Brekford (TTSR) 10-K 27 Mar 14 2013 FY Annual report Financial data

Document_and_Entity_Informatio

Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2013	Feb. 20, 2014	Jun. 28, 2013
Document And Entity Information	'	'	'
Entity Registrant Name	'Brekford Corp.	'	'
Entity Central Index Key	'0001357115	'	'
Document Type	'10-K	'	'
Document Period End Date	31-Dec-13	'	'
Amendment Flag	'false	'	'
Current Fiscal Year End Date	'--12-31	'	'
Is Entity a Well-known Seasoned Issuer?	'No	'	'
Is Entity a Voluntary Filer?	'No	'	'
Is Entity's Reporting Status Current?	'Yes	'	'
Entity Filer Category	'Smaller Reporting Company	'	'
Entity Public Float	'	'	$12,654,104
Entity Common Stock, Shares Outstanding	'	44,500,569	'
Document Fiscal Period Focus	'FY	'	'
Document Fiscal Year Focus	'2013	'	'

Condensed_Consolidated_Balance

Condensed Consolidated Balance Sheet (USD $)	Dec. 31, 2013	Dec. 31, 2012
CURRENT ASSETS	'	'
Cash	$2,052,306	$1,415,252
Accounts receivable, net of allowance $0 and $95,976 at December 31, 2013 and 2012, respectively	1,390,300	4,236,018
Unbilled receivables	125,831	208,051
Prepaid expenses	47,148	61,278
Inventory	1,264,099	672,874
Total current assets	4,879,684	6,593,473
Property and equipment, net	1,593,202	2,477,642
Other non-current assets	187,132	274,998
TOTAL ASSETS	6,660,018	9,346,113
CURRENT LIABILITIES	'	'
Accounts payable and accrued expenses	1,731,706	4,093,356
Accrued payroll and related expenses	104,100	78,303
Line of credit	1,470,533	0
Other liabilities	49,922	50,076
Deferred revenue	677,622	483,784
Customer deposits	27,640	71,199
Obligations under capital leases - current portion	616,115	583,976
Obligations under other notes payable - current portion	32,763	23,454
Deferred rent - current portion	48,632	41,975
Total current liabilities	4,759,033	5,426,123
LONG - TERM LIABILITIES	'	'
Notes payable - stockholders	500,000	500,000
Obligations under capital leases, net of current portion	197,832	813,945
Other notes payable - net of current portion	78,514	49,468
Deferred rent, net of current portion	9,895	79,557
Total long-term liabilities	786,241	1,442,970
TOTAL LIABILITIES	5,545,274	6,869,093
STOCKHOLDERS' EQUITY	'	'
Preferred stock, par value $0.0001 per share; 20,000,000 shares authorized; none issued and outstanding	0	0
Common stock, par value $0.0001 per share; 150,000,000 shares authorized; 44,450,569 issued and outstanding, at December 31, 2013 and 44,248,569 issued and outstanding at December 31, 2012	4,445	4,425
Additional paid-in capital	10,184,751	10,127,461
Treasury Stock, at cost 10,600 shares at December 31, 2013 and 2012 respectively	-5,890	-5,890
Accumulated deficit	-9,068,562	-7,648,976
TOTAL STOCKHOLDERS' EQUITY	1,114,744	2,477,020
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$6,660,018	$9,346,113

Condensed_Consolidated_Balance1

Condensed Consolidated Balance Sheet (Parenthetical) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Assets	'	'
Allowance for Receivables	$0	$95,976
Stockholders Equity	'	'
Preferred Stock par value	$0.00	$0.00
Preferred Stock Authorized	20,000,000	20,000,000
Preferred Stock Issued	0	0
Preferred Stock Outstanding	0	0
Common Stock par value	$0.00	$0.00
Common Stock Authorized	150,000,000	150,000,000
Common Stock Issued	44,450,569	44,248,569
Common Stock Outstanding	44,450,569	44,248,569

Condensed_Consolidated_Stateme

Condensed Consolidated Statements of Operations (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Income Statement [Abstract]	'	'
NET REVENUE	$13,619,306	$18,295,906
COST OF REVENUE	10,183,078	14,706,098
GROSS PROFIT	3,436,228	3,589,808
OPERATING EXPENSES	'	'
Salaries and related expenses	1,956,640	1,554,377
Selling, general and administrative expenses	2,721,650	3,153,914
TOTAL OPERATING EXPENSES	4,678,290	4,708,291
Loss from operations	-1,242,062	-1,118,483
OTHER (EXPENSE) INCOME	'	'
Interest expense	-181,030	-149,337
Interest income	174	4,809
Other income (expense)	3,332	-3,660
TOTAL OTHER INCOME (EXPENSE)	-177,524	-148,188
Loss before income taxes	-1,419,586	-1,266,671
Income tax expense	0	0
NET (LOSS) INCOME	($1,419,586)	($1,266,671)
Loss per share - basic and diluted	($0.03)	($0.03)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC	44,283,364	44,128,602
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED	44,283,364	44,128,602

Consolidated_Statements_of_Cha

Consolidated Statements of Changes in Stockholders' Equity (USD $)	Common Stock	Treasury Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning Balance - Amount at Dec. 31, 2011	$4,385	$0	$10,117,001	($6,382,305)	$3,739,081
Beginning Balance - Shares at Dec. 31, 2011	43,842,265	0	'	'	'
Shares issued upon exercise of warrants - Shares	381,304	'	'	'	'
Shares issued upon exercise of warrants - Amount	38	'	-38	0	0
Restricted shares issues to non-employees - Shares	25,000	'	'	'	'
Restricted shares issues to non-employees - Amount	2	'	10,498	'	10,500
Repurchase of common stock, Shares	'	-10,600	'	'	'
Repurchase of common stock, Amount	'	-5,890	'	'	-5,890
Net loss	'	'	'	-1,266,671	-1,266,671
Ending Balance - Amount at Dec. 31, 2012	4,425	-5,890	10,127,461	-7,648,976	2,477,020
Ending Balance - Shares at Dec. 31, 2012	44,248,569	-10,600	'	'	'
Restricted shares issues to non-employees - Shares	50,000	'	'	'	'
Restricted shares issues to non-employees - Amount	5	'	28,745	'	28,750
Restricted shares issues to employee- Shares	152,000	'	'	'	'
Restricted shares issues to employee - Amount	15	'	28,545	'	28,560
Net loss	'	'	'	-1,419,586	-1,419,586
Ending Balance - Amount at Dec. 31, 2013	$4,445	($5,890)	$10,184,751	($9,068,562)	$1,114,744
Ending Balance - Shares at Dec. 31, 2013	44,450,569	-10,600	'	'	'

Condensed_Consolidated_Stateme1

Condensed Consolidated Statements of Cash Flows (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:	'	'
Net (loss) income	($1,419,586)	($1,266,671)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:	'	'
Depreciation and amortization	1,264,643	765,106
Share-based compensation and payments to consultants	57,310	10,500
Bad debt expense	249,268	1,076,708
Changes in operating assets and liabilities:	'	'
Accounts receivables	2,596,451	-1,639,533
Unbilled Receivables	82,221	-115,083
Prepaid expenses and other non-current assets	101,996	262,099
Inventory	-591,225	-246,375
Accounts payable and accrued expenses	-2,361,650	1,824,984
Accrued payroll and related expenses	25,798	27,658
Other liabilities	-154	-18,861
Customer deposits	-43,559	27,575
Deferred rent	-63,005	-55,494
Deferred revenue	193,838	194,191
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	92,346	846,804
CASH FLOWS FROM INVESTING ACTIVITIES:	'	'
Purchases of property and equipment	-304,792	-1,401,246
NET CASH USED IN INVESTING ACTIVITIES	-304,792	-1,401,246
CASH FLOWS FROM FINANCING ACTIVITIES:	'	'
Borrowing on line of credit	1,470,533	-500,000
Equipment Financing	0	1,000,000
Payments on other notes payable	-37,057	-24,233
Principal payments on lease obligation	-583,976	-333,152
Repurchase of common stock	0	-5,890
NET CASH PROVIDED BY FINANCING ACTIVITIES	849,500	136,725
Net increase (decrease) in cash	637,054	-417,717
CASH - Beginning of year	1,415,252	1,832,969
CASH - End of year	2,052,306	1,415,252
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION	'	'
Cash paid for interest	181,030	149,337
Cash paid for income taxes	154	18,861
Property and equipment acquisitions	380,202	1,727,752
Cash paid for property and equipment acquisitions	-304,792	-1,401,246
Property and equipment acquisitions financed	$75,410	$326,506

1_DESCRIPTION_OF_THE_BUSINESS

1. DESCRIPTION OF THE BUSINESS	12 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
NOTE 1 - DESCRIPTION OF THE BUSINESS	'
	Brekford Corp. (OTCBB; OTCQB: BFDI) headquartered in Hanover, Maryland is a technology services provider of mobile computer and video systems through its vehicle upfitting services to homeland security agencies and federal, state, and municipal law enforcement agencies and offers traffic safety solutions to municipalities, including automated photo speed enforcement and red light camera solutions.  Brekford is an established company which, for more than a decade, has provided services to branches of the U.S. military, various federal entities and numerous security and public safety agencies throughout the United States. Brekford provides these departments and agencies with an end-to-end suite of rugged mobile information technology (IT), vehicle upfitting services, and automated traffic safety photo enforcement technology solutions.
	Brekford is a one-stop shop with its unique 360° approach to vehicle upfitting installations, cutting edge rugged mobile technology, and automated traffic enforcement services for jurisdictions in the United States. We provide bumper-to-bumper vehicle modification and automated traffic enforcement products, road safety camera programs, including red light and speed photo enforcement systems, and back office processing services. The Brekford 360° approach provides our customers with a one-stop engineered solution.  Our commitment to top quality services, along with the core values that our employees strongly uphold: integrity; accountability; respect; excellence; and teamwork; is why we believe Brekford is the premier all-around vehicle upfitter and automated traffic safety technology solutions provider.
	As used in these notes, the terms “Brekford”, “the Company”, “we”, “our”, and “us” refer to Brekford Corp. and, unless the context clearly indicates otherwise, its consolidated subsidiary.

2_SUMMARY_OF_SIGNIFICANT_ACCOU

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	12 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	'
	Principles of Consolidation and Basis of Presentation
	The Company’s consolidated financial statements include the accounts of Brekford Corp. and its wholly-owned subsidiary, Municipal Recovery Agency, LLC. Intercompany transactions and balances are eliminated in consolidation.
	Use of Estimates
	Preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and notes. Actual results could differ from those estimates.
	Concentration of Credit Risk
	The Company maintains cash accounts with major financial institutions. From time to time, amounts deposited may exceed the FDIC insured limits.
	Accounts Receivable
	Accounts receivable are carried at estimated net realizable value. The Company has a policy of reserving for uncollectable accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company calculates the allowance based on a specific analysis of past due balances. Past due status for a particular customer is based on how recently payments have been received from that customer. Historically, the Company’s actual collection experience has not differed significantly from its estimates, due primarily to credit and collections practices and the financial strength of its customers.
	The Company’s practice of reserving for uncollectable citations generated through its photo enforcement solutions is based on its best estimate of the amount of probable losses. The Company calculates allowances based on its experience with collecting citations.  Past due status is based on varying client business rules for the extension of time allotted for payment. For certain contracts, the Company manages both the issuance of citations and the collection of unpaid fines. The Company reviews and evaluates their collections efforts and makes necessary adjustments to the allowance accounts and complete write-offs as deemed necessary.
	Inventory
	Inventory principally consists of hardware and third-party packaged software that is modified to conform to customer specifications and held temporarily until the completion of a contract. Inventory is valued at the lower of cost or market value. The cost is determined by the lower of first-in, first-out (“FIFO”) method, while market value is determined by replacement cost for raw materials and parts and net realizable value for work-in- process.
	Property and Equipment
	Property and equipment is stated at cost. Depreciation of furniture, vehicles, computer equipment and software and phone equipment is calculated using the straight-line method over the estimated useful lives (two to ten years), and leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the lease term (which is three to five years).
	Revenue Recognition
	The Company recognizes revenue relating to its vehicle upfitting solutions when all of the following criteria have been satisfied:  (i) persuasive evidence of an arrangement exists; (ii) delivery or installation has been completed; (iii) the customer accepts and verifies receipt; and (iv) collectability is reasonably assured.  The Company considers delivery to its customers to have occurred at the time at which products are delivered and/or installation work is completed and the customer acknowledges its acceptance of the work.
	The Company provides its customers with a warranty against defects in the installation of its vehicle upfitting solutions for one year from the date of installation.  Warranty claims were $4,029 for the year ended December 31, 2013 and $27,644 for the year ended December 31, 2012.  The Company also performs warranty repair services on behalf of the manufacturers of the equipment it sells. The Company also offers separately-priced extended warranty and product maintenance contracts to its customers on the equipment sold by the Company. Revenues from extended warranty services are apportioned over the period of the extended warranty service contracts and the warranty costs are expensed as incurred. Revenue from extended warranties for the years ended December 31, 2013 and 2012 amounted to $375,756 and $355,150, respectively.
	For automatic traffic enforcement revenue, the Company recognizes the revenue either on the date the Company determines a valid violation has occurred or when the required collection efforts are completed depending on the terms of the respective contract. The Company records revenue related to automated traffic violations for the Company’s share of the violation amount. As of December 31, 2013 revenues of all existing contracts will be recognized as the required collection efforts are complete and the respective municipality is billed.
	Shipping and Handling Costs
	All amounts billed to customers related to shipping and handling are included in products revenues and all costs of shipping and handling are included in cost of sales in the accompanying consolidated statements of operations. The Company incurred shipping and handling costs of $75,134 and $54,652 for the years ended December 31, 2013 and 2012, respectively.
	Advertising Costs
	The Company expenses advertising costs as incurred. These expenses are included in selling, general and administrative expenses in the accompanying statements of operations. Advertising expense amounted to $16,500 and $24,073 for the years ended December 31, 2013 and 2012, respectively.
	Share-Based Compensation
	The Company complies with the provisions of Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 718, Compensation-Stock Compensation, in measuring and disclosing stock based compensation cost.  The measurement objective in ASC Paragraph 718-10-30-6 requires public companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award.  The cost is recognized in expense over the period in which an employee is required to provide service in exchange for the award (the vesting period).  Performance-based awards are expensed ratably from the date that the likelihood of meeting the performance measures is probable through the end of the vesting period.
	Treasury Stock
	The Company accounts for treasury stock using the cost method.  As of December 31, 2013, 10,600 shares of our common stock were held in treasury at an aggregate cost of $5,890.
	Income Taxes
	The Company uses the liability method to account for income taxes. Income tax expense includes income taxes currently payable and deferred taxes arising from temporary differences between financial reporting and income tax bases of assets and liabilities. Deferred income taxes are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense, if any, consists of the taxes payable for the current period. Valuation allowances are established when the realization of deferred tax assets are not considered more likely than not. Accordingly, the value of Company’s net deferred tax assets, net of valuation allowance, was reduced to $0 at December 31, 2013 and 2012.
	The Company files income tax returns with the U.S. Internal Revenue Service and with the revenue services of various states. The Company is no longer subject to U.S. federal, state and local examinations by tax authorities for years prior to 2010. The Company’s policy is to recognize interest related to unrecognized tax benefits as income tax expense. The Company believes that it has appropriate support for the income tax positions it takes and expects to take on its tax returns, and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter.
	Loss per Share
	Basic loss per share is calculated by dividing net loss available to common stockholders by the weighted-average number of common shares outstanding and does not include the effect of any potentially dilutive common stock equivalents.  Diluted loss per share is calculated by dividing net loss by the weighted-average number of shares outstanding, adjusted for the effect of any potentially dilutive common stock equivalents.  There is no dilutive effect on the loss per share during loss periods. See Note 8 for the calculation of basic and diluted loss earnings per share.
	Fair Value of Financial Instruments
	The carrying amounts reported in the balance sheets for cash, accounts receivable, accounts payable and accrued expenses approximate their fair values based on the short-term maturity of these instruments. The carrying amount of the Company’s note obligations approximate fair value, as the terms of these notes are consistent with terms available in the market for instruments with similar risk.
	Segment Reporting
	FASB ASC Topic 280, Segment Reporting, requires that an enterprise report selected information about operating segments in its financial reports issued to its stockholders. Based on its current analysis, management has determined that the Company has only one operating segment, which is Traffic Safety Solutions. The chief operating decision-makers use combined results to make operating and strategic decisions, and, therefore, the Company believes its entire operation is covered under a single segment.
	Newly Issued Accounting Pronouncements
	Management does not believe that any recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on our financial statements.

3_PROPERTY_AND_EQUIPMENT

3. PROPERTY AND EQUIPMENT	12 Months Ended
	Dec. 31, 2013
Property, Plant and Equipment [Abstract]	'
NOTE 3 - PROPERTY AND EQUIPMENT	'
	Property and equipment consists of the following:
		December 31,
		2013			2012
	Leasehold improvements	$	502,092		$	498,025
	Computer equipment and software		509,368			484,624
	Vehicles		333,531			223,868
	Furniture		100,089			100,089
	Cameras		2,808,753			2,573,516
	Phone equipment		48,817			48,817
			4,302,650			3,928,939
	Accumulated depreciation and amortization		(2,709,448	)		(1,451,297	)
		$	1,593,202		$	2,477,642
	Depreciation and amortization of property and equipment for the years ended December 31, 2013 and 2012 was $1,264,643 and $765,106, respectively.

4_LINE_OF_CREDIT_AND_OTHER_NOT

4. LINE OF CREDIT AND OTHER NOTES PAYABLE	12 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
NOTE 4 - LINE OF CREDIT AND OTHER NOTES PAYABLE	'
	On July 12, 2012, the Company closed on an aggregate $3.5 million credit facility (the “Credit Facility”) with PNC Bank, National Association (“PNC”) as lender consisting of $3.0 million in revolving loans (the "Revolving Facility") and $500,000 in a committed non-revolving line of credit loan for the purpose of financing up to 90% of the cost of certain equipment (the “Equipment Loan”). The terms and conditions of the Credit Facility are set forth in a Loan Agreement between the Company and PNC dated June 28, 2012 (the “Loan Agreement”), and the Revolving Facility is evidenced by a Committed Line of Credit Note issued by the Company to the order of PNC (the “Revolving Note”). As part of the financing transaction, each of C.B. Brechin and Scott Rutherford, who serve as directors of the Company and as Chief Executive Officer/Chief Financial Officer and as President of the Company, respectively, entered into a Subordination Agreement dated June 28, 2012 with PNC (each, a “Subordination Agreement”) pursuant to which they agreed that all indebtedness owed to them by the Company (the “Subordinated Debt”) is subordinate to the indebtedness owed to PNC by the Company.  The Subordination Agreements permit the Company to make regular loan payments to Messrs. Brechin and Rutherford so long as the Company is not in default under its loan agreements with PNC.  The terms of the Equipment Loan will be evidenced by a separate promissory note if the Company requests that loan. The loan agreement was amended on July 18, 2013 to extend the loan’s maturity date to September 28, 2013. On July 18, 2013, the Company executed a Waiver and Second Amendment to Loan Documents with PNC which its maturity date was extended to September 28, 2013 and certain financial and other covenants were modified.  On September 27, 2013, the Company executed a Second Amendment [sic] to Loan Documents, effective as of September 28, 2013 (the “Third Modification Agreement”), to extend the maturity date of the Credit Facility to March 31, 2014. The Third Modification Agreement also amended the Credit Facility as follows: (i) the Company is now required to submit financial statements to PNC on a monthly basis rather than on a quarterly basis; (ii) the maximum ratio of total indebtedness (excluding Subordinated Debt) to EBITDA that the Company may maintain, to be tested on a quarterly basis, was increased to 3.5 to 1.0 (from 3.0 to 1.0); and (iii) the minimum rolling four-quarter Debt Service Coverage Ratio that the Company is required to maintain as of the end of each fiscal quarter was reduced to 1.0 to 1.0 (from 1.30 to 1.00). In connection with the Third Modification Agreement, the Company and PNC also executed a Borrowing Base Rider, effective September 28, 2013, which limits the aggregate principal amount of indebtedness that may be outstanding under the Credit Facility at any one time to a Borrowing Base and conditions the Company’s request for an advance under the Credit Facility on the Company’s submission of a Borrowing Base Certificate to the Bank on or before the 15th day of each month. As defined in the Borrowing Base Rider, the “Borrowing Base” is defined as the lesser of (i) $3.0 million and (ii) the sum of (a) 80% of Qualified Accounts (as defined in the Borrowing Base Rider) and (b) 50% of Qualified Inventory (as defined in the Borrowing Base Rider), provided, however, that the total amount of advances allocable to Qualified Inventory may not exceed $500,000. In the event that the outstanding principal amount of indebtedness under the Credit Facility exceeds the Borrowing Base, the Company must immediately repay the amount of such excess.  As of December 31, 2013, amounts outstanding under the line of credit were $1,470,533.
	On March 21, 2014, the Company executed a Fourth Amendment to Loan Documents with PNC pursuant to which (i) the revolving line of credit was reduced to $2.0 million, (ii) the maturity date of the Credit Facility was extended to August 31, 2014, (iii) the interest rate applicable to outstanding principal was changed to the daily LIBOR rate plus 3.0% (from the daily LIBOR rate plus 2.5%), (iv) the existing financial covenants were eliminated, (v) an Interest Coverage Ratio, defined as current quarter EBITDA to current quarter interest, was added and specified to be (a) 1.0 to 1.0 for the quarter ending March 31, 2014 and (b) 1.5 to 1.0 for the quarter ending June 30, 2014, and (vi) a waiver of covenants was granted for the quarter ending December 31, 2013.  All other terms and conditions of the Credit Facility remain unchanged.
	The Company financed certain vehicles and equipment under finance agreements. The agreements mature in September 2014, March 2017 and May 2017. The agreements require various monthly payments of principal and interest until maturity. As of December 31, 2013 and 2012, financed assets of $118,671 and $88,948, respectively, net of accumulated amortization of $50,293 and $28,647 respectively, are included in property and equipment on the balance sheets. As of December 31, 2013 future maturities of notes payable are as follows:
	2014	$	32,938
	2015		28,538
	2016		29,324
	2017		20,477
	Total	$	111,277

5_NOTES_PAYABLE_STOCKHOLDERS

5. NOTES PAYABLE - STOCKHOLDERS	12 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
NOTE 5 - NOTES PAYABLE - STOCKHOLDERS	'
	Brekford financed the repurchase of shares of its common stock and warrants from the proceeds of convertible promissory notes that were issued by Brekford on November 9, 2009 in favor of a lender group that included two of its directors, Messrs. C.B. Brechin and Scott Rutherford, in the principal amounts of $250,000 each (each, a “Promissory Note” and together, the “Promissory Notes”). Each Promissory Note bears interest at the rate of 12% per annum and at the time of issuance was to be convertible into shares of common stock, at the option of the holder, at an original conversion price of $.07 per share. At the time of issuance, Brekford agreed to pay the unpaid principal balance of the Promissory Notes and all accrued but unpaid interest on the date that was the earlier of (i) two years from the issuance date or (ii) 10 business days after the date on which Brekford closes an equity financing that generates gross proceeds in the aggregate amount of not less than $5,000,000.
	On April 1, 2010, Brekford Corp. and each member of the lender group executed a First Amendment to the Unsecured Promissory Note, which amended the Promissory Notes as follows:
	●	Revise the conversion price in the provision that allows the holder of the Promissory Note to elect to convert any outstanding and unpaid principal portion of the Promissory Note and any accrued but unpaid interest into shares of the Common Stock at a price of fourteen cents ($0.14) per share of Common Stock, and
	●	Each Promissory Note’s maturity date was extended to the earlier of (i) four years from the issuance date or (ii) 10 business days after the date on which Brekford closes an equity financing that generates gross proceeds in the aggregate amount of not less than $5,000,000.
	On November 8, 2013, Brekford and each member of the lender group agreed to further extend the maturity dates of the Promissory Notes to the earlier of (i) November 9, 2014 or (ii) 10 business days after the date on which Brekford closes an equity financing that generates gross proceeds in the aggregate amount of not less than $5,000,000.
	As of December 31, 2013 and December 31, 2012, the amounts outstanding under the Promissory Notes totaled $500,000.

6_LEASES

6. LEASES	12 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
NOTE 6 - LEASES	'
	Capital Leases
	The Company financed certain equipment and vehicles under separate non-cancelable equipment loan and security agreements. The agreements mature in March 2015 and April 2015. The agreements require various monthly payments of principal and interest through maturity and are secured by the assets under lease.  As of December 31, 2013 and 2012, capital lease assets of $932,407 and $1,678,435, respectively, net of accumulated amortization of $1,301,593 and $612,137, respectively, are included in property and equipment on the consolidated balance sheets.
	Future minimum lease payments under these lease agreements at December 31, 2013 are as follows:
	2014	$	644,865
	2015		199,970
	Total minimum lease payments		844,835
	Less: amounts representing interest		(30,888	)
	Present value of net minimum lease payments	$	813,947
	Operating Leases
	The Company rents office space under separate non-cancelable operating leases expiring in June 2015 and January 2015.
	Future minimum lease payments under these lease agreements, exclusive of the Company’s share of operating costs at December 31, 2013 are as follows:
	2014		259,536
	2015		42,328
	Total	$	301,864
	In addition, the lessor provided the Company with a $221,400 leasehold improvement incentive that was recorded as a component of property and equipment and is included in deferred rent and is being amortized over the lease term. The lease agreement requires the Company to reimburse the lessor for the cost of the improvements on a pro rata basis over the term of the lease in the event of the Company's default or termination of the lease agreement prior to the expiration of the term of the lease in 2015.
	The Company records rent expense over the term of the lease on a straight-line basis, less amounts received under any sub-lease arrangements. Total rent expense amounted to $238,319 and $234,981 for the years ended December 31, 2013 and 2012, respectively.
	The Company leased approximately 2,500 square feet of office space from Peppermill Properties, LLC, a Maryland limited liability company (“Peppermill”). Peppermill is owned and managed by Chandra (C.B.) Brechin and Scott Rutherford, who are officers, directors and principal stockholders of the Company. On June 1, 2010, the Company entered into a three-year lease with Peppermill. The lease was amended to extend the lease expiration date to June 30, 2015. For the year ended December 31, 2013 and 2012, lease payments amounted to $50,674 and $42,465 respectively.

7_INVENTORY

7. INVENTORY	12 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
NOTE 7 - INVENTORY	'
	As of December 31, 2013 and December 31, 2012 inventory consisted of the following:
		2013		2012
	Raw Materials	$	1,250,141	$	672,874
	Work in Process		13,958		—
	Total Inventory	$	1,264,099	$	672,874

8_LOSS_PER_SHARE

8. LOSS PER SHARE	12 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
NOTE 8 - LOSS PER SHARE	'
	The following table provides information relating to the calculation of (loss) earnings per common share.
		Years Ended December 31,
		2013			2012
	Basic loss earnings  per share
	Net loss	$	(1,419,586	)	$	(1,266,671	)
	Weighted average common shares outstanding - basic		44,283,364			44,128,602
	Basic loss per share	$	(0.03	)	$	-0.03
	Diluted loss per share
	Net loss	$	(1,419,586	)	$	(1,266,671	)
	Weighted average common shares outstanding		44,283,364			44,128,602
	Potential dilutive securities		—			—
	Weighted average common shares outstanding – diluted		44,283,364			44,128,602
	Diluted loss per share	$	(0.03	)	$	(0.03	)
	Common stock equivalents excluded due to anti-dilutive effect		3,571,429			3,946,429

9_SHAREBASED_COMPENSATION

9. SHARE-BASED COMPENSATION	12 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
NOTE 9 - SHARE-BASED COMPENSATION	'
	The Company has issued shares of restricted common stock and warrants to purchase shares of common stock and has granted non-qualified stock options to certain employees and non-employees. On April 25, 2008, the Company’s stockholders approved the 2008 Stock Incentive Plan (the “2008 Incentive Plan”). To date, there have been no stock option grants under the 2008 Incentive Plan. All stock options granted to date were granted under previous arrangements, have exercise prices that are less or equal to the fair value of the underlying common stock at the date of grant and have terms of ten years.
	Stock Options
	There was no share-based compensation expense during the years ended December 31, 2013 or 2012 related to stock options. As of December 31, 2013 and 2012, there were no outstanding stock options.
	Restricted Stock Grants
	During the period ended December 31, 2012, the Company issued an aggregate of 25,000 shares of restricted common stock to a consultant as compensation for future services to be rendered to the Company. Based on a per share price of $0.42 on the date of grant, these shares represent $10,500 in services to be rendered by the consultant.
	During the period ended December 31, 2013, Company issued an aggregate of 202,000 shares of restricted common stock to the non-employees and to its key employees in consideration of services rendered and part of employment agreement. The weighted average value of the shares amounted to $0.28 per share based upon the closing price of shares of the Company’s Common Stock on the date of the grant.  These shares were fully vested on the date of the grant. The Company recorded $57,310 in share-based compensation expense for the year ending December 31, 2013 related to restricted stock grants.
		Restricted Stock Shares			Weighted Average Value
	Nonvested restricted stock at January 1, 2012		—		$	—
	Granted		25,000			0.42
	Vested		(25,000	)		0.42
	Forfeited or expired		—			—
	Nonvested restricted stock at December 31, 2012		—		$	—
	Granted		202,000			0.28
	Vested		(202,000	)		0.28
	Forfeited or expired		—			—
	Nonvested restricted stock at December 31, 2013		—		$	—
	Common Stock Purchase Warrants
	For the year ended December 31, 2013 and 2012, there was no share-based compensation expense for common stock purchase warrants. As of December 31, 2013, there are no unvested common stock purchase warrants.
	A summary of warrant activity is as follows:
		Shares Underlying			Weighted Average		Weighted Average
		Warrants			Exercise Price		Remaining
							Contractual Life (Years)
	Outstanding at January 1, 2012		1,595,000		$	0.37		0.56
	Granted		—			—		—
	Forfeited or expired		(220,000	)		0.39		—
	Exercised		(1,000,000	)		0.39		—
	Outstanding at December 31, 2012		375,000			0.3		0.37
	Granted		—			—		—
	Forfeited or expired		(375,000	)		0.3		—
	Exercised		—			—		—
	Outstanding at December 31, 2013		—
	2008 Stock Incentive Plan
	The 2008 Incentive Plan is designed to provide an additional incentive to executives, employees, directors and key consultants, aligning the long term interests of participants in the 2008 Incentive Plan with those of the Company and the Company’s stockholders. The 2008 Incentive Plan provides that up to 8 million shares of the Company’s common stock may be issued pursuant to awards granted under the 2008 Incentive Plan. As of December 31, 2013, 6,680,000 shares of common stock remained available for future issuance under the 2008 Incentive Plan.
	2008 Employee Stock Purchase Plan
	On February 19, 2008, the Board of Directors authorized the adoption of the 2008 Employee Stock Purchase Plan (the “Purchase Plan”), subsequently approved by the stockholders on April 25, 2008, which is designed to encourage and enable eligible employees to acquire a proprietary interest in the Company’s common stock. The Purchase Plan provides that up to 2 million shares of the Company’s common stock may be issued under the Plan.  No shares have been issued under the Plan.

10_EMPLOYEE_BENEFIT_PLANS

10. EMPLOYEE BENEFIT PLANS	12 Months Ended
	Dec. 31, 2013
Compensation and Retirement Disclosure [Abstract]	'
NOTE 10 - EMPLOYEE BENEFIT PLANS	'
	The Company has a defined contribution savings plan under Section 401(k) of the Internal Revenue Code. The 401(k) Plan is a defined contribution plan, which covers substantially all U.S.-based employees of the Company and its wholly-owned subsidiaries who have completed three months of service. The 401(k) Plan provides that the Company will match 50% of the participant salary deferrals up to 3% of a participant’s compensation for all participants. The Company contributed $21,766 and $18,519 during the years ended December 31, 2013 and December 31, 2012, respectively.

11_MAJOR_CUSTOMERS_AND_VENDORS

11. MAJOR CUSTOMERS AND VENDORS	12 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
NOTE 11 - MAJOR CUSTOMERS AND VENDORS	'
	Major Customers
	The Company has several contracts with government agencies, of which net revenue from two customers during the period ended December 31, 2013 represented 34% of the total net revenue for such twelve-month period. Accounts receivable due from customers at December 31, 2013 amounted to 25% of total accounts receivable at that date.
	For the year ended December 31, 2012, net revenue from one major customer represented 11% of the total net revenue for such period. Accounts receivable due from two customers at December 31, 2012 amounted to 54% of total accounts receivable at that date.
	Major Vendors
	The Company purchased substantially all rugged IT products that it resold during the periods presented from a single distributor. Revenues from rugged IT products amounted to 27% and 53% of total revenues for the year ended December 31, 2013 and 2012, respectively. As of December 31, 2013 and 2012, accounts payable due to this distributor amounted to 27% and 58% of total accounts payable, respectively.

12_INCOME_TAXES

12. INCOME TAXES	12 Months Ended
	Dec. 31, 2013
Income Tax Disclosure [Abstract]	'
NOTE 12 - INCOME TAXES	'
	As of December 31, 2013, the Company has approximately $4.43 million of federal and state net operating loss carryforwards available to offset future taxable income, if any, through 2033. These net operating losses begin to expire in 2028. If, however, there is an ownership change in the Company, Section 382 of the Internal Revenue Code may restrict the Company’s ability to utilize these loss carryforwards to a percentage of the market value of the Company at the time of the ownership change. Therefore, these operating loss carryforwards could become limited in future years if ownership changes were to occur as defined in the Internal Revenue Code and similar state income tax provisions. The Company files income tax returns with the U.S. Internal Revenue Service and with the revenue services of various states.  The Company is no longer subject to U.S. Federal income tax examinations by tax authorities for years before 2010.
	The Company’s deferred tax assets and liabilities are as follows for each of the periods presented:
		December 31,
		2013			2012
	Net operating loss carry forwards	$	1,748,000		$	1,452,000
	Property and Equipment		-224,000			(514,000	)
	Other		10,000			38,000
			1,534,000			976,000
	Valuation allowance		-1,534,000			(976,000	)
	Net deferred tax asset	$	—		$	—
	The Company’s recorded income tax, net of the change in the valuation allowance for each of the periods presented, is as follows:
		Years Ended December 31,
		2013			2012
	Current
	Federal	$	—		$	—
	State		—			—
			—			—
	Deferred
	Federal		-442,000			(389,000	)
	State		-116,000			(106,000	)
			-558,000			(495,000	)
	Change in valuation allowance		558,000			495,000
	Income tax expense	$	—		$	—
	Management has evaluated the recoverability of the deferred income tax assets and the level of the valuation allowance required with respect to such deferred income tax assets. After considering all available facts, the Company fully reserved for its deferred tax assets because management believes that it is more likely than not that their benefits will not be realized in future periods. The Company will continue to evaluate its deferred tax assets to determine whether any changes in circumstances could affect the realization of their future benefit. If it is determined in future periods that portions of the Company’s deferred income tax assets satisfies the realization standard, the valuation allowance will be reduced accordingly.
	A reconciliation of the expected Federal statutory rate of 34% to the Company’s actual rate as reported for each of the periods presented is as follows:
		Years Ended December 31,
		2013			2012
	Expected statutory rate		-34	%		(34.0)	%
	State income tax rate, net of Federal benefit		-5.4	%		(5.3	)%
	Permanent differences
	Other		0.1	%		0.2	%
			39.3	%		39.1	%
	Valuation allowance		-39.3	%		-39.1	%
			—	%		—	%

2_SUMMARY_OF_SIGNIFICANT_ACCOU1

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
Principles of Consolidation and Basis of Presentation	'
	The Company’s consolidated financial statements include the accounts of Brekford Corp. and its wholly-owned subsidiary, Municipal Recovery Agency, LLC. Intercompany transactions and balances are eliminated in consolidation.
Use of Estimates	'
	Preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and notes. Actual results could differ from those estimates.
Concentration of Credit Risk	'
	The Company maintains cash accounts with major financial institutions. From time to time, amounts deposited may exceed the FDIC insured limits.
Accounts Receivables	'
	Accounts receivable are carried at estimated net realizable value. The Company has a policy of reserving for uncollectable accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company calculates the allowance based on a specific analysis of past due balances. Past due status for a particular customer is based on how recently payments have been received from that customer. Historically, the Company’s actual collection experience has not differed significantly from its estimates, due primarily to credit and collections practices and the financial strength of its customers.
	The Company’s practice of reserving for uncollectable citations generated through its photo enforcement solutions is based on its best estimate of the amount of probable losses. The Company calculates allowances based on its experience with collecting citations.  Past due status is based on varying client business rules for the extension of time allotted for payment. For certain contracts, the Company manages both the issuance of citations and the collection of unpaid fines. The Company reviews and evaluates their collections efforts and makes necessary adjustments to the allowance accounts and complete write-offs as deemed necessary.
Inventory	'
	Inventory principally consists of hardware and third-party packaged software that is modified to conform to customer specifications and held temporarily until the completion of a contract. Inventory is valued at the lower of cost or market value. The cost is determined by the lower of first-in, first-out (“FIFO”) method, while market value is determined by replacement cost for raw materials and parts and net realizable value for work-in- process.
Property and Equipment	'
	Property and equipment is stated at cost. Depreciation of furniture, vehicles, computer equipment and software and phone equipment is calculated using the straight-line method over the estimated useful lives (two to ten years), and leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the lease term (which is three to five years).
Revenue Recognition	'
	The Company recognizes revenue relating to its vehicle upfitting solutions when all of the following criteria have been satisfied:  (i) persuasive evidence of an arrangement exists; (ii) delivery or installation has been completed; (iii) the customer accepts and verifies receipt; and (iv) collectability is reasonably assured.  The Company considers delivery to its customers to have occurred at the time at which products are delivered and/or installation work is completed and the customer acknowledges its acceptance of the work.
	The Company provides its customers with a warranty against defects in the installation of its vehicle upfitting solutions for one year from the date of installation.  Warranty claims were $4,029 for the year ended December 31, 2013 and $27,644 for the year ended December 31, 2012.  The Company also performs warranty repair services on behalf of the manufacturers of the equipment it sells. The Company also offers separately-priced extended warranty and product maintenance contracts to its customers on the equipment sold by the Company. Revenues from extended warranty services are apportioned over the period of the extended warranty service contracts and the warranty costs are expensed as incurred. Revenue from extended warranties for the years ended December 31, 2013 and 2012 amounted to $375,756 and $355,150, respectively.
	For automatic traffic enforcement revenue, the Company recognizes the revenue either on the date the Company determines a valid violation has occurred or when the required collection efforts are completed depending on the terms of the respective contract. The Company records revenue related to automated traffic violations for the Company’s share of the violation amount. As of December 31, 2013 revenues of all existing contracts will be recognized as the required collection efforts are complete and the respective municipality is billed.
Shipping and Handling Costs	'
	All amounts billed to customers related to shipping and handling are included in products revenues and all costs of shipping and handling are included in cost of sales in the accompanying consolidated statements of operations. The Company incurred shipping and handling costs of $75,134 and $54,652 for the years ended December 31, 2013 and 2012, respectively.
Advertising Costs	'
	The Company expenses advertising costs as incurred. These expenses are included in selling, general and administrative expenses in the accompanying statements of operations. Advertising expense amounted to $16,500 and $24,073 for the years ended December 31, 2013 and 2012, respectively.
Share-Based Compensation	'
	The Company complies with the provisions of Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 718, Compensation-Stock Compensation, in measuring and disclosing stock based compensation cost.  The measurement objective in ASC Paragraph 718-10-30-6 requires public companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award.  The cost is recognized in expense over the period in which an employee is required to provide service in exchange for the award (the vesting period).  Performance-based awards are expensed ratably from the date that the likelihood of meeting the performance measures is probable through the end of the vesting period.
Treasury Stock	'
	The Company accounts for treasury stock using the cost method.  As of December 31, 2013, 10,600 shares of our common stock were held in treasury at an aggregate cost of $5,890.
Income Taxes	'
	The Company uses the liability method to account for income taxes. Income tax expense includes income taxes currently payable and deferred taxes arising from temporary differences between financial reporting and income tax bases of assets and liabilities. Deferred income taxes are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense, if any, consists of the taxes payable for the current period. Valuation allowances are established when the realization of deferred tax assets are not considered more likely than not. Accordingly, the value of Company’s net deferred tax assets, net of valuation allowance, was reduced to $0 at December 31, 2013 and 2012.
	The Company files income tax returns with the U.S. Internal Revenue Service and with the revenue services of various states. The Company is no longer subject to U.S. federal, state and local examinations by tax authorities for years prior to 2010. The Company’s policy is to recognize interest related to unrecognized tax benefits as income tax expense. The Company believes that it has appropriate support for the income tax positions it takes and expects to take on its tax returns, and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter.
(Loss) per Share	'
	Basic loss per share is calculated by dividing net loss available to common stockholders by the weighted-average number of common shares outstanding and does not include the effect of any potentially dilutive common stock equivalents.  Diluted loss per share is calculated by dividing net loss by the weighted-average number of shares outstanding, adjusted for the effect of any potentially dilutive common stock equivalents.  There is no dilutive effect on the loss per share during loss periods. See Note 8 for the calculation of basic and diluted loss earnings per share.
Fair Value of Financial Instruments	'
	The carrying amounts reported in the balance sheets for cash, accounts receivable, accounts payable and accrued expenses approximate their fair values based on the short-term maturity of these instruments. The carrying amount of the Company’s note obligations approximate fair value, as the terms of these notes are consistent with terms available in the market for instruments with similar risk.
Segment Reporting	'
	FASB ASC Topic 280, Segment Reporting, requires that an enterprise report selected information about operating segments in its financial reports issued to its stockholders. Based on its current analysis, management has determined that the Company has only one operating segment, which is Traffic Safety Solutions. The chief operating decision-makers use combined results to make operating and strategic decisions, and, therefore, the Company believes its entire operation is covered under a single segment.
Newly Issued Accounting Pronouncements	'
	Management does not believe that any recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on our financial statements.

3_PROPERTY_AND_EQUIPMENT_Table

3. PROPERTY AND EQUIPMENT (Tables)	12 Months Ended
	Dec. 31, 2013
Property, Plant and Equipment [Abstract]	'
Schedule of Property and equipment	'
		December 31,
		2013			2012
	Leasehold improvements	$	502,092		$	498,025
	Computer equipment and software		509,368			484,624
	Vehicles		333,531			223,868
	Furniture		100,089			100,089
	Cameras		2,808,753			2,573,516
	Phone equipment		48,817			48,817
			4,302,650			3,928,939
	Accumulated depreciation and amortization		(2,709,448	)		(1,451,297	)
		$	1,593,202		$	2,477,642

4_LINE_OF_CREDIT_AND_OTHER_NOT1

4. LINE OF CREDIT AND OTHER NOTES PAYABLE (Tables)	12 Months Ended
	Dec. 31, 2013
Line Of Credit And Other Notes Payable Tables	'
Future maturities of notes payable	'
	2014	$	32,938
	2015		28,538
	2016		29,324
	2017		20,477
	Total	$	111,277

6_LEASES_Tables

6. LEASES (Tables)	12 Months Ended
	Dec. 31, 2013
Leases Tables	'
Future minimum lease payments under capital lease agreements	'
	2014	$	644,865
	2015		199,970
	Total minimum lease payments		844,835
	Less: amounts representing interest		(30,888	)
	Present value of net minimum lease payments	$	813,947
Future minimum lease payments under operating lease agreements	'
	2014		259,536
	2015		42,328
	Total	$	301,864

7_INVENTORY_Tables

7. INVENTORY (Tables)	12 Months Ended
	Dec. 31, 2013
Inventory Tables	'
Schedule of Inventory	'
		2013		2012
	Raw Materials	$	1,250,141	$	672,874
	Work in Process		13,958		—
	Total Inventory	$	1,264,099	$	672,874

8_LOSS_PER_SHARE_Tables

8. LOSS PER SHARE (Tables)	12 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
Calculation of basic and diluted (loss) earnings per common share	'
		Years Ended December 31,
		2013			2012
	Basic loss earnings  per share
	Net loss	$	(1,419,586	)	$	(1,266,671	)
	Weighted average common shares outstanding - basic		44,283,364			44,128,602
	Basic loss per share	$	(0.03	)	$	-0.03
	Diluted loss per share
	Net loss	$	(1,419,586	)	$	(1,266,671	)
	Weighted average common shares outstanding		44,283,364			44,128,602
	Potential dilutive securities		—			—
	Weighted average common shares outstanding – diluted		44,283,364			44,128,602
	Diluted loss per share	$	(0.03	)	$	(0.03	)
	Common stock equivalents excluded due to anti-dilutive effect		3,571,429			3,946,429

9_SHAREBASED_COMPENSATION_Tabl

9. SHARE-BASED COMPENSATION (Tables)	12 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
Share-based compensation expense related to restricted stock grants	'
		Restricted Stock Shares			Weighted Average Value
	Nonvested restricted stock at January 1, 2012		—		$	—
	Granted		25,000			0.42
	Vested		(25,000	)		0.42
	Forfeited or expired		—			—
	Nonvested restricted stock at December 31, 2012		—		$	—
	Granted		202,000			0.28
	Vested		(202,000	)		0.28
	Forfeited or expired		—			—
	Nonvested restricted stock at December 31, 2013		—		$	—
Summary of Warrant Activity	'
		Shares Underlying			Weighted Average		Weighted Average
		Warrants			Exercise Price		Remaining
							Contractual Life (Years)
	Outstanding at January 1, 2012		1,595,000		$	0.37		0.56
	Granted		—			—		—
	Forfeited or expired		(220,000	)		0.39		—
	Exercised		(1,000,000	)		0.39		—
	Outstanding at December 31, 2012		375,000			0.3		0.37
	Granted		—			—		—
	Forfeited or expired		(375,000	)		0.3		—
	Exercised		—			—		—
	Outstanding at December 31, 2013		—

12_INCOME_TAXES_Tables

12. INCOME TAXES (Tables)	12 Months Ended
	Dec. 31, 2013
Income Tax Disclosure [Abstract]	'
Deferred tax assets and liabilities	'
		December 31,
		2013			2012
	Net operating loss carry forwards	$	1,748,000		$	1,452,000
	Property and Equipment		-224,000			(514,000	)
	Other		10,000			38,000
			1,534,000			976,000
	Valuation allowance		-1,534,000			(976,000	)
	Net deferred tax asset	$	—		$	—
Schedule of Components of Income Tax Expense (Benefit)	'
		Years Ended December 31,
		2013			2012
	Current
	Federal	$	—		$	—
	State		—			—
			—			—
	Deferred
	Federal		-442,000			(389,000	)
	State		-116,000			(106,000	)
			-558,000			(495,000	)
	Change in valuation allowance		558,000			495,000
	Income tax expense	$	—		$	—
Schedule of Effective Income Tax Rate Reconciliation	'
		Years Ended December 31,
		2013			2012
	Expected statutory rate		-34	%		(34.0)	%
	State income tax rate, net of Federal benefit		-5.4	%		(5.3	)%
	Permanent differences
	Other		0.1	%		0.2	%
			39.3	%		39.1	%
	Valuation allowance		-39.3	%		-39.1	%
			—	%		—	%

2_SUMMARY_OF_SIGNIFICANT_POLIC

2. SUMMARY OF SIGNIFICANT POLICIES (Details Narrative) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Warranty claims	$4,029	$27,644
Revenue from extended warranties	375,756	355,150
Shipping and Handling Costs	75,134	54,652
Advertising Costs	16,500	24,073
Common Stock held in treasury amount	5,890	5,890
TreasuryStockMember	'	'
Common Stock held in treasury shares	10,600	'
Common Stock held in treasury amount	$5,890	'

3_PROPERTY_AND_EQUIPMENT_Detai

3. PROPERTY AND EQUIPMENT (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Property And Equipment Details	'	'
Leasehold improvements	$502,092	$498,025
Computer equipment and software	509,368	484,624
Vehicles	333,531	223,868
Furniture	100,089	100,089
Cameras	2,808,753	2,573,516
Phone equipment	48,817	48,817
Property and equipment, gross	4,302,650	3,928,939
Accumulated depreciation and amortization	-2,709,448	-1,451,297
Property and equipment, net	$1,593,202	$2,477,642

3_PROPERTY_AND_EQUIPMENT_Detai1

3. PROPERTY AND EQUIPMENT (Details Narrative) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Property And Equipment Details Narrative	'	'
Depreciation and amortization	$1,264,643	$765,106

4_LINE_OF_CREDIT_AND_OTHER_NOT2

4. LINE OF CREDIT AND OTHER NOTES PAYABLE (Details) (USD $)	Dec. 31, 2013
Line Of Credit And Other Notes Payable Details	'
2014	$32,938
2015	28,538
2016	29,324
2017	20,477
Total	$111,277

4_LINE_OF_CREDIT_AND_OTHER_NOT3

4. LINE OF CREDIT AND OTHER NOTES PAYABLE (Details Narrative) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Line Of Credit And Other Notes Payable Details Narrative	'	'
Line of credit amount outstanding	$1,470,533	'
Financed assets	118,671	88,948
Accumulated amortization	$50,293	$28,647

5_NOTES_PAYABLE_STOCKHOLDERS_D

5. NOTES PAYABLE - STOCKHOLDERS (Details Narrative) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Notes Payable - Stockholders Details Narrative	'	'
Amounts outstanding under Promissory Notes, total	$500,000	$500,000

6_LEASES_Details

6. LEASES (Details) (USD $)	Dec. 31, 2013
Leases Details	'
2014	$644,865
2015	199,970
Total minimum lease payments	844,835
Less: amounts representing interest	-30,888
Present value of net minimum lease payments	$813,947

6_LEASES_Details_1

6. LEASES (Details 1) (USD $)	Dec. 31, 2013
Leases Details 1	'
2014	$259,536
2015	42,328
Total	$301,864

6_LEASES_Details_Narrative

6. LEASES (Details Narrative) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Leases Details Narrative	'	'
Capital Lease Assets, net of amortization	$932,407	$1,678,435
Capital Lease Assets Amortization	1,301,593	612,137
Rent expense over term of lease on straight-line basis	238,319	234,981
Lease payments amount	$50,674	$42,465

7_INVENTORY_Details

7. INVENTORY (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Inventory	'	'
Raw Materials	$1,250,141	$672,874
Work in Process	13,958	0
Total Inventory	$1,264,099	$672,874

8_LOSS_PER_SHARE_Details

8. LOSS PER SHARE (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Basic loss earnings per share:	'	'
Net loss	($1,419,586)	($1,266,671)
Weighted average common shares outstanding - basic	44,283,364	44,128,602
Basic loss per share	($0.03)	($0.03)
Diluted (loss) earnings per share :	'	'
Net loss	($1,419,586)	($1,266,671)
Weighted average common shares outstanding	44,283,364	44,128,602
Potential dilutive securities	0	0
Weighted average common shares outstanding - assuming dilution	44,283,364	44,128,602
Diluted net income per share	($0.03)	($0.03)
Common Stock Equivalents excluded due to antidilutive effect	3,571,429	3,946,429

9_SHAREBASED_COMPENSATION_Deta

9. SHARE-BASED COMPENSATION (Details) (Restricted Stock [Member], USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Restricted Stock [Member]	'	'
Restricted Stock Shares	'	'
Nonvested restricted stock, beginning	0	0
Granted	202,000	25,000
Vested	-202,000	-25,000
Forfeited or expired	0	0
Nonvested restricted stock, Ending	0	0
Weighted Average Value	'	'
Nonvested restricted stock beginning	$0	$0
Granted	$0.28	$0.42
Vested	$0.28	$0.42
Forfeited or expired	$0	$0
Nonvested restricted stock ending	$0	$0

9_SHAREBASED_COMPENSATION_Deta1

9. SHARE-BASED COMPENSATION (Details 1) (Warrant [Member], USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Warrant [Member]	'	'
Shares Underlying Warrants	'	'
Outstanding and exercisable, Beginning	375,000	1,595,000
Granted	0	0
Forfeited or expired	-375,000	-220,000
Exercised	0	-1,000,000
Outstanding and exercisable, Ending	0	375,000
Weighted Average Exercise Price	'	'
Outstanding and exercisable, Beginning	$0.30	$0.37
Granted	$0	$0
Forfeited or expired	$0.30	$0.39
Exercised	$0	$0.39
Outstanding and exercisable, Ending	'	$0.30
Weighted Average Remaining Contractual Term (in years)	'	'
Outstanding and exercisable, Beginning	'	'6 months 22 days
Outstanding and exercisable, Ending	'	'4 months 13 days

9_SHAREBASED_COMPENSATION_Deta2

9. SHARE-BASED COMPENSATION (Detail Narrative) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Share - based compensation expense under restricted stock grants	$57,310	$10,500
RestrictedStockGrantsMember	'	'
Share - based compensation expense under restricted stock grants	$57,310	$10,500

10_EMPLOYEE_BENEFIT_PLANS_Deta

10. EMPLOYEE BENEFIT PLANS (Details Narrative) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Employee Benefit Plans Details Narrative	'	'
Company contribution	$21,766	$18,519

11_MAJOR_CUSTOMERS_AND_VENDORS1

11. MAJOR CUSTOMERS AND VENDORS (Details Narrative)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Hardware products Vendor	'	'
Revenues from hardware products	27.00%	53.00%
Accounts payable due to distributor	27.00%	58.00%
Major Customers	'	'
Net sales	34.00%	11.00%
Accounts receivable	25.00%	54.00%

12_INCOME_TAXES_Details

12. INCOME TAXES (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Income Taxes Details	'	'
Net operating loss carry forwards	$1,748,000	$1,452,000
Property and Equipment	-224,000	-514,000
Other	10,000	38,000
Net deferred tax asset, Gross	1,534,000	976,000
Valuation allowance	-1,534,000	-976,000
Net deferred tax asset	$0	$0

12_INCOME_TAXES_Details_1

12. INCOME TAXES (Details 1) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Current	'	'
Federal	$0	$0
State	0	0
Current	0	0
Deferred	'	'
Federal	-442,000	-389,000
State	-116,000	-106,000
Deferred	-558,000	-495,000
Change in valuation allowance	558,000	495,000
Income tax expense	$0	$0

12_INCOME_TAXES_Details_2

12. INCOME TAXES (Details 2)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Income Taxes Details 2	'	'
Expected statutory rate	-34.00%	-34.00%
State income tax rate, net of Federal benefit	-5.40%	-5.30%
Permanent differences	'	'
Other	0.10%	0.20%
Statutory rate	39.30%	36.10%
Valuation allowance	-39.30%	-36.10%
Effective tax rate	0.00%	0.00%

12_INCOME_TAXES_Details_Narrat

12. INCOME TAXES (Details Narrative) (USD $)	Dec. 31, 2013
Income Taxes Details Narrative	'
Federal and state net operating loss carryforwards available to offset future taxable income (approximately)	$4,430,000