false 0001697851 0001697851 2024-11-14 2024-11-14
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

FORM 8-K
 

 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): November 14, 2024
 

 
REKOR SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
001-38338
81-5266334
(State or Other Jurisdiction
of Incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
     
6721 Columbia Gateway Drive, Suite 400, Columbia, MD 21046
(Address of Principal Executive Offices)
 
Registrant's Telephone Number, Including Area Code:  (410) 762-0800
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, $0.0001 par value per share
 
REKR
 
The Nasdaq Stock Market
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter)
 
Emerging Growth Company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
 

 
Item 2.02.
Results of Operations and Financial Condition.
 
On November 14, 2024, Rekor Systems, Inc. (the “Company”) issued a press release summarizing the Company’s financial results for the third quarter ended September 30, 2024. A copy of this press release is furnished as Exhibit 99.1 hereto and incorporated herein by reference.
 
The foregoing information is intended to be furnished under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition.” This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
 
A conference call has been scheduled for November 14, 2024, at 4:30 PM ET. Listeners may access the call live by telephone at (877) 407-8037 (toll free) and internationally at (201) 689-8037; or, via the Internet at https://event.choruscall.com/mediaframe/webcast.html?webcastid=pzPTSDpm. An archived webcast will also be available to replay this conference call directly from the investor relations section of the Company’s website at https://www.rekor.ai/investors.
 
In its discussion, management may reference certain non-GAAP financial measures related to company performance. A reconciliation of that information to the most directly comparable GAAP measures is provided in the press release, furnished herewith, and a copy of which can also be accessed in the investor relations section of the Company’s website referenced above.
 
Item 9.01.
Financial Statements and Exhibits.
 
(d) Exhibits
 
Exhibit
  No.  
 
Description
     
99.1
 
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 

 
 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
REKOR SYSTEMS, INC.
 
     
     
Date: November 14, 2024
/s/ Eyal Hen
 
 
Name: Eyal Hen
Title:   Chief Financial Officer
 
     
 
 

Exhibit 99.1

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Rekor Systems Reports Third Quarter 2024 Financial Results

Company commences implementation of Rekor Discover in Florida after receiving FDOT-approved product list certification

 

Highlights

 

 

Q3 2024 gross revenue increased 16% to $10.5 million compared to $9.1 million in Q3 2023

 

Q3 recurring revenue increased 14% to $5.5 million compared to $4.8 million

 

Rekor Discover now on the Florida DOT Approved Product List, and deployments commenced

 

Our CEO, David Desharnais, was inducted into the ITS America Board

 

COLUMBIA, MD – November 14, 2024 - Rekor Systems, Inc. (NASDAQ: REKR) ("Rekor" or the "Company"), a leader in developing and implementing advanced roadway intelligence technology, today announced its financial results for the quarter ending September 30, 2024.

 

Rekor Discover™ was recently added to the Florida DOT’s Approved Product List and is now beginning implementation across all Florida DOT districts simultaneously. In October, we amended the Pre-Paid advance Agreement with an affiliate of Yorkville Global Advisors, LP and eliminated the option for additional advances to the Company of $20 million. Below are some highlights of the Company's other achievements during the quarter:

 

 

Rekor Highlighted by Texas DOT: The Texas Department of Transportation presented the Rekor Command™ solution to the Texas House Legislature as a model for the future of roadway management. Rekor's deployment and its successful outcomes were also showcased in a recent video featuring testimonials from the department's senior leaders.

 

New York Moves to Procurement: The New York State Department of Transportation has advanced Rekor Discover™ from the proof-of-concept stage to the procurement phase. This initial implementation establishes a foundation for Rekor to collaborate with various engineering and construction firms, inviting bids for numerous data collection sites across the state.

 

New Mexico Selects Rekor for AI Count Class and Speed: In New Mexico, Rekor Discover™ has been selected to replace the side-firing radars on major roadwork along I-25. This decision highlights Rekor's ability to enhance roadside intelligence and monitor critical infrastructure as part of New Mexico’s $200 million improvement initiative.  

 

Partnership with Goldwings Establishes Hawaiian Presence: Rekor Discover™ is now available to the communities in Hawaii with high demand for roadway intelligence through a new partnership with Goldwings.

 

Nvidia Case Study: NVIDIA recently published a case study highlighting Rekor's integration of its comprehensive accelerated computing platform for roadway intelligence. By leveraging NVIDIA's AI technologies, Rekor is advancing new generative AI applications, including enhanced internal data annotation, streamlined workflows, and more effective calibration and configuration of systems.

 

 

 

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"Our third quarter financial results reflect the delays in revenue realization we recently experienced due to the variability we've previously noted in servicing government customers. Consequently, we are aggressively optimizing our cost structure and accelerating our path to achieve positive cash flow in 2025. To stay resilient in this environment, we’ve taken the necessary steps to adjust to the unpredictability of government procurement timelines and trim our expenses. This expense realignment has been designed to achieve an annual reduction in costs of up to $15 million.," said Eyal Hen, CFO of Rekor. "Concurrent with this optimization program, we eliminated the option to tap additional advances of $20 million under our agreement with Yorkville Advisors. This reflects our confidence in our forward outlook, growing operating momentum, and commitment to protecting shareholder value. As our actions have been targeted to support near-term revenue generation, we continue to look forward to delivering strong future growth in the coming quarters."

 

Our President and CEO, David Desharnais, was recently appointed to the Board of ITS America. “I am truly honored to be inducted into the ITS America Board of Directors and to join forces with visionary leaders from both the public and private sectors to shape the future of transportation,” said Mr. Desharnais. “ITS America is leading the way in transforming the movement of people and goods, championing innovation, and advancing intelligent transportation systems to build safer, more resilient, and connected communities. I look forward to contributing to this bold mission and helping to accelerate the adoption of groundbreaking solutions that will shape the future of our transportation infrastructure."

 

 

Three and Nine Months Ended September 30, 2024 Financial Results

 

This section highlights the changes for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023.

 

Revenues

 

   

Three Months Ended September 30,

   

Change

   

Nine Months Ended September 30,

   

Change

 

(Dollars in thousands)

 

2024

   

2023

   

$

   

%

   

2024

   

2023

   

$

   

%

 

Revenue

  $ 10,546     $ 9,119     $ 1,427       16 %   $ 32,751     $ 23,867     $ 8,884       37 %

 

The increase in revenue for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, was primarily attributable to our Urban Mobility revenue stream which consists of revenue derived from roadway data aggregation activities. During the three and nine months ended September 30, 2024, revenue attributable to ATD was $1,723,000 and $7,428,000, respectively, and is included as part of the Urban Mobility revenue stream.

 

 

 

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Cost of Revenue, excluding Depreciation and Amortization

 

   

Three Months Ended September 30,

   

Change

   

Nine Months Ended September 30,

   

Change

 

(Dollars in thousands)

 

2024

   

2023

   

$

   

%

   

2024

   

2023

   

$

   

%

 

Cost of revenue, excluding depreciation and amortization

  $ 5,903     $ 4,320     $ 1,583       37 %   $ 16,964     $ 11,319     $ 5,645       50 %

 

For the three and nine months that ended September 30, 2024, the cost of revenue, excluding depreciation and amortization, increased compared to the corresponding prior periods primarily due to an increase in personnel and other direct costs, such as hardware, that were incurred to support our increase in revenue. Additionally, during the three and nine months ended September 30, 2024, $809,000 and $2,608,000 of the increase was related to our acquisition of ATD. 

 

Loss from Operations

 

   

Three Months Ended September 30,

   

Change

   

Nine Months Ended September 30,

   

Change

 

(Dollars in thousands)

 

2024

   

2023

   

$

   

%

   

2024

   

2023

   

$

   

%

 

Loss from operations

  $ (12,854 )   $ (9,803 )   $ (3,051 )     31 %   $ (35,845 )   $ (32,770 )   $ (3,075 )     9 %

 

Loss from operations for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, increased primarily due to additional costs of ATD including the additional depreciation and amortization of intangible assets associated with the acquisition.

 

Additional Key Performance Indicators and Non-GAAP Measures

 

Performance Obligations

 

As of September 30, 2024, the Company had approximately $23,613,000 in remaining performance obligations not yet satisfied or partially satisfied. This is a decrease of approximately 11%, down from $26,390,000 of remaining performance obligations as of December 31, 2023. Total performance obligations have decreased over time as the contract term of certain of the Company's large long-term contracts begin to near.

 

Adjusted Gross Profit and Adjusted Gross Margin

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2024

   

2023

   

2024

   

2023

 
   

(Dollars in thousands, except percentages)

   

(Dollars in thousands, except percentages)

 

Revenue

  $ 10,546     $ 9,119     $ 32,751     $ 23,867  

Cost of revenue, excluding depreciation and amortization

    5,903       4,320       16,964       11,319  

Adjusted Gross Profit

  $ 4,643     $ 4,799     $ 15,787     $ 12,548  

Adjusted Gross Margin

    44.0 %     52.6 %     48.2 %     52.6 %

 

Adjusted Gross Margin for the three and nine months ended September 30, 2024, decreased compared to the three and nine months ended September 30, 2023. The fluctuation in Adjusted Gross Margin is typically correlated to the mix of hardware and software sales as well as service-type work. Typically, our software sales carry a higher Adjusted Gross Margin.

 

 

 

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EBITDA and Adjusted EBITDA

 

The Company calculates EBITDA as net loss before interest, taxes, depreciation, and amortization. The Company calculates Adjusted EBITDA as net loss before interest, taxes, depreciation, and amortization, adjusted for (i) impairment of intangible assets, (ii) loss on extinguishment of debt, (iii) stock-based compensation, (iv) losses or gains on sales of subsidiaries, and (v) other unusual or non-recurring items. EBITDA and Adjusted EBITDA are not measurements of financial performance or liquidity under accounting principles generally accepted in the U.S. ("U.S. GAAP") and should not be considered as an alternative to net earnings or cash flow from operating activities as indicators of our operating performance or as a measure of liquidity or any other measures of performance derived in accordance with U.S. GAAP. EBITDA and Adjusted EBITDA are presented because we believe they are frequently used by securities analysts, investors, and other interested parties in the evaluation of a company's ability to service and/or incur debt. However, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do.

 

The following table sets forth the components of the EBITDA and Adjusted EBITDA for the periods included (dollars in thousands):

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2024

   

2023

   

2024

   

2023

 

Net loss

  $ (12,646 )   $ (10,566 )   $ (41,055 )   $ (34,361 )

Interest

    496       906       2,094       2,576  

Depreciation and amortization

    2,399       1,963       7,075       5,925  

EBITDA

  $ (9,751 )   $ (7,697 )   $ (31,886 )   $ (25,860 )
                                 

Share-based compensation

  $ 1,148     $ 1,081     $ 3,430     $ 3,237  

Loss (gain) on extinguishment of debt

    -       -       4,693       (527 )

Loss on offering costs - Prepaid Advance

    888       -       888       -  

Gain on the sale of Global Public Safety

    (1,500 )     -       (1,500 )     -  

Adjusted EBITDA

  $ (9,215 )   $ (6,616 )   $ (24,375 )   $ (23,150 )

 

Rekor has scheduled a conference call to discuss the third quarter 2024 results on Thursday, November 14, 2024, at 4:30 P.M. (Eastern).

 

Any person interested in participating in the call should please dial in approximately 10 minutes prior to the start of the call using the following information:

 

North America877-407-8037/ 201-689-8037

 

International: 

Click here for participant International Toll-Free access numbers

 

 

 

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Webcast : https://event.choruscall.com/mediaframe/webcast.html?webcastid=pzPTSDpm

REPLAY INFORMATION

A replay will be made available online approximately two hours following the live call for a period of two weeks. To access the replay, use the following numbers:

Replay Dial-In877-660-6853 / 201-612-7415

Access ID: 13748129

An archived webcast will also be available to replay this conference call directly from the Company's website under Investors, Events & Presentations.

 

About Rekor Systems, Inc.

Rekor Systems, Inc. (NASDAQ: REKR) is a leader in developing and implementing state-of-the-art roadway intelligence systems using AI-enabled computer vision and machine learning. As a pioneer in the implementation of digital infrastructure, Rekor is collecting, connecting, and organizing the world's mobility data – laying the foundation for a digitally-enabled operating system for the roadway. With our Rekor One® Roadway Intelligence Engine at the core of our technology, we aggregate and transform trillions of data points into intelligence through proprietary computer vision, machine learning, and big data analytics that power our platforms and applications. Our solutions provide actionable insights that give governments and businesses a comprehensive picture of roadways while providing a collaborative environment that drives the world to be safer, greener, and more efficient. To learn more, please visit our website: https://rekor.ai, and follow Rekor on social media on LinkedIn, X (formerly Twitter), Threads, and Facebook.

 

Forward-Looking Statements

 

This press release and its links and attachments contain statements concerning Rekor Systems, Inc. and its future expectations, plans, and prospects that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the impact of Rekor's core suite of AI-powered technology and the size and shape of the global market for ALPR systems. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements that are not statements of historical fact may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," or "continue," by the negative of these terms or by other similar expressions. You are cautioned that such statements are subject to many risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual circumstances, events or results may differ materially from those projected in the forward-looking statements, particularly as a result of various risks and other factors identified in our filings with the Securities and Exchange Commission. All forward-looking statements contained in this press release speak only as of the date on which they were made and are based on management's assumptions and estimates as of such date. We do not undertake any obligation to publicly update any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events, or otherwise.

 

 

Company Contact:

Rekor Systems, Inc.

Eyal Hen

Chief Financial Officer

Phone: +1 (443) 545-7260

ehen@rekor.ai

 

Media & Investor Relations Contact:

Rekor Systems, Inc.

Charles Degliomini
ir@rekor.ai

 

 

 

 

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REKOR SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

 

   

September 30, 2024

   

December 31, 2023

 
   

(Unaudited)

         

ASSETS

               

Current assets

               

Cash and cash equivalents

  $ 10,602     $ 15,385  

Restricted cash

    365       328  

Accounts receivable, net

    6,728       4,955  

Inventory

    3,944       3,058  

Note receivable, current portion

    340       340  

Other current assets

    1,238       1,270  

Total current assets

    23,217       25,336  

Long-term assets

               

Property and equipment, net

    12,693       13,188  

Right-of-use operating lease assets, net

    9,283       9,584  

Right-of-use financing lease assets, net

    2,494       1,989  

Goodwill

    24,313       20,593  

Intangible assets, net

    25,830       17,239  

Note receivable, long-term

    227       482  

Deposits

    3,138       3,740  

Total long-term assets

    77,978       66,815  

Total assets

  $ 101,195     $ 92,151  

LIABILITIES AND STOCKHOLDERS' EQUITY

               

Current liabilities

               

Accounts payable and accrued expenses

    5,773       5,139  

Notes payable, current portion

    1,000       1,000  

Loan payable, current portion

    78       75  

Prepaid Advance liability, at fair value

    11,621       -  

Lease liability operating, short-term

    1,914       1,261  

Lease liability financing, short-term

    855       547  

Contract liabilities

    3,200       3,604  

Liability for ATD Holdback Shares, at fair value

    698       -  

Other current liabilities

    5,467       5,610  

Total current liabilities

    30,606       17,236  

Long-term Liabilities

               

Notes payable, long-term

    -       1,000  

2023 Promissory Notes, net of debt discount of $0 and $1,012, respectively

    -       2,988  

2023 Promissory Notes - related party, net of debt discount of $0 and $2,149, respectively

    -       6,351  

Series A Prime Revenue Sharing Notes, net of debt discount of $296 and $447, respectively

    9,704       9,553  

Series A Prime Revenue Sharing Notes - related party, net of debt discount of $148 and $223, respectively

    4,852       4,777  

Loan payable, long-term

    214       273  

Lease liability operating, long-term

    12,486       13,445  

Lease liability financing, long-term

    1,151       1,057  

Contract liabilities, long-term

    1,196       1,449  

Deferred tax liability

    65       65  

Other non-current liabilities

    587       587  

Total long-term liabilities

    30,255       41,545  

Total liabilities

    60,861       58,781  

Commitments and contingencies (Note 8)

               

Stockholders' equity

               

Preferred stock, $0.0001 par value, 2,000,000 authorized, 505,000 shares designated as Series A and 240,861 shares designated as Series B as of September 30, 2024 and December 31, 2023, respectively. No preferred stock was issued or outstanding as of September 30, 2024 or December 31, 2023, respectively.

    -       -  

Common stock, $0.0001 par value; 300,000,000 authorized shares; 91,114,540 and 69,273,334 shares issued as of September 30, 2024 and December 31, 2023, respectively; 90,955,020 and 69,176,826 shares outstanding as of September 30, 2024 and December 31, 2023, respectively.

    9       7  

Treasury stock, 159,520 and 96,508 shares as of September 30, 2024 and December 31, 2023, respectively.

    (711 )     (522 )

Additional paid-in capital

    280,774       232,568  

Accumulated deficit

    (239,738 )     (198,683 )

Total stockholders equity

    40,334       33,370  

Total liabilities and stockholders equity

  $ 101,195     $ 92,151  

 

 

 

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REKOR SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except share data)

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2024

   

2023

   

2024

   

2023

 

Revenue

  $ 10,546     $ 9,119     $ 32,751     $ 23,867  

Cost of revenue, excluding depreciation and amortization

    5,903       4,320       16,964       11,319  
                                 

Operating expenses:

                               

General and administrative expenses

    8,637       6,871       23,669       19,941  

Selling and marketing expenses

    1,721       1,498       6,156       5,441  

Research and development expenses

    4,740       4,270       14,732       14,011  

Depreciation and amortization

    2,399       1,963       7,075       5,925  

Total operating expenses

    17,497       14,602       51,632       45,318  
                                 

Loss from operations

    (12,854 )     (9,803 )     (35,845 )     (32,770 )

Other income (expense):

                               

(Loss) gain on extinguishment of debt

    -       -       (4,693 )     527  

Interest expense, net

    (496 )     (906 )     (2,094 )     (2,576 )

Gain on remeasurement of ATD Holdback Shares

    192       -       937       -  

Loss on offering costs - Prepaid Advance

    (888 )     -       (888 )     -  

Gain on the sale of Global Public Safety

    1,500       -       1,500       -  

Other (expense) income

    (100 )     143       28       458  

Total other income (expense)

    208       (763 )     (5,210 )     (1,591 )

Net loss

  $ (12,646 )   $ (10,566 )   $ (41,055 )   $ (34,361 )

Loss per common share

  $ (0.14 )   $ (0.16 )   $ (0.49 )   $ (0.56 )

Weighted average shares outstanding

                               

Basic and diluted

    89,285,197       66,671,622       84,397,568       61,125,035  

 

 
v3.24.3
Document And Entity Information
Nov. 14, 2024
Document Information [Line Items]  
Entity, Registrant Name REKOR SYSTEMS, INC.
Document, Type 8-K
Document, Period End Date Nov. 14, 2024
Entity, Incorporation, State or Country Code DE
Entity, File Number 001-38338
Entity, Tax Identification Number 81-5266334
Entity, Address, Address Line One 6721 Columbia Gateway Drive
Entity, Address, Address Line Two Suite 400
Entity, Address, City or Town Columbia
Entity, Address, State or Province MD
Entity, Address, Postal Zip Code 21046
City Area Code 410
Local Phone Number 762-0800
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, $0.0001 par value per share
Trading Symbol REKR
Security Exchange Name NASDAQ
Entity, Emerging Growth Company false
Amendment Flag false
Entity, Central Index Key 0001697851

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