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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): May 15, 2023

____________________

 

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 May 15, 2023, Rekor Systems, Inc. (the “Company”) issued a press release summarizing the Company’s financial results for the first quarter ended March 31, 2023. 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 May 15, 2023, 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 here. 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

 

Press Release dated May 15, 2023

 

 

2

 

 

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: May 15, 2023

/s/ Robert A. Berman

 

 

Name:  Robert A. Berman

Title:    Chief Executive Officer

 

 

 

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EX-99.1 2 rekr_ex991.htm PRESS RELEASE rekr_ex991.htm

EXHIBIT 99.1 

 

 

Rekor Systems, Inc. Reports First Quarter 2023 Financial Results

 

Highlights:

 

 

·

Q1 2023 gross revenue increased 108% to $6.2 million as compared to $3.0 million in Q1 2022

 

·

Recurring revenue increased 148% to $4.2 million in Q1 2023 as compared to $1.7 million in Q1 2022

 

·

Performance obligations increased 14% to $24.3 million as of March 31, 2023, as compared to $21.4 million as of December 31, 2022

 

·

Closed $15 million Senior Secured Notes offering in January 2023

 

·

Completed $10 million Registered Direct Offering in March 2023
 

COLUMBIA, MD / ACCESSWIRE / May 15, 2023 / Rekor Systems, Inc (NASDAQ:REKR) ("Rekor" or the "Company"), a global AI technology company, a leader in providing innovative solutions that are making the world's roadways safer, greener and more efficient, today announced its financial results for the three months ended March 31, 2023.

 

"We have made substantial progress in managing our operation's cash burn during the first three months of 2023. This trend is a tangible result of our ongoing efforts to optimize business operations. Furthermore, the full impact of additional reduction measures that were implemented this quarter will be realized in the second quarter of 2023 and beyond, reinforcing our commitment to achieving sustainable financial performance," said Eyal Hen, CFO Rekor. "Successfully implementing strategic cost reductions is part of prudent financial management and has helped the Company adapt to challenging market conditions while sustaining remarkable growth and accelerating our path to future profitability."

 

Hen added, "We are pleased to have raised additional funds during the first quarter in light of the extraordinary opportunities we are pursuing in 2023. These funds will be vital in sustaining our most important strategic initiatives and preserving the momentum of our first mover advantage in key areas."

 

"The next decade will witness an overwhelming need for hundreds of thousands of new permanent and portable data collection systems worldwide. These systems won't just be shiny new, more efficient versions of the tens of thousands of outdated legacy systems they replace, but systems that overcome serious limitations that the users of those systems have struggled with for years," said Robert A. Berman, Chair and CEO Rekor. "In many cases, these aging systems have been left to languish. Significant voids in essential data gathering have been unaddressed for many years because of serious safety and congestion concerns that have made their value even more marginal."

 

 
1

 

 

Berman concluded, "Rekor Discover is poised to meet this demand head-on by offering highly accurate, always-operational count, class, and speed capabilities that can be implemented without any safety and operational drawbacks plaguing the existing systems. By deploying our cutting-edge AI solution, we provide unparalleled accuracy in data collection and become the crucial Internet of Things (IoT) nodes that form the backbone of a robust roadway operating system.The future of roadway data collection and analysis lies in Rekor Discover."

 

First Quarter 2023 Financial Results

 

Revenues

 

Gross revenue for the three months ended March 31, 2023, increased $3,210,000 or 108% to $6,185,000, compared to $2,975,000 for the same period last year. This increase was primarily attributable to our recent acquisition.

 

Recurring revenue for the three months ended March 31, 2023, which includes SaaS, eCommerce, data aggregation, and customer support revenue, increased $2,509,000 or 148% to $4,204,000, compared to $1,695,000 for the three months ended March 31, 2022.

 

Product and service revenue for the three months ended March 31, 2023, which includes hardware and perpetual license sales, increased by $701,000 or 55% to $1,981,000, compared to $1,280,000 for the three months ended March 31, 2022.

 

Loss from Operations

 

Operating expenses for the three months ended March 31, 2023, increased to $16,004,000, compared to $14,116,000 for the three months ended March 31, 2022. A certain amount of expense increase is inevitable as the Company increases its size and overall revenue base. However, this increase was also primarily attributable to depreciation and amortization expenses as a result of additional implementations of our technology, targeted research and development efforts as we completed and began production deployment of our count, class, and speed offerings for the urban mobility market, and increased professional services expenses.

 

Additional Key Performance Indicators

 

Performance Obligations

 

As of March 31, 2023, the Company had approximately $24,330,000 in remaining performance obligations not yet satisfied or partially satisfied. This is an increase of approximately 14%, up from $21,412,000 of remaining performance obligations as of December 31, 2022. The Company expects to recognize approximately 67% of this amount as revenue over the succeeding twelve months. The remainder is expected to be recognized over the next two to four years.

 

 
2

 

 

Total Contract Value

 

The total contract value of contracts won in a given period provides visibility into the Company's future operating results and cash flows from operations. This is not a measurement under accounting principles generally accepted in the U.S. ("U.S. GAAP") as there are certain assumptions embedded in the total contract value of an agreement, such as the success rate of renewal periods, cancellations, and usage estimates. During the three months ended March 31, 2023, the Company won contracts valued at $12,083,000, compared to $1,525,000 for the value of contracts won during the three months ended March 31, 2022. This growth represents $10,558,000 or 692% growth period-over-period.

 

Additional Non-GAAP Measures

 

Adjusted Gross Profit and Adjusted Gross Margin

 

Adjusted gross profit for the three months ended March 31, 2023, increased to $3,317,000 with an adjusted gross margin of 54%, compared to $1,438,000 and an adjusted gross margin of 48% for the three months ended March 31, 2022. The increase in adjusted gross profit was attributable to a higher mix of software revenue. We are continually working to improve our margin by implementing new technology to further drive down costs and increase our margin.

 

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 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.

 

 
3

 

 

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

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Net loss from continuing operations

 

$ (12,682 )

 

$ (12,673 )

Income taxes

 

 

-

 

 

 

-

 

Interest

 

 

761

 

 

 

9

 

Depreciation and amortization

 

 

1,955

 

 

 

1,364

 

EBITDA

 

$ (9,966 )

 

$ (11,300 )

 

 

 

 

 

 

 

 

 

Share-based compensation

 

$ 1,112

 

 

$ 1,900

 

Gain on extinguishment of debt

 

 

(527 )

 

 

-

 

Adjusted EBITDA

 

$ (9,381 )

 

$ (9,400 )

 

Rekor has scheduled a conference call to discuss its first quarter results on Monday, May 15, 2023, 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 America: 877-407-8037 (Toll-Free)

 

International: 201-689-8037

 

A live webcast of the conference call will be available online at:

https://link.edgepilot.com/s/e04abfe7/I75zIjGALkKnXl7XKUz8Cg?u=https://event.choruscall.com/mediaframe/webcast.html?webcastid=rsDpfG3u

 

REPLAY INFORMATION

 

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

 

Replay Dial-In: 877-660-6853 / 201-612-7415

 

Access ID: 13738383

 

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

 

 
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About Rekor Systems, Inc.

 

Rekor Systems, Inc. (NASDAQ: REKR) is a trusted global authority on intelligent infrastructure providing innovative solutions that drive the world to be safer, greener and more effivcient. As a provider of comprehensive, continuous, and real-time roadway intelligence, Rekor leverages AI, machine learning, and holistic data to support the intelligent infrastructure that is essential for smart mobility. With its disruptive technology, the Company delivers integrated solutions, actionable insights, and predictions that increase roadway safety. To learn more, please visit our website: https://rekor.ai, and follow Rekor on social media on LinkedIn, Twitter, 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.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

 

 

 

March 31, 

2023

 

 

December 31, 

2022

 

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$ 12,066

 

 

$ 1,924

 

Restricted cash and cash equivalents

 

 

378

 

 

 

254

 

Accounts receivable, net

 

 

4,298

 

 

 

3,238

 

Inventory

 

 

2,016

 

 

 

1,986

 

Note receivable, current portion

 

 

340

 

 

 

340

 

Other current assets, net

 

 

1,653

 

 

 

1,202

 

Current assets of discontinued operations

 

 

579

 

 

 

331

 

Total current assets

 

 

21,330

 

 

 

9,275

 

Long-term assets

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

16,007

 

 

 

16,733

 

Right-of-use lease assets, net

 

 

9,509

 

 

 

9,662

 

Goodwill

 

 

20,593

 

 

 

20,593

 

Intangible assets, net

 

 

20,258

 

 

 

21,299

 

Note receivable, long-term

 

 

737

 

 

 

822

 

SAFE investment

 

 

2,005

 

 

 

2,005

 

Deposits

 

 

3,329

 

 

 

3,451

 

Total long-term assets

 

 

72,438

 

 

 

74,565

 

Total assets

 

$ 93,768

 

 

$ 83,840

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$ 6,158

 

 

$ 5,963

 

Notes payable, current portion

 

 

-

 

 

 

1,000

 

Related party notes

 

 

-

 

 

 

1,000

 

Loan payable, current portion

 

 

97

 

 

 

106

 

Lease liability, short-term

 

 

1,074

 

 

 

1,069

 

Contract liabilities, short-term

 

 

4,246

 

 

 

3,044

 

Other current liabilities

 

 

2,202

 

 

 

2,772

 

Current liabilities of discontinued operations

 

 

579

 

 

 

490

 

Total current liabilities

 

 

14,356

 

 

 

15,444

 

Long-term Liabilities

 

 

 

 

 

 

 

 

Notes payable, long-term

 

 

2,000

 

 

 

2,000

 

2023 Promissory Notes, net of debt discount of $1,507

 

 

2,493

 

 

 

-

 

2023 Promissory Notes - related party, net of debt discount of $3,201

 

 

5,299

 

 

 

-

 

Loan payable, long-term

 

 

331

 

 

 

349

 

Lease liability, long-term

 

 

13,867

 

 

 

14,237

 

Contract liabilities, long-term

 

 

1,345

 

 

 

1,005

 

Deferred tax liability

 

 

52

 

 

 

52

 

Other non-current liabilities

 

 

2,048

 

 

 

1,416

 

Total long-term liabilities

 

 

27,435

 

 

 

19,059

 

Total liabilities

 

 

41,791

 

 

 

34,503

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value; authorized; 100,000,000 shares; issued: 61,122,128, shares as of March 31, 2023 and 54,446,602 as of December 31, 2022; outstanding: 61,030,637 shares as of March 31, 2023 and 54,405,080 as of December 31, 2022.

 

 

6

 

 

 

5

 

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 March 31, 2023 and December 31, 2022, respectively. No preferred stock was issued or outstanding as of March 31, 2023 or December 31, 2022, respectively.

 

 

 

 

 

 

 

 

Treasury stock, 91,491 and 41,522 shares as of March 31, 2023 and December 31, 2022, respectively.

 

 

(506 )

 

 

(417 )

Additional paid-in capital

 

 

218,157

 

 

 

202,747

 

Accumulated deficit

 

 

(165,680 )

 

 

(152,998 )

Total stockholders' equity

 

 

51,977

 

 

 

49,337

 

Total liabilities and stockholders' equity

 

$ 93,768

 

 

$ 83,840

 

 

 
6

 

 

REKOR SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except share data)

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Revenue

 

$ 6,185

 

 

$ 2,975

 

Cost of revenue, excluding depreciation and amortization

 

 

2,868

 

 

 

1,537

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

7,201

 

 

 

7,308

 

Selling and marketing expenses

 

 

1,890

 

 

 

1,352

 

Research and development expenses

 

 

4,958

 

 

 

4,092

 

Depreciation and amortization

 

 

1,955

 

 

 

1,364

 

Total operating expenses

 

 

16,004

 

 

 

14,116

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(12,687 )

 

 

(12,678 )

Other income (expense):

 

 

 

 

 

 

 

 

Gain on extinguishment of debt

 

 

527

 

 

 

-

 

Interest expense, net

 

 

(761 )

 

 

(9 )

Other income

 

 

239

 

 

 

14

 

Total other income (expense)

 

 

5

 

 

 

5

 

Loss before income taxes

 

 

(12,682 )

 

 

(12,673 )

Income tax benefit (provision)

 

 

-

 

 

 

-

 

Net loss from continuing operations

 

 

(12,682 )

 

 

(12,673 )

Net income from discontinued operations

 

 

-

 

 

 

72

 

Net loss

 

$ (12,682 )

 

$ (12,601 )

Loss per common share from continuing operations - basic and diluted

 

 

(0.23 )

 

 

(0.29 )

Earning per common share discontinued operations - basic and diluted

 

 

-

 

 

 

0.00

 

Loss per common share - basic and diluted

 

$ (0.23 )

 

$ (0.29 )

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

Basic and diluted

 

 

54,680,048

 

 

 

44,087,911

 

 

SOURCE: Rekor Systems, Inc.

 

 
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