Novume(US:REKR)2025-08-12 20:16PART I - FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements, reflecting continued net losses and going concern doubt Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position at specific quarter-end dates Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $4,830 | $5,013 | | Total current assets | $21,380 | $19,930 | | Total assets | $80,072 | $82,475 | | Liabilities & Equity | | | | Total current liabilities | $15,221 | $18,223 | | Total liabilities | $44,673 | $48,334 | | Total stockholders' equity | $35,399 | $34,141 | Condensed Consolidated Statements of Operations This section details the company's revenues, expenses, and net loss for specified periods Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $12,359 | $12,427 | $21,557 | $22,205 | | Loss from operations | $(7,735) | $(10,075) | $(17,874) | $(22,991) | | Net loss | $(8,658) | $(9,795) | $(19,532) | $(28,409) | | Loss per common share | $(0.07) | $(0.12) | $(0.17) | $(0.35) | Condensed Consolidated Statements of Cash Flows This section outlines the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(15,734) | $(17,926) | | Net cash used in investing activities | $(630) | $(9,707) | | Net cash provided by financing activities | $16,205 | $15,337 | | Net decrease in cash | $(159) | $(12,296) | | Cash at end of period | $5,170 | $3,417 | Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the financial statements - The company's history of losses and negative operating cash flows, along with its assessment that existing cash is insufficient to fund current operations, raises substantial doubt about its ability to continue as a going concern for the next twelve months3031 Revenue Breakdown (in thousands) | Revenue Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Recurring revenue | $5,911 | $6,284 | $11,017 | $11,246 | | Product and service revenue | $6,448 | $6,143 | $10,540 | $10,959 | | Total revenue | $12,359 | $12,427 | $21,557 | $22,205 | - As of June 30, 2025, the company had approximately $13.2 million in remaining performance obligations, with about 88% expected to be recognized as revenue over the succeeding twelve months64 - The company entered into an At Market Issuance Sales Agreement in February 2025 to offer and sell up to $25 million of common stock. As of June 30, 2025, it had issued 14.9 million shares, raising net cash of approximately $17.7 million115116 - Subsequent to the quarter's end, from June 30, 2025, to August 11, 2025, the company issued an additional 3.97 million shares of common stock, receiving net cash of $4.65 million under the Sales Agreement138 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses financial condition, operations, and outlook, addressing revenue, cost containment, and going concern Results of Operations This section analyzes the company's financial performance, including revenue, expenses, and net loss Comparison of Results of Operations (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $21,557 | $22,205 | $(648) | -3% | | Cost of revenue | $11,006 | $11,061 | $(55) | 0% | | Total operating expenses | $28,425 | $34,135 | $(5,710) | -17% | | Loss from operations | $(17,874) | $(22,991) | $5,117 | 22% | | Net loss | $(19,532) | $(28,409) | $8,877 | 31% | - The decrease in revenue for the first six months of 2025 was primarily due to adverse weather conditions and a slowdown in project activity, particularly in the government sector181 - Operating expenses decreased significantly across all categories (General & Administrative, Selling & Marketing, Research & Development) for the first six months of 2025, mainly due to reduced payroll and related costs from cost containment efforts184185186 Non-GAAP Measures This section reconciles and analyzes non-GAAP financial metrics like EBITDA and Adjusted Gross Profit EBITDA and Adjusted EBITDA Reconciliation (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net loss | $(19,532) | $(28,409) | | Interest | $1,176 | $1,598 | | Depreciation and amortization | $3,117 | $4,676 | | EBITDA | $(15,239) | $(22,135) | | Share-based compensation | $2,093 | $2,282 | | Loss on extinguishment of debt | - | $4,693 | | Adjusted EBITDA | $(13,146) | $(15,160) | Adjusted Gross Profit and Margin (in thousands, except for margin) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Adjusted Gross Profit | $10,551 | $11,144 | | Adjusted Gross Margin | 48.9% | 50.2% | Liquidity and Capital Resources This section assesses the company's ability to meet financial obligations and fund operations - As of June 30, 2025, the company had cash, cash equivalents, and restricted cash of $5.17 million and working capital of $6.16 million202 - Management states that existing cash is insufficient to fund current operations, raising substantial doubt about the company's ability to continue as a going concern. The company is exploring external financing options and has contingency plans to reduce or defer expenses20932 Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(15,734) | $(17,926) | | Net cash used in investing activities | $(630) | $(9,707) | | Net cash provided by financing activities | $16,205 | $15,337 | Quantitative and Qualitative Disclosures About Market Risk The company is exempt from providing market risk disclosures due to its status as a smaller reporting company - The company is exempt from providing quantitative and qualitative disclosures about market risk because it qualifies as a "smaller reporting company"213 Controls and Procedures Management concluded disclosure controls were effective, with no material changes to internal controls over financial reporting - The Interim Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025216 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls217 PART II - OTHER INFORMATION Legal Proceedings The company is involved in a breach of contract lawsuit and an OSHA claim, both of which it intends to vigorously defend - H.C. Wainwright & Co., LLC (HCW) has filed a lawsuit against the company for breach of contract, seeking damages and fees related to a July 2023 warrant exercise transaction and a February 2024 public offering223224 - Two former employees filed a complaint with OSHA in 2023. Although OSHA initially dismissed the complaint, the claimants have appealed. One claim has been settled, while the other proceeded to a hearing on liability, with a court finding still pending226227228 - The company believes the claims in both the HCW lawsuit and the OSHA matter are without merit and intends to defend its position vigorously225229 Risk Factors New risk factor highlights potential adverse effects of tariffs and trade policy changes on supply chain and financial performance - A new risk factor highlights that U.S. tariffs and trade policy changes could adversely affect the company's supply chain and financial performance by increasing the cost of imported hardware components like cameras and sensors230 Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the reporting period - None232 Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - None234 Mine Safety Disclosures This disclosure item is not applicable to the company's operations - Not applicable235 Other Information No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No directors or officers adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter236 Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL data files - The exhibits filed with this report include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (101 series)237