11/19/2013Speed Camera Firm Brekford Announces Financial Trouble
Speed camera firm reports a 587 percent drop in profit for 2013.
Brekford Corporation, a Maryland-based operator of red light camera and speed camera programs, is hemorrhaging cash. In a quarterly report filed on Monday with the Securities and Exchange Commission, the company announced that it has lost $968,960 so far this year, off 587 percent from its 2012 result.
"The reduction in net income was due to increased expenses related to salaries, benefit programs and associated support costs for the expansion of [automated traffic enforcement] without corresponding increases in revenue as certain program implementations were delayed," the company explained in its SEC filing. "Increased depreciation expense associated with newly installed technology infrastructure and camera equipment also contributed to the loss."
By this, the company refers to its inability to restart Baltimore's speed camera program after nearly eleven months of trying. Brekford took over after Xerox was fired for being caught issuing bogus tickets to that 5.2 percent of ticket recipients because of bogus radar readings (view report). The small firm has failed to handle the massive program consisting of 78 speed cameras and 81 red light cameras that are expected to issue at least 500,000 tickets per year.
Brekford's other Maryland contracts have also been troubled by the firm's failure to abide by the state law requiring regular, independent calibration of the speed cameras. The problem surfaced in Hagerstown in May, reappearing in Greenbelt in July. Another refund is likely to come soon in Salisbury.
The market has taken notice. In February, Brekford's stock traded over the counter at 76 cents per share. It closed Friday at 33 cents, but release of the latest financial details sent the stock value plunging 46 percent, closing under 18 cents on Monday. The company has run out of cash, owing $6.8 million to creditors with only $6.6 million in assets.
"In the event that the company's cash reserves, cash flow from operations and funds available under its credit facilities are not sufficient to fund the company's future operations, it may need to obtain additional capital," Brekford's SEC filing warned. "No assurance can be given that the company will be able to obtain additional capital in the future or that such capital will be available to the company on acceptable terms."
In addition to automated ticketing machines, Brekford offers police agencies and municipalities other technologies and services used to boost local coffers. These include electronic ticketing machines and connectivity for police cars.