S-4

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Smaller reporting company

(Address, including ZIP code, and telephone number, including area code, of registrant’s principal executive offices)

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Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effective date of this Registration Statement and the effective time (the “Effective Time”) of the mergers of one subsidiary of Novume Solutions, Inc., a Delaware corporation (“Novume”), with and into Brekford Corp., a Delaware corporation (“Brekford” and such merger, the “Brekford Merger”), and of KeyStone Solutions, Inc., a Delaware corporation (“KeyStone”), with and into another subsidiary of Novume (the “KeyStone Merger”, and together with the Brekford Merger, the “Mergers”) as described in the Agreement and Plan of Merger dated as of February 10, 2017 (the “Merger Agreement”).

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ☐

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this form is a post-effective amendment filed pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer”, or “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this information statement/prospectus is not complete and may be changed. These securities may not be sold until the Registration Statement filed with the Securities and Exchange Commission is effective. This information statement/prospectus is not an offer to sell these securities and is not soliciting offers to buy these securities in any state where the offer or sale is not permitted.

We Are Not Asking You for a Proxy and You are Requested Not to Send Us a Proxy.

Brekford Corp., or Brekford, is sending you this information statement/prospectus to give you important information about a transaction affecting the company.

On February 10, 2017, Brekford entered into an Agreement and Plan of Merger (the “Merger Agreement”) to combine the businesses of Brekford and KeyStone Solutions, Inc., a Delaware corporation (“KeyStone”). The Merger Agreement provides for Brekford and KeyStone to each engage in merger transactions (the “Mergers”) with separate wholly-owned subsidiaries of Novume Solutions, Inc., a Delaware corporation (“Novume”). One wholly-owned subsidiary of Novume will merge with and into Brekford, leaving Brekford as a wholly-owned subsidiary of Novume (the “Brekford Merger”), and KeyStone will merge with and into another wholly-owned subsidiary of Novume (“KeyStone Merger Sub”), with KeyStone Merger Sub surviving such merger (the “KeyStone Merger”).

The time at which the Mergers are completed in accordance with the Merger Agreement is referred to herein as the “Effective Time”. As soon as practicable after the Effective Time, Brekford will change its name to “Brekford Traffic Safety, Inc.” and KeyStone Merger Sub will change its name to “KeyStone Solutions, Inc.” References herein to “KeyStone” after the Effective Time refer to KeyStone Merger Sub.

for, 1.9975 shares of Novume Preferred Stock. Such ratio of KeyStone Common Stock to Novume Common Stock and KeyStone Preferred Stock to Novume Preferred Stock is herein referred to as the “KeyStone Exchange Ratio”. The Brekford Exchange Ratio and the KeyStone Exchange Ratio (collectively the “Exchange Ratios”) have been determined with intent that immediately after the Mergers, the pre-merger stockholders of Brekford will own that such portion of the capital stock of Novume as shall be equal to approximately 20% of the issued and outstanding Novume Common Stock, on a fully-diluted basis, and the pre-merger stockholders of KeyStone will own that portion of the capital stock of Novume as is equal to approximately 80% of the issued and outstanding Novume Common Stock, on a fully-diluted basis.

The number of issued and outstanding shares of Brekford Common Stock and the number of shares of Brekford Common Stock underlying outstanding derivative securities of Brekford, and the number of issued and outstanding shares of KeyStone Common Stock and the number of shares of KeyStone Common Stock underlying outstanding derivative securities of KeyStone, at the Effective Time, cannot be determined until the Mergers are completed. As a result, the aggregate number of shares of Novume Common Stock to be issued (or made issuable upon exercise of derivative securities) in the Mergers, and the Brekford Exchange Ratio and the KeyStone Exchange Ratio, cannot be determined until such time.

If the Effective Time were on February 8, 2017, based on the number of shares of Brekford Common Stock, KeyStone Common Stock and KeyStone Preferred Stock issued or issuable as of such date (assuming a conversion price of the KeyStone Preferred Stock of $15.00 per share), the following number of common and preferred shares, warrants and options of Brekford and KeyStone would convert into the following corresponding number of common and preferred shares, warrants and options of Novume and an aggregate of 16,339,358 shares of Novume Common Stock would be issued or become issuable under the Mergers:

The Board of Directors of Brekford has approved the Merger Agreement and determined that the transactions contemplated thereby, including but not limited to the Brekford Merger, are in the best interests of Brekford and its stockholders. Brekford also has obtained stockholder approval of the adoption of the Merger Agreement, and the consummation of the Brekford Merger and the other transactions consummated thereby, in accordance with the requirements of Delaware law and Brekford’s certificate of incorporation, as currently in effect. The stockholder approval will become effective twenty (20) days after this information statement/prospectus is first mailed to our stockholders. This information statement/prospectus also serves as notice to our stockholders under Delaware law of the approval of the Merger Agreement by less than unanimous written consent of our stockholders. No further vote or consent of any other stockholder of Brekford is necessary to approve the adoption of the Merger Agreement.

Brekford Common Stock is listed on the OTCQX. There is currently no public market for KeyStone Common Stock or KeyStone Preferred Stock or other securities of KeyStone, or Novume Common Stock, Novume Preferred Stock, Novume Unit Warrants or any other securities of Novume. Prior to the Effective Time, KeyStone intends to apply for a listing, on the OTCQX, of units (the “Units”) sold during an offering described in an offering statement on Form 1-A and the offering circular appended thereto (the “Reg A Offering”) which was qualified by the SEC on November 8, 2016 (the “Qualification Date”). At the initial closing of the Reg A Offering, KeyStone sold an aggregate of 301,570 Units, with each Unit consisting of one share of KeyStone Preferred Stock and one warrant (a “KeyStone Unit Warrant”) to purchase 0.25 shares of KeyStone Common Stock at an exercise price of $2.00 per share. At the second closing, KeyStone sold an aggregate of 119,757 Units, for an aggregate of 421,327 Units. KeyStone also intends to apply, prior to the Effective Time, for a listing, on the OTCQX, of the Units and the KeyStone Unit Warrants.

After the Effective Time, Novume intends to apply for a listing of Novume Common Stock on the [•] and anticipates that its shares will trade on the [•], upon official notice of issuance, under the symbol “[•].” Novume intends to apply for a listing of Novume Preferred Stock on the [•] and anticipates that its shares of Novume Preferred Stock will trade on the [•], upon official notice of issuance, under the symbol “[•].” Novume intends to apply for a listing on the [•] of the warrants to be issued in exchange for KeyStone Unit Warrants (the “Novume Unit Warrants”) on the [•], and anticipates that the Novume Unit Warrants will trade on the [•], upon official notice of issuance, under the symbol “[•].”

You are urged to review carefully this information statement/prospectus to consider how the matters discussed will affect you.

You should carefully consider the “Risk Factors” section beginning on page 25 of this information statement/prospectus.

This information statement/prospectus is also Novume’s prospectus for an aggregate of 15,004,218 shares of Novume Common Stock, 722,498 Warrants and 841,604 shares of Novume Preferred Stock that shall be issued or become issuable under the Merger Agreement.

Brekford’s Board of Directors would like to express its appreciation for your continued interest in Brekford.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this joint information statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This information statement/prospectus is dated February 10, 2017 and is first being mailed on or about [•], 2017.

This information statement/prospectus incorporates important business and financial information about Brekford from other documents that are not included in or delivered with this information statement/prospectus. These documents are available to you without charge by requesting them in writing, by telephone or over the Internet, at the following address:

To receive timely delivery of these documents, you must request the information no later than [•], 2017.

Please also see “Where You Can Find More Information” beginning on page [•] of this information statement/prospectus to obtain further information and learn about other ways that you can receive this information.

Accordingly, at the Effective Time, each outstanding share of Brekford Common Stock immediately preceding the Effective Time (other than shares subject to perfected appraisal rights and other than shares held by Brekford, Brekford Merger Sub, Novume or any subsidiary of Novume), will be converted into and exchangeable for the right to receive shares of Novume Common Stock at the Brekford Exchange Ratio. Brekford Warrants and Brekford Options will be converted into and exchangeable for Novume Warrants and Novume Options, in a manner, more fully described below, that will maintain the ownership ratio described in the preceding paragraph. Simultaneously, each share of KeyStone Common Stock issued and outstanding immediately prior to the Effective Time will be converted into and exchangeable for shares of Novume Common Stock and each share of KeyStone Preferred Stock will be converted into and exchangeable for the right to receive shares of Novume Preferred Stock, at the KeyStone Exchange Ratio. KeyStone Warrants and KeyStone Options outstanding at the Effective Time will be converted into and exchangeable for Novume Warrants and Novume Options at the KeyStone Exchange Ratio.

The number of issued and outstanding shares of Brekford Common Stock and KeyStone Common Stock, and the number of shares of Brekford Common Stock and KeyStone Common Stock issuable upon the conversion or exercise of derivative securities of each such company, as of the Effective Time, may fluctuate pending completion of the Mergers. As a result, the aggregate number of shares of Novume Common Stock to be issued or made issuable at the Effective Time cannot be determined until immediately before the consummation of the Mergers and therefore will not be known until such time.

(i) the number of shares of Novume Common Stock to be subject to each Novume Option will be equal to the product of (x) the number of shares of KeyStone Common Stock or Brekford Common Stock subject to the original option and (y) the KeyStone Exchange Ratio or the Brekford Exchange Ratio, as applicable;

(ii) the exercise price per share of Novume Common Stock under each Novume Option will be equal to (x) the exercise price per share of the KeyStone Common Stock or Brekford Common Stock under the original option divided by (y) the KeyStone Exchange Ratio or the Brekford Exchange Ratio, as applicable; and

(iii) upon each exercise of a Novume Option by a holder thereof, the aggregate number of shares of Novume Common Stock deliverable upon such exercise will be rounded down, if necessary, to the nearest whole share and the aggregate exercise price will be rounded up, if necessary, to the nearest cent.

As a result, at the Effective Time, all outstanding Brekford Options will terminate and cease to represent a right to acquire Brekford Common Stock and all outstanding KeyStone Options will terminate and cease to represent a right to acquire KeyStone Common Stock.

(i) the number of shares of Novume Common Stock issuable upon exercise of each Novume Warrant will be equal to the product of (x) the number of shares of KeyStone Common Stock or Brekford Common Stock issuable upon exercise of the original warrant and (y) the KeyStone Exchange Ratio or the Brekford Exchange Ratio, as applicable;

(ii) the exercise price per share of Novume Common Stock under the Novume Warrants will be equal to (x) the exercise price per share of the KeyStone Common Stock or Brekford Common Stock under the original warrant divided by (y) the KeyStone Exchange Ratio or the Brekford Exchange Ratio, as applicable; and

(iii) upon each exercise of Novume Warrants by a holder thereof, the aggregate number of shares of Novume Common Stock deliverable upon such exercise will be rounded down, if necessary, to the nearest whole share and the aggregate exercise price will be rounded up, if necessary, to the nearest cent.

As a result, at the Effective Time, all outstanding Brekford Warrants will terminate and cease to represent a right to acquire Brekford Common Stock and all outstanding KeyStone Warrants will terminate and cease to represent a right to acquire KeyStone Common Stock.

Novume does not expect to pay dividends on Novume Common Stock in the foreseeable future. Novume anticipates that future earnings generated from operations, if any, will be retained to develop and expand its business. Novume’s ability to pay dividends on Novume Common Stock will be restricted by the terms of Novume Preferred Stock, which will require Novume to pay full cumulative dividends on the Novume Preferred Stock before making any dividend payment on Novume Common Stock.

Following the Effective Time, the Novume Board shall consist of seven (7) members, four (4) of whom will be independent within the meaning of the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and the national stock exchange to which Novume intends to apply for the listing of Novume Common Stock, Novume Preferred Stock and certain Novume Warrants that will be issuable to the holders of certain KeyStone Warrants (as more fully discussed below). Six (6) members shall be designated by KeyStone and one (1) member shall be designated by Brekford, subject to KeyStone’s approval. The members designated by the Company are James McCarthy, who shall serve as Chairman, Robert A. Berman, Dr. Richard Nathan, Glenn Goord, Paul de Bary and [•]; the member designated by Brekford, and approved by KeyStone, is [•]. At the Effective Time, Glenn Goord, Paul de Bary, [•] and [•] are independent as provided herein.

Brekford stockholders who desire to exercise their appraisal rights must submit a written demand for an appraisal within twenty (20) days of the mailing of this information statement/prospectus, and must continue to hold their Brekford shares through the Effective Time. Brekford stockholders must also comply with other procedures as required by Section 262 of the DGCL. Brekford stockholders who validly demand appraisal of their shares in accordance with the DGCL and do not withdraw their demand or otherwise forfeit their appraisal rights will not receive the merger consideration described herein. Instead, after completion of the Brekford Merger, the Court of Chancery of the State of Delaware will determine the fair value of their shares exclusive of any value arising from the Brekford Merger. This appraisal amount will be paid in cash and could be more than, the same as or less than the value a Brekford stockholder would be entitled to receive under the Merger Agreement.

A copy of Section 262 of the DGCL is included as Annex B to this information statement/prospectus and a summary of this provision is included under “The Transaction—Appraisal Rights” beginning on page 47 of this information statement/prospectus.

This information statement/prospectus contains forward-looking statements. All statements other than statements of historical facts contained in this information statement/prospectus, including statements regarding future results of operations and financial position, business strategy, prospective products and services, timing and likelihood of success, plans and objectives of management for future operations, and future results of current and anticipated products and services, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this prospectus and are subject to a number of risks, uncertainties and assumptions described under the sections in this prospectus entitled “Risk Factors” and elsewhere in this information statement/prospectus. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for us to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

This information statement/prospectus also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about the lines of business and industries in which we are involved. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk.

These forward-looking statements may not be realized due to a variety of factors, including, without limitation:

The forward-looking statements are based upon beliefs and assumptions of the management of Novume, Brekford and KeyStone and are made as of the date of this information statement/prospectus. Novume, Brekford and KeyStone undertake no obligation to publicly update or revise any forward-looking statements included in this information statement/prospectus or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise, except to the extent required by federal securities laws. Any investor should consider all risks and uncertainties disclosed in the companies’ filings with the SEC, described below under the heading “Where You Can Find More Information,” all of which is accessible on the SEC’s website at www.sec.gov.

This summary highlights selected information from this information statement/prospectus and may not contain all of the information that is important to you. To understand the Merger Agreement and the Mergers fully and for a more complete description of the legal terms of the Merger Agreement and the Mergers, you should carefully read this entire information statement/prospectus and the other documents to which you have been referred. See “Where You Can Find More Information” beginning on page [•] of this information statement/prospectus.

Novume is a Delaware corporation formed on February 6, 2017 to become a holding company for Brekford and KeyStone and their respective subsidiaries following the consummation of the Mergers. Prior to the consummation of the Mergers, Novume has had and will have no operations other than those incidental to its formation, its execution of the Merger Agreement, and the preparation of this information statement/prospectus. Novume currently has no operations and no or nominal assets and liabilities.

In accomplishing the Merger through a holding company, Keystone and Brekford intend to pursue their existing lines of business separately while achieving certain economies and benefits from pooled management, shared regulatory compliance costs and other compeimentary resources that can assist in supporting Novume’s growth. Through internal growth and strategic acquisitions, where appropriate and available, Novume seeks to develop its core business as a service provider to global and domestic companies that do business with governments both in the United States and abroad. In selective situations, Novume will also seek to serve as a partner or incubator for emerging businesses, like Brekford’s automated traffic safety enforcement business, where an understanding of government contracting procedures and contacts with other seasoned providers of government services or products can be critical to success.

The mailing address of Novume’s principal executive offices is 14420 Albemarle Point Place, Suite 200, Chantilly, VA 20151, and its telephone number is (703) 953-3838.

Novumes’ strategy for AOC KeySolutions includes diversifying its services offerings within the GovCon market while gaining a critical mass of sustainable revenues. This is expected to involve adding both vertical and horizontal capabilities by acquiring GovCon service providers through a disciplined acquisition strategy. It intends to foster communication and knowledge transfer by constructing a “bridge” across which efficiencies and best practices will be shared between the private sector and government, benefiting government, industry and the taxpayer.

AOC Key Solutions is a business development and consulting firm that assists government contractors in many aspects of their business. Its primary services cover all aspects of the government procurement process, including identifying individual and teaming opportunities, understanding and meeting qualification standards, team development and coordination, proposal strategy and development, and all aspects of support for their clients prior to and after winning government contracts. It also helps commercially focused firms gain entry into the government contracting market for the first time. Since commencing operations in 1983, AOC Key Solutions has assisted clients in winning over approximately $150 billion of government contract awards.

A guiding objective of AOC KeySoutions is to perform in a manner that improves outcomes for all stakeholders, working in a way that increases the efficiency and effectiveness of both the government and the companies who are in, or seek to enter, the government contracting market. In this way, AOC KeySoutions seeks to help contractors achieve positive societal contributions as well as success measured by profits and return on investment.

AOC Key Solutions identifies winnable government contracts for clients and provides teaming support to help its clients identify qualified teaming opportunities from AOC KeySoutionsKeyStone’s large database of government contractors. Next, AOC Key Solutions helps its clients develop the strategy and plan to win contracts, implement and execute their strategy and plan, and prepare a compliant, compelling and winning proposal document. For more than 30 years AOC Key Solutions has provided market intelligence, proposal, capture, advisory and teaming support and other important services to Fortune 50 companies and small businesses alike. For the year ended December 31, 2015, AOC Key Solutions generated over $9.6 million of revenue and net income of approximately $422,000. For the six-month period ended June 30, 2016, AOC Key Solutions’ revenues were $7,177,345 as compared to $4,311,170 for the same period in 2015.

Firestorm is a nationally recognized 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 focused on prevention in addition to planning and response initiatives. For example, Firestorm has developed a behavioral risk and threat assessment program, referred to as BERTHA^®, which positions organizations to prevent violence from occurring through the delivery of awareness training, anonymous reporting and predictive intelligence programs that enable the identification of warning signs that may be exhibited by an individual long before they are on a path to violence.

By educating others on emerging threats and strategies to combat those threats Firestorm increases awareness of its initiatives through the deployment of no-fee webinars, stress tests, and blog articles that include analyses by members of its highly credentialed Expert Council as well as other social media. Firestorm partners with industry associations and aggregators to deliver meaningful risk mitigation strategies and education. It serves clients ranging from some of the world’s largest global companies to main street businesses, public and private, across all industry sectors. Firestorm offers services to federal contractors that enhance their ability to manage risk and respond to adverse events, thereby minimizing people, brand, reputation, financial, legal and regulatory impactsAs part of the Firestorm acquisition, KeyStone gained additional management expertise and has appointed Firestorm executives, Harry Rhulen, as President of KeyStone, and Suzanne Loughlin, as Chief Administrative Officer and General Counsel of KeyStone. Both officers have previously served as public company directors and officers and bring needed expertise to the KeyStone leadership team.

Collectively, the members of KeyStone’s management team have experience in the GovCon sector and inmanaging organic growth as well as growth through acquisitions and integration. In connection with the formation of KeyStone as a platform for expansion in the GovCon sector, Robert A. Berman joined KeyStone as Chief Executive Officer and became an investor in KeyStone. See “Interest of Management and Others in Certain Transactions.” Prior to investing in KeyStone, Mr. Berman executed a growth acquisition strategy for a services company focused on the hospitality industry that had, at the time Mr. Berman joined as Chairman and CEO, a $6 million in annual revenue and 50-employees. Within three (3) years under Mr. Berman’s leadership, it opened offices around the world, grew to more than 3,000 employees and generated $220 million in annual revenue. In addition to operating and growing businesses through acquisitions, Mr. Berman has capital markets experience in both the public and private sectors. Mr. James McCarthy is KeyStone’s Chairman and his career spans over 30 years of marketing strategy creation, proposal development, and oral presentation coaching to contractors seeking to expand their market shares or to enter the GovCon sector. Dr. Richard Nathan, KeyStone’s Chief Operating Officer and member of the Board of Directors of KeyStone (the “KeyStone Board”), brings over 45 years of corporate management, program management, and business and proposal development experience. He has led large management and operation contracts valued at more than a billion dollars and managed service and technical contracts for the United States Department of Education (DoE), Department of Defense (DoD), Department of Homeland Security (DHS), NASA, Environmental Protection Agency (EPA), and state governments. KeyStone believes that the combined expertise of Mr. Berman, Mr. McCarthy and Dr. Nathan will help KeyStone to identify and evaluate key strategic acquisitions as KeyStone pursues its growth strategy.

The mailing address of KeyStone’s principal executive offices is 14420 Albemarle Point Place, Suite 200, Chantilly, VA, 20151, and its telephone number is (703) 953-3838.

Brekford recognizes that traffic safety is a major concern for most communities, yet there is continual pressure on the budgets of state, local and federal government agencies and other public safety providers. Since 2010, Brekford has provided full turnkey automated traffic safety enforcement (“ATSE”) programs, offering a variety of technologies and processing capabilities, to assist government agencies in their mission to reduce deaths and accidents on public roadways. Red light, speed, and distracted driving camera systems enable law enforcement agencies to address traffic safety concerns, while freeing officers to attend to more critical crime prevention activities. ATSE systems have been shown to be effective at reducing vehicle speeds and intersection crashes. Brekford’s ATSE systems contain one or more motor vehicle sensors that produce recorded images of motor vehicles traveling at speeds above a defined threshold, passing through a red light, or where the driver is illegally using a handheld device. Images captured by the camera are processed and reviewed in a secure facility utilizing a proprietary web-based citation management system, and violation notices are mailed to the registered owner of the identified vehicle. Revenue generated from these violator funded programs reduces the tax burden on the community, and is routinely allocated to other public safety initiatives.

Until recently, Brekford also operated within the law enforcement and public safety industry providing vehicle upfitting and technology services (“Vehicle Services”) to state, local, and federal agencies. On February 6, 2017 Brekford signed a definitive agreement to sell 80.1% of its Vehicle Services business to a nationally recognized government service provider. The transaction is expected to close on or before February 28, 2017. Brekford will continue to own a 19.9% share of the Vehicle Services business, and will assist in providing strategic and tactical advice to the new owners, who intend to grow the business nationally.

The majority of Brekford’s sales are to government agencies whose operating budgets, while historically stable, are dependent on national and local economic conditions. Brekford’s recurring revenue model offers these agencies much needed traffic safety services, without an impact to operating budgets. In fact, in most cases, agencies experience a net positive revenue stream from these programs. The ATSE industry has experienced substantial growth in recent years; however, intense competition from a handful of competitor companies and lack of national standards creates both a challenge and an opportunity. Brekford provides distinctive modern technology, and its size, strategy, and low cost structure enable bidding on smaller to medium sized municipalities, which collectively constitute the majority of installation opportunities within the U.S.

The mailing address of Brekford’s principal executive offices is 7020 Dorsey Road, Hanover, Maryland 21076, and its telephone number is (443) 557-0200.

Brekford and KeyStone’s management believe that the combination of Brekford and KeyStone presents the opportunity to realize significant value for both companies. KeyStone subsidiary AOC Key Solutions has the ability to assist Brekford in identifying new opportunities to meet the needs of government entities looking for the types of products and services that Brekford offers. KeyStone subsidiary Firestorm, through its principal offices in locations throughout the United States, can approach local municipalities to educate them about Brekford’s products and services thereby expanding the implementation of these programs, products and services. As Firestorm is a risk management and preparedness consultancy that regularly works with oranizations, public and private, municipal and corporate, to identify vulnerabilities and threats that could harm people, brand and reputation, it has expertise in designing programs to identify threats, develop strategies and plans to mitigate those threats, and educate all stakeholders on their roles and responsibilities in responding to such threats, should they materialize. It is well known that speeding, running red lights, and distracted driving cause serious injuries and fatalaties throughout our nation. Brekford has proven solutions that change driver behavior, thereby reducing the number of traffic infractions in municipalities that have implemented these solutions. Therefore, Firestorm and Brekford expect to be able to collaborate productively to expand the development of comprehensive life-saving programs for municipalities.

Immediately following the Effective Time, the former holders of Brekford Common Stock will collectively will own such portion of the capital stock of Novume as is equal to approximately 20% of the issued and outstanding shares of Novume Common Stock, on a fully-diluted basis, and the stockholders of KeyStone immediately preceding the Effective Time will own such portion of Novume capital stock as is equal to approximately 80% of the issued and outstanding Novume Common Stock, on a fully-diluted basis.

Novume, Brekford and KeyStone entered into the Merger Agreement on February 10, 2017. The Merger Agreement provides for two separate, simultaneous Mergers to occur at the Effective Time, after satisfaction of the conditions for the Mergers under the Merger Agreement. In the Brekford Merger, the Brekford Merger Sub will merge with and into Brekford, with Brekford surviving as a wholly-owned subsidiary of Novume. Simultaneously, in the Keystone Merger, KeyStone, will merge with and into the KeyStone Merger Sub, with KeyStone Merger Sub surviving. As soon as practicable after the Effective Time, Brekford will change its name to “Brekford Traffic Safety, Inc.” and KeyStone Merger Sub will change its name to “KeyStone Solutions, Inc.” References herein to “KeyStone” after the Effective Time refer to KeyStone Merger Sub as the surviving corporation of the KeyStone Merger.

If the Mergers are completed, each share of Brekford Common Stock issued and outstanding immediately prior to the Effective Time and all rights in respect thereof, shall, without any action on the part of any holder thereof, cease to exist and be converted into and become exchangeable for the right to receive 1/15^th of a share of Novume Common Stock, in accordance with the Brekford Exchange Ratio. If the Mergers are completed, each share of KeyStone Common Stock issued and outstanding immediately prior to the Effective Time and all rights in respect thereof, shall, without any action on the part of any holder thereof, cease to exist and be converted into and become exchangeable for, 1.9975 shares of Novume Common Stock, and each share of KeyStone Preferred Stock and all rights in respect thereof, shall, without any action on the part of any holder thereof, cease to exists and be converted into and become exchangeable for, 1.9975 shares of Novume Preferred Stock in accordance with the KeyStone Exchange Ratio. The Brekford Exchange Ratio and the KeyStone Exchange Ratio have been determined with intent that immediately after the Mergers, the pre-merger stockholders of Brekford will own such portion of the capital stock of Novume as is equal to approximately 20% of the issued and outstanding shares of Novume Common Stock, on a fully-diluted basis, and the stockholders of KeyStone immediately preceding the Effective Time will own such portion of Novume capital stock as is equal to approximately 80% of the issued and outstanding Novume Common Stock, on a fully-diluted basis.

The number of issued and outstanding shares of Brekford Common Stock and the number of shares of Brekford Common Stock underlying outstanding derivative securities of Brekford, and the number of issued and outstanding shares of KeyStone Common Stock and the number of shares of KeyStone Common Stock underlying outstanding derivative securities of KeyStone, at the Effective Time, cannot be determined until that time. Consequently, the aggregate number of shares of Novume Common Stock to be issued, or made issuable upon exercise of derivative securities, in the Mergers, and the Brekford Exchange Ratio, cannot be determined until the Mergers are completed.

Brekford Common Stock is listed on the OTCQX. There is currently no public market for KeyStone Common Stock, KeyStone Prefered Stock, KeyStone Unit Warrants or other securities of KeyStone, or Novume Common Stock, Novume Preferred Stock, Novume Unit Warrants or any other securities of Novume. Prior to the Effective Time, KeyStone intends to apply for a listing, on the OTCQX or the OTCQB, of shares of KeyStone Preferred Stock and KeyStone Unit Warrants. After the Effective Time, Novume intends to apply for a listing of Novume Common Stock on the [•] and anticipates that its shares will trade on the [•], upon official notice of issuance, under the symbol “[•].” Novume intends to apply for a listing of Novume Preferred Stock on the [•] and anticipates that its shares of Preferred Stock will trade on the [•], upon official notice of issuance, under the symbol “[•].” Novume intends to apply for a listing on the [•] of the Novume Unit Warrants on the [•], and anticipates that its Novume Unit Warrants will trade on the [•], upon official notice of issuance, under the symbol “[•].”

Consideration to be Received by Holders of Brekford Options and KeyStone Options

If the Mergers are completed, all outstanding Brekford Options will terminate and cease to represent a right to acquire Brekford Common Stock and all outstanding KeyStone Options will terminate and cease to represent a right to acquire KeyStone Common Stock.

At the Effective Time, each Brekford Option and each KeyStone Option which is outstanding and unexercised immediately prior to the Effective Time shall be assumed by Novume and converted into a Novume Option, enabling the holder to purchase shares of Novume Common Stock in such amount and at such exercise price as provided below and otherwise having the same terms and conditions as are in effect immediately prior to the Effective Time:

Consideration to be Received by Holders of Brekford Warrants and KeyStone Warrants

If the Mergers are completed, all outstanding Brekford Warrants will terminate and cease to represent a right to acquire Brekford Common Stock and all outstanding KeyStone Warrants will terminate and cease to represent a right to acquire KeyStone Common Stock.

At the Effective Time, each outstanding warrant to purchase shares of Brekford Common Stock, or to purchase shares of KeyStone Common Stock, which is outstanding and unexercised immediately prior to the Effective Time, shall be assumed by Novume and converted into a warrant to purchase shares of Novume Common Stock in such amount and at such exercise price as provided below and otherwise having the same terms and conditions as are in effect immediately prior to the Effective Time:

For clarity, KeyStone Unit Warrants shall be exchanged for Novume Unit Warrants, which shall contain substantially similar terms to the KeyStone Unit Warrants, but for any adjustments in order to reflect the KeyStone Exchange Ratio.

Additionally, on March 16, 2016, KeyStone entered into a Subordinated Note and Warrant Purchase Agreement with Avon Road Partners, L.P., an affiliate of Robert Berman (“Avon Road” and such agreement, the “Avon Road Purchase Agreement”) pursuant to which KeyStone agreed to issue up to $1,000,000 in subordinated debt and warrants to purchase up to 125,000 shares of KeyStone Common Stock (“Avon Road Warrants”). The exercise price for the Avon Road Warrants is equal to $2.00 per share of KeyStone Common Stock. As of February 8, 2017, subordinated notes with a face amount of $500,000 and Avon Road Warrants to purchase 62,500 shares of KeyStone Common Stock have been issued pursuant to the Note Purchase Agreement to Avon Road. At the Effective Time, the Avon Road Warrants will be exchanged, in the manner described above, for Novume Warrants.

The Board of Directors of Brekford (the “Brekford Board”) determined that the adoption of the Merger Agreement, and the consummation of the Brekford Merger thereunder and the other transactions contemplated thereby, is fair to, advisable and in the best interests of Brekford and its stockholders, and, accordingly, it has duly approved the Merger Agreement, and the consummation of the Brekford Merger thereunder and the other transactions contemplated thereby.

The Merger Agreement provides that at the Effective Time, Robert A. Berman, currently the Chief Executive Officer of KeyStone, shall have been appointed the Chief Executive Officer of Novume; Harry Rhulen, currently the President of KeyStone, shall have been appointed as President of Novume; Dr. Richard Nathan, currently the President and Chief Operating Officer of KeyStone, shall have been appointed as Chief Operating Officer of Novume; James McCarthy, currently the Chief Strategy Officer of KeyStone, shall have been appointed the Chief Strategy Officer of Novume; Suzanne Loughlin, currently the Chief Administrative Officer and General Counsel of KeyStone, shall have been appointed as Chief Administrative Officer and General Counsel of Novume; and Riaz Latifullah, currently the Chief Financial Officer of KeyStone, shall have been appointed Chief Financial Officer of Novume.

At the Effective Time, the Novume Board will consist of seven (7) members, four (4) of whom will be independent within the meaning of the rules and regulations of the SEC and the national stock exchange to which Novume has applied for the listing of Novume Common Stock, Novume Preferred Stock and certain Novume Warrants issuable to holders of certain KeyStone Warrants, as more fully discussed below. Six (6) members shall be designated by KeyStone and one (1) member shall be designated by Brekford, subject to KeyStone’s approval. The members designated by the Company are James McCarthy, who shall serve as Chairman, Robert A. Berman, Dr. Richard Nathan, Glenn Goord, Paul de Bary and [•]; the member designated by Brekford, and approved by the Company, is [•]. At the Effective Time, Glenn Goord, Paul de Bary, [•] and [•] are independent as provided herein.

The Merger Agreement provides that each of Rodney Hillman and Scott Rutherford, currently the President/Chief Operating Officer and Chief Strategic Officer of Brekford, respectively, shall, as of or prior to the Effective Time, enter into separate five (5)-year employment agreements with Brekford or one or more of its subsidiaries to serve as the President/Chief Operating Officer and Chief Technology Officer, respectively. Additionally, at the Effective Time, Novume is expected to assume the existing employment agreements of KeyStone with each of Robert Berman, Richard Nathan, Harry Rhulen, Riaz Latifullah and Suzanne Loughlin, and KeyStone’s offer letter with James McCarthy. All of the forgoing are referred to collectively herein as, the “Employment Agreements.”

Brekford and KeyStone intend that key executives of Novume and of Brekford, as shall be mutually agreed by Brekford and KeyStone, will enter into Employment Agreements with Novume or one or more of its subsidiaries. For a more complete description of the above-described arrangements, see “The Transaction – Interests of Certain Persons in the Transaction – Employment Agreements.”

The Mergers will not be completed unless customary conditions set forth in the Merger Agreement are satisfied or waived by Brekford or KeyStone. Pursuant to the DGCL, the affirmative vote of the holders of a majority of issued and outstanding Brekford Common Stock entitled to vote thereon is required to approve the Brekford Merger, and the vote of the holders of a majority of issued and outstanding KeyStone Common Stock entitled to vote thereon is required to approve the KeyStone Merger.

C.B. Brechin, Scott Rutherford, and Robert West own 25,712,787 shares of Brekford Common Stock, which represent approximately 52.13% of the issued and outstanding shares of Brekford Common Stock. James McCarthy and Dr. Richard Nathan own 4,452,556 shares of KeyStone Common Stock, which represent 81.21% of the issued and outstanding shares of KeyStone Common Stock. Robert A. Berman currently owns no shares of KeyStone Common Stock directly but, as more fully described below, he beneficially owns 2,288,778 shares of KeyStone Common Stock, or 41.70% of the issued and outstanding shares of KeyStone Common Stock. All of the forgoing persons have agreed, as more fully described below, to vote in favor of the adoption of the Merger Agreement and the consummation of the Mergers thereunder. Accordingly, approval of the Merger Agreement and the Mergers by the stockholders of each of Brekford and KeyStone is assured.

The conditions to the obligations of Brekford and KeyStone to effectuate the Mergers are also predicated on (i) the consummation by Brekford of the sale, prior to or as of the Effective Time, of not more than 81% of its ownership of the Upfitting Business, and its use of all proceeds from such disposition to repay in full any and all indebtedness of Brekford such that, as of the Closing, Brekford shall have no indebtedness other than as permitted by Novume, and (ii) the Employment Agreements being in place and in full force and effect prior to or as of the Effective Time.

The Merger Agreement may be terminated prior to the Effective Time by either Brekford or KeyStone under certain circumstances, including (i) if the Mergers are not consummated on or before June 1, 2017 (the “Termination Date”), provided, that, if on the Termination Date all conditions to the closing of the Merger Agreement, as set forth therein, shall be fulfilled, except the condition that this Registration Statement shall have become effective, then the Termination Date shall be extended to a date as shall be agreed by the parties; (ii) if a court of competent jurisdiction or governmental, regulatory or administrative agency or commission shall have issued an order, decree or ruling or taken any other action, in each case permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the Merger Agreement, and such order, decree, ruling or other action shall have become final and nonappealable; (iii) if the other shall have breached, or failed to comply with, in any material respect any of its obligations under the Merger Agreement or any representation or warranty made by such other party shall have been incorrect in any material respect when made or shall have since ceased to be true and correct in any material respect, and such breach, failure or misrepresentation is not cured within thirty (30) days after notice thereof and such breaches, failures or misrepresentations, individually or in the aggregate and without regard to materiality qualifiers contained therein, results or would reasonably be expected to result in a Material Adverse

Effect on Novume, Brekford or KeyStone; (iv) upon the occurrence of a Material Adverse Effect on the other or on Novume or an event which could reasonably be expected to result in a Material Adverse Effect on the other or on Novume; (v) if the Board of Directors of the other or any committee of the Board of Directors of the other (1) shall withdraw or modify in any adverse manner its approval or recommendation of this Agreement or the Mergers, (2) shall fail to reaffirm such approval or recommendation upon such party’s request, (3) approve or recommend any acquisition of the other or a material portion of its assets or any tender offer for shares of its capital stock, in each case, other than by the other party or an affiliate thereof, or (5) shall resolve to take any of the forgoing actions; (vi) if any required approvals of the stockholders of Brekford or KeyStone shall fail to have been obtained prior to the Effective Time.

In certain circumstances, the Merger Agreement obligates Brekford to pay to KeyStone a fee of $250,000 (the “Termination Fee”) if the Merger Agreement is terminated.

The officers of Brekford and Keystone have significant holdings in the voting securities of their respective companies. C.B. Brechin, Scott Rutherford, and Robert West, have each entered into an agreement with Brekford, and Robert A. Berman, James McCarthy, and Dr. Richard Nathan have each entered into an agreement with KeyStone (such persons, collectively, the “Key Stockholders” and such agreements, collectively, the “Key Stockholder Agreements”), in connection with the signing of Merger Agreement, pursuant to which they have agreed to vote all of their voting securities in Brekford or KeyStone, as applicable, (a) in favor of the Merger Agreement and the Mergers and (b) against any action that is intended to, or that could reasonably be expected to, impede, delay or materially adversely affect the transactions contemplated by the Merger Agreement. The forgoing agreements are subject to the condition that the Key Stockholder Agreements will terminate upon the earlier of the Effective Time and the termination of the Merger Agreement.

Each of the Key Shareholders has further agreed that, until the earlier of the termination of the Merger Agreement and the Effective Time, such Key Stockholders will not, directly or indirectly, sell or otherwise transfer any shares of Brekford Common Stock or KeyStone Common Stock, as applicable.

The ownership by the Key Stockholders of Brekford of the issued and outstanding Brekford Common Stock, as of February 8, 2017 is as follows:

The ownership by the Key Stockholders of Keystone of KeyStone Common Stock as of February 9, 2017 is as follows:

Unless otherwise indicated herein, beneficial ownership has been determined in accordance with the rules of the SEC, and includes voting or investment power with respect to shares beneficially owned.

As a result of the provisions of the Key Stockholders Agreements (but subject to the condition described above), based upon the forgoing ownership of the Key Stockholders, the requisite approvals of the Merger Agreement by the holders of Brekford Common Stock and KeyStone Common Stock is assured.

Certain of Brekford’s and KeyStone’s executive officers and directors have financial interests in the Mergers that are different from, or in addition to, their interests as Brekford stockholders generally. The Brekford Board was aware of and considered these interests, among other matters, in evaluating the Merger Agreement and in recommending that the Brekford stockholders adopt the Merger Agreement.

Employment Agreements. Certain of Brekford’s executive officers will be employed by Novume, Brekford or one of Brekford’s subsidiaries after the Effective Time. The Merger Agreement provides, as described above, that Rodney Hillman and Scott Rutherford shall enter into the Employment Agreements to serve as the President/Chief Operating Officer of Brekford and as the Chief Strategic Officer of Brekford or one or more of its subsidiaries. Additionally, Robert Berman will be appointed Chief Executive Officer of Novume, Harry Rhulen will be appointed President of Novume, James McCarthy will be appointed Chair of the Novume Board, Richard Nathan will be appointed Chief Operating Officer of Novume, Riaz Latifullah will be appointed Chief Financial Officer of Novume, and Suzanne Loughlin will be appointed Chief Administrative Officer and General Counsel of Novume. Novume is expected to assume KeyStone’s existing Employment Agreements with each of the forgoing individuals.

Brekford and KeyStone intend that additional key executives of Novume, KeyStone and Brekford, as shall be mutually agreed by Brekford and KeyStone, will enter into Employment Agreements with Novume or one or more of its subsidiaries. Agreements with these executive officers are being negotiated but have not yet been entered into.

Avon Road Option Agreement. On March 16, 2016, James McCarthy, Richard Nathan and Avon Road Partners, L.P., an affiliate of Robert Berman (“Avon Road”), entered into an option agreement (the “Avon Road Option Agreement”). Pursuant to the Avon Road Option Agreement, Messrs. McCarthy and Nathan (each a “Grantor) granted Avon Road the right to purchase up to 50% of the shares of KeyStone Common Stock held by such Grantor as of the date of the Avon Road Option Agreement. The parties to the Avon Road Option Agreement have entered into an agreement such that, at the Effective Time, Avon Road Option will evidence the right of Avon Road to acquire the number shares of Novume Common Stock into which the shares of KeyStone Common Stock are converted in the KeyStone Merger.

Brekford stockholders and KeyStone stockholders will be entitled to appraisal rights under the DGCL, and receive payment for the fair value of their shares of Brekford Common Stock if the Brekford Merger is completed and the dissenting stockholders follow the requirements of Section 262 of the DGCL, or the fair value of their shares of KeyStone Common Stock and/or KeyStone Preferred Stock if the KeyStone Merger is completed and the dissenting stockholders follow the requirements of Section 262 of the DGCL.

Brekford stockholders and KeyStone stockholders who desire to exercise their appraisal rights must submit a written demand for an appraisal within twenty (20) days of the mailing of this information statement/prospectus, and must continue to hold their Brekford shares or KeyStone shares, as applicable, through the Effective Time. Brekford stockholders and KeyStone stockholders must also comply with other procedures as required by Section 262 of the DGCL. Brekford stockholders and KeyStone stockholders who validly demand appraisal of their shares in accordance with the DGCL and do not withdraw their demand or otherwise forfeit their appraisal rights will not receive the merger consideration described herein. Instead, after the Effective Time, the Court of Chancery of the State of Delaware will determine the fair value of their shares exclusive of any value arising from the Brekford Merger or the KeyStone Merger, as applicable. This appraisal amount will be paid in cash and could be more than, the same as or less than the value a Brekford stockholder or a KeyStone stockholder, as applicable, would be entitled to receive under the Merger Agreement.

Novume will account for the merger of KeyStone as a recapitalization as the majority of the voting rights of Novume will be derived from the existing shareholders of KeyStone, therefore KeyStone will be considered the predecessor entity for accounting purposes. In determining KeyStone as the predecessor entity, the companies considered the relative voting rights in Novume, the composition of the board of directors and senior management of Novume as of the effective time of the Mergers and the relative share ownership of the Novume Common Stock as of the Effective Time by former KeyStone and Brekford stockholders. As a result, the historical financial statements of KeyStone will become the historical financial statements of Novume as of the Effective Time. Novume will account for the merger of Brekford as a purchase of Brekford by Novume, using the acquisition method of accounting as required under United States generally accepted accounting principles, or “GAAP.” The assets, including identifiable intangible assets, and liabilities of Brekford as of the Effective Time will be recorded at their respective fair values and added to those of Keystone to form the consolidated financial statements of Novume. Any excess of purchase price over the net fair values of Brekford’s assets and liabilities will be recorded as goodwill. Consolidated financial statements of Novume after the effective time of the merger will reflect those fair values and will not be restated retroactively to reflect the historical financial position or results of operations of Brekford. The results of operations of Brekford will be combined with the results of operations of KeyStone and will be included in the results of operations of Novume, beginning on the effective date of the Mergers. Following the Mergers, the earnings of Novume will reflect the effect of any additional indebtedness and purchase accounting adjustments, including increased interest expense and depreciation and amortization of acquired assets.

If, as planned and expected, the Mergers are completed in accordance with the Merger Agreement, neither Brekford stockholders nor KeyStone stockholders will recognize gain or loss upon the receipt of Novume Common Stock or Novume Preferred Stock, or warrants or options to purchase shares of Novume Common Stock, as applicable, in exchange for Brekford Common Stock, Brekford Warrants or Brekford Options in connection Brekford Merger or in exchange for KeyStone Common Stock, KeyStone Preferred Stock or warrants or options to purchase shares of KeyStone Common Stock in the KeyStone Merger, as applicable. You should read “Material U.S. Federal Income Tax Consequences of the Mergers” for a more complete discussion of the U.S. federal income tax consequences of the merger, including the limitations, exceptions, assumptions and conditions set forth therein.

Tax matters can be complicated, and the tax consequences of the transaction to you will depend on your particular tax situation. Accordingly, you are urged to consult your own tax advisors to determine the particular federal, state, local or foreign income, reporting or other tax consequences of the Mergers to you.

SEE “RISK FACTORS” BELOW FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED BY INVESTORS IN EVALUATING AN INVESTMENT IN THE SECURITIES OFFERED HEREBY.

Selected historical consolidated financial and operating data of KeyStone and Brekford and summary selected unaudited pro forma combined condensed financial data for Novume are presented below. This information should be read in conjunction with, and is qualified in its entirety by, the Consolidated Financial Statements of each of Brekford and KeyStone and the related notes thereto, and the Unaudited Pro Forma Condensed Combined Financial Statements and the related notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations incorporated and included elsewhere in this registration statement. See “Consolidated Financial Statements of Brekford,” “Consolidated Financial Statements of KeyStone,” and “Unaudited Pro Forma Condensed Combined Financial Statements”. Historical results are not necessarily indicative of the results to be expected in the future.

Selected Historical Consolidated Financial and Operating Data of KeyStone Solutions, Inc.

A summary of KeyStone’s selected annual financial data from January 1 through December 31 of each year-end and financial data for the nine months ended September 30, 2016 and 2015 unaudited, respectively, is presented below:

Selected Historical Consolidated Financial and Operating Data of KeyStone Solutions, Inc.

Selected Historical Consolidated Financial and Operating Data of Brekford Corp.

A summary of Brekford’s selected annual financial data from January 1 through December 31 of each year-end and financial data for the nine months ended September 30, 2016 and 2015 (unaudited), respectively, is presented below.

As of the date of this registration statement/prospectus, Novume has not completed the detailed valuation study necessary to arrive at the required final estimates of the fair value of the Firestorm and Brekford assets to be acquired and the liabilities to be assumed and the related allocations of purchase price, nor has it identified all adjustments necessary to conform Firestorm’s and Brekford’s accounting policies to Novume’s accounting policies. A final determination of the fair value of Firestorm and Brekford’s assets and liabilities, including intangible assets with both indefinite or finite lives, will be based on the actual net tangible and intangible assets and liabilities of Firestorm and Brekford that exist as of the closing date of the Mergers. Pursuant to the terms of the Merger Agreement, each share of Brekford Common Stock will be converted into the right to receive the shares of Novume Common Stock at the Brekford Exchange Ratio, each share of KeyStone Common Stock will be converted into the right to receive shares of Novume Common Stock at the KeyStone Exchange Ratio, and each share of KeyStone Preferred Stock will be converted into the right to receive shares of Novume Preferred Stock at the KeyStone

Exchange Ratio. For more information regarding the Mergers, see “The Transaction” and “The Merger Agreement.” As a result of the foregoing, the pro forma adjustments are preliminary and are subject to change as additional information becomes available and as additional analysis is performed. The preliminary pro forma adjustments have been made solely for the purpose of providing the unaudited pro forma condensed combined financial statements presented below. Any increases or decreases in the fair value of assets acquired and liabilities assumed upon completion of the final valuations will result in adjustments to the unaudited pro forma balance sheet and/or statements of income. The final purchase price allocations may be materially different than that reflected in the pro forma purchase price allocations presented herein. The Mergers will be accounted for as reorganization of KeyStone and an acquisition of Brekford under the acquisition method of accounting and the acquisition of Firestorm will also be accounting for under the acquisition method.

The Novume Unaudited Pro Forma Condensed Combined Financial Statements should be read in conjunction with the historical financial statements of Brekford and KeyStone, and the related notes thereto, included elsewhere in this registration statement.

Assumptions and estimates underlying the adjustments to the unaudited pro forma condensed combined financial statements, which are referred to as the pro forma adjustments, are described in the accompanying notes. The historical consolidated financial statements have been adjusted in the unaudited pro forma condensed combined financial statements to give effect to pro forma events that are: (1) directly attributable to the Mergers, acquisition of Firestorm and other related transactions; (2) factually supportable; and (3) with respect to the unaudited pro forma statements of income, expected to have a continuing impact on the combined results of Novume following the Mergers. The Novume Unaudited Pro Forma Condensed Combined Financial Statements are presented for comparative purposes only and do not give effect to any potential cost savings and synergies that could result from the Mergers. The pro forma data are not intended to be indicative of actual results had the Mergers occurred as of the dates indicated above, nor do they purport to indicate results which may be achieved in the future.

Comparative Historical and Unaudited Pro Forma Per Share Financial Information

Presented below are KeyStone’s and Brekford’s historical and pro forma per share data for the year ended December 31, 2015 and nine months ended September 30, 2016. Except for the historical information for the year ended December 31, 2015, the information provided in the table below is unaudited. This information should be read together with the historical consolidated financial statements and related notes of KeyStone and Brekford included elsewhere in this registration statement/prospectus, and with the unaudited pro forma condensed combined financial statements included in the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 115.

The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the Mergers had been completed as of the beginning of the periods presented, nor is it necessarily indicative of the future operating results or financial position of the combined company. The pro forma information, although helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the benefits of expected cost savings, opportunities to earn additional revenue, the impact of restructuring, or other factors that may result as a consequence of the Mergers and, accordingly, does not attempt to predict or suggest future results.

The historical book value per share is computed by dividing stockholders’ equity by the number of shares of common stock outstanding at the end of the period. The pro forma earnings per share of the combined company is computed by dividing the pro forma earnings by the pro forma weighted average number of shares outstanding. The pro forma book value per share of the combined company is computed by dividing total pro forma stockholders’ equity by the pro forma number of shares of common stock outstanding at the end of the period. The pro forma book value per share of the combined company is computed as if the Mergers had been completed on September 30, 2016.

Brekford Common Stock is listed on the OTCQX. There is currently no public market for KeyStone Common Stock, the Units, KeyStone Preferred Stock, KeyStone Unit Warrants or other securities of KeyStone, or Novume Common Stock, Novume Preferred Stock, Novume Unit Warrants or any other securities of Novume. Prior to the Effective Time, KeyStone intends to apply for a listing, on the OTCQX, of the Units, the shares of KeyStone Preferred Stock, and the KeyStone Unit Warrants.

After the Effective Time, Novume intends to apply for a listing of Novume Common Stock on the [•] and anticipates that its shares will trade on the [•], upon official notice of issuance, under the symbol “[•].” Novume intends to apply for a listing of Novume Preferred Stock on the [•] and anticipates that its shares of Novume Preferred Stock will trade on the [•], upon official notice of issuance, under the symbol “[•].” Novume intends to apply for a listing on the [•] of the Novume Unit Warrants on the [•], and anticipates that its Novume Unit Warrants will trade on the [•], upon official notice of issuance, under the symbol “[•].”

The following table sets forth, for the calendar quarters indicated, the high and low sales prices per share of Brekford Common Stock, as reported on the OTCQX.

On January [•], 2017, the last full trading day prior to the public announcement of the proposed Mergers, the last reported closing sale price per share of Brekford Common Stock as reported on the OTCQX was $[•] per share. On [•], 2017, the most recent practicable date prior to the mailing of this information statement/prospectus, the last reported closing sale price per share of Brekford Common Stock as reported on the OTCQX was $[•] per share. Holders of Brekford Common Stock are urged to obtain current market quotations prior to making any decision with respect to the Mergers.

As of February 9, 2017, Brekford had [•] holders of record of Brekford Common Stock, and KeyStone had 7 holders of record of KeyStone Common Stock and 119 holders of record of KeyStone Preferred Stock.

Neither Brekford nor KeyStone has paid any cash dividends on Brekford Common Stock or KeyStone Common Stock, as applicable, and Novume does not anticipate paying any cash dividends on Novume Common Stock for the foreseeable future after completion of the Mergers.

KeyStone Preferred Stock is entitled to, and Novume intends that after the Effective Time Novume Preferred Stock will be entitled to, quarterly cash dividends of $0.175 (7% per annum) per share. KeyStone currently pays, and Novume anticipates paying, such quarterly cash dividends through cash flow and potential business growth from acquired entities.

Novume anticipates that future earnings generated from operations, if any, will be retained to develop and expand the business. Novume’s ability to pay dividends on Novume Common Stock will be restricted by the terms of Novume Preferred Stock, which will require Novume to pay full cumulative dividends on the Novume Preferred Stock before making any dividend payment on Novume Common Stock. The declaration and payment in the future of any cash dividends will be at the discretion of the Novume Board and will depend upon, among other factors, the earnings, capital requirements and financial position of Novume, and existing and/or future loan covenants and general economic conditions.

There are risks associated with the Mergers, combining the businesses of Brekford and KeyStone and holding Novume Common Stock or Novume Preferred Stock to be issued in the Mergers. Brekford and KeyStone stockholders should consider the following risks:

Because neither the Brekford Exchange Ratio nor the KeyStone Exchange Ratio is adjustable based on the market price of Novume Common Stock, Brekford Common Stock or KeyStone Common Stock, you cannot be sure of the value of the merger consideration that you will receive.

The number of shares of Novume Common Stock, or of Novume Preferred Stock convertible into Novume Common Stock, to be issued or to become issuable by Novume in the Mergers is not adjustable based on the market price of Brekford Common Stock or Novume Common Stock, and the Merger Agreement may not be terminated as a result of any changes in such market prices. The market value of the shares of Novume Common Stock or Novume Preferred Stock, as applicable, that Brekford and KeyStone stockholders will be entitled to receive when the Mergers are completed will depend on the market value of shares of Novume Common Stock at that time, which could vary significantly from the market value of shares of Novume Common Stock on the date the Merger Agreement was executed or the date of this information statement/prospectus. Accordingly, as of the date of this information statement/prospectus, neither Brekford nor KeyStone stockholders will know or be able to calculate the market value of the consideration they will receive upon completion of the Mergers. These variations may result from, among other factors, market expectations of the likelihood that the Mergers will be completed and the timing of completion, the prospects of post-merger operations, the effect of any conditions or restrictions imposed on or proposed with respect to Novume by regulatory agencies and authorities, general market and economic conditions and other factors.

The Mergers involve the integration of two companies that have previously operated independently. There can be no assurance that Novume will not encounter significant difficulties in integrating the respective operations of Brekford and KeyStone or that the benefits expected from such integration will be realized. In addition, the achievement of the benefits expected from such integration will require Novume to incur significant costs. The incurrence of any such costs, as well as any unexpected costs or delays, in connection with such integration, could have a material adverse effect on Novume’s business, operating results or financial condition.

Brekford and KeyStone will be subject to business uncertainties and contractual restrictions while the Mergers are pending that could adversely affect their businesses.

Uncertainty about the effect of the Mergers on employees and customers may have an adverse effect on Brekford and/or KeyStone, and consequently on Novume following the Mergers. These uncertainties may impair each company’s ability to attract, retain and motivate key personnel until the Mergers are completed and for a period of

time thereafter, and could cause customers, suppliers and others that deal with either of Brekford or KeyStone to seek to change existing business relationships with Brekford or KeyStone, as applicable. Employee retention may be particularly challenging during the pendency of the Mergers, as employees may experience uncertainty about their future roles with Brekford or KeyStone. If, despite Brekford’s or KeyStone’s retention efforts, key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with Brekford or KeyStone, as the case may be, Brekford’s and/or KeyStone’s business and consequently the business of Novume following the Mergers could be seriously harmed.

Failure to complete the Mergers could negatively affect Novume, Brekford and KeyStone.

If the Mergers are not completed for any reason, Novume, Brekford and KeyStone may be subject to a number of material risks, including the following:

Brekford’s ability to pursue alternatives to the Brekford Merger is restricted.

The Merger Agreement contains an exclusivity provision that provides that, without the prior written consent of the KeyStone, Brekford will not, and will not authorize or permit any of its representatives to, directly or indirectly, solicit, initiate, entertain or encourage or support (including by way of furnishing information) or take any other action to facilitate any inquiries or the making of any proposal or offer which constitutes or may reasonably be expected to lead to an alternative acquisition proposal from any person, or engage in any discussion or negotiations relating thereto or accept any alternative acquisition proposal. The exclusivity provision is subject to certain exceptions that permit the board of directors of Brekford to comply with its fiduciary duties, which, under certain circumstances, would enable Brekford to provide information to, and engage in discussions or negotiations with, third parties with respect to alternative acquisition proposals. Upon termination of the Merger Agreement under certain circumstances, Brekford may be obligated to pay KeyStone a termination fee of $250,000. This provision could discourage a potential acquirer that might have an interest in acquiring all or a significant part of Brekford from considering or proposing that acquisition, even if it were prepared to pay consideration with a higher per share cash or market value than the consideration Novume proposes to pay in the Brekford Merger or might result in a potential competing acquirer proposing to pay a lower per share price to acquire Brekford than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable to KeyStone in certain circumstances.

Each of Brekford and KeyStone stockholders will have reduced ownership and voting interests in Novume and will be able to exercise less influence over management following the Mergers.

Immediately after the Mergers, based on the conversion ratios contained in the Merger Agreement, the pre-merger stockholders of Brekford will own such portion of the capital stock of Novume as is equal to approximately 20% of the issued and outstanding shares of Novume Common Stock, on a fully-diluted basis, and the stockholders of KeyStone immediately preceding the Effective Time will own such portion of Novume capital stock as is equal to approximately 80% of the issued and outstanding Novume Common Stock, on a fully-diluted basis.

There currently is no public trading market for any of Novume Common Stock, Novume Preferred Stock or Novume Unit Warrants and active markets may not develop or, if developed, be sustained. If public trading markets do not develop, holders of Novume Common Stock, Novume Preferred Stock and/or Novume Unit Warrants issued under the Merger Agreement may not be able to sell any such shares of Novume Common Stock, or of Novume Preferred Stock, or the Novume Unit Warrants.

As of the date of this information statement/prospectus, there is currently no public trading market for any of Novume Common Stock, Novume Preferred Stock or the Novume Unit Warrants, and an active market may not develop or be sustained. Novume intends to use its best efforts to obtain, prior to the Effective Time, or as soon as

reasonably practicable thereafter, the approval for listings on a national stock exchange of shares of Novume Common Stock and Novume Preferred Stock, and the Novume Unit Warrants, but there is no guarantee that it will be successful. If active public trading markets for Novume Common Stock, Novume Preferred Stock or Novume Unit Warrants do not develop or are not sustained, it may be difficult or impossible for holders of Novume Common Stock, Novume Preferred Stock or Novume Unit Warrants issued under the Merger Agreement to resell such Novume Common Stock, Novume Preferred Stock or Novume Unit Warrants at any price. Even if markets develop for shares of Novume Common Stock, Novume Preferred Stock or Novume Unit Warrants, these shares may be thinly traded, with wide share price fluctuations, low share prices and minimal liquidity.

The success of Novume’s business will depend, in part, on the continued services of certain key personnel.

After the Effective Time, the success of Novume’s business will depend, in part, on the continued services of certain members of KeyStone’s and Brekford’s management. In particular, the loss of the services of any of Robert A. Berman as Chief Executive Officer and director of Novume, Harry Rhulen as president of Novume, Richard Nathan as Chief Operating Officer and director of Novume, Suzanne Loughlin as Chief Administrative Officer and General Counsel of Novume, Riaz Latifullah as Chief Financial Officer of Novume, James McCarthy as Chair of the Novume Board and Chief Strategy Officer of KeyStone, Rodney Hillman as President/Chief Operating Officer of Brekford could have a material adverse effect on the business, results of operations, and financial condition of Novume.

Because at the Effective Time, certain of Novume’s stockholders will control a significant number of shares of Novume Common Stock, they may have effective control over actions requiring stockholder approval.

Novume’s directors, executive officers and principal stockholders, and their respective affiliates, will beneficially own the majority of the outstanding shares of Novume Common Stock at the Effective Time. As a result, these stockholders, acting together, would have the ability to control the outcome of matters submitted to Novume’s stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of Novume’s assets. In addition, these stockholders, acting together, would have the ability to control the management and affairs of Novume. Accordingly, this concentration of ownership might harm the market price of Novume Common Stock, Novume Warrants and/or Novume Preferred Stock by:

Brekford’s business is subject to a number of risks, some of which are discussed below. Other risks are presented elsewhere in this report and in the information incorporated by reference into this report. You should consider the following risks carefully in addition to the other information contained in this report and Brekford’s other filings with the SEC, including Brekford’s subsequent reports on Forms 10-Q and 8-K, before deciding to buy, sell or hold Brekford Common Stock. The risks and uncertainties described below are not the only ones facing Brekford. Additional risks and uncertainties not presently known to Brekford or that Brekfrod currently deems immaterial may also affect Brekford’s business operations. If any of these risks actually occurs, Brekford’s business, financial condition, or results of operations could be seriously harmed. In that event, the market price for Brekford Common Stock could decline and you may lose all or part of your investment.

Because Brekford depends on government contracts and subcontracts, Brekford faces additional risks related to contracting with federal, state and local governments, including budgetary issues and fixed price contracts.

A significant portion of Brekford’s revenues is derived from contracts with governmental agencies, as a general contractor, subcontractor or supplier. Brekford anticipates that revenue from government contracts will continue to remain a significant portion of Brekford’s revenues. Government business is, in general, subject to special risks and challenges, including:

Governmental budgets and plans are subject to change without warning. Certain risks of selling to governmental entities include dependence on appropriations and administrative allocation of funds, changes in governmental procurement legislation and regulations and other policies that may reflect political developments or agendas, significant changes in contract scheduling, intense competition for government business and termination of purchase decisions for the convenience of the governmental entity. Substantial delays in purchase decisions by governmental entities, and the current constraints on government budgets at the federal, state and local level, could cause Brekford’s revenues and income to drop substantially or to fluctuate significantly between fiscal periods.

In addition, a number of Brekford’s government contracts are fixed price contracts. As a result, Brekford may not be able to recover any cost overruns it may incur. These fixed price contracts require Brekford to estimate the total project cost based on preliminary projections of the project’s requirements. The financial viability of any given project depends in large part on Brekford’s ability to estimate these costs accurately and complete the project on a timely basis. In the event Brekford’s costs on these projects exceed the fixed contractual amount, Brekford will be required to bear the excess costs. Such additional costs would adversely affect Brekford’s financial condition and results of operations. Moreover, certain of Brekford’s government contracts are subject to termination or renegotiation at the convenience of the government, which could result in a large decline in Brekford’s revenues in any given period. Brekford’s inability to address any of the foregoing concerns or the loss or renegotiation of any material government contract could seriously harm its business, financial condition and results of operations.

State budgetary constraints may have a material adverse impact on Brekford.

Many states have experienced, and are continuing to experience, significant budget shortfalls and other related budgetary issues and constraints. Ongoing uncertainty as to the timing and accessibility of budgetary funding, changes in state funding allocations to local agencies and municipalities, or other budget deficiencies that do not permit agencies to fund their internal portion of program expenses may have a negative impact on Brekford’s revenues and income.

If Brekford does not keep pace with rapid technological changes and evolving industry standards, it will not be able to remain competitive, and the demand for its products will likely decline.

Brekford’s future success will depend upon its ability to anticipate and adapt to changes in technology and industry standards, and to effectively develop, introduce, market and gain broad acceptance of new products and product enhancements incorporating the latest technological advancements.

If Brekford is unable to develop and introduce new products and product enhancements successfully and in a cost-effective and timely manner, or are unable to achieve market acceptance of Brekford’s new products, Brekford’s operating results would be adversely affected.

Brekford believes its revenue growth and future operating results will depend on Brekford’s ability to complete development of new products and enhancements, introduce these products in a timely, cost-effective manner, achieve broad market acceptance of these products and enhancements, and reduce production costs. In addition, the introduction of any new products could adversely affect the sales of certain of existing products.

The markets in which Brekford operates are highly competitive and have many more established competitors than we do, which could adversely affect Brekford’s revenues or the market acceptance of its products.

Brekford competes with numerous other companies in its target markets including, but not limited to, large, multinational corporations and many smaller regional firms. Brekford competes with existing, well-established companies and technologies both domestically and abroad. Only a small portion of the public safety market has adopted automated enforcement technologies, and Brekford’s future success will depend in part upon gaining broad market acceptance. Certain technological barriers to entry make it difficult for new competitors to enter the market with competing technologies; however, Brekford is aware of new market entrants from time to time. Increased competition could result in loss of market share, price reductions and reduced gross margins, any of which could seriously harm its business, financial condition and results of operations.

Several of Brekford’s competitors have far greater name recognition and greater financial, technological, marketing and customer service resources than Brekford does. This may allow Brekford’s competitors to respond more quickly to new or emerging technologies and changes in customer requirements. It may also allow them to devote greater resources to the development, promotion, sale and support of their products and services than Brekford can. As a result of the foregoing factors, Brekford may not be able to compete effectively in its target markets and competitive pressures could adversely affect Brekford’s business, financial condition and results of operations.

Brekford may not be able to adequately protect or enforce its intellectual property rights, which could harm Brekford’s competitive position.

If Brekford is not able to adequately protect or enforce the proprietary aspects of its technology, competitors could be able to access its proprietary technology and its business, financial condition and results of operations will likely be seriously harmed. Brekford currently attempts to protect its technology through a combination of patent, copyright, trademark and trade secret laws, employee and third party nondisclosure agreements and similar means. Despite Brekford’s efforts, other parties may attempt to disclose, obtain or use Brekford’s technologies or systems. Brekford’s competitors may also be able to independently develop products that are substantially equivalent or superior to Brekford’s products or design around its patents. In addition, the laws of some foreign countries do not protect Brekford’s proprietary rights as fully as do the laws of the U.S. As a result, Brekford may not be able to protect its proprietary rights adequately in the U.S. or abroad.

Litigation may be necessary in the future to enforce Brekford’s intellectual property rights or to determine the validity and scope of the proprietary rights of others. Litigation may also be necessary to defend against claims of infringement or invalidity by others. Brekford has not in the past, but may in the future, be subject to litigation

regarding its intellectual property rights. An adverse outcome in litigation or any similar proceedings could subject Brekford to significant liabilities to third parties, require Brekford to license disputed rights from others or require it to cease marketing or using certain products or technologies. Brekford may not be able to obtain any licenses on terms acceptable to it, or at all. Brekford also may have to indemnify certain customers or strategic partners if it is determined that Brekfrod has infringed upon or misappropriated another party’s intellectual property. Any of the foregoing could adversely affect Brekford’s business, financial condition and results of operations. In addition, the cost of addressing any intellectual property litigation claim, including legal fees and expenses, and the diversion of management’s attention and resources, regardless of whether the claim is valid, could be significant and could seriously harm Brekford’s business, financial condition and results of operations.

Brekford may be unable to attract and retain key personnel, including senior management, which could seriously harm its business.

Due to the specialized nature of Brekford’s business, Brekford is highly dependent on the continued service of its executive officers and other key management, engineering and technical personnel. The loss of any of Brekford’s officers, or any of other executives or key members of management could adversely affect its business, financial condition, or results of operations. Brekford’s success will also depend in large part upon its ability to continue to attract, retain and motivate qualified engineering and other highly skilled technical personnel, as well as new management personnel and senior executives. Competition for qualified employees, particularly development engineers and software developers, is intense. Brekford may not be able to continue to attract and retain sufficient numbers of such highly skilled employees. Brekford’s inability to attract and retain additional key employees or the loss of one or more of its current key employees could adversely affect its business, financial condition and results of operations.

Brekford’s failure to successfully bid on new contracts and renew existing contracts could reduce its revenues and profits.

Brekford’s business depends on its ability to successfully bid on new contracts and renew existing contracts with public sector customers. Contract proposals and negotiations are complex and frequently involve a lengthy bidding and selection process, which are affected by a number of factors, such as market conditions, financing arrangements and required governmental approvals. For example, a customer may require Brekford to provide a surety bond or letter of credit to protect the client should we fail to perform under the terms of the contract. If negative market conditions continue, or if Brekford fails to secure adequate financing arrangements or the required governmental approval or fail to meet other required conditions, Brekford may not be able to pursue particular projects, which could reduce or eliminate its profitability.

If Brekford experiences declining or flat revenues and Brekford fails to manage such declines effectively, Brekford may be unable to execute its business plan and may experience future weaknesses in operating results.

Based on Brekford’s business objectives, and in order to achieve future growth, Brekford will need to continue to add additional qualified personnel, and invest in additional research and development and sales and marketing activities, which could lead to increases in its expenses and future declines in operating results. In addition, Brekford’s future expansion is expected to place a significant strain on its managerial, administrative, operational, financial and other resources. If Brekford is unable to manage these activities or any revenue declines successfully, Brekford’s growth, Brekford’s business, its financial condition and results of operations could continue to be adversely affected.

Brekford is currently not profitable and it may be unable to become profitable on a quarterly or annual basis.

For the year ended December 31, 2016, Brekford had a net loss and Brekford cannot assure you that it will be profitable in the future. Brekford’s ability to become profitable in future periods could be impacted by budgetary constraints, government and political agendas, economic instability and other items that are not in its control. Furthermore, Brekford relies on operating profits to fund investments in sales and marketing and research and development initiatives. Brekford cannot assure you that its financial performance will sustain a sufficient level to completely support those investments. Most of Brekford’s expenses are fixed in advance. As such, Brekford generally is unable to reduce its expenses significantly in the short-term to compensate for any unexpected delay or decrease in anticipated revenues or increases in planned investments. As a result, Brekford may continue to experience operating losses and net losses in the future, which would make it difficult to fund operations and achieve its business plan, and could cause the market price of Brekford Common Stock to decline.

If Brekford’s internal controls over financial reporting do not comply with the requirements of the Sarbanes-Oxley Act, Brekford’s business and stock price could be adversely affected.

Section 404 of the Sarbanes-Oxley Act of 2002 currently requires Brekford to evaluate the effectiveness of its internal controls over financial reporting at the end of each fiscal year and to include a management report assessing the effectiveness of its internal controls over financial reporting in all annual reports. In connection with the audit of its consolidated financial statements for the year ended December 31, 2015, Brekford determined that its disclosure controls and procedures were not effective due to the material weakness in its internal control over financial reporting. Management concluded that a material weakness exists because the Company does not currently employ a sufficient number of qualified accounting personnel to ensure proper and timely evaluation of complex accounting, tax, and disclosure issues that may arise during the course of the Company’s business. A material weakness is a control deficiency (within the meaning of Public Company Accounting Oversight Board Auditing Standard No. 5) or combination of control deficiencies, that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

As a smaller reporting company, for the year ended December 31, 2015, Brekford was exempt from the auditor attestation requirement over its internal control over financial reporting; however, to the extent it does not qualify as a non-accelerated filer or smaller reporting company in subsequent fiscal years, it will be subject to the auditor attestation requirement under Section 404(b) of the Sarbanes-Oxley Act. In such an event, it may not be able to complete the work required for such attestation on a timely basis and, even if it timely completes such requirements, Brekford’s independent registered public accounting firm may still conclude that its internal controls over financial reporting are not effective.

Brekford’s management does not expect that Brekford’s internal controls over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been or will be detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions. Over time, Brekford’s controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Brekford’s quarterly operating results fluctuate as a result of many factors. Therefore, Brekford may fail to meet or exceed the expectations of securities analysts and investors, which could cause Brekford’s stock price to decline.

Brekford’s quarterly revenues and operating results have fluctuated and are likely to continue to vary from quarter to quarter due to a number of factors, many of which are not within Brekford’s control. Factors that could affect Brekford’s revenues include, among others, the following:

Due to all of the factors listed above as well as other unforeseen factors, Brekford’s future operating results could be below the expectations of securities analysts or investors. If that happens, the trading price of Brekford Common Stock could decline. As a result of these quarterly variations, you should not rely on quarter-to-quarter comparisons of Brekford’s operating results as an indication of its future performance.

The ATSE industry in general is subject to litigation claims due to the nature of contractual arrangements and governing laws associated with each state. As a provider of ATSE services, Brekford could in the future be, from time to time, subject to litigation for ATSE programs, even if Brekford’s products or services were delivered according to contract. While Brekford generally carries insurance against these types of claims, some claims may not be covered by insurance or the damages resulting from such litigation could exceed its insurance coverage limits. In the event that Brekford is required to pay significant damages as a result of one or more lawsuits that are not covered by insurance or exceed its coverage limits, it could materially harm Brekford’s business, financial condition or cash flows. Even defending against unsuccessful claims could cause Brekford to incur significant expenses and result in a diversion of management’s attention.

Brekford may experience production gaps that could materially and adversely impact Brekford’s sales and financial results and the ultimate acceptance of Brekford’s products.

It is possible that Brekford could experience unforeseen quality control issues or part shortages as it adjusts production to meet current demand for its products. Brekford has historically used single suppliers for certain significant components in its products. Should any such delay or disruption occur, or should a key supplier discontinue operations because of the current economic climate, Brekford’s future sales will likely be materially and adversely affected.

Brekford’s international business operations may be threatened by many factors that are outside of its control.

While Brekford historically has had limited international sales, revenues and operations experience, Brekford began work on its first international contracts in Mexico in 2015. Brekford may further expand its international efforts, and in particular, plans to expand its distribution channels in Latin America. Brekford cannot assure you that it will be successful in its expansion efforts. International operations subject Brekford to various inherent risks including, among others:

Any of the factors mentioned above may adversely affect Brekford’s future international revenues and, consequently, affect its business, financial condition and operating results. Additionally, as Brekford pursues the expansion of its international business, certain fixed and other overhead costs could outpace its revenues, thus adversely affecting results of operations. Brekford may likewise face local competitors in certain international markets who are more established, have greater economies of scale and stronger customer relationships.

Brekford may need to raise additional capital in the future, which may not be available on terms acceptable to it, or at all.

Brekford has historically experienced volatility in its earnings and cash flows from operations from year to year. It also may have a need for significant capital in relation to new contracts for camera deployments and general growth of the business. If Brekford’s business declines, or if its line of credit is not sufficient to cover these requirements, or should the bank choose to limit or remove its ability to borrow funds, or if credit markets further tighten, Brekford may need to raise additional capital to repay indebtedness, pursue acquisitions or expand its operations. Such additional capital may be raised through bank borrowings, or other debt or equity financings. Brekford cannot assure you that any additional capital will be available on a timely basis, on acceptable terms, or at all, and such additional financing may result in further dilution to Brekford’s stockholders.

Brekford’s capital requirements will depend on many factors, including, but not limited to:

If Brekford’s capital requirements are materially different from those currently planned, Brekford may need additional capital sooner than anticipated. If additional funds are raised through the issuance of equity or convertible debt securities, the percentage ownership of its stockholders will be reduced and such securities may have rights, preferences and privileges senior to Brekford Common Stock. Additional equity or debt financing may not be available on favorable terms, on a timely basis, or at all. If adequate funds are not available or are not available on acceptable terms, Brekford may be unable to continue its operations as planned, develop or enhance Brekford’s products, expand its sales and marketing programs, take advantage of future opportunities or respond to competitive pressures.

Brekford Common Stock is traded under the symbol BFDI on the OTCQX. Brekford Common Stock is not actively traded and the price of Brekford Common Stock may be volatile. The trading price of Brekford Common Stock has been subject to wide fluctuations in the past. From January 2015 through December 2016, Brekford Common Stock has traded at prices as low as $0.06 per share and as high as $0.36 per share. The market price of Brekford Common Stock could continue to fluctuate in the future in response to various factors, including, but not limited to:

The stock market has from time to time experienced volatility, which has often affected and may continue to affect the market prices of equity securities of many technology companies. This volatility has often been unrelated to the operating performance of these companies. These broad market fluctuations may adversely affect the market price of Brekford Common Stock. In the past, companies that have experienced volatility in the market price of their securities have been the subject of securities class action litigation. If Brekford were to become the subject of a class action lawsuit, it could result in substantial losses and divert management’s attention and resources from other matters.

Because certain of Brekford’s stockholders control a significant number of shares of Brekford Common Stock, they may have effective control over actions requiring stockholder approval.

Brekford’s directors, executive officers and principal stockholders, and their respective affiliates, beneficially own the majority of the outstanding shares of Brekford Common Stock. As a result, these stockholders, acting together, would have the ability to control the outcome of matters submitted to Brekford’s stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of Brekford’s assets. In addition, these stockholders, acting together, would have the ability to control the management and affairs of Brekford. Accordingly, this concentration of ownership might harm the market price of Brekford Common Stock by:

Brekford has not paid dividends on Brekford Common Stock in the past and does not expect to pay dividends on Brekford Common Stock for the foreseeable future. Any return on investment may be limited to the value of Brekford Common Stock.

No cash dividends have been paid on Brekford Common Stock. Brekford expects that any income received from operations will be devoted to its future operations and growth. Brekford does not expect to pay cash dividends on Brekford Common Stock in the near future. Payment of dividends would depend upon Brekford’s profitability at the time, cash available for those dividends, and other factors as Brekford’s board of directors may consider relevant. If Brekford does not pay dividends, Brekford Common Stock may be less valuable because a return on an investor’s investment will only occur if Brekford’s stock price appreciates.

If securities or industry analysts do not publish research or reports about Brekford’s business, or if they change their recommendations regarding Brekford’s stock adversely, Brekford’s stock price and trading volume could decline.

The trading market for Brekford Common Stock will be influenced by the research and reports that industry or securities analysts publish about us or Brekford’s business. Brekford does not currently have and may never obtain research coverage by industry or financial analysts. If no or few analysts commence coverage of Brekford, the trading price of Brekford Common Stock may decrease. Even if Brekford does obtain analyst coverage, if one or more of the analysts who cover us downgrade Brekford’s stock, Brekford’s stock price would likely decline. If one or more of these analysts cease coverage of Brekford or fails to regularly publish reports on Brekford, it could lose visibility in the financial markets, which in turn could cause Brekford Common Stock’s price or trading volume to decline.

Systems and/or service failures could interrupt Brekford’s operations, leading to reduced revenue and profit.

Any interruption in Brekford’s operations or any systems failures, including, but not limited to: (1) the inability of Brekford’s staff to perform their work in a timely fashion, whether caused by limited access to, and/or closure of, Brekford’s and/or Brekford’s clients’ offices or otherwise, (2) the failure of network, software and/or hardware systems, and (3) other interruptions and failures, whether caused by Brekford, a third-party service provider, unauthorized intruders and/or hackers, computer viruses, natural disasters, power shortages, terrorist attacks or otherwise, could cause loss of data and interruptions or delays in Brekford’s business or that of its clients, or both. In addition, the failure or disruption of mail, communications and/or utilities could cause an interruption or suspension of Brekford’s operations or otherwise harm its business. Brekford’s property and business interruption insurance may be inadequate to compensate it for all losses that may occur as a result of any system or operational failure or disruption and, as a result, revenue, profits and operating results could be adversely affected.

Improper disclosure of confidential and personal data could result in liability and harm Brekford’s reputation.

Brekford stores and processes increasingly large amounts of confidential information concerning Brekford’s customers and vendors, as well as confidential information on behalf of Brekford’s customers; therefore, Brekford must ensure that it is at all times compliant with the various privacy laws, rules, and regulations in all of the countries within which it is operating. These laws, rules, and regulations can vary significantly from country to country, with many being more onerous than those in the U.S. The risk of failing to comply with these laws, rules, and regulations increases as it continues to expand globally. Moreover, it must ensure that all of its vendors who have access to such information also have the appropriate privacy policies, procedures and protections in place.

Although Brekford takes appropriate measures to protect such information, the continued occurrence of high-profile data breaches of other companies provides evidence of an external environment increasingly hostile to information security. Cybersecurity attacks in particular are evolving, and Brekford faces the constant risk of cybersecurity threats, including computer viruses, attacks by computer hackers and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and corruption of data. In particular, as a government contractor, Brekford faces a heightened risk of a security breach or disruption with respect to personally identifiable, sensitive but unclassified, or otherwise protected data resulting from an attack by computer hackers, foreign governments and cyber terrorists. Improper disclosure of this information could harm Brekford’s reputation, lead to legal exposure to customers, or subject us to liability under laws, rules and regulations that protect personal or other confidential data, resulting in increased costs or loss of revenue.

This environment demands that Brekford continuously improves its design and coordination of security controls throughout Brekford. Despite these efforts, it is possible that Brekford’s security controls over data, training, and other practices it follows may not prevent the improper disclosure of personally identifiable or other confidential information.

KeyStone is a holding company, has no direct operations. KeyStone subsidiaries generate the majority of the organization’s revenue and profit.

KeyStone was formed in March 2016 as a holding company. It has no current business operations of its own. Its significant assets reside within its subsidiaries, AOC Key Solutions and Firestorm. If AOC Key Solutions or Firestorm need to retain their funds to meet their financial obligations, or if they experience other restrictions on their ability to fund KeyStone, that may limit KeyStone’s access to funds and restrict KeyStone’s ability to meet its dividend, redemption and liquidation obligations in respect of KeyStone Preferred Stock and to pursue its acquisition strategy or other strategic objectives.

KeyStone faces aggressive competition that can impact its ability to obtain contracts and therefore affect its future revenues and growth prospects.

The business of KeyStone is highly competitive, and KeyStone competes with larger companies that have greater name recognition and financial resources, as well as many independent sole-proprietors who sell themselves as business development experts.

The markets in which KeyStone operates are characterized by rapidly changing technology, and the needs of KeyStone’s clients change and evolve regularly. Accordingly, KeyStone’s success depends on its ability to develop services and solutions that address these changing needs of their government contractor clients, and to provide people and technology needed to deliver these services and solutions. To remain competitive, KeyStone must consistently provide superior service, technology and performance on a cost-effective basis to its clients. KeyStone’s competitors may be able to provide KeyStone’s clients with different or greater capabilities or technologies or better contract terms than KeyStone can provide, including technical qualifications, past contract experience, geographic presence, price and the availability of qualified professional personnel. Additionally, KeyStone anticipates that larger or new competitors or alliances among competitors may emerge which may adversely affect KeyStone’s ability to compete for new contracts.

The U.S. government may adopt new contract rules and regulations or revise its procurement practices in a manner adverse to us at any time.

KeyStone’s industry has experienced, and KeyStone expects it will continue to experience, significant changes to business practices as a result of an increased focus on affordability, efficiencies and recovery of costs, among other items. U.S. government agencies may face restrictions or pressure regarding the type and amount of services that they may obtain from private contractors. Legislation, regulations and initiatives dealing with procurement reform, mitigation of potential conflicts of interest, deterrence of fraud, and environmental responsibility or sustainability, as well as any resulting shifts in the buying practices of U.S. government agencies, such as increased usage of fixed-price contracts, multiple award contracts and small business set-aside contracts, could have adverse effects on government contractors and the business development services KeyStone provides. Any of these changes could impair KeyStone’s ability to obtain new support contracts or renew its existing contracts when those contracts are recompleted. Any new contracting requirements or procurement methods could be costly or administratively difficult for KeyStone to implement and could adversely affect its future revenues, profitability and prospects, or alternatively may reduce the need for government contractors to acquire KeyStone’s services.

Technology improvements and disruptions could diminish the need for KeyStone’s traditional services.

Based on recent technological developments, the market for consultants has diminished and may continue to diminish. Some companies are beginning to use the Internet to advertise for different services, including experts for sale, anonymous authors to complete certain proposal sections for an “introductory fee,” and even buying entire proposals on-line, sometimes from overseas vendors. The market trend seems to be that these competitors are offering similar types of services at extremely low prices. This trend towards utilization of unknown and unproven companies advertising traditional consulting services may diminish the demand for KeyStone’s services, which may adversely affect KeyStone’s revenues, results of operations and financial condition.

The spending cuts imposed by the Budget Control Act of 2011 (“BCA”) could impact KeyStone’s operating results and profit.

The U.S. government continues to focus on developing and implementing spending, tax, and other initiatives to stimulate the economy, create jobs, and reduce the deficit. One of these initiatives, the BCA, imposed constraints around U.S. government spending. In an attempt to balance decisions regarding defense, homeland security, and other federal spending priorities, the BCA imposed spending caps that contain approximately $487 billion in reductions to the Department of Defense base budgets over a seven year period (to 2021). Additionally, the BCA triggered an automatic sequestration process, effective March 1, 2013, that would have reduced planned defense spending by an additional $500 billion over a nine-year period that began in the U.S. government’s 2013 fiscal year.

On November 2, 2015, the President signed into law the Bipartisan Budget Act of 2015 (“BBA 2015”). BBA 2015 raises the limit on the U.S. government’s debt until March 2017 and raises the sequester caps imposed by the BCA by $80 billion, split equally between defense and non-defense spending over the next two years ($50 billion in the U.S. government’s 2016 fiscal year and $30 billion in the U.S. government’s 2017 fiscal year). On December 18, 2015, the President signed into law the Consolidated Appropriations Act of 2016, funding the government through September 30, 2016 and on February 9, 2016, the President submitted a budget proposal for the U.S. government’s 2017 fiscal year, consistent with BBA 2015 funding levels. BBA 2015 includes discretionary funding for Department of Defense of approximately $580 billion in the U.S. government’s 2016 fiscal year and $583 billion in the U.S. government’s 2017 fiscal year. This funding includes a base budget for the Department of Defense of approximately $521 billion in the U.S. government’s 2016 fiscal year and $524 billion in the U.S. government’s 2017 fiscal year. BBA 2015 also provides approximately $59 billion for Department of Defense Overseas Contingency Operations (OCO) spending in each of the U.S. government’s 2016 and 2017 fiscal years.

The Bipartisan Budget Act of 2013 (“BBA 2013”) passed by Congress in December 2013 alleviated some budget cuts that would have otherwise been instituted through sequestration in the U.S. government’s 2014 and 2015 fiscal years. While BBA 2013 and BBA 2015 (collectively, the “Bipartisan Budget Acts”), taken together, increased discretionary spending limits through the U.S. government’s 2017 fiscal year, the Bipartisan Budget Acts retained sequestration cuts for the U.S. government’s 2018 through 2021 fiscal years, including the across-the-board spending reduction methodology provided for in the BCA. As a result, there remains uncertainty regarding how, or if, sequestration cuts will be applied in the U.S. government’s 2018 fiscal year and beyond. Department of Defense and other agencies may have significantly less flexibility in how to apply budget cuts in future years. While the defense budget sustained the largest single reductions under the BCA, other civil agencies and programs have also been impacted by significant spending reductions. In light of the BCA and deficit reduction pressures, and the upcoming change in administrations, it is likely that discretionary spending by the U.S. government will remain constrained for a number of years. Additionally, if an annual appropriations bill is not enacted for the U.S. government’s 2017 fiscal year or beyond, the U.S. government may operate under a continuing resolution, abating RFP processes, restricting new contract or program starts and government slowdowns, or even shutdowns, could arise. KeyStone anticipates there will continue to be significant debate within the U.S. government over defense spending throughout the budget appropriations process for the U.S. government’s 2017 fiscal year and beyond. The outcome of these debates could have long-term consequences for KeyStone’s industry and for KeyStone.

Since KeyStone generates most of its revenues from clients that bid on contracts with U.S. government agencies, KeyStone’s operating results could be adversely affected by spending caps or changes in the budgetary priorities of the U.S. government, as well as by delays in RFP processes, program starts or the award of contracts or task orders under contracts.

Consolidation of KeyStone’s client base could lead to less demand for KeyStone’s services.

Last year witnessed a variety of transactions impacting KeyStone’s client base: CACI acquired L-3’s National Security Solutions business unit for $550 million; Harris Corporation acquired Exelis, Inc. for $4.7 billion; Science Applications International Corporation (“SAIC”) acquired Scitor Corporation from Leonard Green Partners for $790 million; The Carlyle Group acquired Novetta Solutions from Arlington Capital; and Computer Sciences Corporation (“CSC”) split its public sector business from its commercial and international business (the public sector business then merged with SRA International to form CSRA, Inc. the largest professional services firm to the U.S. government). This consolidation of KeyStone’s client base could lead to less demand for KeyStone’s services.

Due to the competitive process to obtain contracts and an increase in bid protests, KeyStone may be unable to achieve or sustain revenue growth and profitability.

KeyStone expects that a majority of the business that it seeks in the foreseeable future will be under service agreements awarded to its clients through a competitive bidding process, including Indefinite Delivery/Indefinite Quantity (“ID/IQ”) contracts. The U.S. government has increasingly relied on contracts that are subject to a competitive bidding process, which has resulted in greater competition and increased pricing pressure. As a result, there is a tendency for it to place undue emphasis on low price over technical merit when selecting contractors. This in turn can result in the U.S. government contracts market attracting extremely low-priced competitors who see certain consulting products and services as mere “commodities” and price accordingly. Government contractors may decide that they can prepare their bid responses with internal resources and not engage outside organizations to assist this process.

The competitive bidding process involves substantial costs and a number of risks, including significant cost and managerial time to prepare bids and proposals for contracts that may not be awarded to KeyStone’s clients, and therefore puts KeyStone’s reputation at risk and may affect KeyStone’s future contracts with these clients, or that may be awarded but for which KeyStone’s customers do not receive meaningful task orders which might make them less likely to bid for additional task orders. For support contracts awarded to KeyStone, KeyStone also face the risk of inaccurately estimating the resources and costs that will be required to fulfill these engagements, which also could impact KeyStone’s reputation and the likelihood of getting additional engagements for capture and proposal support.

KeyStone’s business is directly tied to the success of its government contracting clients, which are increasingly reliant on ID/IQ contracts. ID/IQ contracts are not firm orders for services, and KeyStone may generate limited or no revenue from these contracts which could adversely affect its operating performance.

ID/IQ contracts are typically awarded to multiple contractors, and the award of an ID/IQ contract does not represent a firm order for services. Generally, under an ID/IQ contract, the government is not obligated to order a minimum of services or supplies from its contractor, irrespective of the total estimated contract value. In effect, an ID/IQ award acts as a “hunting license,” permitting a contractor to bid on task orders issued under the ID/IQ contract, but not guaranteeing the award of individual task orders. Following an award under a multi-award ID/IQ program, the customer develops requirements for task orders that are competitively bid against all of the contract awardees. However, many contracts also permit the U.S. government to direct work to a specific contractor. KeyStone’s clients may not win new task orders under these contracts for various reasons, including price, past performance and responsiveness, among others. KeyStone supports its government contractor clients both when they compete to get the umbrella ID/IQ contract and subsequently when KeyStone helps the winners of those contracts compete for individual tasks. The proposals for both of these stages can be relatively brief and require quick turn-arounds, thus potentially reducing some opportunities to be awarded significant turn-key engagements. While it is possible that the increased importance of winning the umbrella ID/IQ contract will prompt clients to hire outside firms to prepare their proposals, it is also likely that government contractors will decide to prepare ID/IQ proposals without the assistance from outside experts.

Increased reliance on task order responses as the preferred method of proposal submission may significantly and adversely affect KeyStone’s future revenues, cash flow and financial results.

The U.S. government sometimes makes use of abbreviated (miniature) submissions to a solicitation by requiring a task order response rather than a full proposal, especially for ID/IQ contracts. Task Order Responses (TORs) as a rule tend to be relatively brief and have a short response period (often 10 days). These reduced page counts and shorter response times reduce the need for KeyStone’s traditional services, and if TORs become more of a standard for the U.S. government, this could adversely impact KeyStone’s operations, cash flow and financial results.

KeyStone’s business could be negatively impacted by cyber and other security threats or disruptions.

KeyStone faces various cyber and other security threats, including attempts to gain unauthorized access to sensitive information and networks; insider threats; threats to the safety of KeyStone’s directors, officers and employees; threats to the security of KeyStone’s facilities and infrastructure; and threats from terrorist acts or other acts of aggression. KeyStone’s clients and partners (including subcontractors and joint ventures) face similar threats. Although KeyStone utilizes various procedures and controls to monitor and mitigate the risk of these threats, there can be no assurance that these procedures and controls will be sufficient. These threats could lead to losses of sensitive information or capabilities, harm to personnel, infrastructure or products, and/or damage to KeyStone’s reputation as well as its partners’ ability to perform.

Cyber threats are evolving and include, but are not limited to, malicious software, destructive malware, attempts to gain unauthorized access to data, disruption or denial of service attacks, and other electronic security breaches that could lead to disruptions in mission critical systems, unauthorized release of confidential, personal or otherwise protected information (KeyStone’s or that of its employees, customers or partners), and corruption of data, networks or systems. In addition, KeyStone could be impacted by cyber threats or other disruptions or vulnerabilities found in products it uses or in its partners’ or customers’ systems that are used in connection with KeyStone’s business. These threats, if not prevented or effectively mitigated, could damage KeyStone’s reputation, require remedial actions and lead to loss of business, regulatory actions, potential liability and financial losses.

KeyStone provides services to various customers (commercial and occasionally government) who also face cyber threats. KeyStone’s services may themselves be subject to cyber threats and/or they may not be able to detect or deter threats, or effectively to mitigate resulting losses. These losses could adversely affect KeyStone’s customers and KeyStone.

The impact of these factors is difficult to predict, but one or more of them could result in the loss of information or capabilities, harm to individuals or property, damage to KeyStone’s reputation, loss of business, regulatory actions and potential liability, any one of which could have a material adverse effect on KeyStone’s financial position, results of operations and/or cash flows.

Although KeyStone has identified general criteria and guidelines that KeyStone believes are important in evaluating prospective target businesses for merger or acquisition, KeyStone may enter into a potential business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into a potential business combination may not have attributes entirely consistent with KeyStone’s general criteria and guidelines.

Although KeyStone has identified general criteria and guidelines for evaluating prospective target businesses for merger or acquisition, it is possible that a target business with which KeyStone enters into a potential business combination will not have all of these positive attributes. If KeyStone completes a potential business combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a business that does meet all of KeyStone’s general criteria and guidelines.

Resources could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.

KeyStone anticipates that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If KeyStone decides not to complete a potential business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if KeyStone reaches an agreement relating to a specific target business, KeyStone may fail to complete a potential business combination for any number of reasons including those beyond KeyStone’s control. Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.

KeyStone may seek investment opportunities in industries outside of its management’s area of expertise.

KeyStone intends to focus on target businesses in industries that complement its management team’s backgrounds including consulting for the procurement of government contracts. However, KeyStone may also pursue acquisition opportunities in other markets. Although KeyStone’s management will endeavor to evaluate the risks inherent in any particular business combination candidate, KeyStone cannot provide assurance that it will adequately ascertain or assess all of the significant risk factors.

KeyStone’s strategy of growth through acquisitions could harm KeyStone’s business.

It is KeyStone’s intent to continue to grow through strategic acquisitions. Successful integration of newly acquired target companies may place a significant burden on KeyStone’s management and internal resources. The diversion of management’s attention and any difficulties encountered in the transition and integration processes could harm KeyStone’s business, financial condition and operating results. In addition, KeyStone may be unable to execute its acquisition strategy, resulting in under-utilized resources and a failure to achieve anticipated growth. KeyStone’s operating results and financial condition will be adversely affected if it is unable to achieve, or achieve on a timely basis, cost savings or revenue opportunities from any future acquisitions, or incur unforeseen costs and expenses or experience unexpected operating difficulties from the integration of acquired businesses.

KeyStone’s ability to successfully effect a potential business combination and to be successful thereafter will be totally dependent upon the efforts of KeyStone’s key personnel, some of whom may join KeyStone following a potential business combination. The loss of key personnel could negatively impact the operations and profitability of KeyStone’s post-combination business.

KeyStone’s ability to successfully effect business combinations is dependent upon the efforts of its key personnel. The role of its key personnel in the target business, however, cannot presently be ascertained. Although some of KeyStone’s key personnel may remain with the target business in senior management or advisory positions following business combination, it is likely that some or all of the management of the target business will remain in place. While KeyStone intends to closely scrutinize any individuals we engage after business combination, KeyStone cannot provide assurance that its assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause KeyStone to have to expend time and resources helping them become familiar with such requirements and take time away from oversight of its operations.

KeyStone may have a limited ability to assess the management of a prospective target business and, as a result, may effect a potential business combination with a target business whose management may not have the skills, qualifications or abilities to manage a growing company.

When evaluating the desirability of effecting a potential business combination with a prospective target business, KeyStone’s ability to assess the target business’s management may be limited due to a lack of time, resources or information. KeyStone’s assessment of the capabilities of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities KeyStone suspected. Should the target’s management not possess the skills, qualifications or abilities necessary to manage a growing company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly, any stockholders who choose to remain stockholders following the business combination could suffer a reduction in the value of their shares. The officers and directors of an acquisition candidate may resign upon completion of a potential business combination. The departure of a potential business combination target’s key personnel could negatively impact the operations and profitability of KeyStone’s post-combination business. The role of an acquisition candidate’s key personnel upon the completion of a potential business combination cannot be ascertained at this time.

KeyStone may issue additional notes or other debt securities, or otherwise incur substantial additional debt, to complete a business combination, which may adversely affect KeyStone’s leverage and financial condition and thus negatively impact the value of KeyStone’s stockholders’ investment in KeyStone.

The anticipated cash needs of KeyStone’s business could change significantly as KeyStone pursues and complete business acquisitions, if KeyStone’s business plans change, if economic conditions change from those currently prevailing or from those now anticipated, or if other unexpected circumstances arise that may have a material effect on the cash flow or profitability of KeyStone’s business. If KeyStone requires additional capital resources to grow its business, either internally or through acquisition, it may seek to secure debt financing. KeyStone may not be able to obtain financing arrangements in amounts or on terms acceptable to it in the future.

In connection with the acquisition of Firestorm, on January 25, 2017, KeyStone issued four five-year promissory notes, as follows: Lancer Financial Group, Inc., in the amount of $500,000.00, Suzanne Loughlin, in the amount of $166,666.67, Harry Rhulen, in the amount of $166,666.66, and James W. Satterfield, in the amount of $166,666.67. Although KeyStone has no commitments as of the date of this information statement/prospectus to issue any additional notes or other debt securities, or to otherwise incur additional outstanding debt, it may choose to incur substantial debt to complete one or more other business combinations. The incurrence of debt could have a variety of negative effects, including:

KeyStone may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder its ability to complete a business combination and give rise to increased costs and risks that could negatively impact KeyStone’s operations and profitability.

If KeyStone attempts to simultaneously acquire several businesses that are owned by different sellers, KeyStone may need for each of such sellers to agree that its purchase of its business is contingent on the simultaneous closings of the other business combinations. With multiple business combinations, KeyStone could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If KeyStone is unable to adequately address these risks, it could negatively impact KeyStone’s profitability and results of operations.

This information statement/prospectus contains forward-looking statements. All statements other than statements of historical facts contained in this information statement/prospectus, including statements regarding our future results of operations and financial position, business strategy, prospective products and services, timing and likelihood of success, plans and objectives of management for future operations, and future results of current and anticipated products and services, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this prospectus are only predictions. These forward-looking statements are based largely on current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this information statement/prospectus and are subject to a number of risks, uncertainties and assumptions described under the sections in this information statement/prospectus entitled “Risk Factors” and elsewhere in this information statement/prospectus. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for us to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

This information statement/prospectus also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk. These forward-looking statements may not be realized due to a variety of factors, including, without limitation:

The Merger Agreement provides for a business combination between Brekford and KeyStone in which, subject to the satisfaction of the conditions set forth therein, Brekford Merger Sub will be merged with and into Brekford and KeyStone will be merged with and into KeyStone Merger Sub, with Brekford and KeyStone Merger Sub continuing as the surviving corporations of the Mergers.

Upon the effectiveness of the Mergers, each outstanding share of KeyStone Common Stock will be converted into the right to receive 1.9975 shares of Novume Common Stock, each outstanding share of KeyStone Preferred Stock will be converted into the right to receive 1.9975 shares of Novume Preferred Stock and each outstanding share of Brekford Common Stock will be converted into the right to receive 1/15^th of a shares of Novume Common Stock. As a result of the Mergers, the former stockholders of Brekford will own such portion of the capital stock of Novume as is equal to approximately 20% of the issued and outstanding shares of Novume Common Stock, on a fully-diluted basis, and the stockholders of KeyStone immediately preceding the Effective Time will own such portion of Novume capital stock as is equal to approximately 80% of the issued and outstanding Novume Common Stock, on a fully-diluted basis.

Brekford and KeyStone each regularly evaluate strategic opportunities, including possible alliances, joint ventures, acquisitions and other business combinations with various industry participants. Under appropriate circumstances, representatives of Brekford or KeyStone may establish direct or indirect contact with potential candidates. Set forth below is a summary of the background of these negotiations.

When KeyStone was introduced to Brekford in the early fall of 2016, KeyStone believed Brekford was a potential candidate for KeyStone’s enterprise initiative (“Enterprise Initiative”), in which KeyStone considers direct investments in established contractors who wish to expand their existing contract base or expand into adjacent sectors within the GovCon market. KeyStone considers candidates that it considers high potential/high performing entities with an identified growth path, whereby growth is visible due to specific contracting opportunities or new technologies that have broad appeal in the applicable sector. KeyStone’s goal is to leverage its market expertise, experience, human resources and capital, to be a valuable strategic partner to entities that it partners with through the Enterprise Initiative.

KeyStone and Brekford further identified that Brekford’s vehicle services business would benefit from an operating partner to help grow this part of Brekford’s business to its full potential. Brekford and KeyStone recognized the opportunity to find an operating partner would reside within KeyStone’s client base.

Over time, through discussions among the leadership of each company, Brekford and KeyStone realized that it may be in their best interests to combine rather than for KeyStone to make a direct investment Both parties realized that KeyStone could serve as a partner for both of Brekford’s then-current business lines, the automated traffic safety enforcement and the vehicle services upfitting businesses.

Simultaneously, KeyStone was engaged in preliminary discussions regarding an acquisition of Firestorm. Both Brekford and KeyStone recognized, that should KeyStone complete its acquisition of Firestorm, Firestorm’s national footprint of principal offices could provide opportunities for business development of Brekford’s business lines.

Commencing early fall, 2016, members of KeyStone and Brekford’s board and management held a series of meetings concerning a possible combination of KeyStone and Brekford. At about the same time, KeyStone started a dialogue with a potential partner for Brekford’s vehicle safety upfitting business, which discussions included development of a strategic plan through which the upfitting business could be geographically expanded and grown to its full potential. Because of KeyStone’s relationship with the strategic partner, KeyStone was able to negotiate a sale of 80.1% of the business, with retention by Brekford of 19.9%. For discussion of the sale of the upfitting business, see page F-52.

Brekford’s management concluded that KeyStone demonstrated its value-add proposition to Brekford in identifying an operating partner for the vehicle services business, and in assisting Brekford in developing a strategic plan for the roll out of Brekford’s ATSE business. KeyStone and Brekford both found mutual benefit in these collaborations.

For these and other reasons, the boards of the respective companies determined that a business combination between KeyStone and Brekford was likely to mutually benefit both companies. The boards determined that the optimal form of business combination was to form a holding company that would be owned, on a fully-diluted basis, 80% by KeyStone stockholders and 20% by Brekford stockholders.

As a result of the foregoing, the parties negotiated a letter of intent with respect to a combination substantially on the terms in the merger agreement, which was signed on December 7, 2016. After signing the letter of intent the parties started to actively negotiate a definitive merger agreement, culminating in the execution of such agreement on February 10, 2017.

On February 10, 2017, the Brekford Board, by vote, determined that the terms of the Merger Agreement are fair to, and in the best interests of, Brekford and the holders of Brekford Common Stock.

In reaching its determination to approve the Merger Agreement and the transactions contemplated thereby, the Brekford Board consulted with Brekford management and its legal advisors and considered the proposed Merger Agreement and the related agreements. In reaching its conclusions, the Brekford Board considered the strategic advantages of the Mergers described below, as well as, among other things, the following: (i) the terms of the Merger Agreement; (ii) its knowledge of the business, operations, properties, assets, financial condition, operating results and prospects of Brekford and KeyStone; (iii) current industry, economic and market conditions; (iv) presentations by Brekford management and its financial and legal advisors regarding KeyStone; (v) the compatibility of the respective business philosophies of Brekford and KeyStone; (vi) and continuing the existing business plan of Brekford as an independent corporation.

The Brekford Board also recommended that, to the extent required by law, the stockholders of Brekford authorize, adopt and approve the Merger Agreement and the consummation of the Mergers thereunder.

Brekford has obtained stockholder approval of the Mergers and the Merger Agreement under the DGCL and its certificate of incorporation and bylaws, each as amended and as currently in effect. Brekford may first take corporate action in accordance with the stockholder approval twenty (20) business days after this information statement/prospectus is first mailed to Brekford’s stockholders. No vote or consent of any other stockholder of Brekford is necessary to approve and adopt the Merger Agreement or the consummation of the Mergers thereunder. Accordingly, Brekford is not soliciting any stockholder votes or consents by this joint information statement/prospectus. BREKFORD IS NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND BREKFORD A PROXY.

Section 251 of the DGCL permits a Delaware corporation to merge with or into another Delaware corporation if the merger is approved by the holders of a majority of the voting power of the outstanding capital stock of the corporation entitled to vote thereon. Pursuant to Brekford’s Amended and Restated Certificate of Incorporation, the holders of Brekford Common Stock are entitled to one vote per share on all matters voted upon by Brekford’s stockholders.

On [•], 2017, each of the Key Stockholders of Brekford executed and delivered to Brekford a written consent approving the adoption of the Merger Agreement and the consummation of the Mergers thereunder. As of such date, the beneficial ownership by the Key Stockholders of Brekford of the issued and outstanding Brekford Common Stock, was as follows:

Accordingly, the Key Stockholders of Brekford have agreed to consent to the Brekford Merger and the Merger Agreement in respect of at least 54.23% of the outstanding capital stock of Brekford entitled to vote thereon.

A copy of the foregoing written consents are attached as Annex C to this information statement/prospectus. As a result, in accordance with the DGCL and Brekford’s Amended and Restated Certificate of Incorporation, the adoption of the Merger Agreement and the consummation of the Mergers thereunder were approved and adopted by the holders of a majority of the voting power of the outstanding shares of Brekford Common Stock entitled to vote on this matter.

This information statement/prospectus serves as notice to Brekford’s stockholders pursuant to Section 228 of the DGCL of the approval of the adoption of the Merger Agreement by less than unanimous consent of Brekford’s stockholders.

Brekford and KeyStone’s management believe that the combination of Brekford and KeyStone presents the opportunity to realize significant value for both companies. KeyStone subsidiary AOC Key Solutions has the ability to assist Brekford in identifying new opportunities to meet the needs of government entities looking for the types of products and services that Brekford offers. KeyStone subsidiary Firestorm, through its principal offices in locations throughout the United States, can approach local municipalities to educate them about Brekford’s products and services thereby expanding the implementation of these programs, products and services. As Firestorm is a risk management and preparedness consultancy that regularly works with public and private organizations to identify vulnerabilities and threats that could harm people, brands and reputations, it has expertise in designing programs to identify threats, develop strategies and plans to mitigate those threats, and educate all stakeholders on their roles and responsibilities in responding to such threats, should they materialize. It is well known that speeding, running red lights, and distracted driving cause serious injuries and fatalaties throughout our nation. Brekford has proven solutions that change driver behavior, thereby reducing the number of traffic infractions in municipalities that have implemented these solutions. Therefore, Firestorm and Brekford expect to be able to profitably collaborate to expand the development of comprehensive life-saving programs for municipalities.

Pursuant to the terms of the Merger Agreement, it is expected that, at the Effective Time, Novume will assume the existing employment agreements of KeyStone with each of Robert Berman, Richard Nathan, Harry Rhulen, Riaz Latifullah and Suzanne Loughlin, and KeyStone’s offer letter with James McCarthy (See “Novume Executive Compensation—Employment Agreements”). Additionally, Brekford or one or more of its subsidiaries will enter into an employment agreement with Rodney Hillman and Scott Rutherford.

The employment agreement with Rodney Hillman is being negotiated but has not been into yet.

The employment agreement with Scott Rutherford is being negotiated but has not been into yet.

C.B. Brechin, Scott Rutherford, and Robert West have each entered into an agreement with Brekford, and Robert A. Berman, James McCarthy and Dr. Richard Nathan have each entered into an agreement with KeyStone in connection with the signing of Merger Agreement, pursuant to which they have agreed to vote all of their voting securities in the Brekford or KeyStone, as applicable, (a) in favor of the Merger Agreement and the Mergers and (b) against any action that is intended to, or that could reasonably be expected to, impede, delay or materially adversely affect the transactions contemplated by the Merger Agreement. The forgoing agreements are subject to the condition that the Key Stockholder Agreements will terminate upon the earlier of the Effective Time and the termination of the Merger Agreement.

As a result of these provisions of the Key Stockholders Agreements (but subject to the condition described above), the requisite approvals of the Merger Agreement by the holders of Brekford Common Stock and KeyStone Common Stock are assured.

Each of the Key Shareholders has further agreed that, until the earlier of the termination of the Merger Agreement and the Effective Time, such Key Stockholders will not, directly or indirectly, sell or otherwise transfer any of its shares of Brekford Common Stock or KeyStone Common Stock, as applicable.

However, the Key Stockholder Agreements will not prevent such persons from exercising any duties and obligations that they may have as a member of the Brekford Board, the KeyStone Board or in their capacities as executive officers of either of Brekford or KeyStone.

On March 16, 2016, James McCarthy, Richard Nathan and Avon Road Partners, L.P., an affiliate of Robert Berman (“Avon Road”), entered into an option agreement (the “Avon Road Option Agreement”). Pursuant to the Avon Road Option Agreement, Messrs. McCarthy and Nathan (each a “Grantor) granted Avon Road the right to purchase up to 50% of the shares of KeyStone Common Stock held by such Grantor as of the date of the Avon Road Option Agreement. The parties to the Avon Road Option Agreement have entered into an agreement such that, at the Effective Time, Avon Road Option will evidence the right of Avon Road to acquire the number shares of Novume Common Stock into which the shares of KeyStone Common Stock are converted in the KeyStone Merger.

Novume will account for the merger of KeyStone as a recapitalization as the majority of the voting rights of Novume will be derived from the existing shareholders of KeyStone, therefore KeyStone will be considered the predecessor entity for accounting purposes. In determining KeyStone as the predecessor entity, the companies considered the relative voting rights in Novume, the composition of the board of directors and senior management of Novume as of the effective time of the mergers and the relative share ownership of the Novume’s common stock as of the effective time of the mergers by former KeyStone and Brekford securityholders. As a result, the historical financial statements of KeyStone will become the historical financial statements of Novume as of the effective time of the mergers. Novume will account for the merger of Brekford as a purchase of Brekford by Novume, using the acquisition method of accounting as required under United States generally accepted accounting principles, or “GAAP.” The assets, including identifiable intangible assets, and liabilities of Brekford as of the effective time of the merger will be recorded at their respective fair values and added to those of Keystone to form the consolidated financial statements of Novume. Any excess of purchase price over the net fair values of Brekford’s assets and liabilities will be recorded as goodwill. Consolidated financial statements of Novume after the effective time of the merger will reflect those fair values and will not be restated retroactively to reflect the historical financial position or results of operations of Brekford. The results of operations of Brekford will be combined with the results of operations of KeyStone and will be included in the results of operations of Novume, beginning on the effective date of the Mergers. Following the Mergers, the earnings of Novume will reflect the effect of any additional indebtedness and purchase accounting adjustments, including increased interest expense and depreciation and amortization of acquired assets.

The following discussion is a general summary of the material federal income tax consequences of the Mergers and is based on the Internal Revenue Code of 1986, as amended (the “Code”), the final, proposed and temporary treasury regulations promulgated thereunder, administrative rulings and interpretations, and judicial decisions, in each case as in effect as of the date hereof. All of the foregoing are subject to change at any time, possibly with retroactive effect. No assurance can be given that the IRS will agree with the views expressed in this summary, or that a court will not sustain any challenge by the IRS in the event of litigation.

This discussion addresses only those Brekford or KeyStone stockholders that hold their Brekford Common Stock or KeyStone Common Stock and/or KeyStone Preferred Stock, as applicable, as a capital asset (generally, property held for investment) within the meaning of Section 1221 of the Code. This discussion does not include any description of the tax laws of any state, local or non-U.S. government that may be applicable to a particular holder, does not consider any aspects of U.S. federal tax law other than income taxation and does not address all the U.S. federal income tax consequences that may be relevant to particular Brekford or KeyStone stockholders, as applicable, in light of their individual circumstances or to Brekford or KeyStone stockholders, as applicable, that are subject to special rules, such as:

Determining the actual tax consequences of the Mergers to you may be complex. Such tax consequences will depend on your specific situation and on factors that are not within Brekford’s and KeyStone’s control. Brekford and KeyStone urge you to consult your own tax advisor concerning your particular U.S. federal, state, local and non-U.S. tax consequences of the Mergers.

None of Brekford, KeyStone or Novume intends to secure a ruling from the Internal Revenue Service or obtain a formal opinion of counsel with respect to the tax consequences of the Mergers.

For purposes of this discussion, the term “U.S. Holder” is used to mean a beneficial owner of Brekford Common Stock, KeyStone Common Stock and/or KeyStone Preferred Stock that is, for U.S. federal income tax purposes:

KeyStone in the Merger Agreement and (ii) that the Mergers will be completed in accordance with the Merger Agreement, the Mergers [will] be treated for U.S. federal income tax purposes as reorganizations within the meaning of Section 368(a) of the Code. There can be no assurance that the Mergers will be completed. It is possible that the Mergers may not qualify as reorganizations, and the tax consequences of the Mergers could differ materially from those summarized below. For a further discussion, see the section entitled “Taxable Acquisition” below.

The following summary sets forth certain material U.S. federal income tax considerations for Brekford stockholders and KeyStone stockholders, and the corporate parties to the Mergers if, as planned and expected, the Mergers are completed in accordance with the Merger Agreement:

Tax Implications to holders of Brekford Common Stock. No gain or loss will be recognized for federal income tax purposes by holders of Brekford Common Stock, or warrants or options to purchase shares of Brekford Common Stock, who exchange their Brekford Common Stock for Novume Common Stock, or their warrants or options to purchase shares of Brekford Common Stock for warrants or options to purchase Novume Common Stock, pursuant to the Brekford Merger.

The aggregate tax basis of Novume Common Stock received as a result of the Brekford Merger will be the same as the stockholder’s aggregate tax basis in the Brekford Common Stock surrendered in the exchange. The holding period of the Novume Common Stock held by former holders of Brekford Common Stock as a result of the exchange will include the period during which such stockholders held the Brekford Common Stock exchanged.

A dissenting stockholder who perfects appraisal rights and receives cash will generally recognize gain or loss with respect to his or her shares of the Brekford Common Stock equal to the difference between the amount of cash received and his or her basis in such shares. Such gain or loss will generally be long-term capital gain or loss, provided the shares were held for more than one year before the disposition of the shares, or short-term capital gain or loss, if not. Interest, if any, awarded in an appraisal proceeding by a court would be included in such stockholder’s income as ordinary income.

If you are a non-corporate holder of Brekford Common Stock you may be subject to information reporting and backup withholding on any cash payments for perfecting appraisal rights. You will not be subject to backup withholding, however, if you:

Any amounts withheld under the backup withholding rules are a credit against your U.S. federal income tax liability, provided you furnish timely the required information to the IRS.

Tax Implications to holders of KeyStone Common Stock and/or KeyStone Preferred Stock. No gain or loss will be recognized for federal income tax purposes by holders of KeyStone Common Stock and/or Keystone Preferred Stock as a result of the KeyStone Merger.

The aggregate tax basis of Novume Common Stock received as a result of the KeyStone Merger will be the same as the shareholder’s aggregate tax basis in the KeyStone Common Stock and/or KeyStone Preferred Stock surrendered in the exchange. The holding period of the Novume Common Stock and/or Novume Preferred Stock held by former holders of KeyStone Common Stock and/or Keystone Preferred Stock as a result of the exchange will include the period during which such shareholder held the KeyStone Common Stock or KeyStone Preferred Stock, as applicable, exchanged.

A dissenting stockholder who perfects appraisal rights will generally recognize gain or loss with respect to his or her shares of the KeyStone Common Stock and/or KeyStone Preferred Stock equal to the difference between the amount of cash received and his or her basis in such shares. Such gain or loss will generally be long-term capital gain or loss, provided the shares were held for more than one year before the disposition of the shares, and short-term capital gain or loss, if not.

If you are a non-corporate holder of KeyStone Common Stock and/or KeyStone Preferred Stock you may be subject to information reporting and backup withholding on any cash payments for perfecting appraisal rights. You will not be subject to backup withholding, however, if you:

Tax Implications to Novume, Brekford, KeyStone, Brekford Merger Sub and KeyStone Sub. No gain or loss will be recognized for federal income tax purposes by Novume, Brekford, KeyStone, Brekford Merger Sub or KeyStone Merger Sub as a result of the formation of Novume, Brekford Merger Sub, or KeyStone Merger Sub or the Mergers.

If you receive Novume Common Stock or Novume Preferred Stock as a result of the Brekford Merger or the KeyStone Merger, as applicable, you will be required to retain records pertaining to the Brekford Merger or the KeyStone Merger, as applicable, and you may be required to file with your U.S. federal income tax return for the year in which the merger takes place a statement setting forth certain facts relating to such merger as provided in Treasury Regulations Section 1.368-3(b).

The failure of either or both of the Mergers to qualify as a reorganization within the meaning of Section 368(a) of the Code would result in a Brekford or KeyStone stockholder, as applicable, recognizing gain or loss with respect to the shares of Brekford Common Stock, KeyStone Common Stock or KeyStone Preferred Stock, as applicable, surrendered by such stockholder equal to the difference between the stockholder’s basis in the shares and the fair market value, as of the effective time of the applicable Merger, of the Novume stock received in exchange for the Brekford Common Stock, the KeyStone Common Stock or the KeyStone Preferred Stock, as applicable. In such event, a stockholder’s aggregate basis in the Novume Common Stock or Novume Preferred Stock so received would equal its fair market value, and such stockholder’s holding period would begin the day after the Effective Time. The gain or loss would generally be long-term capital gain or loss, if, as of the Effective Time, the applicable stockholder held the Brekford Common Stock, KeyStone Common Stock or KeyStone Preferred Stock, as applicable, for more than one year, and short-term capital gain or loss, if not. A dissenting stockholder who receives cash will be required to recognize gain or loss in the same manner as described above. The failure of the KeyStone Merger to qualify as a reorganization within the meaning of Section 368(a) would also cause KeyStone to recognize gain or loss as if it had sold all of its assets in a taxable transaction for the fair market value of the assets.

The foregoing discussion is not intended to be a complete analysis or description of all potential U.S. federal income tax consequences of the Brekford Merger or the KeyStone Merger, or the Mergers, together. In addition, the discussion does not address tax consequences which may vary with, or are contingent on, your individual circumstances. Moreover, the discussion does not address any non-income tax or any non-U.S., state or local tax consequences of the Brekford Merger or the KeyStone Merger, or the Mergers, together. Accordingly, Brekford and KeyStone stockholders are urged to consult with their own tax advisors to determine the particular U.S. federal, state, local or foreign income or other tax consequences to them of the Mergers.

As of December 31, 2015, Brekford has approximately $6.64 million of federal and state net operating loss carryforwards available to offset future taxable income, if any, through 2033. These net operating losses begin to expire in 2028.

Upon the consummation of the Brekford Merger, Brekford’s realizable net operating loss carryforward would be significantly limited.

Novume intends to apply for the listing of Novume Common Stock on the [•] and anticipates that its shares will trade on the [•], upon official notice of issuance, under the symbol “[•]”. Novume intends to apply for a listing of Novume Preferred Stock on the [•] and anticipates that its shares of Novume Preferred Stock will trade on the [•], upon official notice of issuance, under the symbol “[•].” Novume intends to apply for a listing on the [•] of the Novume Unit Warrants and anticipates that such Novume Unit Warrants will trade on the [•], upon official notice of issuance, under the symbol “[•].”

All shares of Novume Common Stock received by holders of Brekford Common Stock and holders of KeyStone Common Stock in the Mergers will be freely transferable, except that shares of Novume Common Stock received by persons who are deemed to be “affiliates” (as such term is defined under the Securities Act) of Brekford or KeyStone prior to the Effective Time may be resold by them only in transactions permitted by the resale provisions of Rule 145 promulgated under the Securities Act (or Rule 144 in the case of such persons who become affiliates of Novume) or as otherwise permitted under the Securities Act. Persons who may be deemed to be affiliates of Brekford, KeyStone or Novume generally include individuals or entities that control, are controlled by, or are under common control with, such party and may include certain officers and directors of such party as well as principal stockholders of such party. Each affiliate of Brekford and KeyStone has delivered a letter agreement (an “Affiliate Letter”) to the effect that such person will not offer or sell or otherwise dispose of any of the shares of Novume Common Stock issued to such person in the Mergers in violation of the Securities Act or the rules and regulations promulgated thereunder. In addition, the Merger Agreement requires Brekford and KeyStone to use their best efforts to cause any additional persons who are identified as affiliates to execute an Affiliate Letter on or prior to the date of the closing under the Merger Agreement.

Novume is a Delaware corporation formed on February 6, 2017 to become a holding company for Brekford and KeyStone and their respective subsidiaries following the consummation of the Mergers. Prior to the consummation of the Mergers, Novume has had and will have no operations other than those that are incidental to its formation, its execution of the Merger Agreement, and the preparation of this information statement/prospectus. Novume currently has no operations and no or nominal assets and liabilities.

In accomplishing the Merger through a holding company, Keystone and Brekford intend to pursue their existing lines of business separately while achieving certain economies and benefits from pooled management, shared regulatory compliance costs and other complementary resources that can assist in supporting Novume’s growth. Through internal growth and strategic acquisitions, where appropriate and available, Novume seeks to develop its core business as a service provider to government contractors both in the United States and abroad. In selective situations, Novume will also seek to serve as a partner or incubator for emerging businesses, like Brekford’s automated traffic safety enforcement business, where an understanding of government contracting procedures and contacts with other seasoned providers of government services or products can be critical to success.

The mailing address of Novume’s principal executive offices is 14420 Albemarle Point Place, Suite 200, Chantilly, VA 20151, and is telephone number is (703) 953-3838.

Robert Berman is the Chief Executive Officer of Novume. He also currently serves as the Chief Executive Officer of KeyStone also as the General Partner of Avon Road Partners, L.P., a limited partnership investing in real estate and the broadcast media industry. Mr. Berman was previously the Chief Executive Officer of KeyStone. From 2006 through March 2015 Mr. Berman held the office of Chairman and Chief Executive Officer at Cinium Financial Services Corporation, a privately held specialty finance company, which included as one of its subsidiaries a New York State domiciled property and causality carrier licensed and admitted in 19 states.

While Mr. Berman led Cinium, it made the ranking of the Inc. 500 for both 2012 and 2013. Prior to Cinium Mr. Berman was Chairman and Chief Executive Officer of Empire Resorts, Inc., a NASDAQ-listed gaming company, from 2001-2005.

From 1995 until 2000, Mr. Berman was Chairman and Chief Executive Officer of Hospitality Worldwide Services (“HWS”), a publicly traded company that became the premiere service provider to the hospitality industry. Under Mr. Berman’s leadership HWS grew profitably from a small company with 50 employees and $6 million in revenues to excess of $280 million in revenues with offices on several continents and 3,000 employees. While at HWS Mr. Berman executed a successful acquisition strategy that resulted in multiple strategic operating divisions that created a one-stop shop for the hotel industry.

Mr. Berman was also instrumental in forging partnerships with institutional investors including ING and Apollo RE leading to the acquisition, re-positioning, and sale of more than $100 million of hotel properties such as the Historic Inn in Richmond, VA, the Warwick Hotel in Philadelphia, and the Radisson Hotel at Chicago O’Hare airport among others.

Mr. Berman was director at Executone Information Systems, Inc. a publicly traded telecom company. In 1996 Executone’s board chose Mr. Berman to chair a special committee whose task it was to identify a new strategic direction for the company. The result of the special committees work was the transformation of the company increasing the company’s market capitalization by more than $500 million.

Mr.Berman is an appropriate selection for this position as he is a proven leader with public company and public markets experience. He successfully executed a business strategy in another market that generated significant returns for his shareholders. Novume is now implementing a similar strategy.

James K. McCarthy serves as the Chief Strategy Officer and Chairman of the Board of Directors of Novume, and, until the Effective Time, continues to serve in the same capacity at KeyStone. Mr. McCarthy’s career spans over 30 years of marketing strategy creation, proposal development, and oral presentation coaching to contractors seeking to expand their market shares or to enter the government contracts market sector. As a founder and the Technical Director of AOC Key Solutions, he built an organization that, over the last five years, has played a part in winning an average of $9 billion per year in federal contract awards for its clients. Mr. McCarthy has worked at AOC Key Solutions for over 33 years.

An innovative builder of tools and processes aimed at continuous improvement, Mr. McCarthy created AOC Key Solutions’ approach known as Principle Centered Winning – a collection of proven best practices for market assessment, capture support, and proposal services that help win government contracts.

Mr. McCarthy often serves as a strategic advisor and “capture coach” to senior executives and rising corporate superstars. In these capacities, Mr. McCarthy mentors and guides both large and small business clients on market leadership, capture management, and strategy development to pursue and win government contracts. Mr. McCarthy frequently crafts powerful executive summaries, presentations, or other key documents in pursuit of government contracts. These contracts are valued from tens of millions of dollars to a billion dollars or more. He also frequently serves as a guest speaker on topics ranging from leadership to winning government contracts through every legitimate means available and is an advisor to the Arbinger Institute. Mr. McCarthy has served in an advisory role with the George Washington University, Virginia Science and Technology Campus, Technology Accelerator and has been a frequent speaker with the George Mason University Procurement and Technical Assistance Center. Mr. McCarthy has also served on the board of Coalition for Government Procurement and on the Veterans Institute for Procurement GovCon Council. In February 2016, Mr. McCarthy was named to Executive Mosaic’s Washington 100 as one of the top–100 most influential leaders in the government contracting arena.

Mr.McCarthy is an appropriate selection for this position as he has been a leader in the government contracting market since 1983. He was a founding member of AOC Key Solutions and its predecessor company, and is well known in the government contracting industry for his leadership and innovation. He was the founder and host of Government Contracting Weekly, the only television show dedicated to supporting contractors in their quest for government business.

Mr. Rhulen is a founder and served as CEO of Firestorm, since its inception in 2005, until the KeyStone acquisition of Firestorm in January of 2017. Firestorm Solutions, LLC is a national leader in preparedness and crisis management. Mr. Rhulen previously served as an executive and CEO of a public company with U.S. and European operations, commencing 1989 through 2005. Mr. Rhulen has extensive due diligence experience having participated in over thirty M&A transactions. He has lead several public offerings raising in excess of $350 million.

Mr. Rhulen, while serving on the board of the American Insurance Association, testified before Congress to expand the opportunities for financial service companies. Mr. Rhulen worked as a consultant in many industries, using his risk management, crisis management, and business management skills, as well as his public company, legal, bankruptcy, and due diligence experience to help his clients.

He has served on the boards of several profit and not-for-profit entities. He has received humanitarian awards for many of his efforts, including the “Quality of Human Life” Award from the American Red Cross.Mr. Rhulengraduated Cum Laude from the College of Insurance and has both a Juris Doctor and Masters of Business Degree from Syracuse University.

Mr. Rhulen is an appropriate selection for this position as he has extensive executive leadership and board member public company and mergers and acquisition experience.

Dr. Nathan brings over 45 years of corporate management, program management and business and proposal development experience. He has led large management and operation contracts valued at more than a billion dollars and managed service and technical contracts for DOE, DoD, DHS, NASA, EPA, and state governments. Dr. Nathan has directed and grown the environmental and energy business for a large corporation, and served as a corporate officer and held management and technical positions at Battelle Memorial Institute and Mason & Hanger. Dr. Nathan had worked at AOC Key Solutions, and its predecessor company American Operations Corporation,, for over 17 years, most recently as AOC Key Solutions Chief Executive Officer, before joining KeyStone Solutions as its President and COO.

Dr. Nathan excels in assisting companies to increase their market share through effective growth management, strategic planning, competitive analysis, and other approaches through all phases of the business development process. This includes building upon initial strategic decisions to develop tactical implementation plans for business sector growth.

Dr. Nathan’s management and business development skills span the full range of activities. He has served as capture manager, proposal manager, orals coach, and review team lead. His ability to develop and integrate effective win themes and discriminators unique to a given contract opportunity has resulted in multiple large contract wins for the KeyStone’s customers to include contracts with DOE, NASA, DHS, and DoD as well as state and local governments.

Dr. Nathan is an appropriate selection for this position as he has been a leader in the government contracting market since 1970. During this time he has managed business units up to $500M annual revenue and been on the Board of 5 companies and 1 non-profit.

Ms. Loughlin is the Chief Administrative Officer (CAO) and General Counsel of KeyStone Solutions, Inc. She is also a founder and Chief Risk Officer of Firestorm Solutions, LLC.

Ms. Loughlin has extensive consultative experience in the development of crisis management & communications, workplace violence, emergency response, and business continuity plans for a clients ranging from some of the world’s largest global companies to educational institutions (P-12 and higher education, public and private) and summer camps, as well as governmental entities.

Ms. Loughlin’s previous career experience includes serving as a Director and CAO of a public insurance holding company, between 1998 and 2005, where she was responsible for HR, IT, Corporate Communications, Facilities, Government Relations and Internal Audit. Suzanne was also a litigator with a major New York City law firm and Managing Attorney of a law firm with multiple offices throughout the country between 1986 and 1998. Since 2005, Ms. Loughlin has focused on building Firestorm Solutions, LLC as one of its founders.

Ms. Loughlin is a licensed attorney in New York and serves as a member of the New York State Bar Association and the Sullivan County Bar Association. Ms. Loughlin also holds an Emergency Management Professional Development Series Certification from FEMA, and is a member of the Association of Threat Assessment Professionals.

Very active in her community, Ms. Loughlinserves as a board member of Rhinebeck Bank as well as Hudson Valley Pattern for Progress, Sullivan County Industrial Development Agency, and Sullivan County Partnership for Economic Development. She also serves as President of the Trevor Loughlin Foundation, Inc. which raises funds and issues grants to individuals battling blood cancer and other acute catastrophic illnesses. Ms. Loughlin has received numerous awards for her service, including the Anti Defamation League’s Americanism Award.

Ms. Louglhin is an appropriate selection for this position as she has served as Chief Administrative Officer role in a previous public company, as well as as Managing Attorney of a law firm.

Riaz Latifullah serves as Chief Financial Officer of Novume, and, until the Effective Time, serves in the same capacity at KeyStone. Prior to joining KeyStone, Riaz Latifullah served as the Chief Financial Officer of the American Grandparents Association / Grandparents.com. In this position he was responsible for directing and overseeing all of the company’s financial and accounting activities. He provided strategic advice to executive management on the financial implications of business activities and interacted with the board of directors.

Mr. Latifullah spent 13 years with AARP, a non-profit organization that advocates on behalf of people over age 50. With AARP he served as Vice President, Financial Management, Senior Director Strategic Markets and Director Brand Operations. As an in-house entrepreneur with AARP he created and launched five start-up operations bringing significant changes to the organization.

In other positions before AARP Mr. Latifullah served as General Manager for TV on the WEB, an internet video production company, a Government Relations Representative for the US Merchant Marine Academy Alumni Foundation and an Investment Banking Associate for Ryan, Lee and Company.

Mr. Goord is a 32-year veteran of the New York State Department of Correctional Services and served as Commissioner from 1996 until 2006. As Commissioner, he oversaw the nation’s fourth largest state prison system, administering an operating budget of $2.3 billion in state and federal funds, plus $245 million in capital expenditures.

Mr. Goord’s outstanding contributions to furthering excellence in corrections earned him the Carl Robison Award, the highest honor bestowed by the Middle Atlantic States Correctional Association. In 1998 he earned the Charles Evans Hughes Award for public service from the Albany based Capital Area Chapter for the American Society for Public Administration (ASPA). In 2002, the ASPA awarded Mr. Goord its highest honor, the Governor Alfred E. Smith Award, for his direction of the Department’s immediate and expansive efforts to aid New York City following the September 11, 2001 terrorist attack. He also currently serves on the American Correctional Association Board of Governors.

Paul A. de Bary, 70, has been a member of the board of managers of TDI, LLC, an agent for a manufacturer of digital X-ray systems for medical, veterinary and industrial applications from 2001 through the present. He has also served as chairman of the board of ethics of the Town of Greenwich, Connecticut since 2008. He was a managing director at Marquette de Bary Co., Inc., a New York based broker-dealer, from 1996 to 2015, where he served as a financial advisor for state and local government agencies, public and private corporations and non-profit organizations, as well as general counsel. He previously served as a director of Empire Resorts, Inc. (Nasdaq: NYNY) from 1996 to 2010, where he served as chairman of its audit committee as well as, at various times throughout his tenure as a director, a member of the governance and compensation committees and various special committees. Prior to that, Mr. de Bary was a managing director in the Public Finance Department of Prudential Securities from 1994 to 1997 and a partner in the law firm of Hawkins, Delafield & Wood in New York from 1975 to 1994. Mr. de Bary received an AB in 1968, and an M.B.A. and J.D. in 1971 from Columbia University. Mr. de Bary is a member of the American Bar Association, the New York State Bar Association and the Association of the Bar of the City of New York. Mr. de Bary also serves as a director of several non-profit organizations, including the Columbia Club Foundation, the Society of Columbia Graduates and the AA Alumni Foundation.

James Satterfield, Chief Executive Officer and President of Firestorm Solutions, LLC and Firestorm Franchising, LLC

Jim W. Satterfield is the President/CEO and co-founder of Firestorm^®. Jim is a nationally recognized expert, keynote speaker and author on crisis management, threat assessment, disaster preparedness and business continuity planning. Prior to founding Firestorm in 2005, he served as President, CEO and COO of various public and private companies in business continuity, communications, crisis management, environmental, insurance, reinsurance, risk management and technology. Jim has extensive expertise in the identification and quantification of riskJim has led in the development of national standards for risk management, environmental risk and environmental due diligence. He has spoken to hundreds of groups on risk management, crisis management, governance, disaster planning and preparedness.

Jim’s analysis and experience in working with thousands of businesses has led to the creation of the Firestorm PREDICT.PLAN.PERFORM.^® methodology, the foundation of all Firestorm programs, services and initiatives. Jim emphasizes promoting and enforcing a culture of preparedness to protect an organization’s assets, brand/reputation, revenues and enterprise value.

Jim led the Firestorm team that provided the crisis and media management support at Virginia Tech in response to the shootings, as well as hundreds of other client crisis engagements.

Jim’s philosophy is that “Every crisis is a human crisis.” He co-authored Disaster Ready People For A Disaster Ready America. The book guides individuals in developing their own preparedness plans at home. This benefits corporations as the key to having employees perform at work is for them to know their families are safe – a fundamental building block for all business continuity plans – at work.

Mr. Satterfield is an appropriate selection for this position as he has extensive senior leadership and management expertise, and excels in business development, content marketing and the fostering of strategic relationships.

Greg McCarthy, Chief Executive Officer of AOC Key Solutions and Member of the Board

Greg McCarthy has over 25 years of sales management, marketing, capture and proposal experience. As President, Mr. McCarthy is responsible for overseeing the high degree of customer satisfaction that our clients expect. Mr. McCarthy has worked in virtually every role of the bid and proposal process, including proposal management, proposal writing, orals coach, and compliance manager.

Mr. McCarthy also leads the Key Solutions group specializing in Third Party Performance Assessments. In that capacity, he has interviewed more than 1,000 government personnel regarding contractor performance across dozens of government agencies, giving him “front line” experience in understanding Government needs and translating that understanding into winning proposals. As former COO of AOC Key Solutions, Mr. McCarthy was honored with Smart CEO Magazine’s Executive Management Award.

The Novume Board shall establish an Audit Committee consisting of Paul de Bary, Chair, [•] and [•]. The Audit Committee will assist the Novume Board in maintaining the integrity of its financial statements, and of its financial reporting processes and systems of internal audit controls, and our compliance with legal and regulatory requirements. The Audit Committee will be responsible for reviewing Novume’s annual audit and meeting with Novume’s independent accountants to review Novume’s internal controls and financial management practices. The Novume Board has determined that [•] is an “audit committee financial expert,” as defined by the SEC in Item 407 of Regulation S-K.

The Novume Board shall establish a Compensation Committee consisting of [•], [•] and [•]. All members of the Compensation Committee will be “Non-Employee Directors” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and, unless otherwise determined by the Novume Board, “outside directors” within the meaning of Section 162(m) of the Code. The Compensation Committee will be responsible for establishing salaries, bonuses, and other compensation for Novume’s executive officers and for administering and Novume’s executive compensation plans and programs. The Compensation Committee will advise and make recommendations to the Board of Directors on all matters concerning director compensation.

None of the members of the Compensation Committee shall have been, during 2016, an officer or employee of Novume, KeyStone or Brekford was formerly an officer of Novume, KeyStone or Brekford or had any relationship requiring disclosure by Novume under Item 404 of Regulation S-K. No interlocking relationship as described in Item 407(e)(4) of Regulation S-K shall between any of Novume’s executive officers or Compensation Committee members, on the one hand, and the executive officers or compensation committee members of any other entity, on the other hand, nor has any such interlocking relationship existed in the past.

The Corporate Governance Committee will evaluate and recommends candidates for election to the Board of Directors, review the performance and contribution of directors, recommends membership for standing committees, reviews director independence, and adopts and reviews Novume corporate governance guidelines and codes of conduct. The Corporate Governance Committee will consist of [•] and [•].

Directors who are officers or employees of Novume or its subsidiaries will not receive any compensation for service on the Novume Board, but employee directors will be reimbursed by Novume for expenses incurred in attending meetings of the Novume Board or any committees thereof.

Bonuses for the executive officers may be conditioned on the achievement of objective goals, which may not be waived after being set, based on one or more of the following performance measures: earnings; operating profits (including measures of earnings before interest, taxes, depreciation and amortization; free cash flow or adjusted free cash flow; cash from operating activities; revenues; net income (before or after tax); financial return ratios; market performance; stockholder return and/or value; net profits; earnings per share; profit returns and margins; stock price; working capital; capital investments; returns on assets; returns on equity; returns on capital investments; selling, general and administrative expenses; discounted cash flows; productivity; expense targets; market share; cost control measures; strategic initiatives; changes between years or periods that are determined with respect to any of the above-listed performance criteria; net present value; sales volume; cash conversion costs; leverage ratios; maintenance of liquidity; integration of acquired businesses; operational efficiencies, including Lean Six Sigma initiatives; regulatory compliance, including the Sarbanes-Oxley Act of 2002; and economic profit.

The following executives are currently employed by KeyStone, but, as of the Effective Time their employment agreements shall be assumed by Novume. Accordingly, in the summaries below, references to KeyStone have been replaced with references to Novume to reflect the change in employer.

The Employment Agreement with Robert Berman (the “Berman Employment Agreement”) provides that Mr. Berman is Chief Executive Officer. The agreement has an initial term, which was effective as of January 1, 2017, of five years with automatically renewing one-year terms thereafter. Mr. Berman’s base salary is $395,000 per annum, and he is eligible for a bonus as determined by Novume’s to be established compensation committee. Mr. Berman is also eligible to receive all such other benefits as are provided by Novume to other management employees that are consistent with Novume’s fringe benefits available to any other officer or executive of Novume.

In the event of a Change of Control, as defined in the Berman Employment Agreement, whether during the initial term or thereafter, Novume shall have the right to terminate the Berman Employment Agreement. In the event Novume exercises the option to terminate Mr. Berman, Novume will be required to pay Mr. Berman an amount equal to Mr. Berman’s base salary per annum multiplied by the number of years and portions thereof remaining under the Berman Employment Agreement. Mr. Berman may be terminated by the Company for “Cause”, as defined in the Berman Employment Agreement.

Mr. Berman also agreed as consideration for entering into the Berman Employment Agreement, that for the period during his employment and for twelve months thereafter, he will not (i) compete with Novume in the “Geographic Area”, as defined in the Berman Employment Agreement, or (ii) solicit any of Novume’s existing employees, suppliers or customers.

The employment agreement with Harry Rhulen (the “Rhulen Employment Agreement”) provides Mr. Rhulen is President for an initial five-year term that began on January 25, 2017. His base salary is $275,000 per annum, and he will be eligible for a bonus as determined by Novume’s to be established compensation committee. Mr. Rhulen is also eligible to receive all such other benefits as are provided by Novume to other management employees that are consistent with Novume’s fringe benefits available to any other officer or executive of Novume. Prior to the assumption of the Rhulen Employment Agreement by Novume, Mr. Rhulen was granted options to purchase 80,000 shares of KeyStone Common Stock, which were to begin vesting on the first anniversary of his initial employment as President of KeyStone and continue vesting monthly over the following two years, at a strike price of $3.00 per share. At the Effective Time, these options will be converted into the right to receive Novume Options and will continue to vest in accordance with the forgoing schedule.

Novume may terminate Mr. Rhulen’s employment agreement for “Cause,” as defined in the Rhulen Employment Agreement. In the event that Novume terminates Mr. Rhulen’s employment other than for “Cause,” or Mr. Rhulen terminates his employment for “Good Reason”, as defined in the Rhulen Employment Agreement, Novume will be required to pay Mr. Rhulen an amount equal to the remaining amount of base salary payable under the Rhulen Employment Agreement until the end of the initial five-year term and Novume’s contribution to Mr. Rhulen’s health insurance premiums.

Mr. Rhulen also agreed that, for the period during his employment and for one year thereafter, he will not (i) compete with Novume in the “Restricted Territory”, as defined in Exhibit A to the Rhulen Employment Agreement, or (ii) solicit any of Novume’s existing employees, suppliers or customers.

The James K. McCarthy Offer Letter (the “McCarthy Offer Letter”) provides that Mr. McCarthy is Chief Strategy Officer. His employment is at will, subject to providing 120-days’ notice of resignation or termination. Novume may pay Mr. McCarthy’s salary in lieu of notice for some or all of the 120-day notice period. His base salary is $279,789 per annum, and he is eligible for a bonus as determined by Novume’s to be established compensation committee. Mr. McCarthy will also be eligible to receive all such other benefits as are provided by Novume to other management employees that are consistent with Novume’s fringe benefits available to any other officer or executive of the Company.

Mr. McCarthy also agreed that, for the period during his employment and for two years thereafter, he will not (i) compete with Novume in the “Restricted Territory”, as defined in Exhibit A to the McCarthy Offer Letter, or (ii) solicit any of Novume’s existing employees, suppliers or customers.

The employment agreement with Richard Nathan (the “Nathan Employment Agreement”) provides Mr. Nathan is Chief Operating Officer for an initial term extending until April 15, 2017, with the option to extend the term in writing. His base salary is $225,200 per annum, and he is eligible for a bonus as determined by Novume’s to be established compensation committee. Mr. Nathan is also eligible to receive all such other benefits as are provided by Novume to other management employees that are consistent with Novume’s fringe benefits available to any other officer or executive of Novume.

Novume may terminate Mr. Nathan’s employment agreement for “Cause,” as defined in the Nathan Employment Agreement. In the event that Novume terminates Mr. Nathan’s employment other than for “Cause,” or Mr. Nathan terminates his employment for “Good Reason”, as defined in the Nathan Employment Agreement, Novume will be required to pay Mr. Nathan an amount equal to six months of Mr. Nathan’s base salary and Novume’s contribution to Mr. Nathan’s health insurance premiums.

Mr. Nathan also agreed that, for the period during his employment and for two years thereafter, he will not (i) compete with Novume in the “Restricted Territory”, as defined in Exhibit A to the Nathan Employment Agreement, or (ii) solicit any of Novume’s existing employees, suppliers or customers.

The employment agreement with Riaz Latifullah (the “Latifullah Employment Agreement”) provides that he is Chief Financial Officer for an initial three year term that began on December 23, 2016. His base salary is $285,000 per annum, and he will be eligible for a bonus as determined by Novume’s to be established compensation committee. Mr. Latifullah is also eligible to receive all such other benefits as are provided by Novume to other management employees that are consistent with Novume’s fringe benefits available to any other officer or executive of Novume. Prior to the assumption of the Latifullah Employment Agreement by Novume, Mr. Latifullah was granted options to purchase 90,000 shares of KeyStone Common Stock, which will begin vesting on March 1, 2017 and continue vesting monthly over the following two years, at a strike price of $2.75. At the Effective Time, these options will be converted into the right to receive Novume Options and will continue to vest in accordance with the forgoing schedule.

The employment agreement with Suzanne Loughlin (the “Loughlin Employment Agreement”) provides Ms. Loughlin is General Counsel and Chief Administrative Officer for an initial five-year term that began on January 25, 2017. Her base salary is $225,000 per annum, and she is eligible for a bonus as determined by Novume’s to be established compensation committee. Ms. Loughlin is also eligible to receive all such other benefits as are provided by Novume to other management employees that are consistent with Novume’s fringe benefits available to any other officer or executive of Novume. Prior to the assumption of the Loughlin Employment Agreement by Novume, Ms. Loughlin was granted options to purchase 80,000 shares of KeyStone Common Stock, which were to begin vesting on the first anniversary of her initial employment as General Counsel and Chief Administrative Officer of KeyStone and continue vesting monthly over the following two years, at a strike price of $3.00 per share. At the Effective Time, these options will be converted into the right to receive Novume Options and will continue to vest in accordance with the forgoing schedule.

Novume may terminate Mr. Loughlin’s employment agreement for “Cause,” as defined in the Loughlin Employment Agreement. In the event that Novume terminates Ms. Loughlin’s employment other than for “Cause,” or Ms. Loughlin terminates her employment for “Good Reason”, as defined in the Loughlin Employment Agreement, Novume will be required to pay Ms. Loughlin an amount equal to the remaining amount of base salary payable under the Loughlin Employment Agreement until the end of the initial five-year term and Novume’s contribution to Ms. Loughlin’s health insurance premiums.

Ms. Loughlin also agreed that, for the period during his employment and for one year thereafter, she will not (i) compete with Novume in the “Restricted Territory”, as defined in Exhibit A to the Loughlin Employment Agreement, or (ii) solicit any of Novume’s existing employees, suppliers or customers.

The Greg McCarthy Employment Agreement provides that Mr. McCarthy is the Chief Executive Officer of AOC Key Solutions for an initial term through April 21, 2017, with the option to extend the term in writing. His base salary is $229,800 per annum, and he will be eligible for a bonus as determined by KeyStone’s compensation committee. Mr. McCarthy is also eligible to receive all such other benefits as are provided by KeyStone to other management employees that are consistent with KeyStone’s fringe benefits available to any other officer or executive of KeyStone.

KeyStone may terminate Mr. McCarthy’s employment agreement for “Cause,” as defined in the Gregory McCarthy Employment Agreement. In the event that KeyStone terminates Mr. McCarthy’s employment other than for “Cause,” or Mr. McCarthy terminates his employment for “Good Reason”, as defined in the Gregory McCarthy Employment Agreement, KeyStone will be required to pay Mr. McCarthy an amount equal to six months of Mr. McCarthy’s base salary and KeyStone’s contribution to Mr. McCarthy’s health insurance premiums.

Mr. McCarthy also agreed that, for the period during his employment and for two years thereafter, he will not (i) compete with KeyStone in the “Restricted Territory”, as defined in Exhibit A to the Gregory McCarthy Employment Agreement, or (ii) solicit any of KeyStone’s existing employees, suppliers or customers.

The employment agreement with James Saterfield (the “Satterfield Employment Agreement:”) President of Firestorm Solutions, LLC and Firestorm Franchising, LLC, for an initial five-year term that began on January 25, 2017. His base salary is $225,000 per annum, and he will be eligible for a bonus as determined by Novume’s to be established compensation committee. Mr. Satterfield is also eligible to receive all such other benefits as are provided by Novume to other management employees that are consistent with Novume’s fringe benefits available to any other officer or executive of Novume. Prior to the assumption of the Satterfield Employment Agreement by Novume, Mr. Satterfield was granted options to purchase 50,000 shares of KeyStone Common Stock, which were to begin vesting on the first anniversary of his initial employment as President of KeyStone and continue vesting monthly over the following two years, at a strike price of $3.00 per share. At the Effective Time, these options will be converted into the right to receive Novume Options and will continue to vest in accordance with the forgoing schedule.

Novume may terminate Mr. Satterfield’s employment agreement for “Cause,” as defined in the Satterfield Employment Agreement. In the event that Novume terminates Mr. Satterfield’s employment other than for “Cause,” or Mr. Satterfield terminates his employment for “Good Reason”, as defined in the Satterfield Employment Agreement, Novume will be required to pay Mr. Satterfield an amount equal to the remaining amount of base salary payable under the Satterfield Employment Agreement until the end of the initial five-year term and Novume’s contribution to Mr. Satterfield’s health insurance premiums.

Mr. Satterfield also agreed that, for the period during his employment and for one year thereafter, he will not (i) compete with Novume in the “Restricted Territory”, as defined in Exhibit A to the Satterfield Employment Agreement, or (ii) solicit any of Novume’s existing employees, suppliers or customers.

The Novume Board intends to establish a Compensation Committee, which will be composed of non-employee directors, on which it will rely for recommendations as to the form and amount of compensation to be paid to any executive officers of Novume with whom it does not have an employment agreement and the determination of bonuses generally.

At or prior to the Effective Time, the Novume Board intends to adopt a 2017 Equity Award Plan which terms are intended to be substantially identical to those of KeyStone’s 2016 Equity Award Plan. The purpose of the 2017 Equity Award Plan shall be to promote the interests of Novume (including its subsidiaries and affiliates, if any) and its stockholders by using equity interests in Novume to attract, retain and motivate its management, nonemployee directors and other eligible persons and to encourage and reward their contributions to Novume’s performance and profitability. See “KeyStone Executive Compensation—KeyStone Solutions, Inc. 2016 Equity Award Plan”.

There are currently 1,000 shares of Novume Common Stock outstanding, all of which are owned by KeyStone and will be canceled in the KeyStone Merger. It is anticipated that, after giving effect to the Mergers, approximately 16,900,421 shares of Novume Common Stock will be issued and outstanding, approximately 1,048,204 additional shares will be reserved for issuance upon the exercise of options assumed by Novume, approximately 1,564,102 additional shares will be reserved for issuance upon the exercise of warrants assumed by Novume, approximately 841,604 additional shares will be reserved for issuance upon the conversion of Novume Preferred Stock and approximately 778,380 additional shares will be available for issuance in connection with grants made after the Effective Time under the Stock Option Plan and the Director Stock Option Plan.

The following table sets forth information concerning the beneficial ownership of Novume Common Stock after giving effect to the Mergers by (i) each person or group of persons known to Brekford or KeyStone expected to beneficially own more than 5% of the outstanding shares of Novume Common Stock, (ii) each person who is (or, upon consummation of the Mergers, will be) an executive officer or director of Novume and (iii) all such executive officers and directors of Novume as a group.

KeyStone was formed in March 2016 as a holding company for the purpose of creating or acquiring professional services companies that provide support to the government contracting (“GovCon”) industry. KeyStone was formed through a corporate reorganization of AOC Key Solutions (“AOC Key Solutions”), which, as a result, became a wholly owned subsidiary of KeyStone. Consistent with KeyStone’s acquisitive growth strategy, on January 25, 2016 KeyStone executed the previously announced acquisition of Firestorm Solutions LLC and Firestorm Franchising LLC. The operations of KeyStone are currently conducted by and through its subsidiaries which include AOC Key Solutions, Firestorm Solutions, LLC and Firestorm Franchising, LLC (the latter two such entities hereinafter referred to as “Firestorm”). AOC Key Solutions is an established business development and consulting firm that assists government contractors in winning government contracts. It also helps commercially focused firms gain entry into the government contracting market for the first time. Since commencing operations in 1983, AOC Key Solutions has assisted clients in winning over approximately $150 billion of government contract awards. Firestorm is a nationally-recognized leader in crisis management and related matters that provides services to government contractors.

AOC KeySoutions seeks to improve how the federal government and government contractors operate. KeyStone works to increase the efficiency and effectiveness of government on behalf of the taxpayer, while assisting companies who are in, or seek to enter, the lucrative government contracting market. AOC KeySoutions helps contractors achieve two types of results: positive societal contributions and success measured by profits and return on investment. AOC KeySoutions’s strategy includes diversifying its services offerings within the GovCon market while gaining a critical mass of sustainable revenues. AOC KeySoutions intends to add both vertical and horizontal capabilities by acquiring GovCon service providers through a disciplined acquisition strategy. It intends to foster communication and knowledge transfer by constructing a “bridge” across which efficiencies and best practices will be shared between the private sector and government, benefiting government, industry and the taxpayer.

AOC Key Solutions identifies winnable government contracts for clients and provides teaming support to help its clients identify qualified teaming opportunities from AOC KeySoutions’s large database of government contractors. Next, AOC Key Solutions helps its clients develop the strategy and plan to win contracts, implement and execute their strategy and plan, and prepare a compliant, compelling and winning proposal document. For more than 30 years AOC Key Solutions has provided market intelligence, proposal, capture, advisory and teaming support and other important services to Fortune 50 companies and small businesses alike. For the year ended December 31, 2015, AOC Key Solutions generated over $9.6 million of revenue and net income of approximately $422,000. For the six-month period ended June 30, 2016, AOC Key Solutions’ revenues were $7,177,345 as compared to $4,311,170 for the same period in 2015.

Firestorm is the nationally recognized leader in crisis management, crisis communications, emergency response, and business continuity. Firestorm demonstrates leadership in workplace violence prevention, cyber-breach response, communicable illness/pandemic planning, predictive intelligence, and every emergency, crisis and disaster preparedness initiative. Firestorm is focused on prevention, in addition to planning and response initiatives. For example, Firestorm has developed a behavioral risk and threat assessment program, referred to as BERTHA^®, which positions organizations to prevent violence from occurring through the delivery of awareness training, anonymous reporting, and predictive intelligence programs that enable the identification of warning signs that may be exhibited by an individual long before they are on a path to violence. Firestorm utilizes social media channels to educate others on emerging threats and strategies to combat those threats, through the deployment of no-fee webinars, stress tests, and blog articles that include analyses by members of its highly credentialed Expert Council. Firestorm partners with industry associations and aggregators to deliver meaningful risk mitigation strategies and education. It serves clients ranging from some of the world’s largest global companies to main street businesses, public and private, across all industry sectors. Firestorm offers services to federal contractors that enhance their ability to manage risk and respond to adverse events, thereby minimizing people, brand, reputation, financial, legal and regulatory impactsAs part of the Firestorm acquisition, KeyStone gained additional management expertise and has appointed Firestorm executives, Harry Rhulen, as President of KeyStone, and Suzanne Loughlin, as Chief Administrative Officer and General Counsel of KeyStone. Both officers have previously served as public company directors and officers and bring needed expertise to the KeyStone leadership team.

Members of KeyStone’s management team have extensive experience in the GovCon sector and collective breadth of experience managing organic growth as well as growth through acquisitions and integration. In connection with the formation of KeyStone as a platform for expansion in the GovCon sector, Robert A. Berman joined KeyStone as Chief Executive Officer and became an investor in KeyStone. See “Interest of Management and Others in Certain Transactions.” Prior to investing in KeyStone, Mr. Berman executed a successful growth acquisition strategy for a company in the hospitality industry that had, at the time Mr. Berman joined as Chairman and CEO, a $6 million in annual revenue and making the 50-employee company into the hospitality sector’s premier service provider. Under Mr. Berman’s leadership, it opened offices around the world by acquiring well-run synergistic companies. Within three years, the company grew by more than 3,000 employees and generated $220 million in annual revenue. In addition to successfully operating and growing businesses through acquisitions, Mr. Berman has extensive capital markets experience in both the public and private sectors. Mr. James McCarthy is KeyStone’s Chairman and his career spans over 30 years of marketing strategy creation, proposal development, and oral presentation coaching to contractors seeking to expand their market shares or to enter the GovCon sector. Dr. Richard Nathan, KeyStone’s Chief Operating Officer and member of the Board of Directors of KeyStone (the “KeyStone Board”), brings over 45 years of corporate management, program management, and business and proposal development experience. He has led large management and operation contracts valued at more than a billion dollars and managed service and technical contracts for the United States Department of Education (DoE), Department of Defense (DoD), Department of Homeland Security (DHS), NASA, Environmental Protection Agency (EPA), and state governments. KeyStone believes that the combined expertise of Mr. Berman, Mr. McCarthy and Dr. Nathan will help KeyStone to identify and evaluate key strategic acquisitions as KeyStone pursues its growth strategy.

The mailing address of KeyStone’s principal executive offices is 14420 Albemarle Point Place, Suite 200, Chantilly, VA, 20151, and its telephone number is (703) 953-3838.

Through acquisitions and integration, KeyStone intends to provide a “one-stop,” full suite of services and products to the Government Contracting Market, making it a cohesive force in an extremely fragmented industry. KeyStone will diversify its services within the market it knows well in an effort to gain a critical mass of sustainable revenues.

On March 15, 2016, KeyStone entered into a merger agreement (the “KCS Merger Agreement”) with KCS Merger Sub, Inc. (“KCS Merger Sub”), a wholly owned subsidiary of KeyStone, and AOC Key Solutions. Pursuant to the KCS Merger Agreement, on March 15, 2016, KCS Merger Sub was merged with and into AOC Key Solutions, with AOC Key Solutions becoming a wholly owned subsidiary of KeyStone.

AOC Key Solutions works with clients across nearly all federal agencies and market sectors, and specializes in information technology, defense and homeland security, healthcare, energy and environment, infrastructure support services, design/build, and new and emerging markets. KeyStone’s full service business development process is shown below.

The United States Government purchases between $450 billion and $500 billion in products and services each year from the private sector, making it the single largest customer on the planet. As policy evolves, KeyStone evolves with government keeping itself and its clients ahead of the curve.

The following characteristics have contributed to KeyStone’s success and, KeyStone’s management believes will have a material and positive impact on the growth anticipated from KeyStone’s strategy:

Win Record. Each year KeyStone lists, in its Billion Dollar Club, the major contract awards that it has helped clients win. The 2016 members are shown below. From 2011 through 2016 KeyStone provided support to its clients for over 200 winning bids. During this period, KeyStone averaged $8 billion annually in government contract award wins for our clients. KeyStone is compensated on a time and materials basis for the majority of the services it provides. KeyStone does not provide additional services after a contract has been awarded.

Ability to Provide Value to the Influx of Small Businesses. Recent data suggest that the Small Business Administration helps to start approximately 14,200 small businesses per year. KeyStone’s management believes that a number of these new entities intend to enter the GovCon sector and may be potential KeyStone clients. KeyStone has a toolbox of services and products tailored to help new businesses gain entry into this lucrative market.

Access to Government and Industry Decision-Makers. KeyStone supports clients in seeking work from a majority of federal agencies. KeyStone knows well the executive and working-level staff at all of our government contractor clients, and they are aware of the value of KeyStone’s services. As a result, KeyStone has key market intelligence that allows it to recommend teaming arrangements that have strategic value and are designed to increase the likelihood of a client winning a contract.

Government Contracting Weekly. This is a TV show KeyStone produced and are transitioning to the Internet to broaden its exposure. This show was previously broadcast for several years on CBS in Washington, DC and continues to open doors to KeyStone. Government Contracting Weekly also provides an open and transparent forum to discuss the many issues relevant to both the government and contractors.

Expertise and Depth of Resources. KeyStone employs over 25 in-house proposal development specialists backed by approximately 300 contract technical and management subject matter experts. Many of KeyStone’s employees maintain federal security clearances up to and including Top Secret.

Client Base of World Class Companies. KeyStone’s client base has grown to over 490 companies, ranging from Fortune 50 firms to small and minority-owned businesses and start-ups. Over the KeyStone’s 33-year history, KeyStone has supported a majority of the top-100 federal contractors, based on revenue.

Client Base Continues to Expand. Even with the size of KeyStone’s client base, the total number of contractors registered in the government’s System for Acquisition Management (SAM) exceeds 413,000, the majority of whom KeyStone does not currently serve.

Successful Long-Term Performance is Due to Our Sound and Proven Business Model. KeyStone has been in business for over 34 years with continuity of management from the beginning. KeyStone’s proprietary processes and tools have afforded us the opportunity to train the next generation of talent.

Dedication to Principle-Centered Winning (PCW). KeyStone creates value for its clients by focusing on winning— but winning the right way, not just any way. PCW is a code of conduct, a set of ethical principles and rules; based on service, sacrifice where necessary, and always seeking to act in the interests of KeyStone’s clients. KeyStone also seeks to act in the best interests of the Federal Government. In part, this is because KeyStone is selective about who it takes on as clients – only those companies which KeyStone believes will be able to successfully perform to government requirements. Thus, KeyStone plays the important role of providing the right capabilities and the right price to the government entity with which its clients are contracting.

State-of-the-Art Proposal Facility. For those clients who prefer an off-site proposal venue, KeyStone has a modern, secure and well-equipped proposal facility capable of simultaneously hosting multiple client engagements.

Our Network of Strategic Relationships. To increase KeyStone’s access to senior executives in government and industry, it has created a wide network of strategic relationships with organizations that include the George Washington University, Virginia Science and Technology Campus, Technology Accelerator, George Mason University Procurement and Technical Assistance Center, Arbinger Institute, Coalition for Government Procurement and the Veterans Institute for Procurement. It is through these relationships that KeyStone is able to:

KeyStone’s management believes clients value KeyStone’s services for four primary reasons. First, KeyStone offers a full suite of services for GovCon industry best practices allowing clients to outsource their non-core competencies and focus on performing their contracts more efficiently. Second, many companies cannot maintain a large support infrastructure in-house and find it more cost effective to outsource. Third, KeyStone’s proprietary tools help clients maintain a healthy pipeline. And fourth, KeyStone’s win record supports their top-line revenue growth.

KeyStone works with many highly-regarded government contractors, including start-ups, small and medium sized businesses, and large defense contractors and integrators. KeyStone has supported brand name firms such as Lockheed Martin, Northrop Grumman, Boeing, Raytheon, General Dynamics, Honeywell, BAE, Siemens, CSC, SAID/Libidos, HP, CACTI, AT&T, Booz Allen Hamilton, IBM, Oshkosh, Sodexo and others. Over KeyStone’s 33-year history, it has supported a majority of the top-100 federal contractors (by revenue). KeyStone provides its clients with quality value-added service through efficiencies of scale, productivity enhancements and expertise.

KeyStone’s potential GovCon clients are the various levels of government and those companies that support them. They consist of two groups:

The Private Sector Group consists of those contractors and service companies that serve and support the various levels of Government. Contractors include firms that offer an array of important products and services. These are provided in the areas of national security, defense, homeland security, intelligence, information technology, energy, environment, healthcare, transportation, education, operations and maintenance, infrastructure, logistics, and others. Examples of service companies include law firms, accounting firms, banks and financial institutions, insurance companies, staffing and recruiting firms, media companies, market research, public relations houses, and all manner of consulting firms dedicated to supporting the taxpayer at every level of government.

The Public Sector Group is comprised of the government entities or agencies of the United States including those at the federal, state and municipal levels.

In the GovCon market, business development is tailored and scaled to meet the opportunity and the players associated with that opportunity. Business development is primarily carried out by KeyStone’s team of full-time business developers. To promote KeyStone, KeyStone’s officers and employees take leadership positions in key GovCon industry organizations including industry trade groups and associations, chambers of commerce, veterans organizations, and civic and community organizations. KeyStone’s leadership routinely engages in writing blogs, newsletters, white papers and thought pieces and developing podcasts and webinars for the GovCon industry on various GovCon subjects. KeyStone furthers this educational and brand recognition process by offering seminars and training, participating on roundtables and presenting at industry conferences. KeyStone also uses several technology platforms to monitor industry developments and identify targets of contract opportunity for its clients. Because of KeyStone’s breadth of industry contacts and relationships, KeyStone frequently facilitate and help create teams of multiple companies to pursue targets of opportunity. On each occasion, KeyStone becomes accessible to potential new clients by brokering the relationships.

“The economic system through which different companies compete with each other to sell their services

A government contractor is an organization — either for profit or non-profit — that produces goods or services under a contract for the government. The GovCon market functions at the intersection of government and private industry.

The GovCon market is massive. The US Federal Government is estimated to procure between $450 billion and $500 billion annually for products and services from the private sector — making it the world’s largest customer. KeyStone is positioned to become a leading provider of outsourced services to government contractors.

KeyStone’s management believes the outlook for the GovCon sector for GFY 2017 (the federal government fiscal year starts on October 1 and ends on September 30) is promising. With the new administration brings new contracting opportunity. An anticipated emphasis in defense, infrastructure and homeland security spending could place KeyStone in a favorable position.

KeyStone’s management believes the following indicators suggest an upturn in the market:

KeyStone’s management believes that GovCon’s future appears bright. The following chart provides a recap of federal government spending, demonstrating the size and scope of the GovCon market.

KeyStone intends to bring together in one platform many of the products, services, and expertise used by both the public and private sector groups in the GovCon market. The intent of KeyStone’s management is to set up a structure of “cross pollination” and “cross selling” among all companies throughout the platform. This gives KeyStone a strong marketing tool which KeyStone’s management believes will help us achieve our vision.

KeyStone intends to acquire companies that provide a wide range of complementary services as described below. KeyStone’s acquisition strategy is to buy well-run profitable businesses, like AOC Key Solutions, focusing on top-line revenues to achieve critical mass while concurrently leveraging KeyStone’s platform to create economies of scale and best practices. KeyStone’s strategy targets companies that provide both vertical and horizontal integrated services. KeyStone’s management intends for any such acquisitions to become 100% wholly-owned subsidiaries of KeyStone. KeyStone’s management does not anticipate that KeyStone’s ownership in any particular acquisition will be less than 80%. KeyStone’s management does not believe that its acquisition strategy will cause KeyStone to become an “investment company” under the 1940 Act, nor does it intend to become one.

A vertical is a company that provides products and services within the GovCon market that are compatible and synergistic, and supplement those currently provided by KeyStone. Through strategic acquisitions of verticals, KeyStone’s plan is to be the preeminent source for many of the services and products required to provide end-to-end support to government contractors.

GovCon verticals under consideration include companies engaged in staffing and recruiting, back office support services, information technology support, operations and contract performance, opportunity identification tracking and pipeline management services, teaming solutions, training and business development, price-to-win strategies, hardware and product offerings, traditional and social media services, M&A-related products and services, market research, specialized insurance, government executive recruiting, event planning and concierge services and logistics. KeyStone may consider investing in more than one company in any vertical category if it is a strategic fit.

A horizontal is a company that provides products and services that compete in whole or in part with AOC Key Solutions, which operates in a highly-fragmented market. No single firm is dominant in the market and none has a large market share. As part of KeyStone’s growth strategy, KeyStone will seek to acquire firms that are qualified, meet its standards and offer a supportable business case.

In the past KeyStone has been presented with numerous opportunities where a potential client has asked KeyStone to go at risk in some fashion in pursuit of a particular contract opportunity. The likely recipients of any direct investments are high potential/high performing companies, primarily, but not exclusively, small businesses. Candidates could also include firms whose owners are executing a growth or exit strategy and are positioning themselves for an eventual liquidity event.

These types of investments may be deployed in certain sectors of the GovCon market including but not limited to: information technology; health care; national defense; homeland security; energy and the environment; maintenance and operation of government facilities and infrastructure; architecture, engineering, and construction; transportation; law enforcement; and new and emerging market sectors.

KeyStone’s principal properties as of the date of this information statement/prospectus are set forth below:

KeyStone’s management believes KeyStone’s existing facilities are adequate to meet its current needs and it can renew its existing leases or obtain alternate space on terms that would not have a material impact on KeyStone’s financial results.

The tables below set forth information regarding the members of the KeyStone Board and non-director executive officers of KeyStone prior to and after the Effective Time.

Below is set forth the biography of Greg McCarthy, who, prior to the Effective Time, is a director of KeyStone but who shall not serve on the oard of directors of Novume, KeyStone or Brekford after the Effective Time.

Greg McCarthy, Chief Executive Officer of AOC Key Solutions and Member of the KeyStone Board

The following table sets forth information about the annual compensation of each of the directors at KeyStone who were directors during the last completed fiscal year. There was no director compensation for the 2015 fiscal year as there were no independent directors.

Directors who are officers or employees of KeyStone are not entitled to compensation for services as a director. KeyStone’s independent director, Glenn Goord, received annual compensation of $24,000 in equal quarterly installments. Mr. Goord also received options to purchase [•] shares of KeyStone Common Stock.

Although the KeyStone Board consists of six members, only two are independent and the remaining four are KeyStone’s executive officers. Therefore KeyStone does not currently have a Compensation Committee comprised of a majority of independent directors. Decisions concerning matters such as compensation packages to KeyStone’s officers may be made by existing members of the KeyStone Board, who may have a direct or indirect interest in the outcome of those decisions.

The following table sets forth information about the annual compensation of each of the principal executive officer, principal financial officer and three highest paid persons who were executive officers of KeyStone during the fiscal year ended December 31, 2016, and of Harry Rhulen, who would have been required to be included in this table but for the fact that he was not an executive officer of KeyStone as of December 31, 2016.

For a description of KeyStone’s employment agreements with its executive officers, see “Novume Executive Compensation—Employment Agreements.”

In May 2016, the KeyStone Board and the stockholders unanimously approved and adopted the KeyStone Solutions, Inc. 2016 Equity Award Plan (the “KeyStone Equity Award Plan”). The purpose of the KeyStone Equity Award Plan is to promote the interests of KeyStone (including its subsidiaries and affiliates, if any) and its stockholders by using equity interests in KeyStone to attract, retain and motivate its management, nonemployee directors and other eligible persons and to encourage and reward their contributions to KeyStone’s performance and profitability. The KeyStone Board believes that the ability to provide equity-based incentives will be vital to KeyStone’s ability to continue to attract and retain individuals in the competitive labor markets in which we compete.

The total shares of KeyStone Common Stock issuable under the Plan is 923,016 shares. The total number of options issued under the KeyStone Equity Award Plan is 156,400. The total shares of KeyStone Common Stock available under the KeyStone Equity Award Plan is 766,616.

The Plan permits KeyStone to take a flexible approach to its equity awards by permitting the grant of restricted stock, restricted stock units, restricted stock purchase rights, stock options, stock appreciation rights, performance awards and other stock awards. KeyStone has also designed the KeyStone Equity Award Plan to include a number of provisions that KeyStone’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. Awards that have an exercise price cannot be granted with an exercise price less than the fair market value on the grant date.

No Repricing Without Stockholder Approval. KeyStone cannot, without stockholder approval, reduce the exercise price of an award (except for adjustments in connection with a KeyStone recapitalization), and at any time when the exercise price of an award is above the market value of KeyStone Common Stock, KeyStone cannot, without stockholder approval, cancel and re-grant or exchange such award for cash, other awards or a new award at a lower (or no) exercise price.

No Evergreen Provision. There is no evergreen feature under which the shares of common stock authorized for issuance under the KeyStone Equity Award Plan can be automatically replenished.

No Automatic Grants. The KeyStone Equity Award Plan does not provide for “reload” or other automatic grants to recipients.

No Transferability. Awards generally may not be transferred, except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order, unless approved by the Administrator.

No liberal change-in-control definition. The change-in-control definition contained in the KeyStone Equity Award Plan is not a “liberal” definition that would be activated on mere stockholder approval of a transaction.

“Double-trigger” change in control vesting. If awards granted under the KeyStone Equity Award Plan are assumed by a successor in connection with a change in control of KeyStone, such awards will not automatically vest and pay out solely as a result of the change in control, unless otherwise expressly set forth in an award agreement.

No dividends on unearned performance awards. The KeyStone Equity Award Plan prohibits the current payment of dividends or dividend equivalent rights on unearned performance-based awards.

Limitation on amendments. No amendments to the KeyStone Equity Award Plan may be made without stockholder approval if any such amendment would materially increase the number of shares reserved or the per-participant award limitations under the KeyStone Equity Award Plan, diminish the prohibitions on repricing stock options or stock appreciation rights, or otherwise constitute a material change requiring stockholder approval under applicable laws, policies or regulations or the applicable listing or other requirements of the principal exchange on which KeyStone’s shares are traded.

Administered by the Administrator. The KeyStone Equity Award Plan is administered by the KeyStone Board, or a Committee, which shall be appointed in accordance with Section 3 of the KeyStone Equity Award Plan, or a combination thereof (the “Administrator”).

Clawbacks. Awards based on the satisfaction of financial metrics that are subsequently reversed, due to a financial statement restatement or reclassification, are subject to forfeiture.

The principal features of the KeyStone Equity Award Plan are summarized below. This summary is not complete, however, and is qualified by the terms of the KeyStone Equity Award Plan, a copy of which is filed as Exhibit 10.8 to this Registration Statement.

The maximum aggregate number of shares of KeyStone Common Stock available for issuance under the KeyStone Equity Award Plan is 923,016. Shares subject to an award may be authorized but unissued, or reacquired shares of KeyStone Common Stock or treasury shares. If an award under the KeyStone Equity Award Plan expires or becomes unexercisable without having been exercised in full, or an award is settled for cash, the unissued shares that were subject to the award will become available for future grant under the KeyStone Equity Award Plan, as will any shares that are withheld by KeyStone when an option is exercised or tax withholdings are satisfied by the tendering of shares. However, shares that have actually been issued under the KeyStone Equity Award Plan will not be returned to the KeyStone Equity Award Plan and will not be available for future distribution under the KeyStone Equity Award Plan.

The KeyStone Equity Award Plan is administered by the Administrator. The Administrator has the exclusive authority, subject to the terms and conditions set forth in the KeyStone Equity Award Plan, to determine all matters relating to awards under the KeyStone Equity Award Plan, including the selection of individuals to be granted an award, the type of award, the number of shares of KeyStone 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.

The KeyStone Equity Award Plan provides that it will continue in effect for a term of ten (10) years, unless sooner terminated pursuant to its provisions. The KeyStone Equity Award Plan will be terminated at the Effective Time.

Awards under the KeyStone Equity Award Plan may be granted to employees (including officers), consultants and directors of KeyStone, its subsidiaries and affiliates. In addition, an award under the KeyStone Equity Award Plan may be granted to a person who is offered employment by KeyStone or a subsidiary or affiliate, provided that such award shall be immediately forfeited if such person does not accept such offer of employment within an established time period. If otherwise eligible, an employee, consultant or director who has been granted an award under the KeyStone Equity Award Plan may be granted other awards. Although all employees of KeyStone, its subsidiaries and affiliates are eligible to receive awards under the KeyStone Equity Award Plan, it is not possible to estimate the number of additional individuals who may become eligible to receive awards under the KeyStone Equity Award Plan from time to time.

The KeyStone Equity Award Plan is broad-based and flexible, providing for awards to be made in the form of (a) restricted stock and restricted stock units, (b) restricted stock purchase rights, (c) incentive stock options, which are intended to qualify under Section 422 of the Code, (d) non-qualified stock options, which are not intended to qualify under Section 422 of the Tax Code, (e) stock appreciation rights, (f) performance awards, (g) performance shares, (h) performance units or (i) other stock-based awards that relate to or serve a similar function to the awards described above. Awards may be made on a standalone, combination or tandem basis. Additional information about some of the awards is set forth below.

Restricted Common Stock Awards, Restricted Stock Purchase Rights and Restricted Stock Units

Awards of Restricted KeyStone Common Stock, Restricted Stock Purchase Rights and Restricted Stock Units. Awards of restricted KeyStone Common Stock and grants of restricted stock purchase rights are shares of KeyStone Common Stock awarded or granted to the recipient, all or a portion of which are subject to a restriction period set by the Administrator during which restriction period the recipient or purchaser shall not be permitted to sell, transfer or pledge the restricted common stock. Restricted stock units are notional accounts that are valued solely by reference to shares of KeyStone Common Stock, subject to a restriction period set by the Administrator and payable in KeyStone Common Stock, cash or a combination thereof. The restriction period for both restricted stock and restricted stock units may be based on period of service, which shall not be less than one (1) year, performance of the recipient or KeyStone, its subsidiaries, divisions or departments for which the recipient is employed or such other factors as the Administrator may determine.

Rights as a Stockholder. Subject to any restrictions set forth in the award agreement, a recipient or purchaser of restricted KeyStone Common Stock will possess all of the rights of a holder of common stock of KeyStone, including the right to vote and receive dividends. Cash dividends on the shares of KeyStone Common Stock that are the subject of an award agreement shall be paid in cash to the recipient or purchaser and may be subject to forfeiture as set forth in the award agreement. The recipient of restricted stock units shall not have any of the rights of a stockholder of KeyStone; the Administrator shall be entitled to specify with respect to any restricted stock unit award that upon the payment of a dividend by KeyStone, KeyStone will hold in escrow an amount in cash equal to the dividend that would have been paid on the restricted stock units had they been converted into the same number of shares of KeyStone Common Stock and held by the recipient on that date. Upon adjustment and vesting of the restricted stock unit, any cash payment due with respect to such dividends shall be made to the recipient.

Termination of Employment, Consultancy or Director Relationship. Generally, upon termination of employment, consultancy or a director relationship for any reason during the restricted period, the recipient or purchaser will forfeit the right to the shares of restricted KeyStone Common Stock to the extent that the applicable restrictions have not lapsed at the time of such termination.

Types. Stock options to purchase shares of KeyStone Common Stock may be granted under the KeyStone Equity Award Plan to directors and consultants in the form of nonqualified stock options and to employees in the form of incentive stock options or nonqualified stock options.

Exercise Price. The per share exercise price for shares underlying common stock options will be determined by the Administrator, provided that the exercise price must be at least equal to 100% of the fair market value per share of common stock on the date of grant. In the case of an incentive stock option granted to an employee who, at the time of grant, owns more than 10% of the total combined voting power of all classes of stock of KeyStone, the per share exercise price must be at least equal to 110% of the fair market value per share of common stock on the date of grant.

Term of Option; Vesting. The term during which a common stock option may be exercised will be determined by the Administrator, provided that no common stock option will be exercisable more than ten (10) years from the date of grant. In the case of an incentive stock option granted to an employee who, at the time of grant, owns more than 10% of the total combined voting power of all classes of stock of KeyStone or its subsidiaries or affiliates, the term of such common stock option may not be more than five (5) years. The Administrator has full authority, subject to the terms of the Plan, to determine the vesting period or limitation or waiting period with respect to any common stock option granted to a participant or the shares purchased upon exercise of such option; provided, however, that such vesting restriction or limitation or waiting period shall not be less than one (1) year. In addition, the Administrator may, for any reason, accelerate the exercisability of any common stock option.

Stock Appreciation Rights. The Administrator may grant to an employee, consultant or a director a right to receive the excess of the fair market value of shares of KeyStone Common Stock on the date the stock appreciation right is exercised over the fair market value of such shares on the date the stock appreciation right was granted. Such spread may, in the sole discretion of the Administrator, be paid in cash or common stock or a combination of both.

Performance Awards. The Administrator may grant performance awards to employees based on the performance of a recipient over a specified period. Such performance awards may be awarded contingent upon future performance of KeyStone or its affiliates or subsidiaries during that period. A performance award may be in the form of common stock (or cash in an amount equal to the fair market value thereof) or the right to receive an amount equal to the appreciation, if any, in the fair market value of common stock over a specified period. Performance awards may be paid, in the Administrator’s discretion, in cash or stock or some combination thereof. Each performance award will have a maximum value established by the Administrator at the time the award is made. Unless otherwise provided in an award agreement or by the Administrator, performance awards terminate if the recipient does not remain an employee of KeyStone, or its affiliates or subsidiaries, at all times during the applicable performance period.

Other Stock-Based Awards. The Administrator may, in its discretion, grant other stock-based awards that are related to or serve a similar function to the awards described above.

Material Terms of Performance Goals for Qualified Performance-Based Compensation

Under section 162(m) of the Code, in order for KeyStone to deduct compensation in excess of $1,000,000 that is paid in any year to any “covered employee,” such compensation must be treated as “qualified performance-based,” within the meaning of section 162(m) of the Tax Code. A “covered employee” is defined under section 162(m) of the Code as a company’s principal executive officer or any of such company’s three other most highly compensated executive officers named in the proxy statement (other than the principal executive officer or principal financial officer). Section 7 of the KeyStone Equity Award Plan sets forth the procedures the Administrator should follow to avoid the deductibility limitations of section 162(m) of the Tax Code when making long-term incentive performance awards under the KeyStone Equity Award Plan to current covered employees and employees whom the Administrator anticipates may become covered employees between the time of grant and payment of the award. However, there can be no guarantee that amounts payable under the Plan will be treated as “qualified performance-based” compensation and KeyStone reserves the flexibility to pay nondeductible compensation when necessary to achieve our compensation objectives.

Among other things, in order for an award under Section 7 of the KeyStone Equity Award Plan to be treated as “qualified performance-based” compensation that is not subject to the $1,000,000 cap, stockholder approval of the material terms of the performance goals is required at least every five (5) years. The material terms include the employees eligible to receive the compensation, a description of the performance criteria and the maximum amount of compensation that may be paid to any one employee. A description of the material terms for qualified performance-based compensation in the KeyStone Equity Award Plan follows.

Employees Eligible to Receive Compensation. A performance-based award under the KeyStone Equity Award Plan may be granted to employees (including officers) of KeyStone, its subsidiaries and affiliates. In addition, a performance-based award may be granted to a person who is offered employment by KeyStone or a subsidiary or affiliate, provided that such award shall be immediately forfeited if such person does not accept such offer of employment within an established time period.

Performance Criteria. When making an award under the KeyStone Equity Award 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. Section 7 of the KeyStone Equity Award Plan includes the performance criteria the Administrator has adopted, subject to stockholder approval, for a “qualified performance-based compensation” award, which shall consist of objective tests based on one or more of the following:

Performance criteria may be measured solely on KeyStone, subsidiary or business unit basis, on specific capital projects or groups of projects or a combination thereof. Further, performance criteria may reflect absolute entity performance or a relative comparison of entity performance to the performance of one or more peer groups of entities or other external measure of the selected performance criteria. The measure for any such award may include or exclude items to retain the intents and purposes of specific objectives, such as losses from discontinued operations, extraordinary gains or losses, the cumulative effect of accounting changes, acquisitions or divestitures, foreign exchange impacts, acceleration of payments, costs of capital invested, discount factors, and any unusual or nonrecurring gain or loss. In order to qualify as performance-based under section 162(m) of the Code, the performance criteria will be established before 25% of the performance period has elapsed and will not be subject to change (although future awards may be based on different performance criteria). The performance periods may extend over one to five calendar years, and may overlap one another.

Termination, Amendment and Employee Retirement Income Security Act of 1974 (“ERISA”) Status. The KeyStone Equity Award Plan provides that the KeyStone Board may generally amend, alter, suspend or terminate the KeyStone Equity Award Plan and the Administrator may prospectively or retroactively amend any or all of the terms of awards granted under the KeyStone Equity Award Plan, so long as any such amendment does not impair the rights of any recipient without the recipient’s consent. Stockholder approval is required for any material KeyStone Equity Award Plan amendment or any amendment necessary to comply with the Tax Code or any other applicable laws or stock exchange requirements. The KeyStone Equity Award Plan is not subject to the provisions of ERISA.

Anti-dilution Provisions. Subject to any required action by the stockholders of KeyStone, the number of shares of common stock covered by each outstanding award (and the purchase or exercise price thereof), and the number of shares of common stock that have been authorized for issuance under the KeyStone Equity Award Plan, but as to which no awards have yet been granted (or which have been returned to the KeyStone Equity Award Plan upon cancellation or expiration of an award or the withholding of shares by the KeyStone) will be proportionately adjusted to prevent dilution or enlargement of rights in the event of any stock split, stock dividend, combination or reclassification of the common stock or other relevant capitalization change.

Prohibition on Loans to Participants. KeyStone may not lend money to any participant under the KeyStone Equity Award Plan for the purpose of paying the exercise or base price associated with any award or for the purpose of paying any taxes associated with the exercise or vesting of an award.

Withholding Obligations. KeyStone may take such steps as are considered necessary or appropriate for the withholding of any federal, state, local or foreign taxes of any kind that KeyStone is required by any law or regulation of any governmental authority to withhold in connection with any award under the KeyStone Equity

Award Plan, including, without limiting the generality of the foregoing, the withholding of all or any portion of any payment or the withholding of the issue of common stock to be issued under the KeyStone Equity Award Plan, until such time as the recipient has paid KeyStone for any amount KeyStone is required to withhold with respect to taxes. Unless otherwise determined by the Administrator, withholding obligations may be settled with vested common stock, including vested common stock that is part of the award that gives rise to the withholding requirement. The Administrator may establish such procedures as it deems appropriate, including the making of irrevocable elections, for the settlement of withholding obligations with vested common stock.

KeyStone is committed to effectively managing its employee equity compensation programs while minimizing stockholder dilution. For this reason, in administering KeyStone’s equity compensation program, KeyStone considers both KeyStone’s “burn rate” and “overhang” in evaluating the impact of the program on KeyStone’s stockholders. KeyStone define “burn rate” as the number of equity awards granted during the year, divided by the weighted average number of shares of KeyStone Common Stock outstanding during the period. The burn rate measures the potential dilutive effect of KeyStone’s equity grants. KeyStone defines “overhang” as the number of full value awards granted (but not yet vested or issued) and stock options granted (but not yet exercised) divided by the number of shares of common stock outstanding at the end of the period.

The following is a brief summary of the principal federal income tax consequences of the receipt of restricted common stock and restricted stock units, the grant and exercise of common stock options awarded under the KeyStone Equity Award Plan and the subsequent disposition of shares acquired upon such exercise and the receipt of certain other awards under the Plan. This summary is based upon the provisions of the Code as in effect on the date of this offering circular, current regulations adopted and proposed thereunder and existing judicial decisions, as well as administrative rulings and pronouncements of the Internal Revenue Service (all of which are subject to change, possibly with retroactive effect). This summary is not intended to be exhaustive and does not describe all federal, state or local tax laws. Furthermore, the general rules discussed below may vary, depending upon the personal circumstances of the individual holder. Accordingly, participants should consult a tax advisor to determine the income tax consequences of any particular transaction.

Taxation of Restricted KeyStone Common Stock. In general, except in the case of an election under section 83(b) of the Code, a participant will not incur any tax upon the grant of shares of stock which are subject to a substantial risk of forfeiture. However, when the restrictions lapse or the shares become freely transferable, the participant will recognize ordinary income equal to the fair market value of the applicable shares at such time, less the amount, if any, paid for such shares, unless the participant has made a section 83(b) election with respect to such shares or has elected to defer receipt of such shares, as discussed below.

If a participant makes a section 83(b) election within 30 days of a grant of restricted KeyStone Common Stock, the participant will recognize ordinary income at the time of grant in an amount equal to the difference between the fair market value of the restricted shares on the grant date and the amount, if any, paid for such restricted shares. If the participant makes such an election, he or she will not recognize any further income with respect to such shares solely as a result of a later lapse of the restrictions.

If a participant holds the restricted KeyStone Common Stock as a capital asset after the earlier of either (1) the vesting of such restricted KeyStone Common Stock or (2) the making of a timely section 83(b) election with respect to such restricted KeyStone Common Stock, any subsequent gain or loss will be taxable as long-term or short-term capital gain or loss, depending upon the holding period. For this purpose, the basis in the restricted KeyStone Common Stock generally will be equal to the sum of the amount (if any) paid for the restricted KeyStone Common Stock and the amount included in ordinary income as a result of the vesting event or section 83(b) election, as applicable; provided, however, that, if a participant forfeits restricted KeyStone Common Stock with respect to which a section 83(b) election was made prior to vesting, the participant’s capital loss is limited to the amount (if any) paid for such restricted KeyStone Common Stock.

In general, at the time a participant recognizes ordinary income with respect to the restricted KeyStone Common Stock, KeyStone will be entitled to a deduction in an amount equal to the ordinary income recognized by the participant, which deduction may be limited by section 162(m) of the Code.

Taxation of Restricted Stock Units; Stock Appreciation Rights; Performance Shares and Performance Units. In general, a participant will not incur any tax upon the grant of restricted stock units, stock appreciation rights, performance shares or performance units. However, when the restrictions lapse, the participant will recognize ordinary income in an amount equal to the sum of the cash and the fair market value of any property received.

Taxation of Non-Qualified Stock Options. In general, a participant will not recognize any income upon the grant of a non-qualified stock option. Upon the exercise of a non-qualified stock option, however, a participant generally will recognize ordinary income in an amount equal to the excess of the fair market value of the non-qualified option stock on the date of exercise over the exercise price (i.e., the “spread”) and KeyStone will be entitled to a deduction in an equal amount, which may be limited by section 162(m) of the Code.

Upon subsequent sales of shares obtained through the exercise of non-qualified stock options, the participant may realize short-term or long-term capital gain or loss, depending upon the holding period of the shares, if such shares constitute capital assets in the participant’s hands. The gain or loss will be measured by the difference between the sales price and the tax basis of the shares sold. The tax basis for this purpose generally will be fair market value of the shares on the date of exercise.

Taxation of Incentive Stock Options. A participant who is granted an incentive stock option does not recognize taxable income at the time the option is granted or upon its exercise, although the exercise is an adjustment item for alternative minimum tax purposes and may subject the participant to alternative minimum tax. If the shares acquired upon exercise are sold after the expiration of two years from the grant of the option and one year after exercise of the option, any gain or loss is treated as long-term capital gain or loss. If these holding periods are not satisfied, the participant recognizes ordinary income at the time of disposition equal to the difference between the exercise price and the lower of (1) the fair market value of the shares at the date of the option exercise or (2) the sale price of the shares. Any gain or loss recognized on such a premature disposition of the shares in excess of the amount treated as ordinary income is treated as long-term or short-term capital gain or loss, depending on the holding period. Unless limited by section 162(m) of the Tax Code, KeyStone is generally entitled to a deduction in the same amount as the ordinary income recognized by the participant.

Taxation of Other Stock Based Awards. Other awards may be granted under the KeyStone Equity Award Plan. Since the amount, character and timing of income recognized in connection with such awards will vary depending upon the specific terms and conditions of such awards, no information regarding the tax consequences of the receipt of such awards may be provided at this time.

Tax Withholding. The obligations of KeyStone under the KeyStone Equity Award Plan are conditioned upon proper arrangements being in place with participants in the KeyStone Equity Award Plan for the payment of withholding tax obligations. Unless otherwise determined by the Administrator, withholding tax obligations may be settled with shares of KeyStone Common Stock, including shares that are part of the award that gives rise to the withholding obligation.

In light of the factors described above, the Administrator believes that the ability to grant equity compensation is vital to KeyStone’s ability to continue to attract, motivate, reward, and retain individuals.

After the Effective Time, there shall be no separate executive compensation at the Keystone level. Robert A. Berman’s compensation will continue to be governed by the Berman Employment Agreement.

The information provided in this discussion and analysis of KeyStone’s financial condition and results of operations cover only the years Ended December 31, 2015 and 2014 and the nine months ended September 30, 2016 and 2015. Subsequent to these periods, Keystone has completed a merger with Firestorm and has entered into the Merger Agreement with Novume and Brekford that is the subject of this information statement/prospectus. As of the date of hereof, Novume has not completed the detailed valuation study necessary to arrive at the required final estimates of the fair value of the Keystone, Firestorm and Brekford assets to be acquired and the liabilities to be assumed and the related allocations of purchase price, nor has it identified all adjustments necessary to conform KeyStone’s, Firestorm’s and Brekford’s accounting policies to Novume’s accounting policies. Any increases or decreases in the fair value of assets acquired and liabilities assumed upon completion of the final valuations will result in adjustments to the Novume’s consolidate balance sheet and/or statements of income, which will include operations of Keystone.

The statements of operations and income and other information provided in this discussion and analysis of the financial condition and results of operations of KeyStone should be read in conjunction with the Novume Unaudited Pro Forma Condensed Combined Financial Statements and the historical financial statements of Brekford and KeyStone, and the related notes thereto, included elsewhere in this registration statement.

While KeyStone has no direct current business operations, its significant assets are its cash and equity interest in its principal operating subsidiary, AOC Key Solutions. Thus the financial information in this section for periods prior to March 15, 2016 are for AOC Key Solutions and for all periods subsequent to March 15, 2016 are for the consolidated KeyStone.

KeyStone intends to fund organic growth and add both vertical and horizontal capabilities by acquiring GovCon service providers through a market-focused and disciplined strategy. KeyStone’s efforts to identify prospective target businesses will look for opportunities where the combination of resources will be additive to the existing capabilities of the Company and will not be limited to any geographic region or any particular sector of the GovCon support industry. A primary consideration will be to improve the level of support Keystone provides to its existing customers as well as carefully considered expansions of the customer base.

KeyStone is based in Chantilly, Virginia and has a satellite office in New Orleans, Louisiana. As of September 30, 2016 KeyStone had 31 employees and access to approximately 350 consultants.

KeyStone is an established provider of outsourced services to the GovCon market that generates revenues from fees and reimbursable expenses for professional services usually billed on an hourly rate, time- and-materials (T&M) basis. Clients are typically invoiced on a monthly basis, with revenue recognized as the services are provided. In a few cases, a fixed-fee engagement for our services may be entered into. Fixed-fee engagements can be invoiced once for the entire job, or there could be several “progress” invoices for accomplishing various phases or reaching contractual milestones. T&M contracts represent over 95% of our client engagements and do not provide us with a high degree of predictability of future period performance.

The number of business days on which revenue is generated by our staff and consultants is affected by the number of vacation days taken, as well as the number of holidays in each quarter. There are typically fewer business work days available in the fourth quarter of the year, which can impact revenues during that period. The staff utilization rate can also be affected by seasonal variations in the demand for services from clients. KeyStone’s revenues have historically been weighted slightly toward the second and third calendar quarters, with the fourth quarter generally experiencing the least amount of revenue. Since earnings may be affected by these seasonal variations, results for any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year.

Unexpected changes in the demand for our services can result in significant variations in revenues, and present a challenge to optimal hiring, staffing and use of consultants. The volume of work performed can vary from period to period.

While we anticipate an increasing demand for KeyStone’s services in 2017 based upon an expected increase in the volume of federal government spending and as our clients elect to outsource their bid and proposal activities, it is not clear how the impact of the recent Presidential elections will impact government spending. The federal government fiscal year starts on October 1 and ends on September 30. Thus, the bulk of our revenues for 2017 should be based on budget authorizations made in 2016, however, the new administration does have some discretion to delay spending on programs previously authorized and will establish the budgets for the new fiscal year beginning October 1, 2017. Although the new administration has expressed a desire to reduce the federal government bureaucracy, we cannot assume that this will reduce the demand for Keystone’s services. A short-term result of a program to reduce bureaucracy may be to increase privatization initiatives. Moreover, the new administration’s emphasis on renewing the nation’s infrastructure, which appears to enjoy broad-based support, may result in a significant long-term increase in federal procurements.

Thus, while changes and adjustments can undoubtedly be anticipated, KeyStone believes the overall outlook for the GovCon sector remains promising. This is in part due to the changing nature of the contracting process. The volume and frequency of requests for proposals has been increasing during recent years as outdated and ill-conceived programs have been eliminated in favor of higher priority programs. Moreover, Low Price Technically Acceptable (LPTA) contracts have increasingly falling into disfavor as the true long-term costs of these contracts have become apparent, and a more rigorous approach to government contracting has gained favor. We have seen a growth in KeyStone’s comparable unaudited year-over-year revenue for the nine months ended September 30, 2016.

Comparison of the Nine Months Ended September 30, 2016 and 2015 (Unaudited)

The unaudited results for the periods shown below should be reviewed in conjunction with the KeyStone Solutions unaudited consolidated financial statements and notes for the nine months ended September 30, 2016 and 2015, respectively included elsewhere in this registration statement.

Consolidated revenue for the nine months ended September 30, 2016 is entirely attributable to the KeyStone’s wholly-owned subsidiary, AOC Key Solutions. Revenue increased by $2,549,906, or 36.3%, to $9,582,874 for the nine months ended September 30, 2017 compared to $7,032,968 in the comparable period in 2015. This increase was primarily due to an increase in the demand for services by clients as a result of the federal government putting more contracts out for bid during this period than in the comparable period.

Total cost of revenue for the nine months ended September 30, 2016 increased by $1,520,463, or 38.2%, to $5,496,588 compared to $3,976,125 in the comparable period in 2015. This increase was mostly attributable to additional use of consultants to support the stronger demand for services and an increase in billable expenses due to additional client engagements requiring increased travel and other direct costs.

Gross profit for the nine months ended September 30, 2016 increased by $1,029,443, or 33.7%, to $4,086,286 compared to $3,056,843 for the comparable period in 2015. The gross profit margin remained relatively consistent at 42.6% for the nine months ended September 30, 2016 compared to 43.5% in the comparable period in 2015.

Operating costs and expenses for the nine months ended September 30, 2016 increased by $841,315, or 30.2%, to $3,624,005 compared to $2,782,690 in the comparable period in 2015. This increase was due to an increase in AOC Key Solutions’ payroll related expenses and employee bonuses, offset by decreases in net rent and administrative expenses. Operating cost attributable to the holding company were primarily for expenses associated with professional and legal services in forming KeyStone and the merger of AOC Key Solutions and KeyStone and were included in operating costs and expenses for the nine months ended September 30, 2016. As percentage of revenue, operating costs and expenses for the nine months ended September 30, 2016 decreased to 37.8% compared to 39.5% in the comparable period in 2015.

Novume anticipates that its general and administrative expenses will increase in future periods. These increases will include costs related to hiring of personnel and fees to outside consultants, lawyers and accountants as well as expenses related to maintaining compliance with applicable listing rules and SEC requirements, insurance, and investor relations activities. To the extent that a portion of these costs are assumed by Novume, there will be a decrease in the general and administrative costs for these activities directly charged to Keystone and Brekford. We believe that the overall impact of these changes will be a decrease in such expenses on a consolidated basis. However, until the merger is consummated and the impact of these changes is experienced, there can be no assurance that these expenses will be reduced.

Net other expenses for the nine months ended September 30, 2016 were $28,693 and represented net interest expense for the period. Other expenses for the nine months ended September 30, 2015 were zero.

AOC Key Solutions elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under those provisions, AOC Key Solutions did not pay 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 is now subject to corporate income taxes.

The provision for income tax expense for the nine months ended September 30, 2016 was $12,545 and is comprised of a $137,909 current tax provision offset by a $124,529 deferred tax benefit.

Net income in the nine months ended September 30, 2016 increased by $146,055, or 53.3%, to $420,208 compared to $274,153 for the comparable period in 2015. Net income margin increased to 4.4% for the nine months ended September 30, 2016 compared to 3.9% for the comparable period in 2015 based on the factors noted above.

Keystone expects to finance its operations over the next twelve months primarily through existing cash flow and from the net proceeds of the Reg A Offering, supplemented as necessary by funds available through its $1,000,000 revolving line of credit or $100.000 term loan . The Reg A Offering, line of credit and term loan are further described in this KeyStone management discussion under Liquidity and Capital Resources.

The unaudited net cash flows from operating, investing and financing activities for the periods below were as follows:

For the nine months ended September 30, 2016, net cash provided by operating activities of $559,535 consisted of net income of $420,208 and $39,498 of depreciation and amortization, offset by $99,829 due to changes in working capital, including prepaid expenses, accrued wages and leave, employee advances, accrued income taxes payable and deferred taxes.

For the nine months ended September 30, 2015, net cash used for operating activities of ($58,055) consisted of $413,966 of cash used due to changes in working capital including prepaid expenses, employee advances, accrued wages and leave, and other activities, offset by AOC Key Solutions’ net income of $274,153 and $81,758 of depreciation and amortization

For the nine months ended September 30, 2016, net cash used for investing activities of $35,377 related to the purchase of computer hardware and equipment.

For the nine months ended September 30, 2015, net cash used for investing activities of $43,835 related to the purchase of computer hardware and equipment.

For the nine months ended September 30, 2016, net cash used for financing activities of $333,991 related to the costs of the preferred stock offering, loan origination costs and AOC Key Solutions stockholders’ distributions, offset by the proceeds of $500,000 from a subordinated note.

For the nine months ended September 30, 2015, net cash used for financing activities of $120,055 related to the AOC Key Solutions stockholders’ distributions.

In March 2016, the AOC Key Solutions’ stockholders exchanged 100% of their outstanding shares of common stock in AOC Key Solutions for proportionate shares of KeyStone Solutions’ outstanding common stock.

AOC Key Solutions is one of Novume’s historical operating entities that has been in business for over 30 years. A comparison for the years ended December 31, 2015 and 2014 for AOC Key Solutions, as the predecessor to KeyStone, is provided below. The audited results for the periods shown below should be reviewed in conjunction with the financial statements and notes included elsewhere in this Registration Statement.

Total revenue for the year ended December 31, 2015 decreased by $1,857,662, or 16.1%, to $9,661,705 compared to $11,519,457 for the year ended December 31, 2014 primarily due to a decrease in federal government spending during the period and the resultant reduction in the number of contracts on which our clients bid.

Total cost of revenue for the year ended December 31, 2015 decreased by $1,122,509, or 17.0%, to $5,496,722 compared to $6,619,231 for the year ended December 31, 2014. This year-over-year decrease corresponds with the decrease in revenue noted above.

Gross profit for the year ended December 31, 2015 decreased by $735,153, or 15.0%, to $4,165,073 compared to $4,900,226 for the year ended December 31, 2014. The gross profit margin remained relatively consistent at 43.1% for the year ended December 31, 2015 compared to 42.5% for the year ended December 31, 2014.

Total operating costs and expenses for year ended December 31, 2015 decreased by $1,042,133, or 21.8%, to $3,743,299 compared to $4,785,432 for the year ended December 31, 2014. The reduction in selling, general and administrative expenses was primarily due to a reduction in overhead expenses and a reduction in fringe benefit expenses. As percentage of revenue, operating costs and expenses for the year ended December 31, 2015 decreased to 38.7% compared to 41.5% for the year ended December 31, 2014 as a result of management’s cost containment effort.

Total other expenses for the year ended December 31, 2015 was zero compared to $16 for the year ended December 31, 2014.

Net income for the year ended December 31, 2015 increased by $306,996, or 267.5%, to $421,744 compared to $114,778 for the year ended December 31, 2014, due to management’s operational changes and focus on cost reduction. Net income margin increased to 4.4% for the year ended December 31, 2015 compared to 1.0% for the year ended December 31, 2014.

Net cash flow from operating, investing and financing activities for the periods below were as follows:

For year ended December 31, 2015, net cash provided by operating activities of $260,659 consisted of net income of $421,774 and $70,268 of non-cash depreciation and amortization, offset by $231,383 in working capital adjustments, primarily accrued wages and leave, and other activities.

For year ended December 31, 2014, net cash provided by operating activities of $53,831 consisted of net income of $114,778 adjusted by $79,646 of non-cash depreciation and amortization, and offset by $140,593 in working capital adjustments, primarily accrued wages and leave, and other activities.

For year ended December 31, 2015, net cash used for investing activities of $57,343 related to the purchase of computer hardware and equipment.

For year ended December 31, 2014, net cash used for investing activities of $32,070 related to the purchase of computer hardware and equipment.

For year ended December 31, 2015, net cash used for financing activities of $267,758 related to stockholders’ distributions.

For year ended December 31, 2014, net cash used for financing activities of $319,909 related to stockholders’ distributions.

AOC Key Solutions leases office space in Chantilly, Virginia under the terms of a ten-year lease expiring October 31, 2019. The lease contains one five-year renewal option. The lease terms include an annual increase in base rent and expenses of 2.75%. AOC Key Solutions also leases office space in New Orleans, Louisiana under a three-year lease expiring May 31, 2018.

Rent expense for the nine months ended September 30, 2016 and September 30, 2015 was $375,782 and 376,066, respectively.

Future obligations over the primary terms of the AOC Key Solutions’ long-term lease expiring in 2019 are as follows:

AOC Key Solutions is the lessor in an agreement to sublease office space in Chantilly, Virginia with an initial term of two years with eight one- year options to renew the lease through October 31, 2019. The lease provides for an annual increase in base rent and expenses of 2.90%. The initial term ended October 31, 2011 and AOC Key Solutions exercised the renewal options through 2014. On April 7, 2015, the lease was amended to sublease more space to the subtenant and change the rental calculation. Rent income was $136,901 and $110,742 for the nine months ended September 30, 2016 and 2015, respectively.

KeyStone has funded its operations primarily through cash from operating activities of AOC Key Solutions and the $500,000 Avon Note. As of September 30, 2016 KeyStone Solutions had unrestricted cash and cash equivalents of $758,032 and working capital of $1,441,101 as compared to unrestricted cash and cash equivalents $567,866 and working capital of $1,409,029 as of December 31, 2015.

In the fall of 2016, KeyStone commenced the Reg A Offering pursuant to its Offering Statement on Form 1-A and the Offering Circular thereunder (the “Offering Statement”), as originally filed with the SEC on May 12, 2016 and declared qualified by the SEC on the Qualification Date. The Reg A Offering is for 3,000,000 Units consisting of one share of KeyStone Preferred Stock and a Unit Warrant to purchase 0.25 KeyStone Common Shares, at any time on or before seven years from the Qualification Date, at an exercise price of $2.00 per share of KeyStone Common Stock. The initial closing of the Reg A Offering was for the sale of 301,570 Units for aggregate gross proceeds of $3,015,700. On January 23, 2017, KeyStone had its second closing of the Reg A Offering was for the sale of 119,757 Units and received aggregate gross proceeds of $1,197,570, making the aggregate total sold through the date of this registration statement in the Reg A Offering 421,327 Units for total gross proceeds of $4,213,270. The Reg A Offering remains open following the second closing, with the possibility of additional closings in the future, although there can be no assurance additional closings will occur within a certain timeframe or at all.

Upon the completion of the Mergers, responsibility for KeyStone’s Series A Cumulative Convertible Redeemable Preferred Stock will be assumed by Novume. We anticipate paying the quarterly cash dividends through cash flow from keystone and potential business growth from other acquired entities. The quarterly dividend payments are due within five (5) business days following the end of a quarter. Should dividend payments be approved for all four quarters in 2017, the total estimated payment would be approximately $290,000 which includes accrued interest payable for those stockholders who participated in the initial closing on December 23, 2016. We do not believe the dividend payments will have a material effect on our liquidity and capital resources when compared to anticipated future cash flow.

Operating assets and liabilities consist primarily of receivables from billed and unbilled services, accounts payable, accrued expenses, and accrued payroll and related benefits. The volume of billings and timing of collections and payments affect these account balances.

AOC Key Solutions was a party to a business loan agreement (the “2015 Loan Agreement”) with Sandy Spring Bank (the “Lender”) dated as of September 25, 2015. The primary credit facility was an asset based revolving line of credit up to $1,000,000 which was due to mature on September 30, 2016. To secure our obligations under the 2015 Loan Agreement, AOC Key Solutions had granted to the Lender a security interest in its accounts receivable. The Lender was required to advance funds to AOC Key Solutions up to the lesser of (1) $1,000,000 or (2) eighty percent (80%) of the aggregate amount of all of AOC Key Solutions’ accounts receivable aged 90-days or less which contained selling terms and conditions acceptable to the Lender. AOC Key Solutions’ obligations under the 2015 Loan Agreement were guaranteed by James McCarthy, our Chairman of the Board, and his wife. AOC Key Solutions did not draw any funds from this credit facility in 2015.

On August 11, 2016, KeyStone entered into a Loan and Security Agreement (the “2016 Line of Credit”) with Sandy Spring Bank (the “Lender”) that replaces the 2015 Loan Agreement. The 2016 Line of Credit is comprised of: 1) an asset-based revolving line of credit up to $1,000,000 for short-term working capital needs and general corporate purposes which is due to mature on July 31, 2017, bears interest at the Wall Street Journal Prime Rate, floating, plus 0.50% and is secured by a first lien on all of KeyStone’s business assets; and 2) an optional term loan of $100,000 which must be drawn by July 31, 2017, is for permanent working capital, bears interest at the Wall Street Journal Prime Rate, floating, plus 0.75%, requires monthly payments of principal plus interest to fully amortize the loan over four (4) years, is secured by a first lien on all of KeyStone’s business assets, cross-collateralized and cross-defaulted with the revolving line of credit, and matures on February 15, 2019. The 2016 Line of Credit does not require any personal guarantees.

The borrowing base for the 2016 Line of Credit is up to the lesser of (1) $1,000,000 or (2) eighty percent (80%) of the aggregate amount of all of Keystone’s eligible accounts receivable as defined by the Lender. The borrowing base for the $100,000 term loan is fully reserved under the borrowing base for the revolving line of credit. The 2016 Line of Credit has periodic reporting requirements and balance sheet covenants, as well as affirmative and negative operational and ownership covenants.

As of September 30, 2016 and December 31, 2015, KeyStone had no balances due, respectively for the 2016 Line of Credit and the 2015 Loan Agreement. When the KeyStone replaced the 2015 Loan Agreement with the 2016 Line of Credit on August 11, 2016, neither line of credit had a balance due.

On March 16, 2016, KeyStone entered into a Subordinated Note and Warrant Purchase Agreement (the “Note Purchase Agreement”) pursuant to which KeyStone agreed to issue up to $1,000,000 in subordinated debt and warrants to purchase up to 125,000 shares of the KeyStone’s common stock (“Subordinated Note Warrants”). The exercise price for the Subordinated Note Warrants is equal to $2.00 per share of common stock. As of the date of this offering circular, subordinated notes with a face amount of $500,000 and Subordinated Note Warrants to purchase 62,500 shares of KeyStone’s common stock have been issued pursuant to the Note Purchase Agreement to Avon Road Partners, L.P. (“Avon Road”), an affiliate of Robert Berman, KeyStone’s acting CEO and a member of KeyStone’s Board of Directors.

The note is subordinated to the 2016 Line of Credit and any successor financing facility. Simple interest accrues 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 matures on March 16, 2019.

As of September 30, 2016 and September 30, 2015, KeyStone did not have any material commitments for capital expenditures.

As of the date of this registration statement, KeyStone did not have any off-balance sheet arrangements that have had or are reasonably likely to have a material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital resources or capital expenditures.

The discussion and analysis of KeyStone’s financial condition and results of operations is based upon KeyStone’s financial statements which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of these financial statements requires the management of KeyStone to make estimates and judgments that affect the reported amounts in our financial statements.

KeyStone believes the application of accounting policies, and the estimates inherently required therein, are reasonable. These accounting policies and estimates are periodically reevaluated, and adjustments are made when facts and circumstances dictate a change. KeyStone bases its estimates on historical experience and on various other assumptions that management of KeyStone believes to be reasonable under the circumstances, the results of which form management’s basis for making judgments about the carrying values of assets and liabilities that may not be readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, or if management made different judgments or utilized different estimates.

KeyStone’s accounting policies are further described in its historical audited financial statements and the accompanying notes included elsewhere in this registration statement. KeyStone has identified the following critical accounting policies:

KeyStone recognizes its revenues for the sale 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. KeyStone 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 our employees or consultants at an agreed upon rate per hour set forth in our standard rate sheet or as written from time to time in our contracts or purchase orders. These costs are recognized in the period in which services are performed.

Revenues related to firm fixed price contracts are recognized as revenue as value is delivered to the customer. The pattern of revenue recognition for these contracts varies depending on the terms of the individual contracts, and may be recognized proportionally over the term of the contract or deferred until the end of the contract term and recognized when our obligations have been fulfilled with the customer.

The agreements entered into in connection with a project, whether on a time-and-materials basis or firm fixed price basis, typically allow our clients to terminate early due to breach or for convenience with 30-days’ notice. In the event of termination, the client is contractually required to pay for all time, materials and expenses incurred by us through the effective date of the termination.

Management of KeyStone reviews the collectability of accounts receivable on a monthly basis, assessing the credit-worthiness of customers whose accounts are past due. Management has elected to record bad debts using the direct write-off method. Generally accepted accounting principles require that the allowance method be used to reflect bad debts. However, the effect of the use of the direct write-off method is not materially different from the results that would have been obtained had the allowance method been followed.

Through March 15, 2016, AOC Key Solutions had elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under those provisions, AOC Key Solutions did not pay federal corporate income taxes, and in most instances state income tax, on its taxable income. Instead, the stockholders of AOC Key Solutions were liable for individual income taxes on their respective shares of AOC Key Solutions’ net income. AOC Key Solutions effectively revoked its S Corporation election upon the March 15, 2016 merger with KeyStone Solutions. Both the KeyStone Solutions and AOC Key Solutions are subject to corporate income taxes.

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.

KeyStone’s evaluation as of September 30, 2016 revealed no tax positions that would have a material impact on the financial statements. The 2013 through 2015 tax years remain subject to examination by the IRS. Management of KeyStone Solutions 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.

Brekford (formerly California Cyber Design, Inc. (“CCDI”)) was incorporated in Delaware on May 27, 1998 and changed its name to American Financial Holdings, Inc. (“AFHI”) on August 11, 2004. AFHI, a publicly-traded corporation with no operations, announced the completion of its share exchange transaction with Pelican Mobile Computers, Inc., a Maryland corporation (“Pelican Mobile”), on January 6, 2006. Pelican Mobile exchanged each issued and outstanding share of Pelican Mobile Computers (1,000 shares issued and outstanding at the time of the share exchange) for 25,000 shares of AFHI on a post-split basis (the “Share Exchange”) with an aggregate of

25,000,000 shares of common stock of AFHI issued to the former stockholders of Pelican Mobile. At the time of the Share Exchange, the existing stockholders of AFHI retained 5,512,103 shares of AFHI’s outstanding common stock after the cancellation of approximately 2,549,000 shares of common stock. As a result, the former stockholders of Pelican Mobile became the majority stockholders of AFHI. Under the terms of the Share Exchange, Brekford changed its name to Tactical Solution Partners, Inc. On April 25, 2008, Brekford’s stockholders approved a proposal to change its name from Tactical Solution Partners, Inc. to Brekford International Corp. to better reflect our business strategy. Subsequently, on July 9, 2010, Brekford’s stockholders approved a proposal to change Brekford’s name from Brekford International Corp. to Brekford Corp. On October 27, 2010, Brekford’s Board of Directors approved the merger of Pelican Mobile with Brekford Corp. pursuant to Section 253 of the General Corporation Law of the State of Delaware, with Brekford Corp. as the surviving corporation. The merger became effective upon the filing of a Certificate of Ownership and Merger with the State of Delaware (and the appropriate Articles of Merger with the State of Maryland), pursuant to the terms of an Agreement and Plan of Merger. The merger documents were filed with the States of Delaware and Maryland on October 28, 2010. Effective upon the completion of the merger, Brekford’s corporate name remained Brekford Corp. The operations of Pelican Mobile were continued by Brekford without interruption following the merger.

Brekford Corp. (BFDI) headquartered in Hanover, Maryland is a leading public safety technology service provider of fully integrated traffic safety solutions, parking enforcement citation management, and mobile technology equipment for public safety vehicle services to state and local municipalities, the U.S. Military and various federal public safety agencies throughout the United States and Mexico. Brekford’s combination of upfitting services, cutting edge technology, and automated traffic safety enforcement (“ATSE”) services offers a unique 360º solution for law enforcement agencies and municipalities. Our core values of integrity, accountability, respect, and teamwork drive our employees to achieve excellence and deliver industry leading technology and services, thereby enabling a superior level of safety solutions to our clients. Brekford has one wholly-owned subsidiary, Municipal Recovery Agency, LLC, a Maryland limited liability company, formed in 2012 for the purpose of providing collection systems and services for unpaid citations and parking fines.

Automated Traffic Safety Enforcement – Red Light and Speed Camera Systems

Public safety is a major concern for most communities – especially as populations grow, and yet there is continual pressure on public safety budgets. One way to help make streets safer while reducing workload is a well-run photo red light or speed enforcement program. The objective of photo enforcement is to help curtail aggressive driving through voluntary compliance. Revenue generated from fines routinely goes directly back into supporting other public safety initiatives.

Although opponents of red light cameras cite the increase in rear end collisions as cause for disapproval of cameras, a study conducted in February 2011 by the Insurance Institute for Highway Safety (the “IIHS”) reported that red-light cameras reduced fatal red light running crashes by 24% in 14 large U.S. cities with populations over 200,000. IIHS concluded that if red light cameras had been operating in all 99 U.S. cities with populations over 200,000 during this study period (five years), a total of 815 deaths could have been avoided. Because the types of crashes prevented by red light cameras tend to be far more severe than rear-end crashes, research has shown there is a net positive benefit. Photo enforcement solutions can reduce collisions, injuries and deaths by providing a useful tool for municipalities and law enforcement agencies, without unduly taxing drivers who do not break the law. Today, nearly 600 communities across the U.S. operate red light or speed camera enforcement programs.

Despite the increased safety effects and prevention of fatalities, there is still a common misconception that automated traffic safety enforcement systems are not supported by the general public. An IIHS survey conducted in November 2012 found that a large majority of people living in Washington, D.C., one of the largest combined red light and speed enforcement programs in the U.S., favor camera enforcement. Of those surveyed, 87% support red light cameras and 76% support speed cameras. Even the majority of violators (59%) agreed that they deserved their most recent citation. In 2012, IIHS reported that 633 people were killed and an estimated 133,000 were injured in crashes that involved red light running. Speeding was a factor in 31% of motor vehicle crash deaths in 2012.

Brekford’s ATSE products offer intersection safety (red light), speed, and cell phone enforcement options by way of a complete suite of solution-based products. Brekford’s team of industry professionals has extensive experience in this field, Brekford has developed equipment and a full turnkey solution that Brekford believes will ensure the success of any program. Brekford has created and implemented some of the most cutting-edge features into its design while constructing end-to-end systems specifically with its clients’ needs in mind.

ATSE systems are one of a wide range of measures that are effective at reducing vehicle speeds and crashes. The ATSE system is an enforcement technique with one or more motor vehicle sensors producing recorded images of motor vehicles traveling at speeds above a defined threshold. Images captured by the ATSE system are processed and reviewed in an office environment and violation notices are mailed to the registered owner of the identified vehicle. ATSE is a technology available to law enforcement as a supplement and not a replacement for traditional enforcement operations. Evaluations of ATSE, both internationally and in the United States have identified some advantages over traditional speed enforcement methods. These include:

Beyond traditional tax collection on income or property, state agencies and local municipalities rely heavily on fine and fee revenue generated from a multitude of violator-funded sources. For example, jurisdictions generate sizable revenues from court fees, traffic and parking violations, ordinance infractions, and library and utility arrearages. Each of these revenue sources funds public safety and community development initiatives and without the income, the services are curtailed. Brekford offers client-specific solutions to these agencies and municipalities to assist them with collecting unpaid fines, including:

Many of today’s law enforcement agencies are struggling to balance the increasing demand from their citizens for more services with limited and/or declining budgets. One of the easiest and most cost-effective ways agencies can address this issue is by deploying an electronic ticketing, or E-Ticketing solution. Automating the ticket issuing and processing system can significantly decrease cost, increase productivity and improve officer safety.

Brekford offers a unique functionality that streamlines the data entry process even further. Many law enforcement agencies that have deployed a mobile data system run background queries from national (NCIC), state, and local databases and Brekford’s solution captures the data from these mobile query files and auto-populates all of the requisite data into the electronic citation (E-Tix) form on the screen. Brekford’s Slick-Ticket ™ product is a fully portable, over-the-seat organizer for public safety vehicles, specially designed to house a printer and scanner to allow law enforcement officers to quickly access driver’s license and registration information as well as issue tickets, warnings and citations.

Law enforcement agency, fire department and emergency medical services (“EMS”) personnel have unique requirements for fleet vehicle upfitting and IT equipment to include characteristics such as ruggedness and reliability. The equipment must be able to work in extreme environments that include high levels of vibration and shock, wide temperature ranges, varying humidity, electromagnetic interference as well as voltage and current transients. Brekford’s rugged and non-rugged IT products and mobile data communication systems provide public safety workers with the unique functionalities necessary to enable effective response to emergency situations.

For more than a decade, Brekford has been a distributor for most major brands in the mobile technology arena. Brekford handles everything from Panasonic Toughbooks^® and Arbitrator^® digital video systems to emergency lighting systems and wireless technology. Brekford’s management believes that it has all of the high-end products that Brekford’s customers need to handle their day-to-day operations and protect the public they serve. Every product Brekford sells is tested by highly trained technicians and guaranteed to work in even the most extreme conditions. Brekford specializes in seamlessly incorporating custom-built solutions within existing networks. Brekford delivers end-to-end solutions with service programs that work for agencies large and small, from turnkey drop shipping to municipal leases. Brekford’s commitment is to design and deliver solutions that meet or exceed industry standards for safety, ergonomics, reliability, serviceability and uniformity.

Brekford develops integrated, interoperable, feature-rich mobile systems that enable first responders, such as police, fire and EMS, to obtain and exchange information in real time. The rapid dissemination of real time information is critical to determine and assure timely and precise resource allocation by public sector decision makers. As a premiere Panasonic Toughbook partner, we augment these rugged laptops by designing and manufacturing vehicle mounting systems and docking stations for in-vehicle communications equipment. With rugged laptop computers, tablets and hand-helds devices, GPS terminals, two-way radios, and full console systems, Brekford provides ergonomically sound mounting products with full port replication.

Toughbook Arbitrator is a rugged revolution in law enforcement video capture. The fully integrated system offers unparalleled video capture (up to 360 degrees), storage and transfer, and is designed to work with back-end software for seamless video management, including archiving and retrieving. Brekford augments this solution with an Automatic License Plate Reader (ALPR / LPR), an image-processing technology used to identify vehicles by their license plates. License Plate Readers (LPRs) can record plates at about one per second at speeds of up to 70 MPH and they often utilize infrared cameras for clarity and to facilitate reading at any time of day or night. The data collected can either be processed in real-time, at the site of the read, or it can be transmitted to remote centers and processed at a later time. When combined with wearable body cameras, our total client solution provides a video capture solution that maintains the chain of evidence from the initial event through to court proceedings.

The Brekford 360-degree vehicle solution provides complete vehicle upfitting, mobile data and video solutions including municipal financing and leasing services for agencies. The 360-degree vehicle solutions approach provides customers with a one-stop upfitting, cutting edge technology and installation service. The comprehensive approach enables Brekford to be the only stop our customers need to make to purchase law enforcement vehicles (GM, Ford, Dodge), have them upfitted with lights, sirens, radio communication and rugged IT technology, and have them “ready to roll”. Brekford’s mission is to provide and install equipment that ensures safe and efficient mission critical vehicles while incorporating the latest technological advances. Brekford adheres to strict quality control procedures and provide comprehensive services. The Brekford certified installation team provides Brekford’s customers the highest level of expertise and service from inception to completion, including maintenance and upgrades.

Brekford works with manufacturers and distributors to secure the lowest cost possible while taking advantage of any available incentives in order to provide competitive pricing and minimize delivery time to Brekford’s customers while maintaining Brekford’s product margins. Typically, once Brekford’s sales team receives orders from customers, Brekford then purchase the required products from manufacturers and sell the products to those customers. Sales may include products only or both products and installation services.

Brekford Corp. is a technology services provider of mobile computer and video systems through its vehicle upfitting services to homeland security agencies and federal, state, and local law enforcement agencies and traffic safety enforcement which includes photo speed, red light, and parking enforcement solutions and citation management for municipalities. The primary products and services from which Brekford has earned revenue and anticipates Brekford will continue to earn revenue is through this suite of products and services.

Brekford’s management estimates that the public safety communications market is a $4.2 billion market, growing at more than 10% per annum. Police, fire and EMS personnel have unique requirements for communication, ruggedness, reliability and quality. Their equipment must be able to work in extreme environments that include high levels of vibration and shock, wide temperature ranges, varying humidity, electromagnetic interference and voltage and current transients. Furthermore, public safety personnel and emergency responders are demanding tailored mobile communication solutions that enable real-time access and exchange of critical data to assure timely and precise resource allocation by public sector decision makers. Brekford’s in-vehicle technology and communication solutions provide public safety workers and emergency responders with the unique, integrated functionalities necessary to enable effective response to emergency situations.

ATSE solutions include speed and red-light camera technologies that are increasingly in demand, as well as parking enforcement solutions with a complete turnkey backend citation management software suite. The U.S. market for red-light systems is estimated at 20,000 to 30,000 systems and the market for speed cameras is estimated at 35,000 to 50,000 systems. According to the IIHS, as of March 2015, 466 communities have red light cameras currently operating and 138 communities have speed cameras operating in at least one location. Brekford has established a foothold in this business by securing contracts with several municipalities in the Mid-Atlantic region, and Brekford is currently implementing plans for national and international expansion. There are only a handful of competitors that are currently providing ATSE services with three companies that are considered leaders of this industry. Management believes that Brekford possesses a technical advantage over its competitors. Due to Brekford’s flexible customized solutions and superior customer service, Brekford’s management believes Brekford is poised to capture increased market share in the U.S., Mexico, and other countries in the near future.

Although Brekford operates in an industry that has experienced substantial growth in recent years, it is also characterized by customers that are extensively fragmented. Further, although there are only a handful of competitors in its industry, competition among those companies is intense. Larger competitors may have greater buying power and, therefore, may be able to offer better pricing than we can offer, which is one of the key factors in determining whether a contract will be awarded by local, state and federal agencies with limited budgets. The majority of Brekford’s sales are to government agencies and other government contractors with historically stable operating budgets, thus Brekford’s operating results and growth are largely dependent on national and local economic conditions. At the same time, Brekford’s management believes that Brekford’s technology, size, and strategy provide more flexibility when bidding on contracts in smaller to medium sized municipalities which collectively constitutes the majority of installation opportunities within the U.S.

To address these competitive pressures and industry trends, Brekford intends to grow revenues by:

Brekford has several contracts with government agencies, of which net revenue from one customer during the year ended December 31, 2015 represented 17% of the total net revenue. Two customers accounted for 53% of total accounts receivable as of December 31, 2015, which was subsequently collected in 2016.

Net revenue from one customer during the year ended December 31, 2014 represented 10% of the total net revenue. Accounts receivable due from one customer at December 31, 2014 amounted to 53% of total accounts receivable at that date.

Brekford purchased substantially all rugged IT products that it resold during the periods presented from a single distributor. Revenue from rugged IT products amounted to 59% and 53% of total revenue for the years ended December 31, 2015 and 2014, respectively. As of December 31, 2015 and 2014, accounts payable due to this distributor amounted to 72% and 53% of total accounts payable, respectively.

All companies engaged in supplying equipment and services to government agencies, either directly or by subcontract, are subject to business risks. Government contracts generally contain provisions permitting termination, in whole or in part, without prior notice at the government’s convenience, as well as termination for default based on lack of performance. Upon termination for convenience, Brekford generally would be entitled to compensation only for work done, supplier costs and termination liability at the time of termination and to receive an allowance for profit on the work performed. A termination arising out of Brekford’s default could expose Brekford to liability and have a negative impact on Brekford’s ability to obtain future government contracts and orders. Furthermore, on government contracts for which Brekford is a subcontractor and not the prime contractor, the government could terminate the prime contract for convenience or otherwise, which would likely result in the termination of Brekford’s subcontract.

Because much of Brekford’s business growth 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 Brekford’s business. Camera-operated traffic enforcement solutions have recently been the subject of significant public criticism and legislators in various jurisdictions have introduced, or have indicated that they intend to introduce, legislation to better monitor and control traffic enforcement activities. For example, legislation passed in Maryland in 2014 imposes a civil penalty on enforcement contractors if they issue erroneous citations on behalf of a municipality. It also prohibits contractors from receiving compensation based on the number of citations issued by the municipality or citations actually paid. Brekford cannot predict whether additional pieces of legislation will be enacted, or the impact they may have on Brekford’s business.

As of February 3, 2017, Brekford employed forty-two (42) full-time employees. Brekford has never had a work stoppage, and none of its employees are represented by collective bargaining agreements. Brekford anticipates hiring additional employees to ensure timely delivery of customer projects and services, as necessary. Additionally, Brekford intends to use the services of independent consultants and contractors to perform various professional services, when appropriate. Brekford’s management believes that this use of third-party service providers may enhance Brekford’s ability to contain general and administrative expenses.

Brekford’s corporate headquarters is located in Hanover, Maryland in an approximately 22,000 square foot office and warehouse facility which is leased at various rates through April 30, 2020. Brekford also leases approximately 2,500 square feet of office space from Peppermill Properties, LLC, a Maryland limited liability company (“Peppermill”). Peppermill is owned and managed by Chandra (C.B.) Brechin and Scott Rutherford, who are officers, directors and principal stockholders of Brekford. On June 1, 2010, Brekford entered into a three-year lease with Peppermill, which was subsequently amended to extend the lease expiration date to June 30, 2017. This space is used for the expansion of business. The total minimum annual lease payments due under Brekford’s lease agreements is $638,878.

Brekford is not currently involved in any legal proceedings, however, from time to time, we may become a party to various legal actions and complaints arising in the ordinary course of business. In addition to commitments and obligations in the ordinary course of business, Brekford may become subject to various claims, pending and potential legal actions for damages, investigations relating to governmental laws and regulations and other matters arising out of the normal conduct of Brekford’s business. It is possible that cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies.

Brekford’s principal executive offices are located at 7020 Dorsey Road, Hanover, Maryland 21076. Brekford’s telephone number is (443) 557-0200.

The tables below set forth information regarding the members of the Brekford Board and non-director executive officers of Brekford prior to and after the Effective Time.

Rodney Hillman. Mr. Hillman, age 51, joined Brekford in May 2012 and served as its Strategy & Finance Analyst since October 2012 and as its Director of Operations from May 2012 to September 2012. He was appointed as Brekford’s President and Chief Operating Officer in December 2013. Prior to joining Brekford, Mr. Hillman served in various executive level capacities during his 28 year career. Most recently, he spent 10 years as Chief Operating Officer, Chief Financial Officer, and Director of Game Trading Technologies, Inc. (“GMTD”), a publicly-traded company in the consumer electronics industry that he co-founded. Prior to his tenure at GMTD, Mr. Hillman was Vice President of Product Development at InterAct Accessories, Inc. and held various management positions at both Baltimore Gas & Electric and Constellation Energy Group. Mr. Hillman has an M.S. degree in Finance from Loyola College in Baltimore, Maryland, an M.B.A. degree from the University of Baltimore, and a B.S. degree in Electrical and Computer Engineering from The Johns Hopkins University.

Scott Rutherford. Mr. Rutherford, age 57, has served as Chief Strategic Officer since December 2013 and, prior to that, as Brekford’s President since July 8, 2008. Prior to 2008, he was Director of Engineering of our Pelican division since January 2006. He has also served as a director of Brekford since January 2006. He co-founded Pelican in 1997 and served as its Vice President from 1997 to 2006. Mr. Rutherford has more than 25 years of entrepreneurial experience in conceiving, developing and building technical solutions for clients in both the corporate and government sectors. For Pelican, Mr. Rutherford was responsible for all aspects of technology evaluation and deployment to meet its clients’ needs for mobile, ruggedized computing solutions. This included locating and assimilating complex solutions from various vendors to ensure a turnkey installation in highly variable models of police and fire vehicles. In addition, Mr. Rutherford launched and continues to develop Pelican’s technical support infrastructure, for which he and his team of engineers have been presented with awards for Outstanding Technical Support by various clients, including the Maryland State Police. Leveraging his extensive mechanical, electronic and computer expertise, Mr. Rutherford has developed a large array of products from concept, including a Mobile Training Center for the Department of Defense and proprietary irrigation control filters to eliminate RF interference from the Annapolis Naval Radio Transmitter Station. Mr. Rutherford is the recipient of several awards for his innovative technology systems, including the “Comdex Most Innovative” award in 1998. Brekford’s management and Board of Directors believes Mr. Rutherford is an appropriate electee to the Board of Directors, due to Mr. Rutherford’s experience discussed above, particularly his extensive technical knowledge in areas of mechanical, electronics and computers, his familiarity with and involvement in Brekford’s key market areas, and his significant business experience gained through the ownership and operation of Brekford.

Edward Parker. Mr. Parker, age 67, has over 40 years of experience in law enforcement, security and public safety. He began his career with the Baltimore Police Department where he served in the Homicide, Robbery, Escape & Apprehension and District Narcotics Units as well as the Tactical Section and the Patrol Division. During his law enforcement career, Ed was the recipient of awards and commendations to include a Governor’s Citation for distinguished service rendered to the citizens of Baltimore City. Parker was also the Director of Corporate Security for a large Baltimore-based company, Crown Central Petroleum Corporation, where he was responsible for the development and implementation of crime prevention strategies and security plans for assets and personnel throughout the United States. His responsibilities also included managing compliance with Department of Defense, Department of Energy and United States Coast Guard security requirements. Parker recently retired as the Deputy Director of the Governor’s Office of Crime Control & Prevention, the State Administering Agency for Maryland that administered over $200 million in state and federal grant funds for law enforcement and public safety. During

his tenure at GOCCP, Parker was involved in the development and implementation of some of Maryland’s signature initiatives such as the Criminal Justice Dashboard, CompStat training for police officers, crime mapping, crime analysis and strategies to more effectively supervise and contain violent offenders. Parker also worked to foster a variety of public safety linkages and partnerships to include cross-border information sharing initiatives with law enforcement and public safety partners in Virginia, the District of Columbia, Pennsylvania, Delaware, West Virginia and New York. He also managed over 900 grants. Included in these grants were the Byrne Justice Assistance Grant Program, the Victims of Crime Assistance (VOCA) program, Violence Against Women Act (VAWA) grants, the Paul Coverdell Forensic Sciences Improvement grant program, federal juvenile justice grants, and a variety of state funded grant programs intended to reduce crime, monitor sex offenders, reduce sexual assault and domestic violence and support crime victims. Parker holds a Master’s Degree from Johns Hopkins University.

Robert West. Mr. West, age 47, has served as a director of Brekford since October 2012. He has been the Managing Partner at C3 Healthcare Solutions, LLC since he led its formation in March 2008 with five other members. C3 Healthcare Solutions provides business development and marketing consulting services to health care organizations including hospitals and physician practices. Additionally, Mr. West is the Chief Executive Officer of Pulmonary and Critical Care Associates of Baltimore, PA (“PCCAB”), a 43 physician group practice specializing in pulmonology, critical care, and sleep medicine. He is responsible for oversight of all financial, accounting, and billing operations and has led the organization to 55% revenue growth in the past five years. Mr. West is also the President of Proximall, LLC, a physician billing company that is a wholly owned subsidiary of PCCAB, formed in January 2012. Prior to these endeavors, Mr. West served as Administrative Director of Orthopedics, Neurosciences, and Bariatrics at Greater Baltimore Medical Center from August 2003 to February 2007. Mr. West’s board experience includes the Baltimore Spine Center from January 2005 to February 2007 and he is currently on the Executive Advisory Board of The Doctors Company. Mr. West earned a Master of Science in Management from The University of Maryland in 1999 and a Bachelor of Science from James Madison University in 1991. Brekford’s management and Board of Directors believes Mr. West is an appropriate electee to the Board of Directors, due to Mr. West’s experience discussed above in relation to the financial, management and organizational aspects of these positions.

Steve Ellis. Mr. Ellis, age 54, has served as a director of Brekford since July 2015. He is a partner of EagleFirst, LLC, an advisory firm providing CFO, Merger and Acquisition (“M&A”) and business development support services to small and medium sized businesses with a focus on government contracting, technology and manufacturing. Mr. Ellis has more than 25 years of experience in M&A and senior accounting roles in the United States and internationally. He has managed the negotiation and due diligence processes of more than 30 acquisitions and divestments globally, as well as creating and executing post-acquisition integration plans. Prior to EagleFirst, Mr. Ellis was a CFO at Smith’s Group plc, where he helped create Smiths Detection, a manufacturer of sensors used by government agencies that detect and identify explosives, weapons, chemical agents, and biohazards. Over an eight-year period, he was instrumental in growing Smiths Detection’s revenues from $20 million to nearly $1 billion

C.B. Brechin. Mr. Brechin, age 44, served as Brekford’s Chief Executive Officer from July 2008-November 2016 and as Chief Financial Officer from March 2011-November 2016, and has served as a director of Brekford since January 2006. In 1996, Mr. Brechin co-founded Brekford’s predecessor, Pelican Mobile, which had been a leading provider of rugged, mobile technology solutions providing services to branches of the U.S. military, various federal entities and numerous security and public safety agencies throughout the Mid-Atlantic region for more than a decade. Mr. Brechin possesses several years of technology expertise in the areas of hardware configuration, software installation, troubleshooting and network administration as a computer consultant for a number of organizations before founding the company. Mr. Brechin managed all aspects of the Pelican’s corporate and government sales, including sales strategy, partner/vendor relations, corporate structure, contract acquisition, training and development. In addition, Mr. Brechin managed Pelican’s financial planning, cash flow and risk analysis. He successfully closed over $20 million in sales and secured key client relationships. Through his sales efforts and strategic vision, Pelican was twice been recognized as a top reseller of Panasonic equipment, including “Reseller of the Year” in 2004. Mr. Brechin has a Bachelor’s Degree in Political Science and International Affairs from Kalamazoo College and a Master’s Degree in Information and Telecommunications Systems from Johns Hopkins University. Brekford’s management and Board of Directors believes Mr. Brechin is an appropriate electee to the Board of Directors, due to Mr. Brechin’s experience discussed above, particularly his management experience in running a successful company involved in sales and contracts with government agencies as well was his expertise in technology, corporate governance and financial management.

The Brekford Board has established an Audit Committee, a Compensation Committee and a Corporate Governance Committee, each of which is briefly described below.

The Audit Committee assists the Brekford Board in maintaining the integrity of Brekford’s financial statements and financial reporting processes and systems of internal audit controls, and Brekford’s compliance with legal and regulatory requirements. The Audit Committee reviews the scope of independent audits and assesses the results. The Audit Committee meets with management to consider the adequacy of the internal control over, and the objectivity of, financial reporting. The Audit Committee also meets with Brekford’s independent registered public accounting firm and with appropriate financial personnel concerning these matters. The Audit Committee selects, determines the compensation of, appoints and oversees Brekford’s independent registered public accounting firm. Representatives of the independent registered public accounting firm periodically meet with the Audit Committee and always have unrestricted access to the Audit Committee. The Audit Committee, which currently consists of Steve Ellis (Chairman) and Robert West, met 4 times during 2016. The Brekford Board has determined that Mr. Ellis is an “audit committee financial expert,” as defined by the SEC in Item 407 of Regulation S-K. The Audit Committee has adopted a charter, a copy of which is available on Brekford’s website at: http://ir.issuerdirect.com/bfdi/corporate_governance. The information on Brekford’s website is not a part of this information statement/prospectus.

The Compensation Committee administers incentive compensation plans, including stock option plans, and advises the Brekford Board regarding employee benefit plans. The Compensation Committee establishes the compensation structure for Brekford’s senior managers, approves the compensation of Brekford’s senior executives, and makes recommendations with respect to compensation of the Chief Executive Officer and Brekford’s other executive officers. The Compensation Committee advises and makes recommendations to the Brekford Board on all matters concerning director compensation. The Compensation Committee, which currently consists of Robert West (Chairman) and Steve Ellis, met once during 2016. The Compensation Committee has adopted a charter, a copy of which is available on our website at: http://ir.issuerdirect.com/bfdi/corporate_governance. The information on Brekford’s website is not a part of this information statement/prospectus.

None of the members of Brekford’s compensation committee was, during 2016, an officer or employee of Brekford, was formerly an officer of Brekford or had any relationship requiring disclosure by Brekford under Item 404 of Regulation S-K. No interlocking relationship as described in Item 407(e)(4) of Regulation S-K exists between any of Brekford’s executive officers or Compensation Committee members, on the one hand, and the executive officers or compensation committee members of any other entity, on the other hand, nor has any such interlocking relationship existed in the past.

The Corporate Governance Committee evaluates and recommends candidates for election to the Brekford Board, reviews the performance and contribution of directors, recommends membership for standing committees, reviews director independence, and adopts and reviews Brekford’s corporate governance guidelines and codes of conduct.

The Corporate Governance Committee, which was established in February 2008, currently consists of Robert West (Chairman) and Steve Ellis. The Corporate Governance Committee met once in 2016. The Corporate Governance Committee has not adopted a charter.

To determine whether directors are “independent”, the Brekford Board has adopted the independence standards of The NASDAQ Stock Market Rules (the “NASDAQ Rules”). The Brekford Board has determined that each of Messrs. Ellis, Smith and West is an “independent director” as defined by NASDAQ Rule 5605(b)(1). Each member of the Compensation Committee and the Corporate Governance Committee other than Mr. Brechin and Mr. Rutherford is an “independent director,” and Messrs. West and Ellis satisfy the independence requirements of NASDAQ Rule 5605(c)(2)(A) relating to the independence of Audit Committee members. Brekford’s criteria for independence as approved by the Brekford Board is available to stockholders on Brekford’s website at: http://www.brekford.com/investorrelations.html.

There are no family relationships among the executive officers and directors of Brekford.

The following table sets forth the compensation paid to all persons who served as members of the Brekford Board (other than our named executive officers) during 2016.

In April 2008, the Company’s Board of Directors adopted the 2008 Director’s Compensation Plan, which provides for the following compensation:

During the second quarter of 2016, each non-employee director who attended at least 75% of the regular and special meetings of the Board of Directors and of any committees to which he was appointed during the preceding year received an option to purchase shares of Common Stock. Each of Messrs. Ellis, West and Parker satisfied the foregoing requirement and received a stock option exercisable for 75,000 shares of Common Stock at an exercise price of $0.12 per share. These options will vest ratably over a three-year period commencing on their grant dates.

The Chairman of the Board is entitled to receive cash in the amount of $1,000 per calendar quarter and each other non-employee director is entitled to receive cash in the amount of $1,000 per calendar quarter as compensation for attending Board meetings held during that quarter, provided that a director must attend a minimum of 75% of the regular and special meetings of the full Board and of any committees upon which they sit. The Board held four meetings during 2016.

The Company reimburses a director’s out-of-pocket expenses for in-person meetings upon submission of an expense statement and receipts, up to a maximum of $500 per in-person meeting.

Brekford’s compensation philosophy is to provide its executive officers with compensation packages that attract, retain, reward and motivate them. Therefore, the Brekford Board and its Compensation Committee generally construct compensation packages that take into account those of executive officers with similar positions in comparable companies, linking the performance of Brekford and individual performance and designed to align the interests of the executive officers with those of Brekford’s stockholders. Brekford’s compensation philosophy is also designed to reinforce a sense of ownership in Brekford, urgency with respect to meeting deadlines and overall entrepreneurial spirit and to link rewards to measurable corporate performance metrics.

While the Brekford Board and Compensation Committee seek to provide compensation packages that are competitive within Brekford’s markets and the technology industry, in general, it does not utilize an established peer group in the industry and does not set compensation levels based on any predetermined benchmarks for total compensation or any individual element of compensation. Management of Brekford reviews Brekford’s performance on a regular basis using a variety of financial and non-financial metrics. These metrics include, but are not limited to, net sales, gross margin, sales and marketing expenses, personnel costs, accounts receivable and accounts payable aging, liquidity and cash resources. Management compares actual results against goals and budgets to take appropriate actions in order to improve performance.

Certain compensation adjustments are made pursuant to each executive officer’s employment terms established at the time he or she is hired. Brekford does not have employment agreements or change of control agreements with any of its executive officers. We established the salary levels by surveying companies within similar industry including current compensation data based upon organization size, industry and geographic location.

Members of Brekford’s executive management team are essential in providing input to the Compensation Committee concerning the effectiveness of the executive compensation program, selection of performance criteria, financial performance of Brekford, and performance of individual executives. The Chief Executive Officer is the key member of management who advises the Committee and supplies needed and accurate information.

The Compensation Committee’s charter provides the Committee with the authority to engage compensation consultants (and other advisors) as it deems appropriate to assist with the performance of its duties. The Compensation Committee [did/did not] use an independent advisor concerning 2016 executive compensation.

Brekford’s compensation packages for executive officers consist of cash salaries and, when deemed appropriate, long-term incentive awards in the form of equity-based awards granted under the 2008 Stock Incentive Plan.

Base salaries are set initially upon hire based predominantly on available market data and are adjusted based on market trends, our overall performance, individual contributions to our performance, and our available cash to a lesser extent. Brekford also takes into consideration the scope of its officers’ respective responsibilities. In reviewing base salaries, Brekford also considers several other factors, including cost of living increases, and levels of responsibility.

Executive officers may be granted stock options, shares of Brekford Common Stock (restricted or unrestricted), performance units and/or other equity-based awards. When granted, these awards typically have time vesting requirements as a way to align the interests of the executive officers with those of Brekford’s stockholders. Brekford believes that its long-term performance is aided by a culture that encourages superior performance by Brekford’s executive officers, and that, when appropriate, equity awards encourage and will appropriately reward such superior performance.

The following table sets forth, for each of the last two fiscal years, the total remuneration awarded to, earned by, or paid to (i) each person who served as Brekford’s principal executive officer at any time during 2016, (ii) Brekford’s two most highly compensated executive officers other than the persons described in item (i) who were serving as executive officers as of December 31, 2016 and whose total compensation (excluding above-market and preferential earnings on nonqualified deferred compensation) exceeded $100,000 during 2015, and (iii) up to two additional individuals for whom disclosure would have been provided pursuant to item (ii) had they been serving as executive officers of Brekford as of December 31, 2016 (the principal executive officers and such other persons are referred to as the “named executive officers”). Brekford has determined that its named executive officers for 2016 are C.B. Brechin, who served as its Chief Executive Officer, Chief Financial Officer and Treasurer until November 23, 2016, Rodney Hillman, who served as its President and Chief Operating Officer until November 23, 2016 and has served as its Chief Financial Officer since November 23, 2016, and Scott Rutherford, who serves as its Chief Strategic Officer.

None of the named executive officers is a party to an employment agreement with Brekford, and all of them serve at the discretion of the Brekford Board.

The terms of their employment arrangements entitle Messrs. Hillman and Rutherford to annual base salaries of $157,000 and $185,000, respectively, payable in accordance with our normal payroll practices. Between January 1, 2015 and June 30, 2015, the salary levels for Messrs. Brechin and Rutherford were $170,000 and $185,000, respectively. None of the named executive officers received any bonus, equity or other non-salary compensation for 2016 or 2015, except that Mr. Hillman received a grant of 66,000 shares of Common Stock in 2016 for service in 2015 and a grant of 66,000 shares of Common Stock in 2015 for service in 2014.

On November 23, 2016, Brekford entered into a separation agreement (the “Separation Agreement”) with C.B. Brechin, the Company’s Chief Executive Officer and Chief Financial Officer. Pursuant to the Separation Agreement, as of the Effective Date Mr. Brechin commenced a sabbatical leave from his positon as the Company’s Chief Executive Officer and Chief Financial Officer. Mr. Brechin will continue to serve as a member of the Board of Directors of the Company. For a period of 18 months from the Effective Date, Mr. Brechin will continue to be paid at the rate of $200,000 per year and will continue to participate in the Company’s sponsored retirement plan and medical and dental insurance plans. The salary and benefits described above will continue beyond the 18 months until such time as Mr. Brechin is removed as a personal guarantor for certain Company obligations.

Commencing 18 months after the Effective Date, Mr. Brechin will serve as a consultant to the Company for a period of four years pursuant to the terms of a consulting agreement between the Company and Mr. Brechin (the “Consulting Agreement”). Pursuant to the Consulting Agreement, Mr. Brechin will provide consulting, organizational and strategic services, including, but not limited to, assistance or implementation of the strategic business plans of the Company and assistance with customer relations and project management and he will be paid an annual fee of $150,000.

We have no liabilities under termination or change in control conditions as of December 31, 2016. We do not have a formal policy to determine executive severance benefits. Each executive severance arrangement is negotiated on an individual basis.

The following table sets forth information for the named executive officers regarding the number of shares subject to both exercisable and unexercisable stock options and restricted stock, as well as the exercise prices and expiration dates thereof, as of December 31, 2016.

After the Effective Time, executive compensation shall be in accordance with the employment agreements by and between Brekford and each of Rodney Hillman and Scott Rutherford, and, otherwise, as determined by Novume.

Section 16(a) of the Exchange Act requires Brekford’s officers, directors, and persons who own more than ten percent (10%) of a registered class of our equity securities to file reports of securities ownership and changes in such ownership with the SEC on Forms 3, 4 and 5. Officers, directors, and greater-than-ten-percent stockholders are required by SEC regulations to provide us with copies of all Section 16(a) forms that they file.

Based solely upon a review of Forms 3, Forms 4, and Forms 5 furnished to us pursuant to Rule 16a-3 under the Exchange Act, Brekford believes that all such forms required to be filed pursuant to Section 16(a) of the Exchange Act during the year ended December 31, 2016 were timely filed, as necessary, by the officers, directors, and security holders required to file such forms.

Brekford’s Audit Committee has the responsibility to review and approve all related-party transactions, as contemplated by Item 404 of the SEC’s Regulation S-K, to prevent potential conflicts of interest and to ensure that related party transactions are disclosed in the reports that Brekford files with the SEC as and when required by applicable securities laws and regulations. The term “related party transaction” is generally defined as any transaction (or series of related transactions) in which Brekford is a participant and the amount involved exceeds the lesser of (i) $120,000 or (ii) one percent of Brekford’s average total assets at year-end for the last two completed fiscal years, and in which any director, director nominee or executive officer of Brekford, any holder of more than 5% of the outstanding voting securities of Brekford, or any immediate family member of the foregoing persons will have a direct or indirect interest. The term includes most financial transactions and arrangements, such as loans, guarantees and sales of property, and remuneration for services rendered (as an employee, consultant or otherwise) to Brekford and its subsidiaries.

The following paragraphs discuss related party transactions that occurred during 2015 and 2016.

On October 1, 2009, C.B. Brechin and Scott Rutherford, as well as one other individual, entered into a stock purchase agreement on behalf of Brekford (the “Brekford Stock Purchase Agreement”), with the court-appointed receiver, Robert D. Gordon (the “Receiver”), for Brekford’s former stockholder Legisi Marketing, Inc., to repurchase 18,910,000 shares of Brekford Common Stock and cancel warrants to purchase 10,000,000 shares of Brekford Common Stock that were exercisable at $.39 per share (the “Receiver Warrants”), which shares of Brekford Common Stock and Receiver Warrants had been in the custody of the Receiver. The aggregate purchase price for the securities under the Brekford Stock Purchase Agreement was $700,000. The effectiveness of the Brekford Stock Purchase Agreement was subject to court approval which was received on November 4, 2009. The repurchased shares of Brekford Common Stock and Receiver Warrants were returned to Brekford’s treasury and cancelled.

Brekford financed the repurchase of these shares and Receiver Warrants from the proceeds of convertible promissory notes that were issued by Brekford on November 9, 2009 in favor of a lender group in the principal amounts of $250,000 each (each, a “Promissory Note” and together, the “Promissory Notes”). Each Promissory Note bears interest at the rate of 12% per annum and at the time of issuance was to be convertible into shares of Brekford Common Stock, at the option of the holder, at an original conversion price of $.07 per share. At the time of issuance, Brekford agreed to pay the unpaid principal balance of the Promissory Notes and all accrued but unpaid interest on the date that was the earlier of (i) two years from the issuance date or (ii) 10 business days after the date on which Brekford closes an equity financing that generates gross proceeds in the aggregate amount of not less than $5,000,000. The Promissory Notes have since been extended and are currently due on the earlier of (x) November 9, 2017 or (y) 10 business days after the date on which Brekford closes an equity financing that generates gross proceeds in the aggregate amount of not less than $5,000,000. In addition to the extensions, the Promissory Notes were amended in April 2010 to increase the conversion price to $.14 per share.

The outstanding balance due under each of the Promissory Notes as of December 31, 2016, including principal and interest, is approximately $252,137, and the accrued interest paid to each of Messrs. Brechin and Rutherford to date under their respective Promissory Note is approximately $190,110. No principal was paid in 2016 or 2015. The largest amount of principal outstanding under either of the Promissory Notes during 2016 was $250,000.

While we do not maintain a written policy with respect to related party transactions, our Audit Committee routinely reviews potential transactions with those parties we have identified as related parties.

BREKFORD’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

The following discussion and analysis presents a review of the condensed operating results of Brekford for the nine months ended September 30, 2016 and 2015 and the financial condition of Brekford at September 30, 2016 as well as the operating results for the years ended December 31, 2015 and 2014, respectively. The discussion and analysis should be read in conjunction with the condensed consolidated financial statements and accompanying notes included herein, as well as the Company’s audited financial statements for the years ended December 31, 2015 and 2014 included elsewhere in this prospectus/registration statement.

Results of Operations for the Nine Months Ended September 30, 2016 and 2015

The following tables summarize and compare selected items from the statements of operations for the nine months ended September 30, 2016 and the nine months ended September 30, 2015.

Revenues for the nine months ended September 30, 2016 amounted to $10,748,006 as compared to revenues of $14,586,453 for the nine months ended September 30, 2015, representing a decrease of $3,838,447 or 26.3%. ATSE services and vehicle services decreased by 12.9% and 28.7% respectively.

The ATSE decrease was primarily driven by reduced collections on our Saltillo, Mexico contract as well as reduced revenue for certain legacy Maryland contracts due to the changeover to a fixed fee invoicing model. Revenue for existing legacy Maryland contracts should remain flat through expiration of the contracts, barring any unforeseen changes in the number of cameras deployed. We have started to see revenue contributions from our three new ATSE contracts (Brice, OH, New Rochelle, NY, and Calvert County, MD), as all have completed warning phases and are in full enforcement. Projected camera deployments from these three contracts is projected to more than double in the first quarter of 2017, with commitments to add 16 more units to the existing 11.

We have also continued to experience challenges that are outside the Company’s control with respect to collection rates for our Saltillo, Mexico program. Due to extended delays with implementation of enforcement procedures and other concerns regarding uncollected fine amounts, the Company elected to terminate its exclusive distribution agreement with Grupo Canviso Tech. We have subsequently initiated discussions directly with the City of Saltillo in order to establish a direct contract to support operations through the original term of the program, which is expected to run through December 31, 2017. We chose to take this approach for the purpose of ensuring future revenue and profit streams that are beneficial to the Company. The Company anticipates that a new agreement will be signed in the fourth quarter of 2016; however, we are not able to predict when, or if, collection efforts on prior unpaid fines will be successful until we are able to implement new procedures within the new agreement structure.

Newly added contracts in New Rochelle, New York, Brice, Ohio, and Calvert County, Maryland have begun to provide a material contribution to paid citation rates as of this quarter. As stated previously, we anticipate adding 16 additional cameras specific to these contracts between now and the end of the first quarter of 2017. Additionally, we are continuing to pursue contracts in the U.S. and Latin America, via pilot projects and/or RFP processes, with a current prospect pipeline in excess of 1,000 cameras. Some of these potential programs are in advanced stages of discussion; however, there is no assurance that these efforts will lead to contracts. The Company observes a policy not to comment on the specifics of any pre-contract discussions or pilot projects.

The vehicle services decrease was primarily driven by decreased sales and installations of rugged IT products, as certain large scale orders from this period in 2015 were not repeated in 2016. Our open sales order pipeline totaled approximately $1.5 million at September 30, 2016 and we have initiated procedures to expedite shipments and installations in the future. Additionally, we are working to broaden our customer base regionally and nationally in order to offset revenue reductions caused by the three-year upgrade cycle.

Cost of revenues for the nine months ended September 30, 2016 amounted to $8,201,217 as compared to $11,711,852 for the nine months ended September 30, 2015, a decrease of $3,510,635 or 30.0%. The change was primarily due to the lower sales volume and direct expenses for ATSE programs and lower sales and installations of rugged IT products.

Gross profit for the nine months ended September 30, 2016 amounted to $2,546,789 as compared to $2,874,601 for the nine months ended September 30, 2015, a decrease of $327,812 or 11.4%. The change was primarily due to the lower sales volume and direct expenses for ATSE programs and lower sales and installations of rugged IT products. Overall gross margin for the nine months ended September 30, 2016 was 23.7% as compared to 19.7% for the nine months ended September 30, 2015. ATSE gross margin for the nine months ended September 30, 2016 was 67.8% as compared to 68.7% for the nine months ended September 30, 2015. Vehicle services gross margin for the nine months ended September 30, 2016 was 14.3% as compared to 11.1% for the nine months ended September 30, 2015. The increase in gross margin was due to a higher concentration of e-ticketing and installation purchase orders for the nine months ended September 30, 2016.

Salaries and related expenses for the nine months ended September 30, 2016 amounted to $1,489,311 as compared to $1,482,003 for the nine months ended September 30, 2015, an increase of $7,308 or 0.5%, as there was no significant difference in personnel head count or compensation expense.

Selling, general and administrative expenses for the nine months ended September 30, 2016 amounted to $1,122,333 as compared to $1,264,458 for the nine months ended September 30, 2015, a decrease of $142,125 or 11.2%. The decrease was primarily driven by lower ATSE program management and depreciation expenses.

Total other expenses increased for the nine months ended September 30, 2016 to $739,143 compared to $526,515 for the nine months ended September 30, 2015. The increased expenses were due to primarily to a net increase in financing cost of $528,039 that includes non-cash interest expense related to the original issue discount of $28,076 and the debt discount amortization of $280,761, as well as the loss on extinguishment of debt of $291,912 resulting from the $300,000 conversion of debt to Common Stock during the period September 30, 2016 related to the Investor Note and Warrant. The remainder of the increase was due to cash interest expense associated with balances on the Company’s revolving line of credit.

Net loss for the nine months ended September 30, 2016 amounted to $803,998 compared to a net loss of $398,375 for the nine months ended September 30, 2015, an increase of $405,623. The increased loss was primarily due to lower sales and gross profits from rugged IT and ATSE services, as well as other expenses consisting of non-cash financing costs associated with the Investor Note and Warrant. Excluding other expenses consisting of both cash and non-cash interest expense, operating loss amounted to $64,855 for the nine months ended September 30, 2016 as compared to income of $128,140 for the nine months ended September 30, 2015.

The following tables summarize and compare selected items from the statements of operations for the years ended December 31, 2015 and 2014.

Revenues for the year ended December 31, 2015 amounted to $19,833,681 as compared to revenues of $17,659,533 for the year December 31, 2014, representing an increase of $2,174,148 or 12.3%. Each of our main service platforms provided significant contributions, with vehicle services increasing by 10.9% and ATSE services increasing by 21.9%. Vehicle services growth was primarily driven by increased sales and installation of Panasonic

rugged IT products and Arbitrator in-car video capture systems. ATSE services growth was primarily driven by recurring revenue contributed from our Saltillo, Mexico program as well as slight increases from our U.S. clients who have transitioned to flat fee contract structures. For the year ended December 31, 2015, ATSE paid citations amounted to 166,649 from 59 cameras as compared to 113,720 from 43 cameras for the year ended December 31, 2014, representing an increase of 52,929 or 47%.

In April 2015, the Company began operations on its Saltillo, Mexico program which has resulted in recurring revenue from the City of Saltillo, Mexico under an exclusive agreement signed in 2014 with Grupo Canviso Tec (“Canviso”), a Mexican Corporation, for the purposes of supplying turnkey ATSE services to cities and municipalities in Mexico. As of June 30, 2015, the Company had installed all necessary technology and communications infrastructure to operate the Saltillo program as well as other programs as they are added, with Saltillo being the main operations hub for the entire country. As of December 31, 2015, there were 16 speed photo enforcement cameras in live operation. Based upon timing of the rollout schedule thus far, the Company does not anticipate installing all 210 cameras as contemplated by the agreement with the City. We are working closely with Canviso and the City to determine additional unit counts for 2016 installation along with an associated rollout schedule. Also, as of December 31, 2015 the City had made limited progress in implementing enforcement operations in order to ensure higher citation collection rates. The Company is working closely with Canviso and the City to implement sufficient enforcement measures, including vehicle checkpoints monitored by automated license plate readers and door-to-door collection of unpaid fines. Despite a lower than anticipated collection rate, Saltillo was our 4^th largest customer in terms of revenue for 2015, with a total of 39,207 collected citations from the 16 cameras. This is due to significantly higher violation rates as compared to our U.S. contracts. More importantly, with a view toward sustainability and longevity, the Saltillo program has been a model program for Mexico in terms of reducing accidents, injuries, and deaths caused by speeding.

Cost of revenues for the year ended December 31, 2015 amounted to $15,773,184 as compared to $14,527,646 for the year ended December 31, 2014, an increase of $1,245,538 or 8.6%. The increase was primarily driven by higher direct labor and product costs for vehicle services in conjunction with the increased sales volume. This was offset by lower direct labor and materials costs associated with ATSE services, as we experienced operational efficiencies in terms of less camera maintenance.

Gross profit for the year ended December 31, 2015 amounted to $4,060,497 as compared to $3,131,887 for the year ended December 31, 2014, an increase of $928,610 or 29.7%. Two key drivers of the increase were a higher percentage of revenues from ATSE services as well as a higher gross margin from ATSE services as a result of the operational efficiencies noted above. Overall gross margin for the year ended December 31, 2015 was 20.5% as compared to 17.7% for the year ended December 31, 2014. ATSE gross margin for the year ended December 31, 2015 was 71.4% as compared to 55.2% for the year ended December 31, 2014. Vehicle services gross margin for the year ended December 31, 2015 was 12.1% as compared to 12.1% for the year ended December 31, 2014.

For the full year 2015, the Company exceeded the expected ATSE gross margin of 65% and met the expected vehicle services gross margin of 12%. As contributed revenues from ATSE services continue to rise as a percentage of overall revenues, we anticipate continued growth in the Company’s overall gross margin.

Salaries and related expenses for the year ended December 31, 2015 amounted to $2,038,644 as compared to $1,878,671 for the year ended December 31, 2014, an increase of $159,973 or 8.5%. The increase was due to higher costs for corporate support labor, increased sales commissions, higher health insurance costs, and issuance of shares of restricted stock, offset by reductions in program support labor for ATSE services. The Company will continue to invest in salary related infrastructure support in conjunction with our aggressive business development plan, especially with respect to ATSE services.

Selling, general and administrative expenses for the year ended December 31, 2015 amounted to $1,675,837 as compared to $2,585,302 for the year ended December 31, 2014, a decrease of $909,465 or 35.2%. The decrease was primarily driven by lower depreciation expense as certain obsolete assets had been disposed of during the same period of 2014 and the Company did not incur significant capital expenditures in 2015.

Total other expenses for the year ended December 31, 2015 amounted to $717,187 as compared to $170,561 for the year ended December 31, 2014, an increase of $546,646 or 320.5%. The increased expenses were due primarily to a net increase in financing cost of $506,449 that includes non-cash interest expense related to the original issue discount of $29,820, debt discount amortization of $328,021 and the loss on extinguishment of debt of $55,021, offset by an increase in warrant liability of $14,784 related to the March 2015 issuance of a $650,000 convertible promissory note that matures in March 2017 (the “Investor Note”) and a related five-year common stock purchase warrant (the “Warrant”). The remainder of the increase was due to an increase in cash interest expense associated with balances on the Company’s revolving line of credit.

Net loss for the year ended December 31, 2015 amounted to $371,171 compared to a net loss of $1,502,647 for the year ended December 31, 2014, a decrease of $1,131,476 or 75.3%. The improvement was primarily due to higher overall gross profit margins and lower overall operating expenses. Excluding other expenses consisting of both cash and non-cash interest expense of $286,910 and debt discount amortization of $328,021 and the loss on extinguishment of debt of $55,021, offset by an increase in warrant liability of $14,784, income from operations amounted to $346,016 for the year ended December 31, 2015 as compared to a loss of $1,332,086 for the year ended December 31, 2014, for an improvement of $1,678,102.

At September 30, 2016, we had total current assets of $3,544,580 and total current liabilities of $3,012,867 resulting in a working capital surplus of $531,713. At September 30, 2016 inventory totaled $472,800 consisting primarily of raw materials related to our existing pipeline of committed customer sales orders. In comparison, at December 31, 2015, we had total current assets of $5,344,344 and total current liabilities of $4,952,773, resulting in a working capital surplus of $391,571.

The Company’s accumulated deficit increased to $11,746,378 at September 30, 2016 from $10,942,380 at December 31, 2015, as a result of the net loss recorded for the period ended September 30, 2016. Cash flows provided by operations for the period ended September 30, 2016 were $426,780, compared to cash flows used in operations for the period ended September 30, 2015 of $1,971,248.

On February 6, 2017, Brekford entered into a Contribution and Unit Purchase Agreement (the “Purchase Agreement”) with LB&B Associates Inc. (the “Purchaser”) and Global Public Safety, LLC (“GPS”). Pursuant to the Agreement, on the closing date for the Agreement (the “Closing”) the Company will contribute substantially all assets and certain liabilities related to its vehicle services business (the “Business”) to GPS, a limited liability company owned by Brekford. After the Closing, Brekford will continue to own and run other business operations that are not related to the Business.

On the Closing, GPS will sell units representing 80.1% of the units of GPS to the Purchaser for $6,000,000 $4,000,000 of which will be paid in cash, and $2,000,000 of which will be paid by the Purchaser issuing a promissory note to the Company that will be secured by the Purchaser’s GPS units.

On February 6, 2017, the Purchaser made a deposit of $250,000 (the “Deposit”) pursuant to the terms of the agreement. The Deposit is nonrefundable, if the Closing has not occurred by February 28, 2017 as a result of the Purchaser failing to complete its conditions precedent to closing, which include obtaining financing for the cash portion of the purchase price and consent from its lender, provided that the Purchaser’s inability to fulfill its closing obligations was not caused by the Company.

After the Closing, Brekford will continue to own 19.9% of the units of GPS. On the Closing, the Company will be enter into certain ancillary agreements including a Transition Services Agreement, pursuant to which Brekford will provide services to GPS to promote the efficient transition of the acquired assets; a Pre Novation Agreement, pursuant to which performance under certain contracts being assigned to GPS will be made while these contracts are being assigned to GPS; a Sublease, pursuant to which the Company will lease office space from GPS; and an Amended and Restated Limited Liability Company Agreement which will govern the running of GPS.

As discussed in Note 5 to the condensed consolidated financial statements, the Company is indebted to C.B. Brechin and Scott Rutherford under unsecured promissory notes in the aggregate balance of $500,000 as of December 31, 2015. On November 9, 2016, the maturity dates of these unsecured promissory notes were extended to the earlier of (i) November 9, 2017 or (ii) 10 business days from the date on which Brekford closes an equity financing that generates gross proceeds in the aggregate amount of not less than $5,000,000.

The Company intends to continue its efforts to expand sales of ATSE services, and such expansion may significantly increase the Company’s working capital needs. On March 17, 2015, the Company entered into a note and warrant purchase agreement providing for immediate funding of $650,000 through the issuance of the Investor Note. The primary use of proceeds was to fund startup costs for the initial phase of a project in Mexico providing turnkey ATSE services to the City of Saltillo, which began operations in the second quarter of 2015. Additionally, the Company entered contracts for three ATSE programs in Calvert County, Maryland, Brice, Ohio and New Rochelle, New York, which started generating revenue in the 3^rd quarter of 2016.

the eligible inventory (the “Revolving Loans”). The maximum amount available to the Company under the Loan Agreement for the Revolving Loans is $3,500,000 (the “Credit Limit”). In addition, the Lender agreed to provide the Company with an accommodation loan in an amount not to exceed $500,000, which shall be repaid in thirty-six (36) equal monthly installments of principal and interest (the “Accommodation Loan” and together with the Revolving Loans, the “Loans”). Management believes that the Company’s current level of cash combined with cash that it expects to generate in its operations during the next twelve months including anticipated new customer contracts and funds available from the credit facility (see Note 14 of the condensed consolidated financial statements dated September 30, 2016) will be sufficient to sustain the Company’s business initiatives through at least September 30, 2017, but there can be no assurance that these measures will be successful or adequate.

In the event that the Company’s cash reserves, cash flow from operations and funds available under the Credit Facility (see Note 14 of the condensed consolidated financial statements dated September 30, 2016) are not sufficient to fund the Company’s future operations, it may need to obtain additional capital. We currently have no firm commitments for any additional capital. No assurance can be given that the Company will be able to obtain additional capital in the future or that such capital will be available to the Company on acceptable terms. The Company’s ability to obtain additional capital will be subject to a number of factors, including market conditions, the Company’s operating performance and investor sentiment, which may make it difficult for the Company to consummate a transaction at the time, in the amount and/or upon the terms and conditions that the Company desires. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our shares of common stock or the debt securities may cause us to be subject to restrictive covenants. If the Company is unable to raise additional capital at the times, in the amounts, or upon the terms and conditions that it desires, then it might have to delay, scale back or abandon its expansion efforts. Even with such changes, the Company’s operations could consume available capital resources and liquidity.

Our cash flows from operating activities are significantly affected by our cash to support the growth of our business in areas such as selling, general and administrative. Our operating cash flows are also affected by our working capital needs to support growth and fluctuations in inventory, personnel related expenditures, accounts payable and other current assets and liabilities.

Net cash provided by operating activities was $426,780 for the nine months ended September 30, 2016 compared to $1,971,248 used in operating activities for the nine months ended September 30, 2015, respectively. Cash was used primarily to fund our operations and working capital needs, net of non-cash expenditures such as depreciation and amortization, share based compensation for services and financing related costs. During the nine months ended September 30, 2016, the net loss of $803,998, offset by adjustments of customer payments and vendor payments, was the primary driver of the cash provided by operating activities.

During the nine months ended September 30, 2015, the net loss of $398,375 and increase in accounts receivable amounting to a net cash decrease of $2,133,049 were the primary drivers of the cash used, offset by an increase in other working capital assets and liabilities.

Net cash used in operating activities was $0.8 million for the year ended December 31, 2015 compared to net cash used by operating activities of $0.3 million for the year ended December 31, 2014. Cash was used primarily to fund our operations and working capital needs, net of non-cash expenditures such as depreciation and amortization, share based compensation for services and financing related costs. For the year ended December 31, 2015, the net loss of $0.4 million, the increase in accounts receivable of $2.1 million and unbilled receivable of $0.1 million offset by the increase of accounts payable of $1.1 million were the primary drivers of the cash used in operating activities. For the year ended December 31, 2014, the net loss of $1.5 million, adjusted for a non-cash disposal of equipment of $0.3 million, offset by a decrease in inventory of $0.6 million and an increase in accounts payable of $0.4 million were the primary drivers of the cash provided by operating activities.

Net cash used in investing activities was $140,574 for the period ended September 30, 2016 and there was no cash used for the period ended September 30, 2015.

Net cash used in investing activities was $0.1 million for the year ended December 31, 2015 as compared to $40,000 for the year ended December 31, 2014. Capital expenditures during 2015 were related to cameras and technology infrastructure for commencing Mexico operations.

Net cash used in financing activities was $273,763 for the nine months ended September 30, 2016, compared to net cash provided by financing activities $1,659,160 for the nine months ended September 30, 2015. In the nine months ended September 30, 2016, the Company made payments to line of credit of $584,960 under the Credit Facility related to outstanding customer invoices, compared to line of credit advance of $1,441,126 for the nine months ended September 30, 2015.

Net cash provided by financing activities was $0.4 million for the year ended December 31, 2015 and net cash used in financing activities was $0.6 million for the year ended December 31, 2014. The Company received $0.65 million of net proceeds from the issuance of the Investor Note in March 2015. Furthermore, the Company made aggregate principal payments of $0.4 million under capital leases and other note obligations. In the corresponding period of 2014, aggregate principal payments of $0.8 million under capital leases and other note obligations were offset by proceeds from a note payable of $0.5 million.

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

The following table is a summary of contractual cash obligations for the periods indicated that existed as of December 31, 2015, and is based on information appearing in the notes to Consolidated Financial Statements included elsewhere in this Form S-4.

The following unaudited Pro Forma Condensed Combined Balance Sheet as of September 30, 2016 and unaudited Pro Forma Condensed Combined Statements of Operations for the nine months ended September 30, 2016 and for the year ended December 31, 2015 for Novume illustrate the effect of the Mergers, the acquisition of Firestorm and other related transactions as if the Mergers, acquisition and other related transactions had occurred on September 30, 2016 for the Pro Forma Condensed Combined Balance Sheet and as of January 1, 2015 for the Pro Forma Condensed Combined Statements of Operations.

As of the date of this registration statement, Novume has not completed the detailed valuation study necessary to arrive at the required final estimates of the fair value of the Firestorm and Brekford assets to be acquired and the liabilities to be assumed and the related allocations of purchase price, nor has it identified all adjustments necessary to conform Firestorm’s and Brekford’s accounting policies to Novume’s accounting policies. A final determination of the fair value of Firestorm and Brekford’s assets and liabilities, including intangible assets with both indefinite or finite lives and related amortization, will be based on the actual net tangible and intangible assets and liabilities of Firestorm and Brekford that exist as of the closing date of the Mergers. Pursuant to the terms of the Merger Agreement, each share of Brekford Common Stock will be converted into the right to receive the 1/15^th of a share of Novume Common Stock, each share of KeyStone Common Stock will be converted into the right to receive 1.9975 shares of Novume Common Stock, and each share of KeyStone Preferred Stock will be converted into the right to receive 1.9975 shares of Novume Preferred Stock. For more information regarding the Mergers, see “The Transaction” and “The Merger Agreement.” As a result of the foregoing, the pro forma adjustments are preliminary and are subject to change as additional information becomes available and as additional analysis is performed. The preliminary pro forma adjustments have been made solely for the purpose of providing the unaudited pro forma financial statements presented below. Any increases or decreases in the fair value of assets acquired and liabilities assumed upon completion of the final valuations will result in adjustments to the unaudited pro forma balance sheet and/or statements of operations. The final purchase price allocations may be materially different than that reflected in the pro forma purchase price allocations presented herein.

The Mergers will be accounted for as a reorganization of KeyStone and an acquisition of Brekford under the acquisition method of accounting and the acquision of Firestorm will also be accounted for under the acquisition method.

The Novume Unaudited Pro Forma Condensed Combined Financial Statements should be read in conjunction with the historical financial statements of Brekford and KeyStone, and the related notes thereto.

Assumptions and estimates underlying the adjustments to the unaudited pro forma condensed combined financial statements, which are referred to as the pro forma adjustments, are described in the accompanying notes. The historical consolidated financial statements have been adjusted in the unaudited pro forma condensed combined financial statements to give effect to pro forma events that are: (1) directly attributable to the Mergers, acquisition of Firestorm and other related transactions; (2) factually supportable; and (3) with respect to the unaudited pro forma statements of operations, expected to have a continuing impact on the combined results of Novume following the Mergers and acquisition. The Novume Unaudited Pro Forma Condensed Combined Financial Statements are presented for comparative purposes only and do not give effect to any potential cost savings and synergies that could result from the Mergers. The pro forma data are not intended to be indicative of actual results had the Mergers occurred as of the dates indicated above, nor do they purport to indicate results which may be achieved in the future.

The following is a summary of the material terms of the Merger Agreement. This summary does not purport to describe all the terms of the Merger Agreement and is qualified in its entirety by reference to the complete Merger Agreement, which is attached as Annex A to this information statement/prospectus and incorporated by reference herein.

The summary below is included in this information statement/prospectus only to provide you with information regarding the terms and conditions of the Merger Agreement, and not to provide any other factual information regarding Novume, Brekford, KeyStone or their respective businesses. Accordingly, the representations and warranties and other provisions of the Merger Agreement should not be read alone, but instead should be read only in conjunction with the information provided elsewhere in this information statement/prospectus.

The representations, warranties and covenants contained in the Merger Agreement and described in this information statement/prospectus (i) were made only for purposes of the Merger Agreement and as of specific dates and may be subject to more recent developments; (ii) were made solely for the benefit of the parties to the Merger Agreement and may be subject to limitations agreed upon by the contracting parties, including being qualified by reference to disclosures, for the purposes of allocating risk between parties to the Merger Agreement instead of establishing these matters as facts; and (iii) may apply standards of materiality in a way that is different from what may be viewed as material by you or by other investors. Accordingly, these representations and warranties alone may not describe the actual state of affairs as of the date they were made or at any other time. The representations and warranties contained in the Merger Agreement do not survive the Effective Time. Investors should not rely on the representations, warranties and covenants or any description thereof as characterizations of the actual state of facts or condition of Novume, Brekford or KeyStone or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in public disclosures by Novume, Brekford and KeyStone.

At the Effective Time, Brekford Merger Sub will be merged with and into Brekford and KeyStone will be merged with and into KeyStone Merger Sub. As a result of the Mergers, the separate corporate existence of each of Brekford Merger Sub and KeyStone will cease, and Brekford and KeyStone Merger Sub, respectively, will survive as wholly-owned subsidiaries of Novume. Brekford will be renamed “Brekford Traffic Safety, Inc.” KeyStone Merger Sub will be renamed “KeyStone Solutions, Inc.” Upon effectiveness of the Mergers, each Brekford stockholder will have the right to receive the merger consideration described below under “—Merger Consideration.”

The closing of the Merger Agreement (the “Closing”) will take place upon the fulfillment or waiver of all of the conditions to closing set forth in Article VIII of the Merger Agreement or as soon thereafter as practicable, but not later than June 1, 2017. The Closing will be held at the offices of Crowell and Moring LLP, 1001 Pennsylvania Ave NW, Washington, D.C. 20004 (or such other place as Brekford and KeyStone may mutually agree upon).

If the Brekford Merger is completed, each share of Brekford Common Stock issued and outstanding immediately prior to the Effective Time and all rights in respect thereof, shall, without any action on the part of any holder thereof, cease to exist and be converted into and become exchangeable for the right to receive shares of Novume Common Stock at the Brekford Exchange Ratio. If the KeyStone Merger is completed, each share of KeyStone Common Stock issued and outstanding immediately prior to the Effective Time and all rights in respect thereof, shall, without any action on the part of any holder thereof, cease to exist and be converted into and become exchangeable for, shares of Novume Common Stock, and each share of Keystone Preferred Stock and all rights in respect thereof, shall, without any action on the part of any holder thereof, cease to exists and be converted into and become exchangeable for, shares of Novume Preferred Stock, each at the KeyStone Exchange Ratio.

The Brekford Exchange Ratio and the KeyStone Exchange Ratio have been determined with intent that immediately after the Mergers, the pre-merger stockholders of Brekford will own such portion of the capital stock of Novume as is equal to approximately 20% of the issued and outstanding shares of Novume Common Stock, on a fully-diluted basis, and the stockholders of KeyStone immediately preceding the Effective Time will own such portion of Novume capital stock as is equal to approximately 80% of the issued and outstanding Novume Common Stock, on a fully-diluted basis.

(i) the number of shares of Novume Common Stock to be subject to each Novume Option shall be equal to the product of (x) the number of shares of KeyStone Common Stock or Brekford Common Stock subject to the original option and (y) the KeyStone Exchange Ratio or the Brekford Exchange Ratio, as applicable;

(ii) the exercise price per share of Novume Common Stock under each Novume Option shall be equal to (x) the exercise price per share of the KeyStone Common Stock or Brekford Common Stock under the original option divided by (y) the KeyStone Exchange Ratio or the Brekford Exchange Ratio, as applicable; and

(iii) upon each exercise of a Novume Option by a holder thereof, the aggregate number of shares of Novume Common Stock deliverable upon such exercise shall be rounded down, if necessary, to the nearest whole share and the aggregate exercise price shall be rounded up, if necessary, to the nearest cent.

At the Effective Time, each Brekford Warrant and KeyStone Warrant which is outstanding and unexercised immediately prior to the Effective Time, shall be assumed by Novume and converted into a Novume Warrant to purchase shares of Novume Common Stock in such amount and at such exercise price as provided below and otherwise having the same terms and conditions as are in effect immediately prior to the Effective Time:

(i) the number of shares of Novume Common Stock issuable upon exercise of each Novume Warrant shall be equal to the product of (x) the number of shares of KeyStone Common Stock or Brekford Common Stock issuable upon exercise of the original warrant and (y) the KeyStone Exchange Ratio or the Brekford Exchange Ratio, as applicable;

(ii) the exercise price per share of Novume Common Stock under the Novume Warrants shall be equal to (x) the exercise price per share of the KeyStone Common Stock or Brekford Common Stock under the original warrant divided by (y) the KeyStone Exchange Ratio or the Brekford Exchange Ratio, as applicable; and

(iii) upon each exercise of Novume Warrants by a holder thereof, the aggregate number of shares of Novume Common Stock deliverable upon such exercise shall be rounded down, if necessary, to the nearest whole share and the aggregate exercise price shall be rounded up, if necessary, to the nearest cent.

KeyStone completed the Reg A Offering, which was declared effective by the SEC on the Qualification Date. At the initial closing of the Reg A Offering, KeyStone had sold an aggregate of 301,570 Units. At the second closing, KeyStone sold an aggregate of 119,757 Units, for an aggregate of 421,327 Units. The KeyStone Unit Warrants are exercisable for a period of seven (7) years commencing on the Qualification Date. At the Effective Time, the KeyStone Unit Warrants will be exchanged, in the manner described above, for Novume Unit Warrants.

On March 16, 2016, KeyStone entered into a Subordinated Note and Warrant Purchase Agreement with Avon Road pursuant to which KeyStone agreed to issue up to $1,000,000 in subordinated debt and to issue the Avon Road Warrants. The exercise price for the Avon Road Warrants is equal to $2.00 per share of KeyStone Common Stock. As of February 8, 2017, subordinated notes with a face amount of $500,000 and Avon Road Warrants to purchase 62,500 shares of KeyStone Common Stock have been issued pursuant to the Note Purchase Agreement to Avon Road. At the Effective Time, the Avon Road Warrants will be exchanged, in the manner described above, for Novume Warrants.

At or prior to the Effective Time, Novume shall supply to [•], as the Exchange Agent for the Mergers, in trust for the benefit of the holders of Brekford Common Stock, KeyStone Common Stock and KeyStone Preferred Stock, certificates evidencing the shares of Novume Common Stock or Novume Preferred Stock, as applicable, to be exchanged for outstanding shares of Brekford Common Stock, KeyStone Common Stock and Keystone Preferred Stock in the Mergers.

Commencing immediately after the Effective Time and until the appointment of the Exchange Agent shall be terminated, each holder of a certificate or certificates theretofore representing shares of Brekford Common Stock, KeyStone Common Stock or KeyStone Preferred Stock may surrender the same to the Exchange Agent, and, after the appointment of the Exchange Agent shall be terminated, any such holder may surrender any such certificate to Novume. Such holder shall be entitled upon such surrender to receive in exchange therefor a certificate or certificates representing the number of full shares of Novume Common Stock or Novume Preferred Stock, as applicable, into which the shares theretofore represented by the certificate or certificates so surrendered shall have been converted. All such shares of Novume Common Stock or Novume Preferred Stock, as applicable, issued in accordance with the immediately preceding sentences shall be deemed to have been issued at the Effective Time.

Unless and until any certificate theretofore representing shares of Brekford Common Stock, KeyStone Common Stock or KeyStone Preferred Stock, as applicable, is surrendered as set forth herein, no dividend or other distribution, if any, payable to the holders of record of Novume Common Stock or Novume Preferred Stock as of any date subsequent to the Effective Time shall be paid to the holder of such certificate in respect thereof. Upon the surrender of any such certificate, however, the record holder of the certificate or certificates representing shares of

Novume Common Stock or Novume Preferred Stock issued in exchange therefor shall receive from the Exchange Agent or from Novume, as the case may be, payment of the amount of dividends and other distributions, if any, which as of any date subsequent to the Effective Time and until such surrender shall have become payable with respect to such number of shares of Novume Common Stock or Novume Preferred Stock (“Pre-Surrender Dividends”).

No fraction of a share of Novume Common Stock will be issued by virtue of the Mergers. Instead, each holder of Brekford Common Stock who would otherwise be entitled to a fraction of a share of Novume Common Stock (after aggregating all fractional shares of Novume Common Stock to be received by such holder) will receive from Novume a full share, being the fractional share that would otherwise have been issued rounded up to the nearest whole share.

The Merger Agreement contains a number of representations and warranties made by both Brekford and KeyStone that are subject in some cases to exceptions and qualifications including exceptions that do not result in, and would not, individually or in the aggregate, reasonably be expected to have a “material adverse effect”. See also “—Definition of ‘Material Adverse Effect’” below. The representations and warranties in the Merger Agreement relate to, among other things:

Brekford also makes representations and warranties relating to, among other things, (i) the Fairness Opinion; (ii) environmental matters; and (iii) insurance.

KeyStone, Novume and each of the Merger Subsidiaries also makes representations and warranties relating to, among other things, the activities of the Merger Subsidiaries.

The representations and warranties in the Merger Agreement do not survive after the Effective Time, with the exception of the representations of each of Brekford and KeyStone with regard to the accuracy of information supplied by each such entity for inclusion in the Registration Statement of which this information statement/prospectus is a part, and the absence of any fees or commissions due to brokers, finders or investment bankers in connection with the Mergers.

Many of the representations and warranties in the merger agreement are qualified by “material adverse effect.” In addition, there are separate standalone conditions to completion of the Mergers relating to the absence of any event or occurrence or circumstance that, alone or together with any one or more other events, occurrences or circumstances, has had, is having or would reasonably be expected to result in a material adverse effect on the other party.

For purposes of the Merger Agreement, “material adverse effect” means any change in or effect on the business of the referenced corporation or any of its subsidiaries that is or will be materially adverse to the business, operations (including the income statement), properties (including intangible properties), condition (financial or otherwise), assets, liabilities or regulatory status of such referenced corporation and its Subsidiaries taken as a whole, but shall not include the effects of changes that are generally applicable in (A) the United States economy or (B) the United States securities markets if, in any of (A) or (B), the effect on KeyStone or Brekford (as the case may be) and its respective Subsidiaries, taken as a whole, is not disproportionate relative to the effect on the other and its Subsidiaries, taken as a whole.

Conduct of the Business of each of Brekford and KeyStone Pending the Effective Time

Except as expressly permitted by the Merger Agreement or as expressly consented to in writing by the other, until the earlier of the termination of the Merger Agreement or the Effective Time, each of Brekford and its subsidiaries, on the one hand, and KeyStone and its subsidiaries, on the other hand, must:

In addition, except as otherwise expressly provided in the Merger Agreement, prior to the earlier of the termination of the Merger Agreement or Effective Time, neither Brekford nor any of its subsidiaries may, without the prior written consent of KeyStone, directly or indirectly, do any of the following, and neither KeyStone nor any of its subsidiaries may, without the prior written consent of Brekford, directly or indirectly, do any of the following :

Additionally, Brekford may not take any action, other than pursuant to the Merger Agreement, to cause Brekford Common Stock to cease to be quoted on the OTCQX.

The Merger Agreement provides that neither Brekford nor any of its officers, directors, employees, financial advisors or agents will, without the prior written consent of KeyStone, directly or indirectly, solicit, initiate, encourage (including by way of furnishing information) or take any other action to facilitate any inquiries or proposals which constitute or may reasonably be expected to lead to an Acquisition Proposal (defined below), engage in any discussions or negotiations relating thereto, or accept any Acquisition Proposal. This prohibition does not prevent Brekford from complying with applicable law with respect to tender or exchange offers, nor does it apply, subject to the observance of certain notice, confidentiality and other requirements, to discussions and negotiations occurring prior to stockholder approval of the Merger Agreement relating to Acquisition Proposals if the Brekford Board concludes such action is necessary in order to fulfill its fiduciary duties to the shareholders of Brekford.

As defined in the Merger Agreement, “Acquisition Proposal” means a proposal or offer for a tender or exchange offer, merger, consolidation or other business combination involving Brekford or any proposal to acquire in any manner a substantial equity interest in, or all or substantially all the assets of, Brekford.

Except as otherwise set forth in the Merger Agreement, with respect to Brekford’s and KeyStone’s benefit plans under which employees’ interests are based upon either Brekford Common Stock or KeyStone Common Stock (but which interests do not constitute options), such interests will, from and after the Effective Time, be based on Novume Common Stock in accordance with the Brekford Exchange Ratio or the KeyStone Exchange Ratio, as the case may be.

The Merger Agreement provides that, for a period of six (6) years after the Effective Time, Novume and KeyStone jointly and severally shall indemnify the directors and officers of KeyStone who hold such positions at any time during the period from the date of the Merger Agreement through the Effective Time to the fullest extent to which KeyStone is permitted to indemnify such officers and directors under its Certificate of Incorporation and Bylaws, each as amended and as currently in effect, and applicable law.

Prior to the Effective Time, Brekford will purchase a “tail” on its directors’ and officers’ liability insurance policy (“Brekford Insurance Policies”), which shall be at no less broad coverage and limits than Brekford’s currently existing Brekford Insurance Policies and which shall cover the period the Closing Date until such date as is six (6) years following the Closing Date, provided that, nothing shall prevent Novume, from and after the Closing Date, from purchasing, at its sole option and at its expense, an additional limit on the “tail” policy.

The Merger Agreement may be terminated at any time prior to the Effective Time, whether before or after the approval and adoption of the Merger Agreement by Brekford stockholders:

If (i) the Merger Agreement (A) is terminated by KeyStone due to the withdrawal of the recommendation of the Merger Agreement by the Brekford Board, or by Brekford or KeyStone because of the failure to obtain the requisite Brekford stockholders’ approval, or (B) is terminated as a result of Brekford’s material breach of its obligations with regard to Closing and to filing and distributing the Registration Statement of which this information statement/prospectus is a part, which breach is not cured within thirty (30) days after notice thereof to Brekford, and (ii) at the time of such termination there shall have been an Acquisition Proposal involving Brekford or any of its subsidiaries (whether or not such offer shall have been rejected or shall have been withdrawn prior to the time of such termination), Brekford shall be pay to KeyStone a termination fee of $250,000 (the “Termination Fee”). The Termination Fee shall be payable in cash at the date of termination.

C.B. Brechin, Scott Rutherford, Robert West and Justin Schumer own 25,712,787 shares of Brekford Common Stock, which represent approximately 52.13% of the issued and outstanding shares of Brekford Common Stock. James McCarthy and Dr. Richard Nathan own 4,452,556 shares of KeyStone Common Stock, which represent 81.21% of the issued and outstanding shares of KeyStone Common Stock. Robert A. Berman currently owns no shares of KeyStone Common Stock directly but, as more fully described below, he beneficially owns 2,288,778 shares of KeyStone Common Stock, or 41.70% of the issued and outstanding shares of KeyStone Common Stock. All of the forgoing persons have agreed, as more fully described below, to vote in favor of the adoption of the Merger Agreement and the consummation of the Mergers thereunder. Accordingly, approval of the Merger Agreement and the Mergers by the stockholders of each of Brekford and KeyStone is assured.

Subject to applicable law, the Merger Agreement may be amended by the parties thereto pursuant to a writing adopted by action taken by all of the parties thereto at any time before the Effective Time; provided, however, that, after approval of the Mergers by the stockholders of Brekford or KeyStone, whichever shall occur first, no amendment may be made which would (a) alter or change the amount or kinds of consideration to be received by the holders of shares of Brekford Common Stock, KeyStone Common Stock or KeyStone Preferred Stock upon consummation of the Mergers, (b) alter or change any term of the Certificates of Incorporation of either of the surviving corporations of the Brekford Merger or the KeyStone Merger, or Novume, or (c) alter or change any of the terms and conditions of the Merger Agreement if such alteration or change would adversely affect the holders of any class or series of securities of KeyStone or Brekford. The Merger Agreement may not be amended except by an instrument in writing signed by the parties thereto.

At any time before the Effective Time, any party to the Merger Agreement may (a) extend the time for the performance of any of the obligations or other acts of the other parties, (b) waive any inaccuracies in the representations and warranties contained therein or in any document delivered pursuant thereto and (c) waive compliance with any of the agreements or conditions contained therein. Any agreement on the part of a party to any such extension or waiver shall be valid only as against such party and only if set forth in an instrument in writing signed by such party.

None of Brekford, KeyStone or Novume intends to secure a ruling from the Internal Revenue Service or obtain a formal opinion of counsel with respect to the tax consequences of the Mergers.

For purposes of this discussion, the term “U.S. Holder” is used to mean a beneficial owner of Brekford Common Stock that is, for U.S. federal income tax purposes:

The mergers of Brekford Merger Sub with and into Brekford, and of KeyStone with and into KeyStone Merger Sub, are intended to qualify as reorganizations within the meaning of Section 368(a) of the Code, and the Mergers have been structured consistently with such intent. Based on and assuming (i) the representations of Brekford and KeyStone in the Merger Agreement and (ii) that the Mergers will be completed in accordance with the Merger Agreement, the Mergers will be treated for U.S. federal income tax purposes as reorganizations within the meaning of Section 368(a) of the Code. There can be no assurance that the Mergers will be completed. It is possible that the Mergers may not qualify as reorganizations, and the tax consequences of the Mergers could differ materially from those summarized below. For a further discussion, see the section entitled “Taxable Acquisition” below.

Tax Implications to holders of Brekford Common Stock. No gain or loss will be recognized for federal income tax purposes by holders of Brekford Common Stock who exchange their Brekford Common Stock for Novume Common Stock pursuant to the Brekford Merger.

Any amounts withheld under the backup withholding rules are a credit against your U.S. federal income tax liability, provided you furnish timely the required information to the IRS.

Tax Implications to holders of KeyStone Common Stock and KeyStone Preferred Stock. No gain or loss will be recognized for federal income tax purposes by holders of KeyStone Common Stock or KeyStone Preferred Stock as a result of the KeyStone Merger.

The aggregate tax basis of Novume Common Stock and/or Novume Preferred Stock received as a result of the KeyStone Merger will be the same as the shareholder’s aggregate tax basis in the KeyStone Common Stock and/or KeyStone Preferred Stock surrendered in the exchange. The holding period of the Novume Common Stock and/or Novume Preferred Stock held by former holders of KeyStone Common Stock and/or KeyStone Preferred Stock, as a result of the exchange, will include the period during which such shareholder held the KeyStone Common Stock and/or KeyStone Preferred Stock exchanged.

If you receive Novume Common Stock as a result of the Brekford Merger or the KeyStone Merger, as applicable, you will be required to retain records pertaining to the Brekford Merger or the KeyStone Merger, as applicable, and you may be required to file with your U.S. federal income tax return for the year in which the merger takes place a statement setting forth certain facts relating to such merger as provided in Treasury Regulations Section 1.368-3(b).

The failure of either or both of the Mergers to qualify as a reorganization within the meaning of Section 368(a) of the Code would result in a Brekford or KeyStone stockholder, as applicable, recognizing gain or loss with respect to the shares of Brekford Common Stock, KeyStone Common Stock and/or KeyStone Preferred Stock, as applicable, surrendered by such stockholder equal to the difference between the stockholder’s basis in the shares and the fair market value, as of the effective time of the applicable Merger, of the Novume stock received in exchange for the Brekford Common Stock, the KeyStone Common Stock and/or the KeyStone Preferred Stock, as applicable. In such event, a stockholder’s aggregate basis in the Novume Common Stock so received would equal its fair market value, and such stockholder’s holding period would begin the day after the Effective Time. The gain or loss would generally be long-term capital gain or loss, if, as of the Effective Time, the applicable stockholder held the Brekford Common Stock, KeyStone Common Stock or KeyStone Preferred Stock, as applicable, for more than one year, and short-term capital gain or loss, if not. A dissenting stockholder who receives cash will be required to recognize gain or loss in the same manner as described above. The failure of the KeyStone Merger to qualify as a reorganization within the meaning of Section 368(a) would also cause KeyStone to recognize gain or loss as if it had sold all of its assets in a taxable transaction for the fair market value of the assets.

Upon the consummation of the Brekford Merger, Brekford’s realizable net operating loss carryforward would be significantly limited.

Set forth below is information regarding the beneficial ownership of Brekford Common Stock, our only outstanding class of capital stock, as of February 8, 2017, by (i) each person whom we know beneficially owned more than 5% of the outstanding shares of our common stock, and (ii) all of the current directors and executive officers individually and as a group. We believe that, except as otherwise noted below, each named beneficial owner has sole voting and investment power with respect to the shares listed. Unless otherwise indicated herein, beneficial ownership is determined in accordance with the rules of the SEC, and including voting or investment power with respect to share beneficially owned.

Set forth below is information regarding the beneficial ownership of KeyStones Common Stock, as of February 8, 2017, by (i) each person whom we know beneficially owned more than 5% of the outstanding shares of our common stock, and (ii) all of the current directors and executive officers individually and as a group. We believe that, except as otherwise noted below, each named beneficial owner has sole voting and investment power with respect to the shares listed. Unless otherwise indicated herein, beneficial ownership is determined in accordance with the rules of the SEC, and includes voting or investment power with respect to shares beneficially owned.

The following is a summary of the material terms of the capital stock of Novume under its Amended and Restated Certificate of Incorporation (“Novume Charter”) and Amended and Restated Bylaws (“Novume Bylaws”), each as currently in effect. This summary is not complete and is qualified in its entirety by reference to the DGCL. Copies of the documents referred to in this summary may be obtained as described under “Where You Can Find More Information” on page 148 of this information statement/prospectus.

Novume is authorized to issue 32,000,000 shares of capital stock, each with a par value of $0.0001, consisting of 30,000,000 shares of common stock and 2,000,000 shares of preferred stock. There were 1,000 shares of common stock outstanding and no shares of preferred stock outstanding as of February 10, 2017.

Notwithstanding the provisions of the DGCL, the number of authorized shares of common stock and preferred stock may, without a series vote, be increased or decreased (but not below the number of shares then outstanding) from time to time by the affirmative vote of the holders of a majority in voting power of the outstanding capital stock of Novume entitled to vote, voting together as a single class.

Each holder of shares of the Novume is entitled to attend all special and annual meetings of the stockholders of Novume Common Stock. In addition, each such holder is entitled, together with the holders of all other classes of capital stock entitled to attend special and annual stockholder meetings (subject to the provisions of any resolutions of the board of directors granting any holders of preferred stock exclusive or special voting powers with respect to any matter), to cast one vote for each outstanding share of Novume Common Stock held upon any matter, including the election of directors, which is properly considered and acted upon by the stockholders. Except as otherwise required by law, holders of Novume Common Stock, as such, are not entitled to vote on any amendment to the amended and restated certificate of incorporation (including the certificate of designation of any series of its preferred stock) that relates solely to the terms of one or more outstanding series of preferred stock of Novume if the holders of the affected series are entitled, either voting separately or together with the holders of one or more other affected series, to vote on such amendment under the amended and restated certificate of incorporation (including the certificate of designation of any series of its preferred stock) or pursuant to the DGCL.

The holders of the Novume Common Stock and the holders of any class or series of stock entitled to participate with the holders of the Novume Common Stock as to the distribution of assets in the event of any liquidation, dissolution or winding-up of the company, whether voluntary or involuntary, will become entitled to participate in the distribution of any of Novume’s assets remaining after it has paid, or provided for the payment of, all of its debts and liabilities and after Novume has paid, or set aside for payment, to the holders of any class or series of preferred stock having preference over common stock in the event of liquidation, dissolution or winding-up, the full preferential amounts, if any, to which the holders of such class or series are entitled.

Under the DGCL, the Novume Board may declare and pay dividends on Novume Common Stock out of surplus or current net profits, subject to the rights of issued and outstanding Novume Preferred Stock.

Novume’s ability to pay dividends on Novume Common Stock is restricted by the terms of the Novume Preferred Stock, as Novume is required to pay full cumulative dividends on Novume Preferred Stock before making any dividend payment on Novume Common Stock. In addition, Novume’s ability to pay any dividends on Novume Common Stock is subject to applicable provisions of state law and to the terms of its credit agreements.

Anti-Takeover Effects of Provisions of Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws

Certain anti-takeover provisions have been incorporated into the Novume, including:

Novume’s amended and restated certificate of incorporation authorizes its board of directors from time to time and without further stockholder action to provide for the issuance of shares of preferred stock in one or more series, and to fix the voting powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations, and restrictions of each such series, including, but not limited to, dividend rights, liquidation preferences, conversion privileges and redemption rights. Novume’s board of directors will have broad discretion with respect to the creation and issuance of preferred stock without stockholder approval, subject to any applicable rights of holders of any shares of preferred stock outstanding from time to time.

The rights and privileges of holders of the common stock may be adversely affected by the rights, privileges and preferences of holders of shares of any series of preferred stock that the board of directors may designate and Novume may issue from time to time. Among other things, by authorizing the issuance of shares of preferred stock with particular voting, conversion or other rights, the board of directors could adversely affect the voting power of the holders of the common stock and could discourage any attempt to effect a change in control of Novume, even if such a transaction would be beneficial to the interests of the stockholders of Novume.

The following summary of certain material terms and provisions of Novume Preferred Stock. The following summary is subject to, and qualified in its entirety by, the form of Certificate of Designations of Series A Cumulative Convertible Redeemable Preferred Stock (the “Novume Preferred Stock Certificate of Designations”), which is attached hereto as Annex E. You should review a copy of the Novume Preferred Stock Certificate of Designations for a complete description of the terms and conditions applicable to the Novume Preferred Stock.

Voting Rights. The holders of Novume Preferred Stock shall not have any voting rights except as expressly set forth below or as otherwise from time to time required by law.

So long as any shares of Novume Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by Novume’s Certificate of Incorporation, the vote or consent of the holders of a majority of the outstanding shares of Novume Preferred Stock at the time outstanding and entitled to vote thereon shall be necessary for effecting or validating, either directly or indirectly by amendment, merger, consolidation or otherwise:

Dividends. The Novume Preferred Stock is entitled to quarterly dividends of $0.175 (7.0% per annum) per share.

Conversion Rights. At any time after the third anniversary of the Effective Date, each holder of the Novume Preferred Stock will have the right to convert each share of Novume Preferred Stock into Novume Common Stock at an initial conversion price of (a)(i) $14.00, equivalent to a conversion rate of 0.714 shares of Novume Common Stock for each share of Novume Preferred Stock from November 8, 2019 to November 7, 2020 or (ii) $15.00, equivalent to a conversion rate of 0.667 shares of Novume Common Stock for each share of Novume Preferred Stock from and after November 8, 2020 plus (b) the amount of any accrued but unpaid dividends thereof, if any, whether or not declared, to and including the date immediately prior to such date of conversion.

The Novume Preferred Stock will automatically be converted at the then effective conversion price (i) except as provided below, immediately prior to the closing of Novume’s sale of its common stock in a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), (A) which results in aggregate cash proceeds to Novume of not less than $30,000,000 (net of underwriting discounts and commissions), (B) is made at an offering price per share of at least the then applicable conversion price (as adjusted) and (C) following such offering, the Novume Common Stock is listed for trading on a national securities exchange, and (ii) on the date specified by written consent or agreement of the holders of at least 66^2/3% of the then outstanding shares of Novume Preferred Stock (a “Qualified IPO”). If the closing of a Qualified IPO occurs prior to November 8, 2019, the conversion price per share shall be (i) $11 per share from November 8, 2016 to November 7 , 2017; (ii) $12 per share from November 8, 2017 to November 8, 2018; and (iii) $13 per share from November 8, 2018 to November 8, 2019.

Redemption by Novume. At any time following the third anniversary of the Effective Date, Novume may redeem all or any portion of the then outstanding Novume Preferred Stock for a redemption price equal to either (a) (i) $14.00 per share from November 8, 2019 to [•], 2020 or (ii) $15.00 per share from and after November 8, 2020 plus (b) the amount of any accrued but unpaid dividends thereof, if any, whether or not declared, to and including the date immediately prior to such date of redemption.

Redemption by Holder. At any time after the sixtieth month after the Effective Date, each holder of the Novume Preferred Stock will have the right to require Novume to redeem all, but not less than all, of such holder’s Novume Preferred Stock for a redemption price of $15 per share plus the amount of any accrued but unpaid dividends thereof, if any, whether or not declared, to and including the date immediately prior to such date of redemption.

Liquidation Rights. In the event of a “Liquidation Event” (as defined below), the holders of Novume Preferred Stock are entitled to be paid out of the assets of Novume available for distribution to stockholders an amount equal to $10 per share plus the amount of any accrued but unpaid dividends thereof, if any, whether or not declared, to and including such date of liquidation. “Liquidation Event” shall mean a liquidation, dissolution or winding up of Novume in a single transaction or series of transactions. The sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property and assets of Novume shall not be deemed a Liquidation Event, nor shall the merger, consolidation or any other business combination transaction of Novume into or with any other corporation or person or the merger, consolidation or any other business combination transaction of any other corporation or person into or with Novume be deemed to be a Liquidation Event.

At the Effective Time, the shareholders of Brekford and the stockholders of KeyStone will become stockholders of Novume, and their rights will be governed by the DGCL and the Novume Charter and Novume Bylaws as in effect at the Effective Time. The following are summaries of certain differences between (i) the rights of Brekford shareholders and Novume stockholders, and (ii) the rights of KeyStone stockholders and Novume stockholders.

The following discussions are not intended to be complete and are qualified by reference to the DGCL, the Novume Charter and Novume Bylaws, the certificate of incorporation and bylaws of Brekford (the “Brekford Charter” and the “Brekford Bylaws”, respectively), the certificate of incorporation and Certificate of Designations of Series A Cumulative Convertible Redeemable Preferred Stock (together with the certificate of incorporation, the “KeyStone Charter”) and the bylaws of KeyStone (“KeyStone Bylaws”), as appropriate. Copies of the Novume Charter, in substantially the form to be adopted prior to the Effective Time, and the Novume Bylaws are attached to this Information Statement/Prospectus as Appendix D and Appendix F, respectively.

Since Novume, Brekford and KeyStone are organized under the laws of the State of Delaware, and the charter and bylaws of Novume, Brekford and KeyStone are similar, there are not many significant differences between the rights of holders of Novume Common Stock, holders of Brekford Common Stock and holders of KeyStone Common Stock other than as described below with respect to notices of stockholder proposals. The provisions of the Novume Charter and Novume Bylaws, however, have incorporated certain anti-takeover provisions as more fully described below.

Novume’s authorized capital stock will consist of 32,000,000 shares, of which 30,000,000 shares are common stock, par value $0.0001 per share, and 2,000,000 shares are preferred stock, par value $0.0001 per share.

As of February 10, 2017, there are 1,000 shares of Novume Common Stock outstanding.

Prior to the Effective Time, Brekford’s authorized capital stock consists of 170,000,000 shares, of which 150,000,000 shares are common stock, par value $0.0001 per share, and 20,000,000 shares are preferred stock, par value $0.0001 per share.

As of February 8, 2017, 49,311,265 shares of Brekford Common Stock were outstanding and no shares of Brekford preferred stock were outstanding.

Prior to the Effective Time, KeyStone’s authorized capital stock consists of 32,500,000 shares, of which 25,000,000 shares are common stock, par value $0.0001 per share, and 7,500,000 shares are preferred stock, par value $0.0001 per share, 500,000 shares of which have been designated Series A Cumulative Convertible Redeemable Preferred Stock.

As of February 8, 2017, 5,488,094 shares of KeyStone Common Stock were outstanding and 421,327 shares of KeyStone Preferred Stock were outstanding.

Under the DGCL, the Novume Board may declare and pay dividends on Novume Common Stock out of surplus or current net profits, subject to the rights of issued and outstanding Novume Preferred Stock.

Novume Preferred Stock is entitled to quarterly cash dividends of $0.175 (7% per annum) per share. Novume anticipates paying the quarterly cash dividends through existing assets and cash flow.

Under the DGCL, the Brekford Board may declare and pay dividends on Brekford Common Stock out of surplus or current net profits. During the time that any series of preferred stock of Brekford is outstanding, such preferred stock is not entitled to receive dividends, except as declared, and at such rates per share, as may be specified by the Brekford Board. [In addition, Brekford’s ability to pay any dividends on Brekford Common Stock is subject to applicable provisions of state law and to the terms of its credit agreements.

Prior to the Effective Time, the KeyStone Preferred Stock is entitled to quarterly cash dividends of $0.175 (7% per annum) per share. KeyStone anticipates paying the quarterly cash dividends through existing assets and cash flow.

KeyStone’s ability to pay dividends on KeyStone Common Stock is restricted by the terms of the KeyStone Preferred Stock, as KeyStone is required to pay full cumulative dividends on the KeyStone Preferred Stock before making any dividend payment on KeyStone Common Stock. In addition, KeyStone’s ability to pay any dividends on KeyStone Common Stock is subject to applicable provisions of state law and to the terms of its credit agreements.

Each holder of Novume Common Stock shall be entitled to one vote for each share of Novume Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote; provided, however, that except as otherwise required by law, holders of Novume Common Stock shall not be entitled to vote on any

amendment to the Novume Charter (including any Certificate of Designations relating to any series of the preferred stock of Novume) that relates solely to the terms of one or more outstanding series of the preferred stock of Novume if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to the Novume Charter or the DGCL. There shall be no cumulative voting.

Except with respect to certain material changes in the terms of the Novume Preferred Stock and certain other matters and except as may be required by the DGCL, holders of Novume Preferred Stock will have no voting rights unless and until such Novume Preferred Stock is converted into Novume Common Stock.

Prior to the Effective Time, each share of Brekford Common Stock is entitled to one vote on each matter submitted to a vote of the stockholders of Brekford. Generally, the Brekford Common Stock has the exclusive right to vote for the election of directors and for all other purposes, and holders of the preferred stock of Brekford and shall not be entitled to receive notice of any meeting of stockholders at which they were entitled to vote.

Each holder of KeyStone Common Stock shall be entitled to one vote for each share of KeyStone Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote; provided, however, that except as otherwise required by law, holders of KeyStone Common Stock shall not be entitled to vote on any amendment to the KeyStone Charter (including any Certificate of Designations relating to any series of the preferred stock of KeyStone) that relates solely to the terms of one or more outstanding series of the preferred stock of KeyStone if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to the KeyStone Charter or the DGCL. There shall be no cumulative voting.

Except with respect to certain material changes in the terms of the KeyStone Preferred Stock and certain other matters and except as may be required by the DGCL, holders of KeyStone Preferred Stock will have no voting rights unless and until such KeyStone Preferred Stock is converted into Novume Common Stock.

The size of the Novume Board is determined by resolution of the Novume Board, provided, that, the size of the Novume board is initially five (5) members. The directors hold office until the next annual meeting or until such director’s successor has been elected and qualified.

Prior to the Effective Time, the size of the Brekford Board is determined by resolution of the Brekford Board. The Brekford Board currently is composed of four members. The directors hold office until the next annual meeting or until such director’s successor has been elected and qualified, or until his or her earlier death, resignation or removal.

Prior to the Effective Time, the size of the KeyStone Board is determined by resolution of the KeyStone Board. The KeyStone Board currently is composed of six members. The directors hold office until the next annual meeting or until such director’s successor has been elected and qualified.

Members of the Novume Board may be removed with or without cause by 66 2/3 of the voting power of the corporation entitled to vote at an election of directors.

Prior to the Effective Time, members of the Brekford Board may be removed with or without cause by a majority of the voting power of the corporation entitled to vote at an election of directors.

Prior to the Effective Time, members of the KeyStone Board may be removed with or without cause by a majority of the voting power of the corporation entitled to vote at an election of directors.

Subject to the rights of the holders of any series of preferred stock of Novume then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Novume Board resulting from death, resignation, retirement, removal from office or other cause shall, unless otherwise required by law or by resolution of the Novume Board, be filled by a majority vote of the directors then in office, though less than a quorum, and directors so chosen shall serve for a term expiring at the next annual meeting of stockholders or until such director’s successor shall have been duly elected.

Prior to the Effective Time, vacancies on the Brekford Board may be filled by a majority of the remaining directors (excluding any director elected by any class or series of the preferred stock of Brekford), although less than a quorum, or by a plurality of votes cast in the election of directors at a meeting of the stockholders.

Prior to the Effective Time, subject to the rights of the holders of any series of preferred stock of KeyStone then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the KeyStone Board resulting from death, resignation, retirement, removal from office or other cause shall, unless otherwise required by law or by resolution of the KeyStone Board, be filled by a majority vote of the directors then in office, though less than a quorum, and directors so chosen shall serve for a term expiring at the next annual meeting of stockholders or until such director’s successor shall have been duly elected.

The Novume Charter and Novume Bylaws do not provide for appraisal rights. The DGCL provides for appraisal rights only in the case of a merger or consolidation of a corporation where the petitioning stockholder does not consent to the transaction. No appraisal rights are available where the corporation is to be the surviving corporation and a vote of its stockholders is not required under the DGCL (except for a short form merger pursuant to Section 253 of the DGCL).

Prior to the Effective Time, the Brekford Charter and Brekford Bylaws do not provide for appraisal rights. Brekford stockholders will be entitled to appraisal rights under the DGCL, and receive payment for the fair value of their shares of Brekford Common Stock if the Brekford Merger is completed and the dissenting stockholders follow the requirements of Section 262 of the DGCL.

A copy of Section 262 of the DGCL is included as Annex B to this information statement/prospectus

Prior to the Effective Time, the KeyStone Charter and KeyStone Bylaws do not provide for appraisal rights. The provisions of the DGCL with respect to appraisal rights, as described above, apply to KeyStone.

Any Bylaw of Novume may be altered, amended, rescinded or repealed in accordance with the terms thereof by the holders of 66 2/3 of the shares of capital stock of Novume entitled to vote thereon at any annual meeting or at any special meeting called for that purpose.

Under the DGCL, unless a greater vote is required by the Brekford Charter, an amendment to the Brekford Charter requires the approval of the Brekford Board and the approval of the holders of a majority of the outstanding Brekford Common Stock entitled to vote on the amendment and the holders of a majority of the outstanding stock of each class entitled to vote as a class on such amendment. The Brekford Charter does not require a greater than majority vote.

The Brekford Bylaws provide that the Brekford Bylaws may be altered or amended or new bylaws adopted by the affirmative vote of at least sixty-six and two-thirds percent of the voting power of all of the then-outstanding shares of the capital stock of Brekford entitled to vote. The Brekford Board also has the power to adopt, amend, or repeal the Brekford Bylaws by the majority vote of the whole board.

Under the DGCL, unless a greater vote is required by the KeyStone Charter, an amendment to the KeyStone Charter requires the approval of the KeyStone Board and the approval of the holders of a majority of the outstanding KeyStone Common Stock entitled to vote on the amendment and the holders of a majority of the outstanding stock of each class entitled to vote as a class on such amendment. The KeyStone Charter does not require a greater than majority vote.

Prior to the Effective Time, the KeyStone Bylaws may be adopted, amended or repealed by the stockholders entitled to vote; provided, however, that no bylaw may be adopted, amended or released by the stockholders except by a vote or written consent of at least a majority of the voting power of KeyStone. KeyStone may, in the KeyStone Charter, confer the power to adopt, amend or repeal bylaws upon the KeyStone Board. The fact that such power has been so conferred shall not divest the stockholders of the power, nor limit their power, to adopt, amend or repeal bylaws.

The Novume Bylaws provide that annual stockholder meetings are held on a date to be determined by the Brekford Board. The Novume Bylaws provide that special meetings of stockholders may be called at any time by the Novume Board pursuant to a resolution adopted by a majority of the whole board of Directors, the Chairman of the KeyStone Board, the President or by one or more stockholders holding shares in the aggregate entitled to cast not less than 35% of the vote at that meeting. The “whole board” refers to the total number of authorized directors, whether or not there exist any vacancies in previously authorized directorships.

Prior to the Effective Time, the Brekford Bylaws provide that annual stockholder meetings are held on a date to be determined by the Brekford Board. The Brekford Bylaws provide that special meetings of stockholders may be called the chairman of the board of directors, if any, or the board of directors pursuant to a resolution adopted by a majority of the whole board of directors or by a committee of the Brekford Board duly authorized to call such meetings. The “whole board” refers to the total number of authorized directors, whether or not there exist any vacancies in previously authorized directorships.

Prior to the Effective Time, the KeyStone Bylaws provide that annual stockholder meetings are held on a date to be determined by the Brekford Board. The KeyStone Bylaws provide that special meetings of stockholders may be called at any time by the KeyStone Board pursuant to a resolution adopted by a majority of the whole board of Directors, the Chairman of the KeyStone Board, the President or by one or more stockholders holding shares in the aggregate entitled to cast not less than 20% of the vote at that meeting. The “whole board” refers to the total number of authorized directors, whether or not there exist any vacancies in previously authorized directorships.

The Novume Bylaws provide that notice of the place, if any, date and time of all meetings of stockholders, and the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting, except as otherwise provided herein or required by law or the Certificate of Incorporation of Novume. Written notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of Novume. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders may be given by electronic mail or other electronic transmission, in the manner provided in Section 232 of the DGCL. An affidavit of the secretary or an assistant secretary or of the transfer agent of Novume that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken; provided, however, that if the date of any adjourned meeting is more than 30 days after the date for which the meeting was originally noticed, or if a new record date is fixed for the adjourned meeting, notice of the place, if any, date, and time of the adjourned meeting and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting, shall be given in conformity herewith. At any adjourned meeting, any business may be transacted which might have been transacted at the original meeting.

Prior to the Effective Time, only such business shall be conducted at an annual meeting of stockholders as shall have been properly brought before the meeting. For business to be properly brought before the meeting, it must be: (i) authorized by the Brekford Board and specified in the notice, or a supplemental notice, of the meeting, (ii) otherwise brought before the meeting by or at the direction of the Brekford Board or the chairman of the meeting, or (iii) otherwise properly brought before the meeting by a stockholder. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given written notice thereof to the Secretary of Brekford, delivered or mailed to and received at the principal executive offices of Brekford not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or the annual meeting is called for a date that is not within 30 days from the anniversary date of the preceding year’s annual meeting date, written notice by a stockholder in order to be timely must be received not later than the close of business on the tenth day following the day on which the first public disclosure of the date of the annual meeting was made. Delivery shall be by hand or by certified or registered mail, return receipt requested. In no event shall the public disclosure of an adjournment of an annual meeting commence a new time period for the giving of stockholder’s notice as described above. A stockholder’s notice to the Secretary shall set forth as to each item of business the stockholder proposes to bring before the meeting: (1) a description of such item and the reasons for conducting such business at the meeting, (2) the name and address, as they appear on Brekford’s records, of the stockholder proposing such business, (3) a

representation that the stockholder is a holder of record of shares of stock of Brekford entitled to vote with respect to such business and intends to appear in person or by proxy at the meeting to move the consideration of such business, (4) the class and number of shares of stock of Brekford which are beneficially owned by the stockholder , and (5) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business. No business shall be conducted at any annual meeting except in accordance with the procedures set forth in this paragraph (b). The chairman of the meeting at which any business is proposed by a stockholder shall, if the facts warrant, determine and declare to the meeting that such business was not properly brought before the meeting in accordance with the provisions of this paragraph (b), and, in such event, the business not properly before the meeting shall not be transacted.

Prior to the Effective Time, if a special meeting is called by any stockholder or group of stockholders, the request shall be in writing, specifying the time of such meeting and the general nature of the business proposed to be transacted, and shall be delivered personally or delivered by first-class mail to the Secretary of the KeyStone. No business shall be transacted at such special meeting other than as specified in such notice. Upon receiving such notice, the Secretary shall cause notice to be given to the stockholders, in accordance with the KeyStone Bylaws, that a meeting will be held at the time requested by the stockholder or stockholders calling the special meeting. Such notice shall be sent not less than 35 or more than 60 days after the receipt of the request.

Nominations of persons for election to the KeyStone Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to KeyStone’s notice of meeting (i) by or at the direction of the KeyStone Board or (ii) by any stockholder of record at the time of giving of notice provided for in this paragraph, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in the Keystone Bylaws. Nominations by stockholders of persons for election to the KeyStone Board may be made at such a special meeting of stockholders if the stockholder’s notice has been delivered to the Secretary at the principal executive offices of KeyStone not later than the close of business on the later of the 30th day before such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the KeyStone Board be elected at such meeting.

Notice of the place, if any, date and time of all meetings of stockholders, and the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting, except as otherwise provided herein or required by law or the KeyStone Charter. Written notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of KeyStone. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders may be given by electronic mail or other electronic transmission, in the manner provided in Section 232 of the DGCL. An affidavit of the secretary or an assistant secretary or of the transfer agent of KeyStone that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

The Novume Bylaws provide that any action required to be taken at any annual or special meeting of stockholders of Novume, or any action that may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice, and without a vote if a consent in writing, setting forth the action so taken, is (i) signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted, and (ii) delivered to Novume in accordance with Section 228(a) of the DGCL.

Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within 60 days after the date the earliest dated consent is delivered to Novume, a written consent or consents signed by a sufficient number of holders to take action are delivered to Novume in the manner prescribed in the Novume Bylaws. An electronic mail or other electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for purposes of this Section to the extent permitted by law. Any such consent shall be delivered in accordance with Section 228(d)(1) of the DGCL.

Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing.

Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing (including by electronic mail or other electronic transmission as permitted by law). If the action which is consented to is such as would have required the filing of a certificate under any section of the DGCL if such action had been voted on by stockholders at a meeting thereof, then the certificate filed under such section shall state, in lieu of any statement required by such section concerning any vote of stockholders, that written notice and written consent have been given as provided in Section 228 of the DGCL.

The Brekford Charter and the Brekford Bylaws are silent on action by the stockholders taken by written consent. Accordingly, prior to the Effective Time, stockholders of Brekford may take actions without a meeting in accordance with the DGCL. Section 228(a) of the DGCL provides that, unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of a corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office in this State, its principal place of business or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to a corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested.

Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within 60 days after the date the earliest dated consent is delivered to Brekford, a written consent or consents signed by a sufficient number of holders to take action are delivered to Brekford in the manner prescribed in the DGCL. An electronic mail or other electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated to the extent permitted by law. Any such consent shall be delivered in accordance with Section 228(d)(1) of the DGCL.

Prior to the Effective Time, the KeyStone Bylaws contain the same provision as the Novume Bylaws.

The DGCL provides that a corporation may indemnify its officers, directors, employees and agents against liabilities and expenses incurred in proceedings if the person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal action, had no reasonable cause to believe that the person’s conduct was unlawful. The DGCL further provides that no indemnification is available in respect of a claim as to which the person has been adjudged to be liable to the corporation, unless and only to the extent that a court determines that in view of all the circumstances, such person is fairly and reasonably entitled to indemnity for such expenses that the court deems proper. Under the DGCL, a Delaware corporation must indemnify its present or former directors and officers against expenses (including attorneys’ fees) actually and reasonably incurred to the extent that the officer or director has been successful on the merits or otherwise in defense of any action, suit or proceeding brought against him or her by reason of the fact that he or she is or was a director or officer of the corporation.

The Novume Bylaws provide that Novume will indemnify and advance expenses to, and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that he, or a person for whom he is the legal representative, is or was a director or officer of Novume or, while a director or an officer of Novume, is or was serving at the request of Novume as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such person. Novume will not be obligated to indemnify such person in connection with a proceeding commenced by such person unless Novume’s board of directors has authorized the commencement of such a proceeding.

The Brekford Bylaws provide that Brekford will indemnify and advance expenses to, and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that he, or a person for whom he is the legal representative, is or was a director or officer of Brekford or, while a director or an officer of Brekford, is or was serving at the request of Brekford as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such person. Brekford will not be obligated to indemnify such person in connection with a proceeding commenced by such person unless Brekford’s board of directors has authorized the commencement of such a proceeding.

The provisions of the DGCL with respect to indemnification of directors and officers, as described above, apply to KeyStone.

The KeyStone Bylaws provide that KeyStone will indemnify its directors and executive officers to the fullest extent not prohibited by the DGCL or any other applicable law.

As permitted by the DGCL, the Novume Charter includes a provision eliminating the liability of a director to the corporation or its stockholders for monetary damages for a breach of the director’s fiduciary duties, except liability for any breach of the director’s duty of loyalty to the corporation’s stockholders, for acts or omissions not in good faith or that involve intentional misconduct or knowing violation of law, under Section 174 of the DGCL (which deals generally with unlawful payments of dividends, stock repurchases and redemptions), and for any transaction from which the director derived an improper personal benefit.

The provisions of the DGCL with respect to limitation on director liability, as described above, apply to Brekford.

The provisions of the DGCL with respect to limitation on director liability, as described above, apply to KeyStone.

Novume has no agreements or arrangements with any of its stockholders with respect to the transfer of its common stock.

Brekford has no agreements or arrangements with any of its stockholders with respect to the transfer of its common stock.

On March 16, 2016, Robert Berman, Avon Road, James McCarthy, Richard Nathan, Gregory McCarthy and Kevin Berrigan entered into a stockholders’ agreement (the “Stockholders’ Agreement”). The Merger Agreement provides that the Stockholders’ Agreement is going to be terminated prior to the Effective Time.

The Novume Charter and Novume Bylaws do not provide for restrictions on transfers of shares of Novume Common Stock or Novume Preferred Stock.

The Brekford Charter and Brekford Bylaws do not provide for restrictions on transfers of shares of Brekford Common Stock.

The KeyStone Charter and KeyStone Bylaws do not provide for restrictions on transfers of shares of KeyStone Common Stock or KeyStone Preferred Stock.

The Novume Charter and the Novume Bylaws do not provide a procedure or voting requirements for the dissolution of the corporation. The provisions of the DGCL relating to corporate dissolution, described above, apply to Novume.

The Brekford Charter and Brekford Bylaws do not provide a procedure or voting requirements for the dissolution of the corporation. Under Section 275 of the DGCL, a corporation may be dissolved upon the adoption of a resolution to that effect by a majority of the board, and the approval of a majority of the outstanding stock entitled to vote.

Brekford’s amended and restated certificate of incorporation does not provide for the dissolution of the corporation. The provisions of the DGCL relating to corporate dissolution apply to Brekford.

The KeyStone Charter and the KeyStone Bylaws do not provide a procedure or voting requirements for the dissolution of the corporation. The provisions of the DGCL relating to corporate dissolution, described above, apply to KeyStone.

Crowell & Moring LLP, counsel to KeyStone and Novume, will issue a legal opinion concerning the validity of the Novume Common Stock offered by this information statement/prospectus and the federal income tax consequences of the KeyStone Merger. Sichenzia Ross Ference Kesner LLP has acted as counsel to Brekford.

The consolidated financial statements of Brekford as of December 31, 2015 and December 31, 2014, and for each of the two years in the period ended December 31, 2015, included elsewhere in this information statement/prospectus have been so included in reliance on the report of Stegman & Company, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

The consolidated financial statements of AOC Key Solutions, Inc., the predecessor of KeyStone, as of December 31, 2015 and December 31, 2014, and for each of the two years in the period ended December 31, 2015, included elsewhere in this information statement/prospectus have been so included in reliance on the report of Ericksen Krentel & LaPorte, LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

Brekford is a public company and files annual, quarterly and current reports, proxy statements and other information with the SEC. KeyStone is a private company and has completed an offering described in an offering statement on Form 1-A and the offering circular appended thereto. You may read and copy any document Brekford files and any KeyStone files at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the public reference room. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers, like Brekford, who file electronically with the SEC. The address of the site is http://www.sec.gov.

In addition, Brekford maintains a website that contains information, including copies of reports, proxy statements and other information it files with the SEC. The address of Brekford’s website is www.brekford.com. Information contained on Brekford’s website or that can be accessed through Brekford’s website does not constitute a part of this information statement/prospectus.

Novume filed a registration statement on Form S-4 to register with the SEC Novume Common Stock to be issued to Brekford stockholders and KeyStone stockholders in the Mergers. This information statement/prospectus is a part of that registration statement and constitutes a prospectus of Novume in addition to being an information statement of Brekford. As allowed by SEC rules, this information statement/prospectus does not contain all the information you can find in Novume’s registration statement or the exhibits to the registration statement.

Brekford has supplied all information in this information statement/prospectus relating to Brekford, KeyStone has supplied all the information in this information statement/prospectus relating to KeyStone, and Novume has supplied all information in this information statement/prospectus relating to Novume.

You should rely only on the information contained in this information statement/prospectus. No other person or entity has been authorized to provide you with information that is different from the information contained in this information statement/prospectus. Therefore, if anyone does give you information of this sort, you should not rely on it. If you are in a jurisdiction where offers to exchange or sell, or solicitations of offers to exchange or purchase, the securities offered by this document is unlawful, or if you are a person to whom it is unlawful to direct this type of activity, then the offer presented in this document does not extend to you. This information statement/prospectus is dated [•], 2017. You should not assume that the information contained in this information statement/prospectus is accurate as of any date other than that date. Neither the mailing of this information statement/prospectus to Brekford stockholders nor the issuance of Novume Common Stock in the Mergers creates any implication to the contrary.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Condensed Consolidated Statements of Operations and Comprehensive loss (unaudited)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Brekford Corp. (BFDI), headquartered in Hanover, Maryland, is a leading public safety technology service provider of fully integrated traffic safety solutions, parking enforcement citation management, and mobile technology equipment for public safety vehicle services to state and local municipalities, the U.S. Military and various federal public safety agencies throughout the United States and Mexico. Brekford’s combination of upfitting services, cutting edge technology, and automated traffic safety enforcement (“ATSE”) services offers a unique 360º solution for law enforcement agencies and municipalities. Our core values of integrity, accountability, respect, and teamwork drive our employees to achieve excellence and deliver industry leading technology and services, thereby enabling a superior level of safety solutions to our clients. Brekford has one wholly owned subsidiary, Municipal Recovery Agency, LLC, a Maryland limited liability company, formed in 2012 for the purpose of providing collection systems and services for unpaid citations and parking fines.

As used in these notes, the terms “Brekford”, “the Company”, “we”, “our”, and “us” refer to Brekford Corp. and, unless the context clearly indicates otherwise, its consolidated subsidiary.

For the nine months ended September 30, 2016, the Company incurred a net loss of $803,998 and provided $426,780 of cash for operations. Additionally, at September 30, 2016 the Company had cash available of $593,806, a working capital surplus of $531,713 and availability under the established credit facility (see Note 4) of $2,163,187.

On July 12, 2016 (the “Closing Date”), the Company entered into a loan and security agreement (the “Loan Agreement”) with Fundamental Funding LLC (the “Lender”). The primary purpose of the new Loan Agreement is to pay off the prior loan with the lender, and provide additional working capital. The Loan Agreement provides for a multi-draw loan to the Company for (i) the Company’s accounts receivable, the lesser of (y) $2,500,000 or (z) 85% of the Company’s eligible accounts and (ii) the Company’s inventory advances, the lesser of (y) $500,000 or (z) 50% of the eligible inventory (the “Revolving Loans”). The maximum amount available to the Company under the Loan Agreement for the Revolving Loans is $3,500,000 (the “Credit Limit”). In addition, the Lender agreed to provide the Company with an accommodation loan in an amount not to exceed $500,000, which shall be repaid in thirty-six (36) equal monthly installments of principal and interest (the “Accommodation Loan” and together with the Revolving Loans, the “Loans”). Management believes that the Company’s current level of cash combined with cash that it expects to generate in its operations during the next twelve months including anticipated new customer contracts and funds available from the credit facility (see Note 14) will be sufficient to sustain the Company’s business initiatives through at least September 30, 2017, but there can be no assurance that these measures will be successful or adequate. In the event that the Company’s cash reserves, cash flow from operations and funds available under the Credit Facility (see Note 14) are not sufficient to fund the Company’s future operations, it may need to obtain additional capital.

There can be no assurance, however, that such financing will be available or, if it is available, that we will be able to structure such financing on terms acceptable to us and that it will be sufficient to fund our cash requirements until we can reach a level of sustained profitable operations and positive cash flows. If we are unable to obtain the financing necessary to support our operations, we may be unable to continue as a going concern. We currently have no firm commitments for any additional capital. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our shares of common stock.

The Company’s consolidated financial statements include the accounts of Brekford and its wholly owned subsidiary, Municipal Recovery Agency, LLC. Intercompany transactions and balances are eliminated in consolidation.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In the accompanying unaudited condensed consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, allowance for doubtful accounts, sales returns, allowance for inventory obsolescence, fair value of long-lived assets, deferred taxes and valuation allowance, and the depreciable lives of fixed assets. Actual results could differ from those estimates.

The Company maintains cash accounts with major financial institutions. From time to time, amounts deposited may exceed the FDIC insured limits.

Accounts receivable are carried at estimated net realizable value. The Company has a policy of reserving for uncollectable accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company calculates the allowance based on a specific analysis of past due balances. Past due status for a particular customer is based on how recently payments have been received from that customer. Historically, the Company’s actual collection experience has not differed significantly from its estimates, due primarily to credit and collections practices and the financial strength of its customers.

Inventory principally consists of hardware and third party packaged software that is modified to conform to customer specifications and held temporarily until the completion of a contract. Inventory is valued at the lower of cost or market value. The cost is determined by the first-in, first-out (“FIFO”) method, while market value is determined by replacement cost for raw materials and parts and net realizable value for work-in- process.

Property and equipment is stated at cost. Depreciation of furniture, vehicles, computer equipment and software and phone equipment is calculated using the straight-line method over the estimated useful lives (two to ten years), and leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the lease term (which is three to five years).

Management reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets.

The Company recognizes revenue relating to its vehicle upfitting solutions when all of the following criteria have been satisfied: (i) persuasive evidence of an arrangement exists; (ii) delivery or installation has been completed; (iii) the customer accepts and verifies receipt; and (iv) collectability is reasonably assured. The Company considers delivery to its customers to have occurred at the time at which products are delivered and/or installation work is completed and the customer acknowledges its acceptance of the work.

The Company provides its customers with a warranty against defects in the installation of its vehicle upfitting solutions for one year from the date of installation. Warranty claims were insignificant for the three months and nine months ended September 30, 2016 and September 30, 2015. The Company also performs warranty repair services on behalf of the manufacturers of the equipment it sells. The Company also offers separately priced extended warranty and product maintenance contracts to its customers on the equipment sold by the Company. Revenues from extended warranty services are apportioned over the period of the extended warranty service contracts and the warranty costs are expensed as incurred. Revenue from extended warranties amounted to $25,054 and $86,594 for the three and nine months ended September 30, 2016, respectively, compared to $39,166 and $211,100 respectively, for the same periods in 2015.

For automated traffic safety enforcement revenue, the Company recognizes the revenue when the required collection efforts are completed and the respective municipality is billed depending on the terms of the respective contract. The Company records revenue related to automated traffic violations for the Company’s share of the violation amount.

The Company complies with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation-Stock Compensation, in measuring and disclosing stock based compensation cost. The measurement objective in ASC Paragraph 718-10-30-6 requires public companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. The cost is recognized in expense over the period in which an employee is required to provide service in exchange for the award (the vesting period). Performance-based awards are expensed ratably from the date that the likelihood of meeting the performance measures is probable through the end of the vesting period.

The Company accounts for treasury stock using the cost method. As of September 30, 2016, 10,600 shares of our common stock were held in treasury at an aggregate cost of $5,890.

The Company uses the liability method to account for income taxes. Income tax expense includes income taxes currently payable and deferred taxes arising from temporary differences between financial reporting and income tax bases of assets and liabilities. Deferred income taxes are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense, if any, consists of the taxes payable for the current period. Valuation allowances are established when the realization of deferred tax assets are not considered more likely than not. Due to the Company’s continued losses, 100% valuation allowance has been established on all deferred tax assets.

The Company files income tax returns with the U.S. Internal Revenue Service and with the revenue services of various states. The Company’s policy is to recognize interest related to unrecognized tax benefits as income tax expense. The Company believes that it has appropriate support for the income tax positions it takes and expects to take on its tax returns, and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter.

Basic earnings (loss) per share is calculated by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding and does not include the effect of any potentially dilutive common stock equivalents. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares outstanding, adjusted for the effect of any potentially dilutive common stock equivalents. There is no dilutive effect on the loss per share during loss periods. See Note 13 for the calculation of basic and diluted earnings (loss) per share.

The carrying amounts reported in the balance sheets for cash, accounts receivable, accounts payable and accrued expenses approximate their fair values based on the short-term maturity of these instruments. The carrying amount of the Company’s promissory note obligations approximate fair value, as the terms of these notes are consistent with terms available in the market for instruments with similar risk.

We account for our derivative financial instruments, consisting solely of certain stock purchase warrants that contain non-standard anti-dilutions provisions and/or cash settlement features, and certain conversion options embedded in our convertible instruments, at fair value using Level 3 inputs, which are discussed in Note 14 to these condensed consolidated financial statements. We determine the fair value of these derivative liabilities using the Black-Scholes option-pricing model when appropriate, and in certain circumstances using binomial lattice models or other accepted valuation practices.

When determining the fair value of our financial assets and liabilities using the Black-Scholes option-pricing model, we are required to use various estimates and unobservable inputs, including, among other things, contractual terms of the instruments, expected volatility of our stock price, expected dividends, and the risk-free interest rate. Changes in any of the assumptions related to the unobservable inputs identified above may change the fair value of the instrument. Increases in expected term, anticipated volatility and expected dividends generally result in increases in fair value, while decreases in the unobservable inputs generally result in decreases in fair value.

The Company has certain revenue and expense transactions with a functional currency in Mexican pesos and the Company’s reporting currency is the U.S. dollar. Assets and liabilities are translated from the functional currency to the reporting currency at the exchange rate in effect at the balance sheet date and equity at the historical exchange rates. Revenue and expenses are translated at rates in effect at the time of the transactions. Resulting translation gains and losses are accumulated in a separate component of stockholders’ equity—other comprehensive income (loss). Realized foreign currency transaction gains and losses are credited or charged directly to operations.

FASB ASC Topic 280, Segment Reporting, requires that an enterprise report selected information about operating segments in its financial reports issued to its stockholders. Based on its current analysis, management has determined that the Company has only one operating segment, which is Traffic Safety Solutions. The chief operating decision-makers use combined results to make operating and strategic decisions, and, therefore, the Company believes its entire operation is covered under a single segment.

In May 2014 the FASB issued ASU 2014-09, Revenue from contracts with Customers (Topic 606) (May 2014). The topic of Revenue Recognition had become broad with several other regulatory agencies issuing standards, which lacked cohesion. The new guidance established a “comprehensive framework” and “reduces the number of requirements to which an entity must consider in recognizing revenue” and yet provides improved disclosures to assist stakeholders reviewing financial statements. The amendments in this Update are effective for annual reporting periods beginning after December 15, 2017. Early adoption is permitted for annual reporting periods beginning after December 31, 2016. The Company will adopt the methodologies prescribed by this ASU by the date required. Adoption of the ASU is not expected to have a significant effect on the Company’s consolidated financial statements.

The FASB has issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. Under Generally Accepted Accounting Principles (GAAP), financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting is critical to financial reporting because it established the fundamental basis for measuring and classifying assets and liabilities. Currently, GAAP lacks guidance about management’s responsibility to evaluate whether there is substantial doubt the organization’s ability to continue as a going concern or to provide footnote disclosures. The ASU provides guidance to an organization’s management, with principles and definition that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The amendments in this update are effective for the annual period ending after December 31, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will adopt the methodologies prescribed by this ASU by the date required. Adoption of the ASU is not expected to have a significant effect on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of the Debt Issuance Cost.” To simplify the presentation of the debt issuance costs, the amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those years. By adopting this standard, we have reclassified certain of our assets and liabilities.

In February 2016, FASB issued ASU-2016-02, “Leases (Topic 842).” The guidance requires that a lessee recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right of use asset representing its right to use the underlying asset for the lease term. For finance leases: the right-of-use asset and a lease liability will be initially measured at the present value of the lease payments, in the statement of financial position; interest on the lease liability will be recognized separately from amortization of the right-of-use asset in the statement of comprehensive income; and repayments of the principal portion of the lease liability will be classified within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows. For operating leases: the right-of-use asset and a lease liability will be initially measured at the present value of the lease payments, in the statement of financial position; a single lease cost will be recognized, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; and all cash payments will be classified within operating activities in the statement of cash flows. Under Topic 842 the accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The amendments in Topic 842 are effective for the Company beginning January 1, 2019, including interim periods within that fiscal year. We are currently evaluating the impact of adopting the new guidance of the consolidated financial statements.

In January 2016, the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”) 2016-01, “Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,” which amends the guidance in U.S. generally accepted accounting principles on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and is to be adopted by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adopting this standard.

In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes,” which simplifies the presentation of deferred income taxes by requiring that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. This ASU is effective for financial statements issued for annual periods beginning after December 16, 2016, and interim periods within those annual periods. The adoption of this standard will not have any impact on the Company’s financial position, results of operations and disclosures.

On July 12, 2016 (the “Closing Date”), the Company entered into a loan and security agreement (the “Loan Agreement”) with Fundamental Funding LLC (the “Lender”). The Loan Agreement provides for a multi-draw loan to the Company for (i) the Company’s accounts receivable, the lesser of (y) $2,500,000 or (z) 85% of the Company’s eligible accounts and (ii) the Company’s inventory advances, the lesser of (y) $500,000 or (z) 50% of the eligible inventory (the “Revolving Loans”). The maximum amount available to the Company under the Loan Agreement for the Revolving Loans is $3,500,000 (the “Credit Limit”). In addition, the Lender agreed to provide the Company with an accommodation loan in an amount not to exceed $500,000, which shall be repaid in thirty-six (36) equal monthly installments of principal and interest (the “Accommodation Loan” and together with the Revolving Loans, the “Loans”).

On the Closing Date, the Lender advanced the Company an amount equal to $533,670. The amounts advanced under the Loan Agreement are due and payable on the three (3) year anniversary of the Closing Date (the “Maturity Date”), and thereafter, the Maturity Date shall automatically be extended for successive periods of one year unless the Company shall give lender written notice of termination not less than ninety (90) days prior to the end of such term or renewal term, as applicable. Lender may terminate the Loan Agreement at any time in its sole discretion by giving the Company ninety (90) days prior written notice, provided that upon an Event of Default (as defined in the Loan Agreement), Lender may terminate the Loan Agreement without notice to the Company, effective immediately. Upon termination by the Lender, the Company shall be required to pay certain termination fees based on a percentage of the Credit Limit as set forth in the Loan Agreement.

The outstanding principal balance under the Note for the Revolving Loans shall bear interest at a rate per annum equal to the “prime rate” published from time to time in the Wall Street Journal (the “Prime Rate”), plus 1.75% per annum, accruing daily and payable monthly. The outstanding principal balance under the Accommodation Loan shall bear interest at a rate per annum equal to the Prime Rate in effect from time to time, plus 12.75% per annum, accruing daily and payable monthly. Notwithstanding any other provision in the Loan Agreement, interest on Loans shall be calculated on the higher of: (i) the actual average monthly balance of all Loans from the prior month, or (ii) $1,350,000. In addition the Company will be subject to certain monthly or annual fees on the Loans as set forth in the Loan Agreement.

The remaining portion of Credit Limit may be advanced to the Company upon written notice provided to the Lender during the period beginning from the Closing Date through the Maturity Date provided no default has occurred under the Loan Agreement. The Company may prepay any portion of the Accommodation Loan, in whole or in part, to Lender on or prior to the Maturity Date.

Initial borrowings under the Loan Agreement were subject to, among other things, the substantially concurrent repayment by the Company of all amounts due and owing under the Company’s credit facility, dated May 24, 2014, with Rosenthal & Rosenthal, Inc. and the satisfaction and termination of such borrowing and all liens thereunder (collectively, the “Rosenthal Loan”). All amounts owed under the Rosenthal Loan, which was approximately an aggregate of $2,253,617, was satisfied and terminated by the Company on the Closing Date.

In addition, on the Closing Date, the Company entered into a subordination agreement with each of C.B. Brechin and Scott Rutherford, the Company’s chief executive officer and chief strategy officer, respectively, as well as with the Investor described in Note 6 pursuant to which each of the parties agreed to subordinate all present and future indebtedness held by each of them to the obligations of the Lender.

On the Closing Date, as part of the Loan Agreement and to secure the payment and performance of all of the obligations owed to Lender under the Loan Agreement when due, the Company granted to Lender a security interest in all right, title and interest to all assets of the Borrower, whether now owned or hereafter arising or acquired and wherever located.

The Loan Agreement contains customary affirmative and negative covenants for loan agreements of its type, including but not limited to, limiting the Company’s ability to pay dividends or make any distributions, incur additional indebtedness, grant additional liens, engage in any other lime of business, make investments, merge, consolidate or sell all or substantially all of its assets and enter into transactions with related parties. The Loan Agreement also contains certain financial covenants, including, but not limited to, a debt service coverage ratio.

The Loan Agreement includes customary events of default, including but not limited to, failure to pay principal, interest or fees when due, failure to comply with covenants, default under certain other indebtedness, certain insolvency or bankruptcy events, the occurrence of certain material judgments the institution of any proceeding by a government agency or a change of control of the Company.

All borrowings under the Loan Agreement are due upon a default under the terms of the Loan Agreement. The Company’s obligations under the Loan Agreement are guaranteed by C.B. Brechin, the Company’s chief executive officer pursuant to the terms of a surety agreement.

At September 30, 2016, the Company had $836,813 in outstanding indebtedness under the Revolving Facility and $500,000 in outstanding indebtedness under the Term Loan, and the Company could have borrowed up to an additional $2,163,187 under the Revolving Facility. As of September 30, 2016, we were out of compliance with one of the financial covenants contained in the Credit Facility as a result of the loss recorded for the nine months ended September 30, 2016. We reported this non-compliance to Fundamental, and requested a waiver for the nine months ended September 30, 2016.

The Company financed certain vehicles and equipment under finance agreements. The agreements mature at various dates through December 2017. The agreements require various monthly payments of principal and interest until maturity. At September 30, 2016 and December 31, 2015, financed assets of $26,539 and $47,732, respectively, net of accumulated amortization of $115,377 and $98,184, respectively, were included in property and equipment on the balance sheets. The weighted average interest rate was 3.75% at September 30, 2016 and December 31, 2015.

Brekford financed the repurchase of shares of its common stock and warrants from the proceeds of convertible promissory notes that were issued by Brekford on November 9, 2009 in favor of a lender group that included two of its directors, Messrs. C.B. Brechin and Scott Rutherford, in the principal amounts of $250,000 each (each, a “Promissory Note” and together, the “Promissory Notes”). Each Promissory Note bears interest at the rate of 12% per annum and at the time of issuance was to be convertible into shares of Brekford common stock, at the option of the holder, at an original conversion price of $.07 per share. At the time of issuance, Brekford agreed to pay the unpaid principal balance of the Promissory Notes and all accrued but unpaid interest on the date that was the earlier of (i) two years from the issuance date or (ii) 10 business days after the date on which Brekford closes an equity financing that generates gross proceeds in the aggregate amount of not less than $5,000,000.

On April 1, 2010, Brekford and each member of the lender group executed a First Amendment to each Promissory Note, which amended the respective Promissory Note as follows:

On November 8, 2013, Brekford and each member of the lender group agreed to extend the maturity dates of the Promissory Notes to the earlier of (i) November 9, 2014 or (ii) 10 business days after the date on which Brekford closes an equity financing that generates gross proceeds in the aggregate amount of not less than $5,000,000.

On November 9, 2015, the maturity dates of the Promissory Notes were extended to the earlier of (i) November 9, 2016 or (ii) 10 business days from the date on which Brekford closes an equity financing that generates gross proceeds in the aggregate amount of not less than $5,000,000.

On November 4, 2016, the maturity dates of the Promissory Notes were extended to the earlier of (i) November 9, 2017 or (ii) 10 business days from the date on which Brekford closes an equity financing that generates gross proceeds in the aggregate amount of not less than $5,000,000. Mr. Brechin and Mr. Rutherford have indicated that they will not exercise their right of repayment prior to September 30, 2017.

The Company anticipates the maturity date of the Promissory Notes will continue to be extended for the foreseeable future; thus, they are classified as long-term liabilities. As of September 30, 2016 and December 31, 2015, the amounts outstanding under the Promissory Notes totaled $500,000.

On March 17, 2015, the Company entered into a note and warrant purchase agreement (the “Agreement”) with an accredited investor (the “Investor”) pursuant to which the Investor purchased an aggregate principal amount of $715,000 of a 6% convertible promissory note issued by the Company for an aggregate purchase price of $650,000 (the “Investor Note”). The Investor Note bears interest at a rate of 6% per annum and the principal amount is due on March 17, 2017. Any interest that accrues under the Investor Note is payable either upon maturity or upon any principal being converted on any voluntary conversion date (as to that principal amount then being converted). The Investor Note is convertible at the option of the Investor at any time into shares of Common Stock at a conversion price equal to the lesser of (i) $0.25 per share and (ii) 70% of the average of the lowest three volume weighted average prices for the twelve (12) trading days prior to such conversion (the “Conversion Price”). In no event can the Conversion Price be less than $0.10; provided, however, that if on or after the date of the Agreement the Company sells any Common Stock or Common Stock Equivalents (as defined in the Agreement) at an effective price per share that is less than $0.10 per share, then the Conversion Price shall be equal to the par value of the Common Stock then in effect. In connection with the Agreement, the Investor received a warrant to purchase 780,000 shares of Common Stock (the “Warrant”). The Warrant is exercisable for a period of five years from the date of issuance at an exercise price of $0.50 per share, subject to adjustment (the “Exercise Price”).

On October 23, 2015, the Investor converted $25,000 of principal and $904 of accrued interest due under the Investor Note into 169,530 shares of Common Stock and the Company recognized a loss on extinguishment of debt of $19,869.

On December 2, 2015, the Investor converted $50,000 of principal and $2,129 of accrued interest due under the Investor Note into 349,155 shares of Common Stock and the Company recognized a loss on extinguishment of debt of $35,160.

On February 26, 2016 the Investor converted $50,000 of principal and $2,844 of accrued interest due under the Investor Note into 476,500 shares of Common Stock and the Company recognized a loss on extinguishment of debt of $49,525.

On March 31, 2016 the Investor converted $50,000 of principal and $3,123 of accrued interest due under the Investor Note into 510,310 shares of Common Stock and the Company recognized a loss on extinguishment of debt of $72,947.

On May 31, 2016 the Investor converted $50,000 of principal and $3,625 of accrued interest due under the Investor Note into 605,928 shares of Common Stock and the Company recognized a loss on extinguishment of debt of $38,923.

On July 1, 2016 the Investor converted $50,000 of principal and $3,880 of accrued interest due under the Investor Note into 699,733 shares of Common Stock and the Company recognized a loss on extinguishment of debt of $40,875.

On July 27, 2016 the Investor converted $50,000 of principal and $4,093 of accrued interest due under the Investor Note into 758,670 shares of Common Stock and the Company recognized a loss on extinguishment of debt of $45,024.

On August 31, 2016 the Investor converted $50,000 of principal and $4,381 of accrued interest due under the Investor Note into 776,869 shares of Common Stock and the Company recognized a loss on extinguishment of debt of $44,618.

The following table provides information relating to the Investor Note at September 30, 2016:

We evaluated the financing transactions in accordance with ASC Topic 470, Debt with Conversion and Other Options, and determined that the conversion feature of the Investor Note was afforded the exemption for conventional convertible instruments due to its fixed conversion rate. The Investor Note has an explicit limit on the number of shares issuable so it did meet the conditions set forth in current accounting standards for equity classification. The debt was issued with non-detachable conversion options that are beneficial to the investors at inception, because the conversion option has an effective strike price that is less than the market price of the underlying stock at the commitment date. The accounting for the beneficial conversion feature requires that the beneficial conversion feature be recognized by allocating the intrinsic value of the conversion option to additional paid-in-capital, resulting in a discount on the convertible notes, which will be amortized and recognized as interest expense.

Accordingly, a portion of the proceeds was allocated to the Warrant based on its relative fair value, which totaled $92,079 using the Black Scholes option-pricing model. Further, the Company attributed a beneficial conversion feature of $557,921 to the shares of Common Stock issuable under the Investor Note based upon the difference between the effective Conversion Price and the closing price of the Common Stock on the date on which the Investor Note was issued. The assumptions used in the Black-Scholes model are as follows: (i) dividend yield of 0%; (ii) expected volatility of 80.5%, (iii) weighted average risk-free interest rate of 1.56%, (iv) expected life of five years, and (v) estimated fair value of the Common Stock of $0.26 per share. The expected term of the Warrant represents the estimated period of time until exercise and is based on historical experience of similar awards giving consideration to the contractual terms. The Company recorded amortization of the beneficial conversion feature and warrant feature of the Investor Note in other expense in the amount of $240,988 and $39,773 during the nine months ended September 30, 2016 and $255,960 and $42,243, during the year ended December 31, 2015 which also includes the unamortized beneficial conversion feature and warrant feature attributable to the $375,000 principal converted to equity.

The Company recorded an original issue discount of $65,000 to be amortized over the term of the Agreement as interest expense. The Company recognized $28,076 and $29,820 of interest expense as a result of the amortization during the nine months ended September 30, 2016 and the year ended December 31, 2015 respectively, which also includes the unamortized original issue discount attributable to the $375,000 principal converted to equity.

On March 17, 2015, in conjunction with the issuance of the Investor Note (see Note 6), the Company issued the Warrant, which permits the Investor to purchase 840,000 shares of Common Stock, including 60,000 related to the financing costs, with an exercise price of $0.50 per share and a life of five years.

The Exercise Price is subject to anti-dilution adjustments that allow for its reduction in the event the Company subsequently issues equity securities, including shares of Common Stock or any security convertible or exchangeable for shares of Common Stock, for no consideration or for consideration less than $0.50 a share. The Company accounted for the conversion option of the Warrant in accordance with ASC Topic 815. Accordingly, the conversion option is not considered to be solely indexed to the Company’s own stock and, as such, is recorded as a liability. The derivative liability associated with the Warrant has been measured at fair value at March 17, 2015 and September 30, 2016 using the Black Scholes option-pricing model. The assumptions used in the Black-Scholes model are as follows: (i) dividend yield of 0%; (ii) expected volatility of 81.67% -80.50%; (iii) weighted average risk-free interest rate of 1.14% - 1.56% (iv) expected life of five years; and (v) estimated fair value of the Common Stock of $0.10-$0.26 per share.

At September 30, 2016, the outstanding fair value of the derivative liability was $18,228.

At September 30, 2016 and December 31, 2015, no capital lease was included in property and equipment on the consolidated balance sheets.

The Company rents office space under separate non-cancelable operating leases. Rent expense under our main headquarters lease, expiring on April 30, 2020 amounted to $128,432 and $126,486 for the nine months ended September 30, 2016 and 2015, respectively.

The Company also leases approximately 2,500 square feet of office space from a related party under a non-cancelable operating lease expiring on June 30, 2017. Rent expense under this lease amounted to $36,900 for the nine months ended September 30, 2016 and 2015, respectively.

The Company has several contracts with government agencies, of which net revenue from one major customer during the nine months ended September 30, 2016 represented 14% of the total net revenue for the period. Accounts receivable due from three customers at September 30, 2016 amounted to 43% of total accounts receivable.

For the period ended September 30, 2015, the Company has several contracts with government agencies, of which net revenue from one major customer represented 23% of the total net revenue for the period. Accounts receivable due from three customers at September 30, 2015 amounted to 60% of total accounts receivable.

Accounts receivable due from these customers at December 31, 2015 amounted to 53% of total accounts receivable at that date.

The Company purchased substantially all hardware products that it resold during the periods presented from two major distributors. Revenues from hardware products amounted to 51% and 47% of total revenues for the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016 and 2015, accounts payable due to these distributors amounted to 62% and 43% of total accounts payable, respectively.

Accounts payable due to these distributors at December 31, 2015, amounted to 72% of total accounts payable at that date.

The assumptions used to value warrant grants during the nine months ended September 30, 2016, which consisted solely of the Warrant, were as follows:

Summary of the warrant activity for the nine months ended September 30, 2016 is as follows:

The weighted average remaining contractual life of warrants outstanding as of September 30, 2016 was as follows:

Option grants during the nine months ended September 30, 2016 were primarily made to non-employee directors who elected to receive options for their Board service. The options had a grant date fair value of $0.07 per share and will vest and become exercisable with respect to option shares over a three year period commencing from the date of grant at a rate of 33.33% per year. The Company recorded $3,515 and $10,988 and $4,360 and $8,100 in stock option compensation expense for the three and nine months ended September 30, 2016 and 2015, respectively, related to the stock option grants.

Summary of the option activity for nine months ended September 30, 2016 is as follows:

The unrecognized compensation cost for unvested stock option awards outstanding at September 30, 2016 was approximately $24,547 to be recognized over approximately 3.25 years.

During the nine months ended September 30, 2016, the Company granted an aggregate of 198,000 shares of Common Stock to key employees in consideration of services rendered and part of employment agreement. The weighted average value of the shares amounted to $0.20 per share based upon the closing price of shares of Common Stock on the date of the grant. These shares were fully vested on the date of the grant. The Company recorded $0 and $39,600 in share-based compensation expense for the three and nine months ended September 30, 2016 related to stock grants. For the three and nine months ended September 30, 2015, the Company recorded $0 and $44,880 in share-based compensation expense related to stock grants.

As of September 30, 2016 and December 31, 2015, inventory consisted of the following:

The following table provides information relating to the calculation of loss per common share.

Disclosures about fair value of financial instruments require disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of September 30, 2016, the amounts reported for cash, accrued interest and other expenses, notes payables, and derivative liability approximate their fair values because of their short maturities.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows at September 30, 2016:

The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value:

We have audited the accompanying consolidated balance sheets of Brekford Corp. (the “Company”) as of December 31, 2015 and 2014, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity (deficit), and cash flows for each of the years in the two year period ended December 31, 2015. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Brekford Corp. as of December 31, 2015 and 2014, and the results of its operations and its cash flows for each of the years in the two year period ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America.

The accompanying notes are an integral part of these consolidated financial statements.

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

For the year ended December 31, 2015 the Company incurred a net loss of approximately $371 thousand, and used approximately $816 thousand of cash for operations. Additionally, at December 31, 2015 the company has cash available of approximately $580 thousand, a working capital surplus of approximately $423 thousand and availability under the established credit facility (see Note 5) of approximately $1.1 million.

Management believes that the Company’s current level of cash combined with cash that it expects to generate in its operations during the next 12 months including anticipated new customer contracts and funds available from the credit facility and the note will be sufficient to sustain the Company’s business initiatives through at least December 31, 2016, but there can be no assurance that these measures will be successful or adequate. In the event that the Company’s cash reserves, cash flow from operations and funds available under the Credit Facility (see Note 5) are not sufficient to fund the Company’s future operations, it may need to obtain additional capital.

The Company’s consolidated financial statements include the accounts of Brekford Corp. and its wholly-owned subsidiary, Municipal Recovery Agency, LLC. Intercompany transactions and balances are eliminated in consolidation.

The Company maintains cash accounts with major financial institutions. From time to time, amounts deposited may exceed the FDIC insured limits.

Inventory principally consists of hardware and third-party packaged software that is modified to conform to customer specifications and held temporarily until the completion of a contract. Inventory is valued at the lower of cost or market value. The cost is determined by the lower of first-in, first-out (“FIFO”) method, while market value is determined by replacement cost for raw materials and parts and net realizable value for work-in- process.

The Company provides its customers with a warranty against defects in the installation of its vehicle upfitting solutions for one year from the date of installation. Warranty claims were insignificant for the year ended December 31, 2015 and $10,111 for the year ended December 31, 2014. The Company also performs warranty repair services on behalf of the manufacturers of the equipment it sells. The Company also offers separately-priced extended warranty and product maintenance contracts to its customers on the equipment sold by the Company. Revenues from extended warranty services are apportioned over the period of the extended warranty service contracts and the warranty costs are expensed as incurred. Revenue from extended warranties for the years ended December 31, 2015 and 2014 amounted to $237,286 and $443,737, respectively.

All amounts billed to customers related to shipping and handling are included in products revenues and all costs of shipping and handling are included in cost of sales in the accompanying consolidated statements of operations. The Company incurred shipping and handling costs of $58,120 and $57,843 for the years ended December 31, 2015 and 2014, respectively.

The Company expenses advertising costs as incurred. These expenses are included in selling, general and administrative expenses in the accompanying statements of operations. Advertising expense amounted to $8,000 and $30,412 for the years ended December 31, 2015 and 2014, respectively.

The Company accounts for treasury stock using the cost method. As of December 31, 2015, 10,600 shares of our common stock were held in treasury at an aggregate cost of $5,890.

The Company uses the liability method to account for income taxes. Income tax expense includes income taxes currently payable and deferred taxes arising from temporary differences between financial reporting and income tax bases of assets and liabilities. Deferred income taxes are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense, if any, consists of the taxes payable for the current period. Valuation allowances are established when the realization of deferred tax assets are not considered more likely than not. Due to the Company’s continued losses 100% valuation allowance has been established on all deferred tax assets.

Basic loss per share is calculated by dividing net loss available to common stockholders by the weighted-average number of common shares outstanding and does not include the effect of any potentially dilutive common stock equivalents. Diluted loss per share is calculated by dividing net loss by the weighted-average number of shares outstanding, adjusted for the effect of any potentially dilutive common stock equivalents. There is no dilutive effect on the loss per share during loss periods. See Note 11 for the calculation of basic and diluted loss earnings per share.

In May 2014 the FASB issued ASU 2014-09, Revenue from contracts with Customers (Topic 606) (May 2014). The topic of Revenue Recognition had become broad with several other regulatory agencies issuing standards, which lacked cohesion. The new guidance established a “comprehensive framework” and “reduces the number of requirements to which an entity must consider in recognizing revenue” and yet provides improved disclosures to assist stakeholders reviewing financial statements. The amendments in this Update are effective for annual reporting periods beginning after December 15, 2017. Early adoption is not permitted. The Company will adopt the methodologies prescribed by this ASU by the date required. Adoption of the ASU is not expected to have a significant effect on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of the Debt Issuance Cost.” To simplify the presentation of the debt issuance costs, the amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those years. Early adoption of the amendments in this ASU is permitted for financial statements that have not been previously issued. By adopting this standard, we will reclassify certain of our assets and liabilities but have not calculated the amounts of those recalculations at this time.

In January 2016, the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”) 2016-01, “Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,” which amends the guidance in U.S. generally accepted accounting principles on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and are to be adopted by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adopting this standard.

Depreciation and amortization of property and equipment for the years ended December 31, 2015 and 2014 was $189,613 and $777,434, respectively.

On May 27, 2014, Brekford Corp. closed (the “Closing”) on an aggregate $3.0 million credit facility (the “Credit Facility”) with Rosenthal & Rosenthal, Inc. (“Rosenthal”) as lender consisting of $2.5 million in revolving loans (the “Revolving Facility”) and a $500,000 non-revolving term loan (the “Term Loan”). The terms and conditions of the Credit Facility are set forth in a Financing Agreement between the Company and Rosenthal dated May 27, 2014 (the “Financing Agreement”). The Term Loan is additionally evidenced by a Term Note issued by the Company in favor of Rosenthal. The maximum amount that the Company may borrow from time to time under the Revolving Facility will be the lesser of $2.5 million or the “Loan Availability” (as defined in the Financing Agreement), which is tied to the amount of the Company’s “Eligible Receivables” (as defined in the Financing Agreement) and the amount of its “Eligible Inventory” (as defined in the Financing Agreement). Interest on the unpaid principal balances due under the Credit Facility will be payable monthly in arrears. Amounts borrowed under the Revolving Facility that do not exceed the “Receivable Availability” (as defined in the Financing Agreement) will bear interest at an annual rate equal to the prime rate from time to time publicly announced in New York City by JPMorgan Chase Bank (the “Prime Rate”) plus 2.5%; amounts borrowed under the Revolving Facility that relate to the “Inventory Availability” (as defined in the Financing Agreement) will bear interest at an annual rate equal to the Prime Rate plus 3.0% (the “Inventory Rate”); and any amounts that, on any day, exceed the Loan Availability will bear interest at an annual rate equal to the Inventory Rate plus 4.0%; provided, however, that the Prime Rate will never be deemed to be less than 4.0%. The Company agreed to pay a minimum of $3,000 in monthly interest under the Revolving Facility, as well as a $1,000 monthly loan administration fee. In addition, the Company agreed to pay Rosenthal a facility fee at the Closing in the amount of $30,000. At each annual renewal of the Financing Agreement, the Company will pay Rosenthal a facility fee in the amount of $18,750.

The Company’s obligations under the Financing Agreement and related documents are secured by a continuing lien on and security interest in substantially all of the Company’s assets. The Company’s repayment obligations under the Revolving Facility are due on demand by Rosenthal or, at Rosenthal’s option, upon the expiration of the Financing Agreement and/or the occurrence of an event of default thereunder. The original term of the Financing Agreement will expire on May 31, 2016 but will automatically renew for successive one-year terms unless the Company elects not to renew the Financing Agreement by providing at least 60 days’ prior written notice thereof to Rosenthal. Rosenthal may terminate the Financing Agreement at any time upon 60 days’ prior written notice to the Company.

The Credit Facility replaced the Company’s $2.0 million credit facility with PNC Bank, National Association (“PNC”), under that certain Loan Agreement, dated as of June 28, 2012, as amended (the “PNC Facility”), and refinanced the amounts that were due under the PNC Facility. At the Closing, the Company paid approximately $1,030,707 to PNC in satisfaction of its obligations under the PNC Facility. In addition, the Company used proceeds from the Credit Facility, totaling approximately $310,649, to satisfy its obligations to Bank of America, N.A., under its Master Lease Agreement, dated as of December 13, 2011.

At December 31, 2015, the Company had $1.4 million in outstanding indebtedness under the Revolving Facility and $166,667 in outstanding indebtedness under the Term Loan, and the Company could have borrowed up to an additional $1.1 million under the Revolving Facility. As of December 31, 2015, we were out of compliance with one of the financial covenants contained in the Credit Facility as a result of the loss recorded for the year ended 2015. We reported this non-compliance to Rosenthal & Rosenthal and received the waiver.

The Company financed certain vehicles and equipment under finance agreements. The agreements mature at various dates through December 2017. The agreements require various monthly payments of principal and interest until maturity. As of December 31, 2015 and 2014, financed assets of $47,732 and $75,988, respectively, net of accumulated amortization of $98,184 and $65,927, respectively, are included in property and equipment on the balance sheets. The weighted average interest rate was 3.70% at December 31, 2015 and 3.75% at December 31, 2014. Future maturities of notes payable are as follows as of December 31, 2015:

Brekford financed the repurchase of shares of its common stock and warrants from the proceeds of convertible promissory notes that were issued by Brekford on November 9, 2009 in favor of a lender group that included two of its directors, Messrs. C.B. Brechin and Scott Rutherford, in the principal amounts of $250,000 each (each, a “Promissory Note” and together, the “Promissory Notes”). Each Promissory Note bears interest at the rate of 12% per annum and at the time of issuance was to be convertible into shares of Brekford Corp. common stock, at the option of the holder, at an original conversion price of $.07 per share. At the time of issuance, Brekford agreed to pay the unpaid principal balance of the Promissory Notes and all accrued but unpaid interest on the date that was the earlier of (i) two years from the issuance date or (ii) 10 business days after the date on which Brekford Corp. closes an equity financing that generates gross proceeds in the aggregate amount of not less than $5,000,000.

On April 1, 2010, Brekford Corp. and each member of the lender group executed a First Amendment to the Unsecured Promissory Note, which amended the Promissory Notes as follows:

On November 8, 2013, Brekford Corp. and each member of the lender group agreed to extend the maturity dates of the Promissory Notes to the earlier of (i) November 9, 2014 or (ii) 10 business days after the date on which Brekford Corp. closes an equity financing that generates gross proceeds in the aggregate amount of not less than $5,000,000.

On November 4, 2014, Brekford Corp. and each member of the lender group agreed to further extend the maturity dates of the Promissory Notes to the earlier of (i) November 9, 2015 or (ii) 10 business days after the date on which Brekford Corp. closes an equity financing that generates gross proceeds in the aggregate amount of not less than $5,000,000.

On November 9, 2015, the maturity dates of the Stockholder Notes were extended to the earlier of (i) November 9, 2016 or (ii) 10 business days from the date on which Brekford Corp. closes an equity financing that generates gross proceeds in the aggregate amount of not less than $5,000,000. Mr. Brechin and Mr. Rutherford have indicated that they will not exercise their right of repayment prior to December 31, 2016.

The Company anticipates the maturity date of the Stockholder Notes will continue to be extended for the foreseeable future; thus, they are classified as long term liabilities. As of December 31, 2015 and 2014, the amounts outstanding under the Stockholder Notes totaled $500,000.

The following table provides information relating to the Investor Note at December 31, 2015, excluding the $75,000 of converted debt:

Accordingly, a portion of the proceeds was allocated to the Warrant based on its relative fair value, which totaled $92,079 using the Black Scholes option-pricing model. Further, the Company attributed a beneficial conversion feature of $557,921 to the shares of Common Stock issuable under the Investor Note based upon the difference between the effective Conversion Price and the closing price of the Common Stock on the date on which the Investor Note was issued. The assumptions used in the Black-Scholes model are as follows: (i) dividend yield of 0%; (ii) expected volatility of 80.5%, (iii) weighted average risk-free interest rate of 1.56%, (iv) expected life of five years, and (v) estimated fair value of the Common Stock of $0.26 per share. The expected term of the Warrant represents the estimated period of time until exercise and is based on historical experience of similar awards giving consideration to the contractual terms. The Company recorded amortization of the beneficial conversion feature and warrant feature of the Investor Note in other expense in the amount of $255,960 and $42,243, respectively, during the year ended December 31, 2015 which also includes the unamortized beneficial conversion feature and warrant feature attributable to the $75,000 principal converted to equity.

The Company recorded an original issue discount of $65,000 to be amortized over the term of the Agreement as interest expense. The Company recognized $29,820 of interest expense as a result of the amortization during the year ended December 31, 2015 which also includes the unamortized original issue discount attributable to the $75,000 principal converted to equity.

On March 17, 2015, in conjunction with the issuance of the Investor Note (see Note 7), the Company issued the Warrant, which permits the Investor to purchase 840,000 shares of Common Stock, including 60,000 related to the financing costs, with an exercise price of $0.50 per share and a life of five years.

The Exercise Price is subject to anti-dilution adjustments that allow for its reduction in the event the Company subsequently issues equity securities, including shares of Common Stock or any security convertible or exchangeable for shares of Common Stock, for no consideration or for consideration less than $0.50 a share. The Company accounted for the conversion option of the Warrant in accordance with ASC Topic 815. Accordingly, the conversion option is not considered to be solely indexed to the Company’s own stock and, as such, is recorded as a liability. The derivative liability associated with the Warrant has been measured at fair value at March 17, 2015 and December 31, 2015 using the Black Scholes option-pricing model. The assumptions used in the Black-Scholes model are as follows: (i) dividend yield of 0%; (ii) expected volatility of 80.5% - 105.1%; (iii) weighted average risk-free interest rate of 1.56-1.76%; (iv) expected life of five years; and (v) estimated fair value of the Common Stock of $0.20-$0.26 per share.

At December 31, 2015, the outstanding fair value of the derivative liability was $99,036.

The Company financed certain equipment under separate non-cancelable equipment loan and security agreements. The agreements matured in April 2015. The agreements required various monthly payments and were secured by the assets under lease. At December 31, 2015 and 2014, no capital lease was included in property and equipment on the consolidated balance sheets.

The Company rents office space under separate non-cancelable operating leases expiring in April 2020.

Future minimum lease payments under these lease agreements, exclusive of the Company’s share of operating costs at December 31, 2015 are as follows:

The Company rents office space under separate non-cancelable operating leases. Rent expense under our main headquarters lease, expiring on April 30, 2020 amounted to $169,297 and $ 212,736 for the years ended December 31, 2015 and 2014, respectively.

The Company also leases approximately 2,500 square feet of office space from a related party under a non-cancelable operating lease expiring on June 30, 2016. Rent expense under this lease amounted to $49,200 and $46,800 for the years ended December 31, 2015 and 2014, respectively.

As of December 31, 2015 and December 31, 2014 inventory consisted of the following:

The following table provides information relating to the calculation of loss earnings per common share.

At December 31, 2015 and 2014, the Company’s authorized stock consists of 20,000,000 shares of $.0001 par value preferred stock and 150,000,000 shares of $.0001 par value common stock.

On January 5, 2015, the Company granted an aggregate of 132,000 shares of restricted Common Stock to the key employees in consideration of services rendered. The weighted average fair value of the shares amounted to $0.34 per share based upon the closing price of shares of Common Stock on the date of the grant. These shares were fully vested on the date of the grant. The Company recorded $44,880 in share-based compensation expense related to restricted stock grants.

On October 23, 2015, the Company issued 169,530 shares valued at $0.27 per share to convert $25,000 of principal and $904 of accrued interest due under the Convertible Note Agreement Note and recognized a loss on extinguishment of debt of $19,869.

On December 2, 2015, the Company issued 349,155 shares valued at $0.25 per share to convert $50,000 of principal and $2,129 of accrued interest due under the Convertible Note Agreement and recognized a loss on extinguishment of debt of $35,160.

On January 7, 2014, the Company granted an aggregate of 50,000 shares of restricted Common Stock to the non-employees in consideration of services rendered. The weighted average fair value of the shares amounted to $0.27 per share based upon the closing price of shares of Common Stock on the date of the grant. These shares were fully vested on the date of the grant. The Company recorded $13,500 in share-based compensation expense related to restricted stock grants.

On September 7, 2010, Brekford Corp. issued a press release announcing that its board of directors authorized a stock repurchase program permitting the Company to repurchase up to $500,000 in outstanding shares of the Common Stock from time to time over a period of 12 months in open market transactions or in privately negotiated transactions at the Company’s discretion. The stock repurchase program was subsequently extended for an additional 12 months until September 7, 2012. On September 28, 2012, the Company adopted a new stock repurchase program which permits the Company to repurchase the $363,280 in shares that remained available for repurchase under the old program, with the same terms and conditions except that the term of the new stock repurchase program was 24 months. The repurchase plan expired in September 2014.

The assumptions used to value warrant grants during the year ended December 31, 2015, which consisted solely of the Warrant, were as follows:

The weighted average remaining contractual life of warrants outstanding as of December 31, 2015 was as follows:

The Company has issued shares of restricted common stock and warrants to purchase shares of common stock and has granted non-qualified stock options to certain employees and non-employees. On April 25, 2008, the Company’s stockholders approved the 2008 Stock Incentive Plan (the “2008 Incentive Plan”). During the year ended December 31, 2015, Brekford Corp. granted stock options under the 2008 Incentive Plan to its non-employee directors. These options have exercise prices equal to the fair market value of a share of Common Stock as of the date of grant and have terms of ten years.

Option grants during the year ended December 31, 2015 were made to non-employee directors who elected to receive options during the annual equity grant period in the first quarter of each fiscal year. The options had a grant date fair value of $0.13 per share and will vest and become exercisable with respect to option shares over a three year period commencing from the date of grant at a rate of 33.33% per year.

Option grants during the year ended December 31, 2014 were made to non-employee directors who elected to receive options during the annual equity grant period in the first quarter of each fiscal year. The options had a grant date fair value of $0.10 per share and will vest and become exercisable with respect to option shares over a three year period commencing from the date of grant at a rate of 33.33% per year.

The Company recorded $11,214 and $6,233 in stock option compensation expense during the period ended December 31, 2015 and 2014, respectively, related to the stock option grants.

The Company uses the Black-Scholes option pricing model to determine the fair value of stock options granted to employees and recognizes the compensation cost of employee share-based awards in its statement of operations using the straight-line method over the vesting period of the award, net of estimated forfeitures.

The use of the Black-Scholes option pricing model to estimate the fair value of share-based awards requires that the Company make certain assumptions and estimates for required inputs to the model, including (1) the fair value of the Company’s common stock at each grant date, (ii) the expected volatility of the Company’s common stock value based on industry comparisons, (iii) the expected life of the share-based award, (iv) the risk-free interest rate, and (v) the dividend yield.

The following are the assumptions made in computing the fair value of share-based awards granted in the years ended December 31, 2015 and 2014:

Summary of the option activity for the period ended December 31, 2015 is as follows:

The unrecognized compensation cost for unvested stock option awards outstanding at December 31, 2015 was approximately $34,871 to be recognized over approximately 1.97 years.

During the period ended December 31, 2015, Company issued an aggregate of 132,000 shares of restricted common stock to its key employees in consideration of services rendered and part of employment agreement. The weighted average value of the shares amounted to $0.34 per share based upon the closing price of shares of the Company’s Common Stock on the date of the grant. These shares were fully vested on the date of the grant. The Company recorded $44,880 in share-based compensation expense for the year ending December 31, 2015 related to restricted stock grants.

During the period ended December 31, 2014, the Company granted an aggregate of 50,000 shares of restricted stock to the directors as part of our director compensation program and in consideration of services rendered. The weighted average value of the shares amounted to $0.27 per share based upon the closing price of shares of common stock on the date of the grant. These shares were fully vested on the date of the grant. The Company recorded $13,500 in share-based compensation expense for the year ending December 31, 2014 related to restricted stock grants.

The 2008 Incentive Plan is designed to provide an additional incentive to executives, employees, directors and key consultants, aligning the long term interests of participants in the 2008 Incentive Plan with those of the Company and the Company’s stockholders. The 2008 Incentive Plan provides that up to 8 million shares of the Company’s common stock may be issued pursuant to awards granted under the 2008 Incentive Plan. As of December 31, 2015, 6,680,000 shares of common stock remained available for future issuance under the 2008 Incentive Plan.

On February 19, 2008, the Board of Directors authorized the adoption of the 2008 Employee Stock Purchase Plan (the “Purchase Plan”), subsequently approved by the stockholders on April 25, 2008, which is designed to encourage and enable eligible employees to acquire a proprietary interest in the Company’s common stock. The Purchase Plan provides that up to 2 million shares of the Company’s common stock may be issued under the Plan. No shares have been issued under the Plan.

The Company has a defined contribution savings plan under Section 401(k) of the Internal Revenue Code. The 401(k) Plan is a defined contribution plan, which covers substantially all U.S.-based employees of the Company and its wholly-owned subsidiaries who have completed three months of service. The 401(k) Plan provides that the Company will match 50% of the participant salary deferrals up to 3% of a participant’s compensation for all participants. The Company contributed $8,718 and $11,833 during the years ended December 31, 2015 and, 2014, respectively.

The Company has several contracts with government agencies, of which net revenue from one customer during the year ended December 31, 2015 represented 17% of the total net revenue for such year. Accounts receivable due from customers at December 31, 2015 amounted to 53% of total accounts receivable at that date.

The Company has several contracts with government agencies, of which net revenue from two customers during the year ended December 31, 2014 represented 10% of the total net revenue for such year. Accounts receivable due from customers at December 31, 2014 amounted to 53% of total accounts receivable at that date.

The Company purchased substantially all rugged IT products that it resold during the periods presented from a single distributor. Revenues from rugged IT products amounted to 59% and 53% of total revenues for the years ended December 31, 2015 and 2014, respectively. As of December 31, 2015 and 2014, accounts payable due to this distributor amounted to 72% and 53% of total accounts payable, respectively.

As of December 31, 2015, the Company has approximately $6.64 million of federal and state net operating loss carryforwards available to offset future taxable income, if any, through 2033. These net operating losses begin to expire in 2028. If, however, there is an ownership change in the Company, Section 382 of the Internal Revenue Code may restrict the Company’s ability to utilize these loss carryforwards to a percentage of the market value of the Company at the time of the ownership change. Therefore, these operating loss carryforwards could become limited in future years if ownership changes were to occur as defined in the Internal Revenue Code and similar state income tax provisions. The Company files income tax returns with the U.S. Internal Revenue Service and with the revenue services of various states.

The Company’s deferred tax assets and liabilities are as follows for each of the periods presented:

The Company’s recorded income tax, net of the change in the valuation allowance for each of the periods presented, is as follows:

Management has evaluated the recoverability of the deferred income tax assets and the level of the valuation allowance required with respect to such deferred income tax assets. After considering all available facts, the Company fully reserved for its deferred tax assets because management believes that it is more likely than not that their benefits will not be realized in future periods. The Company will continue to evaluate its deferred tax assets to determine whether any changes in circumstances could affect the realization of their future benefit. If it is determined in future periods that portions of the Company’s deferred income tax assets satisfies the realization standard, the valuation allowance will be reduced accordingly.

A reconciliation of the expected Federal statutory rate of 35% to the Company’s actual rate as reported for each of the periods presented is as follows:

On February 26, 2016, the Investor converted $50,000 of principal and $2,844 of accrued interest due under the Investor Note into 476,500 shares of Common Stock.

KeyStone Solutions, Inc. (Successor) and AOC Key Solutions, Inc. (Predecessor)

The accompanying notes are an integral part of these consolidated financial statements.

KeyStone Solutions, Inc. (Successor) and AOC Key Solutions, Inc. (Predecessor)

The accompanying notes are an integral part of these consolidated financial statements.

KeyStone Solutions, Inc. (the “Company” or “KeyStone”) was formed in March 2016 as a holding company for its wholly owned subsidiary AOC Key Solutions, Inc. (“KSI” or “Predecessor”). KSI provides consulting and technical support services to assist clients seeking federal government contracts in the technology, telecommunications, defense, and aerospace industries. Both the Company and KSI are headquartered in Chantilly, Virginia and have an office in New Orleans, Louisiana.

On March 15, 2016, the stockholders of KSI formed KeyStone as a holding company with the same proportionate ownership percentage as Key Solutions. On that same date KSI entered into a merger agreement (the “Merger Agreement”) with KeyStone and KCS Merger Sub, Inc. (“Merger Sub”), a wholly-owned subsidiary of KeyStone with no activity. Pursuant to the Merger Agreement, on March 15, 2016, Merger Sub was merged with and into KSI, and thus KSI became a wholly-owned subsidiary of KeyStone. To complete the merger, the stockholders exchanged 100% of the outstanding common stock of KSI for newly issued common stock of KeyStone, representing 100% of the outstanding common stock. This effectively transferred 100% of the voting equity interest and control of KSI to KeyStone. The operations of KSI did not change, nor have any assets or operations transferred to either KeyStone or Merger Sub. The merger transaction resulted in no gain or loss to either entity. The stockholders’ proportionate ownership of KeyStone remains the same as it was for KSI.

KeyStone accounted for the merger transaction as a recapitalization in the accompanying consolidated financial statements. All intercompany accounts have been eliminated upon consolidation.

The accounting policies of Keystone described herein are the same as those of KSI.

Assets and liabilities, and revenues and expenses are recognized on the accrual basis of accounting.

The consolidated financial statements include the accounts of KeyStone, the parent company, and its wholly- owned subsidiary:

KeyStone considers all highly liquid debt instruments purchased with the maturity of three months or less to be cash equivalents.

Management reviews the collectability of accounts receivable on a monthly basis, assessing the credit-worthiness of customers whose accounts are past due. Management has elected to record bad debts using the direct write-off method. Generally accepted accounting principles require that the allowance method be used to reflect bad debts. However, the effect of the use of the direct write-off method is not materially different from the results that would have been obtained had the allowance method been followed.

The cost of property and equipment is depreciated over the useful lives of the related assets. Depreciation is recorded on the straight-line basis.

The range of estimated useful lives used for computing depreciation are as follows:

Depreciation expense for the nine months ended September 30, 2016 and September 30, 2015 was $39,498 and $81,758, respectively.

The Company recognizes revenues for the sale 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 standard rate sheet or as written from time to time in the Company’s contracts or purchase orders. Revenues related to firm-fixed-price contracts are recognized as revenue as value is delivered to the client.

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.

Through March 15, 2016, KSI elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under those provisions, KSI does not pay federal corporate income taxes, and in most instances state income tax, on its taxable income. Instead, the KSI stockholders are liable for individual income taxes on their respective shares of KSI’s net income. KSI effectively revoked its S Corporation election upon the March 15, 2016 merger with the KeyStone. Both KSI and KeyStone are subject to corporate income taxes.

The Company’s evaluation as of September 30, 2016 revealed no tax positions that would have a material impact on the financial statements. The 2013 through 2015 tax years remain subject to examination by the IRS. 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.

Prior to 2016, KSI used quarter end dates that coincided with its billing and payroll quarter ended dates of March 27, 2015; June 26, 2015; and September 25, 2015, but used December 31 as its fiscal year end date. In 2016 KSI changed its quarter end dates to coincide with the calendar end date of each quarter.

Supplemental disclosures of cash flow information for the nine months ended September 30, 2016 and September 30, 2015 was as follows:

As more fully disclosed in Note 1, on March 16, 2016, the stockholders exchanged 100% of their outstanding shares of common stock in AOC Key Solutions for proportionate shares of KeyStone’s outstanding common stock.

KeyStone leases office space in Chantilly, Virginia under the terms of a ten-year lease expiring October 31, 2019. The lease contains one five-year renewal option. The lease terms include an annual increase in base rent and expenses of 2.75%.

KeyStone leases office space in New Orleans, Louisiana. The lease is a three-year lease expiring May 31, 2018.

Rent expense for the nine months ended September 30, 2016 and September 30, 2015 was $375,782 and $376,066, respectively.

Future obligations over the primary terms of the KeyStone’s long-term lease expiring in 2019 are as follows:

KeyStone is the lessor in an agreement to sub-lease office space in Chantilly, Virginia with an initial term of two years with eight one-year options to renew the lease through October 31, 2019. The lease provides for an annual increase in base rent and expenses of 2.90%. The initial term ended October 31, 2011 and the KeyStone exercised the renewal options through 2015. On April 7, 2015, the lease was amended to sublease more space to the subtenant and change the rental calculation.

Rent income for the nine months ended September 30, 2016 and September 30, 2015 was $136,900 and $110,742, respectively.

On August 11, 2016, Keystone entered into Loan and Security Agreement (the “2016 Line of Credit”) with Sandy Spring Bank that replaces the 2015 Loan Agreement with KSI. The 2016 Line of Credit is comprised of: 1) an asset-based revolving line of credit up to $1,000,000 for short-term working capital needs and general corporate purposes which is due to mature on July 31, 2017, bears interest at the Wall Street Journal Prime Rate, floating, plus 0.50% and is secured by a first lien on all of KeyStone’s business assets; and 2) an optional term loan of $100,000 which must be drawn by July 31, 2017, which is for permanent working capital, bears interest at the Wall Street Journal Prime Rate, floating, plus 0.75%, requires monthly payments of principal plus interest to fully amortize the loan over four (4) years, is secured by a first lien on all of KeyStone’s business assets, cross-collateralized and cross-defaulted with the revolving line of credit, and matures on February 15, 2019. The 2016 Line of Credit does not require any personal guarantees.

The borrowing base for the 2016 Line of Credit is up to the lesser of (1) $1,000,000 or (2) eighty percent (80%) of the aggregate amount of all of KeyStone’s eligible accounts receivable as defined by Sandy Spring Bank. The borrowing base for the $100,000 term loan is fully reserved under the borrowing base for the revolving line of credit. The 2016 Line of Credit has periodic reporting requirements, balance sheet and profitability covenants, as well as affirmative and negative operational and ownership covenants.

There was no outstanding balance on the 2016 Line of Credit at September 30, 2016.

The Company entered into a note payable to Avon Road Partners, L.P. (“Avon Road”) for $500,000 on March 16, 2016. The note is subordinated to the KeyStone’s current financing facility with Sandy Spring Bank and any successor financing facility. Simple interest accrues 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. The note matures on March 16, 2019.

As more fully disclosed in Note 2, through March 15, 2016, KSI elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under those provisions, KSI did not pay federal corporate income taxes, and in most instances state income tax, on its taxable income. Thus, as of December 31, 2015, KSI did not have any provision for income taxes.

The deferred tax assets on the KeyStone’s consolidated balance sheets are due to temporary differences related primarily to depreciation of property and equipment and accrued deferred employee compensation. There was no valuation allowance for deferred tax assets at September 30, 2016, as management believes that the deferred tax assets will be realized through future operations.

The Company invests the majority of its excess cash in demand deposit accounts with a federally insured financial institution located in Virginia, which at times may exceed the federally insured limit of $250,000. At September 30, 2016 and December 31, 2015, KeyStone had no cash on deposit that exceeded federally insured limit.

KeyStone routinely extends credit to customers in connection with the consulting and technical writing services provided. These accounts receivable are unsecured.

As part of the terms of the subordinated long term debt discussed more fully in Note 5, KeyStone issued a common stock purchase warrant to Avon Road. The warrant grants the registered holder the right to purchase 62,500 shares of the Company’s common stock at $2 per share upon exercise of the warrants. The warrant has an expiration date of March 16, 2019 and the fair value was determined to be $58,520 and is recorded as a debt discount in the accompanying consolidated balance sheet as of September 30, 2016 and will be amortized as interest expense through the maturity date of the note payable.

On March 16, 2016, the two stockholders of the KeyStone entered into an option agreement with Avon Road. 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 2,226,278 shares, at $1 per share, of the KeyStone’s outstanding common stock owned by those two shareholders.

As reported by KeyStone in its current report on Form 1-U as filed with the SEC on January 26, 2017, on January 23, 2017, KeyStone had its second closing of the offering (the “Offering”) pursuant to its Offering Statement on Form 1-A and the Offering Circular thereunder (SEC File No. 024-10551) (the “Offering Statement”), as originally filed with the SEC on May 12, 2016 and declared qualified by the SEC on November 8, 2016 (the “Qualification Date”). The second closing of the Offering was for the sale of 119,757 Units (“Units”) with each Unit consisting of one share of the Company’s Series A Cumulative Convertible Redeemable Preferred Stock, par value $0.0001 per share (“Series A Preferred Stock”) and a warrant to purchase 0.25 KeyStone Common Shares, at any time on or before seven years from the Qualification Date, at an exercise price of $2.00 per KeyStone Common Share. KeyStone received aggregate gross proceeds of $1,197,570 in the second closing. As previously disclosed by the Company in its Current Report on Form 1-U as filed with the SEC on December 28, 2016, the initial closing of the Offering was for the sale of 301,570 Units for aggregate gross proceeds of $3,015,700, making the aggregate total sold to date in the Offering 421,327 Units for total gross proceeds of $4,213,270. As set forth in the Offering Statement, the Offering remains open following the second closing, with the possibility of additional closings in the future, although there can be no assurance additional closings will occur within a certain timeframe or at all.

As reported by KeyStone in its current report on Form 1-U as filed with the SEC on January 26, 2017, on January 25, 2017 (the “Closing Date”), KeyStone executed the definitive transaction documents described in more detail below and simultaneously closed on its previously announced acquisition of Firestorm Solutions LLC and Firestorm Franchising LLC (collectively, the “Firestorm Entities” or “Firestorm”).

Pursuant to the terms of the Membership Interest Purchase Agreement (the “MIPA”), by and among KeyStone, each of the Firestorm Entities, each of the Members of the Firestorm Entities, and a newly created acquisition subsidiary of the KeyStone, Firestorm Holdings, LLC, a Delaware limited liability company (“Firestorm Holdings”), KeyStone has acquired all of the membership interests in each of the Firestorm Entities for the following consideration:

The foregoing descriptions of the MIPA, the Lancer Note, Firestorm Principal Note, the $5.00 Warrant and the $7.00 Warrant do not purport to be complete and are qualified in their entirety by reference to the MIPA, Lancer Note, Firestorm Principal Note, $5.00 Warrant and $7.00 Warrant.

In connection with the MIPA the KeyStone has also entered into employment agreements with three of the founders of the Firestorm Entities as set forth below.

The Rhulen Employment Agreement provides that upon the Closing Date his employment agreement will become effective for an initial five year term as President of KeyStone Solutions, Inc. His base salary will be $275,000 per annum, and he will be eligible for a bonus as determined by the KeyStone’s compensation committee. Mr. Rhulen will also be eligible to receive all such other benefits as are provided by the KeyStone to other management employees that are consistent with the KeyStone’s fringe benefits available to any other officer or executive of the KeyStone. Mr. Rhulen has been granted options to purchase 80,000 KeyStone Common Shares, which shall begin vesting on the one year anniversary of the Closing Date and continue vesting monthly over the following two years, at a strike price of $3.00 per share, in connection with the Acquisition.

The Loughlin Employment Agreement provides that upon the Closing Date her employment agreement will become effective for an initial five year term as General Counsel and Chief Administrative Officer of KeyStone Solutions, Inc. Her base salary will be $225,000 per annum, and she will be eligible for a bonus as determined by the KeyStone’s compensation committee. Ms. Loughlin will also be eligible to receive all such other benefits as are provided by the KeyStone to other management employees that are consistent with the KeyStone’s fringe benefits available to any other officer or executive of the KeyStone. Ms. Loughlin has been granted options to purchase 80,000 KeyStone Common Shares, which shall begin vesting on the one year anniversary of the Closing Date and continue vesting monthly over the following two years, at a strike price of $3.00 per share, in connection with the Acquisition.

The Satterfield Employment Agreement provides that upon the Closing Date his employment agreement will become effective for an initial five year term as President and Chief Executive Officer of each of the Firestorm Entities. His base salary will be $225,000 per annum, and he will be eligible for a bonus as determined by the KeyStone’s compensation committee. Mr. Satterfield will also be eligible to receive all such other benefits as are provided by the KeyStone to other management employees that are consistent with the KeyStone’s fringe benefits available to any other officer or executive of the KeyStone or its subsidiaries. Mr. Satterfield has been granted options to purchase 50,000 KeyStone Common Shares, which shall begin vesting on the one year anniversary of the Closing Date and continue vesting monthly over the following two years, at a strike price of $3.00 per share, in connection with the Acquisition.

On February 10, 2017, KeyStone and Brekford, Inc. (“Brekford”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) to combine the businesses of Brekford and KeyStone. The Merger Agreement provides for Brekford and KeyStone to each engage in merger transactions (the “Mergers”) with separate wholly-owned subsidiaries of Novume Solutions, Inc., a Delaware corporation (“Novume”). One wholly-owned subsidiary of Novume will merge with and into Brekford, leaving Brekford as a wholly-owned subsidiary of Novume (the “Brekford Merger”), and KeyStone will merge with and into another wholly-owned subsidiary of Novume (“KeyStone Merger Sub”), with KeyStone Merger Sub surviving such merger (the “KeyStone Merger”).

If the Mergers are completed: (1) each share of Brekford Common Stock issued and outstanding immediately prior to the Effective Time and all rights in respect thereof, shall, without any action on the part of any holder thereof, cease to exist and be converted into and become exchangeable for the right to receive 1/15th of a share (the “Brekford Exchange Ratio”) of Novume Common Stock, (2) each share of KeyStone Common Stock issued and outstanding immediately prior to the Effective Time and all rights in respect thereof, shall, without any action on the part of any holder thereof, cease to exist and be converted into and become exchangeable for, 1.9975 shares of Novume Common Stock, and (3) each share of KeyStone Preferred Stock and all rights in respect thereof, shall, without any action on the part of any holder thereof, cease to exist and be converted into and become exchangeable for, 1.9975 shares of Novume Preferred Stock. Such ratio of KeyStone Common Stock to Novume Common Stock and KeyStone Preferred Stock to Novume Preferred Stock is herein referred to as the “KeyStone Exchange Ratio”. The Brekford Exchange Ratio and the KeyStone Exchange Ratio (collectively the “Exchange Ratios”) have been determined with intent that immediately after the Mergers, the pre-merger stockholders of Brekford will own that such portion of the capital stock of Novume as shall be equal to approximately 20% of the issued and outstanding Novume Common Stock, on a fully-diluted basis, and the pre-merger stockholders of KeyStone will own that portion of the capital stock of Novume as is equal to approximately 80% of the issued and outstanding Novume Common Stock, on a fully-diluted basis.

On January 11, 2017 the Board of Directors (the “Board”) of KeyStone Solutions, voted to expand the size of the Board from five members to six members, and to appoint Mr. Paul A. de Bary as an independent director of the Company.

In connection with his appointment as an independent director Mr. de Bary will be granted an option to purchase 25,000 shares of KeyStone common stock at an exercise price of $3.00 per share all of which are immediately exercisable.

We have audited the accompanying financial statements of AOC Key Solutions, Inc. (a Delaware corporation), which comprise the balance sheets as of December 31, 2015 and 2014, and the related statements of income, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes to the financial statements.

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of AOC Key Solutions, Inc. as of December 31, 2015 and 2014, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

AOC Key Solutions, Inc. (the Company) provides consulting and technical writing services to assist clients seeking federal government contracts in the technology, telecommunications, defense, and aerospace industries. The Company is headquartered in Chantilly, Virginia and has an office in New Orleans, Louisiana.

Assets and liabilities, and revenues and expenses are recognized on the accrual basis of accounting.

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with the maturity of three months or less to be cash equivalents.

The cost of property and equipment is depreciated over the useful lives of the related assets. Depreciation is computed on both the straight line and accelerated basis for financial and tax reporting purposes.

The range of estimated useful lives used for computing depreciation for financial reporting purposes for major asset classifications are as follows:

Depreciation expense for the years ended December 31, 2015 and 2014 was $70,268 and $79,646, respectively.

The Company has elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under those provisions, the Company does not pay federal corporate income taxes, and in most instances state income tax, on its taxable income. Instead, the stockholders are liable for individual income taxes on their respective shares of the Company’s net income.

The Company’s evaluation as of December 31, 2015 revealed no tax positions that would have a material impact on the financial statements. The 2012 through 2015 tax years remain subject to examination by the IRS. 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.

Subsequent events have been evaluated through March 15, 2016, which is the date the financial statements were available to be issued.

Supplemental disclosures of cash flow information for the year ended December 31, 2015 and 2014 are as follows:

The Company leases office space in Chantilly, Virginia under the terms of a ten-year lease expiring October 31, 2019. The lease contains one five-year renewal option. The lease terms include an annual increase in base rent and expenses of 2.75%.

The Company leases office space in New Orleans, Louisiana. The lease is a three year lease expiring May 31, 2018.

Rent expense was $500,415 and $478,079 respectively for the years ended December 31, 2015 and 2014.

Future obligations over the primary terms of the Company’s long-term lease expiring in 2019 are as follows:

The Company is the lessor in an agreement to sub-lease office space in Chantilly, Virginia under the terms of a seven-year lease, which expired October 31, 2014. The Company exercised the first and second renewal options on the lease. These options extend the lease until August 31, 2016. The lease terms include an annual increase in base rent and expenses of 2.90%. On April 7, 2015, the lease was amended to sub-lease more space to the subtenant and change the rental calculation.

Rent income was $156,375 and $101,522, respectively for the years ended December 31, 2015 and 2014.

The Company has an available line of credit with the Sandy Spring Bank for up to $1,000,000. The Company’s borrowing base under the terms of this credit line is 80% of accounts receivable aged less than 90 days, up to the maximum $1,000,000 available. The line has a maturity date of September 30, 2016 and bears interest at the Wall Street Journal Prime Rate plus a margin of .50%, or 3.75% at December 31, 2015 and 2014. There was no outstanding balance on this line of credit at December 31, 2015 and 2014.

The Company invests the majority of its excess cash in demand deposit accounts with a federally insured financial institution located in Virginia, which at times may exceed the federally insured limit of $250,000. At December 31, 2015 and 2014, the Company had $375,972 and $238,789, respectively, of cash on deposit that exceeded federally insured limit.

The Company routinely extends credit to customers in connection with the consulting and technical writing services provided. These accounts receivable are unsecured.

The Company advanced $30,000 to a family member of a 30% owner. The advance was made in July 2014, and the entire amount was still outstanding at December 31, 2014. The amount outstanding under this receivable was $20,594 at December 31, 2015. The outstanding balance is included in employee advances on the accompanying balance sheet.

THIS AGREEMENT AND PLAN OF MERGER, dated as of February 10, 2017 (the “Agreement”), is entered into by and among KeyStone Solutions, Inc., a Delaware corporation (the “Company”), Novume Solutions, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company (“Novume”), KeyStone Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Novume (“Company Merger Sub”), Brekford Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Novume (“Brekford Merger Sub”), and Brekford Corp., a Delaware corporation (“Brekford” and, together with the Company, Novume, Company Merger Sub and Brekford Merger Sub, each a “Party” and collectively the “Parties”).

WHEREAS, the Boards of Directors of the Company and Brekford have each determined that it is in the best interests of the stockholders of the Company and Brekford, respectively, that each such corporation become a subsidiary of Novume pursuant to the Mergers (as defined in Section 1.1 hereof) and desire to make certain representations, warranties and agreements in connection with the Mergers;

WHEREAS, the Company and Brekford are unwilling to enter into this Agreement (and effect the transactions contemplated hereby) unless, contemporaneously with the execution and delivery hereof, certain record and beneficial holders of shares of the common stock, par value $0.0001 per share, of the Company (“Company Common Stock”), and certain record and beneficial holders of shares of the common stock, par value $0.0001 per share, of Brekford (“Brekford Common Stock”), as applicable, enter into agreements (the “Key Stockholder Agreements”) providing for certain matters with respect to their shares of Company Common Stock and Brekford Common Stock, as applicable (including, without limitation, subject to the express provisions and conditions of those agreements, to vote such shares in favor of the Mergers (as defined in Section 1.1 hereof));

WHEREAS, for federal income tax purposes, it is intended that the formation of Novume and the Mergers shall constitute one or more integrated tax-free transactions under Section 368 of the Internal Revenue Code of 1986, as amended (the “Code”);

WHEREAS, Brekford has delivered to the Company and Novume a letter identifying all persons (each, a “Brekford Affiliate”) who are, at the date hereof, “affiliates” of Brekford for purposes of Rule 145 under the 1933 Act (as defined in Section 10.4 hereof), and each Brekford Affiliate has delivered to the Company and Novume a letter (each, a “Brekford Affiliate Letter”) relating to (i) the transfer, prior to the Effective Time (as defined in Section 1.2 hereof), of the shares of Brekford Common Stock beneficially owned by such Brekford Affiliate on the date hereof, (ii) the transfer of the shares of Novume Common Stock to be received by such Brekford Affiliate in the Brekford Merger and (iii) the obligations of each such Brekford Affiliate to deliver to Sichenzia Ross Ference Kesner LLP (“SRFK”), counsel to Brekford, a certificate requested by such firm (if requested); and

WHEREAS, the Company has delivered to Brekford and Novume a letter identifying all persons (each, a “Company Affiliate”) who are, at the date hereof, “affiliates” of the Company for purposes of Rule 145 under the 1933 Act, and each Company Affiliate has delivered to

Brekford and Novume a letter (each, a “Company Affiliate Letter”) relating to (i) the transfer, prior to the Effective Time, of the shares of Company Common Stock and Company Preferred Stock beneficially owned by such Company Affiliate on the date hereof, (ii) the transfer of the shares of Novume Common Stock and Novume Preferred Stock to be received by such Company Affiliate in the Company Merger and (iii) the obligations of each such Company Affiliate to deliver to Crowell & Moring LLP, counsel to the Company, a certificate requested by such firm (if requested).

NOW, THEREFORE, in consideration of the mutual agreements and covenants set forth herein, the Parties hereby agree as follows:

Section 1.1. The Mergers. At the Effective Time, and subject to and upon the terms and conditions of this Agreement, (a) the Company shall be merged with and into Company Merger Sub in accordance with the Delaware General Corporation Law (“Delaware Law”), the separate corporate existence of the Company shall cease, and Company Merger Sub shall continue as the surviving corporation (the “Company Merger”), and (b) Brekford Merger Sub shall be merged with and into Brekford in accordance with Delaware Law, the separate corporate existence of Brekford Merger Sub shall cease, and Brekford shall continue as the surviving corporation (the “Brekford Merger”).The Company Merger and the Brekford Merger are herein collectively referred to as the “Mergers” and each individually as a “Merger.” The Company Merger Sub and Brekford as the surviving corporations after the Mergers are herein sometimes collectively referred to as the “Surviving Corporations” and each individually as a “Surviving Corporation” and the Company and Brekford Merger Sub as the non-surviving corporations after the Mergers are herein sometimes collectively referred to as the “Merged Corporations” and each individually as a “Merged Corporation.”

Section 1.2. Effective Time. As promptly as practicable after the satisfaction or waiver of the conditions set forth in ARTICLE VIII hereof and the consummation of the Closing referred to in Section 7.2(c) hereof, the Parties shall cause the Mergers to be consummated concurrently by filing a Certificate of Merger with the Secretary of State of the State of Delaware with respect to each of the Mergers, in such form as required by, and executed in accordance with, the relevant provisions of Delaware Law (the effective time of such filings being the “Effective Time”).

Section 1.3. Effects of the Mergers. At the Effective Time, the effect of the Mergers shall be as provided in the applicable provisions of Delaware Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, (a) all of the property, rights, privileges, powers and franchises of the Company and Company Merger Sub shall continue with, or vest in, as the case may be, Company Merger Sub as the Surviving Corporation, and all debts, liabilities and duties of the Company and Company Merger Sub shall be, or become, as the case may be, the debts, liabilities and duties of Company Merger Sub as the Surviving Corporation, and (b) all of the property, rights, privileges, powers and franchises of Brekford and Brekford Merger Sub shall continue with, or vest in, as the case may be, Brekford as the Surviving Corporation, and all debts, liabilities and duties of Brekford and Brekford Merger Sub shall continue to be, or become, as the case may be, the debts, liabilities and duties of Brekford as the Surviving Corporation. As of the Effective Time, each of the Surviving Corporations shall be a direct, wholly-owned Subsidiary of Novume.

Section 1.4. Subsequent Actions. If, at any time after the Effective Time, either of the Surviving Corporations shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to continue in, vest, perfect or confirm of record or otherwise in such Surviving Corporation its right, title or interest in, to or under any of the rights, properties, privileges, franchises or assets of either of its constituent corporations acquired or to be acquired by such Surviving Corporation as a result of, or in connection with, one of the Mergers or otherwise to carry out this Agreement, the officers and directors of such Surviving Corporation shall be directed and authorized to execute and deliver, in the name and on behalf of either of such constituent corporations, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of each of such corporations or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties, privileges, franchises or assets in such Surviving Corporation or otherwise to carry out this Agreement.

Section 1.5. Certificate of Incorporation; Bylaws; Directors and Officers of Surviving Corporations. At the Effective Time:

(a) the Certificate of Incorporation of Company Merger Sub as a Surviving Corporation as in effect immediately prior to the Effective Time shall be the Certificate of Incorporation of Company Merger Sub, and the Certificate of Incorporation of Brekford Merger Sub as in effect immediately prior to the Effective Time shall be the Certificate of Incorporation of Brekford as a Surviving Corporation, in each case until thereafter amended as provided by law and such Certificates of Incorporation;

(b) the respective Bylaws of each of Company Merger Sub and Brekford Merger Sub shall be the Bylaws of the Company Merger Sub and the Brekford, respectively, as Surviving Corporations, immediately prior to the Effective Time, in each case until thereafter amended as provided by law and the Certificates of Incorporation and such Bylaws of such Surviving Corporation; and

(c) the officers of each of Company Merger Sub and Brekford, respectively, as Surviving Corporations shall be designated and appointed upon mutual agreement of the Parties prior to the Effective Time. Such persons shall serve as the officers of Company Merger Sub and Brekford, respectively, as Surviving Corporations from and after the Effective Time until their successors are elected or appointed and qualified or until their resignation or removal.

Section 1.6. Company Names. At the Effective Time, the name of KeyStone Merger Sub shall be changed to “KeyStone Solutions, Inc.” and the name of Brekford shall be changed to “Brekford Traffic Safety, Inc.”

Section 1.7. Company Stockholders’ Agreement. As of the Effective Time, that certain stockholders’ agreement dated March 16, 2016, as amended (the “Stockholders’ Agreement”), by and among Robert Berman, Avon Road Partners, L.P., James McCarthy, Richard Nathan, Gregory McCarthy and Kevin Berrigan shall be terminated.

Section 2.1. Conversion of Securities. The manner and basis of converting the shares of common stock of Novume, the Surviving Corporations and of the Merged Corporations at the Effective Time, by virtue of the Mergers and without any action on the part of any of the Parties or the holder of any of such securities, shall be as hereinafter set forth in this ARTICLE II.

(a) Each share of Company Common Stock issued and outstanding immediately before the Effective Time (other than those held in the treasury of the Company) and all rights in respect thereof, shall at the Effective Time, without any action on the part of any holder thereof, forthwith cease to exist and be converted into and become exchangeable for, 1.9975 shares of common stock, par value $0.0001 per share (“Novume Common Stock”), of Novume, and each share of Series A Cumulative Convertible Redeemable Preferred Stock (“Company Preferred Stock”) of the Company issued and outstanding immediately before the Effective Time and all rights in respect thereof, shall at the Effective Time, without any action on the part of any holder thereof, forthwith cease to exists and be converted into and become exchangeable for, 1. shares of Series A Cumulative Convertible Redeemable Preferred Stock (“Novume Preferred Stock”), of Novume (collectively, the “Company Merger Consideration”, and such ratio of Company Common Stock to Novume Common Stock and Company Preferred Stock to Novume Preferred Stock being herein referred to as the “Company Exchange Ratio”). Fractional shares of Novume Common Stock and Novume Preferred Stock will not be issued in connection with the Company Merger. For a discussion of the treatment of fractional shares that would otherwise be issued, see Section 2.7.

(b) Each share of Brekford Common Stock issued and outstanding immediately before the Effective Time (other than those held in the treasury of Brekford) and all rights in respect thereof, shall at the Effective Time, without any action on the part of any holder thereof, forthwith cease to exist and be converted into and become exchangeable for the right to receive 1/15^th of one share (the “Brekford Exchange Ratio”) of Novume Common Stock (the “Brekford Merger Consideration”). Fractional shares of Novume Common Stock will not be issued in connection with the Brekford Merger. For a discussion of the treatment of fractional shares that would otherwise be issued, see Section 2.7.

(c) Commencing immediately after the Effective Time, each certificate which, immediately prior to the Effective Time, represented issued and outstanding shares of Company Common Stock or Company Preferred Stock (together, “Company Shares”) or Brekford Common Stock (“Brekford Shares” and, together with the Company Shares, the “Shares”), shall evidence the right to receive the Company Merger Consideration or the Brekford Merger Consideration, as the case may be, on the basis hereinbefore set forth, but subject to the limitations set forth in Sections 2.3, 2.5, 2.7, 2.8 and 2.9 hereof.

Section 2.3. Cancellation of Treasury Shares and of Outstanding Novume Common Stock.

(a) At the Effective Time, each share of Company Common Stock and Company Preferred Stock held in the treasury of the Company immediately prior to the Effective Time, and each share of Brekford Common Stock held in the treasury of Brekford immediately prior to the Effective Time, shall be cancelled and retired and no shares of stock or other securities of Novume or either of the Surviving Corporations shall be issuable, and no payment or other consideration shall be made, with respect thereto.

(b) At the Effective Time, the shares of Novume Common Stock held by the Company shall be cancelled and retired and no shares of stock or other securities of Novume or any other corporation shall be issuable, and no payment or other consideration shall be made, with respect thereto.

Section 2.4. Conversion of Common Stock and Preferred Stock of the Merged Corporations into Common Stock of the Surviving Corporations.

(a) At the Effective Time, each share of common stock of Brekford Merger Sub issued and outstanding immediately prior to the Effective Time, and all rights in respect thereof, shall, without any action on the part of Novume, forthwith cease to exist and be converted into 1,000 validly issued, fully paid and nonassessable shares of common stock of Brekford, as one of the Surviving Corporations (or such greater number as the Company shall determine prior to the Effective Time). Immediately after the Effective Time and upon surrender by Novume of the certificate representing the shares of the common stock of Brekford Merger Sub, Brekford as one of the Surviving Corporations shall deliver to Novume an appropriate certificate or certificates representing the common stock of Brekford created by conversion of the common stock of Brekford Merger Sub owned by Novume as aforesaid.

Section 2.5. Exchange of Shares Other Than Treasury Shares. Subject to the terms and conditions hereof, at or prior to the Effective Time, Novume shall appoint an exchange agent to effect the exchange of Shares for Novume Common Stock and Novume Preferred Stock in accordance with the provisions of this ARTICLE II (the “Exchange Agent”). From time to time after the Effective Time, Novume shall deposit, or cause to be deposited, (i) certificates representing Novume Common Stock for conversion of Shares in accordance with the provisions of Section 2.2 hereof and (ii) certificates representing Novume Preferred Stock for conversion of Shares in accordance with the provisions of Section 2.2 hereof (such certificates, together with any dividends or distributions with respect thereto, being herein referred to collectively as the “Exchange Fund”). Commencing immediately after the Effective Time and until the appointment of the Exchange Agent shall be terminated, each holder of a certificate or certificates theretofore representing Shares may surrender the same to the Exchange Agent, and, after the appointment of the Exchange Agent shall be terminated, any such holder may surrender any such certificate to Novume. Such holder shall be entitled upon such surrender to receive in exchange therefor a certificate or certificates representing the number of full shares of Novume Common Stock or Novume Preferred Stock, as applicable, into which the Shares theretofore represented by the certificate or certificates so surrendered shall have been converted in accordance with the provisions of Section 2.2 hereof. All such shares of Novume Common

Stock or Novume Preferred Stock, as applicable, issued in accordance with the immediately preceding sentence shall be deemed to have been issued at the Effective Time. Until so surrendered and exchanged, each outstanding certificate which, prior to the Effective Time, represented issued and outstanding Shares shall be deemed for all corporate purposes of the Parties, other than the payment of dividends and other distributions, if any, to represent the right to receive the Company Merger Consideration or the Brekford Merger Consideration, as the case may be. Unless and until any such certificate theretofore representing Shares is so surrendered, no dividend or other distribution, if any, payable to the holders of record of Novume Common Stock or Novume Preferred Stock as of any date subsequent to the Effective Time shall be paid to the holder of such certificate in respect thereof. Upon the surrender of any such certificate theretofore representing Shares, however, the record holder of the certificate or certificates representing shares of Novume Common Stock or Novume Preferred Stock issued in exchange therefor shall receive from the Exchange Agent or from Novume, as the case may be, payment of the amount of dividends and other distributions, if any, which as of any date subsequent to the Effective Time and until such surrender shall have become payable with respect to such number of shares of Novume Common Stock or Novume Preferred Stock (“Pre-Surrender Dividends”). No interest shall be payable with respect to the payment of Pre-Surrender Dividends, upon the surrender of certificates theretofore representing Shares. After the appointment of the Exchange Agent shall have been terminated, such holders of Novume Common Stock that have not received payment of Pre- Surrender Dividends, shall look only to Novume for payment thereof. Notwithstanding the foregoing provisions of this Section 2.5, neither the Exchange Agent nor any Party shall be liable to a holder of Shares for any Novume Common Stock or Novume Preferred Stock or dividends or distributions thereon delivered to a public official pursuant to any applicable abandoned property, escheat or similar law or to a transferee pursuant to Section 2.6 hereof.

Section 2.6. Transfer Books. The stock transfer books of the Company with respect to the Company Shares and the stock transfer books of Brekford with respect to the Brekford Shares shall each be closed at the Effective Time and no transfer of any Shares will thereafter be recorded on any of such stock transfer books. In the event of a transfer of ownership of Shares that is not registered in the stock transfer records of the Company or Brekford, as the case may be, at the Effective Time, cash and/or a certificate or certificates representing the number of full shares of Novume Common Stock or Novume Preferred Stock, as applicable, into which such Shares shall have been converted in accordance with Section 2.2 hereof shall be issued to the transferee in accordance with Section 2.7 hereof, and a cash payment in the amount of Pre-Surrender Dividends, if any, in accordance with Section 2.5 hereof, if the certificate or certificates representing such Shares is or are surrendered as provided in Section 2.5 hereof, accompanied by all documents required to evidence and effect such transfer and by evidence of payment of any applicable stock transfer tax.

(a) No scrip or fractional share certificate for Novume Common Stock or Novume Preferred Stock will be issued upon the surrender for exchange of certificates evidencing Shares. Any such fractional shares that would have been issued shall be rounded up to the nearest whole share and such whole share shall be issued.

(b) None of Novume, the Company or Brekford shall be liable to any holder of Shares or Novume Common Stock or Novume Preferred Stock, as the case may be, for such shares (or dividends or distributions with respect thereto) delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

(a) At the Effective Time, each option granted by the Company to purchase shares of Company Common Stock (each, a “Company Option”), or by Brekford to purchase shares of Brekford Common Stock (each, a “Brekford Option” and, together with the Company Options, “Options”), which is outstanding and unexercised immediately prior to the Effective Time, shall be assumed by Novume and converted into an option (a “Novume Option”) to purchase shares of Novume Common Stock in such amount and at such exercise price as provided below and otherwise having the same terms and conditions as are in effect immediately prior to the Effective Time:

(i) the number of shares of Novume Common Stock to be subject to the Novume Option shall be equal to the product of (x) the number of shares of Company Common Stock or Brekford Common Stock subject to the original Option and (y) the Company Exchange Ratio or the Brekford Exchange Ratio, as applicable;

(ii) the exercise price per share of Novume Common Stock under the Novume Option shall be equal to (x) the exercise price per share of the Company Common Stock or Brekford Common Stock under the original Option divided by (y) the Company Exchange Ratio or the Brekford Exchange Ratio, as applicable; and

(iii) upon each exercise of Novume Options by a holder thereof, the aggregate number of shares of Novume Common Stock deliverable upon such exercise shall be rounded down, if necessary, to the nearest whole share and the aggregate exercise price shall be rounded up, if necessary, to the nearest cent. The adjustments provided herein with respect to any Options which are “incentive stock options” (as defined in Section 422 of the Code) shall be effected in a manner consistent with Section 424(a) of the Code.

(b) Novume shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Novume Common Stock for delivery upon exercise of Novume Options in accordance with this Section 2.8. As soon as practicable (and in no event later than thirty (30) days) after the Effective Time, Novume shall file a registration statement on Form S-8 (or any successor or other appropriate forms), or another appropriate form with respect to the shares of Novume Common Stock subject to the Novume Options and shall use its best efforts to maintain the effectiveness of such registration statement or registration statements (and maintain the current status of the prospectus or prospectuses contained therein) for so long as the Novume Options remain outstanding.

(c) At the Effective Time, each outstanding warrant to purchase shares of Company Common Stock (each, a “Company Warrant”), or to purchase shares of Brekford Common Stock (each, a “Brekford Warrant” and, together with the Company Warrants, the “Warrants”), which is outstanding and unexercised immediately prior to the Effective Time, shall be assumed by

Novume and converted into a warrant to purchase shares of Novume Common Stock (a “Novume Warrants”) in such amount and at such exercise price as provided below and otherwise having the same terms and conditions as are in effect immediately prior to the Effective Time:

(i) the number of shares of Novume Common Stock issuable upon exercise of each Novume Warrant shall be equal to the product of (x) the number of shares of Company Common Stock or Brekford Common Stock issuable upon exercise of the original Warrant and (y) the Company Exchange Ratio or the Brekford Exchange Ratio, as applicable;

(ii) the exercise price per share of Novume Common Stock under the Novume Warrants shall be equal to (x) the exercise price per share of the Company Common Stock or Brekford Common Stock under the original Warrant divided by (y) the Company Exchange Ratio or the Brekford Exchange Ratio, as applicable; and

Section 2.9. Certain Adjustments. Without limiting any other provision of this Agreement, if, between the date of this Agreement and the Effective Time, the outstanding shares of Company Common Stock or of Brekford Common Stock shall be changed into a different number of shares by reason of any reclassification, recapitalization, split-up, combination or exchange of shares, or any dividend payable in stock or other securities shall be declared thereon with a record date within such period, the exchange ratio established pursuant to the provisions of Section 2.2 hereof shall be adjusted accordingly to provide to the holders of Company Common Stock and Brekford Common Stock the same economic effect as contemplated by this Agreement prior to such reclassification, recapitalization, split-up, combination, exchange or dividend.

Section 3.1. Certificate of Incorporation of Novume. Prior to the Effective Time, the Company shall cause the Certificate of Incorporation of Novume to be amended and restated to read substantially as set forth in Appendix I hereto, and shall cause Novume to file with the Secretary of State of the State of Delaware a Certificate of Designations of the Novume Preferred Stock containing terms substantially identical to the Certificate of Designations of the Company Preferred Stock filed with the Secretary of State of the State of Delaware as of the date hereof, but in any event, which shall provide rights, preferences and privileges to the holders of Novume Preferred Stock that are no less favorable to such holders than those currently provided to the holders of Company Preferred Stock.

(a) At the Effective Time, Robert A. Berman shall have been appointed the Chief Executive Officer of Novume; such other persons shall have been appointed officers of Novume as are designated by the Board of Directors of the Company as it exists immediately prior to the Effective Time.

(b) At the Effective Time, the Novume Board shall consist of seven (7) members, four (4) of whom shall be independent within the meaning of the 1934 Act, and the national stock exchange to which the Company has applied for the listing of Novume Common Stock as described in Section 7.10. Six (6) members of the Novume Board shall be designated by the Company, and one (1) member of the Novume Board shall be designated by Brekford, subject to the approval of KeyStone. The members designated by the Company are James McCarthy, who shall serve as Chairman, Robert A. Berman, Dr. Richard Nathan, Glenn Goord, Paul de Bary and one additional independent director who shall be designated by the Company prior to the Effective Time. The member to be designated by Brekford shall be independent, as provided herein, and shall be subject to the approval by the Company; such member shall be identified by Brekford and approved by the Company prior to the Effective Time. As of the date hereof, Glenn Goord and Paul de Bary are independent as provided herein, and shall so remain, as and at the Effective Time.

Section 4.1. Organization and Qualification; Subsidiaries. Each of Brekford and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization. Each of Brekford and its Subsidiaries has the requisite corporate power and authority and any necessary governmental authority, franchise, license or permit to own, operate or lease the properties that it purports to own, operate or lease and to carry on its business as it is now being conducted, and is duly qualified as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of its properties owned, operated or leased or the nature of its activities makes such qualification necessary, except for such failure which, when taken together with all other such failures, would not reasonably be expected to have a Material Adverse Effect on Brekford. Brekford’s Subsidiaries are listed on Schedule 4.1 hereto.

Section 4.2. Certificate of Incorporation and Bylaws. Brekford has heretofore furnished, or otherwise made available, to the Company a complete and correct copy of the Certificate, or Articles, of Incorporation, as applicable, and the Bylaws (or comparable governing documents), each as amended to the date hereof, of Brekford and each of its Subsidiaries. Such Certificate and Articles of Incorporation and Bylaws (or comparable governing documents) are in full force and effect. Neither Brekford nor any of its Subsidiaries is in violation of any of the provisions of its respective Certificate or Articles Incorporation, as applicable, or its Bylaws (or comparable governing documents).

(a) The authorized capital stock of Brekford consists of (i) 20,000,000 shares of preferred stock, par value $0.0001 per share, none of which are outstanding and none of which

are reserved for issuance and (ii) 150,000,000 shares of Brekford Common Stock, of which, as of February 8, 2017, 49,311,265 shares were issued and outstanding and 1,390,000 shares were issuable upon the exercise of options outstanding under the Brekford option plans listed on Schedule 4.3 hereto. Since January 1, 2017, no shares of Brekford Common Stock have been issued, except upon the exercise of options described in the immediately preceding sentence. Except as set forth on Schedule 4.3, there are no outstanding Brekford Equity Rights. For purposes of this Agreement, “Brekford Equity Rights” shall mean subscriptions, options, warrants, calls, commitments, agreements, conversion rights or other rights of any character (contingent or otherwise) to purchase or otherwise acquire from Brekford or any of Brekford’s Subsidiaries at any time, or upon the happening of any stated event, any shares of the capital stock of Brekford. Schedule 4.3 sets forth a complete and accurate list with respect to all outstanding Brekford Equity Rights of the holder thereof, the date of grant, the number of shares for which each such Brekford Equity Right is exercisable, the respective dates upon which each such Brekford Equity Right vests, becomes exercisable and expires, and the exercise price of each such Brekford Equity Right.

(b) There are no outstanding obligations of Brekford or any of Brekford’s Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of Brekford or any such Subsidiary.

(d) All of the outstanding capital stock of each of Brekford’s Subsidiaries is duly authorized, validly issued, fully paid and nonassessable, and, except as set forth on Schedule 4.3, is owned by Brekford free and clear of any liens, security interests, pledges, agreements, claims, charges or encumbrances. Except as set forth on Schedule 4.3, there are no existing subscriptions, options, warrants, calls, commitments, agreements, conversion rights or other rights of any character (contingent or otherwise) to purchase or otherwise acquire from Brekford or any of Brekford’s Subsidiaries at any time, or upon the happening of any stated event, any shares of the capital stock of any of Brekford’s Subsidiaries, or any securities convertible into or exercisable for shares of the capital stock of any of Brekford’s Subsidiaries, whether or not presently issued or outstanding and there are no outstanding obligations of Brekford or any of Brekford’s Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of any of Brekford’s Subsidiaries. Except for equity interests disclosed on Schedule 4.3 hereto and Subsidiaries listed on Schedule 4.1 hereto, Brekford does not directly or indirectly own any equity interest in any other person. Each of Brekford’s Subsidiaries is a wholly-owned Subsidiary.

(e) Except as disclosed on Schedule 4.3 hereto, there are no stockholder agreements, voting trusts or other agreements or understandings to which Brekford is a party or to which it is bound relating to the voting or registration of any shares of capital stock of Brekford. Brekford has not taken any action that would result in, nor is Brekford a party to any agreement, arrangement or understanding not disclosed on Schedule 4.3 hereto that would result in, any Options to purchase Brekford Common Stock that are unvested becoming vested in connection with or as a result of the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

Section 4.4. Authority Relative to this Agreement. Brekford has the necessary corporate power and authority to enter into this Agreement. The execution and delivery of this Agreement by Brekford and the consummation by Brekford of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Brekford, including the approval of this Agreement by Brekford’s stockholders as required by the Delaware Law. This Agreement has been duly executed and delivered by Brekford and, assuming the due authorization, execution and delivery thereof by the other Parties, constitutes a legal, valid and binding obligation of Brekford, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity (the “Bankruptcy Exception”).

(a) Except as listed on Schedule 4.5 hereto, the execution and delivery of this Agreement by Brekford do not, and the performance of this Agreement by Brekford will not, (i) violate or conflict with the Certificate of Incorporation or Bylaws of Brekford, (ii) conflict with or violate any Legal Requirement, or conflict with or violate any Permit, applicable to Brekford or any of its Subsidiaries or by which any of their respective property is bound or affected, (iii) violate or conflict with the Certificate of Incorporation or Bylaws (or comparable governing documents) of any of Brekford’s Subsidiaries or (iv) result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination or cancellation of, or result in the creation of a lien or encumbrance on any of the properties or assets of Brekford or any of its Subsidiaries pursuant to, result in the loss of any material benefit under, or require the consent of any other party to, any contract, instrument, permit, license or franchise to which Brekford or any of its Subsidiaries is a party or by which Brekford, each Subsidiary or any of their respective property is bound or affected, except, in the case of clauses (ii), (iii) or (iv) above, for conflicts, violations, breaches, defaults, results or consents which, individually or in the aggregate, would not have a Material Adverse Effect on Brekford.

(b) Except as listed on Schedule 4.5 and except for applicable requirements, if any, of the Exchange Act (as defined on Section 10.4 hereof), filing and recordation of appropriate merger or other documents as required by Delaware Law and any filings required pursuant to any state securities or “blue sky” laws or the rules of any applicable stock exchanges, neither Brekford nor its any of its Subsidiaries is required to submit any notice, report or other filing with any governmental authority, domestic or foreign, in connection with the execution, delivery or performance of this Agreement. Except as set forth in the immediately preceding sentence, no waiver, consent, approval or authorization of any governmental or regulatory authority, domestic or foreign, is required to be obtained by Brekford or any of its Subsidiaries in connection with its execution, delivery or performance of this Agreement.

(a) Brekford has filed all forms, reports and documents required to be filed with the Securities and Exchange Commission (“SEC”) since January 1, 2016, and has heretofore delivered or made available to the Company, in the form filed with the SEC, together with any

amendments thereto, its (i) Annual Report on Form 10-K for the fiscal year ended December 31, 2015, (ii) all proxy statements relating to Brekford’s meetings of stockholders (whether annual or special) held since January 1, 2016, (iii) Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2016, and (iv) all other reports or registration statements filed by Brekford with the SEC since January 1, 2016 (collectively, the “Brekford SEC Reports”). The Brekford SEC Reports (i) were prepared substantially in accordance with the requirements of the 1933 Act (as defined in Section 10.4 hereof), or the Exchange Act as the case may be, and the rules and regulations promulgated under each of such respective acts, and (ii) did not at the time they were filed contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(b) The financial statements, including all related notes and schedules, contained in the Brekford SEC Reports (or incorporated by reference therein) fairly present the consolidated financial position of Brekford and each of its Subsidiaries as at the respective dates thereof and the consolidated results of operations and cash flows of Brekford and each of its Subsidiaries for the periods indicated in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved (except for changes in accounting principles disclosed in the notes thereto) and subject, in the case of interim financial statements, to normal year-end adjustments.

(c) Brekford has heretofore made available to the Company a complete and correct copy of any material amendments or modifications, which have not yet been filed with the SEC, to agreements, documents or other instruments which previously had been filed by Brekford with the SEC pursuant to the Exchange Act.

Section 4.7. No Undisclosed Liabilities; Absence of Certain Changes or Events. Except as and to the extent publicly disclosed by Brekford in the Brekford SEC Reports filed prior to the date of this Agreement, as of January 1, 2016, neither Brekford nor any of its Subsidiaries had any material liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, and whether due or to become due or asserted or unasserted, which would be required by GAAP to be reflected in, reserved against or otherwise described in the consolidated balance sheet of Brekford (including the notes thereto) as of such date or which could reasonably be expected to have a Material Adverse Effect on Brekford. Except as disclosed on Schedule 4.7 hereto, since September 30, 2016, neither Brekford nor any of its Subsidiaries has incurred any material liability, except in the ordinary course of their respective businesses consistent with their past practices, and there has not been any change, or any event involving a prospective change, in the business, financial condition or results of operations of Brekford or any of its Subsidiaries which has had, or is reasonably likely to have, a Material Adverse Effect on Brekford, and Brekford and each of its Subsidiaries has conducted their respective businesses in the ordinary course consistent with their past practices.

Section 4.8. Litigation. Except as disclosed in Schedule 4.8 hereto, there are no claims, actions, suits, proceedings or, to Brekford’s knowledge, investigations pending or, to Brekford’s knowledge, threatened against Brekford or any of its Subsidiaries, or any properties or rights of Brekford or any of its Subsidiaries, before any court, administrative, governmental, arbitral, mediation or regulatory authority or body, domestic or foreign, (a) as of the date hereof, as to

which there is more than a remote possibility of an adverse judgment or determination against Brekford or any of its Subsidiaries or any properties or rights of Brekford or any of its Subsidiaries in excess of $100,000 or which otherwise is reasonably likely to have a Material Adverse Effect on Brekford, (b) as of the date hereof, which questions the validity of this Agreement or any action to be taken by Brekford in connection with the consummation of the transactions contemplated by this Agreement or could otherwise prevent or delay the consummation of the transactions contemplated by this Agreement, or (c) as to which there is reasonably likely to be an adverse judgment or determination against Brekford or any of its Subsidiaries or any properties or rights of Brekford or any of its Subsidiaries in excess of $100,000 or which otherwise could reasonably be expected to have a Material Adverse Effect on Brekford.

Section 4.9. No Violation of Law; Permits. The business of Brekford and each of its Subsidiaries is not being conducted in violation of any statute, law, ordinance, rule, regulation, judgment, order or decree of any domestic or foreign governmental, regulatory or judicial entity (including any stock exchange or other self-regulatory body) (“Legal Requirements”), or in violation of any permits, franchises, licenses, approvals, tariffs and other authorizations or consents that are granted by any domestic or foreign government or regulatory or judicial entity (including any stock exchange or other self-regulatory body) (“Permits”), except for possible violations of any Legal Requirements, or violations of any Permits, none of which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on Brekford. Brekford and each of its Subsidiaries have all Permits that are required in connection with the operation of their businesses (collectively, “Required Permits”), and no proceedings are pending or, to the knowledge of Brekford, threatened to revoke or limit any Required Permit, except, in each case, those the absence or violation of which do not and will not have a Material Adverse Effect on Brekford. Except as set forth on Schedule 4.9 hereto, (a) to Brekford’s knowledge, no investigation or review by any domestic or foreign governmental or regulatory entity (including any stock exchange or other self-regulatory body) with respect to Brekford or any of its Subsidiaries in relation to any alleged violation of law or regulation is pending or threatened, and (b) no governmental or regulatory entity (including any stock exchange or other self-regulatory body) has notified Brekford of its intention to conduct the same, except for such investigations which, if they resulted in adverse findings, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Brekford. Except as set forth on Schedule 4.9 hereto, neither Brekford nor any of its Subsidiaries is subject to any cease and desist or other order, judgment, injunction or decree issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has adopted any board resolutions at the request of, any court, governmental entity or regulatory agency that materially restricts the conduct of its business or which could reasonably be expected to have a Material Adverse Effect on Brekford, or would prevent or delay the consummation of the transactions contemplated by this Agreement, nor has Brekford or any of its Subsidiaries been advised that any court, governmental entity or regulatory agency is considering issuing or requesting any of the foregoing. Brekford and each of its Subsidiaries and affiliates has complied with all material federal and state regulatory reporting requirements necessary for the lawful provision of services or products currently offered by Brekford or such Subsidiaries or affiliate.

Section 4.10. Registration Statement; Information Statement. None of the information supplied or to be supplied by or on behalf of Brekford for inclusion or incorporation by reference in the Registration Statement on Form S-4 (the “Registration Statement”) to be filed with the SEC by Novume in connection with the issuance of shares of Novume Common Stock and Novume Preferred Stock in the Mergers will, at the time the Registration Statement becomes effective under the 1933 Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the information supplied or to be supplied by or on behalf of Brekford for inclusion or incorporation by reference in the information statement, in definitive form, relating to the approval of the Mergers by the required Brekford stockholders (the “Information Statement”) will, at any time prior to the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. If at any time prior to the Effective Time any event with respect to Brekford, its officers and directors or any of its Subsidiaries should occur which is required to be described in an amendment of, or a supplement to, the Registration Statement or the Information Statement, Brekford shall promptly so advise the Company and such event shall be so described, and such amendment or supplement (which the Company shall have a reasonable opportunity to review) shall be promptly filed with the SEC and, as required by law, disseminated to the shareholders of Brekford. The Registration Statement and the Information Statement (except for information relating to or provided by the Company) will each comply as to form in all material respects with the provisions of the 1933 Act and the Exchange Act, as applicable, and the rules and regulations promulgated thereunder, as applicable.

(a) Set forth on Schedule 4.11 hereto is a true and complete list of all employee benefit plans within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), all deferred compensation, bonus or other incentive compensation, stock options, restricted stock, stock purchase or other equity-based, severance or change in control, salary continuation, tuition assistance, disability, leave of absence plans, policies or agreements, and all employment, consulting, management or other individual compensation agreements with respect to any current or former employee of Brekford or any of its Brekford ERISA Affiliates, which in each case Brekford or any of its Brekford ERISA Affiliates has any obligation or liability, contingent or otherwise (collectively, the “Brekford Benefit Plans”).

(b) All contributions and other payments required to be made by Brekford or any Brekford ERISA Affiliate to or under any Brekford Benefit Plan (or to any person pursuant to the terms thereof) have been timely made in accordance with applicable law. No Brekford Benefit Plan is subject to Section 412 of the Code or Section 302 of ERISA.

(c) Each of the Brekford Benefit Plans intended to be “qualified” within the meaning of Section 401(a) of the Code has been determined by the Internal Revenue Service (the “IRS”) to be so qualified, and, to the knowledge of Brekford or any Brekford ERISA Affiliate, no circumstances exist that could reasonably be expected by Brekford or any Brekford ERISA

Affiliate to result in the revocation of any such determination. Brekford is in compliance with, and each of the Brekford Benefit Plans is and has been operated in compliance with, all applicable Legal Requirements governing such plan, including, without limitation, ERISA and the Code.

(d) Brekford has made available to the Company with respect to each Brekford Benefit Plan a true, correct and complete copy of each of the following documents where applicable (i) such plan, summary plan description and summary of material modifications, (ii) the most recent annual report filed with the IRS, (iii) each related trust agreement, (iv) the most recent determination of the IRS with respect to the qualification under any provision of the Code and (v) the most recent IRS Form 5500 and actuarial report or valuation.

(e) Except as set forth on Schedule 4.11 hereto, the consummation or announcement of any transaction contemplated by this Agreement will not either alone or upon the occurrence of any additional or further acts or events) result in any (i) payment (whether of severance pay or otherwise) becoming due from Brekford or any Brekford ERISA Affiliate to any current or former officer, employee, former employee or director thereof, or to any other person for the benefit of any such officer, employee or director, or (ii) acceleration, vesting or establishment of any benefit under any Brekford Benefit Plan, or (iii) disqualification of any of the Brekford Benefit Plans intended to be qualified under, result in a prohibited transaction or breach of fiduciary duty under, or otherwise violate, ERISA or the Code.

(f) Neither Brekford nor any of its Brekford ERISA Affiliates has incurred, and neither of such entities reasonably expects to incur, any material liability to the PBGC (other than premiums which are not overdue) or pursuant to Title IV of ERISA with respect to any Brekford Benefit Plan. Neither Brekford nor any Brekford ERISA Affiliate is an employer with respect to, and neither has incurred or reasonably expects to incur, any withdrawal liability with respect to, any “multiemployer plan” (as defined in Section 3(37) of ERISA).

(g) There are no pending or, to the knowledge of Brekford or any Brekford ERISA Affiliate, threatened actions, claims or proceedings against any Brekford Benefit Plan or its assets, plan sponsor, plan administrator or fiduciaries with respect to the operation of such plan (other than routine benefit claims).

Section 4.12. Labor Matters. Except as disclosed on Schedule 4.12 hereto, neither Brekford nor any of its Subsidiaries is party to any collective bargaining agreement or other labor agreement with any union or labor organization and no union or labor organization has been recognized by Brekford or any of its Subsidiaries as an exclusive bargaining representative for employees of Brekford or any of its Subsidiaries. Except as disclosed on Schedule 4.12 hereto, there is no current union representation question involving employees of Brekford or any of Brekford’s Subsidiaries, nor does Brekford have knowledge of any significant activity or proceeding of any labor organization (or representative thereof) or employee group to organize any such employees. Neither Brekford nor any of its Subsidiaries has made any commitment not in collective bargaining agreements listed on Schedule 4.12 hereto that would require the application of the terms of any collective bargaining agreements entered into by Brekford or any of its Subsidiaries to the Company, Novume, or any Subsidiary or joint venture of either the Company or Novume. Except as disclosed on Schedule 4.12 hereto, (i) there is no material

active arbitration under any collective bargaining agreement involving Brekford or any of its Subsidiaries, (ii) there is no material unfair labor practice, grievance, employment discrimination or other labor or employment related charge, complaint or claim against Brekford or any of its Subsidiaries pending before any court, arbitrator, mediator or governmental agency or tribunal, or threatened, (iii) there is no material strike, picketing or work stoppage by, or any lockout of, employees of Brekford or its Subsidiaries pending or, to Brekford’s knowledge, threatened, against or involving Brekford or any of its Subsidiaries, (iv) there is no significant active arbitration under any collective bargaining agreement involving Brekford or any of its Subsidiaries regarding the employer’s right to move work from one location or entity to another, or to consolidate work locations, or involving other similar restrictions on business operations, and (v) there is no material proceeding, claim, suit, action or, to Brekford’s knowledge, governmental investigation pending or, to Brekford’s knowledge, threatened, in respect of which any director, officer, employee or agent of Brekford or any of its Subsidiaries is or may be entitled to claim indemnification from Brekford or any Brekford Subsidiary pursuant to their respective charters or bylaws or as provided in the indemnification agreements, if any, listed on Schedule 4.12 hereto. For purposes of this Section 4.12, “material” refers to any liability which could reasonably be expected to exceed $100,000. A true, correct and complete copy has been made available to the Company of each current or last, in the case where there is no current, expired collective bargaining agreement to which Brekford or any of its Subsidiaries is a part or under which Brekford or any of its Subsidiaries has obligations.

Section 4.13. Environmental Matters. Environmental Matters. Except as set forth on Schedule 4.13 hereto:

(a) Brekford and each of its Subsidiaries are and have been in compliance with all applicable Environmental Laws (as defined below) and neither Brekford nor any of its Subsidiaries has received any written or oral communication from any person or governmental authority that alleges that Brekford or any of its Subsidiaries is not in compliance with applicable Environmental Laws, except for such non-compliance which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect on Brekford.

(b) Brekford and each of its Subsidiaries have obtained or have applied for all environmental, health and safety permits, licenses, variances, approvals and authorizations (collectively, the “Environmental Permits”) necessary for the construction of their facilities or the conduct of their operations, and all such Environmental Permits are effective or, where applicable, a renewal application has been timely filed and is pending agency approval, and Brekford and each of its Subsidiaries are in compliance with all terms and conditions of such Environmental Permits except for such non-compliance which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect on Brekford. There are no past or present events, conditions, circumstances, activities, practices, incidents, actions or plans that may materially interfere with, or prevent, future continued compliance on the part of Brekford or any of its Subsidiaries with such Environmental Permits. Neither Brekford nor any of its Subsidiaries has knowledge of matters or conditions that would preclude reissuance or transfer of any such Environmental Permit, including amendment of such instrument, to Novume or one of its Subsidiaries, where such action is necessary to maintain material compliance with Environmental Laws.

(c) To Brekford’s knowledge, there is no requirement to be imposed in the future by any Environmental Law or Environmental Permit which could reasonably be expected to result in the incurrence of a material cost by Brekford or any of its Subsidiaries.

(d) There is no Environmental Claim (as defined below) pending or, to Brekford’s knowledge, threatened (i) against Brekford or any of its Subsidiaries, (ii) against any person whose liability for any Environmental Claim Brekford or any of its Subsidiaries has or may have retained or assumed either contractually or by operation of law, or (iii) against or associated with any real or personal property or operations which Brekford or any of its Subsidiaries currently or previously owned, leased or operated, in whole or in part.

(e) There have been no Releases (as defined below) of any Hazardous Material (as defined below) that would be reasonably likely to form the basis of any Environmental Claim against Brekford or any of its Subsidiaries, or against any person whose liability for any Environmental Claim Brekford or any of its Subsidiaries has or may have retained or assumed either contractually or by operation of law.

(f) With respect to any predecessor of Brekford or any of its Subsidiaries, there is no Environmental Claim pending or, to Brekford’s knowledge, threatened, or any Release of Hazardous Materials that would be reasonably likely to form the basis of any Environmental Claim against Brekford or any of its Subsidiaries.

(g) Brekford has disclosed to the Company all material facts which Brekford reasonably believes form the basis of a material current or future cost relating to any environmental matter affecting Brekford and each of its Subsidiaries.

(h) None of the properties currently or formerly owned, leased or operated by Brekford, any of its Subsidiaries or any predecessor thereof are now, or were in the past, listed on the National Priorities List of Superfund Sites (the “NPL”), the Comprehensive Environmental Response, Compensation and Liability Information System (“CERCLIS”), or any other comparable state or local environmental database, including those that are triggered by sales or transfers of businesses or real property.

(i) Brekford has delivered, or caused to be delivered, to the Company copies of all written environmental audit reports, written site assessments performed by environmental professionals, asbestos surveys, written claims and complaints, and consent decrees and other similar documents with respect to Brekford or any of its Subsidiaries, which are in the possession or control of Brekford or any of its Subsidiaries, related to compliance with Environmental Laws, Environmental Claims, or Releases of Hazardous Materials.

(i) “Environmental Claim” means any and all administrative, regulatory or judicial actions, suits, demands, demand letters, directives, claims, liens, investigations, proceedings or notices of noncompliance or violation (written or oral) by any person (including any federal, state, local or foreign governmental authority) alleging potential liability (including, without limitation, potential responsibility for or liability for enforcement, investigatory costs, cleanup costs, governmental response costs, removal costs, remedial costs, natural resources

damages, property damages, personal injuries or penalties) arising out of, based on or resulting from (A) the presence, or Release or threatened Release into the environment, of any Hazardous Materials at any location, whether or not owned, operated, leased or managed by Brekford or any of its Subsidiaries (including but not limited to obligations to clean up contamination resulting from leaking underground storage tanks); or (B) circumstances forming the basis of any violation or alleged violation of any Environmental Law; or (C) any and all claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from the presence or Release of any Hazardous Materials.

(ii) “Environmental Laws” means all applicable foreign, federal, state and local laws (including the common law), rules, requirements and regulations relating to pollution, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or protection of human health as it relates to the environment including, without limitation, laws and regulations relating to Releases of Hazardous Materials, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials or relating to management of asbestos in buildings.

(iii) “Hazardous Materials” means (A) any petroleum or any by-products or fractions thereof, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, any form of natural gas, explosives, and polychlorinated biphenyls (“PCBs”); (B) any chemicals, materials or substances, whether waste materials, raw materials or finished products, which are now defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous substances,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” “pollutants,” “contaminants,” or words of similar import under any Environmental Law; and (C) any other chemical, material or substance, whether waste materials, raw materials or finished products, regulated or forming the basis of liability under any Environmental Law.

(iv) “Release” means any release, spill, emission, leaking, injection, deposit, disposal, discharge, dispersal, leaching or migration into the environment (including without limitation ambient air, atmosphere, soil, surface water, groundwater or property).

(a) The Board of Directors of Brekford has determined that the transactions contemplated by this Agreement are in the best interests of Brekford and its stockholders and has resolved to recommend to such stockholders that they vote in favor thereof.

(b) The approval of the Merger of Brekford Merger Sub into Brekford by a majority of the votes entitled to be cast by all holders of Brekford Common Stock (the “Brekford Stockholders’ Approval”) is the only vote of the holders of any class or series of the capital stock of Brekford required to approve this Agreement, the Mergers and the other transactions contemplated hereby, in accordance with the provisions of Delaware Law, any applicable United States federal and state securities laws, and the Certificate of Incorporation and Bylaws of Brekford, each as amended and as currently in effect.

(c) The Brekford Key Stockholders, together, hold the requisite voting power to obtain the Brekford Stockholders’ Approval.

Section 4.15. Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s, investment banking or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Brekford or any of its Subsidiaries.

(a) Brekford and each of its Subsidiaries, and each affiliated group (within the meaning of Section 1504 of the Code) of which Brekford or any of its Subsidiaries is or has been a member, has timely filed all federal state, local, foreign, income and franchise Tax Returns (as defined below), and all other material Tax Returns required to be filed by them. All such Tax Returns are true and correct in all material respects. Except to the extent adequately reserved for in accordance with GAAP, all material Taxes due and payable by Brekford and each of its Subsidiaries have been timely paid in full. The most recent consolidated financial statements contained in the Brekford SEC Reports reflect an adequate reserve (other than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) in accordance with GAAP for all Taxes payable by Brekford and each of its Subsidiaries for all taxable periods and portions thereof through the date of such financial statements.

(b) No material deficiencies for any Taxes have been proposed, asserted or assessed in writing against Brekford or any of its Subsidiaries that have not been fully paid or adequately provided for in the appropriate financial statements of Brekford and its Subsidiaries, no requests for waivers of the time to assess any Taxes are pending, and no power of attorney with respect to any Taxes has been executed or filed with any taxing authority. No material issues relating to Taxes have been raised in writing by any governmental authority during any presently pending audit or examination. For any open taxable period, neither Brekford nor any of its Subsidiaries has waived or extended the statute of limitations applicable to any Tax or Tax Return or consented to any extension of time with respect to any material tax assessment or deficiency.

(c) There are no material liens or encumbrances for Taxes on any of the assets of Brekford or any of its Subsidiaries (other than for current Taxes not yet due and payable).

(d) Brekford and each of its Subsidiaries have complied in all material respects with all applicable Legal Requirements relating to the payment and withholding of Taxes.

(e) Neither of Brekford nor any of its Subsidiaries has made any payments, nor are any of them obligated to make any payments, and none of them is a party to any agreement that could obligate it to make any payments that would not be deductible by reason of Sections 280G or 162(m) of the Code as a result of the transactions contemplated by this Agreement.

(f) Neither Brekford nor any of its Subsidiaries is a party to any tax allocation agreement, tax sharing agreement, tax indemnity agreement or similar agreement, arrangement or practice with respect to Taxes (including any advance pricing agreement, closing agreement or other agreement relating to Taxes with any taxing authority but excluding in each case any contract entered into in the ordinary course of business and the primary subject of which is not

Taxes). Neither Brekford nor any of its Subsidiaries (i) has been a member of an affiliated group for federal income tax purposes other than a group of which Brekford is the common parent or (ii) has any liability for the Taxes of any person other than itself under Treasury Regulations Section 1.1502-6 (or any similar provision of U.S. state or local or non-U.S. Tax Law), or as a transferee or successor.

(g) No federal, state, local or foreign audits or other administrative proceedings or court proceedings are presently pending with regard to any Taxes or Tax Returns of Brekford or any of its Subsidiaries and neither Brekford nor any of its Subsidiaries has received a written notice of any pending audit or proceeding.

(h) Neither Brekford nor any of its Subsidiaries has agreed to or is required to make any adjustment under Section 481(a) of the Code as a result of a “closing agreement” as described in Section 7121 of the Code (or any similar or corresponding provision of U.S. state or local or non-U.S. Tax Law) that, in either case, would result in the inclusion of a material amount of income in, or the exclusion of a material amount of deductions from, taxable income for any taxable period (or portion thereof) ending after the Closing Date.

(i) No property owned by Brekford or any of its Subsidiaries (i) constitutes “tax exempt use property” within the meaning of Section 168(h)(1) of the Code; or (ii) is tax exempt bond financed property within the meaning of Section 168(g) of the Code.

(j) Neither Brekford nor any of its Subsidiaries has (i) in the two (2) years prior to the date of this Agreement, distributed stock of another person, or has had its stock distributed by another person, in a transaction that was purported or intended to be governed in whole or in part by Sections 355 or 361 of the Code or (ii) engaged in any “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4(b) (or any similar provision of U.S. state or local or non-U.S. Tax Law).

(k) For purpose of this Agreement, (A) the terms “Tax” or “Taxes” shall mean all taxes, charges, fees, imposts, levies or other assessments, including, without limitation, all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever, together with any interest and any penalties, fines, additions to tax or additional amounts imposed by any taxing authority (domestic or foreign) and shall include any transferee liability in respect of Taxes, any liability in respect of Taxes imposed by contract, tax sharing agreement, tax indemnity agreement or any similar agreement and (B) the term “Tax Return” shall mean any report, return, document, declaration or any other information or filing required to be supplied to any taxing authority or jurisdiction (foreign or domestic) with respect to Taxes, including, without limitation, information returns, any document with respect to or accompanying payments or estimated Taxes, or with respect to or accompanying requests for the extension of time in which to file any such report, return document, declaration or other information.

Section 4.17. Intellectual Property. Brekford and each of its Subsidiaries owns or possess all necessary licenses or other valid rights to use all material computer software and firmware, patents, trademarks, trade names, brand names, copyrights, trade secrets, applications for trademarks and for patents, domain names, know-how and other proprietary rights and information used or held for use in connection with the business of Brekford and each of its Subsidiaries as currently conducted or as contemplated to be conducted, and, to the knowledge of Brekford, except as described on Schedule 4.17 hereto, as of the date hereof, there has been no assertion or claim challenging the ownership or validity of any of the foregoing. Except as disclosed on Schedule 4.17 hereto, the conduct of the business of Brekford and each of its Subsidiaries as currently conducted does not to the knowledge of Brekford, in any material respect, conflict with or infringe any patent, license, trademark, trade name, service mark, copyright, domain name or any other intellectual property right of any third party. To the knowledge of Brekford, except as described on Schedule 4.17 hereto, there are no infringements of any proprietary rights owned by or licensed by or to Brekford or any of its Subsidiaries.

Section 4.18. Insurance. Except as set forth on Schedule 4.18 hereto, each of Brekford and each of its Subsidiaries is, and has been continuously since January 1, 2016 (or such later date as each such Subsidiary was organized or acquired by Brekford), insured with financially responsible insurers in such amounts and against such risks and losses as are customary for companies conducting the business as conducted by Brekford and each of its Subsidiaries during such time period. Except as set forth on such Schedule 4.18, since January 1, 2016 neither Brekford nor any of its Subsidiaries has received notice of cancellation or termination with respect to any material insurance policy of Brekford or any of its Subsidiaries. The insurance policies of Brekford and each of its Subsidiaries are valid and enforceable policies.

Section 4.19. Ownership of Securities. As of the date hereof, neither of Brekford nor any of its Subsidiaries nor any of their affiliates or associates (as such terms are defined under the Exchange Act), (a)(i) beneficially owns, directly or indirectly, or (ii) is party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, in each case, shares of capital stock of the Company, which in the aggregate represent 10% or more of the outstanding shares of Company Common Stock, or (b) is an “interested stockholder” of the Company within the meaning of Section 203 of the Delaware Law. Except as set forth on Schedule 4.19 hereto, neither Brekford nor any of its Subsidiaries owns any shares of Company Common Stock.

(a) Brekford has delivered or otherwise made available to the Company true, correct and complete copies of all contracts and agreements (and all amendments, modifications and supplements thereto and all side letters to which Brekford is a party affecting the obligations of any party thereunder) to which Brekford or any of its Subsidiaries is a party or by which any of its properties or assets are bound that are material to the business, properties or assets of Brekford and each of its Subsidiaries taken as a whole, including, without limitation, all: (i) employment, consulting, non-competition, severance, golden parachute or indemnification contracts (including, without limitation, any contract to which Brekford is a party involving employees of Brekford); (ii) contracts granting a right of first refusal or first negotiation; (iii) partnership or joint venture agreements; (iv) agreements for the acquisition, sale or lease of material properties or assets of Brekford (by merger, purchase or sale of assets or stock or otherwise); (v) contracts or agreements with any governmental entity; (vi) contracts or

arrangements limiting or restraining Novume, Brekford, any of Brekford’s Subsidiaries or any successor thereto from engaging or competing in any business; and (vii) all commitments and agreements to enter into any of the foregoing (collectively, together with any such contracts entered into in accordance with Section 6.1 hereof, the “Brekford Contracts”).

(i) There is no default under any Brekford Contract either by Brekford or any of its Subsidiaries or, to the knowledge of Brekford, by any other party thereto, and no event has occurred that with the lapse of time or the giving of notice or both would constitute a default thereunder by Brekford or any of its Subsidiaries or, to the knowledge of Brekford, any other party, in any such case in which such default or event could reasonably be expected to have a Material Adverse Effect on Brekford.

(ii) No party to any such Brekford Contract has given notice to Brekford of or made a claim against Brekford with respect to any breach or default thereunder, in any such case in which such breach or default could reasonably be expected to have a Material Adverse Effect on Brekford.

(c) Set forth on Schedule 4.20(c) hereto is a list of each material contract, agreement or arrangement to which Brekford or any of its Subsidiaries is a party or may be bound and under the terms of which any of the rights or obligations of a party thereto will be modified or altered (including, without limitation, any acceleration of rights or obligations thereunder pursuant to the terms of any such contract, agreement or arrangement) as a result of the transactions contemplated hereby.

Section 4.21. Investment Company. Brekford is not and will be not an “investment company” within the meaning of Code Section 368(a)(2)(F)(ii) immediately before the Effective Time.

Section 4.22. Certain Plans. Immediately following the Effective Time, Brekford, as the Surviving Corporation in the Brekford Merger, will own substantially all of the assets of Brekford immediately prior to the Brekford Merger. There is no plan or intention for Brekford Merger Sub, as the Surviving Corporation of the Brekford Merger, to transfer any material assets or businesses or to cease any existing business of the Brekford after the Effective Time. There is no plan or intention for the Novume stock issued in the Brekford Merger to be redeemed.

The Company and each Merger Subsidiary (as defined below) hereby represent and warrant to Brekford as follows:

Section 5.1. Organization and Qualification; Subsidiaries. Each of the Company and each of Novume, Company Merger Sub and Brekford Merger Sub (collectively, the “Merger Subsidiaries” and each individually a “Merger Subsidiary”) is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization. Each of the Company and each of the Merger Subsidiaries has the requisite corporate power and authority and any necessary governmental authority, franchise, license or

permit to own, operate or lease the properties that it purports to own, operate or lease and to carry on its business as it is now being conducted, and is duly qualified as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of its properties owned, operated or leased or the nature of its activities makes such qualification necessary, except for such failure which, when taken together with all other such failures, would not reasonably be expected to have a Material Adverse Effect on the Company. The Company’s Subsidiaries are listed on Schedule 5.1 hereto.

Section 5.2. Certificate of Incorporation, Certificate of Designations and Bylaws. The Company has heretofore furnished, or otherwise made available, to Brekford a complete and correct copy of the Certificates of Incorporation and the Bylaws (or comparable governing documents), each as amended to the date hereof, of the Company and each of the Merger Subsidiaries, and a complete and correct copy of the Certificates of Designations, each as amended to the date hereof, for each class of the Company Preferred Stock and Novume Preferred Stock. Such Certificates of Incorporation, Bylaws (or comparable governing documents) and Certificates of Designation are in full force and effect. Neither the Company nor any of the Merger Subsidiaries is in violation of any of the provisions of its respective Certificate of Incorporation or its Bylaws (or comparable governing documents).

(a) The authorized capital stock of the Company consists of (i) 7,500,000 shares of Preferred Stock, par value $0.0001 per share, 500,000 shares of which have been designated Series A Cumulative Convertible Redeemable Preferred Stock, 421,357 shares of which are issued and outstanding and none of which are reserved for issuance, and (ii) 25,000,000 shares of Company Common Stock, of which, as of February 7, 2017, 5,488,094 shares were issued and outstanding, no shares were held in the treasury of the Company, 280,882 shares were issuable upon the conversion of Company Preferred Stock, 493,230 shares were issuable upon the exercise of warrants, 506,400 shares were issuable upon the exercise of options outstanding under the Company option plans listed on Schedule 5.3(a) hereto. Except as set forth on Schedule 5.3 hereto, (i) from February 9, 2017 through the date hereof, no shares of Company Common Stock have been issued, except upon the exercise of options described in the immediately preceding sentence, and (ii) as of the date hereof, there are no outstanding “Company Equity Rights”. For purposes of this Agreement, Company Equity Rights shall mean subscriptions, options, warrants, calls, commitments, agreements, conversion rights or other rights of any character (contingent or otherwise) to purchase or otherwise acquire from the Company or any of the Company’s Subsidiaries at any time, or upon the happening of any stated event, any shares of the capital stock of the Company). Schedule 5.3 hereto sets forth a complete and accurate list with respect to all outstanding Company Equity Rights as of February 9, 2017 of the holder thereof, the date of grant, the number of shares for which each such Company Equity Right is exercisable, the respective dates upon which each such Company Equity Right vests, becomes exercisable and expires, and the exercise price of each such Company Equity Right.

(b) Except as set forth on Schedule 5.3(b), there are no outstanding obligations of the Company or any of the Company’s Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of the Company.

(c) All of the issued and outstanding shares of Company Common Stock and Company Preferred Stock are validly issued, fully paid and nonassessable.

(d) The authorized capital stock of Novume consists of 30,000,000 shares of Novume Common Stock, par value $0.0001 per share, of which 1,000 shares are validly issued and outstanding, and 20,000,000 shares of Novume Preferred Stock, none of which are issued and outstanding. All of the issued and outstanding capital stock of Novume is, and at the Effective Time will be, owned by the Company free and clear of any liens, security interests, pledges, agreements, claims, charges or encumbrances, and there are (i) no other shares of capital stock or other voting securities of Novume, (ii) no securities of Novume convertible into or exchangeable for shares of capital stock or other voting securities of Novume and (iii) no options or other rights to acquire from Novume, and no obligations of Novume to issue, any capital stock, other voting securities or securities convertible into or exchangeable for capital stock or other voting securities of Novume. All of the issued and outstanding capital stock of each of Company Merger Sub and Brekford Merger Sub is duly authorized, validly issued, fully paid and nonassessable, and is owned by Novume free and clear of any liens, security interests, pledges, agreements, claims, charges or encumbrances.

(e) Except as disclosed on Schedule 5.3 hereto, there are no stockholder agreements, voting trusts or other agreements or understandings to which the Company is a party or to which it is bound relating to the voting or registration of any shares of capital stock of the Company. The Company has not taken any action that would result in, nor is the Company a party to any agreement, arrangement or understanding not disclosed on Schedule 5.3 hereto, that would result in any Options to purchase Company Common Stock that are unvested becoming vested in connection with or as a result of the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

Section 5.4. Authority Relative to this Agreement. Each of the Company and each Merger Subsidiary has the necessary corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement by the Company and each Merger Subsidiary and the consummation by each such Party of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of each such Party. This Agreement has been duly executed and delivered by each of the Company and each Merger Subsidiary and, assuming the due authorization, execution and delivery thereof by the other Parties, constitutes a legal, valid and binding obligation of each such Party, enforceable against it in accordance with its terms, subject to the Bankruptcy Exception.

(a) Except as listed on Schedule 5.5 hereto, the execution and delivery of this Agreement by each of the Company and each Merger Subsidiary does not, and the performance of this Agreement by each of the Company and each Merger Subsidiary will not, (i) violate or conflict with the Certificate of Incorporation or Bylaws of the Company, (ii) conflict with or violate any law, regulation, court order, judgment or decree applicable to the Company or any of its Subsidiaries or by which any of their respective property is bound or affected, (iii) violate or conflict with the Articles or Certificate of Incorporation or Bylaws (or comparable governing

documents) of any of the Company’s Subsidiaries, or (iv) result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination or cancellation of, or result in the creation of a lien or encumbrance on any of the properties or assets of the Company or any of its Subsidiaries pursuant to, result in the loss of any material benefit under, or require the consent of any other party to, any contract, instrument, permit, license or franchise to which the Company or any of its Subsidiaries is a party or by which the Company, any of such Subsidiaries or any of their respective property is bound or affected except, in the case of clauses (ii), (iii) or (iv) above, for conflicts, violations, breaches, defaults, results or consents which, individually or in the aggregate, would not have a Material Adverse Effect on the Company.

(b) Except as listed on Schedule 5.5 and except for applicable requirements, if any, of the Exchange Act, filing and recordation of appropriate merger or other documents as required by Delaware Law and any filings required pursuant to any state securities or “blue sky” laws or the rules of any applicable stock exchanges, neither the Company nor any of its Subsidiaries is required to submit any notice, report or other filing with any governmental authority, domestic or foreign, in connection with the execution, delivery or performance of this Agreement. Except as set forth in the immediately preceding sentence, no waiver, consent, approval or authorization of any governmental or regulatory authority, domestic or foreign, is required to be obtained by the Company or any of its Subsidiaries in connection with its execution, delivery or performance of this Agreement.

(a) The Company has filed all forms, reports and documents required to be filed with the SEC since March 15, 2016, and has heretofore delivered or made available to Brekford, in the form filed with the SEC, together with any amendments thereto (collectively, the “Company SEC Reports”). The Company SEC Reports (i) were prepared substantially in accordance with the requirements of the 1933 Act or the Exchange Act, as the case may be, and the rules and regulations promulgated under each of such respective acts, and (ii) did not at the time they were filed contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(b) The financial statements, including all related notes and schedules, contained in the Company SEC Reports (or incorporated by reference therein) fairly present the consolidated financial position of the Company and its Subsidiaries as at the respective dates thereof and the consolidated results of operations and cash flows of the Company and its Subsidiaries for the periods indicated in accordance with GAAP applied on a consistent basis throughout the periods involved (except for changes in accounting principles disclosed in the notes thereto) and subject in the case of interim financial statements to normal year-end adjustments.

(c) The Company has heretofore made available to Brekford a complete and correct copy of any material amendments or modifications, which have not yet been filed with the SEC, to agreements, documents or other instruments which previously had been filed by the Company with the SEC pursuant to the Exchange Act.

Section 5.7. No Undisclosed Liabilities; Absence of Certain Changes or Events. Except as and to the extent publicly disclosed by the Company in the Company SEC Reports filed prior to the date of this Agreement, as of March 15, 2016, none of the Company or its Subsidiaries had any material liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, and whether due or to become due or asserted or unasserted, which would be required by GAAP to be reflected in, reserved against or otherwise described in the consolidated balance sheet of the Company (including the notes thereto) as of such date or which could reasonably be expected to have a Material Adverse Effect on the Company. Except as disclosed on Schedule 5.7 hereto, since March 15, 2016, there has not been any change, or any event involving a prospective change, in the business, financial condition or results of operations of the Company or any of its Subsidiaries which has had, or is reasonably likely to have, a Material Adverse Effect on the Company and the Company and each of its Subsidiaries has conducted its and their business in the ordinary course consistent with past practices.

Section 5.8. No Violation of Law; Permits. The business of the Company and each of its Subsidiaries is not being conducted in violation of any Legal Requirements, or in violation of any Permits, except for possible violations none of which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on the Company. The Company and each of its Subsidiaries have all Permits that are required in connection with the operation of their businesses (collectively, “Company Required Permits”), and no proceedings are pending or, to the knowledge of the Company, threatened to revoke or limit any Company Required Permit, except, in each case, those the absence or violation of which do not and will not have a Material Adverse Effect on the Company. Except as set forth on Schedule 5.8 hereto, (a) to the Company’s knowledge, no investigation or review by any domestic or foreign governmental or regulatory entity (including any stock exchange or other self-regulatory body) with respect to the Company or its Subsidiaries in relation to any alleged violation of law or regulation is pending or threatened, and (b) no governmental or regulatory entity (including any stock exchange or other self-regulatory body) has notified the Company of its intention to conduct the same, except for such investigations which, if they resulted in adverse findings, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. Except as set forth on Schedule 5.8 hereto, neither the Company nor any of its Subsidiaries is subject to any cease and desist or other order, judgment, injunction or decree issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has adopted any board resolutions at the request of, any court, governmental entity or regulatory agency that materially restricts the conduct of its business or which could reasonably be expected to have a Material Adverse Effect on the Company, or would prevent or delay the consummation of the transactions contemplated by this Agreement, nor has the Company or any of its Subsidiaries been advised that any court, governmental entity or regulatory agency is considering issuing or requesting any of the foregoing.

Section 5.9. Registration Statement. None of the information supplied or to be supplied by or on behalf of the Company for inclusion or incorporation by reference in the Registration Statement will, at the time the Registration Statement becomes effective under the 1933 Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If at any time prior to the Effective Time any event with

respect to the Company, its officers and directors or any of its Subsidiaries should occur which is required to be described in an amendment of, or a supplement to, the Registration Statement, the Company shall promptly so advise Brekford and such event shall be so described, and such amendment or supplement (which the Company shall have a reasonable opportunity to review) shall be promptly filed with the SEC and, as required by law, disseminated to the shareholders of Brekford. The Registration Statement (except for information relating to or provided by Brekford) will each comply as to form in all material respects with the provisions of the 1933 Act and the Exchange Act, as applicable, and the rules and regulations promulgated thereunder, as applicable.

(a) The Board of Directors of the Company has unanimously determined that the transactions contemplated by this Agreement are in the best interests of the Company and its stockholders and has resolved to recommend to such stockholders that they vote in favor thereof.

(b) The approval of the Merger of Company into the Company Merger Sub by a majority of the votes entitled to be cast by all holders of Company Common Stock (the “Company Stockholders’ Approval”) is the only vote of the holders of any class or series of the capital stock of the Company required to approve this Agreement, the Mergers and the other transactions contemplated hereby, in accordance with the provisions of Delaware Law, any applicable United States federal and state securities laws and the Certificate of Incorporation and Bylaws of the Company, each as amended and as currently in effect.

(c) The Company Key Stockholders, together, hold the requisite voting power to obtain the Company Stockholders’ Approval.

Section 5.12. Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s, investment banking or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company or any of its Subsidiaries.

Section 5.13. Ownership of Securities. As of the date hereof, neither the Company nor, to the Company’s knowledge, any of its affiliates or associates (as such terms are defined under the Exchange Act), (a) (i) beneficially owns, directly or indirectly, or (ii) is party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, in each case, shares of capital stock of Brekford, which in the aggregate represent 10% or more of the outstanding shares of Brekford Common Stock. The Company owns no shares of Brekford Common Stock.

Section 5.14. Activities of Merger Subsidiaries. None of the Merger Subsidiaries have conducted any activities other than in connection with the organization thereof, the negotiation and execution of this Agreement and the consummation of the transactions contemplated hereby.

Section 5.15. Litigation. Except as disclosed in Schedule 5.16 hereto, there are no claims, actions, suits, proceedings or, to the Company’s knowledge, investigations pending or, to the

Company’s knowledge, threatened against the Company or any of its Subsidiaries, or any properties or rights of the Company or any of its Subsidiaries, before any court, administrative, governmental, arbitral, mediation or regulatory authority or body, domestic or foreign, (a) as of the date hereof, as to which there is more than a remote possibility of an adverse judgment or determination against the Company or any of its Subsidiaries or any properties or rights of the Company or any of its Subsidiaries in excess of $100,000 or which otherwise could have a Material Adverse Effect on the Company, (b) as of the date hereof, which questions the validity of this Agreement or any action to be taken by the Company in connection with the consummation of the transactions contemplated by this Agreement or could otherwise prevent or delay the consummation of the transactions contemplated by this Agreement, or (c) as to which there is reasonably likely to be an adverse judgment or determination against the Company or any of its Subsidiaries which could reasonably be expected to have a Material Adverse Effect on the Company.

(a) Set forth on Schedule 5.16 hereto is a true and complete list of all employee benefit plans within the meaning of Section 3(3) of ERISA, all deferred compensation, bonus or other incentive compensation, stock options, restricted stock, stock purchase or other equity-based, severance or change in control, salary, continuation, tuition assistance, disability, leave of absence plans, policies or agreements, and all employment, consulting, management or other individual compensation agreements with respect to any current or former employee of the Company or any of its Company ERISA Affiliates, which, in each case, the Company or any of its Company ERISA Affiliates has any obligation or liability, contingent or otherwise (collectively, the “Company Benefit Plans”).

(b) All contributions and other payments required to be made by the Company or any Company ERISA Affiliate to or under any Company Benefit Plan maintained (or to any person pursuant to the terms thereof) have been timely made. No Company Benefit Plan is subject to Section 412 of the Code or Section 302 of ERISA.

(c) Each of the Company Benefit Plans intended to be “qualified” within the meaning of Section 401(a) of the Code has been determined by the IRS to be so qualified, and, to the knowledge of the Company or any Company ERISA Affiliate, no circumstances exist that could reasonably be expected by the Company or any Company ERISA Affiliate to result in the revocation of any such determination. The Company is in compliance with, and each of the Company Benefit Plans is and has been operated in compliance with, all applicable Legal Requirements governing such plan, including, without limitation, ERISA and the Code.

(d) Except as set forth on Schedule 5.16 hereto, the consummation or announcement of any transaction contemplated by this Agreement will not (either alone or upon the occurrence of any additional or further acts or events) result in any (i) payment (whether of severance pay or otherwise) becoming due from the Company or any Company ERISA Affiliate to any current or former officer, employee, former employee or director thereof, or to any other person for the benefit of any such officer, employee or director, or (ii) acceleration, vesting or establishment of any benefit under any Company Benefit Plan, or (iii) disqualification of any of the Company Benefit Plans intended to be qualified under, result in a prohibited transaction or breach of fiduciary duty under, or otherwise violate, ERISA or the Code.

(e) Neither the Company nor any Company ERISA Affiliate has incurred, and none of such entities reasonably expects to incur, any material liability to the PBGC (other than premiums which are not overdue) or pursuant to Title IV of ERISA with respect to any Company Benefit Plan. Neither the Company nor any Company ERISA Affiliate is an employer with respect to, and neither has incurred or reasonably expects to incur, any withdrawal liability with respect to any “multiemployer plan” (as defined in Section 3(37) of ERISA).

(f) There are no pending or, to the Company’s knowledge, threatened actions, claims or proceedings against any Company Benefit Plan or its assets, plan sponsor, plan administrator or fiduciaries with respect to the operation of such plan (other than routine benefit claims).

(g) Each Company Benefit Plan that constitutes in any part a nonqualified deferred compensation plan within the meaning of Section 409A of the Code has been operated and maintained in operational and documentary compliance with Section 409A of the Code and applicable guidance thereunder. No payment to be made under any Company Benefit Plan is, or to the knowledge of the Company, will be, subject to the penalties of Section 409A(a)(1) of the Code.

(a) The Company and each of its Subsidiaries, and each affiliated group (within the meaning of Section 1504 of the Code) of which the Company or any Subsidiary is or has been a member, has timely filed all federal state, local, foreign, income and franchise Tax Returns (as defined below), and all other material Tax Returns required to be filed by them. All such Tax Returns are true and correct in all material respects. Except to the extent adequately reserved for in accordance with GAAP, all material Taxes due and payable by the Company and each of its Subsidiaries have been timely paid in full. The most recent consolidated financial statements contained in the Company SEC Reports reflect an adequate reserve (other than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) in accordance with GAAP for all Taxes payable by the Company and its Subsidiaries for all taxable periods and portions thereof through the date of such financial statements.

(b) No material deficiencies for any Taxes have been proposed, asserted or assessed in writing against the Company or any of its Subsidiaries that have not been fully paid or adequately provided for in the appropriate financial statements of the Company and each of its Subsidiaries, no requests for waivers of the time to assess any Taxes are pending, and no power of attorney with respect to any Taxes has been executed or filed with any taxing authority. No material issues relating to Taxes have been raised in writing by any governmental authority during any presently pending audit or examination. For any open taxable period, the Company and each of its Subsidiaries have not waived or extended the statute of limitations applicable to any Tax or Tax Return or consented to any extension of time with respect to any material tax assessment or deficiency.

(c) There are no material liens or encumbrances for Taxes on any of the assets of the Company or any of its Subsidiaries (other than for current Taxes not yet due and payable).

(d) The Company and each of its Subsidiaries have complied in all material respects with all applicable laws, rules and regulations relating to the payment and withholding of Taxes.

(e) Neither the Company nor any of its Subsidiaries has made any payments, nor are any of them obligated to make any payments, and none of them is a party to any agreement that could obligate it to make any payments that would not be deductible by reason of Sections 280G or 162(m) of the Code as a result of the transactions contemplated by this Agreement.

(f) Neither the Company nor any of its Subsidiaries is a party to any tax allocation agreement, tax sharing agreement, tax indemnity agreement or similar agreement, arrangement or practice with respect to Taxes (including any advance pricing agreement, closing agreement or other agreement relating to Taxes with any taxing authority but excluding in each case any contract entered into in the ordinary course of business and the primary subject of which is not Taxes). Neither the Company nor any of its Subsidiaries (i) has been a member of an affiliated group for federal income tax purposes other than a group of which the Company is the common parent or (ii) has any liability for the Taxes of any person other than itself under Treasury Regulations Section 1.1502-6 (or any similar provision of U.S. state or local or non-U.S. Tax Law), or as a transferee or successor.

(g) No federal, state, local or foreign audits or other administrative proceedings or court proceedings are presently pending with regard to any Taxes or Tax Returns of the Company or its Subsidiaries and neither the Company nor any of its Subsidiaries has received a written notice of any pending audit or proceeding, in any such case involving a material issue with respect to Taxes.

(h) Neither the Company nor any of its Subsidiaries has agreed to or is required to make any material adjustment under Section 481(a) of the Code as a result of a “closing agreement” as described in Section 7121 of the Code (or any similar or corresponding provision of U.S. state or local or non-U.S. Tax Law) that, in either case, would result in the inclusion of a material amount of income in, or the exclusion of a material amount of deductions from, taxable income for any taxable period (or portion thereof) ending after the Closing Date.

(i) No property owned by the Company or any of its Subsidiaries (i) constitutes “tax exempt use property” within the meaning of Section 168(h)(1) of the Code; or (ii) is tax exempt bond financed property within the meaning of Section 168(g) of the Code.

(j) Neither the Company nor any of its Subsidiaries has (i) in the two (2) years prior to the date of this Agreement, distributed stock of another person, or has had its stock distributed by another person, in a transaction that was purported or intended to be governed in whole or in part by Sections 355 or 361 of the Code or (ii) engaged in any “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4(b) (or any similar provision of U.S. state or local or non-U.S. Tax Law).

Section 5.18. Intellectual Property. The Company and each of its Subsidiaries owns or possesses all necessary licenses or other valid rights to use all material computer software and firmware, patents, patent rights, trademarks, trademark rights, trade names, trade name rights, brand names, copyrights, service marks, trade secrets, applications for trademarks and for service marks, know-how and other proprietary rights and information used or held for use in connection with the business of the Company and each of its Subsidiaries as currently conducted or as contemplated to be conducted, and, to the knowledge of the Company, except as described on Schedule 5.18 hereto, as of the date hereof, there has been no assertion or claim challenging the ownership or validity of any of the foregoing. To the knowledge of the Company, except as disclosed on Schedule 5.18 hereto, the conduct of the business of the Company and each of its Subsidiaries as currently conducted does not, in any material respect, conflict with or infringe any patent, patent right, license, trademark, trademark right, trade name, trade name right, service mark, copyright or any other intellectual property right of any third party. To the knowledge of the Company, except as described on Schedule 5.18 hereto, there are no infringements of any proprietary rights owned by or licensed by or to the Company or any of its Subsidiaries.

(a) Except for such contracts as are filed publicly in the Company SEC Reports, the Company has delivered or otherwise made available to Brekford true, correct and complete copies of all contracts and agreements (and all amendments, modifications and supplements thereto and all side letters to which the Company is a party affecting the obligations of any party thereunder) to which the Company or any of its Subsidiaries is a party or by which any of its properties or assets are bound that are material to the business, properties or assets of the Company and its Subsidiaries taken as a whole, including, without limitation, all: (i) employment, consulting, non-competition, severance, golden parachute or indemnification contracts (including, without limitation, any contract to which the Company is a party involving employees of the Company); (ii) contracts granting a right of first refusal or first negotiation; (iii) partnership or joint venture agreements; (iv) agreements for the acquisition, sale or lease of material properties or assets of the Company (by merger, purchase or sale of assets or stock or otherwise); (v) contracts or agreements with any governmental entity; (vi) contracts or arrangements limiting or restraining Novume, the Company, any of the Company’s Subsidiaries or any successor thereto from engaging or competing in any business; and (vii) all commitments and agreements to enter into any of the foregoing (collectively, together with any such contracts entered into in accordance with Section 6.2 hereof, the “Company Contracts”).

(i) There is no default under any Company Contract either by the Company or any of its Subsidiaries or, to the knowledge of the Company, by any other party thereto, and no event has occurred that with the lapse of time or the giving of notice or both would constitute a default thereunder by the Company or any of its Subsidiaries or, to the knowledge of the Company, any other party, in any such case in which such default or event could reasonably be expected to have a Material Adverse Effect on the Company.

(ii) No party to any such Company Contract has given notice to the Company of or made a claim against the Company with respect to any breach or default thereunder, in any such case in which such breach or default could reasonably be expected to have a Material Adverse Effect on the Company.

(c) Set forth on Schedule 5.19(c) hereto is a list of each material contract, agreement or arrangement to which the Company or any of its Subsidiaries is a party or may be bound and under the terms of which any of the rights or obligations of a party thereto will be modified or altered (including, without limitation, any acceleration of rights or obligations thereunder pursuant to the terms of any such contract, agreement or arrangement) as a result of the transactions contemplated hereby.

Section 5.20. Investment Company. None of Novume, the Merger Subsidiaries or the Company, is or will be an “investment company” within the meaning of Code Section 368(a)(2)(F)(ii) immediately before the Effective Time.

Section 5.21. Certain Plans. Immediately following the Effective Time, Company Merger Sub, as the Surviving Corporation in the Company Merger, will own substantially all of the assets of the Company immediately prior to the Company Merger. There is no plan or intention for Company Merger Sub, as the Surviving Corporation of the Company Merger, to transfer any material assets or businesses or to cease any existing business of the Company after the Effective Time. There is no plan or intention for the Novume stock issued in the Company Merger to be redeemed.

Section 6.1. Conduct of Business of Brekford. Brekford covenants and agrees that, between the date of this Agreement and the Effective Time, unless the Company shall otherwise consent in writing, and except as described on Schedule 6.1 hereto or as otherwise expressly contemplated hereby, the business of Brekford and each of its Subsidiaries shall be conducted only in, and such entities shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and Brekford and each of its Subsidiaries will use their commercially reasonable efforts to preserve substantially intact their business organizations, to keep available the services of those of their present officers, employees and consultants who are integral to the operation of their businesses as presently conducted and to preserve their present relationships with significant customers, significant suppliers and with other persons with whom they have significant business relations. By way of amplification and not limitation, except as set forth on Schedule 6.1 hereto or as otherwise expressly contemplated by this Agreement, Brekford agrees on behalf of itself and each of its Subsidiaries that they will not, between the date of this Agreement and the Effective Time, directly or indirectly, do any of the following without the prior written consent of the Company:

(a) (i) except for (A) the issuance of Brekford Common Stock in order to satisfy obligations under employee benefit plans disclosed in Schedule 4.11; (B) grants of Brekford Options as set forth in Schedule 6.1; (C) the issuance of securities by any of Brekford’s Subsidiaries to any person which is directly or indirectly wholly-owned by Brekford; and (D) the issuance of Brekford Common Stock to satisfy the exercise of outstanding Brekford Warrants or outstanding Brekford Options, issue, sell, pledge, dispose of, encumber, authorize, or propose the

issuance, sale, pledge, disposition, encumbrance or authorization of any shares of capital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of capital stock of, or any other ownership interest in, Brekford or any of its Subsidiaries; (ii) amend or propose to amend the Certificate of Incorporation or Bylaws of Brekford or any of its Subsidiaries or adopt any shareholder rights plan or related rights agreement; (iii) split, combine or reclassify any outstanding shares of Brekford Common Stock, or declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise with respect to such shares; (iv) redeem, purchase or otherwise acquire or offer to redeem, purchase or otherwise acquire any shares of its capital stock; or (v) authorize or propose or enter into any contract, agreement, commitment or arrangement with respect to any of the matters prohibited by this Section 6.1(a);

(b)(i) acquire (by merger, consolidation, or acquisition of stock or assets) any corporation, partnership or other business organization or division thereof or make any investment in another entity other than an entity which is a wholly-owned subsidiary of Brekford as of the date hereof, except for investments which do not exceed $50,000 for any single investment or series of related investments, or $100,000 in the aggregate for all such investments in any twelve (12)-month period; (ii) except in the ordinary course of business and in a manner consistent with past practice, sell, pledge, dispose of, or encumber or authorize or propose the sale, pledge, disposition or encumbrance of any assets of Brekford or any of its Subsidiaries; (iii) authorize or make capital expenditures which are in excess of the amounts shown in Schedule 6.1 hereto; (iv) enter into any agreement, contract or commitment which involves payments by Brekford or any of its Subsidiaries in an amount in excess of $50,000 individually or as part of a series of related transactions, except for agreements, contracts and commitments of a type referred to in another clause of this subsection (b) and not prohibited thereby because of the amount of such contract; or (v) authorize, enter into or amend any contract, agreement, commitment or arrangement with respect to any of the matters prohibited by this Section 6.1(b);

(c) (i) incur any indebtedness for borrowed money or assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person or issue or sell any debt securities or warrants or rights to acquire any debt securities of Brekford or any of its Subsidiaries or guarantee any debt securities of others (other than Brekford or any of its wholly-owned Subsidiaries) or enter into or amend any contract, agreement, commitment or arrangement with respect to any of the foregoing, other than (A) in replacement for existing or maturing debt, (B) borrowings by Brekford under its lines of credit existing on the date hereof up to the maximum amount permitted thereunder (as such maximum amount may be reduced from time to time in accordance with the terms thereof) or (C) capital leases or other vendor financing for capital assets the acquisition of which is otherwise permitted under this Agreement; (ii) make any loans, advances or capital contributions to, or investments in, any other person (other than to the wholly-owned subsidiaries of Brekford or customary loans or advances to employees in the ordinary course of business consistent with past practice and in amounts not material to the maker of such loan or advance); or (iii) mortgage or pledge any of its material assets, tangible or intangible, or create or suffer to exist any material lien thereupon;

(d) enter into (i) leveraged derivative contracts (defined as contracts that use a factor to multiply the underlying index exposure), or (ii) other derivative contracts except for the purpose of hedging known interest rate and foreign exchange exposures or otherwise reducing such Party’s cost of financing;

(e) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of Brekford or any of its Subsidiaries (other than the Brekford Merger);

(f) alter through merger, liquidation, reorganization, restructuring or in any other fashion the corporate structure or ownership of any of Brekford’s Subsidiaries;

(g) except as may be required by law or as contemplated by this Agreement, enter into, adopt or amend or terminate any Brekford Benefit Plan, or (except for normal increases in the ordinary course of business consistent with past practice that, in the aggregate, do not result in a material increase in benefits or compensation expense to Brekford, and as required under existing agreements or in the ordinary course of business generally consistent with past practice) increase in any manner the compensation or fringe benefits of any director, officer or employee or pay any benefit not required by any Brekford Benefit Plan] as in effect as of the date hereof;

(h) make any payments (except in the ordinary course of business and in amounts and in a manner consistent with past practice or as otherwise required by Legal Requirements or the provisions of any Brekford Benefit Plan) under any Brekford Benefit Plan to any director or employee of, or independent contractor or consultant to, Brekford or its Subsidiaries;

(i) change in any material respect its tax or accounting policies, methods or procedures except as required by GAAP;

(j) do any act or omit to do any act which would cause a material breach of any material contract, commitment or obligation;

(k) take any action which could reasonably be expected to adversely affect or delay the ability of any of the Parties to obtain any approval of any governmental or regulatory body required to consummate the transactions contemplated hereby;

(l) other than pursuant to this Agreement, take any action to cause the Brekford Common Stock to cease to be quoted on the OTCQX;

(m) (i) issue SARs, new performance shares, restricted stock, or similar equity based rights; (ii) materially modify (with materiality to be determined with respect to the Brekford Benefit Plan in question) any actuarial cost method, assumption or practice used in determining benefit obligations, annual expense and funding for any Brekford Benefit Plan, except to the extent required by GAAP; (iii) materially modify (with materiality to be determined with respect to the Brekford Benefit Plan trust in question) the investment philosophy of the Brekford Benefit Plan trusts or maintain an asset allocation which is not consistent with such philosophy, subject to any ERISA fiduciary obligation; (iv) subject to any ERISA fiduciary obligation, enter into any outsourcing agreement, or any other material contract relating to the Brekford Benefit Plans or management of the Brekford Benefit Plan trusts; (v) offer any new or extend any existing retirement incentive, “window” or similar benefit program; (vi) grant any ad hoc pension increase; (vii) establish any new or fund any existing “rabbi” or similar trust (except in

accordance with the current terms of such trust), or enter into any other arrangement for the purpose of securing non-qualified benefits or deferred compensation; (viii) adopt or implement any corporate owned life insurance; or (ix) adopt, implement or maintain any “split dollar” life insurance program;

(n) take any action which would cause its representations and warranties contained herein to become inaccurate in any material respect;

(o) revalue in any material respect any of its assets, including, without limitation, writing down the value of inventory or writing-off notes or accounts receivable other than in the ordinary course of business or as required by GAAP;

(p) make or revoke any tax election or settle or compromise any tax liability material to Brekford and/or any of its Subsidiaries taken as a whole or change (or make a request to any taxing authority to change) any material aspect of its method of accounting for tax purposes, other than as required by applicable Legal Requirements;

(q) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business of liabilities reflected or reserved against in, or contemplated by, the consolidated financial statements (or the notes thereto) of Brekford and its Subsidiaries or incurred in the ordinary course of business consistent with past practice;

(r) settle or compromise any pending or threatened suit, action or claim relating to the transactions contemplated hereby; or

Section 6.2. Conduct of Business of the Company. The Company covenants and agrees that, between the date of this Agreement and the Effective Time, unless Brekford shall otherwise consent in writing, and except as described on Schedule 6.2 hereto or as otherwise expressly contemplated hereby, the Company and each of its Subsidiaries will use their commercially reasonable efforts to preserve substantially intact their business organizations, to keep available the services of those of their present officers, employees and consultants who are integral to the operation of their businesses as presently conducted and to preserve their present relationships with significant clients and with other persons with whom they have significant business relations. By way of amplification and not limitation, except as set forth on Schedule 6.2 hereto or as otherwise expressly contemplated by this Agreement, the Company agrees on behalf of itself and each of its Subsidiaries that they will not, between the date of this Agreement and the Effective Time, directly or indirectly, do any of the following without the prior written consent of Brekford:

(a) (i) except for (A) the issuance of Company Common Stock in order to satisfy obligations under employee benefit plans disclosed in Schedule 5.16; (B) grants of Company Options as set forth in Schedule 6.2; (C) the issuance of securities by any of the Company’s Subsidiaries to any person which is directly or indirectly wholly-owned by the Company; and (D) the issuance of Company Common Stock to satisfy the exercise of outstanding Company Warrants or outstanding Company Options, issue, sell, pledge, dispose of, encumber, authorize,

or propose the issuance, sale, pledge, disposition, encumbrance or authorization of any shares of capital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of capital stock of, or any other ownership interest in, the Company or any of its Subsidiaries; (ii) amend or propose to amend the Certificate of Incorporation or Bylaws of the Company or any of its Subsidiaries or adopt any shareholder rights plan or related rights agreement; (iii) split, combine or reclassify any outstanding shares of Company Common Stock, or declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise with respect to such shares; (iv) redeem, purchase or otherwise acquire or offer to redeem, purchase or otherwise acquire any shares of its capital stock; or (v) authorize or propose or enter into any contract, agreement, commitment or arrangement with respect to any of the matters prohibited by this Section 6.2(a);

(b) (i) other than as set forth on Schedule 2(b)(i)(B) hereto, acquire (by merger, consolidation, or acquisition of stock or assets) any corporation, partnership or other business organization or division thereof or make any investment in another entity other than an entity which is a wholly-owned Subsidiary of the Company as of the date hereof, except for investments which do not exceed $50,000 for any single investment or series of related investments, or $100,000 in the aggregate for all such investments in any twelve (12)-month period; (ii) except in the ordinary course of business and in a manner consistent with past practice, sell, pledge, dispose of, or encumber or authorize or propose the sale, pledge, disposition or encumbrance of any assets of the Company or any of its Subsidiaries; (iii) authorize or make capital expenditures which are in excess of the amounts shown in Schedule 6.2 hereto; (iv) enter into any agreement, contract or commitment which involves payments by the Company or any of its Subsidiaries in an amount in excess of $50,000 individually or as part of a series of related transactions, except for agreements, contracts and commitments of a type referred to in another clause of this subsection (b) and not prohibited thereby because of the amount of such contract; or (v) authorize, enter into or amend any contract, agreement, commitment or arrangement with respect to any of the matters prohibited by this Section 6.2(b); or

(c) (i) incur any indebtedness for borrowed money or assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person or issue or sell any debt securities or warrants or rights to acquire any debt securities of the Company or any of its Subsidiaries or guarantee any debt securities of others (other than the Company or any of its wholly-owned Subsidiaries) or enter into or amend any contract, agreement, commitment or arrangement with respect to any of the foregoing, other than (A) in replacement for existing or maturing debt, (B) borrowings by the Company under its lines of credit existing on the date hereof up to the maximum amount permitted thereunder (as such maximum amount may be reduced from time to time in accordance with the terms thereof) or (C) capital leases or other vendor financing for capital assets the acquisition of which is otherwise permitted under this Agreement; (ii) make any loans, advances or capital contributions to, or investments in, any other person (other than to the wholly-owned subsidiaries of the Company or customary loans or advances to employees in the ordinary course of business consistent with past practice and in amounts not material to the maker of such loan or advance); or (iii) mortgage or pledge any of its material assets, tangible or intangible, or create or suffer to exist any material lien thereupon;

(e) adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Company Merger);

(f) alter through merger, liquidation, reorganization, restructuring or in any other fashion the corporate structure or ownership of any of the Company’s Subsidiaries;

(g) except as may be required by law or as contemplated by this Agreement, enter into, adopt or amend or terminate any Company Benefit Plan, or (except for normal increases in the ordinary course of business consistent with past practice that, in the aggregate, do not result in a material increase in benefits or compensation expense to the Company, and as required under existing agreements or in the ordinary course of business generally consistent with past practice) increase in any manner the compensation or fringe benefits of any director, officer or employee or pay any benefit not required by any Company Benefit Plan as in effect as of the date hereof;

(h) make any payments (except in the ordinary course of business and in amounts and in a manner consistent with past practice or as otherwise required by Legal Requirements or the provisions of any Company Benefit Plan) under any Company Benefit Plan to any director or employee of, or independent contractor or consultant to, the Company or its Subsidiaries;

(i) change in any material respect its tax or accounting policies, methods or procedures except as required by GAAP;

(j) change in any material respect its tax or accounting policies, methods or procedures except as required by GAAP;

(k) do any act or omit to do any act which would cause a material breach of any material contract, commitment or obligation;

(l) take any action which could reasonably be expected to adversely affect or delay the ability of any of the Parties to obtain any approval of any governmental or regulatory body required to consummate the transactions contemplated hereby;

(m) (i) issue SARs, new performance shares, restricted stock, or similar equity based rights; (ii) materially modify (with materiality to be determined with respect to the Company Benefit Plan in question) any actuarial cost method, assumption or practice used in determining benefit obligations, annual expense and funding for any Company Benefit Plan, except to the extent required by GAAP; (iii) materially modify (with materiality to be determined with respect to the Company Benefit Plan trust in question) the investment philosophy of the Company Benefit Plan trusts or maintain an asset allocation which is not consistent with such philosophy, subject to any ERISA fiduciary obligation; (iv) subject to any ERISA fiduciary obligation, enter into any outsourcing agreement, or any other material contract relating to the Company Benefit

Plans or management of the Company Benefit Plan trusts; (v) offer any new or extend any existing retirement incentive, “window” or similar benefit program; (vi) grant any ad hoc pension increase; (vii) establish any new or fund any existing “rabbi” or similar trust (except in accordance with the current terms of such trust), or enter into any other arrangement for the purpose of securing non-qualified benefits or deferred compensation; (viii) adopt or implement any corporate owned life insurance; or (ix) adopt, implement or maintain any “split dollar” life insurance program;

(n) take any action which would cause its representations and warranties contained herein to become inaccurate in any material respect;

(p) make or revoke any tax election or settle or compromise any tax liability material to the Company and/or any of its Subsidiaries taken as a whole or change (or make a request to any taxing authority to change) any material aspect of its method of accounting for tax purposes, other than as required by applicable Legal Requirements;

(q) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business of liabilities reflected or reserved against in, or contemplated by, the consolidated financial statements (or the notes thereto) of the Company and its Subsidiaries or incurred in the ordinary course of business consistent with past practice;

(r) settle or compromise any pending or threatened suit, action or claim relating to the transactions contemplated hereby; or

Section 6.3. Exclusivity. During the period commencing on the date hereof, Brekford, without the prior written consent of the Company, will not, and will not authorize or permit any of its Party Representatives (as defined in Section 7.5(b) hereof) to, directly or indirectly, solicit, initiate, entertain or encourage or support (including by way of furnishing information) or take any other action to facilitate any inquiries or the making of any proposal or offer which constitutes or may reasonably be expected to lead to an Acquisition Proposal (as defined below) from any person, or engage in any discussion or negotiations relating thereto or accept any Acquisition Proposal, unless the Board of Directors of Brekford shall conclude in good faith, after considering applicable law, on the basis of oral or written advice of outside counsel, that such action is necessary for the Board of Directors to act in a manner consistent with its fiduciary duties. Consistent with the foregoing provisions of this Section 6.3, Brekford shall immediately cease and terminate any currently existing solicitation, initiation, encouragement, activity, discussion or negotiation with any persons conducted heretofore by Brekford or its Representatives with respect to the foregoing. Brekford agrees not to release any third party from, or waive any provision of, any standstill agreement to which it is a party or any confidentiality agreement between it and another person who has made, or who may reasonably

be considered likely to make, an Acquisition Proposal, unless the Board of Directors of Brekford shall conclude in good faith, after considering applicable law, on the basis of oral or written advice of outside counsel, that such action is necessary for the Board of Directors to act in a manner consistent with its fiduciary duties. As used herein, “Acquisition Proposal” shall mean a proposal or offer for a tender or exchange offer, merger, consolidation or other business combination involving Brekford or any proposal to acquire in any manner a substantial equity interest in, or all or substantially all of the assets of, Brekford.

Section 6.4. Subsequent Financial Statements. Prior to the Effective Time, Brekford shall (a) prior to making publicly available its financial results for any period, provide a copy of such financial results to the Company and (b) timely file with the SEC each Annual Report on Form 10-K, Quarterly Report on Form 10-Q and Current Report on Form 8-K required to be filed by it under the Exchange Act and the rules and regulations promulgated thereunder, and, prior to the filing thereof, provide a copy to the Company, and will promptly deliver to the Company copies of each such report filed with the SEC. As of their respective dates, none of such reports shall contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The respective audited financial statements and unaudited interim financial statements of Brekford included in such reports will fairly present the financial position of Brekford and each of its Subsidiaries as at the dates thereof and the results of their operations and cash flows for the periods then ended in accordance with GAAP applied on a consistent basis and, subject, in the case of unaudited interim financial statements, to normal year-end adjustments and any other adjustments described therein.

Section 6.5. Control of Operations. Nothing contained in this Agreement shall give the Company or Brekford, directly or indirectly, the right to control or direct the operations of the other prior to the Effective Time. Prior to the Effective Time, each of the Company and Brekford shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its respective operations.

Section 7.1. Registration Statement; Information Statement. As promptly as practicable after the execution and delivery of this Agreement, the Parties shall prepare and file with the SEC, and shall use all reasonable efforts to have cleared by the SEC, the Registration Statement on Form S-4 under the Securities Act of 1933, and the Information Statement, and Brekford shall promptly thereafter mail to the holders of record of Brekford Common Stock the Information Statement in accordance with the requirements of the applicable rules and regulations of the Exchange Act.

(a) At the earliest reasonably practicable time following the execution and delivery of this Agreement, each of the Company and Brekford shall promptly take all action necessary in accordance with Delaware Law and its Certificate of Incorporation and Bylaws, each as amended and as currently in effect, to obtain the Company Stockholders’ Approval and the Brekford

Stockholders’ Approval, as applicable. The stockholder vote or consent required for approval of each of the Mergers will be no greater than that contemplated by Sections 4.14(b) and 5.10(b) hereof. Each of the Parties shall take all other action necessary or, in the opinion of the other Parties, reasonably advisable to promptly and expeditiously secure any vote or consent of stockholders required by Delaware Law, as the case may be, and such Party’s Certificate of Incorporation and Bylaws, each as amended and as currently in effect, to adopt this Agreement, and effect the Mergers and any other transactions contemplated hereby.

(b) Upon receipt of the Brekford Stockholders’ Approval, Brekford take all action as may be necessary and appropriate to distribute the Information Statement to the holders of record of Brekford Common Stock in accordance with the applicable rules and regulations of the Exchange Act.

(c) Upon the terms and subject to the conditions hereof and as soon as practicable after the conditions set forth in ARTICLE VIII hereof have been fulfilled or waived, each of the Parties shall execute in the manner required by Delaware Law and deliver to and file with the Secretary of State of the State of Delaware such instruments and agreements as may be required by Delaware Law, and the Parties shall take all such other and further actions as may be required by law to make the Mergers effective. Prior to the filings referred to in this Section 7.2(c), a closing (the “Closing”) will be held at the offices of Crowell & Moring LLP, 1001 Pennsylvania Ave NW, Washington, D.C. 20004 (or such other place as the Company and Brekford may mutually agree upon), for the purpose of confirming all the foregoing. The Closing will take place upon the fulfillment or waiver of all of the conditions to closing set forth in ARTICLE VIII of this Agreement, or as soon thereafter as practicable (the date of the Closing being herein referred to as the “Closing Date”).

Section 7.3. Additional Agreements. Each of the Parties will comply in all material respects with all applicable Legal Requirements of any governmental authority in connection with its execution, delivery and performance of this Agreement and the transactions contemplated hereby. Each of the Parties agrees to use all commercially reasonable efforts to obtain in a timely manner all necessary waivers, consents and approvals and to effect all necessary registrations and filings, and to use all commercially reasonable efforts to take, or cause to be taken, all other actions and to do, or cause to be done, all other things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement. The Parties shall cooperate in responding to inquiries from, and making presentations to, regulatory authorities.

Section 7.4. Notification of Certain Matters. Each of the Company and Brekford shall give prompt notice to the other of the following:

(a) the occurrence or nonoccurrence of any event whose occurrence or nonoccurrence would be likely to cause either:

(i) any representation or warranty of such Party contained in this Agreement to be untrue or inaccurate in any material respect at any time from the date hereof to the Effective Time, or (ii) directly or indirectly, any Material Adverse Effect with respect to such Party;

(b) any material failure of such Party, or any officer, director, employee or agent of any thereof, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder;

(c) any facts relating to such Party which would make it necessary or advisable to amend the Registration Statement or the Information Statement in order to make the statements therein not misleading or to comply with applicable law;

(d) any notice of, or other communication relating to, a default or event which, with notice or lapse of time or both, would become a default, received by it or any of its Subsidiaries subsequent to the date of this Agreement and prior to the Effective Time, under any contract or agreement material to the financial condition, properties, businesses or results of operations of it and its Subsidiaries taken as a whole to which it or any of its Subsidiaries is a party or is subject; and

(e) any notice or other communication from any third party alleging that the consent of such third party is or may be required in connection with the transactions contemplated by this Agreement;

provided, however, that the delivery of any notice pursuant to this Section 7.4 shall not limit or otherwise affect the remedies available hereunder to the Party receiving such notice.

(a) From the date hereof to the Effective Time, each of the Company and Brekford shall, and shall cause its respective Subsidiaries, and its and their officers, directors, employees, auditors, counsel and agents to afford the officers, employees, auditors, counsel and agents of the other Party complete access at all reasonable times to such Party’s and its Subsidiaries’ officers, employees, auditors, counsel agents, properties, offices and other facilities and to all of their respective books and records, and shall furnish the other with all financial, operating and other data and information as such other Party may reasonably request.

(b) Each of the Company and Brekford agrees that all information so received from the other Party shall be deemed received pursuant to the Mutual Non-Disclosure Agreement between the Company and Brekford dated as of October 10, 2016, heretofore executed and delivered by the Company and Brekford (the “Confidentiality Agreement”) and such Party shall, and shall cause its Subsidiaries and each of its and their respective officers, directors, employees, financial advisors and agents (“Party Representatives”), to comply with the provisions of the Confidentiality Agreement with respect to such information and the provisions of the Confidentiality Agreement are hereby incorporated herein by reference with the same effect as if fully set forth herein; provided, that, the Company, on one hand, and Brekford, on the other hand, shall be permitted to disclose the contents of this Agreement and the Mergers in appropriate filings with the SEC, upon consultation with and agreement by Brekford, on the one hand, and the Company, on the other hand.

Section 7.6. Public Announcements. Except as required by applicable law or stock exchange requirements, the Company and Brekford shall provide the other Party with a reasonable opportunity to review and comment on all press releases and other public statements with respect to the transactions contemplated hereby.

(a) For a period of six (6) years after the Effective Time, Novume and the Company jointly and severally shall indemnify the directors and officers of the Company who hold such positions at any time during the period from the date hereof through the Effective Time to the fullest extent to which the Company is permitted to indemnify such officers and directors under its Certificate of Incorporation and Bylaws, each as amended and as currently in effect, and applicable law.

(b) Prior to the Effective Time, Brekford will purchase a “tail” on its directors’ and officers’ liability insurance policy (“Brekford Insurance Policies”), which shall be at no less broad coverage and limits than Brekford’s currently existing Brekford Insurance Policies and which shall cover the period from the Closing Date until such date as is six (6) years following the Closing Date, provided that, nothing shall prevent Novume, from and after the Closing Date, from purchasing, at its sole option and at its expense, an additional limit on the “tail” policy.

(a) Except as otherwise set forth in Section 2.8 and Section 2.9 hereof, in the case of the Company Benefit Plans listed on Schedule 7.8(a)(i) hereto (“Company Stock Plans”) and the Brekford Benefit Plans listed on Schedule 7.8(b)(i) hereto (“Brekford Stock Plans”), to the extent the employees’ interests are based upon Company Common Stock or Brekford Common Stock, as applicable, or the market prices thereof (but which interests do not constitute Options), as applicable, each of the Company and Brekford agrees that such interests shall, from and after the Effective Time, be based on Novume Common Stock in accordance with the Company Exchange Ratio (with respect to Company Stock Plans) and the Brekford Exchange Ratio (with respect to Brekford Benefit Plans).

(b) With respect to any Company Stock Plans or Brekford Stock Plans maintained or contributed to persons outside the United States for the benefit of non-United States citizens or residents, the principles set forth in this Section 7.8, and on Schedule 6.1 or Schedule 6.2, as applicable, shall apply to the extent the application of such principles does not violate applicable foreign law.

(c) Without limiting the applicability of Sections 2.8 and 2.9 hereof, each of the Parties shall take all actions as are necessary to ensure that the Company and Brekford will not be at the Effective Time bound by any stock options, warrants, stock appreciation rights (“SARs”), or other awards, rights or agreements which would entitle any person, other than Novume, to own any capital stock of the Surviving Corporations or to receive any payment in respect thereof, and all Company Stock Plans and Brekford Benefit Plans conferring any rights with respect to Company Common Stock, Company Preferred Stock or other capital stock of the Company, or Brekford Common Stock or other capital stock of Brekford, as the case may be, shall be deemed hereby to be amended to be in conformity with this Section 7.8.

(a) Robert A. Berman shall, as of or prior to the Effective Time, have been appointed the Chief Executive Officer of Novume, and an executive team of Novume shall have been appointed, consisting of such individuals as shall be designated by the Board of Directors of the Company.

(b) Each of Scott Rutherford and Rodney Hillman (together, the “Brekford Officers”) shall, as of or prior to the Effective Time, enter into separate five (5)-year employment agreements (the “Employment Agreements”) in the form attached as Exhibit A hereto, and proprietary rights agreements (“Proprietary Rights Agreements”) in the form attached as Exhibit B hereto, with Brekford, pursuant to which they shall be engaged to serve as the Chief Technology Officer and President/Chief Operating Officer, respectively. None of the Brekford Officers shall have any right, remedy or cause of action under this Section 7.9, nor shall they be third party beneficiaries of this Section 7.9. In addition to the forgoing, the Parties intend that key executives of the Company and of Brekford, as shall be mutually agreed by the Parties, will enter into employment agreements with Novume or one or more of its subsidiaries.

Section 7.10. Stock Exchange Listing. The Company shall use its best efforts to obtain, prior to the Effective Time, or as soon as reasonably practicable thereafter, the approval for listing on a national stock exchange of the shares of Novume Common Stock into which the Shares will be converted pursuant to ARTICLE II hereof and which will be issuable upon exercise of options pursuant to Section 2.8 hereof; provided, that, if such listing is not obtained within ninety (90) days of the Effective Time, the Board of Directors of Novume will use its best efforts to take further actions as appropriate to achieve such listing as soon as is reasonably practicable.

Section 7.11. Sale of Upfitting Business. The obligations of the Company to consummate the transactions contemplated by this Agreement are conditioned upon the prior or concurrent closing of the sale by Brekford of not more than 81% of the ownership of its Rugged Information Technology Solutions and 360° Vehicle Solution Upfitting Business (collectively, the “Upfitting Business”); provided, that, (a) Novume shall retain not less than a 19% ownership interest in the Upfitting Business and (b) Brekford will use all proceeds from such disposition to repay in full any and all indebtedness of Brekford such that, as of the Closing, Brekford shall have no indebtedness other than as permitted by the Company.

Section 7.12. Post-Merger Novume Board of Directors. At the Effective Time, the Novume Board shall consist of seven (7) members, four (4) of whom shall be independent within the meaning of the 1934 Act, and the national stock exchange to which the Company has applied for the listing of Novume Common Stock as described in Section 7.10. Six (6) members of the Novume Board shall be designated by the Company, and one (1) member of the Novume Board shall be designated by Brekford, subject to the approval of KeyStone. The members designated by the Company are James McCarthy, who shall serve as Chairman, Robert A. Berman, Dr. Richard Nathan, Glenn Goord, Paul de Bary and one additional independent director who shall be designated by the Company prior to the Effective Time. The member to be designated by Brekford shall be independent, as provided herein, and shall be subject to the approval by the Company; such member shall be identified by Brekford and approved by the Company prior to the Effective Time. As of the date hereof, Glenn Goord and Paul de Bary are independent as provided herein, and shall so remain, as and at the Effective Time.

Section 7.13. Registration Rights. Novume shall not be required to amend or maintain the effectiveness of the Registration Statement for the purpose of permitting resale of the shares of Novume Common Stock received pursuant hereto by the persons who may be deemed to be “affiliates” of the Company or Brekford within the meaning of Rule 145 promulgated under the 1933 Act, as amended.

Section 7.14. Affiliates. Each of the Company and Brekford (i) has disclosed to the other all persons who are, or may be, at the time this Agreement is executed its “affiliates” for purposes of Rule 145 under the 1933 Act, and (ii) has delivered, or caused each person who is so identified as an “affiliate” of it to deliver, to the other as promptly as practicable but in no event later than the Closing Date, a Company Affiliate Letter or a Brekford Affiliate Letter, as the case may be. The Company and Brekford shall notify each other from time to time of any other persons who then are, or may be, such an “affiliate” and use all reasonable efforts to cause each additional person who is identified as an “affiliate” to execute a Company Affiliate Letter or a Brekford Affiliate Letter, as the case may be.

Section 7.15. Blue Sky. The Company and Brekford will use their best efforts to obtain prior to the Effective Time all necessary blue sky permits and approvals required to permit the distribution of the shares of Novume Common Stock to be issued in accordance with the provisions of this Agreement.

(a) In consummating the Brekford Merger and the transactions contemplated hereby, Brekford shall comply in all material respects with the provisions of the Exchange Act and the 1933 Act, and shall comply, and/or cause its subsidiaries to comply or to be in compliance, in all material respects, with all other applicable Legal Requirements.

(b) In consummating the Company Merger and the transactions contemplated hereby, the Company shall comply in all material respects with the provisions of the Exchange Act and the 1933 Act, and shall comply, and/or cause its subsidiaries to comply or to be in compliance, in all material respects, with all other applicable Legal Requirements.

Section 7.17. Key Stockholder Agreements. Each of C.B. Brechin, Scott Rutherford, and Robert West (the “Brekford Key Stockholders”) shall have entered into a Key Stockholder Agreement with Brekford, and each of Robert A. Berman, James McCarthy and Dr. Richard Nathan (the “Company Key Stockholders” and collectively with the Brekford Key Stockholders, the “Key Stockholders”), shall have entered into a Key Stockholder Agreement with the Company, pursuant to which the Key Stockholder shall agree to vote all of their voting securities in the Company or Brekford, as applicable, in favor of this Agreement and the Mergers.

Section 7.18. Continuation of Historic Business. After the Effective Time Brekford, as the Surviving Corporation of the Brekford Merger, will continue Brekford’s historic business or use a significant portion of Brekford’s historic assets in a business. Company Merger Sub, as the Surviving Corporation of the Company Merger, will continue the Company’s historic business or use a significant portion of the Company’s historic assets in a business.

Section 8.1. Conditions to the Obligations of Each Party to Effect the Mergers. The respective obligations of each Party to effect the Mergers shall be subject to the following conditions:

(a) Stockholder Approval. The Mergers, this Agreement and all transactions contemplated hereby shall have been approved and adopted by the requisite vote of the stockholders of each of the Company and Brekford, in accordance with Section 7.2(a), and each of the Merger Subsidiaries in accordance with Delaware Law, applicable United States state and federal securities laws, and the Certificate of Incorporation and Bylaws, each as amended and as currently in effect, of each such entity;

(b) Legality. No federal, state or foreign statute, rule, regulation, executive order, decree or injunction shall have been enacted, entered, promulgated or enforced by any court or governmental authority which is in effect and has the effect of making the Mergers illegal or otherwise prohibiting the consummation of the Mergers;

(c) Required Consents. All authorizations, licenses, Permits, consents, orders or approvals of, or declarations, filings with or notices to, any governmental body, agency or official, or any non-governmental third party (all of the foregoing, “Required Consents”), which are necessary for the consummation of the transactions contemplated hereby, other than immaterial Required Consents the failure to obtain which would have no material adverse effect on the consummation of the transactions contemplated hereby and no Material Adverse Effect on Novume or either of the Surviving Corporations, shall have been, as applicable, made, filed, shall have occurred or shall have been obtained and all such Required Consents shall be in full force and effect, provided, however, that a Required Consent shall not be deemed to have been obtained if in connection with the grant thereof there shall have been an imposition by any state or federal governmental body, agency or official of any condition, requirement, restriction or change of regulation, or any other action directly or indirectly related to such grant taken by such governmental body, which would reasonably be expected to either (i) have a Material Adverse Effect on any of Novume or either of the Surviving Corporations, or (ii) prevent the Parties from realizing in all material respects the economic benefits of the transactions contemplated by this Agreement that such Parties currently anticipate receiving therefrom;

(d) Registration Statement Effective. The Registration Statement shall have become effective, no stop order suspending the effectiveness of the Registration Statement shall then be in effect, and no proceedings for that purpose shall then be threatened by the SEC or shall have been initiated by the SEC and not concluded or withdrawn;

(e) Blue Sky. All state securities or blue sky permits or approvals required to carry out the transactions contemplated hereby shall have been received; and

(f) Key Stockholder Agreements. Each of the Key Stockholders shall have entered into a Key Stockholder Agreement with the Company or Brekford, as applicable, and Brekford shall have received copies of each such agreement with the Company Key Stockholders duly executed by Brekford and the applicable Key Stockholder, and the Company shall have received copies of each such agreement with the Brekford Key Stockholders duly executed by Brekford and the applicable Key Stockholder.

Section 8.2. Additional Conditions to Obligations of the Company. The obligations of the Company to effect the Mergers are also subject to the fulfillment of the following conditions:

(a) Representations and Warranties. The representations and warranties of Brekford contained in this Agreement shall be true and correct on the date hereof and (except to the extent such representations and warranties speak as of an earlier date) shall also be true and correct on and as of the Closing Date, except for changes expressly contemplated by this Agreement, with the same force and effect as if made on and as of the Closing Date;

(b) Agreements, Conditions and Covenants. Brekford shall have performed or complied in all material respects with all agreements, conditions and covenants required by this Agreement to be performed or complied with by Brekford on or before the Effective Time;

(i) The Company shall have received a certificate of an executive officer of Brekford to the effect set forth in paragraphs (a) and (b) above; and

(ii) The Company shall have received a certificate of the Secretary of Brekford with respect to certain corporate matters, including a true, correct and complete copy of Brekford’s certificate of incorporation, as currently in effect, a true, correct and complete copy of Brekford’s bylaws, as currently in effect, certificate(s) as to Brekford’s formation and good standing in its jurisdiction of formation and each other jurisdiction in which it is qualified to do business, and attaching thereto a true, correct and complete copy of resolutions and consents, as applicable, of the stockholder(s) and board of Brekford authorizing, in each case, the execution, delivery and performance of this Agreement, the filing and distribution of the Information Statement, and the consummation of the transactions contemplated hereby.

(i) The Company shall have received an opinion of Crowell & Moring LLP, counsel to the Company, dated as of the Closing Date, in form and substance reasonably satisfactory to the Company, substantially to the effect that, on the basis of the facts, representations and assumptions set forth in such opinion: (A) no gain or loss will be recognized for federal income tax purposes by Novume, the Company or Company Merger Sub as a result of the formation of Novume and Company Merger Sub and the Merger of the Company with and into the Company Merger Sub; and (B) no gain or loss will be recognized for federal income tax purposes by the stockholders of the Company upon their exchange of Company Common Stock or Company Preferred Stock, as applicable, solely for Novume Common Stock or Novume Preferred Stock, as applicable, pursuant to such Merger. In rendering such opinion, Crowell & Moring LLP may require and rely upon representations and covenants including those contained in certificates of officers of Novume, the Company, Brekford and others, as may be requested by Crowell & Moring LLP and shall be provided by Novume, the Company, Brekford; and

(ii) To the extent required by the SEC in connection with the filing of the Registration Statement and the Information Statement, Brekford shall have received the opinion described in Section 8.3(d)(i) hereof, in form and substance reasonably satisfactory to the Company.

(e) Affiliate Letters. The Company shall have received the Brekford Affiliate Letters required by Section 7.14, duly executed by each “affiliate” of Brekford;

(f) No Material Adverse Change. Since September 30, 2016, there shall not have occurred any event that has had or could reasonably be expected to have a Material Adverse Effect on Brekford or Novume;

(g) Consents Under Brekford Agreements. Brekford shall have obtained the consents listed on Schedule 8.2(g) hereto, as well as the consent or approval of each other person whose consent or approval shall be required under any agreement or instrument in order to permit the consummation of the transactions contemplated hereby except those which the failure to obtain would not, individually or in the aggregate, have a Material Adverse Effect on Novume or either of the Surviving Corporations; and

(h) Employment Agreements; Proprietary Rights Agreements. The Employment Agreements and Proprietary Rights Agreements shall be in full force and effect.

(i) Sale of Upfitting Business. The sale of the Upfitting Business as described, and on the terms and conditions set forth, in Section 7.11 shall have been consummated in accordance with the requirements of Delaware Law and Brekford’s Certificate of Incorporation and Bylaws, each as amended and as currently in effect.

Section 8.3. Additional Conditions to Obligations of Brekford. The obligations of Brekford to effect the Mergers are also subject to the fulfillment of the following conditions:

(a) Representations and Warranties. The representations and warranties of the Company contained in this Agreement shall be true and correct on the date hereof and (except to the extent such representations and warranties speak as of an earlier date) shall also be true and correct on and as of the Closing Date, except for changes expressly contemplated by this Agreement, with the same force and effect as if made on and as of the Closing Date;

(b) Agreements, Conditions and Covenants. The Company shall have performed or complied in all material respects with all agreements, conditions and covenants required by this Agreement to be performed or complied with by the Company on or before the Effective Time;

(i) Brekford shall have received a certificate of an executive officer of the Company to the effect set forth in paragraphs (a) and (b) above; and

(ii) Brekford shall have received a certificate of the Secretary of the Company with respect to certain corporate matters, including a true, correct and complete copy of the Company’s certificate of incorporation, as currently in effect, a true, correct and complete copy of the Company’s bylaws, as currently in effect, certificate(s) as to the Company’s formation and good standing in its jurisdiction of formation and each other jurisdiction in which it is qualified to do business, and attaching thereto a true, correct and complete copy of resolutions and consents, as applicable, of the stockholder(s) and board of the Company authorizing, in each case, the execution, delivery and performance of this Agreement, the filing and distribution of the Information Statement, and the consummation of the transactions contemplated hereby.

(i) To the extent required by the SEC in connection with the filing of the Registration Statement and the Information Statement, Brekford shall have received an opinion of counsel, such counsel to be determined, dated as of the Closing Date, in form and substance reasonably satisfactory to Brekford, substantially to the effect that, on the basis of the facts, representations and assumptions set forth in such opinion: (A) no gain or loss will be recognized for federal income tax purposes by Novume, Brekford or Brekford Merger Sub as a result of the formation of Novume and Brekford Merger Sub and the Merger of Brekford Merger Sub with and into Brekford; and (B) no gain or loss will be recognized for federal income tax purposes by the stockholders of Brekford upon their exchange of Brekford Common Stock for the Brekford Merger Consideration pursuant to such Merger; and

(ii) the Company shall have received the opinion described in Section 8.2(d)(i) hereof, in form and substance reasonably satisfactory to Brekford;

(e) Affiliate Letters. Brekford shall have received the Company Affiliate Letters required by Section 7.14 hereof, duly executed by each “affiliate” of the Company;

(g) Consents Under the Company Agreements. The Company shall have obtained the consent or approval of each person whose consent or approval shall be required under any agreement or instrument in order to permit the consummation of the transactions contemplated hereby except those which the failure to obtain would not, individually or in the aggregate, have a Material Adverse Effect on Novume or either of the Surviving Corporations.

Section 9.1. Termination. This Agreement may be terminated at any time before the Effective Time in each case as authorized by the respective Board of Directors of the Company or Brekford:

(b) By either the Company or Brekford if the Mergers shall not have been consummated on or before June 1, 2017 (the “Termination Date”); provided, however, that the right to terminate this Agreement under this Section 9.1(b) shall not be available to any Party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur on or before the Termination Date; and provided, further, that if on the Termination Date the conditions to the Closing set forth in Section 8.1(d) shall not have been fulfilled, but all other conditions to the Closing shall be fulfilled or shall be capable of being fulfilled, then the Termination Date shall be extended to a date mutually agreed upon by the parties hereto;

(c) By either the Company or Brekford if a court of competent jurisdiction or governmental, regulatory or administrative agency or commission shall have issued an order, decree or ruling or taken any other action (which order, decree or ruling the Parties shall use their commercially reasonable efforts to lift), in each case permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such order, decree, ruling or other action shall have become final and nonappealable;

(d) By either the Company or Brekford if the other shall have breached, or failed to comply with, in any material respect any of its obligations under this Agreement or any representation or warranty made by such other Party shall have been incorrect in any material respect when made or shall have since ceased to be true and correct in any material respect, and such breach, failure or misrepresentation is not cured within thirty (30) days after notice thereof and such breaches, failures or misrepresentations, individually or in the aggregate and without regard to materiality qualifiers contained therein, results or would reasonably be expected to result in a Material Adverse Effect on Novume, the Company or Brekford;

(e) By either the Company or Brekford upon the occurrence of a Material Adverse Effect on the other or on Novume or an event which could reasonably be expected to result in a Material Adverse Effect on the other or on Novume;

(f) By either the Company or Brekford if the Board of Directors of the other or any committee of the Board of Directors of the other (i) shall withdraw or modify in any adverse manner its approval or recommendation of this Agreement, the Mergers or any other transaction contemplated hereby, (ii) shall fail to reaffirm such approval or recommendation upon such Party’s request, (iii) approve or recommend any acquisition of the other or a material portion of its assets or any tender offer for shares of its capital stock, in each case, other than by a Party or an affiliate thereof, or (iv) shall resolve to take any of the actions specified in clause (i) above; or

(g) By either the Company or Brekford if the Company Stockholders’ Approval or the Brekford Stockholders’ Approval, as applicable, shall fail to have been obtained in accordance with Section 7.2(a); provided, however, that no termination by Brekford shall be effective pursuant to Sections 9.1(f) or (g) under circumstances in which a Termination Fee is payable by Brekford under Section 9.2(b) unless concurrently with such termination, such Termination Fee is paid in full by Brekford in accordance with the provisions of Section 9.2(b).

(a) In the event of termination of this Agreement as provided in Section 9.1 hereof, and subject to the provisions of Section 10.1 hereof, this Agreement shall forthwith become void and there shall be no liability on the part of any of the Parties, except (i) as set forth in this Section 9.2 and in Sections 4.10, 4.16, 5.9, 5.12 and 10.3 hereof, and (ii) nothing herein shall relieve any Party from liability for any willful breach hereof.

(b) If (i) this Agreement (A) is terminated by the Company pursuant to Section 9.1(f) hereof, or the Company or Brekford pursuant to Section 9.1(g) hereof because of the failure to obtain the Brekford Stockholders’ Approval, or (B) is terminated as a result of Brekford’s material breach of Section 7.2 hereof which is not cured within thirty (30) days after notice thereof to Brekford, and (ii) at the time of such termination there shall have been an Acquisition Proposal involving Brekford or any of its subsidiaries (whether or not such offer shall have been rejected or shall have been withdrawn prior to the time of such termination), Brekford shall pay to the Company a termination fee of $250,000 (the “Termination Fee”). The Termination Fee payable under this Section 9.2(b) shall be payable in cash at the date of termination.

(c) Brekford agrees that the agreements contained in Section 9.2(b) above are an integral part of the transactions contemplated by this Agreement and constitute liquidated damages and not a penalty. If Brekford fails to promptly pay to the Company any fee due under such Section 9.2(b), Brekford shall pay the costs and expenses (including reasonable legal fees and expenses) in connection with any action, including the filing of any lawsuit or other legal action, taken to collect payment, together with interest on the amount of any unpaid fee at the publicly announced prime rate as reported by The Wall Street Journal’s bank survey from the date such fee was required to be paid.

Section 9.3. Amendment. This Agreement may be amended by the Parties pursuant to a writing adopted by action taken by all of the Parties at any time before the Effective Time; provided, however, that, after approval of the Mergers by the stockholders of the Company or Brekford, whichever shall occur first, no amendment may be made which would (a) alter or change the amount or kinds of consideration to be received by the holders of Shares upon consummation of the Mergers, (b) alter or change any term of the Certificate of Incorporation of either of the Surviving Corporations or Novume, or (c) alter or change any of the terms and conditions of this Agreement if such alteration or change would adversely affect the holders of any class or series of securities of the Company or Brekford. This Agreement may not be amended except by an instrument in writing signed by the Parties.

Section 9.4. Waiver. At any time before the Effective Time, any Party may (a) extend the time for the performance of any of the obligations or other acts of the other Parties, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a Party to any such extension or waiver shall be valid only as against such Party and only if set forth in an instrument in writing signed by such Party.

Section 10.1. Non-Survival of Representations, Warranties and Agreements. The representations, warranties and agreements in this Agreement shall terminate at the Effective Time or upon the termination of this Agreement pursuant to Section 9.1 hereof, as the case may be, except that (a) the agreements set forth in ARTICLE I and Sections 2.4, 2.5, 2.6, 2.7, 2.8, 7.7, 7.8 and 7.11 hereof and this Section 10.1 shall survive the Effective Time indefinitely, (b) the agreements and representations set forth in Sections 4.10, 4.16, 5.9, 5.12, 7.5(b), 9.2 and 10.3 hereof and this Section 10.1 shall survive termination indefinitely and (c) nothing contained herein shall limit any covenant or agreement of the Parties which by its terms contemplates performance after the Effective Time.

Section 10.2. Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made as of the date of receipt and shall be delivered personally or mailed by registered or certified mail (postage prepaid, return receipt requested), sent by overnight courier or sent by telecopy, to the Parties at the following addresses or telecopy numbers (or at such other address or telecopy number for a Party as shall be specified by like notice):

Section 10.3. Expenses. Except as otherwise provided herein, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs and expenses, whether or not the transactions contemplated by this Agreement are consummated, and any actions taken by either party in furtherance thereof shall be at such Party’s sole risk and expense.

Section 10.4. Certain Definitions. For purposes of this Agreement, the following terms shall have the following meanings:

(a) “1933 Act” means the U.S. Securities Act of 1933, as the same may be amended from time to time, and “Exchange Act” means the U.S. Securities Exchange Act of 1934, as the same may be amended from time to time.

(b) “affiliate” of a person means a person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the first mentioned person.

(c) “Brekford ERISA Affiliate” means any entity that would have ever been considered a single employer with Brekford under Section 4001(b) of ERISA or part of the same “controlled group” as Brekford for purposes of Section 302(d)(3) of ERISA.

(d) “Company ERISA Affiliate” means any entity that would have ever been considered a single employer with the Company under Section 4001(b) of ERISA or part of the same “controlled group” as the Company for purposes of Section 302(d)(3) of ERISA.

(e) “control” (including the terms “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of stock, as trustee or executor, by contract or credit arrangement or otherwise.

(f) “knowledge” of any Party shall mean the actual knowledge of the executive officers of such Party.

(g) “Material Adverse Effect” means any change in or effect on the business of the referenced corporation or any of its Subsidiaries that is or will be materially adverse to the business, operations (including the income statement), properties (including intangible properties), condition (financial or otherwise), assets, liabilities or regulatory status of such referenced corporation and its Subsidiaries taken as a whole, but shall not include the effects of changes that are generally applicable in (A) the United States economy or (B) the United States securities markets if, in any of (A) or (B), the effect on the Company or Brekford (as the case may be) and its respective Subsidiaries, taken as a whole, is not disproportionate relative to the effect on the other and its Subsidiaries, taken as a whole.

(h) “person” means an individual, corporation, partnership, association, trust, unincorporated organization, entity or group (as defined in the Exchange Act).

(i) “Subsidiary” means any corporation or other legal entity of which the Company or Brekford, as the case may be (either alone or through or together with any other Subsidiary or Subsidiaries), owns, directly or indirectly, more than 50% of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity.

Section 10.5. Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 10.6. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the maximum extent possible.

Section 10.7. Entire Agreement; No Third-Party Beneficiaries. This Agreement constitutes the entire agreement and, except as expressly set forth herein, supersedes any and all other prior agreements and undertakings, both written and oral, among the Parties, or any of them, with respect to the subject matter hereof and, except for Section 7.7 (Indemnification; Directors’ and Officers’ Insurance), is not intended to confer upon any person other than the Company, Brekford, Novume, Company Merger Sub and Brekford Merger Sub and, after the Effective Time, their respective stockholders, any rights or remedies hereunder.

Section 10.8. Assignment. This Agreement shall not be assigned by operation of law or otherwise.

Section 10.9. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed entirely within that State, without regard to the conflicts of laws provisions thereof.

Section 10.10. Counterparts. This Agreement may be executed in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an original, but all of which shall constitute one and the same agreement.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective officers hereunto duly authorized, all as of the date first written above.

KeyStone Solutions, Inc.,

a Delaware corporation

/s/ Robert A. Berman

Name: Robert A. Berman

Title: Chief Executive Officer

Brekford Corp.,

a Delaware corporation

/s/ Rodney Hillman

Name: Rodney Hillman

Title: President and Chief Operating Officer

Novume Solutions, Inc.,

a Delaware corporation

/s/ Robert A. Berman

Name: Robert A. Berman

Title: Chief Executive Officer

KeyStone Merger Sub, Inc.,

a Delaware corporation

/s/ Robert A. Berman

Name: Robert A. Berman

Title: President

Brekford Merger Sub, Inc.,

a Delaware corporation

/s/ Robert A. Berman

Name: Robert A. Berman

Title: President

§ 262 Appraisal rights [For application of this section, see 79 Del. Laws, c. 72, § 22, 79 Del. Laws, c. 122, § 12 and 80 Del. Laws, c. 265, § 18]

(a) Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of the stockholder’s shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word “stockholder” means a holder of record of stock in a corporation; the words “stock” and “share” mean and include what is ordinarily meant by those words; and the words “depository receipt” mean a receipt or other instrument issued by a depository representing an interest in 1 or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.

(b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to § 251 (other than a merger effected pursuant to § 251(g) of this title and, subject to paragraph (b)(3) of this section, § 251(h) of this title), § 252, § 254, § 255, § 256, § 257, § 258, § 263 or § 264 of this title:

(1) Provided, however, that, except as expressly provided in § 363(b) of this title, no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of the meeting of stockholders to act upon the agreement of merger or consolidation, were either: (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in § 251(f) of this title.

(2) Notwithstanding paragraph (b)(1) of this section, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 255, 256, 257, 258, 263 and 264 of this title to accept for such stock anything except:

a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;

b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of record by more than 2,000 holders;

c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a. and b. of this section; or

d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a., b. and c. of this section.

(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 251(h), § 253 or § 267 of this title is not owned by the parent immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.

(4) In the event of an amendment to a corporation’s certificate of incorporation contemplated by § 363(a) of this title, appraisal rights shall be available as contemplated by § 363(b) of this title, and the procedures of this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as practicable, with the word “amendment” substituted for the words “merger or consolidation,” and the word “corporation” substituted for the words “constituent corporation” and/or “surviving or resulting corporation.”

(c) Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the certificate of incorporation contains such a provision, the provisions of this section, including those set forth in subsections (d), (e), and (g) of this section, shall apply as nearly as is practicable.

(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting (or such members who received notice in accordance with § 255(c) of this title) with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) of this section that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Each stockholder electing to demand the appraisal of such stockholder’s shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or

(2) If the merger or consolidation was approved pursuant to § 228, § 251(h), § 253, or § 267 of this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice or, in the case of a merger approved pursuant to § 251(h) of this title, within the later of the consummation of the offer contemplated by § 251(h) of this title and 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder’s shares. Such demand will be sufficient if it

reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder’s shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice or, in the case of a merger approved pursuant to § 251(h) of this title, later than the later of the consummation of the offer contemplated by § 251(h) of this title and 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder’s shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.

(e) Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections (a) and (d) of this section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw such stockholder’s demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d) of this section hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within 10 days after such stockholder’s written request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) of this section hereof, whichever is later. Notwithstanding subsection (a) of this section, a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition or request from the corporation the statement described in this subsection.

(f) Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such

notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation.

(g) At the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder. If immediately before the merger or consolidation the shares of the class or series of stock of the constituent corporation as to which appraisal rights are available were listed on a national securities exchange, the Court shall dismiss the proceedings as to all holders of such shares who are otherwise entitled to appraisal rights unless (1) the total number of shares entitled to appraisal exceeds 1% of the outstanding shares of the class or series eligible for appraisal, (2) the value of the consideration provided in the merger or consolidation for such total number of shares exceeds $1 million, or (3) the merger was approved pursuant to § 253 or § 267 of this title.

(h) After the Court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding the Court shall determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. Unless the Court in its discretion determines otherwise for good cause shown, and except as provided in this subsection, interest from the effective date of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment. At any time before the entry of judgment in the proceedings, the surviving corporation may pay to each stockholder entitled to appraisal an amount in cash, in which case interest shall accrue thereafter as provided herein only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Court, and (2) interest theretofore accrued, unless paid at that time. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the stockholders entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted such stockholder’s certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such stockholder is not entitled to appraisal rights under this section.

(i) The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Court’s decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any state.

(j) The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order

all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney’s fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.

(k) From and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholder’s demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just; provided, however that this provision shall not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder’s demand for appraisal and to accept the terms offered upon the merger or consolidation within 60 days after the effective date of the merger or consolidation, as set forth in subsection (e) of this section.

(l) The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range maybe reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial, bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15 (d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(c) (1) The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form.

(2) The registrant undertakes that every prospectus (i) that is filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(d) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(e) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

(f) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in Chantilly, Virginia, on February 10, 2017.


NOVUME SOLUTIONS, INC.

By:		/s/ Robert A. Berman
Name:		Robert A. Berman
Title:		Chief Executive Officer

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Robert Berman and Riaz Latifullah, or any of them, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his name, place and stead, in any and all capacities, to sign the Registration Statement on Form S-4 of Novume Solutions, Inc. and any or all amendments (including post-effective amendments) thereto and any new registration statement with respect to the offering contemplated thereby filed pursuant to Rule 462(b) of the Securities Act, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises hereby ratifying and confirming all that said attorneys-in-fact and agents, or his or her or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.



Title of each class of securities to be registered	Amount to be registered	Proposed maximum offering price per share	Proposed maximum aggregate offering price	Amount of registration fee
Common Stock, $.0001 par value(1)	14,249,924(2)	N/A	$10,732,464.46(3)	$ 1,243.90
Series A Cumulative Convertible Redeemable Preferred Stock, $0.0001 par value	841,604(4)	N/A	$4,216,436.04(5)	$ 488.68
Common Stock underlying Series A preferred	561,064(6)	N/A	—	(7)
Warrants to purchase shares of Common Stock, $0.0001 par value	722,498(8)	N/A	$551,506.03 (9)	$ 63.92
Common Stock underlying Warrants	493,230(10)	N/A	—	(11)
TOTAL:	16,868,320		$15,500,406.53	$1,796.50


Brekford Securities	Number of Shares			Exchange Ratio	Novume Common Stock Issued or Issuable under the Mergers
Common Stock, par value $0.0001 per share		49,311,264		1-for-15		3,287,418
Shares of Common Stock, par value $0.0001 per share, underlying Brekford Warrants		840,000		1-for-15		56,000
Shares of Common Stock, par value $0.0001 per share, underlying Brekford Options		550,000		1-for-15		36,667

Subtotal:		50,701,264				3,380,084


KeyStone Securities	Number of Shares			Exchange Ratio	Novume Securities
Common Stock, par value $0.0001 per share		5,488,094		1.9975-for-1		10,962,506
Shares of Common Stock, par value $0.0001 per share, underlying KeyStone Preferred Stock		(1	)	1.9975-for-1		(2	)
Shares of Common Stock, par value $0.0001 per share, underlying KeyStone Warrants		493,230		1.9975-for-1		985,230
Shares of Common Stock, par value $0.0001 per share, underlying KeyStone Options		506,400		1.9975-for-1		1,011,538

Subtotal:		6,487,724	(3)			12,959,274	(4)

TOTAL COMMON STOCK:		57,188,988	(5)			16,339,358	(6)


QUESTIONS AND ANSWERS ABOUT THE MERGERS			1

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS			4

SUMMARY			6

CERTAIN FINANCIAL INFORMATION			17

RISK FACTORS			25

SPECIAL CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			42

THE TRANSACTION			44

INFORMATION ABOUT NOVUME			52

DIRECTORS AND OFFICERS OF NOVUME			53

COMPENSATION OF NOVUME DIRECTORS			58

NOVUME EXECUTIVE COMPENSATION			58

OWNERSHIP OF NOVUME			62

INFORMATION ABOUT KEYSTONE			63

DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES OF KEYSTONE			71

KEYSTONE DIRECTOR COMPENSATION			72

KEYSTONE EXECUTIVE COMPENSATION			73

KEYSTONE SOLUTIONS, INC. 2016 EQUITY AWARD PLAN			74

KEYSTONE’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATIONS			82

INFORMATION ABOUT BREKFORD			91

BREKFORD DIRECTORS AND OFFICERS			97

BREKFORD CORPORATE GOVERNANCE MATTERS			100

BREKFORD DIRECTOR COMPENSATION			101

BREKFORD EXECUTIVE COMPENSATION			102

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE OF BREKFORD			105

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF BREKFORD			106

BREKFORD’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATIONS			107

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS			115



THE MERGER AGREEMENT			122

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGERS			130

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS OF BREKFORD			133

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS OF KEYSTONE			134

DESCRIPTION OF THE CAPITAL STOCK OF NOVUME			135

COMPARISON OF STOCKHOLDER RIGHTS			138

LEGAL MATTERS			148

EXPERTS			148

WHERE YOU CAN FIND MORE INFORMATION			148

Annex A – Merger Agreement

Annex B – DGCL Section 262 (Appraisal Rights)

Annex C – Brekford Stockholder Consents*

Annex D – Amended and Restated Certificate of Incorporation of Novume*

Annex E – Certificate of Designations, Rights and Preferences of Series A Cumulative

Convertible Redeemable Preferred Stock of Novume*

Annex F – Amended and Restated Bylaws of Novume*

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF BREKFORD			F-1

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF KEYSTONE			F-41


	Year ended December 31,													Nine months ended
	2015		2014			2013		2012			2011			September 30, 2016			September 30, 2015
Statements of Income Data:
Revenue	$	9,661,795	$	11,519,457		$	13,434,039	$	16,096,262		$	15,669,709		$	9,582,874		$	7,032,968
Cost of revenue		5,496,722		6,619,231			7,216,208		8,410,039			8,454,204			5,496,588			3,976,125

Gross Profit		4,165,073		4,900,226			6,217,831		7,686,223			7,215,505			4,086,286			3,056,843
Operating costs and expenses
Selling, general, and administrative expenses		3,743,299		4,785,432			5,684,195		6,294,448			5,365,661			3,624,005			2,782,690
Total operating costs and expenses		3,743,299		4,785,432			5,684,195		6,294,448			5,365,661			3,624,005			2,782,690

Operating income		421,774		114,794			533,636		1,391,775			1,849,844			462,281			274,153
Other income (expenses)
Interest expense		—		(16	)		—		(1,017	)		(9,960	)		(28,693	)		—

Total other (expenses)		—		(16	)		—		(1,017	)		(9,960	)		(28,693	)		—
Income before taxes		421,774		114,778			533,636		1,390,758			1,839,884			433,588			274,153

Provision for income taxes		—		—			—		—			—			(12,545	)		—

Net income	$	421,774	$	114,778		$	533,636	$	1,390,758		$	1,839,884		$	446,133		$	274,153


	December 31,
	2015		2014		2013		2012		2011		September 30, 2016
Balance Sheet Data:
Total Assets	$	2,549,029	$	2,542,639	$	3,188,814	$	3,403,276	$	3,857,857	$	4,025,422
Total Liabilities	$	966,612	$	1,114,238	$	1,555,282	$	1,792,948	$	2,438,388	$	2,148,415
Total Stockholders’ Equity	$	1,582,417	$	1,428,401	$	1,633,532	$	1,610,328	$	1,419,469	$	1,877,007


Loss before taxes		(371,171	)		(1,502,647	)		(1,419,586	)		(1,266,671	)		1,211,328		(803,998	)		(398,375	)
Total provision for income taxes		—			—			—			—			—		—			—

Net (loss)	$	(371,171	)	$	(1,502,647	)	$	(1,419,586	)	$	(1,266,671	)	$	1,211,328	$	(803,998	)	$	(398,375	)


	Year ended December 31, 2015 (unaudited)			Nine months ended September 30, 2016 (unaudited)
Pro Forma Statement of Operations Data:
Net revenue	$	13,390,618		$	12,196,641
Cost of revenue		6,839,982			6,401,628

Gross profit		6,550,636			5,795,013
Salaries and related expenses		1,628,151			1,237,946
Selling, general and administrative expenses		5,434,109			4,829,272

Total operating expenses		7,062,260			6,067,218

Loss from operations		(511,624	)		(272,204	)
Other expense, net		(40,237	)		(211,104	)
Interest expense, net		(874,336	)		(382,245	)

Loss from continuing operations before provision from income taxes		(1,426,197	)		(865,553	)
Provision for income taxes		—			(13,380	)

Net loss	$	(1,426,197	)	$	(878,933	)


	As of September 30, 2016 (unaudited)
Pro Forma Balance Sheet Data:
Total assets	$	17,745,494
Total liabilities and mezzanine debt	$	8,360,035
Total stockholders’ equity	$	9,385,459


	Nine months ended September 30, 2016						Year ended December 31, 2015
	Basic			Diluted			Basic			Diluted
KeyStone Solutions, Inc.
Historical earnings per share of common stock – basic and diluted	$	0.08		$	0.06		$	0.08		$	0.06
Unaudited pro forma combined (loss) per share of common stock–basic and diluted (1)	$	0.04		$	0.03		$	0.04		$	0.03
Brekford Corp.
Historical net loss from continuing operations per share of common stock– basic and diluted	$	(0.02	)	$	(0.02	)	$	(0.01	)	$	(0.01	)
Unaudited pro forma loss from continuing operations per share of common stock– basic and diluted (2)	$	(0.24	)	$	(0.24	)	$	(0.11	)	$	(0.11	)
Novume Solutions, Inc.
Unaudited pro forma combined (loss) from continuing operations per share of common stock–basic and diluted (3)	$	(0.06	)	$	(0.06	)	$	(0.10	)	$	(0.10	)


	Brekford Common Stock
	High		Low
2017
First Quarter (through January 30, 2017)	$	0.13	$	0.10

2016
Fourth Quarter	$	0.12	$	0.06
Third Quarter	$	0.12	$	0.08
Second Quarter	$	0.30	$	0.10
First Quarter	$	0.21	$	0.14

2015
Fourth Quarter	$	0.28	$	0.18
Third Quarter	$	0.29	$	0.20
Second Quarter	$	0.28	$	0.16
First Quarter	$	0.37	$	0.16


Name	Age		Position	Since
*Executive Officers:*
James K. McCarthy		65	Chairman of the Board and Chief Strategy Officer		2017
Robert A. Berman		57	Chief Executive Officer and Member of the Board		2017
Dr. Richard Nathan		72	Chief Operating Officer		2017
Harry Rhulen		53	President		2017
Riaz Latifullah		60	Chief Financial Officer		2017
Suzanne Loughlin		57	General Counsel and Chief Administrative Officer		2017

*Directors*:
James K. McCarthy		65	Chairman		2016
Robert Berman		57	Director		2016
Dr. Richard Nathan		72	Director		2016
Glenn Goord		65	Director		2016
Paul A. de Bary		70	Director		2017
[•] [•]		[•] [•]	Director Director		2017 2017

*Significant Employees*:

James W. Satterfield		70	President and Chief Executive Officer of Firestorm Solutions, LLC and Firestorm Franchising, LLC		2017
Greg McCarthy		54	Chief Executive Officer, AOC Key Solutions, Inc.		2016


Name of beneficial owner (1)	Amount and nature of beneficial ownership (2)			Percent of class (3)
Robert A. Berman		4,571,850	(4)		27.1	%
James McCarthy		2,806,717			16.6	%
Richard Nathan		1,640,289			9.7	%
C.B. Brechin		945,906			5.6	%
Paul de Bary		49,938			*
Glenn Goord		49,938			*
Gregory McCarthy		546,762			3.2	%
Harry Rhulen		701,453			4.2	%
Suzy Loughlin		701,453			4.2	%
Riaz Latifullah		179,776			1.1	%

All current Directors and executive officers as a group (10 persons)		12,194,082			72.2	%


Location	Square Feet	Principal Use	Ownership	Lease Expiration
14420 Albemarle Point Place Suite 200 Chantilly, VA 20152	18,587 (8,297 subleased)	Principal Office; Daily Operations	Lease	October 31, 2019 for lease and sublease
2030 Dickory Avenue Suite 202 New Orleans, LA 70123	746	Accounting Operations	Lease	May 31, 2018
1000 Holcomb Woods Parkway Suite 130 Roswell GA 10076	3,135	Firestorm Operations	Lease	October 31, 2017


Name	Capacities in which compensation was received	Cash compensation		Other compensation		Total compensation
James K. McCarthly	Chairman	$	277,655	$	14,173	$	291,828
Dr. Richard Nathan	Director	$	214,935	$	10,791	$	225,726
Greg McCarthy	Director	$	246,649	$	18,271	$	264,740
Kevin Berrigan (1)	Director	$	213,582	$	6,263	$	219,845


Name	Capacities in which compensation was received	Cash compensation		Other compensation (1)		Total compensation
Robert Berman	Chief Executive Officer	$	300,000	$	—	$	300,000
James K. McCarthy	Chief Strategy Officer		277,655		14,173		291,828
Greg McCarthy	Chief Executive Officer of AOC Key Solutions		246,649		18,271		264,920
Dr. Richard Nathan	Chief Operating Officer		214,935		10,791		225,726
Riaz Latifullah	Chief Financial Officer		200,000		—		200,000
Harry Rhulen	President		—		—		—


	1/1/16 - 3/14/16 (Predecessor Unaudited) and 3/15/16 - 9/30/16 (Successor Unaudited) Combined			9 months ended 9/30/15 (Predecessor Unaudited)
REVENUE	$	9,582,874		$	7,032,968
Cost of revenue		5,496,588			3,976,125

Gross profit		4,086,286			3,056,843
OPERATING EXPENSES
Selling, general, and administrative expenses		3,624,005			2,782,690

Income from operations		462,281			274,153
OTHER (EXPENSES) INCOME
Interest expense		(28,693	)		—

Total other (expenses) income		(28,693	)		—
Income before taxes		433,588			274,153
Provision for income taxes		13,380			—

Net income	$	420,208		$	274,153


	Nine months ended September30,
	2016			2015
Net cash provided by (used for):
Operating activities	$	559,535		$	(58,055	)
Investing activities		(35,377	)		(43,835	)
Financing activities		(333,991	)		(120,055	)

Net increase (decrease) in cash:	$	190,167		$	(221,945	)


2016	$	125,084
2017		505,484
2018		513,939
2019		435,314

Total	$	1,579,821


Name	Fees earned or paid in cash ($)		Stock awards ($) (1)(2)		Option awards ($) (1)(2)		All other compensation ($)		Total ($)
Steve Ellis		3,000		—		4,928		—		7,928
Gregg Smith		1,000		—		—		—		1,000
Robert West		2,000		—		4,928		—		6,928
Edward Parker		1,000		—		4,928		—		5,928


Name and Principal Position	Year		Salary ($)		Stock awards ($)(2)		Option awards ($)(2)		Total ($)
C.B Brechin		2016		200,000		—		—		200,000
Director (1)		2015		191,539		—		—		191,539
Rodney Hillman		2016		157,000		13,200		—		170,200
President & Chief Operations Officer, Chief Financial Officer		2015		137,270		13,200		—		150,470
Scott Rutherford		2016		185,000		—		—		185,000
Chief Strategic Officer (1)		2015		177,174		—		—		177,174


	Option Awards										Stock Awards
Name	Number of Securities underlying Unexercised Options (#) Exercisable		Number of Securities underlying Unexercised Options (#) Un- exercisable		Equity Incentive Plan Awards: Number of securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have not Vested ($)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#)
CB. Brechin		—		—		—		—		—		—		—		—		—
Former Chief Executive Officer
Rodney Hillman		—		—		—		—		—		66,000	$	7,920		—		—
President & Chief Operating Officer, Chief Financial Officer																		—
Scott Rutherford		—		—		—		—		—		—		—		—		—
Chief Technology Officer


	Nine Months Ended September 30,						(Decrease) / Increase
	2016			2015			$			%
Net Revenues	$	10,748,006		$	14,586,453		$	(3,838,447	)		(26.3	)%
Cost of Revenues		8,201,217			11,711,852			(3,510,635	)		(30.0	)%

Gross Profit	$	2,546,789		$	2,874,601		$	(327,812	)		(11.4	)%

Gross Profit Percentage of Revenue		23.7	%		19.7	%


	Nine Months Ended September 30,				Increase / (Decrease)
	2016		2015		$			%
OPERATING EXPENSES
Salaries and related expenses	$	1,489,311	$	1,482,003	$	7,308			0.5	%
Selling, general and administrative expenses		1,122,333		1,264,458		(142,125	)		(11.2	)%

Total operating expenses	$	2,611,644	$	2,746,461	$	(134,817	)		(4.9	)%


	Nine Months ended September 30,						(Decrease)/Increase
	2016			2015			$			%
OTHER (EXPENSE) INCOME
Interest expense	$	(528,039	)	$	(487,287	)	$	(40,752	)		8.4	%
Interest income		—			—			—			—
Loss on extinguishment of debt		(291,912	)		—			(291,912	)		—
Change in derivative liability		80,808			(39,228	)		120,036			306.6	%

Total other (expense) income	$	(739,143	)	$	(526,515	)	$	(212,628	)		40.4	%


	Year Ended December 31,						Increase(Decrease)
	2015			2014			$		%
Net Revenues	$	19,833,681		$	17,659,533		$	2,174,148		12.3	%
Cost of Revenues		15,773,184			14,527,646			1,245,538		8.6	%

Gross Profit	$	4,060,497		$	3,131,887		$	928,610		29.7	%

Gross Profit Percentage of Revenue		20.5	%		17.7	%


	Payments due by period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-Term Debt	$	50,937	$	29,277	$	21,660	$	—	$	—
Capital Lease Obligations		—		—		—		—		—
Operating Leases		786,975		172,697		549,803		64,475		—
Purchase Obligations		—		—		—		—		—
Other Long-Term Liabilities Reflected on the Registrant’s Balance Sheet under GAAP		1,140,000		1,140,000		—		—		—

Total	$	1,977,912	$	1,341,974	$	571,463	$	64,475	$	—


	Keystone Solutions Inc.		Brekford, Corp.		Firestorm, LLC		Pro Forma Adjustments			Ref			Novume
ASSETS
CURRENT ASSETS
Cash	$	758,032	$	593,806	$	36,206	$	(500,000	)		(1	)	$	7,374,379
								3,944,596			(2	)
								2,541,739			(4	)
Accounts receivable, net		2,188,007		1,677,923		110,641		(1,473,340	)		(4	)		2,503,231
Unbilled receivables		—		762,718		—		(470,477	)		(4	)		292,241
Inventory		—		472,000		—		(256,630	)		(4	)		215,370
Prepaids and other current assets		53,211		38,133		5,850		—						97,194
Notes receivable		24,000		—		—		—						24,000

Total current assets		3,023,250		3,544,580		152,696		3,785,888						10,506,415
Property and equipment, net		129,985		269,104		—		(50,621	)		(4	)		348,468
Excess of purchase price over net assets								2,508,839			(1	)		2,758,118
								249,279			(3	)
Notes receivable								2,000,000			(4	)		2,000,000
Investment								1,491,000			(4	)		1,491,000
Other non-current assets		872,187		81,402		130,274		(487,864	)		(2	)		641,493
								(13,025	)		(4	)
								58,520			(5	)

TOTAL ASSETS	$	4,025,422	$	3,895,086	$	282,971	$	9,542,016					$	17,745,494

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	820,825	$	1,741,872	$	27,247	$	(836,813	)		(4	)	$	1,753,131
Accrued payroll and related expenses		683,624		74,773		4,570		—						762,967
Line of credit, net of fees		—		836,813		—		(233,575	)		(4	)		603,238
Term loan – current portion, net of fees		—		166,667		—		(141,534	)		(4	)		25,133
Accrued income taxes payable		137,909		—		—		—						137,909
Other current liabilities		6,057		192,742		—		—						198,799

Total current liabilities		1,648,415		3,012,867		31,817		(1,211,922	)					3,481,176


LONG—TERM LIABILITIES
Notes payable—stockholders	—	500,000		148,600	(500,000	)	(4	)	148,600
Other notes payable—net of current portion, net of fees	500,000	4,409		—	—				504,409
Deferred rent, net of current portion	—	43,937		—	—				43,937
Term notes payable, net of current portion	—	333,358		—	907,407		(1	)	907,407
					(333,358	)	(4	)
Convertible promissory notes, net of debt discounts and issuance costs of $90,207 at September 30, 2016	—	249,794		—	(249,794	)	(4	)	—

Total long-term liabilities	500,000	1,131,498		148,600	(175,745	)			1,604,353

TOTAL LIABILITIES	2,148,415	4,144,365		180,417	(1,387,667	)			5,085,530
Convertible redeemable preferred stock					3,274,505		(2	)	3,274,505
STOCKHOLDERS’ (DEFICIT) EQUITY
Member’s (deficit) equity	—			41,132	(41,132	)	(1	)	—
Common stock	500	4,918		—	49		(1	)	549
					(4,918	)	(3	)
Additional paid-in capital	1,581,917	11,498,570		—	976,238		(1	)	2,558,155
					(11,498,570	)	(3	)
Additional paid-in capital—warrants					227,700		(1	)	468,446
					182,226		(2	)
					58,520		(5	)
Treasury Stock, at cost 10,600 shares at September 30, 2016	—	(5,890	)	—	5,890		(3	)	—
Accumulated (Deficit) Earnings	294,590	(11,746,378	)	61,422	(61,422	)	(1	)	6,358,310
					11,746,378		(3	)
					6,063,720		(4	)


Other comprehensive loss		—		(499	)		—		499	(3	)		—

TOTAL STOCKHOLDERS’ (DEFICIT) EQUITY		1,877,007		(249,279	)		102,554		7,655,177				9,385,459

TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY	$	4,025,422	$	3,895,086		$	282,971	$	9,542,016			$	17,745,494


	Keystone Solutions Inc.		Brekford, Corp.			Firestorm, LLC			Pro Forma Adjustments			Ref			Novume
Net revenue	$	9,661,795	$	19,833,681		$	916,894		$	(17,021,752	)		(1	)	$	13,390,618
Cost of revenue		5,496,722		15,773,184			539,089			(14,969,013	)		(1	)		6,839,982

Gross Profit		4,165,073		4,060,497			377,805			(2,052,739	)					6,550,636
Operating Expenses
Salaries and related expenses		—		2,038,644			—			(410,493	)		(1	)		1,628,151
Selling, general and administrative expenses		3,743,299		1,675,837			476,939			(461,966	)		(1	)		5,434,109

Total operating expenses		3,743,299		3,714,481			476,939			(872,459	)					7,062,260

Income (loss) from operations		421,774		346,016			(99,134	)		(1,180,280	)					(511,624	)
Other (expense) income
Interest expense		—		(676,950	)		(130	)		(197,256	)		(1	)		(874,336	)
Change in fair value of derivative liability		—		14,784												14,784
Loss on extinguishment of debt		—		(55,021	)											(55,021	)

Total other (expense) income		—		(717,187	)		(130	)		(197,256	)					(914,573	)

Net income (loss)	$	421,774	$	(371,171	)	$	(99,264	)	$	(1,377,536	)				$	(1,426,197	)

Loss per share—basic	$	0.08	$	(0.01	)		(2	)	$	(0.04	)				$	(0.10	)

Loss per share—diluted	$	0.06	$	(0.01	)		(2	)	$	(0.04	)				$	(0.10	)

Weighted average number of shares—basic		5,488,094		44,690,550			(2	)		35,928,720						14,249,924

Weighted average number of shares—diluted		6,768,606		44,690,550			(2	)		37,209,232						14,249,924


	Keystone Solutions Inc.			Brekford, Corp.			Firestorm, LLC		Pro Forma Adjustments			Ref			Novume
Net revenue	$	9,582,874		$	10,748,006		$	719,749	$	(8,853,988	)		(1	)	$	12,196,641
Cost of revenue		5,496,588			8,201,217			294,302		(7,590,479	)		(1	)		6,401,628

Gross Profit		4,086,286			2,546,789			425,447		(1,263,509	)					5,795,013
Operating Expenses
Salaries and related expenses		—			1,489,311			—		(251,365	)		(1	)		1,237,946
Selling, general and administrative expenses		3,624,005			1,122,333			395,280		(312,346	)		(1	)		4,829,272

Total operating expenses		3,624,005			2,611,644			395,280		(563,711	)					6,067,218

Income (loss) from operations		462,281			(64,855	)		30,167		(699,798	)					(272,204	)
Other (expense) income
Interest expense		(28,693	)		(528,039	)		—		174,487			(1	)		(382,245	)
Change in fair value of derivative liability		—			80,808			—								80,808
Loss on extinguishment of debt		—			(291,912	)		—								(291,912	)

Total other (expense) income		(28,693	)		(739,143	)		—		174,487						(593,349	)

Income (loss)—before taxes		433,588			(803,998	)		30,167		(525,311	)					(865,553	)
Provision for income taxes		(13,380	)		—			—		—						(13,380	)
Net income (loss)	$	420,208		$	(803,998	)	$	30,167	$	(525,311	)				$	(878,933	)


	Amount and Nature of Beneficial Ownership		Percentage of Class (1)
Directors, Director Nominees and Named Executive Officers
C.B. Brechin ⁽¹⁾		15,989,570		34.5	%
Scott Rutherford ⁽¹⁾		13,024,373		28.1	%
Steve Ellis ⁽²⁾		25,000		*
Gregg Smith ⁽³⁾		60,000		*
Robert West ⁽⁴⁾		350,800		*
Rodney Hillman		198,000		*

Directors and Executive Officers as a Group (6 persons)		29,647,743		63.9	%


Name and address of beneficial owner (1)	Amount and nature of beneficial ownership (2)		Amount and nature of beneficial ownership acquirable			Percent of class (3)
Robert A. Berman		—		2,288,778	(4)		30.5	%
Paul de Bary		—		25,000			*
Glenn Goord		—		25,000			*
James McCarthy		2,810,220		—			53.9	%
Gregory McCarthy		273,722		—			5.2	%
Richard Nathan		1,642,336		—			31.5	%
Riaz Latifullah				3,750			*
Suzy Loughlin		162,698		108,466	(5)		5.1	%
Harry Rhulen		162,698		108,466	(5)		5.1	%
Jim Satterfield		162,698		108,466	(5)		5.1	%

All directors and officers as a group (10 persons)		5,214,372		2,667,926	(4)		100.0	%