multiple large-scale prospects in the pipeline, Brekford's management team is confident in future growth plans for our ATSE business. We are also currently developing several innovative products for release in early 2018 that we believe have the potential to disrupt the industry by providing needed law enforcement and public safety solutions that currently do not exist."
Hillman added, "As we focus on our core business, we are also very excited about the long-awaited merger with Keystone Solutions, which we expect to close by the end of August. Brekford's core business will continue unimpeded after the merger; however, the added synergy provided by the Keystone management team should enhance our ability to penetrate markets throughout the United States. And finally, our minority investment in Global Public Safety, along with cooperative efforts in engaging new prospects, allows Brekford to remain closely aligned with our legacy public safety roots."
About Brekford Traffic Safety, Inc.
Brekford Traffic Safety, Inc. provides state-of-the art automated traffic enforcement solutions to municipalities, and other public safety agencies in the United States, Canada, and Latin America. Its services include automated speed, red light, and distracted driving camera enforcement programs. Brekford's combination of automated traffic enforcement services with a longstanding background and foundation in public safety solutions offers a unique 360-degree solution for law enforcement agencies and municipalities.
The Company invests heavily in research and development to deliver advanced traffic safety enforcement solutions and reliable service to its customers. Brekford's range of technologies includes its P2S Speed Enforcement System, Safety Zone SpeedAlert Radar Signs, BRAVA Red Light Enforcement System, and back office iP360 Violation Processing and Evidence Management Suite. We develop each solution to yield better results through innovative designs and manufacturing in the U.S., high quality engineering and components, flexible and easy-to-use tools, and proven chain of custody.
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.
Company contact:
Rod Hillman, President and COO
(410) 762-0800
[email protected]
Condensed Consolidated Balance Sheets (Unaudited)
|
June 30,
2017
|
December 31,
2016
|
|||||||
|
ASSETS
|
||||||||
|
CURRENT ASSETS
|
||||||||
|
Cash
|
$
|
1,853,215
|
$
|
591,618
|
||||
|
Accounts receivable, net of allowance $0 at June 30, 2017 and December 31, 2016, respectively
|
225,554
|
115,106
|
||||||
|
Unbilled receivables
|
373,799
|
314,262
|
||||||
|
Prepaid expenses
|
28,317
|
53,211
|
||||||
|
Note receivable - current, including accrued interest of $20,055 at June 30, 2017
|
320,055
|
-
|
||||||
|
Inventory
|
215,254
|
221,186
|
||||||
|
Current assets - discontinued operations
|
-
|
1,069,511
|
||||||
|
Total current assets
|
3,016,194
|
2,364,894
|
||||||
|
Property and equipment, net
|
292,877
|
208,310
|
||||||
|
Other non-current assets
|
-
|
9,877
|
||||||
|
Investment in GPS
|
262,140
|
-
|
||||||
|
Note receivable - non-current
|
1,700,000
|
-
|
||||||
|
Non-current assets - discontinued operations
|
-
|
40,387
|
||||||
|
TOTAL ASSETS
|
$
|
5,271,211
|
$
|
2,623,468
|
||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
||||||||
|
CURRENT LIABILITIES
|
||||||||
|
Accounts payable and accrued expenses
|
$
|
963,412
|
$
|
721,880
|
||||
|
Accrued payroll and related expenses
|
54,714
|
17,062
|
||||||
|
Obligations under other notes payable - current portion
|
-
|
20,150
|
||||||
|
Derivative liability
|
18,228
|
24,360
|
||||||
|
Other liabilities
|
70,000
|
55,408
|
||||||
|
Current liabilities - discontinued operations
|
-
|
971,466
|
||||||
|
Total current liabilities
|
1,106,354
|
1,810,326
|
||||||
|
LONG - TERM LIABILITIES
|
||||||||
|
Deferred rent, net of current portion
|
-
|
6,520
|
||||||
|
Convertible promissory notes, net of debt discounts of $40,853 at December 31, 2016
|
-
|
299,147
|
||||||
|
Long term liabilities - discontinued operations
|
-
|
989,520
|
||||||
|
Total long-term liabilities
|
-
|
1,295,187
|
||||||
|
TOTAL LIABILITIES
|
1,106,354
|
3,105,513
|
||||||
|
STOCKHOLDERS' EQUITY (DEFICIT)
|
||||||||
|
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; 49,311,264 issued and outstanding, at June 30, 2017 and 2016
|
4,931
|
4,931
|
||||||
|
Additional paid-in capital
|
11,531,575
|
11,515,472
|
||||||
|
Treasury stock, at cost 10,600 shares at June 30, 2017 and December 31, 2016
|
(5,890
|
)
|
(5,890
|
)
|
||||
|
Accumulated deficit
|
(7,365,984
|
)
|
(11,996,783
|
)
|
||||
|
Other comprehensive income
|
225
|
225
|
||||||
|
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)
|
4,164,857
|
(482,045
|
)
|
|||||
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
$
|
5,271,211
|
$
|
2,623,468
|
||||
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)(Unaudited)
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
|
2017
|
2016
|
2017
|
2016
|
|||||||||||||
|
|
|
|||||||||||||||
|
NET REVENUE
|
$
|
835,822
|
$
|
607,252
|
$
|
1,583,990
|
$
|
1,220,197
|
||||||||
|
COST OF REVENUE
|
292,716
|
242,763
|
587,902
|
426,893
|
||||||||||||
|
GROSS PROFIT
|
543,106
|
364,489
|
996,088
|
793,304
|
||||||||||||
|
OPERATING EXPENSES
|
||||||||||||||||
|
Salaries and related expenses
|
403,222
|
430,203
|
830,185
|
832,383
|
||||||||||||
|
Selling, general and administrative expenses
|
302,043
|
275,608
|
654,516
|
577,254
|
||||||||||||
|
TOTAL OPERATING EXPENSES
|
705,265
|
705,811
|
1,484,701
|
1,409,637
|
||||||||||||
|
LOSS FROM OPERATIONS
|
(162,159
|
)
|
(341,322
|
)
|
(488,613
|
)
|
(616,333
|
)
|
||||||||
|
OTHER (EXPENSE) INCOME:
|
||||||||||||||||
|
Interest income
|
14,981
|
-
|
20,077
|
-
|
||||||||||||
|
Interest expense
|
-
|
(105,524
|
)
|
(248,351
|
)
|
(213,110
|
)
|
|||||||||
|
Change in fair value of derivative liability
|
(756
|
)
|
71,148
|
6,132
|
70,308
|
|||||||||||
|
Loss on extinguishment of debt
|
-
|
(38,923
|
)
|
-
|
(161,395
|
)
|
||||||||||
|
TOTAL OTHER INCOME (EXPENSE)
|
14,225
|
(73,299
|
)
|
(222,142
|
)
|
(304,197
|
)
|
|||||||||
|
Loss before income taxes
|
(147,934
|
)
|
(414,621
|
)
|
(710,755
|
)
|
(920,530
|
)
|
||||||||
|
Income tax benefit
|
-
|
152,700
|
2,068,132
|
152,700
|
||||||||||||
|
Net (loss) income from continuing operations
|
(147,934
|
)
|
(261,921
|
)
|
1,357,377
|
(767,830
|
)
|
|||||||||
|
Net income from discontinued operations
|
-
|
282,762
|
3,273,422
|
234,387
|
||||||||||||
|
NET (LOSS) INCOME
|
(147,934
|
)
|
20,841
|
4,630,799
|
(533,443
|
)
|
||||||||||
|
OTHER COMPREHENSIVE LOSS - foreign currency translation
|
-
|
(1,437
|
)
|
-
|
(1,437
|
)
|
||||||||||
|
Comprehensive (loss) income
|
$
|
(147,934
|
)
|
$
|
19,404
|
$
|
4,630,799
|
$
|
(534,880
|
)
|
||||||
|
Net income (loss) per share from continuing operations - basic
|
$
|
(0.00
|
)
|
$
|
(0.01
|
)
|
$
|
0.03
|
$
|
(0.02
|
)
|
|||||
|
Net income per share from discontinued operations - basic
|
$
|
-
|
$
|
0.01
|
$
|
0.07
|
$
|
0.01
|
||||||||
|
Net income (loss) per share - basic
|
$
|
(0.00
|
)
|
$
|
0.00
|
$
|
0.10
|
$
|
(0.01
|
)
|
||||||
|
Net income (loss) per share from continuing operations - diluted
|
$
|
(0.00
|
)
|
$
|
(0.01
|
)
|
$
|
0.03
|
$
|
(0.02
|
)
|
|||||
|
Net income per share from discontinued operations - diluted
|
$
|
-
|
$
|
0.01
|
$
|
0.07
|
$
|
0.01
|
||||||||
|
Net income (loss) per share - diluted
|
$
|
(0.00
|
)
|
$
|
0.00
|
$
|
0.10
|
(0.01
|
)
|
|||||||
|
Weighted average shares outstanding used in computing per share amounts:
|
||||||||||||||||
|
Basic
|
49,311,264
|
46,454,266
|
49,311,264
|
45,876,068
|
||||||||||||
|
Diluted
|
49,311,264
|
54,148,048
|
49,311,264
|
53,569,850
|
||||||||||||
SOURCE: Brekford Traffic Safety, Inc.