Rekor Systems, Inc. Reports Second Quarter 2021 Financial
Results
Highlights:
●
Second quarter 2021 gross revenue increased 60% to $4.3 million as
compared to $2.7 million in the second quarter of 2020
●
First half 2021 gross revenue increased 99% to $8.5 million as
compared to $4.3 million in the prior year
●
Second quarter 2021 gross margin was 66%, up from 52% in the second
quarter of 2020
●
Signed a definitive agreement to acquire Waycare Technologies,
Ltd., expanding our global footprint, capabilities, and product
offerings
COLUMBIA, Md. – August 16, 2021 - Rekor
Systems, Inc, (NASDAQ: REKR) ("Rekor"
or the “Company”), a global AI technology company with
a mission to provide intelligent infrastructure and insights that
build safer, smarter and more efficient cities around the world,
announced today its unaudited financial results for the second
quarter of 2021.
“We have posted another quarter of strong revenue growth with
our top line rising 60 percent year-over-year,” said Eyal
Hen, Chief Financial Officer, Rekor. “For the first six
months of the fiscal year, we generated nearly $8.5 million in
revenues, just about doubling our revenues compared to the same
period last year. Revenue growth was widely diversified, with the
eCommerce platform, the UVED Program and partners’ sales
being the main drivers. We’ve also seen an increase in
operating expenses as we continue to expand our teams and service
offerings to capitalize on market opportunities we see
ahead.”
“While we are content with our second quarter 2021 results,
we believe that we are in a unique position to drive meaningful and
sustainable long-term revenue growth by continuously strengthening
our product portfolio,” added Robert A. Berman, President and
CEO, Rekor. “To that end, we have announced the acquisition
of Waycare, a cloud-based platform for proactive traffic
management. Waycare’s solutions, which use artificial
intelligence algorithms to produce actionable insights and
predictions for traffic safety and congestion management,
complement our offerings. This acquisition supplements our
portfolio of solutions and expands our global footprint. It’s
a logical step as we pursue our strategy to become a key enabler of
the emerging market of intelligent infrastructure.
“We understand that great products need to be sold,”
Mr. Berman continued. “We recently hired Mike Dunbar as our
new Chief Revenue Officer to bring in fresh ideas to refine our
go-to-market strategy. This initiative, in combination with input
from the talented Waycare team we are welcoming into our
organization, should further strengthen our remarkable growth. We
continuously assess conventional, as well as disruptive strategies,
to increase our footprint. We have the hardware, we have the
software, and now, we are focusing intently on growing our
geographic footprint.”
Second Quarter Financial Results
Revenues
Revenue for the three months ended June 30, 2021, increased
$1,597,000 or 60% to $4,274,000, compared to $2,677,000 for the
three months ended June 30, 2020. Revenue for the six months ended
June 30, 2021, increased $4,218,000 or 99% to $8,491,000, compared
to $4,273,000 for the comparable period in 2020. The increase in
revenue for the three and six months ended June 30, 2021, compared
to the three and six months ended June 30, 2020, was a result of
additional products and programs we offered, increases in our
direct sales and the continuing development of our Partners
Program.
In 2021, we initiated services for the state of
Oklahoma’s Uninsured Vehicle
Enforcement Diversion (UVED)
Program, which has generated
revenue of $387,000 and $635,000 for the Company during the three
and six months ended June 30, 2021, respectively. We also had
significant growth in our eCommerce revenue, which is defined as
revenue recognized through our eCommerce platform as well as our
solutions in the tolling industry. For the three months ended June
30, 2021, and 2020, we recognized eCommerce revenues of $405,000
and $197,000, respectively. For the six months ended June 30, 2021
and 2020, we recognized eCommerce revenues of $848,000 and
$373,000, respectively.
Cost of Revenue, Gross Profit and Gross Margin
Gross profit for the three months ended June 30, 2021, increased to
$2,842,000 with a gross margin of 66%, compared to $1,401,000 and a
gross margin of 52% for the three months ended June 30, 2020. The
increase in gross profit was attributable to the sale of software.
The margin on the sale of software is typically higher than our
hardware products due to the reduced material and labor hours
associated with the issuance of a license.
For the six months ended June 30, 2021, the Company generated gross
profits of $5,097,000 with a gross margin of 60%. This compares to
gross profits of $2,503,000 and a gross margin of 59% for the
year-ago comparable period.
Loss from Operations
Operating loss for the three months ended June 30, 2021, increased
to $4,685,000, compared to $2,779,000 for the three months ended
June 30, 2020. For the six months ended June 30, 2021, and 2020,
the Company generated an operating loss of $9,991,000 and
$5,382,000, respectively. The Company continued to increase
headcount to support its growth initiatives and saw an increase in
professional fees mainly associated with merger and acquisition
initiatives. The Company also increased its marketing efforts to
promote its products and services including digital marketing and
other sales efforts. In addition, research and development expenses
increased in the three and six months ended June 30, 2021,
primarily due to the development of new products and additional
software capabilities.
Loss per Share
Loss per share for the three months ended June 30, 2021, increased
to $(0.12), compared to $(0.04) for the three months ended June 30,
2020. For the six months ended June 30, 2021 and 2020, loss per
share was $(0.27) and $(0.23), respectively. The increase in net
loss per share is due to the increase in our net loss from
continuing operations and was partially offset by an increase in
weighted average shares outstanding.
Performance Obligations
On June 30, 2021, the Company had approximately $15,174,000 of
remaining performance obligations not yet satisfied or partially
satisfied. The Company expects to recognize approximately 34% of
this amount as revenue over the succeeding twelve months, and the
remainder is expected to be recognized over the next two to four
years thereafter.
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, (v) losses associated with equity method
investments, (vi) merger and acquisition transaction costs, and
(vii) 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 June 30,
Six
Months ended June 30,
2021
2020
2021
2020
Total
comprehensive loss from continuing operations
$(4,760)
$(419)
$(10,160)
$(4,193)
Income
taxes
3
7
7
13
Interest
18
1,086
50
2,250
Depreciation
and amortization
625
466
1,239
889
EBITDA
$(4,114)
$1,140
$(8,864)
$(1,041)
Loss
on extinguishment of debt
$-
$200
$-
$200
Share-based
compensation
1,125
166
1,906
337
Gain
on sale of business
-
(3,636)
-
(3,636)
Loss
due to change in value of equity investments
74
-
150
-
One-time
consulting fees
-
-
776
-
Adjusted
EBITDA
$(2,915)
$(2,130)
$(6,032)
$(4,140)
Rekor has scheduled a conference call to discuss the 2021 second
quarter results on Monday, August 16, 2021, at 4:30 P.M.
(Eastern).
All interested parties may listen to a live webcast of the call
at:
By phone: Toll Free: 877-545-0320 or International: 973-528-0016;
passcode: 765912
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 Systems, Inc. (NASDAQ: REKR) is a trusted global authority on
intelligent infrastructure providing solutions that drive the world
to be safer, smarter, and more efficient. As a provider of
comprehensive and continuous real-time roadway intelligence, Rekor
leverages AI, machine learning, and holistic data to provide
actionable insights. Rekor believes that intelligent infrastructure
is required to truly activate smart cities and, with its disruptive
Rekor One™ technology and solutions, the Company provides a
seamless platform to accomplish this objective. 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 Contact:
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.
Bulent Ozcan
ir@rekor.ai
REKOR SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
(Unaudited)
June
30, 2021
December
31, 2020
ASSETS
Current assets
Cash
and cash equivalents
$69,032
$20,595
Restricted
cash and cash equivalents
856
412
Short-term
investments
12,998
-
Accounts
receivable, net
1,996
1,038
Inventory
1,357
1,264
Note
receivable, current portion
340
340
Other
current assets, net
1,267
469
Current
assets of discontinued operations
-
2
Total current assets
87,846
24,120
Long-term assets
Property
and equipment, net
1,564
1,047
Right-of-use
lease assets, net
277
426
Goodwill
6,336
6,336
Intangible
assets, net
6,224
7,038
Investments
in unconsolidated companies
-
75
Note
receivable, long-term
1,190
1,360
SAFE
investment
1,000
-
Other
long-term assets
127
-
Total long-term assets
16,718
16,282
Total assets
$104,564
$40,402
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts
payable and accrued expenses
$4,130
$3,898
Notes
payable, current portion
990
-
Loan
payable, current portion
911
517
Lease
liability, short-term
142
253
Contract
liabilities
1,782
1,126
Current
liabilities of discontinued operations
129
124
Total current liabilities
8,084
5,918
Long-term liabilities
Notes
payable, long-term
-
980
Loan
payable, long-term
55
469
Lease
liability, long-term
144
188
Contract
liabilities, long-term
1,077
958
Deferred
tax liability, long-term
31
24
Long
term liabilities of discontinued operations
-
5
Total long-term liabilities
1,307
2,624
Total liabilities
9,391
8,542
Series
A Cumulative Convertible Redeemable Preferred stock, $0.0001 par
value. authorized: 505,000 shares authorized at June 30, 2021 and
December 31, 2020. issued and outstanding. 0 and 502,327 shares
issued and outstanding at June 30, 2021 and December 31,
2020
-
6,669
Commitments and contingencies
Stockholders' equity
Common stock,
$0.0001 par value. authorized. 100,000,000 shares. issued:
41,012,766, shares at June 30, 2021 and 33,013,271 at December 31,
2020. outstanding: 41,032,127 shares at June 30, 2021 and
33,013,271 at December 31, 2020
4
3
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 June 30, 2021 and December 31, 2020, respectively
-
-
Series
B Cumulative Convertible Preferred stock, 0.0001 par value.
authorized: 240,861 shares authorized at June 30, 2021 and December
31, 2020. issued and outstanding. 0 and 240,861 shares issued and
outstanding at June 30, 2021 and December 31, 2020
-
-
Treasury
stock, 19,361 and 0 shares as of June 30, 2021 and December 31,
2020, respectively
(319)
-
Additional
paid-in capital
148,754
68,238
Accumulated
other comprehensive income
3
-
Accumulated
deficit
(53,269)
(43,050)
Total stockholders’ equity
95,173
25,191
Total liabilities and stockholders’ equity
$104,564
$40,402
REKOR SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share data)
(Unaudited)
Three
Months ended June 30,
Six
Months ended June 30,
2021
2020
2021
2020
Revenue
$4,274
$2,677
$8,491
$4,273
Cost
of revenue
1,432
1,276
3,394
1,770
Gross
profit
2,842
1,401
5,097
2,503
Operating
expenses:
General
and administrative expenses
5,024
2,937
10,427
5,728
Selling
and marketing expenses
984
424
1,920
795
Research
and development expenses
1,519
819
2,741
1,362
Operating
expenses
7,527
4,180
15,088
7,885
Loss
from operations
(4,685)
(2,779)
(9,991)
(5,382)
Other
income (expense):
Loss
on extinguishment of debt
-
(200)
-
(200)
Interest
expense
(18)
(1,086)
(50)
(2,250)
Gain
on the sale of business
-
3,636
-
3,636
Other
income
19
17
34
16
Total
other income (expense)
1
2,367
(16)
1,202
Loss
before income taxes
(4,684)
(412)
(10,007)
(4,180)
Income
tax provision
(3)
(7)
(7)
(13)
Equity
in loss of investee
(74)
-
(150)
-
Net
loss from continuing operations
(4,761)
(419)
(10,164)
(4,193)
Net
loss from discontinued operations
(1)
(199)
(4)
(213)
Net
loss
(4,762)
(618)
(10,168)
(4,406)
Comprehensive
loss:
Net
loss from continuing operations
(4,761)
(419)
(10,164)
(4,193)
Change
in unrealized gain on short-term investments
1
-
4
Total
comprehensive loss from continuing operations
(4,760)
(419)
(10,160)
(4,193)
Total
comprehensive loss
$(4,761)
$(618)
$(10,164)
$(4,406)
Loss
per common share from continuing operations - basic and
diluted
(0.12)
(0.03)
(0.27)
(0.22)
Loss
per common share discontinued operations - basic and
diluted
