Redflex Traffic Systems is not the only red light camera company in financial trouble. Brekford Corporation, an upstart competitor based in Maryland, reported on Friday a net loss of $1,266,671 for 2012. The company collected $18,295,906 in revenue, which represents both receipts from automated tickets and payments for various "electronic ticketing" and other information technology products and services the firm sells.

"Management primarily attributes the net loss in 2012 to a non-cash write-off of bad debts, lower gross profit margins, and expenses related to preparing for the Baltimore [speed camera] contract," the firm explained in a notice to investors.

After being embarrassed by the inaccurate tickets issued by Xerox, a Fortune 500 company, Baltimore selected the penny-stock firm Brekford to operate the camera program, even though the firm lacks experience and, with just seventy employees, manpower. Brekford is getting by on a $3.5 million bank loan provided by PNC Bank to pay for the purchase of the cameras to be used in Baltimore. The firm warned its highly leveraged position meant could result in serious financial jeopardy if the economic downturn continues.

"The weakened economy could also have an effect on the company's ability to obtain external funding if needed," Brekford noted in its annual report. "If the company encounters unforeseen circumstances, then it may need to curtail certain of its operations. Although management believes the company has access to adequate capital resources, it has not secured any commitments for new financing at this time nor can it provide any assurance that new capital will be available to it on acceptable terms, if at all."

Brekford is terrified by the possibility that pending legislation to hold photo ticketing companies financially liable to motorists who are falsely accused of speeding might pass.

"Because much of our business involves providing traffic enforcement solutions to governmental agencies and municipalities, the future passage of laws and regulations affecting red light camera and speed camera systems could have a material adverse impact on our business," Brekford explained. "For example, several bills are pending before the Maryland General Assembly that, if enacted, would significantly change current law, including, without limitation, by imposing a civil penalty on enforcement contractors like Brekford if they issue erroneous citations on behalf of a municipality, and by prohibiting contractors such as Brekford from receiving compensation that is based on the number of citations issued by the municipality or citations actually paid."

Existing Maryland law already prohibits payments to Brekford based on the number of citations, but the state's highest court refused to enforce the provision (view ruling).