Rekor Systems (REKR) 10-K 11 Apr 19 2018 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2018	Mar. 31, 2019	Jun. 29, 2018
Document And Entity Information
Entity Registrant Name	Novume Solutions, Inc.
Entity Central Index Key	0001697851
Document Type	10-K
Document Period End Date	Dec. 31, 2018
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	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		19,367,619
Entity Public Float			$ 23,700,000
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2018

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Current Assets
Cash and cash equivalents	$ 2,767,183	$ 1,957,212
Accounts receivable, net	5,264,949	6,707,294
Inventory	72,702	155,716
Notes receivable	0	1,475,000
Other current assets	425,530	635,566
Total current assets	8,530,364	10,930,788
Property and Equipment
Capitalized Software	913,455	52,400
Furniture and fixtures	302,243	211,885
Office equipment	544,533	524,131
Camera systems	553,758	462,399
Vehicles	36,020	10,020
Leasehold improvements	95,422	72,918
Total fixed assets	2,445,431	1,333,753
Less: accumulated depreciation	(978,150)	(633,014)
Net property and equipment	1,467,281	700,739
Goodwill	3,092,616	3,092,616
Intangibles, net	4,834,503	5,468,874
Other Assets
Investment at cost	0	262,140
Deposits and other long-term assets	130,485	143,583
Total other assets	130,485	405,723
Total assets	18,055,249	20,598,740
Current Liabilities
Accounts payable	1,593,726	1,390,877
Accrued expenses	2,643,027	3,060,512
Lines of credit	1,661,212	3,663,586
Notes payable, current portion	2,469,211	0
Deferred revenue	207,059	117,636
Total current liabilities	8,574,235	8,232,611
Long-Term Liabilities
Notes payable	964,733	1,405,994
Deferred rent	8,475	53,217
Total long-term liabilities	973,208	1,459,211
Total liabilities	9,547,443	9,691,822
Series A Cumulative Convertible Redeemable Preferred stock, $0.0001 par value, 505,000 shares authorized and 502,327 shares issued and outstanding as of December 31, 2018 and 2017, respectively	5,051,683	4,396,580
Stockholders' Equity
Common stock, $0.0001 par value, 30,000,000 shares authorized, 18,767,619 and 14,463,364 shares issued and outstanding as of December 31, 2018 and 2017, respectively	1,877	1,447
Additional paid-in capital	15,518,013	12,342,527
Accumulated deficit	(12,063,791)	(5,833,660)
Total Stockholders' Equity	3,456,123	6,510,338
Total Liabilities and Stockholders' Equity	18,055,249	20,598,740
Preferred Class A [Member]
Stockholders' Equity
Preferred stock	0	0
Preferred Class B [Member]
Stockholders' Equity
Preferred stock	0	0
Series B Cumulative Convertible Redeemable Preferred
Stockholders' Equity
Preferred stock	$ 24	$ 24

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2018	Dec. 31, 2017
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	2,000,000	2,000,000
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, authorized	30,000,000	30,000,000
Common stock, issued	18,767,619	14,463,364
Common stock, outstanding	18,767,619	14,463,364
Series A Cumulative Convertible Redeemable Preferred
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	505,000	505,000
Preferred stock, issued	502,327	502,327
Preferred stock, outstanding	502,327	502,327
Preferred Class A [Member]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	505,000	505,000
Preferred stock, issued	502,327	502,327
Preferred stock, outstanding	502,327	502,327
Preferred Class B [Member]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	240,861	240,861
Preferred stock, issued	240,861	240,861
Preferred stock, outstanding	240,861	240,861
Series B Cumulative Convertible Redeemable Preferred
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	240,861	240,861
Preferred stock, issued	240,861	240,861
Preferred stock, outstanding	240,861	240,861

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Income Statement [Abstract]
Revenue	$ 48,562,441	$ 22,135,818
Cost of revenue	34,765,781	13,792,473
Gross profit	13,796,660	8,343,345
Operating expenses
Selling, general, and administrative expenses	18,833,280	12,981,744
Loss from operations	(5,036,620)	(4,638,399)
Other expense
Interest expense	(609,461)	(213,492)
Other income (expense)	(28,168)	(483,909)
Total other income	(637,629)	(697,401)
Loss before income taxes	(5,674,249)	(5,335,800)
(Provision) benefit from income taxes	(29,250)	294,666
Net loss	$ (5,703,499)	$ (5,041,134)
Loss per common share - basic	$ (0.44)	$ (0.51)
Loss per common share - diluted	$ (0.44)	$ (0.51)
Weighted average shares outstanding
Basic	15,409,014	11,767,304
Diluted	15,409,014	11,767,304

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($)	Common Stock	Series B Preferred Stock	Additional Paid-In Capital	Retained Earnings	Total
Beginning balance, shares at Dec. 31, 2016	5,000,000	0
Beginning balance, amount at Dec. 31, 2016	$ 500	$ 0	$ 1,976,549	$ (430,395)	$ 1,546,654
Stockholders' distributions					0
Net common stock issued in Firestorm acquisition, shares	488,094
Net common stock issued in Firestorm acquisition, amount	$ 49		976,237		976,286
Effect of contribution to Novume Solutions, Inc. on August 28, 2017, Shares	5,158,503
Effect of contribution to Novume Solutions, Inc. on August 28, 2017, amount	$ 516		(516)
Net common stock issued in Brekford acquisition, shares	3,287,187
Net common stock issued in Brekford acquisition, amount	$ 329		5,850,864		5,851,193
Stock-based compensation			408,465		408,465
Issuance of warrants			418,424		418,424
Exercise of warrants, shares	121,247
Exercise of warrants, amount	$ 12		124,994		125,006
Issues of common stock, net of costs, amount					(123,473)
Equity issued in Global acquisition, shares	375,000	240,861
Equity issued in Global acquisition, amount	$ 38	$ 24	2,974,836		2,974,898
Net common stock issued in BC Management acquisition, shares	33,333
Net common stock issued in BC Management acquisition, amount	$ 3		163,329		163,332
Preferred stock dividends				(362,131)	(362,131)
Accretion of Series A preferred stock			(550,655)		(550,655)
Net loss				(5,041,134)	(5,041,134)
Ending balance, shares at Dec. 31, 2017	14,463,364	240,861
Ending balance, amount at Dec. 31, 2017	$ 1,447	$ 24	12,342,527	(5,833,660)	6,510,338
Adjustment to adopt new accounting guidance revenue recognition (1)				(67,000)	(67,000)
Balance as of January 1, 2018	14,463,364	240,861
Balance as of January 1, 2018	$ 1,447	$ 24	12,342,527	(5,900,660)	6,443,338
Stock-based compensation			464,509		464,509
Issuance of warrants			123,472		123,472
Issues of common stock, net of costs, shares	4,125,000
Issues of common stock, net of costs, amount	$ 413		2,796,087		2,796,500
Issuance of common stock for the extinguishment of warrants, shares	96,924
Issuance of common stock for the extinguishment of warrants, amount	$ 9		133,746		133,755
Net common stock issued in Secure Education Consultants acquisition, shares	33,333
Net common stock issued in Secure Education Consultants acquisition, amount	$ 3		163,329		163,332
Issuance related to note payable, shares	35,000
Issuance related to note payable, amount	$ 4		125,997		126,001
Issuance upon exercise of stock options, shares	13,998
Issuance upon exercise of stock options, amount	$ 1		23,449		23,450
Preferred stock dividends				(459,632)	(459,632)
Accretion of Series A preferred stock			(655,103)		(655,103)
Net loss				(5,703,499)	(5,703,499)
Ending balance, shares at Dec. 31, 2018	18,767,619	240,861
Ending balance, amount at Dec. 31, 2018	$ 1,877	$ 24	$ 15,518,013	$ (12,063,791)	$ 3,456,123

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (5,703,499)	$ (5,041,134)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	345,136	142,545
Provision for losses on accounts receivable	0	24,000
Deferred taxes	0	(294,666)
Share-based compensation	464,509	408,465
Amortization of financing costs	94,466	109,236
Deferred rent	(11,213)	(20,076)
Warrant expense	133,755	67,491
Change in fair value of derivative liability	(78,228)	60,000
Amortization of intangibles	1,021,176	546,410
Loss on notes receivable writedown	0	450,000
Allowance for other receivables	134,817	0
Impairment of investment	262,140	0
Changes in operating assets and liabilities
Accounts receivable	1,442,345	(158,512)
Inventory	83,014	12,056
Deposits	(86,099)	(95,060)
Other current assets	74,415	(183,622)
Accounts payable	202,849	(398,315)
Accrued expenses	(454,850)	1,033,893
Deferred revenue	22,423	95,143
Notes receivable	0	75,000
Net cash used in operating activities	(2,052,844)	(3,167,146)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of note receivable	1,475,000	0
Capital expenditures	(1,079,854)	(289,657)
Net cash provided by (used in) investing activities	395,146	(289,657)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings	41,255,962	7,761,384
Repayments of short-term borrowings	(43,201,019)	(7,111,163)
Proceeds from notes payable	2,000,000	0
Acquisition of Firestorm - net of cash acquired	0	(417,704)
Acquisition of Brekford - net of cash acquired	0	1,943,760
Acquisition of Global - net of cash required	0	(1,069,693)
Acquisition of BC Management	0	(100,000)
Net proceeds from exercise of options	23,450	0
Net proceeds from exercise of warrants	0	125,006
Net proceeds from issuance of common stock	2,796,500	0
Net proceeds from issuance of preferred stock	0	1,745,347
Payment of deferred offering costs	0	0
Payment of preferred dividends	(344,724)	(251,509)
Payment of financing costs	(62,500)	0
Net cash provided by financing activities	2,467,669	2,625,428
Net increase (decrease) in cash and cash equivalents	809,971	(831,375)
Cash and cash equivalents at beginning of year	1,957,212	2,788,587
Cash and cash equivalents at end of period	$ 2,767,183	$ 1,957,212

NATURE OF OPERATIONS AND RECAPI

NATURE OF OPERATIONS AND RECAPITALIZATION	12 Months Ended
	Dec. 31, 2018
Nature Of Operations And Recapitalization
NATURE OF OPERATIONS AND RECAPITALIZATION	Nature of Operations Novume Solutions, Inc. (the “Company” or “Novume”) was formed in February 2017 to effectuate the mergers of, and become a holding company for KeyStone Solutions, Inc. (“KeyStone”) and Brekford Traffic Safety, Inc. (“Brekford”). For the purpose of this document any references to KeyStone are to KeyStone Solutions, Inc. prior to August 28, 2017 and to KeyStone Solutions, LLC on and after August 28, 2017. In February 2019, the Company organized OpenALPR Software Solutions, LLC (“OpenALPR”). On February 28, 2019, we renamed Brekford to Rekor Recognition Systems, Inc. For narrative purposes, all references to Brekford before February 28, 2019 are to Brekford Traffic Safety, Inc. and to Rekor Recognitions Systems, Inc. on and after February 28, 2019. In March 2019, Novume acquired substantially all of the assets and certain liabilities of OpenALPR Technology, Inc. (“OpenALPR Technology”). The Company’s current plan is for OpenALPR to operate as a subsidiary of Brekford (see Note 3). For the purpose of this document any references to OpenALPR are to OpenALPR Technology, Inc. prior to March 12, 2019 and to OpenALPR Software Solutions, LLC on and after March 12, 2019. For narrative purposes, Company and Novume references include AOC Key Solutions, Brekford, KeyStone, Firestorm and Global entities. The financial results of Brekford are included in the results of operations from August 28, 2017 through December 31, 2018 (see Note 3). The historical financial statements for Novume prior to the merger with Brekford reflect the historical financial statements of KeyStone. In this document, references to KeyStone are to KeyStone Solutions, Inc. prior to August 28, 2017, and to KeyStone Solutions, LLC on and after, August 28, 2017 and references to Novume prior to August 28, 2017 are to KeyStone. KeyStone was formed in March 2016 as a holding company for its wholly owned subsidiary AOC Key Solutions, Inc., which is headquartered in Chantilly, Virginia. AOC Key Solutions provides consulting and technical support services to assist clients seeking U.S. Federal government contracts in the technology, telecommunications, defense, and aerospace industries. On January 25, 2017, Novume (KeyStone) acquired Firestorm (see Note 3), a leader in crisis management, crisis communications, emergency response, and business continuity, including workplace violence prevention, cyber-breach response, communicable illness/pandemic planning, predictive intelligence, and other emergency, crisis and disaster preparedness initiatives. Firestorm is headquartered in Roswell, Georgia. The financial results of Firestorm are included in the results of operations from January 25, 2017 through December 31, 2018. Brekford, headquartered in Hanover, Maryland, is a leading public safety technology service provider of fully-integrated automated traffic safety enforcement solutions, including speed, red light, and move-over and automatic license plate reading systems. The financial results of Brekford are included in the results of operations from August 28, 2017, through December 31, 2018. On October 1, 2017, Novume acquired Global (see Note 3). Global provides temporary contract professional and skilled labor to businesses throughout the United States. Contracts to provide such services vary in length, usually less than one year. Global’s corporate offices are located in Fort Worth, Texas. The financial results of Global are included in the results of operations from October 1, 2017 through December 31, 2018. On December 31, 2017 and January 1, 2018, Firestorm acquired certain assets of BC Management, Inc. (“BC Management”) and Secure Education Consultants, LLC (“Secure Education”), respectively (see Note 3). These acquisitions provide risk management staffing and customized emergency protocols and critical incident response training. Results of operations for both BC Management and Secure Education have been included in the financial statements of Novume since January 1, 2018. On October 9, 2018, the Company entered into a Management Services Agreement (the “MSA”) with OpenALPR, whereby the Company provides support services. These services include sales, call center and customer support, engineering, marketing and website services along with business strategy, contract and other back office functions. The MSA provides for the Company to receive compensation on a time and materials basis for most services and a commission basis for sales, and the Company has determined that the compensation was not material. On March 12, 2019, the Company acquired substantially all of the assets and liabilities of OpenALPR Technology (see Note 17), a software development company. The assets acquired are now held within OpenALPR Software Solutions, LLC. OpenALPR software currently has the capability to analyze video images produced by almost any Internet Protocol (“IP”) camera and identify vehicle license plates from over 70 countries while also providing the make, model and color of the vehicle.

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	12 Months Ended
	Dec. 31, 2018
Summary Of Significant Accounting Policies
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	Principles of Consolidation The consolidated financial statements include the accounts of Novume, the parent company, and its wholly owned subsidiaries AOC Key Solutions, Inc., Brekford Traffic Safety Inc., Novume Media, Inc., Chantilly Petroleum, LLC, Firestorm Solutions, LLC, Firestorm Franchising, LLC, Global Technical Services, Inc. and Global Contract Professionals, Inc. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the accounting rules under Regulation S-X, as promulgated by the Securities and Exchange Commission (“SEC”). All significant intercompany accounts and transactions have been eliminated in consolidation. Certain amounts in the prior year's financial statements have been reclassified to conform to the current year's presentation. In the opinion of management, all adjustments necessary for a fair presentation for the periods presented have been reflected as required by Regulation S-X, Rule 10-01. All necessary adjustments are of a normal, recurring nature. Going Concern Assessment Beginning with the year ended December 31, 2017 and all annual and interim periods thereafter, management will assess going concern uncertainty in the Company’s consolidated financial statements to determine whether there is sufficient cash on hand and working capital, including available borrowings on loans and external bank lines of credit, to operate for a period of at least one year from the date the consolidated financial statements are issued or available to be issued, which is referred to as the “look-forward period”, as defined in GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, management will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, its ability to delay or curtail expenditures or programs and its ability to raise additional capital, if necessary, among other factors. Based on this assessment, as necessary or applicable, management makes certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent it deems probable those implementations can be achieved and management has the proper authority to execute them within the look-forward period. The Company has generated losses since its inception in August 2017 and has relied on cash on hand, external bank lines of credit, the sale of a note, debt financing and a public offering of its common stock to support cashflow from operations. The Company attributes losses to merger costs, public company corporate overhead and investments made by some of our subsidiary operations. As of and for the year ended December 31, 2018, the Company had a net loss of approximately $5.7 million and working capital deficit of approximately $0.04 million which includes the early retirement of $2.5 million of long-term debt in March 2019. The Company’s net cash position was increased by approximately $4.0 million in March 2019 by the issuance of $20 million senior secured notes, of which $5 million was non-cash, offset by $7 million of cash paid for the acquisition of OpenALPR, and approximately $4.0 million related to the extinguishment of debt and associated fees (see Note 17). Management believes that based on relevant conditions and events that are known and reasonably knowable, that its current forecasts and projections, for one year from the date of the filing of the consolidated financial statements in this Annual Report on Form 10-K, indicate the Company’s ability to continue operations as a going concern for that one-year period. The Company is actively monitoring its operations, cash on hand and working capital. The Company has contingency plans to reduce or defer expenses and cash outlays should operations weaken in the look-forward period or additional financing is not available. Cash and Cash Equivalents Novume considers all highly liquid debt instruments purchased with the maturity of three months or less to be cash equivalents. Brekford makes collections on behalf of certain client jurisdictions. Cash balances designated for these client jurisdictions as of December 31, 2018 and 2017 were $608,557 and $641,103, respectively, and correspond to equal amounts of related accounts payable. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are customer obligations due under normal trade terms. The Company performs continuing credit evaluations of its clients’ financial condition, and the Company generally does not require collateral. Management reviews accounts receivable to determine if any receivables will potentially be uncollectible. Factors considered in the determination include, among other factors, number of days an invoice is past due, client historical trends, available credit ratings information, other financial data and the overall economic environment. Collection agencies may also be utilized if management so determines. The Company records an allowance for doubtful accounts based on specifically identified amounts that are believed to be uncollectible. The Company also considers recording as an additional allowance a certain percentage of aged accounts receivable, based on historical experience and the Company’s assessment of the general financial conditions affecting its customer base. If actual collection experience changes, revisions to the allowance may be required. After all reasonable attempts to collect an account receivable have failed, the amount of the receivable is written off against the allowance. Based on the information available, the Company determined that an allowance for loss of $24,405 and $24,000 was required at December 31, 2018 and 2017, respectively. Accounts receivable at December 31, 2018 and 2017 included $1,124,705 and $1,259,089 in unbilled contracts respectively related to work performed in the year in which the receivable was recorded. The amounts were billed in the subsequent year. Inventory Inventory principally consists of parts held temporarily until installed for service. 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 components and replacement parts. Other Current Assets, Net Other assets are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as necessary. In the Brekford Merger on August 28, 2017, a refund of $134,818 was due from the prior financing company. The balance due remains outstanding as of December 31, 2018 and the Company has established a valuation allowance of $134,818. Property and Equipment The cost of furniture and fixtures and equipment is depreciated over the useful lives of the related assets. Leasehold improvements are amortized over the shorter of their estimated useful lives or the terms of the lease. Depreciation and amortization is recorded on the straight-line basis. The range of estimated useful lives used for computing depreciation are as follows: Furniture and fixtures 2 - 10 years Office equipment 2 - 5 years Leasehold improvements 3 - 15 years Internally developed software 3 - 5 years Automobiles 3 - 5 years Camera systems 3 years The Company capitalizes eligible costs related to internally-developed software in accordance with ASC 985-20 which were incurred during the application development stage. Capitalized internally-developed software costs, net, not yet placed in service were $913,455 and $52,400 as of December 31, 2018 and 2017, respectively. Repairs and maintenance are expensed as incurred. Expenditures for additions, improvements and replacements are capitalized. Depreciation and amortization expense for the years ended December 31, 2018 and 2017 was $345,136 and $142,545, respectively. Business Combination Management conducts a valuation analysis on the tangible and intangible assets acquired and liabilities assumed at the acquisition date thereof. During the measurement period, which may be up to one year from the Amounts paid for acquisitions are allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. We allocate a portion of the purchase price to the fair value of identifiable intangible assets. The fair value of identifiable intangible assets is based on detailed valuations that use information and assumptions provided by management. We allocate any excess purchase price over the fair value of the net tangible and intangible assets acquired to goodwill. We recorded goodwill and intangible assets for the mergers and acquisitions that occurred in 2017 and 2018. The BC Management, Secure Education and Firestorm acquisitions were asset acquisitions, which created both book and tax bases in goodwill and non-goodwill intangible assets. BC Management’s acquisition resulted in $0.4 million of non-goodwill intangible assets. Secure Education’s acquisition resulted in $0.4 million of non-goodwill intangible assets. The Firestorm acquisition resulted in $2.5 million of non-goodwill intangible assets. Brekford and Global were stock acquisitions and only have book basis in the goodwill and intangible assets. The fair value assigned to Brekford’s intangible and goodwill is $0.6 million and $1.4 million, respectively. The GTS and GCP goodwill and intangible assets resulted in a fair value of $1.6 million and $2.6 million, respectively, and corresponding net deferred tax liability of $0.5 million. As a result of the deferred tax liability, an adjustment was recorded to goodwill to account for the tax effect of the deferred tax liability in the year ended December 31, 2017. Goodwill and Other Intangibles In applying the acquisition method of accounting, amounts assigned to identifiable assets and liabilities acquired were based on estimated fair values as of the date of acquisition, with the remainder recorded as goodwill. Identifiable intangible assets are initially valued at fair value using generally accepted valuation methods appropriate for the type of intangible asset. Identifiable intangible assets with definite lives are amortized over their estimated useful lives and are reviewed for impairment if indicators of impairment arise. Intangible assets with indefinite lives are tested for impairment within one year of acquisitions or annually as of October 1, and whenever indicators of impairment exist. The fair value of intangible assets are compared with their carrying values, and an impairment loss would be recognized for the amount by which a carrying amount exceeds its fair value. No material impairments have been recorded through December 31, 2018. Acquired identifiable intangible assets are amortized over the following periods: Acquired Intangible Asset Amortization Basis Expected Life (years) Customer-Related Straight-line basis 5-15 Marketing-Related Straight-line basis 4 Technology-Based In line with underlying cash flows or straight-line basis 3 Revenue Recognition The Company recognizes revenues for the provision of services when persuasive evidence of an arrangement exists, services have been rendered or delivery has occurred, the fee is fixed or determinable and the collectability of the related revenue is reasonably assured. The Company principally derives revenues from fees for services generated on a project-by-project basis. Revenues for time-and-materials contracts are recognized based on the number of hours worked by the employees or consultants at an agreed-upon rate per hour set forth in the Company’s contracts or purchase orders. Revenues related to firm-fixed-price contracts are primarily recognized upon completion of the project as these projects are typically short-term in nature. Revenue from the sale of individual franchises is recognized when the contract is signed and collectability is assured, unless the franchisee is required to perform certain training before operations commence. The franchisor has no obligation to the franchisee relating to store development and the franchisee is considered operational at the time the franchise agreement is signed or when required training is completed, if applicable. Royalties from individual franchises are earned based upon the terms in the franchising agreement which are generally the greater of $1,000 or 8% of the franchisee’s monthly gross sales. For automated traffic safety enforcement revenue, the Company recognizes the revenue when the required collection efforts, from citizens, are completed and posted to the municipality’s account. The respective municipality is then billed depending on the terms of the respective contract, typically 15 days after the preceding month while collections are reconciled. For contracts where the Company receives a percentage of collected fines, revenue is calculated based upon the posted payments from citizens multiplied by the Company’s contractual percentage. For contracts where the Company receives a specific fixed monthly fee regardless of citations issued or collected, revenue is recorded once the amount collected from citizens exceeds the monthly fee per camera. Brekford’s fixed-fee contracts typically have a revenue neutral provision whereby the municipality’s payment to Brekford cannot exceed amounts collected from citizens within a given month. Advertising The Company expenses all non-direct-response advertising costs as incurred. Such costs were not material for the years ended December 31, 2018 and 2017. Use of Estimates Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual amounts may differ from these estimates. On an on-going basis, the Company evaluates its estimates, including those related to collectability of accounts receivable, fair value of debt and equity instruments and income taxes. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not apparent from other sources. Actual results may differ from those estimates under different assumptions or conditions. Income Taxes Income tax expense consists of U.S. federal and state income taxes. We are required to pay income taxes in certain state jurisdictions. Historically, AOC Key Solutions and GCP initially elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under those provisions, neither AOC Key Solutions nor GCP paid federal corporate income tax, and in most instances state income tax, on its taxable income. AOC Key Solutions revoked its S Corporation election upon the March 15, 2016 merger with KeyStone and GCP revoked its S Corporation election upon the acquisition by Novume, and are therefore, subject to corporate income taxes. Firestorm is a single-member LLC with KeyStone as the sole member. We use the liability method of accounting for income taxes as set forth in the authoritative guidance for accounting for income taxes. This method requires an asset and liability approach for the recognition of deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Management has evaluated the recoverability of the net deferred income tax assets and the level of the valuation allowance required with respect to such net deferred income tax assets. After considering all available facts, the Company fully reserved for its net deferred tax assets because management believes that it is not more likely than not that their benefits will be realized in future periods. The Company will continue to evaluate its net 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 net deferred income tax assets satisfy the realization standard, the valuation allowance will be reduced accordingly. As of December 31, 2018 the Company has gross federal and state NOL carry forwards of $9.7 million and $0.5 million, net of federal tax effects, respectively. These NOLs are scheduled to begin to expire in 2034 and $4.7 million are grandfathered under the Tax Cuts and Jobs Act; thus, these NOLs are not subject to the 80 percent limitation. NOLs generated in 2018 of $5.0 million will be carried forward indefinitely and are subject to the annual 80 percent limitation. The Company also has a valuation allowance of $2.3 million recorded against its net deferred tax assets as of December 31, 2018. The tax effects of uncertain tax positions are recognized in the consolidated financial statements only if the position is more likely than not to be sustained on audit, based on the technical merits of the position. For tax positions meeting the more likely than not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized. It is our accounting policy to account for ASC 740-10-related penalties and interest as a component of the income tax provision in the consolidated statements of operations and comprehensive loss. As of December 31, 2018 and 2017, our evaluation revealed no uncertain tax positions that would have a material impact on the financial statements. The 2015 through 2017 tax years remain subject to examination by the IRS, as of December 31, 2018. Our management does not believe that any reasonably possible changes will occur within the next twelve months that will have a material impact on the financial statements. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “2017 Act”) was enacted, which changes U.S. tax law and includes various provisions that impact our Company. The 2017 Act effects our Company by: changing U.S. tax rates; increasing the Company’s ability to use accumulated net operating losses generated after December 31, 2017; and limiting the Company’s ability to deduct interest. Equity-Based Compensation The Company recognizes equity-based compensation based on the grant-date fair value of the award on a straight-line basis over the requisite service period, net of estimated forfeitures. Total equity-based compensation expense included in selling, general and administrative expenses in the accompanying consolidated statements of operations for the years ended December 31, 2018 and 2017 was $464,509 and $408,465, respectively. The Company estimates the fair value of stock options using the Black-Scholes option-pricing model. The use of the Black-Scholes option-pricing model requires the use of subjective assumptions, including the fair value and projected volatility of the underlying common stock and the expected term of the award. The fair value of each option granted has been estimated as of the date of the grant using the Black-Scholes option pricing model with the following assumptions during the years ended December 31, 2018 and 2017: For the Years Ended December 31, 2018 2017 Risk-free interest rate 3.03% 1.00% - 2.17% Expected term 5 years 0.3 – 6.1 years Volatility 88.5% 70.0% Dividend yield 0% 0% Estimated annual forfeiture rate at time of grant 0% 0% - 30% Risk-Free Interest Rate – Expected Term – Expected Volatility – Dividend Yield – Forfeiture Rate – Fair Value of Financial Instruments The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value as of December 31, 2018 and 2017 because of the relatively short-term maturity of these financial instruments. The carrying amount reported for long-term debt approximates fair value as of December 31, 2018, given management’s evaluation of the instrument’s current rate compared to market rates of interest and other factors. The determination of fair value is based upon the fair value framework established by Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures Level 1 – Level 2 – Level 3 – Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. The Company determined that the value of the remaining balance of the note receivable at December 31, 2017 approximated its recorded value, and the Company sold the note in February 2018 for proceeds of $1,400,000. The Company’s goodwill and other intangible assets are measured at fair value on a non-recurring basis using Level 2 and Level 3 inputs. The Company has concluded that its Series A Preferred Stock is a Level 3 financial instrument and that the fair value approximates the carrying value, which includes the accretion of the discounted interest component through December 31, 2018. There were no changes in levels during the years ended December 31, 2018 and 2017. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, and accounts receivable. Concentrations of credit risk with respect to accounts receivable are minimal due to the collection history and due to the nature of the Company’s client base. The Company limits its credit risk with respect to cash by maintaining cash balances with high-quality financial institutions. At times, the Company’s cash may exceed U.S. Federally insured limits, and as of December 31, 2018 and 2017, the Company had $2,176,907 and $1,707,212, respectively, of cash and cash equivalents on deposit that exceeded the federally insured limit. Earnings per Share Basic earnings per share, or EPS, is computed using the weighted average number of common shares outstanding during the period. Diluted EPS is computed using the weighted average number of common and potentially dilutive securities outstanding during the period, except for periods of net loss for which no potentially dilutive securities are included because their effect would be anti-dilutive. Potentially dilutive securities consist of common stock issuable upon exercise of stock options or warrants using the treasury stock method. Potentially dilutive securities issuable upon conversion of the Series A Preferred Stock are calculated using the if-converted method. The Company calculates basic and diluted earnings per common share using the two-class method. Under the two-class method, net earnings are allocated to each class of common stock and participating security as if all of the net earnings for the period had been distributed. Participating securities consist of preferred stock that contain a nonforfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common stockholders. On August 28, 2017, the Company effected a 1.9339-to-1 stock exchange related to its acquisition of Brekford. The per share amounts have been updated to show the effect of the exchange on earnings per share as if the exchange occurred at the beginning of 2017. The impact of the stock exchange is also shown on the Company’s Statement of Changes in Stockholders’ Equity. Segment Reporting The Financial Accounting Standards Board (“FASB”) ASC Topic 280, Segment Reporting New Accounting Pronouncements Recently Issued Accounting Pronouncements Not Yet Adopted In August 2018, the Financial Accounting Standards Board (“ FASB”) issued ASU No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting . In August 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-12, Derivatives and Hedging (Topic 815) In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment. In June 2016, the FASB issued ASU 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In February 2016, the FASB issued ASU 2016-02, Leases The standard will have a material impact on the Company’s consolidated balance sheets, but will not have a material impact on its consolidated statements of operations. The most significant impact will be the recognition of right-of-use (“ROU”) assets and lease liabilities for operating leases. Adoption of the standard will result in the recognition of additional ROU assets and lease liabilities for operating leases ranging between $0.8 million to $1.2 million as of January 1, 2019. There are currently no other accounting standards that have been issued, but not yet adopted, that will have a significant impact on the Company’s consolidated financial position, results of operations or cash flows upon adoption. Recently Adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ● ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date ● ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations ● ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensin ● ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients The underlying principle is to use a five-step analysis of transactions to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The standard permits the use of either a retrospective or modified retrospective application. ASU 2014-09 and ASU 2016-12 are effective for annual reporting periods beginning after December 15, 2017. On January 1, 2018, the Company adopted Topic 606, Revenue from Contracts with Customers The following tables summarize the impact of adopting ASC 606 on the Company’s consolidated financial statements as of and for the year ended December 31, 2018: As of December 31, 2018 As Reported Adjustments Balance Without Adoption of 606 Consolidated Balance Sheet Liabilities Deferred revenue $ 207,059 $ (10,999 ) $ 196,060 Equity Accumulated deficit $ (12,063,791 ) $ 10,999 $ (12,052,792 ) For the Year Ended December 31, 2018 As Reported Adjustments Balance Without Adoption of 606 Consolidated Statement of Operations Revenue $ 48,562,441 $ (56,001 ) $ 48,506,440 Net loss $ (5,703,499 ) $ (56,001 ) $ (5,759,500 ) Net loss per share: Basic $ (0.44 ) $ - $ (0.44 ) Diluted $ (0.44 ) $ - $ (0.44 ) The adoption of ASC 606 did not affect the Company's reported total amounts of cash flows from operating, investing or financing activities in its consolidated statements of cash flows. Practical Expedients Election Costs to Obtain and Fulfill a Contract Revenue Recognition Revenue is recognized when control of the goods and services provided are transferred to our customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services using the following steps: ● Identification of the contract, or contracts, with a customer ● Identification of the performance obligations in the contract ● Determination of the transaction price ● Allocation of the transaction price to the performance obligations in the contract ● Recognition of revenue when, or as, performance obligations are satisfied The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Disaggregated Revenue The Company’s revenue by contract type is as follows: For the Years Ended December 31, 2018 2017 Revenues Time & materials $ 42,559,925 $ 19,553,770 Fixed price 5,905,181 2,225,179 Franchising 97,335 356,869 Total revenue $ 48,562,441 $ 22,135,818 Performance Obligations ● Time and Material Services ● Firm-Fixed-Price Services ● Franchising Services Accounts Receivable, Net The Company reviews accounts receivable on a periodic basis to determine if any receivables will potentially be uncollectible. Estimates are used to determine the amount of the allowance for doubtful accounts necessary to reduce accounts receivable to its estimated net realizable value. The estimates are based on an analysis of past due receivables, historical bad debt trends, current economic conditions, and customer specific information. After the Company has exhausted all collection efforts, the outstanding receivable balance relating to services provided is written off against the allowance. Additions to the provision for bad debt are charged to expense. The Company determined that an allowance for loss of $24,405 and $24,000 was required at December 31, 2018 and 2017, respectively. In March 2016, FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting In January 2016, the FASB, issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities In January 2017, the FASB issued ASU 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation: Scope of Modification Accounting

ACQUISITIONS

ACQUISITIONS	12 Months Ended
	Dec. 31, 2018
Acquisitions
ACQUISITIONS	Secure Education Consultants Acquisition On January 1, 2018, Novume completed its acquisition of certain assets of Secure Education through Firestorm. Consideration paid as part of this acquisition included: (a) $99,197 in cash, (b) 33,333 shares of Novume common stock valued at $163,332; (c) warrants to purchase 33,333 shares of Novume common stock, exercisable over a period of five years, at an exercise price of $5.44 per share, valued at $65,988 and (d) warrants to purchase 33,333 of Novume common stock, exercisable over a period of five years at an exercise price of $6.53 per share, valued at $57,484. The Company has completed its analysis of the purchase price allocation. The Company recorded $386,001 of customer relationships as intangibles. The table below shows the final breakdown related to the Secure Education acquisition: Cash paid $ 99,197 Common stock issued 163,332 Warrants issued, at $5.44 65,988 Warrants issued, at $6.53 57,484 Total consideration 386,001 Less intangible and intellectual property (386,001 ) Net goodwill recorded $ - BC Management Acquisition On December 31, 2017, Novume completed its acquisition of certain assets of BC Management, Inc. (“BC Management”). Consideration paid as part of this acquisition included: (a) $100,000 in cash, (b) 33,333 shares of Novume common stock valued at $163,332 and (c) 66,666 warrants to purchase Novume common stock valued at $123,472. The preliminary purchase price has been allocated to the assets acquired and liabilities assumed based on fair values as of the acquisition date. Since the acquisition of BC Management occurred on December 31, 2017, the results of operations for BC Management have not been included in the Company’s Consolidated Statement of Operations for the year ended December 31, 2017. The Company has completed its analysis of the purchase price allocation which was the same as the preliminary allocation. The Company recorded $386,004 of customer relationships as intangibles. The table below shows the final breakdown related to the BC Management acquisition: Cash paid $ 100,000 Common stock issued 163,332 Warrants issued, at $5.44 65,988 Warrants issued, at $6.53 57,484 Total consideration 386,804 Less intangible and intellectual property (386,804 ) Net goodwill recorded $ - Global Acquisition On October 1, 2017, Novume completed its acquisition of Global by purchasing GTS and GCP. Consideration paid as part of the Global acquisition included: (a) $750,000 in cash, (b) 375,000 shares of Novume common stock valued at $566,288 and (c) 240,861 shares of Novume Series B Cumulative Convertible Preferred Stock (the “Novume Series B Preferred Stock”) valued at $2,408,610. In addition to the merger consideration, Novume paid $365,037 to satisfy in full all of the outstanding debt of GTS and GCP at closing, except for certain intercompany debt and ordinary course debt, and amounts due under (a) the Secured Account Purchase Agreement dated August 22, 2012 by and between GTS and (“WFB”) (the “GTS Wells Fargo Credit Facility”) and (b) the Secured Account Purchase Agreement dated August 22, 2012 by and between GCP and WFB (the “GCP Wells Fargo Credit Facility” and together with the GTS Wells Fargo Credit Facility, the “Wells Fargo Credit Facilities”), which have remained in effect following the consummation of the Global Acquisition. In connection with the Wells Fargo Credit Facilities, Novume delivered general continuing guaranties, dated September 29, 2017 to WFB, guaranteeing the Guaranteed Obligations of GTS and GCP (as defined in the Wells Fargo Guaranty Agreements) under the Wells Fargo Credit Facilities, and paid $175,000 in the aggregate to reduce the current borrowed amounts under the Wells Fargo Credit Facilities as of October 1, 2017. Additionally, Novume assumed $2,462,276 of Global’s liabilities. As part of the Global acquisition, the Company issued 240,861 shares of $0.0001 par value Novume Series B Cumulative Convertible Preferred Stock (the “Series B Preferred Stock”). All Series B Preferred Stock was issued at a price of $10.00 per share as part of the acquisition of Global. The Series B Preferred Stock is entitled to quarterly cash dividends of 1.12% (4.48% per annum) per share. The Series B Preferred Stock has a conversion price of $5.00 per share. Each Series B Preferred Stock has an automatic conversion feature based on the share price of Novume (see Note 9). The Company measured the holdback consideration in April 2018 and determined that the contingent liability should be decreased by $94,657. In accordance with ASC 805-10-25, a contingent consideration classified as an asset or liability shall be recognized in earnings, and $94,657 was recognized as other income for the year ended December 31, 2018. As of December 31, 2017, the Company had $200,000 of holdback consideration included in accrued expenses. For the year ended December 31, 2018, the Company paid $105,343 of the holdback consideration. The Company completed its analysis of the purchase price allocation in 2017. The table below shows the final breakdown related to the Global acquisition: Assets acquired $ 4,384,668 Liabilities acquired (4,384,417 ) Net assets acquired 251 Less intangible assets 2,574,000 Consideration paid (see below) 4,264,934 Net goodwill recorded $ 1,690,683 Cash consideration $ 550,000 Cash paid towards acquired liabilities 540,037 Total cash paid 1,090,037 Holdback consideration 200,000 Common stock consideration 566,288 Series B Preferred Stock consideration 2,408,610 Total acquisition consideration $ 4,264,934 The determination of the fair value of the assets acquired and liabilities assumed, includes approximately $2.6 million of intangible and intellectual property and approximately $1.7 million of goodwill. Brekford Acquisition On August 28, 2017, the mergers by and among Novume, KeyStone, Brekford, Brekford Merger Sub, Inc., and KeyStone Merger Sub, LLC, were consummated (the “Brekford Merger”). As a result, Brekford became a wholly-owned subsidiary of Novume, and Brekford Merger Sub ceased to exist. KeyStone Merger Sub, LLC also became a wholly-owned subsidiary of Novume, and KeyStone Solutions, Inc. ceased to exist. When KeyStone Merger Sub, Inc. filed its certificate of merger with the Secretary of State of Delaware, it immediately effectuated a name-change to KeyStone Solutions, LLC, the name by which it is now known. Upon completion of the Brekford Merger, the merger consideration was issued in accordance with the terms of the merger agreement. Immediately upon completion of the Brekford Merger, the pre-merger stockholders of KeyStone owned approximately 80% or 13,548,837 of the issued and outstanding capital stock of Novume on a fully-diluted basis, and the pre-merger stockholders of Brekford owned approximately 20% or 3,375,084 shares of the issued and outstanding capital stock of Novume on a fully-diluted basis. The Company completed its analysis of the purchase price allocation in 2017. The table below shows the final breakdown related to the Brekford acquisition: Common stock issued $ 5,851,193 Total consideration 5,851,193 Less cash received (1,943,778 ) Less note receivable (2,000,000 ) Less other assets (1,139,007 ) Less intangible assets (558,412 ) Plus liabilities assumed 1,191,937 Net goodwill recorded $ 1,401,933 The determination of the fair value of the assets acquired and liabilities assumed, includes approximately $0.6 million of intangible and intellectual property and approximately $1.4 million of goodwill. Firestorm Acquisition On January 25, 2017, the Company acquired each of the Firestorm Entities for the following consideration: $500,000 in cash; $1,000,000 in the aggregate in the form of four unsecured, subordinated promissory notes with interest (of which interest on $500,000 of the notes is payable at an interest rate of 7% and interest on $500,000 of the notes is payable at an interest rate of 2%) payable over, and principal due after, five years (of which $907,407 was recorded to notes payable to reflect the net fair value of the notes issued due to the difference in interest rates); 488,094 (946,875 post Brekford Merger) shares of Novume common stock; warrants to purchase 162,699 (315,627 post Brekford Merger) shares of Novume common stock, exercisable over a period of five years, at an exercise price of $2.58 per share; and warrants to purchase 162,699 (315,627 post Brekford Merger) shares of Novume common stock, exercisable over a period of five years, at an exercise price of $3.61 per share. The Company completed its analysis of the purchase price allocation in 2017. The table below shows the final breakdown related to the Firestorm acquisition: Cash paid $ 500,000 Notes payable issued 907,407 Common stock issued 976,286 Warrants issued, at $2.58 125,411 Warrants issued, at $3.61 102,289 Total consideration 2,611,393 Less cash received (82,296 ) Less other assets (137,457 ) Less intangible and intellectual property (2,497,686 ) Plus liabilities assumed 106,046 Net goodwill recorded $ - The determination of the fair value of the assets acquired and liabilities assumed includes approximately $2.5 million of intangible and intellectual property. In connection with the acquisition, Novume also entered into employment agreements with Harry Rhulen, James Satterfield and Suzanne Loughlin (the “Firestorm Principals”). On December 28, 2018, the Firestorm Principals resigned and their employment agreements were terminated effective with their resignations. Any Firestorm Principals’ unvested options expired concurrently with their termination. The Firestorm Principals had 90 days from the date of their termination to exercise any vested options and they did not do so. Operations of Combined Entities The following 2017 unaudited pro-forma combined financial information gives effect to the acquisition of Firestorm, the merger with Brekford and the acquisition of Global as if they were consummated January 1, 2017. This 2017 unaudited pro-forma financial information is presented for information purposes only and is not intended to present actual results that would have been attained had the acquisition been completed as of January 1, 2017 (the beginning of the earliest period presented) or to project potential operating results as of any future date or for any future periods. For the Years Ended December 31, 2018 2017 Revenues $ 48,562,441 $ 42,828,709 Net loss $ (5,703,499 ) $ (6,183,910 ) Basic earnings (loss) per share $ (0.44 ) $ (0.52 ) Diluted earnings (loss) per share $ (0.44 ) $ (0.52 ) Basic Number of Shares 15,409,014 13,592,532 Diluted Number of Shares 15,409,014 13,592,532

INVESTMENT AT COST AND NOTES RE

INVESTMENT AT COST AND NOTES RECEIVABLE	12 Months Ended
	Dec. 31, 2018
Investment At Cost And Notes Receivable
INVESTMENT AT COST AND NOTES RECEIVABLE	On February 6, 2017, prior to the Brekford Merger, Brekford entered into a Contribution and Unit Purchase Agreement (the “CUP Agreement”) with LB&B Associates Inc. (“LB&B”) and Global Public Safety, LLC (“Global Public Safety”). The closing for the transaction set forth in the CUP Agreement occurred on February 28, 2017 (the “GPS Closing”) and on such date the Company contributed substantially all of the assets and certain liabilities related to its vehicle services business to Global Public Safety. On the GPS Closing, the Company sold units representing 80.1% of the units of Global Public Safety to LB&B for $6,048,394, after certain purchase price adjustments of prepaid expenses and unbilled customer deposits. $4,048,394 was paid in cash, including a $250,000 deposit that was paid on February 6, 2017, and $2,000,000 was paid by LB&B issuing the Company a promissory note receivable (the “GPS Promissory Note”). After the GPS Closing, the Company continues to own 19.9% of the units of Global Public Safety after the transaction. The Company is accounting for this as an investment at cost. The Company recorded an impairment of $262,140 related to the investment in Global Public Safety for the year end December 31, 2018. The GPS Promissory Note is subordinated to the LB&B’s senior lender and accrues interest at a rate of 3% per annum. The maturity date of the GPS Promissory Note was March 31, 2022. The GPS Promissory Note was to be repaid as follows: (a) $75,000 plus all accrued interest on each of September 30, 2017; December 31, 2017; March 31, 2018, June 30, 2018 and September 30, 2018 (or, in the event any such date is not a business day, the first business day after such date), (b) $100,000 plus all accrued interest on each of December 31, 2018; March 31, 2019; June 30, 2019 and September 30, 2019 (or, in the event any such date is not a business day, the first business day after such date) (c) $125,000 plus all accrued interest on each of December 31, 2019; March 31, 2020; June 30, 2020; September 30, 2020, December 31, 2020; March 31, 2021, June 31, 2021; September 30, 2021; and December 31, 2021 (or, in the event any such date is not a business day, the first business day after such date), and (d) $100,000 on March 31, 2022. The GPS Promissory Note was secured pursuant to the terms of a Pledge Agreement (the “LB&B Pledge Agreement”) between the Company and LB&B. Pursuant to the LB&B Pledge Agreement LB&B, granted the Company a continuing second-priority lien and security interest in the LB&B’s units of Global Public Safety, subject to liens of the LB&B’s senior lender. As of December 31, 2017, the Company reclassified the note receivable balance to a current asset and wrote down $450,000 based on the decision to sell the note receivable to an unrelated third-party. The sale was consummated in February 2018. The current portion of notes receivable was $0 and $1,475,000 as of December 31, 2018 and 2017, respectively. In connection with the sale, the Company indemnified the unrelated third-party buyer for any amount of principal and interest not paid by LB&B.

IDENTIFIABLE INTANGIBLE ASSETS

IDENTIFIABLE INTANGIBLE ASSETS	12 Months Ended
	Dec. 31, 2018
Identifiable Intangible Assets
IDENTIFIABLE INTANGIBLE ASSETS	The following provides a breakdown of identifiable intangible assets as of December 31, 2018: Customer Relationships Marketing Related Technology Based Total Identifiable intangible assets, gross $ 5,588,677 $ 730,000 $ 83,412 $ 6,402,089 Accumulated amortization (1,332,868 ) (234,718 ) - (1,567,586 ) Identifiable intangible assets, net $ 4,255,809 $ 495,282 $ 83,412 $ 4,834,503 In connection with the acquisition of Firestorm, Global, Brekford, BC Management and Secure Education, the Company identified intangible assets of $2,497,686, $2,574,000, $558,412, $386,804 and $386,801 respectively, representing trade names, customer relationships and technology. These assets are being amortized on a straight-line basis over their weighted average estimated useful life of 7.8 years and amortization expense amounted to $1,021,176 and $456,410 for the years ended December 31, 2018 and 2017, respectively. As of December 31, 2018, the estimated annual amortization expense for each of the next five fiscal years and thereafter is as follows: 2019 $ 1,048,980 2020 1,048,980 2021 996,778 2022 238,155 2023 154,596 Thereafter 1,347,014 Total $ 4,834,503

SUPPLEMENTAL DISCLOSURES OF CAS

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION	12 Months Ended
	Dec. 31, 2018
Supplemental Disclosures Of Cash Flow Information
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION	Supplemental disclosures of cash flow information for the years ended December 31, 2018 and 2017 was as follows: For the Years Ended December 31, 2018 2017 Cash paid for interest $ 478,693 $ 213,455 Cash paid for taxes $ 13,607 $ - Issuance of common stock for the extinguishment of warrants $ 133,755 $ - Common stock issued in connection with note payable $ 126,001 $ - Warrants issued in connection with issuance of Series A Preferred Stock $ - $ 67,491 Notes payable for equipment purchase $ 31,824 $ - Business Combinations: Current assets $ - $ 5,263,445 Property and equipment $ - $ 382,159 Intangible assets $ 386,001 $ 6,015,285 Goodwill $ - $ 3,092,616 Other non-current assets $ - $ 271,381 Note receivable, long-term $ - $ 1,700,000 Assumed liabilities $ - $ (5,069,709 ) Deferred revenue $ - $ (22,493 ) Other non-current liabilities $ - $ (16,584 ) Issuance of common stock $ (163,332 ) $ (7,784,560 ) Issuance of Series B preferred stock $ - $ (2,408,610 ) Notes payable $ - $ (1,117,253 ) Issuance of common stock warrants $ (123,472 ) $ (123,473 ) On April 7, 2017, Novume paid cash dividends of $75,694 to shareholders of record of Series A Preferred Stock as of March 30, 2017. On July 8, 2017, October 7, 2017, January 5, 2018, April 6, 2018 and July 9, 2018, the Company paid cash dividends of $87,907 to shareholders of record of Series A Preferred Stock as of the end of the previous month. On September 30, 2018, December 31, 2018 and March 31, 2019, the Company accrued dividends of $87,907 to Series A Preferred Stock shareholders of record. Accrued dividends payable to Series A Preferred Stock shareholders were $175,814 and $87,907 as of December 31, 2018 and 2017, respectively. On January 5, 2018, April 6, 2018 and July 9, 2018, the Company paid cash dividends of $27,001 to shareholders of record of Series B Preferred Stock as of the end of the previous month. On September 30, 2018, December 31, 2018 and March 31, 2019, the Company accrued dividends of $27,001 to Series B Preferred Stock shareholders of record. Accrued dividends payable to Series B Preferred Stock shareholders were $54,002 and $27,001 as of December 31, 2018 and 2017, respectively.

DEBT

DEBT	12 Months Ended
	Dec. 31, 2018
Debt
DEBT	Line of Credit Global has revolving lines of credit with WFB under the Wells Fargo Credit Facilities. WFB agreed to advance to Global, 90% of all eligible accounts with a maximum facility amount of $5,000,000. Interest is payable under the Wells Fargo Credit Facilities at a monthly rate equal to the Three-Month LIBOR in effect from time to time plus 3% plus the Margin. The Margin is 3%. Payment of the revolving lines of credit is secured by the accounts receivable of Global. The terms of the Wells Fargo Credit Facilities ran through December 31, 2018, with automatic renewal terms of 12 months. The current term of the Wells Fargo Credit Facilities run through December 31, 2019. WFB or Global may terminate the Wells Fargo Credit Facilities upon at least 60 days’ written notice prior to the last day of the current term. The principal balance at December 31, 2018 and December 31, 2017 was $1,094,766 and $2,057,259, respectively. As part of the lines of credit agreements, Global must maintain certain financial covenants. Global met all financial covenant requirements for the year ended December 31, 2018. On November 12, 2017, AOC Key Solutions entered into an Account Purchase Agreement and related agreements (the “AOC Wells Agreement”) with WFB. Pursuant to the AOC Wells Agreement, AOC Key Solutions agreed to sell and assign to WFB all of its Accounts (as such term is defined in Article 9 of the Uniform Commercial Code), constituting accounts arising out of sales of Goods (as such term is defined in Article 9 of the Uniform Commercial Code) or rendition of services that WFB deems to be eligible for borrowing under the AOC Wells Agreement. WFB agreed to advance to AOC Key Solutions, 90% of all eligible accounts with a maximum facility amount of $3,000,000. Interest is payable under the AOC Wells Agreement at a monthly rate equal to the Daily One Month LIBOR in effect from time to time plus 5%. The AOC Wells Agreement also provides for a deficit interest rate equal to the then applicable interest rate plus 50% and a default interest rate equal to the then applicable interest rate or deficit interest rate, plus 50%. The initial term of the AOC Wells Agreement runs through December 31, 2018 (the “Initial Term”), with automatic renewal terms of 12 months (the “Renewal Term”), commencing on the first day after the last day of the Initial Term. AOC Key Solutions may terminate the AOC Wells Agreement upon at least 60 days’ prior written notice, but no more than 120 days’ written notice, prior to and effective as of the last day of the Initial Term or the Renewal Term, as the case may be. WFB may terminate the AOC Wells Agreement at any time and for any reason upon 30 days’ written notice or without notice upon the occurrence of an Event of Default (as such term is defined in the Agreement) after the expiration of any grace or cure period. The principal balance at December 31, 2018 and December 31, 2017 was $566,447 and $1,606,327, respectively. As part of the line of credit agreement, AOC Key Solutions must maintain certain financial covenants. AOC Key Solutions met all financial covenant requirements for the year ended December 31, 2018. Long-Term Debt On March 16, 2016, Novume entered into a Subordinated Note and Warrant Purchase Agreement (the “Avon Road Note Purchase Agreement”) pursuant to which Novume agreed to issue up to $1,000,000 in subordinated debt (the "Avon Road Note") and warrants to purchase up to 242,493 shares of Novume’s common stock (“Avon Road Subordinated Note Warrants”). The exercise price for the Avon Road Subordinated Note Warrants is equal to $1.031 per share of common stock. Subordinated notes with a face amount of $500,000 and Avon Road Subordinated Note Warrants to purchase 121,247 shares of Novume’s common stock have been issued pursuant to the Avon Road Note Purchase Agreement to Avon Road Partners, L.P. (“Avon Road”), an affiliate of Robert Berman, Novume’s CEO and a member of Novume’s Board of Directors. The Avon Road Subordinated Note Warrants had an expiration date of March 16, 2019 and qualified for equity accounting as the warrants did not fall within the scope of ASC Topic 480, Distinguishing Liabilities from Equity The Avon Road Note accrues simple interest on the unpaid principal of the note at a rate equal to the lower of (a) 9% per annum, or (b) the highest rate permitted by applicable law. Interest is payable monthly, and the note was to mature on March 16, 2019. On October 23, 2018, the maturity date of this note was extended to March 16, 2020. On March 12, 2019, the $500,000 balance due on the Avon Road Note was retired in its entirety (see Note 17). On January 25, 2017, pursuant to the terms of the Novume acquisition of the membership interests in the Firestorm Entities, the Company issued $1,000,000 in the aggregate in the form of four unsecured, subordinated promissory notes issued by Novume with interest payable over five years after the Firestorm Closing Date, to Lancer Financial Group, Inc. (“Lancer”) and the Firestorm Principals. The principal amount of the note payable to Lancer is $500,000. The principal amount of the note payable to Mr. Rhulen is $166,666.66. The principal amount of the notes payable to each of Mr. Satterfield and Ms. Loughlin is $166,666.67. The Firestorm Principal notes are payable at an interest rate of 2% and the Lancer note is payable at an interest rate of 7%. The notes mature on January 25, 2022. The balance of these notes payable was $938,272 and $924,383, net of unamortized interest, as of December 31, 2018 and 2017, respectively, to reflect the amortized fair value of the notes issued due to the difference in interest rates of $61,728 and $75,617, respectively. On April 3, 2018, Novume and Brekford entered into a transaction pursuant to which an institutional investor (the “Lender”) loaned $2,000,000 to Novume and Brekford (the “2018 Promissory Note”). The loan was originally due and payable on May 1, 2019 and bears interest at 15% per annum, with a minimum of 15% interest payable if the loan is repaid prior to May 1, 2019. On October 24, 2018, Novume and Brekford entered into a note amendment with the Lender by which the maturity date of the note was extended to May 1, 2020 (the “2018 Promissory Note Amendment”). The 2018 Promissory Note Amendment further provides for payment of interest through May 1, 2019, if the principal is repaid before May 1, 2019, and for the payment of interest through May 1, 2020, if the principal is repaid after May 1, 2019 and before May 1, 2020. The loan is secured by a security interest in all of the assets of Brekford. In addition, Novume issued 35,000 shares of common stock to the Lender, which shares contain piggy-back registration rights. If the shares are not so registered on the next selling shareholder registration statement, Novume shall be obligated to issue an additional 15,000 shares to the Lender. Upon any sale of Brekford or its assets, the Lender will be entitled to receive 7% of any proceeds received by Novume or Brekford in excess of $5 million (the “Lender’s Participation”). In addition, commencing January 1, 2020, the Lender shall be paid 7% of Brekford’s earnings before interest, taxes, depreciation and amortization, less any capital expenditures, which amount would be credited for any payments that might ultimately be paid to the Lender as its Lender’s Participation, if any. At April 3, 2018, the fair value of shares issued was $126,000. At October 24, 2018, an additional $62,500 fee was paid as consideration for extending the maturity date to May 1, 2020 (as described above) and designated as financing costs related to the 2018 Promissory Note Amendment. Amortized financing cost for the year ended December 31, 2018 was determined to be $96,378 and is included in interest expense. The 2018 Promissory Note has an effective interest rate of 19.5%. On March 12, 2019, the $2,000,000 balance due on the 2018 Promissory Note was retired in its entirety (see Note 17). The principal amounts due for long-term notes payable described above and a minor equipment note payable are shown below as of December 31, 2018: Short-term Long-term Total 2019 $ 2,563,245 $ - $ 2,563,245 2020 - 4,665 4,665 2021 - 4,959 4,959 2022 - 1,005,273 1,005,273 2023 - 11,564 11,564 Thereafter - - - Total 2,563,245 1,026,461 3,589,706 Less unamortized interest - (61,728 ) (61,728 ) Less unamortized financing costs (94,034 ) - (94,034 ) 2,469,211 964,733 3,433,944 Current portion of long-term debt (2,469,211 ) - (2,469,211 ) Long-term debt $ - $ 964,733 $ 964,733

INCOME TAXES

INCOME TAXES	12 Months Ended
	Dec. 31, 2018
Income Taxes
INCOME TAXES	The Company accounts for income taxes in accordance with ASC Topic 740. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. In determining the need for a valuation allowance, management reviews both positive and negative evidence pursuant to the requirements of ASC Topic 740, including current and historical results of operations, future income projections and the overall prospects of the Company’s business. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “2017 Act”) was enacted, which changes U.S. tax law and includes various provisions that impact our company. The 2017 Act effects our company by (i) changing U.S. tax rates, (ii) increasing the Company’s ability to utilize accumulated net operating losses generated after December 31, 2017, and (iii) impacts the estimates of our deferred tax assets and liabilities. The expense (benefit) benefit from income taxes for the years ended December 31, 2018 and 2017 consists of the following: For the Years Ended December 31, 2018 2017 Current: State $ 29,250 $ 23,919 Deferred: Federal $ 82,893 $ (311,211 ) State (82,893 ) (7,374 ) Expense (benefit) from income taxes $ 29,250 $ (294,666 ) The components of deferred income tax assets and liabilities are as follows at December 31, 2018 and 2017: For the Years Ended December 31, 2018 2017 Deferred tax assets: Fixed assets $ - $ 14,604 Amortizable start-up costs 34,439 - Accrual and others 240,646 507,052 Interest expense carryforward 147,260 Net operating loss carryforward 2,517,900 1,513,921 Valuation allowance (2,308,460 ) (1,342,108 ) 631,785 693,469 Deferred tax liabilities: Goodwill and Intangibles (551,301 ) (693,469 ) Fixed assets (80,484 ) - Total deferred tax assets, net $ - $ - The difference between the income tax provision computed at the U.S. Federal statutory rate and the effective tax rate is as follows for the years ended December 31, 2018 and 2017: For the Years Ended December 31, 2018 2017 U.S. statutory federal rate 21.0 % 34.0 % (Decrease) increase in taxes resulting from: State income tax rate, net of U.S. Federal benefit 2.9 % 5.1 % Acquisition related costs 0.0 % -6.8 % Impact of changes in tax rates -0.1 % -16.9 % True-ups -5.7 % 0.0 % Other -1.6 % -4.0 % Valuation allowance -17.0 % -5.8 % Effective tax rate -0.5 % 5.6 % The Company files income tax returns in the United States and in various state and foreign jurisdictions. No U.S. Federal, state or foreign income tax audits were in process as of December 31, 2018. Management has evaluated the recoverability of the net deferred income tax assets and the level of the valuation allowance required with respect to such net deferred income tax assets. After considering all available facts, the Company fully reserved for its net deferred tax assets because management believes that it is not more likely than not that their benefits will 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 net deferred income tax assets satisfy the realization standard, the valuation allowance will be reduced accordingly. At December 31, 2018, Novume had gross net operating loss carryforwards of $9,733,277 and a valuation allowance of $2,308,460 recorded against its net deferred tax assets. At December 31, 2017, Novume had gross net operating loss carryforwards of $5,909,378 and a valuation allowance of $1,342,108 recorded against its net deferred tax assets. For the years ended December 31, 2018 and 2017, Novume did not record any interest or penalties related to unrecognized tax benefits. It is the Company’s policy to record interest and penalties related to unrecognized tax benefits as part of income tax expense. The 2015 through 2017 tax years remain subject to examination by the IRS.

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY	12 Months Ended
	Dec. 31, 2018
Stockholders' Equity Attributable to Parent [Abstract]
STOCKHOLDERS' EQUITY	Common Stock The Company is authorized to issue 30,000,000 shares of common stock, $0.0001 par value. As of December 31, 2018 and December 31, 2017, the issued and outstanding common shares of Novume were 18,767,619 and 14,463,364, respectively. On March 15, 2016, the stockholders of AOC Key Solutions formed KeyStone as a holding company with the same proportionate ownership percentage as AOC Key Solutions. Pursuant to the KeyStone Merger Agreement, the stockholders exchanged 100% of the outstanding common stock of AOC Key Solutions for 5,000,000 (9,699,720 post merger exchange) shares newly issued KeyStone common stock, representing 100% of the outstanding common stock. The formation of KeyStone provided for 25,000,000 authorized shares of KeyStone $0.0001 par value common stock. As of December 31, 2016, 5,000,000 (9,699,720 post merger exchange) shares of KeyStone common stock were issued and outstanding. In January 2017, the Company issued 488,094 (946,875 post Brekford merger exchange) shares of KeyStone common stock as consideration as part of its acquisition of Firestorm. Upon completion of the KeyStone and Brekford merger on August 28, 2017, the pre-merger stockholders of KeyStone owned approximately 80% of the issued and outstanding capital stock of the Company on a fully-diluted basis, and the pre-merger stockholders of Brekford owned approximately 20% of the issued and outstanding capital stock of Novume on a fully-diluted basis. As consideration, in accordance with the terms of the Brekford Merger Agreement, the Company issued 5,158,503 shares of Novume common stock to former KeyStone shareholders and In October 2017, the Company issued 375,000 shares of Novume common stock as consideration as part of its acquisition of Global. In December 2017, the Company issued 33,333 shares of Novume common stock as consideration as part of its acquisition of BC Management. In January 2018, the Company issued 33,333 shares of Novume common stock as consideration as part of its acquisition of Secure Education. In April 2018, the Company issued 35,000 shares of Novume common stock as additional consideration to the Lender in connection with the 2018 Promissory Note. As part of its acquisition of Brekford on August 29, 2017, the Company assumed warrants to purchase 56,000 shares of Novume common stock (the “Brekford Warrants”) (see Note 10). Effective October 16, 2018, the Company entered into exchange agreements with holders of the Brekford Warrants pursuant to which the Company issued to the holders an aggregate of 96,924 shares of common stock in exchange for the return of the warrants to the Company for cancellation. On November 1, 2018, the Company issued 4,125,000 shares of common stock through an underwritten public offering at a public offering price of $0.80 per share. Net proceeds to the Company was approximately $2.8 million. In addition, the Company granted underwriters a 45-day option to purchase up to 618,750 additional shares of common stock to cover over-allotment, if any. The underwriters did not exercise this option and the options were cancelled. As part of the consideration to the underwriters, the Company issued to the underwriters warrants to purchase an aggregate of 206,250 shares of common stock, exercisable over a period of five years, at an exercise price of $1.00 per share. The underwriter warrants have a value of approximately $0.2 million and are exercisable commencing April 27, 2019 and expire on October 29, 2023. On December 13, 2018, the Company received a letter from the Nasdaq indicating that the Company is required to maintain a minimum bid price of $1 per share of its common stock. The Company's closing bid price of its common stock had been less than $1 for the previous 30 consecutive business days. As such, the Company was not compliant with the minimum bid price requirements under Nasdaq Listing Rule 5550(a)(2). The letter from Nasdaq provided the Company with a compliance period of 180 calendar days, or until June 11, 2019, to regain compliance with the minimum bid price requirement. If at any time during this 180-day compliance period the closing bid price of the Company’s common stock is at least $1 for a minimum of 10 consecutive business days, then Nasdaq will provide the Company with written confirmation of compliance and the matter will be closed. In the event that the Company’s common stock were to be delisted from the Nasdaq, management expects that it would be traded on the OTCQB or OTCQX, which are unorganized, inter-dealer, over-the-counter markets which provides significantly less liquidity than the Nasdaq or other national securities exchanges. In the event that the Company’s common stock were to be delisted from the Nasdaq, it may have a material adverse effect on the trading and price. For the year ended December 31, 2018, the Company issued 13,998 shares of Novume common stock related to the exercise of common stock options. For the year ended December 31, 2018 and 2017, the Company issued 4,304,255 and 9,463,364 shares of Novume common stock, respectively. On February 15, 2019, the Company entered into Amendment No. 1 to the OpenALPR Purchase Agreement (see Note 12), pursuant to which the Company agreed to issue 600,000 shares of Novume common stock as partial consideration for the acquisition of the assets of OpenALPR. On March 12, 2019, the Company issued 600,000 shares of Novume common stock pursuant to the acquisition of OpenALPR. Preferred Stock The Company is authorized to issue up to 2,000,000 shares of preferred stock, $0.0001 par value. The Company’s preferred stock may be entitled to preference over the common stock with respect to the distribution of assets of the Company in the event of liquidation, dissolution or winding-up of the Company, whether voluntarily or involuntarily, or in the event of any other distribution of assets of the Company among its shareholders for the purpose of the winding-up of its affairs. The authorized but unissued shares of the preferred stock may be divided into, and issued in, designated series from time to time by one or more resolutions adopted by the Board of Directors of the Company. The Board of Directors of the Company, in its sole discretion, has the power to determine the relative powers, preferences and rights of each series of preferred stock. Series A Cumulative Convertible Redeemable Preferred Stock Of the 2,000,000 authorized shares of preferred stock, 500,000 shares were initially designated as $0.0001 par value Series A Cumulative Convertible Redeemable Preferred Stock (the “Series A Preferred Stock”). The number of designated shares of the Series A Preferred Stock was increased to 505,000 shares on March 20, 2017. In November 2016, KeyStone commenced a Regulation A Offering (the “Reg A Offering”) of up to 3,000,000 Units. Each Unit (post merger exchange) consisted of one share of Series A Preferred Stock and one Unit Warrant to purchase 0.48 shares of Novume’s common stock at an exercise price of $1.03 per share. The holders of Series A Preferred Stock are entitled to quarterly dividends of 7.0% per annum per share. The holders of Series A Preferred Stock have a put right to convert each share into common stock at an initial conversion price and a specified price which increases annually based on the passage of time beginning in November 2019. The holders of Series A Preferred Stock also have a put right after 60 months from the issuance date to redeem any or all of the Series A Preferred Stock at a redemption price of $15.00 per share plus any accrued but unpaid dividends. Novume has a call right after 36 months from the issuance date to redeem all of the Series A Preferred Stock at a redemption price which increases annually based on the passage of time beginning in November 2019. The Series A Preferred Stock contains an automatic conversion feature based on a qualified initial public offering in excess of $30,000,000 or a written agreement by at least two-thirds of the holders of Series A Preferred Stock at an initial conversion price and a specified price which increases annually based on the passage of time beginning in November 2016. Based on the terms of the Series A Preferred Stock, the Company concluded that the Series A Preferred Stock should be classified as temporary equity in the accompanying consolidated balance sheets as of December 31, 2018 and 2017. The Reg A Offering Units were sold at $10 per Unit in minimum investment amounts of $5,000. There were three closings related to the sales of the Units. The gross proceeds, which the Company deemed to be fair value, from the first closing on December 23, 2016 totaled $3,015,700 with the issuance of 301,570 shares of Series A Preferred Stock and 301,570 Unit Warrants. On January 23, 2017, the Company completed its second closing of the Reg A Offering for the sale and issuance of 119,757 shares of Series A Preferred Stock and 119,757 Unit Warrants with the Company receiving aggregate gross proceeds of $1,197,570. On March 21, 2017, the Company completed its third and final closing of the Reg A Offering for the sale and issuance of 81,000 shares of Series A Preferred Stock and 81,000 Unit Warrants with the Company receiving aggregate gross proceeds of $810,000. The aggregate total sold in the Reg A Offering through and including the third and final closing was 502,327 Units, or 502,327 shares of Series A Preferred Stock and 502,327 Unit Warrants, for total gross proceeds to the Company of $5,023,270. The Reg A Offering is now closed. Novume adjusts the value of the Series A Preferred Stock to redemption value at the end of each reporting period. The adjustment to the redemption value is recorded through additional paid in capital of $655,103 and $550,655 for the years ended December 31, 2018 and 2017, respectively. As of December 31, 2018 and 2017, 502,327 shares of Series A Preferred Stock were issued and outstanding. The Series A Preferred Stock is entitled to quarterly cash dividends of $0.175 (7% per annum) per share. Dividends accrue quarterly and dividend payments for declared dividends are due within five business days following the end of a quarter. On April 7, 2017, Novume paid cash dividends of $75,694 to shareholders of record of Series A Preferred Stock as of March 30, 2017. On July 8, 2017, October 7, 2017, January 5, 2018, April 6, 2018 and July 9, 2018, the Company paid cash dividends of $87,907 to shareholders of record of Series A Preferred Stock as of the end of the previous month. On September 30, 2018, December 31, 2018 and March 31, 2019, the Company accrued dividends of $87,907 to Series A Preferred Stock shareholders of record. Accrued dividends payable to Series A Preferred Stock shareholders were $175,814 and $87,907 as of December 31, 2018 and 2017, respectively. The Unit Warrants expire on November 8, 2023. The Unit Warrants are required to be measured at fair value at the time of issuance and classified as equity. The Company determined that under the Black-Scholes option pricing model, the aggregate fair value at the dates of issuance was $169,125. As of December 31, 2018 and 2017, 502,327 Unit Warrants were outstanding. Series B Cumulative Convertible Preferred Stock Of the 2,000,000 authorized shares of preferred stock, 240,861 shares are designated as $0.0001 par value Novume Series B Cumulative Convertible Preferred Stock (the "Series B Preferred Stock"). As part of the Global Merger, the Company issued 240,861 shares of $0.0001 par value Series B Preferred Stock. All Series B Preferred Stock was issued at a price of $10.00 per share as part of the acquisition of the Global Merger. The Series B Preferred Stock has a conversion price of $5.00 per share. Each Series B Preferred Stock has an automatic conversion feature based on the share price of Novume. The Series B Preferred Stock is entitled to quarterly cash dividends of 1.121% (4.484% per annum) per share. Dividends accrue quarterly and dividend payments for declared dividends are due within five business days following the end of a quarter. On January 5, 2018, April 6, 2018 and July 9, 2018, the Company paid cash dividends of $27,001 to shareholders of record of Series B Preferred Stock as of the end of the previous month. On September 30, 2018, December 31, 2018 and March 31, 2019, the Company accrued dividends of $27,001 to Series B Preferred Stock shareholders of record. Accrued dividends payable to Series B Preferred Stock shareholders were $54,002 and $27,001 as of December 31, 2018 and 2017, respectively. Warrants The Company has a total of 1,473,163 and 1,256,247 warrants issued and outstanding as of December 31, 2018 and 2017, respectively. These warrants are exercisable and convertible for a total of 1,214,491 and 997,575 shares of Novume common stock as of December 31, 2018 and 2017, respectively. The exercise price for the Brekford Warrant is $7.50 and they expire on March 31, 2020. Effective October 16, 2018, the Company entered into exchange agreements with holders of the Brekford Warrant pursuant to which the Company issued to the holders an aggregate of 96,924 shares of common stock in exchange for the return of the warrants to the Company for cancellation. As of December 31, 2018, no Brekford Warrants were outstanding. As of December 31, 2017, there were 56,000 Brekford Warrants outstanding (see Note 10). As part of the Reg A Offering in fiscal year 2016 and 2017, Novume issued 502,327 Unit Warrants to the holders of Series A Preferred Stock. The exercise price for these Unit Warrants is $1.03 and they are convertible into a total of 243,655 shares of Novume common stock. The Unit Warrants expire on November 23, 2023. As of December 31, 2018 and 2017, there are 502,327 Unit Warrants outstanding. On March 16, 2016, Novume entered into a Subordinated Note and Warrant Purchase Agreement (the “Avon Road Note Purchase Agreement”) pursuant to which Novume agreed to issue up to $1,000,000 in subordinated debt and warrants to purchase up to 242,493 shares of Novume’s common stock (“Avon Road Subordinated Note Warrants”). The exercise price for the Avon Road Subordinated Note Warrants is equal to $1.031 per share of common stock. Subordinated notes with a face amount of $500,000 and Avon Road Subordinated Note Warrants to purchase 121,247 shares of Novume’s common stock have been issued pursuant to the Avon Road Note Purchase Agreement to Avon Road, an affiliate of Robert Berman, Novume’s CEO and a member of Novume’s Board of Directors. These warrants were exercised on December 11, 2017 for proceeds of $125,006 and there are no Avon Road Subordinated Note Warrants outstanding as of December 31, 2018 and 2017. On March 12, 2019, the $500,000 principal balance due on the Avon Road Note was retired in its entirety (see Note 17). Pursuant to its acquisition of Firestorm on January 24, 2017, Novume issued warrants to purchase 315,627 shares of Novume common stock, exercisable over a period of five years, at an exercise price of $2.5744 per share; and warrants to purchase 315,627 Novume Common Shares, exercisable over a period of five years, at an exercise price of $3.6083 per share. The expiration date of the Firestorm warrants is January 24, 2022. As of December 31, 2018 and 2017, there are 631,254 Firestorm warrants outstanding. Pursuant to its acquisition of BC Management on December 31, 2017, Novume issued warrants to purchase 33,333 shares of Novume common stock, exercisable over a period of five years, at an exercise price of $5.44 per share; and warrants to purchase 33,333 Novume common stock, exercisable over a period of five years, at an exercise price of $6.53 per share. The expiration date of the BC Management warrants is December 31, 2022. As of December 31, 2018 and 2017, there are 66,666 BC Management warrants outstanding. Pursuant to its acquisition of Secure Education on January 1, 2018, Novume issued warrants to purchase 33,333 shares of Novume common stock, exercisable over a period of five years, at an exercise price of $5.44 per share; and warrants to purchase 33,333 Novume common stock, exercisable over a period of five years, at an exercise price of $6.53 per share. The expiration date of the Secure Education warrants is January 1, 2023. As of December 31, 2018, there are 66,666 Secure Education warrants outstanding. On November 1, 2018, in connection with the underwritten public offering, the Company issued to the underwriters warrants to purchase 206,250 shares of Novume common stock, exercisable over a period of five years, at an exercise price of $1.00 per share. The underwriter warrants have a value of approximately $0.2 million and are exercisable commencing April 27, 2019 and expire on October 29, 2023.

WARRANT DERIVATIVE LIABILITY

WARRANT DERIVATIVE LIABILITY	12 Months Ended
	Dec. 31, 2018
Warrant Derivative Liability
WARRANT DERIVATIVE LIABILITY	On March 17, 2015, Brekford issued a Warrant (“Brekford Warrant”), which permits the holder to purchase 56,000 shares of common stock with an exercise price of $7.50 per share and a life of five years. The Brekford Warrant 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 $7.50 a share. The Company accounted for the conversion option of the Brekford 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 Brekford Warrant has been measured at fair value at December 31, 2017 using the Black Scholes option-pricing model. The assumptions used in the Black-Scholes model are as follows: dividend yield of 0%; expected volatility of 70.0% - 81.6%; weighted average risk-free interest rate of 1.89%; expected life of 2.21-2.71 years; and estimated fair value of the common stock of $1.80-$4.90 per share. Effective October 16, 2018, the Company entered into exchange agreements with holders of the Brekford Warrant pursuant to which the Company issued to the holders an aggregate of 96,924 shares of common stock in exchange for the return of the warrants to the Company for cancellation and extinguishment of the warrant liability. At December 31, 2018 and 2017, the outstanding fair value of the derivative liability was $0 and $78,228, respectively.

COMMON STOCK OPTION AGREEMENT

COMMON STOCK OPTION AGREEMENT	12 Months Ended
	Dec. 31, 2018
Common Stock Option Agreement
COMMON STOCK OPTION AGREEMENT	On March 16, 2016, two stockholders of the Company entered into an option agreement with Avon Road (collectively, the “Avon Road Parties”). Under the terms of this agreement Avon Road paid the stockholders $10,000 each (a total of $20,000) for the right to purchase, on a simultaneous and pro-rata basis, up to 4,318,856 shares of Novume’s common stock owned by those two shareholders at $0.52 per share, which was determined to be the fair value. The option agreement had a two-year term which would have expired on March 16, 2018. On September 7, 2017, the Avon Road Parties entered into an amended and restated option agreement which extended the right to exercise the option up to and including March 21, 2019 (the “Amended and Restated Option Agreement”). Pursuant to the Amended and Restated Option Agreement, Avon Road exercised the option to purchase 4,318,856 shares of Novume’s common stock. As of December 31, 2018, Avon Road may be deemed to be the beneficial owner with shared voting and dispositive power of 4,440,104 shares of Novume common stock in the aggregate, or 23.7% of the class of securities. Mr. Robert A. Berman may be deemed to be the beneficial owner of 4,462,104 shares of Novume common stock in the aggregate, or 23.8% of the class of securities. As the general partner of Avon Road, Mr. Berman may be deemed to share with Avon Road (and not with any third-party) the power to vote or direct the vote of and to dispose or direct the disposition of the 4,440,104 shares of Novume common stock beneficially owned by Avon Road, or 23.7% of the class of securities. In addition, as of December 31, 2018, Mr. James McCarthy now holds directly 2,725,836 shares of Novume common and he may be deemed to be the beneficial owner with sole voting and dispositive power of 2,725,836 shares of Novume common stock, or 14.5% of the class of securities.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	12 Months Ended
	Dec. 31, 2018
Commitments And Contingencies
COMMITMENTS AND CONTINGENCIES	Operating Leases During 2017 and 2018, AOC Key Solutions leased office space in Chantilly, Virginia under the terms of a ten-year lease expiring October 31, 2019. The lease contained one five-year renewal option. The lease terms included an annual increase in base rent and expenses of 2.75%, which have been amortized ratably over the lease term. During this same period, AOC Key Solutions was the lessor in an agreement to sublease office space in Chantilly, Virginia with an initial term of two years, with eight one-year options for the subtenant to renew the lease through October 31, 2019. This sublease provided for annual increases in base rent and expenses of 2.90%. The initial term ended October 31, 2011 and the subtenant exercised the renewal options through 2014. On April 7, 2015, the sublease was amended to sublease more space to the subtenant and change the rental calculation. The sublease provided for an offset of $182,534 to rent expense for each of the years ended December 31, 2018 and 2017. Effective December 31, 2018, AOC Key Solutions terminated the original lease agreement for the Chantilly, Virginia space, and on January 1, 2019, AOC Key Solutions entered into a new agreement as sublessor for a portion of the original space occupied in this location. This sublease includes annual increases in base rent and expenses of 2.75% and expires on June 30, 2024, with a right to renew subject to the sublessor renewing its lease. AOC Key Solutions also leases office space in New Orleans, Louisiana under the terms of a three-year lease which expired on May 31, 2018, and lease payments are currently being made on a month-to-month basis. Firestorm leases office space in Roswell, Georgia under the terms of a lease expiring on January 31, 2022 and in Grand Rapids, Michigan under a lease which expires April 30, 2019. Brekford leases office space from Global Public Safety, LLC on a month-to-month basis. Brekford also leases space under an operating lease expiring on April 30, 2019. Global leases office space in Fort Worth, Texas under the terms of a lease expiring on January 31, 2022. Rent expense for the years ended December 31, 2018 and 2017 was $790,999 and $605,264, respectively, and is included in selling, general and administrative expenses. As of December 31, 2018, the future obligations over the primary terms of Novume’s long-term leases expiring through 2024 are as follows: 2019 $ 348,222 2020 337,437 2021 252,262 2022 193,898 2023 189,682 Thereafter 81,834 Total $ 1,403,335 The Company is currently finalizing the impact of the FASB’s new lease standard, ASU 2016-02, on its Consolidated Financial Statements and related disclosures, as described in Note 2 to the Consolidated Financial Statements. NeoSystems The Company planned to acquire NeoSystems LLC (“NeoSystems”) through a forward merger under an agreement entered into on November 16, 2017. The consummation of the merger was subject to, among other things, the completion of the Qualifying Offering by February 28, 2018, the proceeds of which were expected to be used in connection with the contemplated acquisition of NeoSystems. On March 7, 2018, the Company received notice of termination of the Agreement and Plan of Merger (the “NeoSystems Merger Agreement”). The stated basis of termination by NeoSystems was due to the Company’s failure to complete a Qualifying Offering, as defined in the NeoSystems Merger Agreement, by February 28, 2018. The terms of the NeoSystems Merger Agreement provided that upon termination, the Company was required to pay certain fees and expenses of legal counsel, financial advisors, investment bankers and accountants, which shall not exceed in the aggregate $450,000 (the “Breakup Fee”). During 2018, the Company paid NeoSystems a Breakup Fee of $225,000 which was recorded as a selling, general and administrative expense. OpenALPR Asset Purchase Agreement On November 14, 2018, the Company entered into an Asset Purchase Agreement (the “OpenALPR Purchase Agreement”) by and among Novume, OpenALPR and Matthew Hill pursuant to which the Company will purchase all of the assets of OpenALPR and its subsidiaries, except for certain excluded assets, and assume certain liabilities as provided for in the OpenALPR Purchase Agreement (the “OpenALPR Acquisition”). As consideration for the OpenALPR Acquisition, Novume shall pay $15,000,000, subject to certain adjustments, provided that OpenALPR may elect to receive up to 1,000,000 shares of the Company’s common stock, par value, $0.0001 per share, in lieu of up to $5,000,000 in cash valued at a price per share of $5. On February 15, 2019, the Company entered into Amendment No. 1 to the OpenALPR Purchase Agreement, pursuant to which the parties agreed to amend the Base Purchase Price to $7,000,000, subject to adjustment after closing, issue a promissory note in the amount of $5,000,000, and issue 600,000 shares of Novume common stock as consideration for the acquisition of OpenALPR’s assets. On March 8, 2019, the Company entered into Amendment No. 2 to the OpenALPR Asset Purchase Agreement which eliminated the working capital adjustment set forth in the OpenALPR Asset Purchase Agreement, as amended, and replaced it with an adjustment for prepaid maintenance contracts. On March 12, 2019, the Company completed the acquisition of all of the assets of OpenALPR, except for certain excluded assets, and assumed certain liabilities, through Brekford. Consideration paid as part of this acquisition was: (a) $7,000,000 in cash, subject to adjustment after closing; (b) 600,000 shares of Novume common stock, and (c) a promissory note in the principal amount of $5,000,000 pursuant to the 2019 Promissory Note, together with an accompanying warrant to purchase 625,000 shares of Novume common stock, exercisable over a period of five years at an exercise price of $0.74 per share, valued at $208,125 (see Note 17). As the OpenALPR acquisition has recently been completed, the Company is currently in the process of completing the purchase price allocation treating the OpenALPR acquisition as a business combination. The purchase price allocation for OpenALPR will be included in the Company’s consolidated financial statements in the first quarter of the year ending December 31, 2019. As of March 31, 2019, there are 625,000 OpenALPR warrants outstanding. Hill Employment Agreement Also, on November 14, 2018, concurrent with the execution of the OpenALPR Purchase Agreement, the Company entered into an employment agreement with Matthew Hill (the “Hill Employment Agreement”) which became effective as of March 12, 2019, the closing date of the OpenALPR Purchase Agreement, pursuant to which Mr. Hill began serving as the Company’s Chief Science Officer. The Hill Employment Agreement provides for a term of three years unless earlier terminated pursuant to the terms thereof which term renews for additional one-year terms until terminated upon ninety days advance notice. Mr. Hill will earn an annual base compensation of $165,000. Either party may terminate the Hill Employment Agreement with or without cause with notice as contemplated by the Hill Employment Agreement, provided however, if Mr. Hill determines to terminate his employment, he shall provide the Company with at least six months prior written notice. The Hill Employment Agreement provides for the payment of severance under certain circumstances as outlined therein.

EQUITY INCENTIVE PLAN

EQUITY INCENTIVE PLAN	12 Months Ended
	Dec. 31, 2018
Equity Incentive Plan
EQUITY INCENTIVE PLAN	In August 2017, the Company approved and adopted the 2017 Equity Award Plan (the “2017 Plan”) which replaced the 2016 Equity Award Plan (the “2016 Plan”). The 2017 Plan permits the granting of stock options, stock appreciation rights, restricted and unrestricted stock awards, phantom stock, performance awards and other stock-based awards for the purpose of attracting and retaining quality employees, directors and consultants. Maximum awards available under the 2017 Plan were initially set at 3,000,000 shares. Stock Options Stock options granted under the 2017 Plan may be either incentive stock options (“ISOs”) or non-qualified stock options (“NSOs”). ISOs may be granted to employees and NSOs may be granted to employees, directors, or consultants. Stock options are granted at exercise prices as determined by the Board of Directors. The vesting period is generally three to four years with a contractual term of 10 years. The 2017 Plan is administered by the Administrator, which is currently the Board of Directors of the Company. The Administrator has the exclusive authority, subject to the terms and conditions set forth in the 2017 Plan, to determine all matters relating to awards under the 2017 Plan, including the selection of individuals to be granted an award, the type of award, the number of shares of Novume common stock subject to an award, and all terms, conditions, restrictions and limitations, if any, including, without limitation, vesting, acceleration of vesting, exercisability, termination, substitution, cancellation, forfeiture, or repurchase of an award and the terms of any instrument that evidences the award. Novume has also designed the 2017 Plan to include a number of provisions that Novume’s management believes promote best practices by reinforcing the alignment of equity compensation arrangements for nonemployee directors, officers, employees, consultants and stockholders’ interests. These provisions include, but are not limited to, the following: No Discounted Awards No Repricing Without Stockholder Approval No Evergreen Provision No Automatic Grants No Transferability. No Tax Gross-Ups. No Liberal Change-in-Control Definition. “Double-trigger” Change in Control Vesting. No Dividends on Unearned Performance Awards Limitation on Amendments. Clawbacks. When making an award under the 2017 Plan, the Administrator may designate the award as “qualified performance-based compensation,” which means that performance criteria must be satisfied in order for an employee to be paid the award. Qualified performance-based compensation may be made in the form of restricted common stock, restricted stock units, common stock options, performance shares, performance units or other stock equivalents. The 2017 Plan includes the performance criteria the Administrator has adopted, subject to stockholder approval, for a “qualified performance-based compensation” award. A summary of stock option activity under the Company’s 2017 Plan for the years ended December 31, 2018 and 2017 is as follows: Number of Shares Subject to Option Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding Balance at January 1, 2017 58,499 $ 1.68 9.29 Granted 1,638,331 2.21 9.29 Exercised - - - Forfeited (1,455 ) (1.55 ) (9.07 ) Expired - - - Outstanding Balance at December 31, 2017 1,695,375 $ 2.19 9.26 $ 4,590,714 Granted 48,499 0.73 9.85 Exercised (13,998 ) 1.68 9.50 Forfeited (450,633 ) 1.82 8.71 Expired (51,686 ) 1.36 8.53 Outstanding Balance at December 31, 2018 1,227,557 $ 2.13 8.39 $ - Exercisable at December 31, 2018 823,472 $ 1.87 8.32 $ - Vested and expected to vest at December 31, 2018 1,107,236 $ 2.08 8.37 $ - Stock compensation expense for the year ended December 31, 2018 and 2017 was $464,509 and $408,465, respectively, and is included in selling, general and administrative expenses in the accompanying consolidated statements of operations. The weighted average grant date fair value of options granted for the years ended December 31, 2018 and 2017 was $0.73 and $2.21, respectively. The intrinsic value of the stock options granted during the years ended December 31, 2018 and 2017, was $0 and $4,399,570, respectively. The total fair value of shares that became vested after grant during the years ended December 31, 2018 and 2017 was $325,095 and $1,624,252, respectively. As of December 31, 2018, there was $428,557 of unrecognized stock compensation expense related to unvested stock options granted under the 2017 Plan that will be recognized over a weighted average period of 1.75 years.

EMPLOYEE BENEFIT PLAN

EMPLOYEE BENEFIT PLAN	12 Months Ended
	Dec. 31, 2018
Employee Benefit Plan
EMPLOYEE BENEFIT PLAN	AOC Key Solutions has a defined contribution savings plan under Section 401(k) of the Internal Revenue Code (the “Code”) (the “AOC 401(k) Plan”) which was amended on January 1, 2013, as required by the Code. Pursuant to the amended AOC 401(k) Plan, AOC Key Solutions will make nondiscretionary “safe harbor” matching contributions for all participants of 100% of the participant’s salary deferrals up to 3%, and 50% of deferrals up to the next 2%, of the participant’s compensation. Brekford has a defined contribution savings plan under Section 401(k) of the Code (the “Brekford 401(k) Plan”). The Brekford 401(k) Plan is a defined contribution plan, which covers substantially all U.S.-based employees who have completed three months of service. The Brekford 401(k) Plan provides that Brekford will match 50% of the participant salary deferrals up to 3% of a participant’s compensation for all participants. GCP also maintains a 401(k) plan (the “GCP 401(k) Plan”), which was amended September 15, 2014. However, GCP has not historically made matching contributions to the GCP 401(k) Plan. The amount of contributions recorded by the Company under these plans during the years ended December 31, 2018 and 2017 were $158,893 and $144,932, respectively. On January 1, 2019, Novume established the Novume Solutions, Inc. 401(k) Plan (the “Novume 401(k) Plan”), a Qualified Automatic Contribution Arrangement (QACA) safe harbor plan, and the AOC 401(k) Plan, the Brekford 401(k) Plan, and the GCP 401(k) Plan were amended and merged into the Novume 401(k) Plan. Employees that satisfied the eligibility requirements became participants in the Novume 401(k) Plan. Novume contributes an amount equal to the sum of 100% of a participant’s elective deferrals that do not exceed 1% of participant’s compensation, plus 50% of the participant’s elective deferrals that exceed 1% of the participants compensation, but do not exceed 6% of the participant’s compensation. Employee contributions are fully vested and matching contributions are subject to a two-year service vesting schedule.

INVENTORY

INVENTORY	12 Months Ended
	Dec. 31, 2018
Inventory Abstract
INVENTORY	As of December 31, 2018 and December 31, 2017, inventory consisted entirely of parts of $72,702 and $155,716, respectively.

EARNINGS (LOSS) PER SHARE

EARNINGS (LOSS) PER SHARE	12 Months Ended
	Dec. 31, 2018
Earnings Loss Per Share
EARNINGS (LOSS) PER SHARE	The following table provides information relating to the calculation of earnings (loss) per common share: For the Years Ended December 31, 2018 2017 Basic and diluted (loss) earnings per share Net (loss) earnings from continuing operations $ (5,703,499 ) $ (5,041,134 ) Less: preferred stock accretion (655,103 ) (550,655 ) Less: preferred stock dividends (459,632 ) (362,131 ) Net income (loss) attributable to shareholders (6,818,234 ) (5,953,920 ) Weighted average common shares outstanding - basic 15,409,014 11,767,304 Basic (loss) earnings per share $ (0.44 ) $ (0.51 ) Weighted average common shares outstanding - diluted 15,409,014 11,767,304 Diluted (loss) earnings per share $ (0.44 ) $ (0.51 ) Common stock equivalents excluded due to anti-dilutive effect 3,898,257 2,362,877 As the Company had a net loss for the year ended December 31, 2018, the following 3,898,257 potentially dilutive securities were excluded from diluted loss per share as the Company had a net loss: 1,214,491 for outstanding warrants, 974,487 related to the Series A Preferred Stock, 481,722 related to the Series B Preferred Stock and 1,227,557 related to outstanding options. For the year ended December 31, 2017, the following potentially 2,362,877 dilutive securities were excluded from diluted loss per share as the Company had a net loss: 968,766 for outstanding warrants, 932,070 related to the Series A Preferred Stock, 120,430 related to the Series B Preferred Stock and 341,611 related to outstanding options. In addition, 64,082 options were excluded from the diluted loss per share calculations as the exercise price of these shares exceeded the per share value of the common stock. (Loss) Earnings Per Share under Two – Class Method The Series A Preferred Stock and Series B Preferred Stock have the non-forfeitable right to participate on an as converted basis at the conversion rate then in effect in any common stock dividends declared and, as such, is considered a participating security. The Series A Preferred Stock and Series B Preferred Stock are included in the computation of basic and diluted loss per share pursuant to the two-class method. Holders of the Series A Preferred Stock and Series B Preferred Stock do not participate in undistributed net losses because they are not contractually obligated to do so. The computation of diluted (loss) earnings per share attributable to common stockholders reflects the potential dilution that could occur if securities or other contracts to issue shares of common stock that are dilutive were exercised or converted into shares of common stock (or resulted in the issuance of shares of common stock) and would then share in our earnings. During the periods in which we record a loss attributable to common stockholders, securities would not be dilutive to net loss per share and conversion into shares of common stock is assumed not to occur. The following table provides a reconciliation of net (loss) to preferred shareholders and common stockholders for purposes of computing net (loss) per share for the years ended December 31, 2018 and 2017: For the Years Ended December 31, 2018 2017 Numerator: Net (loss) earnings from continuing operations $ (5,703,499 ) $ (5,041,134 ) Less: preferred stock accretion (655,103 ) (550,655 ) Less: preferred stock dividends (459,632 ) (362,131 ) Net income (loss) attributable to shareholders $ (6,818,234 ) $ (5,953,920 ) Denominator (basic): Weighted average common shares outstanding 15,409,014 11,767,304 Participating securities - Series A preferred stock 974,487 932,070 Participating securities - Series B preferred stock 481,722 120,430 Weighted average shares outstanding 16,865,223 12,819,804 Loss per common share - basic under two-class method $ (0.40 ) $ (0.46 ) Denominator (diluted): Weighted average common shares outstanding 15,409,014 11,767,304 Participating securities - Series A preferred stock 974,487 932,070 Participating securities - Series B preferred stock 481,722 120,430 Weighted average shares outstanding 16,865,223 12,819,804 Loss per common share - basic under two-class method $ (0.40 ) $ (0.46 )

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	12 Months Ended
	Dec. 31, 2018
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	Leasing Agreements On January 1, 2019, AOC Key Solutions entered into a new agreement as sublessor for a portion of the original space occupied in Chantilly, Virginia. This sublease includes annual increases in base rent and expenses of 2.75% and expires on June 30, 2024, with a right to renew subject to the sublessor renewing its lease. On February 19, 2019, Secure Education entered into a lease assignment transferring its interest in and to the lease for its office space in Grand Rapids, Michigan, effective April 30, 2019. Establishment of Novume 401(k) Plan On January 1, 2019, Novume established the Novume Solutions, Inc. 401(k) Plan (the “Novume 401(k) Plan”), a Qualified Automatic Contribution Arrangement (QACA) safe harbor plan, and the AOC 401(k) Plan, the Brekford 401(k) Plan, and the GCP 401(k) Plan were amended and merged into the Novume 401(k) Plan (see Note 14). Employees that satisfied the eligibility requirements became participants in the Novume 401(k) Plan. Novume contributes an amount equal to the sum of 100% of a participant’s elective deferrals that do not exceed 1% of participant’s compensation, plus 50% of the participant’s elective deferrals that exceed 1% of the participants compensation, but do not exceed 6% of the participant’s compensation. Employee contributions are fully vested and matching contributions are subject to a two-year service vesting schedule. Amendments to the OpenALPR Asset Purchase Agreement On February 15, 2019, the Company entered into Amendment No. 1 to the OpenALPR Asset Purchase Agreement, pursuant to which the parties agreed to amend the Base Purchase Price to $7,000,000, subject to adjustment after closing, issue a promissory note in the amount of $5,000,000, and issue 600,000 shares of Novume common stock as consideration for the acquisition of OpenALPR’s assets. On March 8, 2019, the Company entered into Amendment No. 2 to the OpenALPR Asset Purchase Agreement which eliminated the working capital adjustment set forth in the OpenALPR Asset Purchase Agreement, as amended, and replaced it with an adjustment for prepaid maintenance contracts. Series A Preferred Stock and Unit Warrants Designated as OTCQB Securities On February 15, 2019, the Company’s Series A Preferred Stock and Unit Warrants which had been designated as securities trading on the OTC Markets OTCQX exchange were transferred to being designated as trading on the OTC Markets OTCQB exchange. Renaming of Brekford to Rekor Recognition Systems, Inc. On February 28, 2019, the Company renamed Brekford to Rekor Recognition Systems, Inc. (see Note 1). 2019 Promissory Note On March 12, 2019, Novume entered into a note purchase agreement pursuant to which investors (the “2019 Lenders”) loaned $20,000,000 to Novume (the “2019 Promissory Note”) and the Company issued to the 2019 Lenders warrants to purchase 2,500,000 shares of Novume common stock (the “March 2019 Warrants”). The loan is due and payable on March 11, 2021 and bears interest at 16% per annum, of which at least 10% per annum shall be paid in cash. The full remaining portion of all interest, if any, shall accrue and be paid-in-kind. The notes also require (a) a premium, if paid before the maturity date, (b) a $1,000,000 exit fee due at maturity, and (c) compliance with affirmative, negative and financial covenants. Transaction costs were approximately $403,250 for a work fee payable over 10 months, $290,000 in legal fees and a $200,000 closing fee. The loan is secured by a security interest in substantially all of the assets of Novume. The March 2019 Warrants are exercisable over a period of five years, at an exercise price of $0.74 per share, and are valued at $832,500. The warrants are exercisable commencing March 12, 2019 and expire on March 12, 2024. The 2019 Promissory Note has an effective interest rate of 24.87%. Payoff of $500,000 Avon Road Note On March 12, 2019, the $500,000 principal balance due on the Avon Road Note was retired in its entirety (see Note 9). Payoff of $2,000,000 Promissory Note On March 12, 2019, the $2,000,000 principal balance due on the 2018 Promissory Note was retired in its entirety and the Company paid to the Lender $1,050,000 of consideration for the Lender’s Participation and $50,000 of interest due through May 1, 2019 (see Note 7). OpenALPR Acquisition On March 12, 2019 and pursuant to the OpenALPR Asset Purchase Agreement, as amended, the Company completed the acquisition of all of the assets of OpenALPR, except for certain excluded assets, and assumed certain liabilities, through Brekford. Consideration paid as part of this acquisition was: (a) $7,000,000 in cash, subject to adjustment after closing; (b) 600,000 shares of Novume common stock, and (c) a promissory note in the principal amount of $5,000,000 pursuant to the 2019 Promissory Note (as defined above), together with an accompanying warrant to purchase 625,000 shares of Novume common stock, exercisable over a period of five years at an exercise price of $0.74 per share, valued at $208,125. As the OpenALPR acquisition has recently been completed, the Company is currently in the process of completing the purchase price allocation treating the OpenALPR acquisition as a business combination. The purchase price allocation for OpenALPR will be included in the Company’s consolidated financial statements in the first quarter of the year ending December 31, 2019. As of March 31, 2019, there are 625,000 OpenALPR warrants outstanding. Hill Employment Agreement On March 12, 2019, concurrent with the execution of the OpenALPR Purchase Agreement, the Hill Employment Agreement became effective, pursuant to which Mr. Hill will serve as Chief Science Officer of the Company (see Note 12).

SUMMARY OF SIGNIFICANT ACCOUN_2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
	Dec. 31, 2018
Accounting Policies [Abstract]
Principles of Consolidation	The consolidated financial statements include the accounts of Novume, the parent company, and its wholly owned subsidiaries AOC Key Solutions, Inc., Brekford Traffic Safety Inc., Novume Media, Inc., Chantilly Petroleum, LLC, Firestorm Solutions, LLC, Firestorm Franchising, LLC, Global Technical Services, Inc. and Global Contract Professionals, Inc. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the accounting rules under Regulation S-X, as promulgated by the Securities and Exchange Commission (“SEC”). All significant intercompany accounts and transactions have been eliminated in consolidation. Certain amounts in the prior year's financial statements have been reclassified to conform to the current year's presentation. In the opinion of management, all adjustments necessary for a fair presentation for the periods presented have been reflected as required by Regulation S-X, Rule 10-01. All necessary adjustments are of a normal, recurring nature.
Going Concern Assessment	Beginning with the year ended December 31, 2017 and all annual and interim periods thereafter, management will assess going concern uncertainty in the Company’s consolidated financial statements to determine whether there is sufficient cash on hand and working capital, including available borrowings on loans and external bank lines of credit, to operate for a period of at least one year from the date the consolidated financial statements are issued or available to be issued, which is referred to as the “look-forward period”, as defined in GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, management will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, its ability to delay or curtail expenditures or programs and its ability to raise additional capital, if necessary, among other factors. Based on this assessment, as necessary or applicable, management makes certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent it deems probable those implementations can be achieved and management has the proper authority to execute them within the look-forward period. The Company has generated losses since its inception in August 2017 and has relied on cash on hand, external bank lines of credit, the sale of a note, debt financing and a public offering of its common stock to support cashflow from operations. The Company attributes losses to merger costs, public company corporate overhead and investments made by some of our subsidiary operations. As of and for the year ended December 31, 2018, the Company had a net loss of approximately $5.7 million and working capital deficit of approximately $0.04 million which includes the early retirement of $2.5 million of long-term debt in March 2019. The Company’s net cash position was increased by approximately $4.0 million in March 2019 by the issuance of $20 million senior secured notes, of which $5 million was non-cash, offset by $7 million of cash paid for the acquisition of OpenALPR, and approximately $4.0 million related to the extinguishment of debt and associated fees (see Note 17). Management believes that based on relevant conditions and events that are known and reasonably knowable, that its current forecasts and projections, for one year from the date of the filing of the consolidated financial statements in this Annual Report on Form 10-K, indicate the Company’s ability to continue operations as a going concern for that one-year period. The Company is actively monitoring its operations, cash on hand and working capital. The Company has contingency plans to reduce or defer expenses and cash outlays should operations weaken in the look-forward period or additional financing is not available.
Cash Equivalents	Novume considers all highly liquid debt instruments purchased with the maturity of three months or less to be cash equivalents. Brekford makes collections on behalf of certain client jurisdictions. Cash balances designated for these client jurisdictions as of December 31, 2018 and 2017 were $608,557 and $641,103, respectively, and correspond to equal amounts of related accounts payable.
Accounts Receivable and Allowance for Doubtful Accounts	Accounts receivable are customer obligations due under normal trade terms. The Company performs continuing credit evaluations of its clients’ financial condition, and the Company generally does not require collateral. Management reviews accounts receivable to determine if any receivables will potentially be uncollectible. Factors considered in the determination include, among other factors, number of days an invoice is past due, client historical trends, available credit ratings information, other financial data and the overall economic environment. Collection agencies may also be utilized if management so determines. The Company records an allowance for doubtful accounts based on specifically identified amounts that are believed to be uncollectible. The Company also considers recording as an additional allowance a certain percentage of aged accounts receivable, based on historical experience and the Company’s assessment of the general financial conditions affecting its customer base. If actual collection experience changes, revisions to the allowance may be required. After all reasonable attempts to collect an account receivable have failed, the amount of the receivable is written off against the allowance. Based on the information available, the Company determined that an allowance for loss of $24,405 and $24,000 was required at December 31, 2018 and 2017, respectively. Accounts receivable at December 31, 2018 and 2017 included $1,124,705 and $1,259,089 in unbilled contracts respectively related to work performed in the year in which the receivable was recorded. The amounts were billed in the subsequent year.
Inventory	Inventory principally consists of parts held temporarily until installed for service. 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 components and replacement parts.
Other Current Assets, Net	Other assets are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as necessary. In the Brekford Merger on August 28, 2017, a refund of $134,818 was due from the prior financing company. The balance due remains outstanding as of December 31, 2018 and the Company has established a valuation allowance of $134,818.
Property and Equipment	The cost of furniture and fixtures and equipment is depreciated over the useful lives of the related assets. Leasehold improvements are amortized over the shorter of their estimated useful lives or the terms of the lease. Depreciation and amortization is recorded on the straight-line basis. The range of estimated useful lives used for computing depreciation are as follows: Furniture and fixtures 2 - 10 years Office equipment 2 - 5 years Leasehold improvements 3 - 15 years Internally developed software 3 - 5 years Automobiles 3 - 5 years Camera systems 3 years The Company capitalizes eligible costs related to internally-developed software in accordance with ASC 985-20 which were incurred during the application development stage. Capitalized internally-developed software costs, net, not yet placed in service were $913,455 and $52,400 as of December 31, 2018 and 2017, respectively. Repairs and maintenance are expensed as incurred. Expenditures for additions, improvements and replacements are capitalized. Depreciation and amortization expense for the years ended December 31, 2018 and 2017 was $345,136 and $142,545, respectively.
Business Combinations	Management conducts a valuation analysis on the tangible and intangible assets acquired and liabilities assumed at the acquisition date thereof. During the measurement period, which may be up to one year from the Amounts paid for acquisitions are allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. We allocate a portion of the purchase price to the fair value of identifiable intangible assets. The fair value of identifiable intangible assets is based on detailed valuations that use information and assumptions provided by management. We allocate any excess purchase price over the fair value of the net tangible and intangible assets acquired to goodwill. We recorded goodwill and intangible assets for the mergers and acquisitions that occurred in 2017 and 2018. The BC Management, Secure Education and Firestorm acquisitions were asset acquisitions, which created both book and tax bases in goodwill and non-goodwill intangible assets. BC Management’s acquisition resulted in $0.4 million of non-goodwill intangible assets. Secure Education’s acquisition resulted in $0.4 million of non-goodwill intangible assets. The Firestorm acquisition resulted in $2.5 million of non-goodwill intangible assets. Brekford and Global were stock acquisitions and only have book basis in the goodwill and intangible assets. The fair value assigned to Brekford’s intangible and goodwill is $0.6 million and $1.4 million, respectively. The GTS and GCP goodwill and intangible assets resulted in a fair value of $1.6 million and $2.6 million, respectively, and corresponding net deferred tax liability of $0.5 million. As a result of the deferred tax liability, an adjustment was recorded to goodwill to account for the tax effect of the deferred tax liability in the year ended December 31, 2017.
Goodwill and Other Intangibles	In applying the acquisition method of accounting, amounts assigned to identifiable assets and liabilities acquired were based on estimated fair values as of the date of acquisition, with the remainder recorded as goodwill. Identifiable intangible assets are initially valued at fair value using generally accepted valuation methods appropriate for the type of intangible asset. Identifiable intangible assets with definite lives are amortized over their estimated useful lives and are reviewed for impairment if indicators of impairment arise. Intangible assets with indefinite lives are tested for impairment within one year of acquisitions or annually as of October 1, and whenever indicators of impairment exist. The fair value of intangible assets are compared with their carrying values, and an impairment loss would be recognized for the amount by which a carrying amount exceeds its fair value. No material impairments have been recorded through December 31, 2018. Acquired identifiable intangible assets are amortized over the following periods: Acquired Intangible Asset Amortization Basis Expected Life (years) Customer-Related Straight-line basis 5-15 Marketing-Related Straight-line basis 4 Technology-Based In line with underlying cash flows or straight-line basis 3
Revenue Recognition	The Company recognizes revenues for the provision of services when persuasive evidence of an arrangement exists, services have been rendered or delivery has occurred, the fee is fixed or determinable and the collectability of the related revenue is reasonably assured. The Company principally derives revenues from fees for services generated on a project-by-project basis. Revenues for time-and-materials contracts are recognized based on the number of hours worked by the employees or consultants at an agreed-upon rate per hour set forth in the Company’s contracts or purchase orders. Revenues related to firm-fixed-price contracts are primarily recognized upon completion of the project as these projects are typically short-term in nature. Revenue from the sale of individual franchises is recognized when the contract is signed and collectability is assured, unless the franchisee is required to perform certain training before operations commence. The franchisor has no obligation to the franchisee relating to store development and the franchisee is considered operational at the time the franchise agreement is signed or when required training is completed, if applicable. Royalties from individual franchises are earned based upon the terms in the franchising agreement which are generally the greater of $1,000 or 8% of the franchisee’s monthly gross sales. For automated traffic safety enforcement revenue, the Company recognizes the revenue when the required collection efforts, from citizens, are completed and posted to the municipality’s account. The respective municipality is then billed depending on the terms of the respective contract, typically 15 days after the preceding month while collections are reconciled. For contracts where the Company receives a percentage of collected fines, revenue is calculated based upon the posted payments from citizens multiplied by the Company’s contractual percentage. For contracts where the Company receives a specific fixed monthly fee regardless of citations issued or collected, revenue is recorded once the amount collected from citizens exceeds the monthly fee per camera. Brekford’s fixed-fee contracts typically have a revenue neutral provision whereby the municipality’s payment to Brekford cannot exceed amounts collected from citizens within a given month.
Advertising	The Company expenses all non-direct-response advertising costs as incurred. Such costs were not material for the years ended December 31, 2018 and 2017.
Use of Estimates	Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual amounts may differ from these estimates. On an on-going basis, the Company evaluates its estimates, including those related to collectability of accounts receivable, fair value of debt and equity instruments and income taxes. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not apparent from other sources. Actual results may differ from those estimates under different assumptions or conditions.
Income Taxes	Income tax expense consists of U.S. federal and state income taxes. We are required to pay income taxes in certain state jurisdictions. Historically, AOC Key Solutions and GCP initially elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under those provisions, neither AOC Key Solutions nor GCP paid federal corporate income tax, and in most instances state income tax, on its taxable income. AOC Key Solutions revoked its S Corporation election upon the March 15, 2016 merger with KeyStone and GCP revoked its S Corporation election upon the acquisition by Novume, and are therefore, subject to corporate income taxes. Firestorm is a single-member LLC with KeyStone as the sole member. We use the liability method of accounting for income taxes as set forth in the authoritative guidance for accounting for income taxes. This method requires an asset and liability approach for the recognition of deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Management has evaluated the recoverability of the net deferred income tax assets and the level of the valuation allowance required with respect to such net deferred income tax assets. After considering all available facts, the Company fully reserved for its net deferred tax assets because management believes that it is not more likely than not that their benefits will be realized in future periods. The Company will continue to evaluate its net 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 net deferred income tax assets satisfy the realization standard, the valuation allowance will be reduced accordingly. As of December 31, 2018 the Company has gross federal and state NOL carry forwards of $9.7 million and $0.5 million, net of federal tax effects, respectively. These NOLs are scheduled to begin to expire in 2034 and $4.7 million are grandfathered under the Tax Cuts and Jobs Act; thus, these NOLs are not subject to the 80 percent limitation. NOLs generated in 2018 of $5.0 million will be carried forward indefinitely and are subject to the annual 80 percent limitation. The Company also has a valuation allowance of $2.3 million recorded against its net deferred tax assets as of December 31, 2018. The tax effects of uncertain tax positions are recognized in the consolidated financial statements only if the position is more likely than not to be sustained on audit, based on the technical merits of the position. For tax positions meeting the more likely than not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized. It is our accounting policy to account for ASC 740-10-related penalties and interest as a component of the income tax provision in the consolidated statements of operations and comprehensive loss. As of December 31, 2018 and 2017, our evaluation revealed no uncertain tax positions that would have a material impact on the financial statements. The 2015 through 2017 tax years remain subject to examination by the IRS, as of December 31, 2018. Our management does not believe that any reasonably possible changes will occur within the next twelve months that will have a material impact on the financial statements. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “2017 Act”) was enacted, which changes U.S. tax law and includes various provisions that impact our Company. The 2017 Act effects our Company by: changing U.S. tax rates; increasing the Company’s ability to use accumulated net operating losses generated after December 31, 2017; and limiting the Company’s ability to deduct interest.
Equity-Based Compensation	The Company recognizes equity-based compensation based on the grant-date fair value of the award on a straight-line basis over the requisite service period, net of estimated forfeitures. Total equity-based compensation expense included in selling, general and administrative expenses in the accompanying consolidated statements of operations for the years ended December 31, 2018 and 2017 was $464,509 and $408,465, respectively. The Company estimates the fair value of stock options using the Black-Scholes option-pricing model. The use of the Black-Scholes option-pricing model requires the use of subjective assumptions, including the fair value and projected volatility of the underlying common stock and the expected term of the award. The fair value of each option granted has been estimated as of the date of the grant using the Black-Scholes option pricing model with the following assumptions during the years ended December 31, 2018 and 2017: For the Years Ended December 31, 2018 2017 Risk-free interest rate 3.03% 1.00% - 2.17% Expected term 5 years 0.3 – 6.1 years Volatility 88.5% 70.0% Dividend yield 0% 0% Estimated annual forfeiture rate at time of grant 0% 0% - 30% Risk-Free Interest Rate – Expected Term – Expected Volatility – Dividend Yield – Forfeiture Rate –
Fair Value of Financial Instruments	The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value as of December 31, 2018 and 2017 because of the relatively short-term maturity of these financial instruments. The carrying amount reported for long-term debt approximates fair value as of December 31, 2018, given management’s evaluation of the instrument’s current rate compared to market rates of interest and other factors. The determination of fair value is based upon the fair value framework established by Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures Level 1 – Level 2 – Level 3 – Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. The Company determined that the value of the remaining balance of the note receivable at December 31, 2017 approximated its recorded value, and the Company sold the note in February 2018 for proceeds of $1,400,000. The Company’s goodwill and other intangible assets are measured at fair value on a non-recurring basis using Level 2 and Level 3 inputs. The Company has concluded that its Series A Preferred Stock is a Level 3 financial instrument and that the fair value approximates the carrying value, which includes the accretion of the discounted interest component through December 31, 2018. There were no changes in levels during the years ended December 31, 2018 and 2017.
Concentrations of Credit Risk	Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, and accounts receivable. Concentrations of credit risk with respect to accounts receivable are minimal due to the collection history and due to the nature of the Company’s client base. The Company limits its credit risk with respect to cash by maintaining cash balances with high-quality financial institutions. At times, the Company’s cash may exceed U.S. Federally insured limits, and as of December 31, 2018 and 2017, the Company had $2,176,907 and $1,707,212, respectively, of cash and cash equivalents on deposit that exceeded the federally insured limit.
Earnings per Share	Basic earnings per share, or EPS, is computed using the weighted average number of common shares outstanding during the period. Diluted EPS is computed using the weighted average number of common and potentially dilutive securities outstanding during the period, except for periods of net loss for which no potentially dilutive securities are included because their effect would be anti-dilutive. Potentially dilutive securities consist of common stock issuable upon exercise of stock options or warrants using the treasury stock method. Potentially dilutive securities issuable upon conversion of the Series A Preferred Stock are calculated using the if-converted method. The Company calculates basic and diluted earnings per common share using the two-class method. Under the two-class method, net earnings are allocated to each class of common stock and participating security as if all of the net earnings for the period had been distributed. Participating securities consist of preferred stock that contain a nonforfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common stockholders. On August 28, 2017, the Company effected a 1.9339-to-1 stock exchange related to its acquisition of Brekford. The per share amounts have been updated to show the effect of the exchange on earnings per share as if the exchange occurred at the beginning of 2017. The impact of the stock exchange is also shown on the Company’s Statement of Changes in Stockholders’ Equity.
Segment Reporting	The Financial Accounting Standards Board (“FASB”) ASC Topic 280, Segment Reporting
New Accounting Pronouncements	Recently Issued Accounting Pronouncements Not Yet Adopted In August 2018, the FASB”) issued ASU No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting . In August 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-12, Derivatives and Hedging (Topic 815) In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment. In June 2016, the FASB issued ASU 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In February 2016, the FASB issued ASU 2016-02, Leases The standard will have a material impact on the Company’s consolidated balance sheets, but will not have a material impact on its consolidated statements of operations. The most significant impact will be the recognition of right-of-use (“ROU”) assets and lease liabilities for operating leases. Adoption of the standard will result in the recognition of additional ROU assets and lease liabilities for operating leases ranging between $0.8 million to $1.2 million as of January 1, 2019. There are currently no other accounting standards that have been issued, but not yet adopted, that will have a significant impact on the Company’s consolidated financial position, results of operations or cash flows upon adoption. Recently Adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ● ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date ● ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations ● ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensin ● ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients The underlying principle is to use a five-step analysis of transactions to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The standard permits the use of either a retrospective or modified retrospective application. ASU 2014-09 and ASU 2016-12 are effective for annual reporting periods beginning after December 15, 2017. On January 1, 2018, the Company adopted Topic 606, Revenue from Contracts with Customers The following tables summarize the impact of adopting ASC 606 on the Company’s consolidated financial statements as of and for the year ended December 31, 2018: As of December 31, 2018 As Reported Adjustments Balance Without Adoption of 606 Consolidated Balance Sheet Liabilities Deferred revenue $ 207,059 $ (10,999 ) $ 196,060 Equity Accumulated deficit $ (12,063,791 ) $ 10,999 $ (12,052,792 ) For the Year Ended December 31, 2018 As Reported Adjustments Balance Without Adoption of 606 Consolidated Statement of Operations Revenue $ 48,562,441 $ (56,001 ) $ 48,506,440 Net loss $ (5,703,499 ) $ (56,001 ) $ (5,759,500 ) Net loss per share: Basic $ (0.44 ) $ - $ (0.44 ) Diluted $ (0.44 ) $ - $ (0.44 ) The adoption of ASC 606 did not affect the Company's reported total amounts of cash flows from operating, investing or financing activities in its consolidated statements of cash flows. Practical Expedients Election Costs to Obtain and Fulfill a Contract Revenue Recognition Revenue is recognized when control of the goods and services provided are transferred to our customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services using the following steps: ● Identification of the contract, or contracts, with a customer ● Identification of the performance obligations in the contract ● Determination of the transaction price ● Allocation of the transaction price to the performance obligations in the contract ● Recognition of revenue when, or as, performance obligations are satisfied The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Disaggregated Revenue The Company’s revenue by contract type is as follows: For the Years Ended December 31, 2018 2017 Revenues Time & materials $ 42,559,925 $ 19,553,770 Fixed price 5,905,181 2,225,179 Franchising 97,335 356,869 Total revenue $ 48,562,441 $ 22,135,818 Performance Obligations ● Time and Material Services ● Firm-Fixed-Price Services ● Franchising Services Accounts Receivable, Net The Company reviews accounts receivable on a periodic basis to determine if any receivables will potentially be uncollectible. Estimates are used to determine the amount of the allowance for doubtful accounts necessary to reduce accounts receivable to its estimated net realizable value. The estimates are based on an analysis of past due receivables, historical bad debt trends, current economic conditions, and customer specific information. After the Company has exhausted all collection efforts, the outstanding receivable balance relating to services provided is written off against the allowance. Additions to the provision for bad debt are charged to expense. The Company determined that an allowance for loss of $24,405 and $24,000 was required at December 31, 2018 and 2017, respectively. In March 2016, FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting In January 2016, the FASB, issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities In January 2017, the FASB issued ASU 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation: Scope of Modification Accounting

SUMMARY OF SIGNIFICANT ACCOUN_3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	12 Months Ended
	Dec. 31, 2018
Summary Of Significant Accounting Policies Tables Abstract
Estimated useful lives	Furniture and fixtures 2 - 10 years Office equipment 2 - 5 years Leasehold improvements 3 - 15 years Internally developed software 3 - 5 years Automobiles 3 - 5 years Camera systems 3 years Acquired Intangible Asset Amortization Basis Expected Life (years) Customer-Related Straight-line basis 5-15 Marketing-Related Straight-line basis 4 Technology-Based In line with underlying cash flows or straight-line basis 3
Assumptions for options granted	For the Years Ended December 31, 2018 2017 Risk-free interest rate 3.03% 1.00% - 2.17% Expected term 5 years 0.3 – 6.1 years Volatility 88.5% 70.0% Dividend yield 0% 0% Estimated annual forfeiture rate at time of grant 0% 0% - 30%
Summary of impact of adopting ASC 606	As of December 31, 2018 As Reported Adjustments Balance Without Adoption of 606 Consolidated Balance Sheet Liabilities Deferred revenue $ 207,059 $ (10,999 ) $ 196,060 Equity Accumulated deficit $ (12,063,791 ) $ 10,999 $ (12,052,792 ) For the Year Ended December 31, 2018 As Reported Adjustments Balance Without Adoption of 606 Consolidated Statement of Operations Revenue $ 48,562,441 $ (56,001 ) $ 48,506,440 Net loss $ (5,703,499 ) $ (56,001 ) $ (5,759,500 ) Net loss per share: Basic $ (0.44 ) $ - $ (0.44 ) Diluted $ (0.44 ) $ - $ (0.44 )
Summary of Disaggregated Revenue	For the Years Ended December 31, 2018 2017 Revenues Time & materials $ 42,559,925 $ 19,553,770 Fixed price 5,905,181 2,225,179 Franchising 97,335 356,869 Total revenue $ 48,562,441 $ 22,135,818

ACQUISITIONS (Tables)

ACQUISITIONS (Tables)	12 Months Ended
	Dec. 31, 2018
Acquisition Tables Abstract
Purchase price allocation	The Company has completed its analysis of the purchase price allocation. The Company recorded $386,001 of customer relationships as intangibles. The table below shows the final breakdown related to the Secure Education acquisition: Cash paid $ 99,197 Common stock issued 163,332 Warrants issued, at $5.44 65,988 Warrants issued, at $6.53 57,484 Total consideration 386,001 Less intangible and intellectual property (386,001 ) Net goodwill recorded $ - The Company has completed its analysis of the purchase price allocation which was the same as the preliminary allocation. The Company recorded $386,004 of customer relationships as intangibles. The table below shows the final breakdown related to the BC Management acquisition: Cash paid $ 100,000 Common stock issued 163,332 Warrants issued, at $5.44 65,988 Warrants issued, at $6.53 57,484 Total consideration 386,804 Less intangible and intellectual property (386,804 ) Net goodwill recorded $ - The Company completed its analysis of the purchase price allocation in 2017. The table below shows the final breakdown related to the Global acquisition: Assets acquired $ 4,384,668 Liabilities acquired (4,384,417 ) Net assets acquired 251 Less intangible assets 2,574,000 Consideration paid (see below) 4,264,934 Net goodwill recorded $ 1,690,683 Cash consideration $ 550,000 Cash paid towards acquired liabilities 540,037 Total cash paid 1,090,037 Holdback consideration 200,000 Common stock consideration 566,288 Series B Preferred Stock consideration 2,408,610 Total acquisition consideration $ 4,264,934 The Company completed its analysis of the purchase price allocation in 2017. The table below shows the final breakdown related to the Brekford acquisition: Common stock issued $ 5,851,193 Total consideration 5,851,193 Less cash received (1,943,778 ) Less note receivable (2,000,000 ) Less other assets (1,139,007 ) Less intangible assets (558,412 ) Plus liabilities assumed 1,191,937 Net goodwill recorded $ 1,401,933 The Company completed its analysis of the purchase price allocation in 2017. The table below shows the final breakdown related to the Firestorm acquisition: Cash paid $ 500,000 Notes payable issued 907,407 Common stock issued 976,286 Warrants issued, at $2.58 125,411 Warrants issued, at $3.61 102,289 Total consideration 2,611,393 Less cash received (82,296 ) Less other assets (137,457 ) Less intangible and intellectual property (2,497,686 ) Plus liabilities assumed 106,046 Net goodwill recorded $ -
Pro-forma financial information	For the Years Ended December 31, 2018 2017 Revenues $ 48,562,441 $ 42,828,709 Net loss $ (5,703,499 ) $ (6,183,910 ) Basic earnings (loss) per share $ (0.44 ) $ (0.52 ) Diluted earnings (loss) per share $ (0.44 ) $ (0.52 ) Basic Number of Shares 15,409,014 13,592,532 Diluted Number of Shares 15,409,014 13,592,532

IDENTIFIABLE INTANGIBLE ASSETS

IDENTIFIABLE INTANGIBLE ASSETS (Tables)	12 Months Ended
	Dec. 31, 2018
Identifiable Intangible Assets Tables Abstract
Breakdown of identifiable intangible assets	Customer Relationships Marketing Related Technology Based Total Identifiable intangible assets, gross $ 5,588,677 $ 730,000 $ 83,412 $ 6,402,089 Accumulated amortization (1,332,868 ) (234,718 ) - (1,567,586 ) Identifiable intangible assets, net $ 4,255,809 $ 495,282 $ 83,412 $ 4,834,503
Annual amortization expense	2019 $ 1,048,980 2020 1,048,980 2021 996,778 2022 238,155 2023 154,596 Thereafter 1,347,014 Total $ 4,834,503

SUPPLEMENTAL DISCLOSURES OF C_2

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION (Tables)	12 Months Ended
	Dec. 31, 2018
Supplemental Disclosures Of Cash Flow Information Tables Abstract
Supplemental disclosures of cash flow information	For the Years Ended December 31, 2018 2017 Cash paid for interest $ 478,693 $ 213,455 Cash paid for taxes $ 13,607 $ - Issuance of common stock for the extinguishment of warrants $ 133,755 $ - Common stock issued in connection with note payable $ 126,001 $ - Warrants issued in connection with issuance of Series A Preferred Stock $ - $ 67,491 Notes payable for equipment purchase $ 31,824 $ - Business Combinations: Current assets $ - $ 5,263,445 Property and equipment $ - $ 382,159 Intangible assets $ 386,001 $ 6,015,285 Goodwill $ - $ 3,092,616 Other non-current assets $ - $ 271,381 Note receivable, long-term $ - $ 1,700,000 Assumed liabilities $ - $ (5,069,709 ) Deferred revenue $ - $ (22,493 ) Other non-current liabilities $ - $ (16,584 ) Issuance of common stock $ (163,332 ) $ (7,784,560 ) Issuance of Series B preferred stock $ - $ (2,408,610 ) Notes payable $ - $ (1,117,253 ) Issuance of common stock warrants $ (123,472 ) $ (123,473 )

DEBT (Tables)

DEBT (Tables)	12 Months Ended
	Dec. 31, 2018
Debt Tables Abstract
Schedule of debt	Short-term Long-term Total 2019 $ 2,563,245 $ - $ 2,563,245 2020 - 4,665 4,665 2021 - 4,959 4,959 2022 - 1,005,273 1,005,273 2023 - 11,564 11,564 Thereafter - - - Total 2,563,245 1,026,461 3,589,706 Less unamortized interest - (61,728 ) (61,728 ) Less unamortized financing costs (94,034 ) - (94,034 ) 2,469,211 964,733 3,433,944 Current portion of long-term debt (2,469,211 ) - (2,469,211 ) Long-term debt $ - $ 964,733 $ 964,733

INCOME TAXES (Tables)

INCOME TAXES (Tables)	12 Months Ended
	Dec. 31, 2018
Income Taxes Tables Abstract
Income tax benefit	For the Years Ended December 31, 2018 2017 Current: State $ 29,250 $ 23,919 Deferred: Federal $ 82,893 $ (311,211 ) State (82,893 ) (7,374 ) Expense (benefit) from income taxes $ 29,250 $ (294,666 )
Deferred income tax assets and liabilities	For the Years Ended December 31, 2018 2017 Deferred tax assets: Fixed assets $ - $ 14,604 Amortizable start-up costs 34,439 - Accrual and others 240,646 507,052 Interest expense carryforward 147,260 Net operating loss carryforward 2,517,900 1,513,921 Valuation allowance (2,308,460 ) (1,342,108 ) 631,785 693,469 Deferred tax liabilities: Goodwill and Intangibles (551,301 ) (693,469 ) Fixed assets (80,484 ) - Total deferred tax assets, net $ - $ -
Effective tax rate	For the Years Ended December 31, 2018 2017 U.S. statutory federal rate 21.0 % 34.0 % (Decrease) increase in taxes resulting from: State income tax rate, net of U.S. Federal benefit 2.9 % 5.1 % Acquisition related costs 0.0 % -6.8 % Impact of changes in tax rates -0.1 % -16.9 % True-ups -5.7 % 0.0 % Other -1.6 % -4.0 % Valuation allowance -17.0 % -5.8 % Effective tax rate -0.5 % 5.6 %

COMMITMENTS (Tables)

COMMITMENTS (Tables)	12 Months Ended
	Dec. 31, 2018
Commitments
Future obligations	2019 $ 348,222 2020 337,437 2021 252,262 2022 193,898 2023 189,682 Thereafter 81,834 Total $ 1,403,335

EQUITY INCENTIVE PLAN (Tables)

EQUITY INCENTIVE PLAN (Tables)	12 Months Ended
	Dec. 31, 2018
Equity Incentive Plan Tables Abstract
Stock option activity	Number of Shares Subject to Option Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding Balance at January 1, 2017 58,499 $ 1.68 9.29 Granted 1,638,331 2.21 9.29 Exercised - - - Forfeited (1,455 ) (1.55 ) (9.07 ) Expired - - - Outstanding Balance at December 31, 2017 1,695,375 $ 2.19 9.26 $ 4,590,714 Granted 48,499 0.73 9.85 Exercised (13,998 ) 1.68 9.50 Forfeited (450,633 ) 1.82 8.71 Expired (51,686 ) 1.36 8.53 Outstanding Balance at December 31, 2018 1,227,557 $ 2.13 8.39 $ - Exercisable at December 31, 2018 823,472 $ 1.87 8.32 $ - Vested and expected to vest at December 31, 2018 1,107,236 $ 2.08 8.37 $ -

EARNINGS (LOSS) PER SHARE (Tabl

EARNINGS (LOSS) PER SHARE (Tables)	12 Months Ended
	Dec. 31, 2018
Earnings Loss Per Share Tables Abstract
Earnings (loss) per common share	For the Years Ended December 31, 2018 2017 Basic and diluted (loss) earnings per share Net (loss) earnings from continuing operations $ (5,703,499 ) $ (5,041,134 ) Less: preferred stock accretion (655,103 ) (550,655 ) Less: preferred stock dividends (459,632 ) (362,131 ) Net income (loss) attributable to shareholders (6,818,234 ) (5,953,920 ) Weighted average common shares outstanding - basic 15,409,014 11,767,304 Basic (loss) earnings per share $ (0.44 ) $ (0.51 ) Weighted average common shares outstanding - diluted 15,409,014 11,767,304 Diluted (loss) earnings per share $ (0.44 ) $ (0.51 ) Common stock equivalents excluded due to anti-dilutive effect 3,898,257 2,362,877
Earnings (loss) per common share, Class Method	For the Years Ended December 31, 2018 2017 Numerator: Net (loss) earnings from continuing operations $ (5,703,499 ) $ (5,041,134 ) Less: preferred stock accretion (655,103 ) (550,655 ) Less: preferred stock dividends (459,632 ) (362,131 ) Net income (loss) attributable to shareholders $ (6,818,234 ) $ (5,953,920 ) Denominator (basic): Weighted average common shares outstanding 15,409,014 11,767,304 Participating securities - Series A preferred stock 974,487 932,070 Participating securities - Series B preferred stock 481,722 120,430 Weighted average shares outstanding 16,865,223 12,819,804 Loss per common share - basic under two-class method $ (0.40 ) $ (0.46 ) Denominator (diluted): Weighted average common shares outstanding 15,409,014 11,767,304 Participating securities - Series A preferred stock 974,487 932,070 Participating securities - Series B preferred stock 481,722 120,430 Weighted average shares outstanding 16,865,223 12,819,804 Loss per common share - basic under two-class method $ (0.40 ) $ (0.46 )

NATURE OF OPERATIONS AND RECA_2

NATURE OF OPERATIONS AND RECAPITALIZATION (Details Narrative)	12 Months Ended
	Dec. 31, 2018
Nature Of Operations And Recapitalization Details Narrative Abstract
Date of operation	Feb. 1, 2017
State of operation	Delaware

SUMMARY OF SIGNIFICANT ACCOUN_4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	12 Months Ended
	Dec. 31, 2018
Furniture and fixtures | Minimum
Estimated useful life	2 years
Furniture and fixtures | Maximum
Estimated useful life	10 years
Office equipment | Minimum
Estimated useful life	2 years
Office equipment | Maximum
Estimated useful life	5 years
Leasehold improvements | Minimum
Estimated useful life	3 years
Leasehold improvements | Maximum
Estimated useful life	15 years
Internally developed software | Minimum
Estimated useful life	3 years
Internally developed software | Maximum
Estimated useful life	5 years
Automobiles | Minimum
Estimated useful life	3 years
Automobiles | Maximum
Estimated useful life	5 years
Camera systems
Estimated useful life	3 years

SUMMARY OF SIGNIFICANT ACCOUN_5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1)	12 Months Ended
	Dec. 31, 2018
Customer Relationships
Amortization Basis	Straight-line basis
Customer Relationships | Minimum
Expected Life	5 years
Customer Relationships | Maximum
Expected Life	15 years
Marketing Related
Amortization Basis	Straight-line basis
Expected Life	4 years
Technology Based
Amortization Basis	In line with underlying cash flows or straight-line basis
Expected Life	3 years

SUMMARY OF SIGNIFICANT ACCOUN_6

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Risk-free interest rate	3.03%
Expected term	5 years
Volatility	88.50%	70.00%
Dividend yield	0.00%	0.00%
Estimated annual forfeiture rate at time of grant	0.00%
Minimum
Risk-free interest rate		1.00%
Expected term		3 months 18 days
Estimated annual forfeiture rate at time of grant		0.00%
Maximum
Risk-free interest rate		2.17%
Expected term		6 years 1 month 6 days
Estimated annual forfeiture rate at time of grant		30.00%

SUMMARY OF SIGNIFICANT ACCOUN_7

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Liabilities
Deferred revenue	$ 207,059	$ 117,636
Equity
Accumulated deficit	(12,063,791)	(5,833,660)
Revenue	48,562,441	22,135,818
Net loss	$ (5,703,499)	$ (5,041,134)
Net loss per share:
Basic	$ (0.44)	$ (0.51)
Diluted	$ (0.44)	$ (0.51)
As Reported
Liabilities
Deferred revenue	$ 207,059
Equity
Accumulated deficit	(12,063,791)
Revenue	48,562,441
Net loss	$ (5,703,499)
Net loss per share:
Basic	$ (0.44)
Diluted	$ (0.44)
Adjustments
Liabilities
Deferred revenue	$ (10,999)
Equity
Accumulated deficit	10,999
Revenue	(56,001)
Net loss	$ (56,001)
Net loss per share:
Basic	$ 0
Diluted	$ 0
Balance Without Adoption of 606
Liabilities
Deferred revenue	$ 196,060
Equity
Accumulated deficit	(12,052,792)
Revenue	48,506,440
Net loss	$ (5,759,500)
Net loss per share:
Basic	$ (0.44)
Diluted	$ (0.44)

SUMMARY OF SIGNIFICANT ACCOUN_8

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Revenue	$ 48,562,441	$ 22,135,818
Time & materials
Revenue	42,559,925	19,553,770
Fixed price
Revenue	5,905,181	2,225,179
Franchising
Revenue	$ 97,335	$ 356,869

SUMMARY OF SIGNIFICANT ACCOUN_9

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Summary Of Significant Accounting Policies Details Narrative Abstract
Allowance for doubtful accounts	$ 24,405	$ 24,000
Depreciation and amortization expense	345,136	142,545
Equity-based compensation expense	464,509	408,465
Uninsured cash and cash equivalents	$ 2,176,907	$ 1,707,212

ACQUISITIONS (Details)

ACQUISITIONS (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Less intangible assets	$ 4,834,503
Notes payable issued	0	$ 1,117,253
Less intangible and intellectual property	386,001	$ 6,015,285
Secure Education
Consideration paid (see below)	386,001
Cash paid	99,197
Common stock issued	163,332
Warrants issued	65,988
Warrants issued	57,484
Total consideration	386,001
Less intangible and intellectual property	(386,001)
Net goodwill/intangible recorded	0
BC Management
Consideration paid (see below)	386,804
Cash paid	100,000
Common stock issued	163,332
Warrants issued	65,988
Warrants issued	57,484
Total consideration	386,804
Less intangible and intellectual property	(386,804)
Net goodwill/intangible recorded	0
Global Entities
Assets acquired	4,384,668
Liabilities acquired	(4,384,417)
Net assets acquired	251
Less intangible assets	(2,574,000)
Consideration paid (see below)	4,264,934
Cash paid	550,000
Cash paid towards acquired liabilities	540,037
Total cash paid	1,090,037
Holdback consideration	200,000
Common stock consideration	566,288
Series B Preferred Stock consideration	2,408,610
Total consideration	4,264,934
Plus liabilities assumed	(4,384,417)
Net goodwill/intangible recorded	1,690,683
Brekford
Liabilities acquired	1,191,937
Consideration paid (see below)	5,851,193
Common stock issued	5,851,193
Total consideration	5,851,193
Less cash received	(1,943,778)
Less note receivable	(2,000,000)
Less other assets	(1,139,007)
Less intangible and intellectual property	(558,412)
Plus liabilities assumed	1,191,937
Net goodwill/intangible recorded	1,401,933
Firestorm
Liabilities acquired	106,046
Consideration paid (see below)	2,611,393
Cash paid	500,000
Notes payable issued	907,407
Common stock issued	976,286
Warrants issued	125,411
Warrants issued	102,289
Total consideration	2,611,393
Less cash received	(82,296)
Less other assets	(137,457)
Less intangible and intellectual property	(2,497,686)
Plus liabilities assumed	106,046
Net goodwill/intangible recorded	$ 0

ACQUISITIONS (Details 1)

ACQUISITIONS (Details 1) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Acquisition Details 1Abstract
Revenues	$ 48,562,441	$ 42,828,709
Net income (loss)	$ (5,703,499)	$ (6,183,910)
Basic earnings (loss) per share	$ (0.44)	$ (0.52)
Diluted earnings (loss) per share	$ (0.44)	$ (0.52)
Basic Number of Shares	15,409,014	13,592,532
Diluted Number of Shares	15,409,014	13,592,532

INVESTMENT AT COST AND NOTES _2

INVESTMENT AT COST AND NOTES RECEIVABLE (Details Narrative) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Investment At Cost And Notes Receivable Details Narrative Abstract
Notes receivable, current	$ 0	$ 1,475,000

IDENTIFIABLE INTANGIBLE ASSET_2

IDENTIFIABLE INTANGIBLE ASSETS (Details) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Identifiable intangible assets, gross	$ 6,402,089
Accumulated amortization	(1,567,586)
Identifiable intangible assets, net	4,834,503	$ 5,468,874
Customer Relationships
Identifiable intangible assets, gross	5,588,677
Accumulated amortization	(1,332,868)
Identifiable intangible assets, net	4,255,809
Marketing Related
Identifiable intangible assets, gross	730,000
Accumulated amortization	(234,718)
Identifiable intangible assets, net	495,282
Technology Based
Identifiable intangible assets, gross	83,412
Accumulated amortization	0
Identifiable intangible assets, net	$ 83,412

IDENTIFIABLE INTANGIBLE ASSET_3

IDENTIFIABLE INTANGIBLE ASSETS (Details 1)	Dec. 31, 2018USD ($)
Identifiable Intangible Assets Details 1Abstract
2019	$ 1,048,980
2020	1,048,980
2021	996,778
2022	238,155
2023	154,596
Thereafter	1,347,014
Total	$ 4,834,503

SUPPLEMENTAL DISCLOSURES OF C_3

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Supplemental Disclosures Of Cash Flow Information Details Abstract
Cash paid for interest	$ 478,693	$ 213,455
Cash paid for taxes	13,607	0
Issuance of common stock for the extinguishment of warrants	133,755	0
Common stock issued in connection with note payable	126,001	0
Warrants issued in connection with issuance of Series A Preferred Stock	0	67,491
Notes payable for equipment purchase	31,824	0
Business Combinations:
Current Assets	0	5,263,445
Property and equipment, net	0	382,159
Intangible assets	386,001	6,015,285
Goodwill	0	3,092,616
Other non-current assets	0	271,381
Note receivable, long-term	0	1,700,000
Assumed liabilities	0	(5,069,709)
Deferred revenue	0	(22,493)
Other non-current liabilities	0	(16,584)
Issuance of common stock	(163,332)	(7,784,560)
Issuance of Series B preferred stock	0	(2,408,610)
Notes payable	0	(1,117,253)
Issuance of common stock warrants	$ (123,472)	$ (123,473)

DEBT (Details)

DEBT (Details)	Dec. 31, 2018USD ($)
2019	$ 2,563,245
2020	4,665
2021	4,959
2022	1,005,273
2023	11,564
Thereafter	0
Total	3,589,706
Less unamortized interest	(61,728)
Less unamortized financing costs	(94,034)
Long-term debt	3,433,944
Current portion of long-term debt	(2,469,211)
Noncurrent long-term debt	964,733
Short-term Debt
2019	2,563,245
2020	0
2021	0
2022	0
2023	0
Thereafter	0
Total	2,563,245
Less unamortized interest	0
Less unamortized financing costs	(94,034)
Long-term debt	2,469,211
Current portion of long-term debt	(2,469,211)
Noncurrent long-term debt	0
Long-term Debt
2019	0
2020	4,665
2021	4,959
2022	1,005,273
2023	11,564
Thereafter	0
Total	1,026,461
Less unamortized interest	(61,728)
Less unamortized financing costs	0
Long-term debt	964,733
Current portion of long-term debt	0
Noncurrent long-term debt	$ 964,733

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Current:
State	$ 29,250	$ 23,919
Deferred:
Federal	82,893	(311,211)
State	(82,893)	(7,374)
Benefit (expense) from income taxes	$ 29,250	$ (294,666)

INCOME TAXES (Details 1)

INCOME TAXES (Details 1) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Deferred tax assets:
Fixed assets	$ 0	$ 14,604
Amortizable start-up costs	34,439	0
Accrual and others	240,646	507,052
Interest expense carryforward	147,260	0
Net operating loss carryforward	2,517,900	1,513,921
Valuation allowance	(2,308,460)	(1,342,108)
Deferred tax assets	631,785	693,469
Deferred tax liabilities:
Goodwill and Intangibles	(551,301)	(693,469)
Fixed assets	(80,484)	0
Total deferred tax assets, net	$ 0	$ 0

INCOME TAXES (Details 2)

INCOME TAXES (Details 2)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Income Taxes Details 2Abstract
U.S. statutory federal rate	21.00%	34.00%
(Decrease) increase in taxes resulting from:
State income tax rate, net of U.S. Federal benefit	2.90%	5.10%
Acquisition related costs	0.00%	(6.80%)
Impact of changes in tax rates	(0.10%)	(16.90%)
True-ups	(5.70%)	0.00%
Other	(1.60%)	(4.00%)
Valuation allowance	(17.00%)	(5.80%)
Effective tax rate	(0.50%)	5.60%

INCOME TAXES (Details Narrative

INCOME TAXES (Details Narrative) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Income Taxes Details Narrative Abstract
Net operating loss carryforwards	$ 9,733,277	$ 5,909,378

STOCKHOLDERS' EQUITY (Details N

STOCKHOLDERS' EQUITY (Details Narrative) - $ / shares	Dec. 31, 2018	Dec. 31, 2017
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	2,000,000	2,000,000
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, authorized	30,000,000	30,000,000
Common stock, issued	18,767,619	14,463,364
Common stock, outstanding	18,767,619	14,463,364
Series A Cumulative Convertible Redeemable Preferred
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	505,000	505,000
Preferred stock, issued	502,327	502,327
Preferred stock, outstanding	502,327	502,327
Preferred Class A [Member]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	505,000	505,000
Preferred stock, issued	502,327	502,327
Preferred stock, outstanding	502,327	502,327
Preferred Class B [Member]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	240,861	240,861
Preferred stock, issued	240,861	240,861
Preferred stock, outstanding	240,861	240,861
Series B Cumulative Convertible Redeemable Preferred
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	240,861	240,861
Preferred stock, issued	240,861	240,861
Preferred stock, outstanding	240,861	240,861

WARRANT DERIVATIVE LIABILITY (D

WARRANT DERIVATIVE LIABILITY (Details Narrative) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Warrant Derivative Liability Details Narrative Abstract
Fair value of derivative liability	$ 0	$ 78,228

COMMITMENTS (Details)

COMMITMENTS (Details)	Dec. 31, 2018USD ($)
Commitments Details Abstract
2019	$ 348,222
2020	337,437
2021	252,262
2022	193,898
2023	189,682
Thereafter	81,834
Total	$ 1,403,335

COMMITMENTS (Details Narrative)

COMMITMENTS (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Commitments Details Narrative Abstract
Rent expense	$ 790,999	$ 605,264
Rent income	$ 182,534	$ 182,534

EQUITY INCENTIVE PLAN (Details)

EQUITY INCENTIVE PLAN (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Equity Incentive Plan Details Abstract
Number of options outstanding, beginning	1,695,375	58,499
Number of options, granted	48,499	1,638,331
Number of options, exercised	(13,998)	0
Number of options, cancelled	(450,633)	(1,455)
Number of options, expired	(51,686)
Number of options outstanding, ending	1,227,557	1,695,375
Number of options outstanding, exercisable	823,472
Number of options outstanding, vested and expected to vest	1,107,236
Weighted average exercise price outstanding, beginning	$ 2.19	$ 1.68
Weighted average exercise price, granted	0.73	2.21
Weighted average exercise price, exercised	1.68	0
Weighted average exercise price, cancelled	1.82	(1.55)
Weighted average exercise price, expired	1.36
Weighted average exercise price outstanding, ending	2.13	$ 2.19
Weighted average exercise price outstanding, exercisable	1.87
Weighted average exercise price outstanding, vested and expected to vest	$ 2.08
Average remaining contractual term outstanding, beginning	9 years 2 months 16 days	9 years 3 months 14 days
Average remaining contractual term, granted	9 years 10 months 6 days	9 years 3 months 14 days
Average remaining contractual term, exercised	9 years 6 months
Average remaining contractual term, cancelled	8 years 8 months 16 days	9 years 25 days
Average remaining contractual term, expired	8 years 6 months 11 days
Average remaining contractual term outstanding, ending	8 years 4 months 20 days	9 years 3 months 4 days
Average remaining contractual term, exercisable	8 years 3 months 25 days	8 years 9 months 22 days
Average remaining contractual term, vested and expected to vest	8 years 4 months 13 days	9 years 2 months 16 days
Aggregate intrinsic value outstanding, ending	$ 0	$ 4,590,714
Aggregate intrinsic value outstanding, exercisable	0
Aggregate intrinsic value outstanding, vested and expected to vest	$ 0

EQUITY INCENTIVE PLAN (Details

EQUITY INCENTIVE PLAN (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Equity Incentive Plan Details Narrative Abstract
Stock compensation expense	$ 464,509	$ 408,465
Unrecognized stock compensation expense	$ 428,557
Unrecognized stock compensation expense, recognition period	1 year 9 months

EMPLOYEE BENEFIT PLAN (Details

EMPLOYEE BENEFIT PLAN (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Employee Benefit Plan Details Narrative Abstract
Contributions	$ 158,893	$ 144,932

INVENTORY (Details Narrative)

INVENTORY (Details Narrative) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Inventory Details Narrative Abstract
Parts	$ 72,702	$ 155,716

EARNINGS (LOSS) PER SHARE (Deta

EARNINGS (LOSS) PER SHARE (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Basic and diluted (loss) earnings per share
Net (loss) earnings from continuing operations	$ (5,703,499)	$ (5,041,134)
Less: preferred stock accretion	(655,103)	(550,655)
Less: preferred stock dividends	(459,632)	(362,131)
Net income (loss) attributable to shareholders	$ (6,818,234)	$ (5,953,920)
Weighted average common shares outstanding - basic	15,409,014	11,767,304
Basic (loss) earnings per share	$ (0.44)	$ (0.51)
Weighted average common shares outstanding - diluted	15,409,014	11,767,304
Diluted (loss) earnings per share	$ (0.44)	$ (0.51)
Common stock equivalents excluded due to anti-dilutive effect	3,898,257	2,362,877

EARNINGS (LOSS) PER SHARE (De_2

EARNINGS (LOSS) PER SHARE (Details 1) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Numerator:
Net (loss) earnings from continuing operations	$ (5,703,499)	$ (5,041,134)
Less: preferred stock accretion	(655,103)	(550,655)
Less: preferred stock dividends	(459,632)	(362,131)
Net income (loss) attributable to shareholders	$ (6,818,234)	$ (5,953,920)
Denominator (basic):
Weighted average common shares outstanding	15,409,014	11,767,304
Participating securities - Series A preferred stock	974,487	932,070
Participating securities - Series B preferred stock	481,722	120,430
Weighted average shares outstanding	16,865,223	12,819,804
Loss per common share - basic under two-class method	$ (0.40)	$ (0.46)
Denominator (diluted):
Weighted average common shares outstanding	15,409,014	11,767,304
Participating securities - Series A preferred stock	974,487	932,070
Participating securities - Series B preferred stock	481,722	120,430
Weighted average shares outstanding	16,865,223	12,819,804
Loss per common share - basic under two-class method	$ (0.40)	$ (0.46)

EARNINGS (LOSS) PER SHARE (De_3

EARNINGS (LOSS) PER SHARE (Details Narrative) - shares	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Potentially dilutive securities excluded from loss per share	3,898,257	2,362,877
Warrants
Potentially dilutive securities excluded from loss per share	1,214,491	968,766
Series A Preferred Stock
Potentially dilutive securities excluded from loss per share	974,487	932,070
Series B Preferred Stock
Potentially dilutive securities excluded from loss per share	481,722	120,430
Options
Potentially dilutive securities excluded from loss per share	1,227,557	341,611