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| 8-K - CURRENT REPORT - Rekor Systems, Inc. | rekr_8k.htm |
Exhibit 99.1
Rekor Systems, Inc. Reports 2020 Financial Results
Highlights:
●
2020 gross revenue increased 69% to $9.2 million as compared to
$5.5 million in 2019
●
Fourth quarter 2020 gross revenue increased 88% to $2.8 million as
compared to $1.5 million in the fourth quarter of 2019
●
Raised $70.1 million in net cash proceeds during February 2021,
with a public offering
COLUMBIA, Md. – March 10, 2021 - Rekor Systems,
Inc,
(NASDAQ:
REKR) ("Rekor"), a provider of real-time roadway, customer and
public safety intelligence to enable AI-driven decisions, today
announced its financial results for the year ended December 31,
2020.
"Our results for the year ended 2020 have demonstrated a remarkably
high level of growth on a year-over-year basis,” said Eyal
Hen, Chief Financial Officer, Rekor. "We believe this is a
testament to the strategic realignment of the Company as it has
intensified its focus on the longer-term drivers of demand from our
commercial and government sectors. During 2020, we strengthened our
balance sheet by retiring our long-term, high interest, debt with a
combination of cash payments and issuance of our common stock. In
the current year, we have positioned ourselves as a 100%
technology-focused organization with our eCommerce platform and
partners program as key channels to generate revenue. We have great
confidence in our go-to-market strategy of providing a global
customer base with frictionless transactions and recently finalized
a secondary offering of $70.1 million in net cash proceeds,
providing us the ability to expand that strategy and look for
M&A opportunities.”
“We are pleased with our results for 2020, which demonstrate
substantial, ongoing, year-over-year improvement despite
unprecedented global challenges,” said Robert A. Berman,
President and CEO of Rekor. “The past year we laid the
foundation to accelerate the growth of our commercial and
government sectors.”
During 2020, Rekor was selected by multiple resellers and formed
partnerships with various companies, including Mastercard® and
White Castle®, to use an array of AI-based technologies in
retail, public safety, and parking operations. The Company has used
intensive machine learning for over three years in developing its
current suite of differentiated product and service offerings and
has recently filed for six patents based on these products and
services.
Full-Year 2020 and Fourth Quarter 2020 Financial
Results
Revenues
Revenue for the three months ended December 31, 2020, increased to
$2,835,000, compared to $1,507,000 for the three months ended
December 31, 2019. This increase was a result of
additional products the Company
offered during the period as it continued expanding its technology
offerings. Revenues earned from the eCommerce platform organically
increased $85,000 or 53% to $244,000 for the three months ended
December 31, 2020. This is an overall increase from $159,000 for
the three months ended December 31, 2019.
Revenue for the year ended December 31, 2020, increased to
$9,234,000, compared to $5,469,000 for the year ended December 31,
2019. This increase was primarily attributable to the expanded
technology offerings and large contracts, as well as the fact that
operational results from our OpenALPR acquisition have only been
included in our operations since March 2019. During the year ended
December 31, 2020, revenue attributable to OpenALPR was recognized
for the full year compared to only a nine and half month’s
period in the corresponding period in 2019. Additionally, part of
the growth in revenue for the year ended December 31, 2020, was
attributable to revenues earned through our eCommerce platform
which organically increased, $426,000 or 97%, to $865,000 from
$439,000 for the year ended December 31, 2019.
Cost of Revenue, Gross Profit and Gross Margin
Gross profit for the three months ended December 31, 2020,
increased to $2,055,000 with a gross margin of 72%, compared to
$1,007,000 with a gross margin of 67% for the three months ended
December 31, 2019. The increase in gross profit was primarily
attributable to an increase in revenue for the corresponding
period. The
higher margin in the fourth quarter is a result of an increase in
software revenue, which have higher margin.
Gross profit for the year ended December 31, 2020, increased to
$5,701,000 with a gross margin of 62%, compared to $3,817,000 with
a gross margin of 70% for the year ended December 31, 2019. The
increase in gross profit was primarily attributable to an increase
in revenue for the corresponding period.
The decline in the gross margin percentage was attributable to
building infrastructure in connection with large software and
hardware contracts. These contracts included construction and
assembly of fixtures for our vehicle recognition cameras and the
infrastructure necessary to support database and communications
operations on a shared basis with other municipalities. In this
early stage, the cost of building the network is higher and the
initial margins for such projects are consequently lower than
expected than for future operations that will be able to use the
same infrastructure.
Loss from Operations
Operating loss for the three months ended December 31, 2020,
increased to $3,099,000, compared to $2,247,000 in the same period
in 2019, and operating loss for the year ended December 31, 2020,
increased to $11,848,000, compared to $7,534,000 in the same period
in 2019. The increase in the operating loss throughout the year is
attributable mainly to the increased headcount to support the
Company’s growth plan and solidify the corporate structure.
In addition, we increased our R&D expenses to continue the
development of new solutions to remain ahead of the curve with our
technology.
Performance Obligations
As of December 31, 2020, we had approximately $16,705,000 in
contracts that were closed prior to December 31, 2020, but which
have a contractual period beyond December 31, 2020. These contracts
generally cover a term of one to five years, in which we will
recognize revenue ratably over the contract term. We currently
expect to recognize approximately 30% of this amount over the
succeeding twelve months, and the remainder is expected to be
recognized over the following five years. On occasion our customers
will prepay the full contract or a substantial portion of the
contract. Amounts related to the prepayment of the contract for a
service period that is not yet met are recorded as part of our
contract liabilities balance.
The table below reflects the 65% growth in the remaining value in
contracts from December 31, 2019 through December 31, 2020 (dollars
in thousands):
EBITDA and Adjusted EBITDA
We calculate EBITDA as net loss before interest, taxes,
depreciation and amortization. We calculate 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):
|
|
Year ended December 31,
|
|
|
|
2020
|
2019
|
|
Net
loss
|
$(13,962)
|
$(12,405)
|
|
Income
taxes
|
23
|
47
|
|
Interest
|
2,503
|
3,909
|
|
Depreciation
and amortization
|
1,961
|
1,377
|
|
EBITDA
|
$(9,475)
|
$(7,072)
|
|
|
|
|
|
Loss
on extinguishment of debt
|
$3,281
|
$1,113
|
|
Share-based
compensation
|
796
|
446
|
|
Gain
on sale of business
|
(3,631)
|
-
|
|
Loss
on sale of Secure Education
|
-
|
3
|
|
Adjusted
EBITDA
|
$(9,029)
|
$(5,510)
|
Rekor has scheduled a conference call to discuss the 2020 fourth
quarter and full year results on Wednesday, March 10, 2021, at 4:45
P.M. (Eastern).
All interested parties may listen to a live webcast of the call
at:
Online: https://www.webcaster4.com/Webcast/Page/2523/40273
By phone: Toll Free: 877-407-8033 or International:
201-689-8033
An archived webcast will also be available to replay this
conference call directly from the Company’s website under
Investors, Events & Presentations. Slides that accompany the
conference call will be available on the Company’s
website.
About Rekor Systems, Inc.
Rekor (Nasdaq: REKR) provides real-time, customer and public safety
intelligence to enable AI-driven decisions. Rekor bridges
commercial and government sectors with actionable, real-time
vehicle recognition data to enable informed decisions faster and
with greater outcomes. Rekor is transforming industries like Public
Safety, Customer Experience, and Smart Cities in approximately 80
countries across the globe with smarter, quicker, cost-competitive
vehicle recognition solutions for security, revenue discovery and
recovery, public safety, electronic toll collection, brand loyalty,
parking operations, logistics, and traffic management. We use the
power of artificial intelligence to analyze video streams and
transform them into AI-driven decisions by our clients. Our machine
learning software can turn most IP cameras into highly accurate and
affordable vehicle recognition devices used to help protect lives,
increase brand loyalty, and enhance operations and logistics,
without the need to install expensive new infrastructure. We make
what was once considered impossible, possible. To learn more please
visit our website: https://rekor.ai.
Forward-Looking Statements
This press release includes 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. 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. Important factors that
could have such a result include a decline or weakness in general
economic conditions, an outbreak of hostilities, the ongoing
pandemic and responses thereto related to COVID-19, a decline or
volatility in the securities markets or regulatory changes or other
adverse developments with respect to the markets for the
Company’s products and services or an inability to obtain
adequate financing. 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.
Media:
Robin Bectel
REQ For Rekor Systems, Inc.
rekor@req.co
Company Contact:
Rekor Systems, Inc.
Eyal Hen
Chief Financial Officer
Phone: +1 (443) 545-7260
ehen@rekor.ai
Investor Relations
Contact:
Rekor Systems, Inc.
Charles Degliomini
ir@rekor.ai
REKOR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
|
|
December 31,
2020
|
December 31,
2019
|
|
ASSETS
|
|
|
|
Current Assets
|
|
|
|
Cash
and cash equivalents
|
$20,595
|
$1,075
|
|
Restricted
cash and cash equivalents
|
412
|
461
|
|
Accounts
receivable, net
|
1,038
|
776
|
|
Inventory
|
1,264
|
302
|
|
Note
receivable, current portion
|
340
|
-
|
|
Other
current assets, net
|
469
|
175
|
|
Current
assets of discontinued operations
|
2
|
7,441
|
|
Total current assets
|
24,120
|
10,230
|
|
Long-term Assets
|
|
|
|
Property
and equipment, net
|
1,047
|
442
|
|
Right-of-use
lease assets, net
|
426
|
283
|
|
Goodwill
|
6,336
|
6,336
|
|
Intangible
assets, net
|
7,038
|
8,244
|
|
Investments
in unconsolidated companies
|
75
|
-
|
|
Note
receivable, long-term
|
1,360
|
-
|
|
Long-term
assets of discontinued operations
|
-
|
3,457
|
|
Total long-term assets
|
16,282
|
18,762
|
|
Total assets
|
$40,402
|
$28,992
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
|
|
|
|
Current Liabilities
|
|
|
|
Accounts
payable and accrued expenses
|
$3,898
|
$3,678
|
|
Loan
payable, current portion
|
517
|
-
|
|
Lease
liability, short-term
|
253
|
148
|
|
Contract
liabilities
|
1,126
|
749
|
|
Current
liabilities of discontinued operations
|
124
|
5,757
|
|
Total current liabilities
|
5,918
|
10,332
|
|
Long-term Liabilities
|
|
|
|
Notes
payable, long-term
|
980
|
20,409
|
|
Loan
payable, long-term
|
469
|
-
|
|
Lease
liability, long-term
|
188
|
161
|
|
Contract
liabilities, long-term
|
958
|
775
|
|
Deferred
tax liability, long-term
|
24
|
10
|
|
Long
term liabilities of discontinued operations
|
5
|
536
|
|
Total long-term liabilities
|
2,624
|
21,891
|
|
Total liabilities
|
8,542
|
32,223
|
|
Series
A Cumulative Convertible Redeemable Preferred stock, $0.0001 par
value, 505,000 shares authorized and 502,327 shares issued and
outstanding as of December 31, 2020 and December 31, 2019,
respectively
|
6,669
|
5,804
|
|
Commitments and Contingencies
|
|
|
|
Stockholders' Equity (Deficit)
|
|
|
|
Common stock,
$0.0001 par value, 100,000,000 and 30,000,000 shares authorized,
33,013,271 and 21,595,653 shares issued and outstanding as of
December 31, 2020 and December 31, 2019, respectively
|
3
|
2
|
|
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 December 31, 2020 and December 31, 2019,
respectively
|
-
|
-
|
|
Series
B Cumulative Convertible Preferred stock, $0.0001 par value,
240,861 shares authorized, issued and outstanding as of December
31, 2020 and December 31, 2019, respectively
|
-
|
-
|
|
Additional
paid-in capital
|
68,238
|
19,371
|
|
Accumulated
deficit
|
(43,050)
|
(28,408)
|
|
Total stockholders’ equity (deficit)
|
25,191
|
(9,035)
|
|
Total liabilities and stockholders’ equity
(deficit)
|
$40,402
|
$28,992
|
REKOR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share data)
|
|
Year ended December 31,
|
|
|
|
2020
|
2019
|
|
Revenue
|
$9,234
|
$5,469
|
|
Cost
of revenue
|
3,533
|
1,652
|
|
Gross
profit
|
5,701
|
3,817
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
General
and administrative expenses
|
12,117
|
8,276
|
|
Selling
and marketing expenses
|
2,247
|
1,646
|
|
Research
and development expenses
|
3,185
|
1,429
|
|
Operating
expenses
|
17,549
|
11,351
|
|
|
|
|
|
Loss
from operations
|
(11,848)
|
(7,534)
|
|
Other
income (expense):
|
|
|
|
Loss
on extinguishment of debt
|
(3,281)
|
(1,113)
|
|
Interest
expense
|
(2,503)
|
(3,909)
|
|
Other
income
|
62
|
198
|
|
Gain
on sale of business
|
3,631
|
-
|
|
Total
other expense
|
(2,091)
|
(4,824)
|
|
Loss
before income taxes
|
(13,939)
|
(12,358)
|
|
Income
tax provision
|
(23)
|
(47)
|
|
Net
loss from continuing operations
|
$(13,962)
|
$(12,405)
|
|
Net
loss from discontinued operations
|
(220)
|
(3,479)
|
|
Net
loss
|
$(14,182)
|
$(15,884)
|
|
Loss
per common share from continuing operations - basic and
diluted
|
(0.63)
|
(0.68)
|
|
Loss
per common share discontinued operations - basic and
diluted
|
(0.01)
|
(0.17)
|
|
Loss
per common share - basic and diluted
|
$(0.64)
|
$(0.85)
|
|
|
|
|
|
Weighted
average shares outstanding
|
|
|
|
Basic
and diluted
|
24,192,680
|
20,033,023
|