Novume(US:REKR)2024-05-15 20:26PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Rekor Systems' unaudited condensed consolidated financial statements for Q1 2024 and 2023 are presented, including balance sheets, operations, equity, cash flows, and detailed notes UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS Condensed Consolidated Balance Sheet Highlights (Dollars in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :---------------- | | Total Assets | $107,150 | $92,151 | | Total Liabilities | $52,191 | $58,781 | | Total Stockholders' Equity | $54,959 | $33,370 | | Goodwill | $24,161 | $20,593 | | Intangible assets, net | $28,167 | $17,239 | - Total assets increased by $14,999K, primarily driven by increases in goodwill and intangible assets due to the ATD acquisition1213 - Total liabilities decreased by $6,590K, mainly from the repayment of 2023 Promissory Notes121389 - Total stockholders' equity increased by $21,589K, largely due to the 2024 Public Offering121384 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Condensed Consolidated Statements of Operations Highlights (Three Months Ended March 31, Dollars in thousands) | Metric | 2024 | 2023 | Change ($) | Change (%) | | :------------------------------------------ | :----- | :----- | :--------- | :--------- | | Revenue | $9,778 | $6,185 | $3,593 | 58% | | Cost of revenue, excluding D&A | $5,285 | $2,868 | $2,417 | 84% | | Loss from operations | $(12,916) | $(12,687) | $(229) | -2% | | Net loss | $(18,614) | $(12,682) | $(5,932) | -47% | | Loss per common share (Basic and Diluted) | $(0.23) | $(0.23) | $0.00 | 0% | | (Loss) gain on extinguishment of debt | $(4,693) | $527 | $(5,220) | -991% | - Revenue increased significantly by 58% year-over-year, primarily driven by the ATD acquisition16184 - Net loss widened by 47% due to increased cost of revenue, operating expenses, and a substantial loss on extinguishment of debt related to the early redemption of the 2023 Promissory Notes16185190 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Condensed Consolidated Statements of Shareholders' Equity Highlights (Dollars in thousands) | Metric | March 31, 2024 | January 1, 2024 | | :-------------------------- | :------------- | :-------------- | | Total Stockholders' Equity | $54,959 | $33,370 | | Common Stock Issued (shares) | 85,324,918 | 69,176,826 | | Additional Paid-In Capital | $272,950 | $232,568 | | Accumulated Deficit | $(217,297) | $(198,683) | - Total stockholders' equity increased by $21,589K during Q1 2024, primarily due to $26,362K net proceeds from the 2024 Public Offering and $10,979K from common stock issued for the ATD acquisition, partially offset by a net loss of $18,614K1811784 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Condensed Consolidated Statements of Cash Flows Highlights (Three Months Ended March 31, Dollars in thousands) | Cash Flow Activity | 2024 | 2023 | Change ($) | Change (%) | | :------------------------------------------------------- | :----- | :----- | :--------- | :--------- | | Net cash used in operating activities | $(7,886) | $(9,490) | $1,604 | 17% | | Net cash used in investing activities | $(9,130) | $(728) | $(8,402) | -1154% | | Net cash provided by financing activities | $13,570 | $20,643 | $(7,073) | -34% | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(3,446) | $10,425 | $(13,871) | -133% | - Net cash used in operating activities improved by 17% year-over-year21201 - Net cash used in investing activities significantly increased by 1154% due to the ATD acquisition21202 - Net cash provided by financing activities decreased by 34% despite the 2024 Public Offering, due to the repayment of 2023 Promissory Notes21203 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – GENERAL, BASIS OF PRESENTATION, AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Rekor Systems, Inc. and its subsidiaries (Rekor Recognition Systems, Waycare, STS, ATD) operate in the roadway intelligence sector, developing products and services for public safety, urban mobility, and transportation management23 - The company completed the acquisition of All Traffic Data Services, LLC (ATD) on January 2, 202424 - The company has generated losses and negative operating cashflows since inception, with working capital of $5,241K and a net loss of $18,614K for Q1 20243235 - Existing cash is insufficient to fund operations for the next twelve months, raising substantial doubt about its ability to continue as a going concern3235 Revenue by Customer Type (Three Months Ended March 31, 2024, Dollars in thousands) | Customer Type | Revenue | | :------------------------ | :------ | | Urban Mobility | $5,614 | | Transportation Management | $665 | | Public Safety | $3,499 | | Total revenue | $9,778 | - As of March 31, 2024, the unsatisfied portion of remaining performance obligations was approximately $22,912K, with $17,494K expected to be recognized as revenue over the succeeding twelve months65 NOTE 2 – ACQUISITION - On January 2, 2024, Rekor Systems acquired 100% of All Traffic Data Services, LLC (ATD) for an aggregate purchase price of approximately $20,774K8283 ATD Acquisition Purchase Price Allocation (Dollars in thousands) | Item | Amount | | :---------------------------------------------------- | :------- | | Cash paid | $9,795 | | Common stock issued (3,496,464 shares) | $10,979 | | Total Consideration | $20,774 | | Goodwill recognized | $3,568 | | Intangible assets recognized | $12,100 | Unaudited Pro Forma Combined Financial Information (Three Months Ended March 31, Dollars in thousands) | Metric |