HANOVER, MD--(Marketwire - Mar 8, 2013) - Brekford Corp. (the "Company") (
The Company generated record annual revenue of $18,295,906 for 2012, an increase of 9.5% over 2011 annual revenue. A net loss for the year of $1,266,671 was primarily due to a non-cash write-down of bad debts for outstanding citations, coupled with significant infrastructure expenditures in preparation for future Automated Traffic Enforcement programs, including Baltimore, Maryland.
"We consider 2012 a watershed year for Brekford, primarily due to our selection as the official vendor for the Automated Traffic Violation Enforcement System ('ATVES') program for the City of Baltimore, Maryland," stated C. B. Brechin, Chief Executive Officer of Brekford Corp. "This represents the largest combined speed and red light automated camera enforcement program in North America. The Baltimore program will more than triple Brekford's market presence in 2013 with respect to managed traffic enforcement cameras. We believe our success in securing the Baltimore contract has positioned Brekford as a formidable contender for automated traffic enforcement contracts with other large cities, while continuing to gain market share with smaller municipalities that value our commitment to superior customer service. We expect 2013 to be an outstanding year for Brekford, in terms of both revenue and earnings, reflecting contributions from the Baltimore program, additional automated traffic enforcement contracts, anticipated contracts for our newly established financial services offering, and continued growth in our vehicle upfitting product line with federal and state agencies."
"Excluding the non-cash charge, we would have reported a modest loss for the year, reflecting 'ramp-up' costs associated with staffing levels, software development, and technology development in preparation for the Baltimore contract, which will begin to produce significant revenue starting in the second quarter of 2013. Although the contract did not contribute any revenue in 2012, we had to expand staffing levels and infrastructure capabilities in order to be ready to assume our role as vendor for the Baltimore ATVES program. We are confident these expenditures will ensure a smooth transition for the Baltimore program and prepare Brekford to seamlessly add other programs as new contracts are signed."
"With respect to the bad debt expense, management determined that a more conservative approach to the recognition of write-offs would be appropriate in light of the impact of an uncertain economy upon the timing of violator payments of tickets issued by law enforcement agencies," continued Brechin. "Outstanding citations must be paid before motorists are allowed to renew their vehicle registrations every two year. Collection of previously charged off accounts driven by such vehicle registration renewals and efforts by our financial services personnel will be reported as recoveries."
"While the Baltimore ATVES program will greatly expand the scope of our automated traffic enforcement business in 2013, we remain focused on expanding market share now that our infrastructure and industry-leading camera technology are gaining recognition throughout the industry," said Scott Rutherford, Brekford's President and R&D innovator. "We invested a significant amount of time and resources in developing leading-edge intellectual property solutions for our clients, resulting in what we believe to be the best automated traffic enforcement camera technology on the market, complemented by an extremely robust and expandable suite of system management software."
"Supplemental to our efforts with automated traffic enforcement, we are also pursuing contracts to provide financial services involving the collection of past-due receivables for municipalities. Industry analysts estimate that municipal governments throughout the U.S. are saddled with over $40 billion in delinquent receivables, representing uncollected automated traffic fines, city utility bills, parking violations, etc., and we believe Brekford can play a key role in 'monetizing' these past-due receivables for budget-strapped local governments. This would generate additional revenue for our Company, while expanding its role as a strategic partner with the municipalities that are our customers. In addition to the exciting developments associated with our automated traffic enforcement and financial services business product lines, we continued to expand our customer base for the upfitting of law enforcement, utility, and other vehicle fleets during 2012 and expect this legacy product line to continue its growth and profitability in the coming years," concluded Brechin.
Financial highlights for year ended December 31, 2012:
Net revenue increased 9.5% to $18,295,906 for the twelve months ended December 31, 2012, compared with $16,716,560 in the previous year. The increase in total net revenue was primarily due to continued growth in automated traffic enforcement revenue and additional sales of rugged IT products.
As of December 31, 2012, the Company's total assets approximated $9.3 million, compared with approximately $8.1 million on December 31, 2011. Cash on hand approximated $1.4 million at the end of 2012, versus approximately $1.8 million at the end of 2011. The Company's current ratio stood at 1.2-to-1.0 ($6.6 million in current assets vs. $5.4 million in current liabilities). There were no borrowings outstanding against the Company's bank line of credit as of December 31, 2012.
Gross profit declined to $3,589,808 (19.6% of net revenue) in the year ended December 31, 2012, from $4,336,953 (25.9% of net revenue) in 2011. The narrowing in gross profit margin was primarily due to changes in revenue mix and lower profit margins from electronic ticketing systems and rugged IT products.
Total operating expenses increased from $2,998,566 in 2011 to $4,708,291 in 2012. Salaries and related expenses increased 20.7% to $1,554,377, versus $1,287,776 in 2011 due to increased staffing to support growth in the Company's automated traffic enforcement products, including a ramp-up in staffing in preparation for the Baltimore ATVES contract; additional costs that were incurred to support growth in the sales of upfitting products and services; and some increases in the cost of Company benefit plans. Selling, general and administrative expenses increased 84.4%, primarily due to the above-mentioned non-cash increase in bad debt expense, along with higher equipment depreciation, consulting expenses, and accounting/auditing fees. SG&A expenses also increased in the fourth quarter of 2012 due to the Company's pursuit of, and preparation for, the Baltimore ATVES contract, along with investments in Brekford's intellectual property hardware and software.
The Company recorded a net loss of $1,266,671, or $0.03 per share, in 2012, versus net income of $1,211,328, or $0.03 per diluted share, in the year ended December 31, 2011. Management primarily attributes the net loss in 2012 to a non-cash write-off of bad debts, lower gross profit margins, and expenses related to preparing for the Baltimore ATVES contract.
The Company has available an aggregate $3.5 million credit facility with PNC Bank, as of December 31, 2012.
About Brekford Corp.
Brekford Corp. has provided state-of-the-art mobile technology and traffic safety solutions to municipalities, the U.S. military, various federal entities and other security and public safety agencies throughout the United States over the last ten years. Its services include automated traffic safety solutions and an end-to-end suite of mobile computer, video technology and equipment upfitting services. Brekford's combination of upfitting services, cutting-edge technology, and automated traffic enforcement services offers a unique 360-degree solution for any organization, including homeland security and law enforcement agencies. Additional information about Brekford may be found online at www.brekford.com.
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. Actual results may differ materially from the results suggested by these forward-looking statements, for a number of reasons, including, but not limited to, market conditions, the cost and success of development activities and the ability to successfully manage growth. 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. The Company expressly disclaims any obligation to update any forward-looking statements.
(Financial Highlights Follow)
|Condensed Statement of Operations|
|($000, except per-share figures)|
|Twelve Months Ended|
|Income (Loss) from Operations||(1,118||)||1,338|
|Total Other Expense||(148||)||(127||)|
|Net Income (Loss)||$||(1,267||)||$||1,211|
|Earnings Per Share -|
|Basic and Diluted||$||(0.03||)||$||0.03|
|Weighted Avg. Number of|
|Shs. Outstanding - Basic||44,129||40,799|
|Weighted Avg. Number of|
|Shs. Outstanding - Diluted||44,129||43,913|
|BALANCE SHEET ($000)|
|Cash and Cash Equivalents||$||1,415||$||1,833|