Brekford (TTSR) 10-K 24 Mar 16 2015 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2015	Mar. 24, 2016	Jun. 30, 2015
Document And Entity Information
Entity Registrant Name	Brekford Corp.
Entity Central Index Key	1,357,115
Document Type	10-K
Document Period End Date	Dec. 31, 2015
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			$ 4,519,508
Entity Common Stock, Shares Outstanding		45,627,754
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2,015

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2015	Dec. 31, 2014
CURRENT ASSETS
Cash	$ 580,400	$ 1,112,881
Accounts receivable, net of allowance $0 at December 31, 2015 and 2014, respectively	3,781,263	1,706,704
Unbilled receivables	304,470	198,725
Prepaid expenses	122,914	146,569
Inventory	606,471	681,948
Total current assets	5,395,518	3,846,827
Property and equipment, net	223,347	284,322
Other non-current assets	179,208	112,132
TOTAL ASSETS	5,798,073	4,243,281
CURRENT LIABILITIES
Accounts payable and accrued expenses	2,979,131	1,842,892
Accrued payroll and related expenses	98,000	23,252
Line of credit	1,421,800	1,169,558
Term loan - current portion	166,667	250,000
Deferred revenue	95,233	255,405
Customer deposits	36,070	137,826
Obligations under capital lease - current portion	0	140,209
Obligations under other notes payable - current portion	29,277	28,602
Derivative liability	99,036	0
Other liabilities	46,979	48,669
Total current liabilities	4,972,193	3,896,413
LONG - TERM LIABILITIES
Notes payable - stockholders	500,000	500,000
Other notes payable - net of current portion	21,660	48,371
Deferred rent, net of current portion	44,923	0
Convertible promissory notes, net of debt discounts of $386,976 and $0 at December 31, 2015 and 2014, respectively	253,023	0
Term notes payable, net of current portion	0	166,667
Total long-term liabilities	819,606	715,038
TOTAL LIABILITIES	5,791,799	4,611,451
STOCKHOLDERS' EQUITY (DEFICIT)
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; 45,151,254 and 44,500,569 issued and outstanding, at December 31, 2015 and December 31, 2014, respectively	4,515	4,450
Additional paid-in capital	10,951,491	10,204,479
Treasury Stock, at cost 10,600 shares at December 31, 2015 and 2014 respectively	(5,890)	(5,890)
Accumulated deficit	(10,942,380)	(10,571,209)
Other comprehensive loss	(1,462)	0
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)	6,274	(368,170)
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY	$ 5,798,073	$ 4,243,281

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Assets
Allowance for Receivables	$ 0	$ 0
Debt discounts	$ 386,976	$ 0
Stockholders Equity
Preferred Stock par value	$ 0.0001	$ 0.0001
Preferred Stock Authorized	20,000,000	20,000,000
Preferred Stock Issued	0	0
Preferred Stock Outstanding	0	0
Common Stock par value	$ 0.0001	$ 0.0001
Common Stock Authorized	150,000,000	150,000,000
Common Stock Issued	45,151,254	44,500,569
Common Stock Outstanding	45,151,254	44,500,569
Treasury Stock	10,600	10,600

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Statement [Abstract]
Net Revenue	$ 19,833,681	$ 17,659,533
Cost of Revenue	15,773,184	14,527,646
Gross profit	4,060,497	3,131,887
Operating expenses:
Salaries and related expenses	2,038,644	1,878,671
Selling, general and administrative expenses	1,675,837	2,585,302
Total operating expenses	3,714,481	4,463,973
Income (Loss) from operations	346,016	(1,332,086)
Other (expense) income:
Interest expense	(676,950)	(170,561)
Change in fair value in derivative liability	14,784	0
Loss on extinguishment of debt	(55,021)	0
Total other (expense) income	(717,187)	(170,561)
Loss before income taxes	(371,171)	(1,502,647)
Income tax expense	0	0
Net loss	(371,171)	(1,502,647)
Other comprehensive loss - foreign currency translation	(1,462)	0
Comprehensive loss	$ (372,633)	$ (1,502,647)
Loss per share - basic and diluted	$ (0.01)	$ (0.03)
Weighted average shares outstanding used in computing per share amounts:
Basic	44,690,550	44,499,610
Diluted	44,690,550	44,499,610

CONSOLIDATED STATEMENTS OF CHAN

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY - USD ($)	Common Stock	Treasury Stock [Member]	Additional Paid-In Capital	Accumulated Deficit	Other Comprehensive Loss	Total
Beginning Balance - Shares at Dec. 31, 2013	44,450,569	(10,600)
Beginning Balance - Amount at Dec. 31, 2013	$ 4,445	$ (5,890)	$ 10,184,751	$ (9,068,562)		$ 1,114,744
Restricted shares issues to non-employees - Shares	50,000
Restricted shares issues to non-employees - Amount	$ 5		13,495			13,500
Stock options to non-employees - Shares
Stock options to non-employees - Amount			$ 6,233			6,233
Net loss				$ (1,502,647)		(1,502,647)
Ending Balance - Shares at Dec. 31, 2014	44,500,569	(10,600)
Ending Balance - Amount at Dec. 31, 2014	$ 4,450	$ (5,890)	$ 10,204,479	$ (10,571,209)		(368,170)
Restricted shares issues to employee- Shares	132,000
Restricted shares issues to employee - Amount	$ 13		44,867			44,880
Convertible debt exchanged for common shares, Shares	518,685
Convertible debt exchanged for common shares, Amount	$ 52		133,010			133,062
Debt discount feature related to issuance of convertible note payable			557,921			557,921
Stock options to non-employees - Shares
Stock options to non-employees - Amount			$ 11,214			11,214
Other comprehensive loss					$ (1,462)	(1,462)
Net loss				$ (371,171)		(371,171)
Ending Balance - Shares at Dec. 31, 2015	45,151,254	(10,600)
Ending Balance - Amount at Dec. 31, 2015	$ 4,515	$ (5,890)	$ 10,951,491	$ (10,942,380)	$ (1,462)	$ 6,274

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Cash flows from operating activities:
Net loss	$ (371,171)	$ (1,502,647)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	189,613	777,434
Share-based compensation	56,094	19,733
Bad debt expense	0	51,178
Amortization of debt discount and warrant features	328,021	0
Amortization of financing cost	42,487	0
Change in fair value of derivative liability	(14,784)	0
Loss on extinguishment of debt	55,021	0
Loss on disposal of property and equipment	0	319,739
Changes in operating assets and liabilities:
Accounts receivable	(2,074,560)	(367,581)
Unbilled receivables	(105,745)	(72,894)
Prepaid expenses and other non-current assets	7,753	(24,421)
Inventory	75,477	582,151
Accounts payable and accrued expenses	1,139,281	363,184
Accrued payroll and related expenses	74,748	(80,848)
Other liabilities	(1,690)	(1,253)
Customer deposits	(101,756)	110,186
Deferred rent	44,923	(58,527)
Deferred revenue	(160,172)	(422,217)
Net cash (used in) operating activities	(816,460)	(306,783)
Cash flows from investing activities:
Purchases of property and equipment	(128,638)	(40,293)
Net cash used in investing activities	(128,638)	(40,293)
Cash flows from financing activities:
Net change in line of credit	252,243	(300,975)
Principal payments on lease obligation	(140,209)	(673,738)
Payments on other notes payable	(26,036)	(34,303)
Borrowings on term notes	650,000	500,000
Deferred financing cost	(71,919)	0
Payments on term notes	(250,000)	(83,333)
Net cash provided (used in) by financing activities	414,079	(592,349)
Effect of foreign currency translation	(1,462)	0
Net change in cash	(532,481)	(939,425)
Cash - beginning of year	1,112,881	2,052,306
Cash - end of year	580,400	1,112,881
Supplemental disclosures of cash flow information:
Cash paid for interest	236,355	170,561
Cash paid for income taxes	17,096	1,253
Conversion of notes payable in exchange for common stock	75,000	0
Liabilities settled in exchange for equipment	$ 0	$ 260,000

1. DESCRIPTION OF THE BUSINESS

1. DESCRIPTION OF THE BUSINESS	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
NOTE 1 - DESCRIPTION OF THE BUSINESS	Brekford Corp. (OTCBB; OTCQB: BFDI) headquartered in Hanover, Maryland is a leading public safety technology service provider of fully integrated traffic safety solutions, parking enforcement citation collections and integrator of mobile technology equipment for public safety vehicle services to State and Local municipalities, the U.S. Military and various Federal public safety agencies throughout the United States. Brekford’s combination of upfitting services, cutting edge technology, and automated traffic enforcement services offers a unique 360º solution for law enforcement agencies and municipalities. Our core values of integrity, accountability, respect, and teamwork drive our employees to achieve excellence and deliver industry leading technology and services, thereby enabling a superior level of safety solutions to our clients. Brekford has one wholly-owned subsidiary, Municipal Recovery Agency, LLC, a Maryland limited liability company, that was formed in 2012 for the purpose of providing collection systems and services for unpaid citations and parking fines. 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. LIQUIDITY

2. LIQUIDITY	12 Months Ended
	Dec. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
NOTE 2 - LIQUIDITY	For the year ended December 31, 2015 the Company incurred a net loss of approximately $371 thousand, and used approximately $816 thousand of cash for operations. Additionally, at December 31, 2015 the company has cash available of approximately $580 thousand, a working capital surplus of approximately $423 thousand and availability under the established credit facility (see Note 5) of approximately $1.1 million. Management believes that the Company’s current level of cash combined with cash that it expects to generate in its operations during the next 12 months including anticipated new customer contracts and funds available from the credit facility and the note will be sufficient to sustain the Company’s business initiatives through at least December 31, 2016, but there can be no assurance that these measures will be successful or adequate. In the event that the Company’s cash reserves, cash flow from operations and funds available under the Credit Facility (see Note 5) are not sufficient to fund the Company’s future operations, it may need to obtain additional capital.

3. SUMMARY OF SIGNIFICANT ACCOU

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
NOTE 3 - 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 The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In the accompanying unaudited condensed consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, allowance for doubtful accounts, sales returns, allowance for inventory obsolescence, fair value of long-lived assets, deferred taxes and valuation allowance, and the depreciable lives of fixed assets. 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. 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). Management reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. 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 insignificant for the year ended December 31, 2015 and $10,111 for the year ended December 31, 2014. 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, 2015 and 2014 amounted to $237,286 and $443,737, respectively. For automated traffic safety enforcement revenue, the Company recognizes the revenue when the required collection efforts are completed and the respective municipality is billed 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. 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 $58,120 and $57,843 for the years ended December 31, 2015 and 2014, 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 $8,000 and $30,412 for the years ended December 31, 2015 and 2014, respectively. Share-Based Compensation The Company complies with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation Stock Compensation Treasury Stock The Company accounts for treasury stock using the cost method. As of December 31, 2015, 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 The Company files income tax returns with the U.S. Internal Revenue Service and with the revenue services of various states. 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 11 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 promissory note obligations approximate fair value, as the terms of these notes are consistent with terms available in the market for instruments with similar risk. We account for our derivative financial instruments, consisting solely of certain stock purchase warrants that contain non-standard anti-dilutions provisions and/or cash settlement features, and certain conversion options embedded in our convertible instruments, at fair value using Level 3 inputs, which are discussed in Note 14 to these condensed consolidated financial statements. We determine the fair value of these derivative liabilities using the Black-Scholes option-pricing model when appropriate, and in certain circumstances using binomial lattice models or other accepted valuation practices. When determining the fair value of our financial assets and liabilities using the Black-Scholes option-pricing model, we are required to use various estimates and unobservable inputs, including, among other things, contractual terms of the instruments, expected volatility of our stock price, expected dividends, and the risk-free interest rate. Changes in any of the assumptions related to the unobservable inputs identified above may change the fair value of the instrument. Increases in expected term, anticipated volatility and expected dividends generally result in increases in fair value, while decreases in the unobservable inputs generally result in decreases in fair value. Foreign Currency Transactions The Company has certain revenue and expense transactions with a functional currency in Mexican pesos and the Company's reporting currency is the U.S. dollar. Assets and liabilities are translated from the functional currency to the reporting currency at the exchange rate in effect at the balance sheet date and equity at the historical exchange rates. Revenue and expenses are translated at rates in effect at the time of the transactions. Resulting translation gains and losses are accumulated in a separate component of stockholders' equity - other comprehensive income (loss). Realized foreign currency transaction gains and losses are credited or charged directly to operations. Segment Reporting FASB ASC Topic 280, Segment Reporting Recent Accounting Pronouncements In May 2014 the FASB issued ASU 2014-09, Revenue from contracts with Customers (Topic 606) (May 2014). The topic of Revenue Recognition had become broad with several other regulatory agencies issuing standards, which lacked cohesion. The new guidance established a “comprehensive framework” and “reduces the number of requirements to which an entity must consider in recognizing revenue” and yet provides improved disclosures to assist stakeholders reviewing financial statements. The amendments in this Update are effective for annual reporting periods beginning after December 15, 2017. Early adoption is not permitted. The Company will adopt the methodologies prescribed by this ASU by the date required. Adoption of the ASU is not expected to have a significant effect on the Company’s consolidated financial statements. The FASB has issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. Under Generally Accepted Accounting Principles (GAAP), financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting is critical to financial reporting because it established the fundamental basis for measuring and classifying assets and liabilities. Currently, GAAP lacks guidance about management’s responsibility to evaluate whether there is substantial doubt the organization’s ability to continue as a going concern or to provide footnote disclosures. The ASU provides guidance to an organization’s management, with principles and definition that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The amendments in this update are effective for the annual period ending after December 31, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will adopt the methodologies prescribed by this ASU by the date required. Adoption of the ASU is not expected to have a significant effect on the Company’s consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of the Debt Issuance Cost.” To simplify the presentation of the debt issuance costs, the amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those years. Early adoption of the amendments in this ASU is permitted for financial statements that have not been previously issued. By adopting this standard, we will reclassify certain of our assets and liabilities but have not calculated the amounts of those recalculations at this time. In February 2016, FASB issued ASU-2016-02, "Leases (Topic 842)." The guidance requires that a lessee recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right of use asset representing its right to use the underlying asset for the lease term. For finance leases: the right-of-use asset and a lease liability will be initially measured at the present value of the lease payments, in the statement of financial position; interest on the lease liability will be recognized separately from amortization of the right-of-use asset in the statement of comprehensive income; and repayments of the principal portion of the lease liability will be classified within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows. For operating leases: the right-of-use asset and a lease liability will be initially measured at the present value of the lease payments, in the statement of financial position; a single lease cost will be recognized, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; and all cash payments will be classified within operating activities in the statement of cash flows. Under Topic 842 the accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The amendments in Topic 842 are effective for the Company beginning January 1, 2019, including interim periods within that fiscal year. We are currently evaluating the impact of adopting the new guidance of the consolidated financial statements. In January 2016, the Financial Accounting Standards Board ("FASB"), issued Accounting Standards Update ("ASU") 2016-01, "Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which amends the guidance in U.S. generally accepted accounting principles on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and are to be adopted by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adopting this standard. In November 2015, the FASB issued ASU 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes," which simplifies the presentation of deferred income taxes by requiring that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. This ASU is effective for financial statements issued for annual periods beginning after December 16, 2016, and interim periods within those annual periods. The adoption of this standard will not have any impact on the Company's financial position, results of operations and disclosures.

4. PROPERTY AND EQUIPMENT

4. PROPERTY AND EQUIPMENT	12 Months Ended
	Dec. 31, 2015
Property, Plant and Equipment [Abstract]
NOTE 4 - PROPERTY AND EQUIPMENT	Property and equipment consists of the following: December 31, 2015 2014 Leasehold improvements $ 502,092 $ 502,092 Computer equipment and software 519,368 519,368 Vehicles 333,531 333,531 Furniture 100,089 100,089 Cameras 703,392 574,753 Phone equipment 48,817 48,817 Handheld ticketing system 30,293 30,293 2,237,582 2,108,943 Accumulated depreciation and amortization (2,014,235 ) (1,824,621 ) $ 223,347 $ 284,322 Depreciation and amortization of property and equipment for the years ended December 31, 2015 and 2014 was $189,613 and $777,434, respectively.

5. LINE OF CREDIT AND OTHER NOT

5. LINE OF CREDIT AND OTHER NOTES PAYABLE	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
NOTE 5 - LINE OF CREDIT AND OTHER NOTES PAYABLE	Line of Credit On May 27, 2014, Brekford Corp. closed (the “Closing”) on an aggregate $3.0 million credit facility (the “Credit Facility”) with Rosenthal & Rosenthal, Inc. (“Rosenthal”) as lender consisting of $2.5 million in revolving loans (the “Revolving Facility”) and a $500,000 non-revolving term loan (the “Term Loan”). The terms and conditions of the Credit Facility are set forth in a Financing Agreement between the Company and Rosenthal dated May 27, 2014 (the “Financing Agreement”). The Term Loan is additionally evidenced by a Term Note issued by the Company in favor of Rosenthal. The maximum amount that the Company may borrow from time to time under the Revolving Facility will be the lesser of $2.5 million or the “Loan Availability” (as defined in the Financing Agreement), which is tied to the amount of the Company’s “Eligible Receivables” (as defined in the Financing Agreement) and the amount of its “Eligible Inventory” (as defined in the Financing Agreement). Interest on the unpaid principal balances due under the Credit Facility will be payable monthly in arrears. Amounts borrowed under the Revolving Facility that do not exceed the “Receivable Availability” (as defined in the Financing Agreement) will bear interest at an annual rate equal to the prime rate from time to time publicly announced in New York City by JPMorgan Chase Bank (the “Prime Rate”) plus 2.5%; amounts borrowed under the Revolving Facility that relate to the “Inventory Availability” (as defined in the Financing Agreement) will bear interest at an annual rate equal to the Prime Rate plus 3.0% (the “Inventory Rate”); and any amounts that, on any day, exceed the Loan Availability will bear interest at an annual rate equal to the Inventory Rate plus 4.0%; provided, however, that the Prime Rate will never be deemed to be less than 4.0%. The Company agreed to pay a minimum of $3,000 in monthly interest under the Revolving Facility, as well as a $1,000 monthly loan administration fee. In addition, the Company agreed to pay Rosenthal a facility fee at the Closing in the amount of $30,000. At each annual renewal of the Financing Agreement, the Company will pay Rosenthal a facility fee in the amount of $18,750. The Company’s obligations under the Financing Agreement and related documents are secured by a continuing lien on and security interest in substantially all of the Company’s assets. The Company’s repayment obligations under the Revolving Facility are due on demand by Rosenthal or, at Rosenthal’s option, upon the expiration of the Financing Agreement and/or the occurrence of an event of default thereunder. The original term of the Financing Agreement will expire on May 31, 2016 but will automatically renew for successive one-year terms unless the Company elects not to renew the Financing Agreement by providing at least 60 days’ prior written notice thereof to Rosenthal. Rosenthal may terminate the Financing Agreement at any time upon 60 days’ prior written notice to the Company. The Credit Facility replaced the Company’s $2.0 million credit facility with PNC Bank, National Association (“PNC”), under that certain Loan Agreement, dated as of June 28, 2012, as amended (the “PNC Facility”), and refinanced the amounts that were due under the PNC Facility. At the Closing, the Company paid approximately $1,030,707 to PNC in satisfaction of its obligations under the PNC Facility. In addition, the Company used proceeds from the Credit Facility, totaling approximately $310,649, to satisfy its obligations to Bank of America, N.A., under its Master Lease Agreement, dated as of December 13, 2011. At December 31, 2015, the Company had $1.4 million in outstanding indebtedness under the Revolving Facility and $166,667 in outstanding indebtedness under the Term Loan, and the Company could have borrowed up to an additional $1.1 million under the Revolving Facility. As of December 31, 2015, we were out of compliance with one of the financial covenants contained in the Credit Facility as a result of the loss recorded for the year ended 2015. We reported this non-compliance to Rosenthal & Rosenthal and received the waiver. Other Notes Payable The Company financed certain vehicles and equipment under finance agreements. The agreements mature at various dates through December 2017. The agreements require various monthly payments of principal and interest until maturity. As of December 31, 2015 and 2014, financed assets of $47,732 and $75,988, respectively, net of accumulated amortization of $98,184 and $65,927, respectively, are included in property and equipment on the balance sheets. The weighted average interest rate was 3.70% at December 31, 2015 and 3.75% at December 31, 2014. Future maturities of notes payable are as follows as of December 31, 2015: 2016 $ 29,277 2017 21,660 Total $ 50,937

6. NOTES PAYABLE - STOCKHOLDERS

6. NOTES PAYABLE - STOCKHOLDERS	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
NOTE 6 - 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 Brekford Corp. 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 Corp. 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, 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 Corp. and each member of the lender group agreed to 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 Corp. closes an equity financing that generates gross proceeds in the aggregate amount of not less than $5,000,000. On November 4, 2014, Brekford Corp. 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, 2015 or (ii) 10 business days after the date on which Brekford Corp. closes an equity financing that generates gross proceeds in the aggregate amount of not less than $5,000,000. On November 9, 2015, the maturity dates of the Stockholder Notes were extended to the earlier of (i) November 9, 2016 or (ii) 10 business days from the date on which Brekford Corp. closes an equity financing that generates gross proceeds in the aggregate amount of not less than $5,000,000. Mr. Brechin and Mr. Rutherford have indicated that they will not exercise their right of repayment prior to December 31, 2016. The Company anticipates the maturity date of the Stockholder Notes will continue to be extended for the foreseeable future; thus, they are classified as long term liabilities. As of December 31, 2015 and 2014, the amounts outstanding under the Stockholder Notes totaled $500,000.

7. CONVERTIBLE PROMISSORY NOTES

7. CONVERTIBLE PROMISSORY NOTES PAYABLE - INVESTOR	12 Months Ended
	Dec. 31, 2015
Convertible Promissory Notes Payable - Investor
NOTE 7 - CONVERTIBLE PROMISSORY NOTES PAYABLE - INVESTOR	On March 17, 2015, the Company entered into a note and warrant purchase agreement (the “Agreement”) with an accredited investor (the “Investor”) pursuant to which the Investor purchased an aggregate principal amount of $715,000 of a 6% convertible promissory note issued by the Company for an aggregate purchase price of $650,000 (the “Investor Note”). The Investor Note bears interest at a rate of 6% per annum and the principal amount is due on March 17, 2017. Any interest that accrues under the Investor Note is payable either upon maturity or upon any principal being converted on any voluntary conversion date (as to that principal amount then being converted). The Investor Note is convertible at the option of the Investor at any time into shares of Common Stock at a conversion price equal to the lesser of (i) $0.25 per share and (ii) 70% of the average of the lowest three volume weighted average prices for the twelve (12) trading days prior to such conversion (the “Conversion Price”). In no event can the Conversion Price be less than $0.10; provided, however, that if on or after the date of the Agreement the Company sells any Common Stock or Common Stock Equivalents (as defined in the Agreement) at an effective price per share that is less than $0.10 per share, then the Conversion Price shall be equal to the par value of the Common Stock then in effect. In connection with the Agreement, the Investor received a warrant to purchase 780,000 shares of Common Stock (the “Warrant”). The Warrant is exercisable for a period of five years from the date of issuance at an exercise price of $0.50 per share, subject to adjustment (the “Exercise Price”). On October 23, 2015, the Investor converted $25,000 of principal and $904 of accrued interest due under the Investor Note into 169,530 shares of Common Stock and the Company recognized a loss on extinguishment of debt of $19,869. On December 2, 2015, the Investor converted $50,000 of principal and $2,129 of accrued interest due under the Investor Note into 349,155 shares of Common Stock and the Company recognized a loss on extinguishment of debt of $35,160. The following table provides information relating to the Investor Note at December 31, 2015, excluding the $75,000 of converted debt: 2015 Convertible promissory note payable $ 640,000 Original issuance discount, net of amortization of the $23,002 as of December 31, 2015 (35,180 ) Beneficial conversion feature, net of amortization of $197,437 as of December 31, 2015 (301,960 ) Warrant feature, net of amortization of the $32,585 as of December 31, 2015 (49,835 ) Convertible promissory note payable, net $ 253,023 We evaluated the financing transactions in accordance with ASC Topic 470, Debt with Conversion and Other Options, and determined that the conversion feature of the Investor Note was afforded the exemption for conventional convertible instruments due to its fixed conversion rate. The Investor Note has an explicit limit on the number of shares issuable so it did meet the conditions set forth in current accounting standards for equity classification. The debt was issued with non-detachable conversion options that are beneficial to the investors at inception, because the conversion option has an effective strike price that is less than the market price of the underlying stock at the commitment date. The accounting for the beneficial conversion feature requires that the beneficial conversion feature be recognized by allocating the intrinsic value of the conversion option to additional paid-in-capital, resulting in a discount on the convertible notes, which will be amortized and recognized as interest expense. Accordingly, a portion of the proceeds was allocated to the Warrant based on its relative fair value, which totaled $92,079 using the Black Scholes option-pricing model. Further, the Company attributed a beneficial conversion feature of $557,921 to the shares of Common Stock issuable under the Investor Note based upon the difference between the effective Conversion Price and the closing price of the Common Stock on the date on which the Investor Note was issued. The assumptions used in the Black-Scholes model are as follows: (i) dividend yield of 0%; (ii) expected volatility of 80.5%, (iii) weighted average risk-free interest rate of 1.56%, (iv) expected life of five years, and (v) estimated fair value of the Common Stock of $0.26 per share. The expected term of the Warrant represents the estimated period of time until exercise and is based on historical experience of similar awards giving consideration to the contractual terms. The Company recorded amortization of the beneficial conversion feature and warrant feature of the Investor Note in other expense in the amount of $255,960 and $42,243, respectively, during the year ended December 31, 2015 which also includes the unamortized beneficial conversion feature and warrant feature attributable to the $75,000 principal converted to equity. The Company recorded an original issue discount of $65,000 to be amortized over the term of the Agreement as interest expense. The Company recognized $29,820 of interest expense as a result of the amortization during the year ended December 31, 2015 which also includes the unamortized original issue discount attributable to the $75,000 principal converted to equity.

8. WARRANT DERIVATIVE LIABILITY

8. WARRANT DERIVATIVE LIABILITY	12 Months Ended
	Dec. 31, 2015
Warrant Derivative Liability
NOTE 8 - WARRANT DERIVATIVE LIABILITY	On March 17, 2015, in conjunction with the issuance of the Investor Note (see Note 7), the Company issued the Warrant, which permits the Investor to purchase 840,000 shares of Common Stock, including 60,000 related to the financing costs, with an exercise price of $0.50 per share and a life of five years. The Exercise Price is subject to anti-dilution adjustments that allow for its reduction in the event the Company subsequently issues equity securities, including shares of Common Stock or any security convertible or exchangeable for shares of Common Stock, for no consideration or for consideration less than $0.50 a share. The Company accounted for the conversion option of the Warrant in accordance with ASC Topic 815. Accordingly, the conversion option is not considered to be solely indexed to the Company’s own stock and, as such, is recorded as a liability. The derivative liability associated with the Warrant has been measured at fair value at March 17, 2015 and December 31, 2015 using the Black Scholes option-pricing model. The assumptions used in the Black-Scholes model are as follows: (i) dividend yield of 0%; (ii) expected volatility of 80.5% - 105.1%; (iii) weighted average risk-free interest rate of 1.56-1.76%; (iv) expected life of five years; and (v) estimated fair value of the Common Stock of $0.20-$0.26 per share. At December 31, 2015, the outstanding fair value of the derivative liability was $99,036.

9. LEASES

9. LEASES	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
NOTE 9 - LEASES	Capital Leases The Company financed certain equipment under separate non-cancelable equipment loan and security agreements. The agreements matured in April 2015. The agreements required various monthly payments and were secured by the assets under lease. At December 31, 2015 and 2014, no capital lease was included in property and equipment on the consolidated balance sheets. Operating Leases The Company rents office space under separate non-cancelable operating leases expiring in April 2020. Future minimum lease payments under these lease agreements, exclusive of the Company’s share of operating costs at December 31, 2015 are as follows: 2016 172,697 2017 177,878 2018 183,214 2019 188,711 2020 64,475 Total $ 786,975 The Company rents office space under separate non-cancelable operating leases. Rent expense under our main headquarters lease, expiring on April 30, 2020 amounted to $169,297 and $ 212,736 for the years ended December 31, 2015 and 2014, respectively. The Company also leases approximately 2,500 square feet of office space from a related party under a non-cancelable operating lease expiring on June 30, 2016. Rent expense under this lease amounted to $49,200 and $46,800 for the years ended December 31, 2015 and 2014, respectively.

10. INVENTORY

10. INVENTORY	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
NOTE 10 - INVENTORY	As of December 31, 2015 and December 31, 2014 inventory consisted of the following: 2015 2014 Raw Materials $ 573,769 $ 579,279 Work in Process 32,702 102,669 Total Inventory $ 606,471 $ 681,948

11. LOSS PER SHARE

11. LOSS PER SHARE	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
NOTE 11 - LOSS PER SHARE	The following table provides information relating to the calculation of loss earnings per common share. Years Ended December 31, 2015 2014 Basic loss earnings per share Net loss $ (371,171 ) $ (1,502,647 ) Weighted average common shares outstanding - basic 44,690,550 44,499,610 Basic loss per share $ (0.01 ) $ (0.03) Diluted loss per share Net loss $ (371,171 ) $ (1,502,647 ) Weighted average common shares outstanding 44,690,550 44,499,610 Potential dilutive securities — — Weighted average common shares outstanding – diluted 44,690,550 44,499,610 Diluted loss per share $ (0.01 ) $ (0.03 ) Common stock equivalents excluded due to anti-dilutive effect 8,576,134 3,796,429

12. STOCKHOLDERS' EQUITY

12. STOCKHOLDERS' EQUITY	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
NOTE 12 - STOCKHOLDERS' EQUITY	At December 31, 2015 and 2014, the Company’s authorized stock consists of 20,000,000 shares of $.0001 par value preferred stock and 150,000,000 shares of $.0001 par value common stock. The following common stock transactions occurred during the period: On January 5, 2015, the Company granted an aggregate of 132,000 shares of restricted Common Stock to the key employees in consideration of services rendered. The weighted average fair value of the shares amounted to $0.34 per share based upon the closing price of shares of Common Stock on the date of the grant. These shares were fully vested on the date of the grant. The Company recorded $44,880 in share-based compensation expense related to restricted stock grants. On October 23, 2015, the Company issued 169,530 shares valued at $0.27 per share to convert $25,000 of principal and $904 of accrued interest due under the Convertible Note Agreement Note and recognized a loss on extinguishment of debt of $19,869. On December 2, 2015, the Company issued 349,155 shares valued at $0.25 per share to convert $50,000 of principal and $2,129 of accrued interest due under the Convertible Note Agreement and recognized a loss on extinguishment of debt of $35,160. On January 7, 2014, the Company granted an aggregate of 50,000 shares of restricted Common Stock to the non-employees in consideration of services rendered. The weighted average fair value of the shares amounted to $0.27 per share based upon the closing price of shares of Common Stock on the date of the grant. These shares were fully vested on the date of the grant. The Company recorded $13,500 in share-based compensation expense related to restricted stock grants. Purchases of Equity Securities by the Issuer and Affiliated Purchasers On September 7, 2010, Brekford Corp. issued a press release announcing that its board of directors authorized a stock repurchase program permitting the Company to repurchase up to $500,000 in outstanding shares of the Common Stock from time to time over a period of 12 months in open market transactions or in privately negotiated transactions at the Company's discretion. The stock repurchase program was subsequently extended for an additional 12 months until September 7, 2012. On September 28, 2012, the Company adopted a new stock repurchase program which permits the Company to repurchase the $363,280 in shares that remained available for repurchase under the old program, with the same terms and conditions except that the term of the new stock repurchase program was 24 months. The repurchase plan expired in September 2014. Warrants The assumptions used to value warrant grants during the year ended December 31, 2015, which consisted solely of the Warrant, were as follows: Year ended December 31, 2015 Expected life (in years) 5.00 Volatility 80.5% Risk free interest rate 1.56% Expected Dividend Rate 0 Summary of the warrant activity for year ended December 31, 2015 is as follows: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at January 1, 2015 — $ — — $ 0.00 Granted 840,000 0.50 4.21 0.00 Forfeited or expired — — — 0.00 Exercised — — — Outstanding at December 31, 2015 840,000 0.50 4.21 0.00 Exercisable at December 31, 2015 840,000 0.50 4.21 0.00 The weighted average remaining contractual life of warrants outstanding as of December 31, 2015 was as follows: Weighted Average Stock Stock Remaining Exercisable Warrants Warrants Contractual Prices Outstanding Exercisable Life (years) $ 0.50 840,000 840,000 4.21 Total 840,000 840,000 4.21

13. SHARE-BASED COMPENSATION

13. SHARE-BASED COMPENSATION	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
NOTE 13 - 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”). During the year ended December 31, 2015, Brekford Corp. granted stock options under the 2008 Incentive Plan to its non-employee directors. These options have exercise prices equal to the fair market value of a share of Common Stock as of the date of grant and have terms of ten years. Stock Options Option grants during the year ended December 31, 2015 were made to non-employee directors who elected to receive options during the annual equity grant period in the first quarter of each fiscal year. The options had a grant date fair value of $0.13 per share and will vest and become exercisable with respect to option shares over a three year period commencing from the date of grant at a rate of 33.33% per year. Option grants during the year ended December 31, 2014 were made to non-employee directors who elected to receive options during the annual equity grant period in the first quarter of each fiscal year. The options had a grant date fair value of $0.10 per share and will vest and become exercisable with respect to option shares over a three year period commencing from the date of grant at a rate of 33.33% per year. The Company recorded $11,214 and $6,233 in stock option compensation expense during the period ended December 31, 2015 and 2014, respectively, related to the stock option grants. The Company uses the Black-Scholes option pricing model to determine the fair value of stock options granted to employees and recognizes the compensation cost of employee share-based awards in its statement of operations using the straight-line method over the vesting period of the award, net of estimated forfeitures. The use of the Black-Scholes option pricing model to estimate the fair value of share-based awards requires that the Company make certain assumptions and estimates for required inputs to the model, including (1) the fair value of the Company’s common stock at each grant date, (ii) the expected volatility of the Company’s common stock value based on industry comparisons, (iii) the expected life of the share-based award, (iv) the risk-free interest rate, and (v) the dividend yield. The following are the assumptions made in computing the fair value of share-based awards granted in the years ended December 31, 2015 and 2014: Year ended December 31, 2015 Year ended December 31, 2014 Expected life (in years) 3.50 3.50 Volatility 80.5 % 70.8 % Risk free interest rate 0.95 % 0.72 % Expected Dividend Rate 0 0 Summary of the option activity for the period ended December 31, 2015 is as follows: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at January 1, 2014 — $ 0.00 — $ 0.00 Granted 225,000 0.20 — 0.00 Forfeited or expired — — — 0.00 Exercised — — — Outstanding at January 1, 2015 225,000 $ 0.20 4.15 $ 0.00 Granted 225,000 0.24 3.25 0.00 Forfeited or expired (50,000) — — 0.00 Exercised — — — Outstanding at December 31, 2015 400,000 $ 0.20 3.25 0.00 Exercisable at December 31, 2015 75,000 — 0.00 Vested and expected to vest 325,000 $ 0.20 3.25 0.00 The unrecognized compensation cost for unvested stock option awards outstanding at December 31, 2015 was approximately $34,871 to be recognized over approximately 1.97 years. Restricted Stock Grants During the period ended December 31, 2015, Company issued an aggregate of 132,000 shares of restricted common stock to its key employees in consideration of services rendered and part of employment agreement. The weighted average value of the shares amounted to $0.34 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 $44,880 in share-based compensation expense for the year ending December 31, 2015 related to restricted stock grants. During the period ended December 31, 2014, the Company granted an aggregate of 50,000 shares of restricted stock to the directors as part of our director compensation program and in consideration of services rendered. The weighted average value of the shares amounted to $0.27 per share based upon the closing price of shares of common stock on the date of the grant. These shares were fully vested on the date of the grant. The Company recorded $13,500 in share-based compensation expense for the year ending December 31, 2014 related to restricted stock grants. Restricted Stock Shares Weighted Average Value Nonvested restricted stock at January 1, 2014 — $ — Granted 50,000 0.27 Vested (50,000 ) 0.27 Forfeited or expired — — Nonvested restricted stock at December 31, 2014 — $ — Granted 132,000 0.34 Vested (132,000 ) 0.34 Forfeited or expired — — Nonvested restricted stock at December 31, 2015 — $ — 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, 2015, 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.

14. EMPLOYEE BENEFIT PLANS

14. EMPLOYEE BENEFIT PLANS	12 Months Ended
	Dec. 31, 2015
Compensation and Retirement Disclosure [Abstract]
NOTE 14 - 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 $8,718 and $11,833 during the years ended December 31, 2015 and, 2014, respectively.

15. MAJOR CUSTOMERS AND VENDORS

15. MAJOR CUSTOMERS AND VENDORS	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
NOTE 15 - MAJOR CUSTOMERS AND VENDORS	Major Customers The Company has several contracts with government agencies, of which net revenue from one customer during the year ended December 31, 2015 represented 17% of the total net revenue for such year. Accounts receivable due from customers at December 31, 2015 amounted to 53% of total accounts receivable at that date. The Company has several contracts with government agencies, of which net revenue from two customers during the year ended December 31, 2014 represented 10% of the total net revenue for such year. Accounts receivable due from customers at December 31, 2014 amounted to 53% 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 59% and 53% of total revenues for the years ended December 31, 2015 and 2014, respectively. As of December 31, 2015 and 2014, accounts payable due to this distributor amounted to 72% and 53% of total accounts payable, respectively.

16. INCOME TAXES

16. INCOME TAXES	12 Months Ended
	Dec. 31, 2015
Income Tax Disclosure [Abstract]
NOTE 16 - INCOME TAXES	As of December 31, 2015, the Company has approximately $6.64 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’s deferred tax assets and liabilities are as follows for each of the periods presented: December 31, 2015 2014 Net operating loss carry forwards $ 2,780,000 $ 2,640,000 Property and Equipment (500,000) (513,000 ) Other — 3,000 2,280,000 2,130,000 Valuation allowance (2,280,000) (2,130,000 ) 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, 2015 2014 Current Federal $ — $ — State — — — — Deferred Federal (130,000) (486,000 ) State (20,000) (110,000 ) (150,000) (596,000 ) Change in valuation allowance 150,000 596,000 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 35% to the Company’s actual rate as reported for each of the periods presented is as follows: Years Ended December 31, 2015 2014 Expected statutory rate (35.0) % (34.0) % State income tax rate, net of Federal benefit (5.2) % (5.4) % Permanent differences Other — % 0.1 % 40.2 % 39.3 % Valuation allowance (40.2) % (39.3) % — % — %

17. SUBSEQUENT EVENTS

17. SUBSEQUENT EVENTS	12 Months Ended
	Dec. 31, 2015
Subsequent Events
NOTE 17 - SUBSEQUENT EVENTS	On February 26, 2016, the Investor converted $50,000 of principal and $2,844 of accrued interest due under the Investor Note into 476,500 shares of Common Stock.

3. SUMMARY OF SIGNIFICANT ACC24

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
	Dec. 31, 2015
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	The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In the accompanying unaudited condensed consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, allowance for doubtful accounts, sales returns, allowance for inventory obsolescence, fair value of long-lived assets, deferred taxes and valuation allowance, and the depreciable lives of fixed assets. 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.
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). Management reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets.
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 insignificant for the year ended December 31, 2015 and $10,111 for the year ended December 31, 2014. 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, 2015 and 2014 amounted to $237,286 and $443,737, respectively. For automated traffic safety enforcement revenue, the Company recognizes the revenue when the required collection efforts are completed and the respective municipality is billed 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.
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 $58,120 and $57,843 for the years ended December 31, 2015 and 2014, 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 $8,000 and $30,412 for the years ended December 31, 2015 and 2014, respectively.
Share-Based Compensation	The Company complies with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, - , 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, 2015, 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 The Company files income tax returns with the U.S. Internal Revenue Service and with the revenue services of various states. 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 11 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 promissory note obligations approximate fair value, as the terms of these notes are consistent with terms available in the market for instruments with similar risk. We account for our derivative financial instruments, consisting solely of certain stock purchase warrants that contain non-standard anti-dilutions provisions and/or cash settlement features, and certain conversion options embedded in our convertible instruments, at fair value using Level 3 inputs, which are discussed in Note 14 to these condensed consolidated financial statements. We determine the fair value of these derivative liabilities using the Black-Scholes option-pricing model when appropriate, and in certain circumstances using binomial lattice models or other accepted valuation practices. When determining the fair value of our financial assets and liabilities using the Black-Scholes option-pricing model, we are required to use various estimates and unobservable inputs, including, among other things, contractual terms of the instruments, expected volatility of our stock price, expected dividends, and the risk-free interest rate. Changes in any of the assumptions related to the unobservable inputs identified above may change the fair value of the instrument. Increases in expected term, anticipated volatility and expected dividends generally result in increases in fair value, while decreases in the unobservable inputs generally result in decreases in fair value.
Foreign Currency Transactions	The Company has certain revenue and expense transactions with a functional currency in Mexican pesos and the Company's reporting currency is the U.S. dollar. Assets and liabilities are translated from the functional currency to the reporting currency at the exchange rate in effect at the balance sheet date and equity at the historical exchange rates. Revenue and expenses are translated at rates in effect at the time of the transactions. Resulting translation gains and losses are accumulated in a separate component of stockholders' equity - other comprehensive income (loss). Realized foreign currency transaction gains and losses are credited or charged directly to operations.
Segment Reporting	FASB ASC Topic 280, , 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.
Recent Accounting Pronouncements	In May 2014 the FASB issued ASU 2014-09, Revenue from contracts with Customers (Topic 606) (May 2014). The topic of Revenue Recognition had become broad with several other regulatory agencies issuing standards, which lacked cohesion. The new guidance established a “comprehensive framework” and “reduces the number of requirements to which an entity must consider in recognizing revenue” and yet provides improved disclosures to assist stakeholders reviewing financial statements. The amendments in this Update are effective for annual reporting periods beginning after December 15, 2017. Early adoption is not permitted. The Company will adopt the methodologies prescribed by this ASU by the date required. Adoption of the ASU is not expected to have a significant effect on the Company’s consolidated financial statements. The FASB has issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. Under Generally Accepted Accounting Principles (GAAP), financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting is critical to financial reporting because it established the fundamental basis for measuring and classifying assets and liabilities. Currently, GAAP lacks guidance about management’s responsibility to evaluate whether there is substantial doubt the organization’s ability to continue as a going concern or to provide footnote disclosures. The ASU provides guidance to an organization’s management, with principles and definition that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The amendments in this update are effective for the annual period ending after December 31, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will adopt the methodologies prescribed by this ASU by the date required. Adoption of the ASU is not expected to have a significant effect on the Company’s consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of the Debt Issuance Cost.” To simplify the presentation of the debt issuance costs, the amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those years. Early adoption of the amendments in this ASU is permitted for financial statements that have not been previously issued. By adopting this standard, we will reclassify certain of our assets and liabilities but have not calculated the amounts of those recalculations at this time. In February 2016, FASB issued ASU-2016-02, "Leases (Topic 842)." The guidance requires that a lessee recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right of use asset representing its right to use the underlying asset for the lease term. For finance leases: the right-of-use asset and a lease liability will be initially measured at the present value of the lease payments, in the statement of financial position; interest on the lease liability will be recognized separately from amortization of the right-of-use asset in the statement of comprehensive income; and repayments of the principal portion of the lease liability will be classified within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows. For operating leases: the right-of-use asset and a lease liability will be initially measured at the present value of the lease payments, in the statement of financial position; a single lease cost will be recognized, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; and all cash payments will be classified within operating activities in the statement of cash flows. Under Topic 842 the accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The amendments in Topic 842 are effective for the Company beginning January 1, 2019, including interim periods within that fiscal year. We are currently evaluating the impact of adopting the new guidance of the consolidated financial statements. In January 2016, the Financial Accounting Standards Board ("FASB"), issued Accounting Standards Update ("ASU") 2016-01, "Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which amends the guidance in U.S. generally accepted accounting principles on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and are to be adopted by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adopting this standard. In November 2015, the FASB issued ASU 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes," which simplifies the presentation of deferred income taxes by requiring that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. This ASU is effective for financial statements issued for annual periods beginning after December 16, 2016, and interim periods within those annual periods. The adoption of this standard will not have any impact on the Company's financial position, results of operations and disclosures.

4. PROPERTY AND EQUIPMENT (Tabl

4. PROPERTY AND EQUIPMENT (Tables)	12 Months Ended
	Dec. 31, 2015
Property, Plant and Equipment [Abstract]
Schedule of Property and equipment	December 31, 2015 2014 Leasehold improvements $ 502,092 $ 502,092 Computer equipment and software 519,368 519,368 Vehicles 333,531 333,531 Furniture 100,089 100,089 Cameras 703,392 574,753 Phone equipment 48,817 48,817 Handheld ticketing system 30,293 30,293 2,237,582 2,108,943 Accumulated depreciation and amortization (2,014,235 ) (1,824,621 ) $ 223,347 $ 284,322

5. LINE OF CREDIT AND OTHER N26

5. LINE OF CREDIT AND OTHER NOTES PAYABLE (Tables)	12 Months Ended
	Dec. 31, 2015
Line Of Credit And Other Notes Payable Tables
Future maturities of notes payable	2015 Convertible promissory note payable $ 640,000 Original issuance discount, net of amortization of the $23,002 as of December 31, 2015 (35,180 ) Beneficial conversion feature, net of amortization of $197,437 as of December 31, 2015 (301,960 ) Warrant feature, net of amortization of the $32,585 as of December 31, 2015 (49,835 ) Convertible promissory note payable, net $ 253,023

7. CONVERTIBLE PROMISSORY NOT27

7. CONVERTIBLE PROMISSORY NOTES PAYABLE - INVESTOR (Tables)	12 Months Ended
	Dec. 31, 2015
Convertible Promissory Notes Payable - Investor
Convertible promissory note	2015 Convertible promissory note payable $ 640,000 Original issuance discount, net of amortization of the $23,002 as of December 31, 2015 (35,180 ) Beneficial conversion feature, net of amortization of $197,437 as of December 31, 2015 (301,960 ) Warrant feature, net of amortization of the $32,585 as of December 31, 2015 (49,835 ) Convertible promissory note payable, net $ 253,023

9. LEASES (Tables)

9. LEASES (Tables)	12 Months Ended
	Dec. 31, 2015
Leases Tables
Future minimum lease payments under operating lease agreements	2016 172,697 2017 177,878 2018 183,214 2019 188,711 2020 64,475 Total $ 786,975

10. INVENTORY (Tables)

10. INVENTORY (Tables)	12 Months Ended
	Dec. 31, 2015
Inventory Tables
Schedule of Inventory	2015 2014 Raw Materials $ 573,769 $ 579,279 Work in Process 32,702 102,669 Total Inventory $ 606,471 $ 681,948

11. LOSS PER SHARE (Tables)

11. LOSS PER SHARE (Tables)	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
Calculation of basic and diluted (loss) earnings per common share	Years Ended December 31, 2015 2014 Basic loss earnings per share Net loss $ (371,171 ) $ (1,502,647 ) Weighted average common shares outstanding - basic 44,690,550 44,499,610 Basic loss per share $ (0.01 ) $ (0.03) Diluted loss per share Net loss $ (371,171 ) $ (1,502,647 ) Weighted average common shares outstanding 44,690,550 44,499,610 Potential dilutive securities — — Weighted average common shares outstanding – diluted 44,690,550 44,499,610 Diluted loss per share $ (0.01 ) $ (0.03 ) Common stock equivalents excluded due to anti-dilutive effect 8,576,134 3,796,429

12. STOCKHOLDERS' EQUITY (Table

12. STOCKHOLDERS' EQUITY (Tables)	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
Assumptions for warrent valuation	Year ended December 31, 2015 Year ended December 31, 2014 Expected life (in years) 3.50 3.50 Volatility 80.5 % 70.8 % Risk free interest rate 0.95 % 0.72 % Expected Dividend Rate 0 0
Summary of warrant activity	Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at January 1, 2015 — $ — — $ 0.00 Granted 840,000 0.50 4.21 0.00 Forfeited or expired — — — 0.00 Exercised — — — Outstanding at December 31, 2015 840,000 0.50 4.21 0.00 Exercisable at December 31, 2015 840,000 0.50 4.21 0.00
Weighted Average Remaining Contractual Life of Warrants	Weighted Average Stock Stock Remaining Exercisable Warrants Warrants Contractual Prices Outstanding Exercisable Life (years) $ 0.50 840,000 840,000 4.21 Total 840,000 840,000 4.21

13. SHARE-BASED COMPENSATION (T

13. SHARE-BASED COMPENSATION (Tables)	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
Assumptions for option valuation	Year ended December 31, 2015 Year ended December 31, 2014 Expected life (in years) 3.50 3.50 Volatility 80.5 % 70.8 % Risk free interest rate 0.95 % 0.72 % Expected Dividend Rate 0 0
Summary of the option activity for the period	Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at January 1, 2014 — $ 0.00 — $ 0.00 Granted 225,000 0.20 — 0.00 Forfeited or expired — — — 0.00 Exercised — — — Outstanding at January 1, 2015 225,000 $ 0.20 4.15 $ 0.00 Granted 225,000 0.24 3.25 0.00 Forfeited or expired (50,000) — — 0.00 Exercised — — — Outstanding at December 31, 2015 400,000 $ 0.20 3.25 0.00 Exercisable at December 31, 2015 75,000 — 0.00 Vested and expected to vest 325,000 $ 0.20 3.25 0.00
Share-based compensation expense related to restricted stock grants	Restricted Stock Shares Weighted Average Value Nonvested restricted stock at January 1, 2014 — $ — Granted 50,000 0.27 Vested (50,000 ) 0.27 Forfeited or expired — — Nonvested restricted stock at December 31, 2014 — $ — Granted 132,000 0.34 Vested (132,000 ) 0.34 Forfeited or expired — — Nonvested restricted stock at December 31, 2015 — $ —

16. INCOME TAXES (Tables)

16. INCOME TAXES (Tables)	12 Months Ended
	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Deferred tax assets and liabilities	December 31, 2015 2014 Net operating loss carry forwards $ 2,780,000 $ 2,640,000 Property and Equipment (500,000) (513,000 ) Other — 3,000 2,280,000 2,130,000 Valuation allowance (2,280,000) (2,130,000 ) Net deferred tax asset $ — $ —
Schedule of Components of Income Tax Expense (Benefit)	Years Ended December 31, 2015 2014 Current Federal $ — $ — State — — — — Deferred Federal (130,000) (486,000 ) State (20,000) (110,000 ) (150,000) (596,000 ) Change in valuation allowance 150,000 596,000 Income tax expense $ — $ —
Schedule of Effective Income Tax Rate Reconciliation	Years Ended December 31, 2015 2014 Expected statutory rate (35.0) % (34.0) % State income tax rate, net of Federal benefit (5.2) % (5.4) % Permanent differences Other — % 0.1 % 40.2 % 39.3 % Valuation allowance (40.2) % (39.3) % — % — %

2. LIQUIDITY (Details Narrative

2. LIQUIDITY (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Net loss	$ (371,171)	$ (1,502,647)
Cash for operations	816,460	306,783
Cash	580,400	$ 1,112,881
Working capital surplus	423,000
Credit facility	$ 1,100,000

3. SUMMARY OF SIGNIFICANT ACC35

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Warranty claims	$ 0	$ 10,111
Revenue from extended warranties	237,286	443,737
Shipping and Handling Costs	58,120	57,843
Advertising Costs	8,000	30,412
Common Stock held in treasury amount	$ 5,890	$ 5,890
Treasury Stock [Member]
Common Stock held in treasury shares	10,600
Common Stock held in treasury amount	$ 5,890

4. PROPERTY AND EQUIPMENT (Deta

4. PROPERTY AND EQUIPMENT (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Property And Equipment Details
Leasehold improvements	$ 502,092	$ 502,092
Computer equipment and software	519,368	519,368
Vehicles	333,531	333,531
Furniture	100,089	100,089
Cameras	703,392	574,753
Phone equipment	48,817	48,817
Handheld ticketing system	30,293	30,293
Property and equipment, gross	2,237,582	2,108,943
Accumulated depreciation and amortization	(2,014,235)	(1,824,621)
Property and equipment, net	$ 223,347	$ 284,322

4. PROPERTY AND EQUIPMENT (De37

4. PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Property And Equipment Details Narrative
Depreciation and amortization	$ 189,613	$ 777,434

5. LINE OF CREDIT AND OTHER N38

5. LINE OF CREDIT AND OTHER NOTES PAYABLE (Details)	Dec. 31, 2015USD ($)
Line Of Credit And Other Notes Payable Details
2,016	$ 29,277
2,017	21,660
Total	$ 50,937

5. LINE OF CREDIT AND OTHER N39

5. LINE OF CREDIT AND OTHER NOTES PAYABLE (Details Narrative) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Short-term Debt [Line Items]
Financed assets	$ 47,732	$ 75,988
Accumulated amortization	$ 98,184	$ 65,927
Weighted average interest rate	3.70%	3.75%
Revolving Credit Facility [Member]
Short-term Debt [Line Items]
Outstanding indebtedness	$ 1,400,000
Additional Borrowed	1,100,000
Term Loan [Member]
Short-term Debt [Line Items]
Outstanding indebtedness	$ 166,667

6. NOTES PAYABLE - STOCKHOLDE40

6. NOTES PAYABLE - STOCKHOLDERS (Details Narrative) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Notes Payable - Stockholders Details Narrative
Amounts outstanding under Promissory Notes, total	$ 500,000	$ 500,000

7. CONVERTIBLE PROMISSORY NOT41

7. CONVERTIBLE PROMISSORY NOTES PAYABLE - INVESTOR (Details)	Dec. 31, 2015USD ($)
Convertible Promissory Notes Payable - Investor Details
Convertible promissory note payable	$ 640,000
Original issuance discount, net of amortization of the $23,002 as of December 31, 2015	(35,180)
Beneficial conversion feature, net of amortization of $197,437 as of December 31, 2015	(301,960)
Warrant feature, net of amortization of the $32,585 as of December 31, 2015	(49,835)
Convertible promissory note payable, net	$ 253,023

7. CONVERTIBLE PROMISSORY NOT42

7. CONVERTIBLE PROMISSORY NOTES PAYABLE - INVESTOR (Details Narrative)	12 Months Ended
	Dec. 31, 2015USD ($)
Convertible Promissory Notes Payable - Investor Details
Interest expense	$ 29,820
Original issue discount	75,000
Amortization of the beneficial conversion feature	255,960
Amortization of the beneficial warrant feature	42,243
Converted debt	$ 75,000

8. WARRANT DERIVATIVE LIABILI43

8. WARRANT DERIVATIVE LIABILITY (Details Narrative) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Warrant Derivative Liability
Derivative liability	$ 99,036	$ 0

9. LEASES (Details)

9. LEASES (Details)	Dec. 31, 2015USD ($)
Leases Details
2,016	$ 172,697
2,017	177,878
2,018	183,214
2,019	188,711
2,020	64,475
Total	$ 786,975

9. LEASES (Details Narrative)

9. LEASES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Leases Details Narrative
Rent expense over term of lease on straight-line basis	$ 169,297	$ 212,736
Lease payments amount	$ 49,200	$ 46,800

10. INVENTORY (Details)

10. INVENTORY (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Inventory
Raw Materials	$ 573,769	$ 579,279
Work in Process	32,702	102,669
Total Inventory	$ 606,471	$ 681,948

11. LOSS PER SHARE (Details)

11. LOSS PER SHARE (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Basic loss earnings per share
Net loss	$ (371,171)	$ (1,502,647)
Weighted average common shares outstanding - basic	44,690,550	44,499,610
Basic loss per share	$ (0.01)	$ (0.03)
Diluted loss per share
Net loss	$ (371,171)	$ (1,502,647)
Weighted average common shares outstanding	44,690,550	44,499,610
Potential dilutive securities	0	0
Weighted average common shares outstanding - diluted	44,690,550	44,499,610
Diluted loss per share	$ (0.01)	$ (0.03)
Common Stock Equivalents excluded due to anti-dilutive effect	8,576,134	3,796,429

12. STOCKHOLDERS' EQUITY (Detai

12. STOCKHOLDERS' EQUITY (Details)	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
Expected life (in years)	5 years
Volatility	80.50%
Risk free interest rate	1.56%
Expected Dividend Rate	0.00%

Disclosure - 12. STOCKHOLDERS'

Disclosure - 12. STOCKHOLDERS' EQUITY (Details 1)	12 Months Ended
	Dec. 31, 2015$ / sharesshares
Number of Warrants
Outstanding beginning | shares	0
Granted | shares	840,000
Forfeited or expired | shares	0
Exercised | shares	0
Outstanding ending | shares	840,000
Exercisable ending | shares	840,000
Weighted Average Exercise Price
Outstanding beginning	$ 0
Granted	0.50
Forfeited or expired	0
Exercised	0
Outstanding ending	0.50
Exercisable ending	$ 0.50
Granted	4 years 2 months 16 days
Outstanding ending	4 years 2 months 16 days
Exercisable ending	4 years 2 months 16 days
Aggregate Intrinsic Value
Outstanding beginning	$ 0
Granted	0
Forfeited or expired	0
Exercised	0
Outstanding ending	0
Exercisable ending	$ 0

Disclosure - 12. STOCKHOLDERS50

Disclosure - 12. STOCKHOLDERS' EQUITY (Details 2)	12 Months Ended
	Dec. 31, 2015$ / sharesshares
Stock Warrants Outstanding	840,000
Stock Warrants Exercisable	840,000
Weighted Average Remaining Contractual Life (years)	4 years 2 months 16 days
$ 0.50 [Member]
Exercisable Price | $ / shares	$ 0.50
Stock Warrants Outstanding	840,000
Stock Warrants Exercisable	840,000
Weighted Average Remaining Contractual Life (years)	4 years 2 months 16 days

12. STOCKHOLDERS' EQUITY (Det51

12. STOCKHOLDERS' EQUITY (Details Narrative) - $ / shares	Dec. 31, 2015	Dec. 31, 2014
Stockholders Equity Details Narrative
Preferred Stock par value	$ 0.0001	$ 0.0001
Preferred Stock Authorized	20,000,000	20,000,000
Common Stock par value	$ 0.0001	$ 0.0001
Common Stock Authorized	150,000,000	150,000,000

13. SHARE-BASED COMPENSATION (D

13. SHARE-BASED COMPENSATION (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Notes to Financial Statements
Expected life (in years)	3 years 6 months	3 years 6 months
Volatility	80.50%	70.80%
Risk free interest rate	0.95%	0.72%
Expected Dividend Rate	$ 0	$ 0

13. SHARE-BASED COMPENSATION 53

13. SHARE-BASED COMPENSATION (Details 1) - Stock Options [Member] - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Number of Options
Outstanding, Beginning	225,000	0
Granted	225,000	225,000
Forfeited or expired	(50,000)	0
Exercised	0	0
Outstanding Ending	400,000	225,000
Exercisable at December 31, 2015	75,000
Vested and expected to vest	325,000
Weighted Average Exercise Price
Outstanding, Beginning	$ 0.20	$ 0
Granted	0.24	0.20
Forfeited or expired	0	0
Exercised	0	0
Outstanding Ending	0.20	$ 0.20
Vested and expected to vest	$ 0.20
Granted	3 years 3 months
Outstanding Ending	3 years 3 months	4 years 1 month 24 days
Vested and expected to vest	3 years 3 months
Aggregate Intrinsic Value
Outstanding Beginning	$ 0	$ 0
Granted	0	0
Forfeited or expired	0	0
Exercised	0	0
Outstanding Ending	0	0
Exercisable at December 31, 2015	$ 0	$ 0

13. SHARE-BASED COMPENSATION 54

13. SHARE-BASED COMPENSATION (Details 2) - Restricted Stock [Member] - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Restricted Stock Shares
Nonvested restricted stock, beginning	0	0
Granted	132,000	50,000
Vested	(132,000)	(50,000)
Forfeited or expired	0	0
Nonvested restricted stock, Ending	0	0
Weighted Average Value
Nonvested restricted stock beginning	$ 0	$ 0
Granted	0.34	0.27
Vested	0.34	0.27
Forfeited or expired	0	0
Nonvested restricted stock ending	$ 0	$ 0

13. SHARE-BASED COMPENSATION 55

13. SHARE-BASED COMPENSATION (Detail Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Share - based compensation expense	$ 56,094	$ 19,733
2008 Incentive Plan [Member]
Common stock remained available for future issuance	6,680,000
Restricted Stock Grants [Member]
Share - based compensation expense	$ 44,880	13,500
Recognized period	1 year 11 months 19 days
Stock Options [Member]
Share - based compensation expense	$ 11,214	$ 6,233
Unrecognized compensation cost for unvested stock option	$ 34,871

14. EMPLOYEE BENEFIT PLANS (Det

14. EMPLOYEE BENEFIT PLANS (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Employee Benefit Plans Details Narrative
Company contribution	$ 8,718	$ 11,833

15. MAJOR CUSTOMERS AND VENDO57

15. MAJOR CUSTOMERS AND VENDORS (Details Narrative)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Hardware products Vendor
Revenues from hardware products	59.00%	53.00%
Accounts payable due to distributor	72.00%	53.00%
Major Customers
Net sales	17.00%	10.00%
Accounts receivable	53.00%	53.00%

16. INCOME TAXES (Details)

16. INCOME TAXES (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Income Taxes Details
Net operating loss carry forwards	$ 2,780,000	$ 2,640,000
Property and Equipment	(500,000)	(513,000)
Other	0	3,000
Net deferred tax asset, Gross	2,280,000	2,130,000
Valuation allowance	(2,280,000)	(2,130,000)
Net deferred tax asset	$ 0	$ 0

16. INCOME TAXES (Details 1)

16. INCOME TAXES (Details 1) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Current
Federal	$ 0	$ 0
State	0	0
Current	0	0
Deferred
Federal	(130,000)	(486,000)
State	(20,000)	(110,000)
Deferred	(150,000)	(596,000)
Change in valuation allowance	150,000	596,000
Income tax expense	$ 0	$ 0

16. INCOME TAXES (Details 2)

16. INCOME TAXES (Details 2)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Taxes Details 2
Expected statutory rate	(35.00%)	(34.00%)
State income tax rate, net of Federal benefit	(5.20%)	(5.40%)
Permanent differences
Other	0.00%	0.10%
Statutory rate	40.20%	39.30%
Valuation allowance	(40.20%)	(39.30%)
Effective tax rate	0.00%	0.00%

16. INCOME TAXES (Details Narra

16. INCOME TAXES (Details Narrative)	Dec. 31, 2015USD ($)
Income Taxes Details Narrative
Federal and state net operating loss carryforwards available to offset future taxable income (approximately)	$ 6,640,000