Rekor Systems, Inc. Reports First Quarter 2021 Financial
Results
Highlights:
●
First quarter 2021 gross revenue increased 164% to $4.2 million as
compared to $1.6 million in the first quarter of 2020
●
Raised $70.1 million in net cash proceeds during February 2021 with
an underwritten public offering
COLUMBIA, Md. – May 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 unaudited financial results for the first quarter of
2021.
“Our results in the first quarter have demonstrated a
continuing high level of growth on a year-over-year basis,”
said Eyal Hen, Chief Financial Officer, Rekor. “In the first
quarter we stepped up our sales outreach by actively marketing our
eCommerce platform and expanding our channel partners program along
with continuing our aggressive direct sales efforts. These
activities were key to increased revenue generation in the first
quarter of 2021. Rekor's go-to-market strategy reaches a global
customer base with frictionless transactions and gives us great
confidence moving forward.”
“We are pleased with our results for the first quarter 2021,
which demonstrate substantial ongoing year-over-year
improvement,” said Robert A. Berman, President and CEO,
Rekor. “This quarter we accelerated growth in both our
commercial and government sectors.”
In February 2021, the Company completed an underwritten offering
with resulting net proceeds of $70.1 million in cash.
The company has continued to expand its product and service
offerings in recent quarters. The product suite incorporates
intensive machine learning, which was been developed over the last
three years and, which differentiates Rekor’s offerings from
its competitors. Importantly, we also launched the beta version of
the Rekor One platform, which is now ready for demonstration to all
commercial and public sector potential customers.
First Quarter 2021 and First Quarter 2020 Financial
Results
Revenues
Revenue for the three months ended March 31, 2021, increased
$2,621,000 or 164% to $4,216,000, compared to $1,595,000 for the
three months ended March 31, 2020. The increase in revenue for the
three months ended March 31, 2021, compared to the three months
ended March 31, 2020, was a result of additional products and
services the Company offered and increases in direct sales and
Partner Program sales of our existing products and services. In the
first quarter of 2021, we initiated services for the state of
Oklahoma’s Uninsured
Vehicle Enforcement Diversion (UVED) Program,
which
issued over 25,000 diversion notices of non-compliance and
generated approximately $1,000,000 in revenue for the state and
$245,000 of revenue for the Company in the current quarter. We also
had significant growth in our eCommerce revenue, which is defined
as revenue recognized through our eCommerce platform as well as
from our solutions in the tolling industry. For the three months
ended March 31, 2021 and 2020, the Company recognized eCommerce
revenues of $442,000 and $177,000 respectively. The remainder of
the increase was attributable to increased sales of hardware and
software subscriptions through our Partner Program and direct sales
channels.
Cost of Revenue, Gross Profit and Gross Margin
Gross profit for the three months ended March 31, 2021, increased
to $2,254,000 with a gross margin of 53%, compared to $1,101,000
and a gross margin of 69% for the three months ended March 31,
2020. The increase in gross profit was primarily attributable to
the increase in revenue for the corresponding period.
The
decrease in gross margin was attributable to a higher level of
hardware sales that occurred during the three months ended March
31, 2021, as hardware sales typically have lower margins than
software sales.
Loss from Operations
Operating loss for the three months ended March 31, 2021, increased
to $5,308,000, compared to $2,604,000 for the three months ended
March 31, 2020. The increase in the operating loss during the
period is attributable mainly to the increased headcount to support
our growth plan and professional services related to our merger and
acquisition activities. In addition, we continue to increase our
R&D expenses to keep developing new solutions and advancing our
technology.
Loss per Share
Loss per share for the three months ended March 31, 2021 decreased
to $(0.15), compared to $(0.19) for the three months ended March
31, 2020. The $(0.04) decrease in the loss per share was due to the
increase in the weighted average of shares outstanding for the
three months ended March 31, 2021 compared to the three months
ended March 31, 2020. During the period subsequent to March 31,
2020, the Company issued shares in connection with an At-the-Market
sales agreement, the retirement of debt, the conversion of
preferred stock and an underwritten public offering, all of which
caused an increase in the weighted average of common shares
outstanding for the three months ended March 31, 2021.
Performance Obligations
As of March 31, 2021, we had approximately $16,186,000 of contracts
that were closed prior to March 31, 2021, but have a contractual
period beyond March 31, 2021. 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 32% of this amount over the succeeding twelve months,
and the remainder is expected to be recognized over the following
four 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 17% growth in the remaining value of
contracts from March 31, 2020, compared to March 31, 2021 (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, (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 March 31,
2021
2020
Total
comprehensive loss from continuing operations
$(5,401)
$(3,774)
Income
taxes
3
7
Interest
32
1,163
Depreciation
and amortization
614
423
EBITDA
$(4,752)
$(2,181)
Share-based
compensation
781
171
Loss
due to change in value of equity investments
76
-
One-time
consulting fees
776
-
Adjusted
EBITDA
$(3,119)
$(2,010)
Rekor has scheduled a conference call to discuss the 2021 first
quarter results on Monday, May 10, 2021, at 4:30 P.M.
(Eastern).
All interested parties may listen to a live webcast of the call
at:
By phone: Toll Free: 877-407-8033 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.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
(Unaudited)
March 31,
2021
December 31,
2020
ASSETS
Current Assets
Cash
and cash equivalents
$62,845
$20,595
Restricted
cash and cash equivalents
1,005
412
Short-term
investments
23,996
-
Accounts
receivable, net
2,474
1,038
Inventory
1,101
1,264
Note
receivable, current portion
340
340
Other
current assets, net
626
469
Current
assets of discontinued operations
1
2
Total current assets
92,388
24,120
Long-term Assets
Property
and equipment, net
1,337
1,047
Right-of-use
lease assets, net
352
426
Goodwill
6,336
6,336
Intangible
assets, net
6,633
7,038
Investments
in unconsolidated companies
74
75
Note
receivable, long-term
1,275
1,360
Total long-term assets
16,007
16,282
Total assets
$108,395
$40,402
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts
payable and accrued expenses
$4,712
$3,898
Notes
payable, current portion
985
-
Loan
payable, current portion
625
517
Lease
liability, short-term
199
253
Contract
liabilities
1,497
1,126
Current
liabilities of discontinued operations
128
124
Total current liabilities
8,146
5,918
Long-term Liabilities
Notes
payable, long-term
-
980
Loan
payable, long-term
350
469
Lease
liability, long-term
167
188
Contract
liabilities, long-term
910
958
Deferred
tax liability, long-term
27
24
Long
term liabilities of discontinued operations
-
5
Total long-term liabilities
1,454
2,624
Total liabilities
9,600
8,542
Series
A Cumulative Convertible Redeemable Preferred stock, $0.0001 par
value; authorized: 505,000 shares authorized at March 31, 2021 and
December 31, 2020; issued and outstanding: 0 and 502,327 shares
issued and outstanding at March 31, 2021 and December 31,
2020
-
6,669
Commitments and Contingencies
Stockholders' Equity
Common
stock, $0.0001 par value; authorized; 100,000,000 shares; issued:
40,972,238 shares at March 31, 2021 and 33,013,271 at December 31,
2020; outstanding: 40,952,877 shares at March 31, 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 March 31, 2021 and December 31, 2020, respectively
Series
B Cumulative Convertible Preferred stock, $0.0001 par value;
authorized: 240,861 shares authorized at March 31, 2021 and
December 31, 2020; issued and outstanding: 0 and 240,861 shares
issued and outstanding at March 31, 2021 and December 31,
2020
-
-
Treasury
stock, 19,361 and 0 shares as of March 31, 2021 and December 31,
2020, respectively
(319)
-
Additional
paid-in capital
147,615
68,238
Accumulated
other comprehensive income
2
-
Accumulated
deficit
(48,507)
(43,050)
Total stockholders’ equity
98,795
25,191
Total liabilities and stockholders’ equity
$108,395
$40,402
REKOR SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share data)
(Unaudited)
Three months ended March 31,
2021
2020
Revenue
$4,216
$1,595
Cost
of revenue
1,962
494
Gross
profit
2,254
1,101
Operating
expenses:
General
and administrative expenses
5,403
2,791
Selling
and marketing expenses
937
371
Research
and development expenses
1,222
543
Operating
expenses
7,562
3,705
Loss
from operations
(5,308)
(2,604)
Other
income (expense):
Interest
expense
(32)
(1,163)
Other
income
16
-
Total
other expense
(16)
(1,163)
Loss
before income taxes
(5,324)
(3,767)
Income
tax provision
(3)
(7)
Equity
in loss of investee
(76)
-
Net
loss from continuing operations
(5,403)
(3,774)
Net
loss from discontinued operations
(3)
(14)
Net
loss
$(5,406)
$(3,788)
Comprehensive
loss:
Net
loss from continuing operations
(5,403)
(3,774)
Change
in unrealized gain on short-term investments
2
-
Total
comprehensive loss from continuing operations
(5,401)
(3,774)
Total
comprehensive loss
$(5,404)
$(3,788)
Loss
per common share from continuing operations - basic and
diluted
(0.15)
(0.19)
Loss
per common share discontinued operations - basic and
diluted
