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What changed in Rekor Systems, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Rekor Systems, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+190 added−210 removedSource: 10-K (2026-03-31) vs 10-K (2025-03-31)

Top changes in Rekor Systems, Inc.'s 2025 10-K

190 paragraphs added · 210 removed · 130 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

56 edited+15 added−53 removed66 unchanged
Biggest changeOur platform also employs proprietary algorithms to strip PII from data, protecting the privacy of our customers and their data. ● Enhanced Accuracy and Capture for Vehicle Recognition : Our AI software achieves superior accuracy rates under broader parameters of vehicle speed, camera viewing angles, and lighting conditions, capturing vehicle traits, rust, damage, and other unique signatures that can be used to aid investigations ● Technology leading Vehicle Classification, Count, and Speed: Our AI software also achieves superior accuracy and performance rates across all 13 classes and deep classification of vehicles for DOT studies in line with the latest FHWA guidelines. ● Intelligence-Based Policing : Our comprehensive data capture allows us to detect patterns and analytics around vehicles of interest for law enforcement, significantly enhancing the value of our products and services. ● Functionality with any IP Cameras : Our AI software supports images and vehicle recognition captured by almost any digital camera, providing a flexible, infrastructure-agnostic solution that is easily scalable across geographies. ● Edge Processing : Our hardware delivers low-latency alerting via defined edge processing at the edge of the network, enabling real-time data processing and scale without the need for expensive infrastructure such as fiber. ● SOC II Compliance: Each of our three platforms are SOC II Compliant. 15 Table of Contents Customer Segments and Markets Our technology and solutions are transforming the transportation infrastructure landscape, empowering customers in 90 countries around the world.
Biggest changeIn the transportation management, public safety, urban mobility, and commercial markets, we possess and continue to cultivate a variety of competitive strengths that set us apart: ● Solution-driven Approach : We bridge the gap between data and actionable solutions by converting data into information, knowledge, and insights through proprietary technology ● Single Source Provider : We deliver an integrated platform of solutions to meet diverse needs, serving as infrastructure and data agnostic single-source provider ● One Device Multiple Missions : Advanced IoT devices support multiple AI-based data collection and analytics services simultaneously, providing extreme value and extensibility. ● Cross-Agency Functionality : Our platform supports multiple missions with unified operating system, integrating directly into agency workflows. ● Industry-leading Privacy and Security : Advanced security technologies, SOC II compliance across all platforms, and proprietary algorithms to protect PII. ● Enhanced Accuracy and Capture for Vehicle Recognition : Superior performance under broader parameters of speed, viewing angles, and lighting conditions, with ability to capture unique vehicle signatures ● Technology leading Vehicle Classification, Count, and Speed: Our AI software also achieves superior accuracy and performance rates across all 13 classes and deep classification of vehicles for DOT studies in line with the latest FHWA guidelines. ● Deep Infrastructure Expertise: Hundreds of personnel-years of experience in roadway sensor deployment and traffic engineering. ● Functionality with any IP Cameras: Our AI software supports images and vehicle recognition captured by almost any digital camera, providing a flexible, infrastructure-agnostic solution that is easily scalable across geographies. ● Edge Processing: Low-latency alerting via edge processing enabling real-time data processing and scale without expensive infrastructure like fiber. ● Comprehensive Data-as-a-Service Model: Eliminates hardware ownership burden while providing FHWA-compliant traffic data through managed, turnkey solutions. 13 Table of Contents Customer Segments and Markets Our technology and solutions serve customers in 70 countries worldwide.
Agencies can leverage Rekor’s AI-based systems to capture this data in a fully automated way and then access this rich data in real-time through the sustainability planning application. 11 Table of Contents Rekor Scout ® for Public Safety Rekor is helping to transform the typically siloed, reactive, single-purpose world of legacy law enforcement and security technology with real-time, AI-driven solutions that act as connectors between agencies and force multipliers in a chronically under-resourced space.
Agencies can leverage Rekor’s AI-based systems to capture this data in a fully automated way and then access this rich data in real-time through the sustainability planning application. 9 Table of Contents Rekor Scout ® for Public Safety Rekor is helping to transform the typically siloed, reactive, single-purpose world of legacy law enforcement and security technology with real-time, AI-driven solutions that act as connectors between agencies and force multipliers in a chronically under-resourced space.
This API supports nearly any programming language, analyzes still images of vehicles from different countries and responds in seconds with accurate license plate data, vehicle make, model, body type, color and orientation. 12 Table of Contents Rekor Hardware Products Rekor’s portfolio of innovative hardware products are purpose-built to optimize the value of our software as well as bring the advantages of edge AI processing to capture real-time roadway data.
This API supports nearly any programming language, analyzes still images of vehicles from different countries and responds in seconds with accurate license plate data, vehicle make, model, body type, color and orientation. 10 Table of Contents Rekor Hardware Products Rekor’s portfolio of innovative hardware products are purpose-built to optimize the value of our software as well as bring the advantages of edge AI processing to capture real-time roadway data.
Millions of cars per week are automatically checked in this way. Through this platform agencies can access real-time alerting, forensic research tools, and investigative tools that accelerate public safety and security missions. Agencies and customers can access plate data by state or province from over 50 countries together with the vehicles’ make, model, color, body type, and direction of travel.
Millions of cars per week are automatically checked in this way. Through this platform agencies can access real-time alerting, forensic research tools, and investigative tools that accelerate public safety and security missions. Agencies and customers can access plate data by state or province from over 70 countries together with the vehicles’ make, model, color, body type, and direction of travel.
Rekor’s solutions are uniquely aligned with these priorities and address a wide range of challenges: ● Rekor Scout ® : Plays a pivotal role in public safety and law enforcement by providing advanced monitoring and intelligence tools for vehicle recognition and Automatic License Plate Recognition (ALPR) that enable proactive policing, crime prevention, real-time crime alerting, contactless compliance, and investigative policing missions.
Our solutions are uniquely aligned with these priorities and address a wide range of challenges: ● Rekor Scout ® : Plays a pivotal role in public safety and law enforcement by providing advanced monitoring and intelligence tools for vehicle recognition and Automatic License Plate Recognition (ALPR) that enable proactive policing, crime prevention, real-time crime alerting, contactless compliance, and investigative policing missions.
With a focus on innovation, security, and operational excellence, Rekor is shaping the future of transportation, delivering intelligent and connected solutions that pave the way for a brighter, more efficient, and sustainable future for all. 8 Table of Contents Platforms, Products, and Solutions Rekor's revenue streams are driven by our innovative software and data services, along with complementary hardware and peripheral products.
With a focus on innovation, security, and operational excellence, Rekor is shaping the future of transportation, delivering intelligent and connected solutions that pave the way for a brighter, more efficient, and sustainable future for all. 7 Table of Contents Platforms, Products, and Solutions Rekor's revenue streams are driven by our innovative software and data services, along with complementary hardware and peripheral products.
Business Drivers and Growth Strategies Rekor’s products and services have consistently demonstrated their ability to significantly enhance public safety, urban mobility, and transportation management, positioning the company as a leader in addressing critical infrastructure challenges. The transportation and roadway infrastructure market is undergoing transformative change, driven by a convergence of political, economic, societal, and technological forces.
Business Drivers and Growth Strategies Our products and services have consistently demonstrated their ability to significantly enhance public safety, urban mobility, and transportation management, positioning the company as a leader in addressing critical infrastructure challenges. The transportation and roadway infrastructure market is undergoing transformative change, driven by a convergence of political, economic, societal, and technological forces.
Rekor is committed to leading the laying the foundation of a groundbreaking new digital infrastructure operating system for roadways—and has already delivered proven value across multiple domains: ● Enhanced Roadway Safety: Real-time AI monitoring systems detect hazards and reduce roadway fatalities. ● Optimized Traffic Flow: Intelligent analytics alleviate congestion, improve commute times, and boost productivity. ● Cost Savings & Efficiency: AI automation streamlines operations, maximizing resource allocation for agencies. ● Improved Data Accuracy & Insights: Precise, real-time traffic data drives smarter decision-making and better resource planning. ● Border & Freight Management: AI-driven vehicle identification enhances security while minimizing bottlenecks. ● Uninsured Driver Reduction: Automated enforcement ensures insurance compliance, improving public safety.
Rekor is committed to leading the laying the foundation of a groundbreaking new digital infrastructure operating system for roadways—and has already delivered proven value across multiple domains: ● Enhanced Roadway Safety: Real-time AI monitoring systems detect hazards and reduce roadway fatalities. ● Optimized Traffic Flow: Intelligent analytics alleviate congestion, improve commute times, and boost productivity. ● Cost Savings & Efficiency: AI automation streamlines operations, maximizing resource allocation for agencies. ● Improved Data Accuracy & Insights: Precise, real-time traffic data drives smarter decision-making and better resource planning. ● Border & Freight Management: AI-driven vehicle identification enhances security while minimizing bottlenecks. ● Uninsured Driver Reduction: Automated enforcement ensures insurance compliance, improving public safety and reducing costs to government and consumers.
We are subject to the laws and regulations that restrict the use and dissemination of information classified for national security purposes. To help ensure compliance with these laws and regulations, our employees are sometimes required to complete tailored ethics and other compliance training relevant to their position and our operations. 19 Table of Contents
We are subject to the laws and regulations that restrict the use and dissemination of information classified for national security purposes. To help ensure compliance with these laws and regulations, our employees are sometimes required to complete tailored ethics and other compliance training relevant to their position and our operations. 17 Table of Contents
Its solutions empower agencies to prevent accidents, reduce inefficiencies, and optimize resources, driving smarter, safer, and more efficient roadways across the nation. 4 Table of Contents Roadway Intelligence Rekor is a leader in roadway intelligence, committed to revolutionizing transportation systems by collecting, connecting, and organizing the world’s mobility data.
Its solutions empower public agencies and public sector clients to prevent accidents, reduce inefficiencies, and optimize resources, driving smarter, safer, and more efficient roadways across the nation. 4 Table of Contents Roadway Intelligence Rekor is a leader in roadway intelligence, committed to revolutionizing transportation systems by collecting, connecting, and organizing mobility data.
Rekor’s solutions support a variety of use cases, including: ● Traffic Analysis o Comprehensive traffic reports, including Federal Highway Administration (“FHWA”)-mandated vehicle classification, count and speed analytics. o Analytics on bicycles, pedestrians, and other micro-mobility modes. o Identification of patterns and hot spots for emissions and traffic impacts. ● Traffic Operations & Management o Data-driven traffic operations for improved efficiency. o Real-time incident detection and response for proactive problem-solving. o Proactive traffic calming around events to minimize congestion and enhance safety. o Intelligent analytics to alleviate congestion, shorten commute times, and boost productivity. ● High-Definition Video Monitoring o Traffic monitoring to assist law enforcement. o Support for intelligence-based policing to improve crime prevention. o Contactless compliance and enforcement solutions for safety and legal adherence. ● Enhanced Roadway Safety o Real-time AI monitoring systems to detect hazards and reduce roadway fatalities. o Predictive analytics to anticipate and address potential safety risks. ● Optimized Resource Allocation o AI automation to streamline operations and maximize resource allocation. o Improved data accuracy to support better decision-making and strategic planning. ● Border & Freight Management o AI-based vehicle identification to enhance national security and minimize bottlenecks at borders and ports. o Weigh-in-Motion (“WIM”) systems for real-time commercial trucking analytics ● Insurance Compliance & Public Safety o Automated enforcement systems to reduce uninsured drivers and improve overall public safety. 6 Table of Contents By combining advanced technology, domain expertise, and implementation capacity, Rekor offers truly end-to-end roadway intelligence solutions for public agencies and private sector clients.
Rekor’s solutions support a variety of use cases, including: ● Traffic Analysis o Comprehensive traffic reports, including Federal Highway Administration (“FHWA”) mandated vehicle classification, count and speed analytics. o Analytics on bicycles, pedestrians, and other micro-mobility modes. o Identification of patterns and hot spots for emissions and traffic impacts. ● Traffic Operations & Management o Data-driven traffic operations for improved efficiency. o Real-time incident detection and response for proactive problem-solving. o Proactive traffic calming around events to minimize congestion and enhance safety. o Intelligent analytics to alleviate congestion, shorten commute times, and boost productivity. ● High-Definition Video Monitoring o Traffic monitoring to assist law enforcement. o Support for intelligence-based policing to improve crime prevention. o Contactless compliance and enforcement solutions for safety and legal adherence. ● Enhanced Roadway Safety o Real-time AI monitoring systems to detect hazards and reduce roadway fatalities. o Predictive analytics to anticipate and address potential safety risks. ● Optimized Resource Allocation o AI automation to streamline operations and maximize resource allocation. o Improved data accuracy to support better decision-making and strategic planning. ● Border & Freight Management o AI-based vehicle identification to enhance national security and minimize bottlenecks at borders and ports. o Weigh-in-Motion (“WIM”) systems for real-time commercial trucking analytics ● Insurance Compliance & Public Safety o Automated enforcement systems to reduce uninsured drivers and improve overall public safety.
Our platforms aggregate and analyze trillions of data points from IoT devices, roadway sensors, cameras, and an expansive partner network, enabling customers to make proactive, informed decisions and optimize resources, and enabling us to deliver tailored solutions for government and commercial customers in public safety, urban mobility, and transportation management.
Our platforms aggregate and analyze trillions of data points from roadway sensors and other IoT devices, enabling customers to make proactive, informed decisions and optimize resources, and enabling us to deliver tailored solutions for government and commercial customers in public safety, urban mobility, and transportation management.
Since 2018, Rekor has worked to deserve a place at the forefront of this wave of transformation and modernization of roadways, actively designing, building, and deploying its AI solutions through public-private collaborations with departments of transportation (“DOTs”), public safety agencies, and private sector partners.
Since 2018, Rekor has worked to deserve a place at the forefront of a wave of transformation and modernization of roadways, actively designing, building, and deploying AI solutions and other advanced complimentary technologies through public-private collaborations with departments of transportation (“DOTs”), public safety agencies, and private sector partners.
These capabilities empower agencies to allocate resources strategically, mitigate risks, response quickly to roadway incidences, and improve traffic flow, ensuring safer and more efficient roadways. ● Rekor Discover ® : Critical for analyzing, planning, and maintaining the nation’s 4.2 million miles of roadways, Discover provides data-driven insights to assess existing infrastructure and guide strategic investments.
These capabilities empower agencies to allocate resources strategically, mitigate risks, response quickly to roadway incidences, and improve traffic flow, ensuring safer and more efficient roadways. ● Rekor Discover ® : Critical for analyzing, planning, and maintaining roadways, Discover provides data-driven insights to assess existing infrastructure and guide strategic investments.
Rekor’s flexible, integrative solutions align perfectly with this vision, positioning the company to lead the next generation of roadway intelligence, creating smarter, safer, and more efficient transportation infrastructure and urban mobility for communities nationwide. Marketing and Sales We offer products and services in multiple markets, using direct sales, an eCommerce platform and extensive partnerships and alliances.
Our flexible, integrative solutions align perfectly with this vision, positioning the company to lead the next generation of roadway intelligence, creating smarter, safer, and more efficient transportation infrastructure and urban mobility for communities nationwide. Marketing and Sales We offer products and services through direct sales, an eCommerce platform, and partnerships.
Traditional Traffic Studies Rekor's traditional traffic studies serve as the cornerstone for both permanent and temporary traffic analytics projects, delivering vital data and insights for those involved in the planning and management of roadway infrastructure and commercial initiatives.
Traffic services include, but are not limited to the following: Traditional Traffic Studies Rekor's traditional traffic studies serve as the cornerstone for both permanent and temporary traffic analytics projects, delivering vital data and insights for those involved in the planning and management of roadway infrastructure and commercial initiatives.
While private-sector innovations like sensor technology, Internet of Things (“IoT”), AI, cloud computing, autonomous vehicles, and smart drones are advancing rapidly, fundamental challenges such as poor roadway quality, traffic congestion, and driver safety continue to escalate. In February of 2023, the U.S.
While private-sector innovations like sensor technology, Internet of Things (“IoT”), AI, cloud computing, autonomous vehicles, and smart drones are advancing rapidly, fundamental challenges such as poor roadway quality, traffic congestion, and driver safety continue to present a challenge.
Rekor One®, together with our Rekor Partner Network, enables us to generate unique and deep insights that enable proactive and data-driven decision-making, enabling governments and businesses to unlock the full potential of their infrastructure, and foster safer, smarter, and more efficient roadways and communities, and improving the lives of people. 7 Table of Contents The Road Ahead The United States is now making historic investments to modernize and digitize its aging infrastructure, leveraging cutting-edge technologies like artificial intelligence, edge computing, and the internet of things.
Using our solutions, we are able to generate unique and deep insights that enable proactive and data-driven decision-making, enabling governments and businesses to unlock the full potential of their infrastructure, and foster safer, smarter, and more efficient roadways. 6 Table of Contents The Road Ahead The United States is now making historic investments to modernize and digitize its aging infrastructure, leveraging cutting-edge technologies like artificial intelligence, edge computing, and the internet of things.
Seasonality We derive revenues substantially from the sale of software, hardware and related services and do not currently anticipate a significant seasonality impact on our revenues. There is a portion of our revenue that requires our technicians and field support teams to work outside.
Seasonality We derive a substantial part of our revenues from the sale of software, hardware and related services that are not subject to seasonal variation. There is currently a significant portion of our revenue that requires our technicians and field support teams to work outside.
Powered by advanced AI and fueled by diverse data sources, Rekor delivers real-time and predictive solutions that enhance mobility, safety, and operational efficiency across public and private sectors.
Powered by advanced AI and fueled by diverse data sources, Rekor delivers historical and real-time, as well as predictive alerts that can be used to enhance mobility, safety, and operational efficiency across public and private sectors.
Our direct sales force has been organized into groups aligned to the Intelligent Traffic Systems (“ITS”) chapters and other targeted market segments, with a primary focus on direct-to-end-user sales through a high-touch consultative process. In addition, we have established partnerships and strategic alliances that allow us to bundle our technology into purpose-built solutions for various national and global market segments.
Our direct sales force is organized into groups aligned with Intelligent Traffic Systems (ITS) chapters and targeted market segments, with primary focus on direct-to-end-user sales through high-touch consultative processes. We have established partnerships and strategic alliances allowing us to bundle technology into purpose-built solutions for various market segments.
Powered by vast and diverse multi-modal datasets and proprietary AI technologies, we have designed these solutions with the objective of delivering unparalleled roadway intelligence. They enable clients to more effectively monitor, manage, and optimize the movement of vehicles, traffic, and activities in and around roadways and communities with precision.
Powered by vast and diverse multi-modal datasets and proprietary AI technologies, these solutions deliver advanced roadway intelligence, enabling clients to more effectively monitor, manage, and optimize the movement of vehicles, traffic, and activities in and around roadways and communities with precision and sensitivity to privacy and environmental concerns.
Our global workforce is highly educated, technical and specialized, with a substantial majority of employees working in technical roles. As o f March 18, 2025, we had 323 employees, of which 319 were full-time and four considered part-time.
Our global workforce is highly educated, technical and specialized, with a substantial majority of employees working in technical roles. As of March 25, 2026, we had 234 employees, of which 233 were full-time and one was considered part-time.
As we continue to increase our roadway intelligence engagement with national, state and municipal DOTs, we remain focused on law enforcement communities – both directly and indirectly through strategic partners and resellers/integrators. Our market-leading solutions can provide significant value to DOTs for traffic management, planning and operations, and to municipal planning organizations for urban mobility.
We remain focused on increasing roadway intelligence engagement with national, state, and municipal DOTs, while maintaining focus on law enforcement communities both directly and through strategic partners and resellers. Our solutions provide significant value to DOTs for traffic management, planning and operations, municipal planning organizations for urban mobility, law enforcement for intelligence-based policing, and corporate security applications.
The Rekor One® platform is the central hub of an integrated operating system, supporting the assimilation, analysis, and distribution of data from various sources. Our sales strategy involves offering subscriptions for our software solutions, utilizing the Software-as-a-Service (“SaaS”) model.
The Rekor One® platform is designed to be the central hub of an integrated operating system, supporting the assimilation, analysis, and distribution of data from various sources. Our sales strategy involves offering subscriptions for our software and data solutions, which is intended to build a strong base of recurring revenues.
Our extensive technology portfolio, combined with our ability to deploy skilled teams anywhere in the world for traffic engineering and traffic services, positions us as a leading force in shaping the future of traffic management and infrastructure development. 14 Table of Contents Competitive Strengths Our patented technology has driven our global expansion and been prominently featured by renowned outlets.
Our extensive technology portfolio, combined with our ability to deploy skilled teams anywhere in the world for traffic engineering and traffic services, positions us as a leading force in shaping the future of traffic management and infrastructure development. 12 Table of Contents Competitive Strengths Our proprietary technologies have driven our expansion and been carefully evaluated in proof of concept trials by our public and private clients.
Vehicle category classification, vehicle counts, and speed reports are made available in web-based dashboards or exported in multiple file formats that meet TMG standards. 13 Table of Contents Rekor Traffic Services With the addition of ATD in 2024, Rekor offers thousands of personnel-years of unparalleled traffic data collection and traffic engineering expertise and services to our customers using both traditional and AI-based approaches.
Vehicle category classification, vehicle counts, and speed reports are made available in web-based dashboards or exported in multiple file formats that meet TMG standards. 11 Table of Contents Rekor Traffic Services We offer extensive traffic data collection and engineering services using both traditional and AI-based approaches.
These relationships have allowed Rekor to refine its technologies and demonstrate their full potential in real-world applications. By employing a "land and expand" growth strategy, Rekor continues to deepen relationships with existing customers while attracting new ones, fostering collaboration, and expanding its data network to drive greater value for all stakeholders through its business growth flywheel.
These relationships have allowed us to refine our technologies and demonstrate their full potential in real-world applications. We continue to deepen relationships with existing customers while attracting new ones, fostering collaboration, and expanding our network to drive greater value for all stakeholders.
By combining advanced AI-driven insights with a forward-thinking infrastructure strategy, Rekor is reshaping how transportation systems operate.
By providing advanced AI-driven insights to assist forward-thinking infrastructure managers, Rekor is reshaping how transportation systems operate.
By upgrading infrastructure to collect reliable data, integrating it with third-party sources, and delivering actionable insights tailored to agency-specific needs, Rekor enables its customers to achieve greater efficiency and safety while driving innovation. 17 Table of Contents Addressing Competitive Challenges As a relatively new entrant, Rekor operates in a highly competitive market, with rivals that boast significant technical, marketing, financial and other resource advantages, as well as larger installed device bases.
By upgrading infrastructure to collect reliable data, integrating it with third-party sources, and delivering actionable insights tailored to agency-specific needs, Rekor enables its customers to achieve greater efficiency and safety while driving innovation. 15 Table of Contents Addressing Competitive Challenges We operate in a highly competitive market with rivals having significant resource advantages and larger installed bases, we differentiate through our comprehensive platform spanning wide range of use cases.
We expect the market for our solutions and services to be significant. We are dedicated to addressing a wide range of market segments, including intelligent transportation systems, smart mobility, traffic analytics, incident detection and location systems, traffic and parking management, smart cities, vehicle regulatory compliance programs, and more.
We are dedicated to addressing a wide range of market segments, including intelligent transportation systems, smart mobility, traffic analytics, incident detection and location systems, traffic and parking management, smart cities, vehicle regulatory compliance programs, and more. We are confident in our competitive position and look forward to continued growth and success as we lead the way in intelligent infrastructure.
Through our Rekor One® roadway intelligence engine, we aggregate these datasets from diverse sources and securely deliver these insights to government agencies and private-sector clients, driving smarter, more effective decision-making across transportation management, urban mobility, and public safety ecosystems, as well as multiple commercial market segments.
Through our Rekor One® roadway intelligence engine, we aggregate datasets from diverse sources and securely deliver insights to government agencies and private-sector clients, driving smarter, more effective decision-making across transportation management, urban mobility, and public safety ecosystems. Our mission extends beyond connectivity—we are building a dynamic, AI-driven network to modernize traffic management, public safety, and emergency services.
With many markets currently relying on outdated physical infrastructure, or in the early stages of technology adoption, we see immense potential for growth. Our diverse customer base includes cities, states, municipalities, law enforcement agencies, commercial customers and more, and our success is evidenced by our multiple pilots, proof of concept, and full-scale deployment agreements throughout the Americas.
Our diverse customer base includes cities, states, municipalities, law enforcement agencies, and commercial customers. While many markets are still relying on outdated physical infrastructure or in early stages of technology adoption, we see immense potential for growth.
To ensure our continued success, we prioritize the filing of patent applications to safeguard the innovations that arise from our research, development, and design efforts, and we are currently pursuing multiple patent applications.
To ensure our continued success, we will continue to file patent applications to safeguard the innovations that arise from our research, development, and design efforts, and we are currently pursuing multiple patent applications. 16 Table of Contents Acquisitions On January 2, 2024, we completed the ATD Acquisition.
Roadway intelligence involves the ability to harness vast amounts and varieties data from roadways, vehicles, transportation systems, and hundreds of external elements like weather, special events, work zones, and more, transforming it into actionable insights. These unique insights empower stakeholders to enhance public safety, optimize traffic flows, and improve operational efficiencies.
Roadway intelligence involves harnessing vast amounts and varieties of data from roadways, vehicles, transportation systems, and hundreds of external elements like weather, special events, and work zones, transforming it into actionable insights.
We achieve this by collecting, connecting, and organizing the world’s mobility data, making it useful, accessible, and actionable for real-time insights and decision-making. This provides our customers with significantly enhanced situational awareness, rapid response capabilities, risk mitigation strategies, and predictive analytics. To realize this vision, we’ve developed a suite of interconnected AI-driven hardware and purpose-built software platforms.
This provides our customers with significantly enhanced situational awareness, rapid response capabilities, risk mitigation strategies, and predictive analytics. To implement this vision, we have developed a suite of interconnected AI-driven hardware and purpose-built software platforms.
These strategic advantages have solidified Rekor’s reputation as a flexible, collaborative, and innovative partner, uniquely equipped to meet the complex demands of modernizing transportation systems. Rekor ’ s Competitive Advantages Rekor’s competitive edge lies in its ability to combine deep expertise, advanced technology, and a customer-centric approach to deliver unmatched value.
Rekor ’ s Competitive Advantages Rekor’s competitive edge lies in its ability to combine deep expertise, advanced technology, and a customer-centric approach to deliver unmatched value.
With Scout, Command, and Discover working together, Rekor empowers governments and businesses to modernize infrastructure, enhance safety, reduce traffic, and build smarter, more resilient communities.
By aligning our mission with evolving market forces and governmental priorities, we are well-positioned to lead the next generation of transportation and public safety intelligence. With Scout, Command, and Discover working together, Rekor empowers governments and businesses to modernize infrastructure, enhance safety, reduce traffic, and build smarter, more resilient communities.
By collaborating closely with our public and private sector customers, we deliver mission-critical services and solutions that enable them to achieve their objectives effectively, while simultaneously working toward creating a new digital infrastructure operating system for roadways. Our vision is to create safer, smarter, and more sustainable roadways and communities, improving the lives of citizens and the world around them.
ITEM 1. BUSINESS Overview Rekor is a roadway intelligence Company, working to modernize public safety, urban mobility, and transportation management through the development of cutting-edge solutions. By collaborating closely with public and private sector customers, we deliver mission-critical services and solutions that enable them to achieve their objectives effectively, while simultaneously building a new digital infrastructure operating system for roadways.
While we will continue to pursue opportunities to sell perpetual licenses and hardware, our focus has been on providing innovative SaaS and pay-for-data offerings and services with recurring annual revenues. Our eCommerce site allows us to serve individuals and smaller organizations at scale using a self-service recurring revenue model.
Our focus is on providing our innovative Software as a Service ("SaaS") model and Data-as-a-Service offerings with recurring annual revenues, supplemented by hardware sales that serve as entry points. Our eCommerce platform enables us to serve individuals and smaller organizations at scale using a self-service recurring revenue model. We expect the market for our solutions and services to be significant.
Our operations are conducted primarily by our wholly-owned subsidiaries, Rekor Recognition Systems, Inc. (“Rekor Recognition”), Waycare Technologies, Ltd. (“Waycare”), Southern Traffic Services, Inc. (“STS”), and All Traffic Data Systems (“ATD”). A New Operating System for Roadways We believe the United States of America stands at a critical turning point in the evolution of its transportation and roadway infrastructure.
Our operations are conducted primarily by our wholly-owned subsidiaries, Rekor Recognition Systems, Inc. (“Rekor Recognition”), Waycare Technologies, Ltd. and Waycare Technologies, Inc. (combined “Waycare”), Southern Traffic Services, Inc. (“STS”), and All Traffic Data Services, LLC (“ATD”). We also have a separate subsidiary, Rekor Labs LLC.
These developments, combined with increased government attention to the need to digitize transportation infrastructure, create a significant opportunity for Rekor to accelerate its growth and impact.
Rising safety concerns, rapid urbanization, and the growing need for advanced mobility solutions have prompted governments and businesses to seek innovative, scalable technologies. Increased government attention to the need to digitize transportation infrastructure, create a significant opportunity for Rekor to accelerate its growth and impact.
Assets that are typically integrated include freeway service patrol vehicles, highway police vehicles, city police vehicles, fire department vehicles, construction vehicles, EMS, maintenance vehicles, street sweep vehicles, and snowplows. 10 Table of Contents Rekor Discover ® for Urban Mobility Traditional approaches to capturing roadway and infrastructure analytics for planning and engineering generally employ expensive, manual processes that use antiquated technology to capture a fraction of the available information for a fraction of the time.
These capabilities improve traveler awareness, support safer routing decisions, and help reduce the likelihood of secondary incidents 8 Table of Contents Rekor Discover ® for Urban Mobility Traditional approaches to capturing roadway and infrastructure analytics for planning and engineering generally employ expensive, manual processes that use antiquated technology to capture a fraction of the available information for a fraction of the time.
Our mission extends beyond connectivity—we are building a dynamic, AI-driven network to modernize traffic management, public safety, and emergency services. By applying a digital layer to existing physical infrastructure and roadways, Rekor is creating a new generation digital operating system for roadways, delivering real-time intelligence that powers economic growth, operational excellence, and improved quality of life for communities.
By applying a digital layer to existing physical infrastructure and roadways, Rekor is creating a next-generation digital operating system for roadways, delivering real-time intelligence that powers economic growth, operational excellence, and improved quality of life for communities. 5 Table of Contents Roadway Intelligence Powered by Rekor Rekor is working to towards transforming transportation and mobility data into actionable insights.
As the U.S. invests in digitizing its transportation systems, Rekor is uniquely equipped to provide the technology and expertise needed to create a brighter future for mobility and public safety 16 Table of Contents Competition Rekor’s strategy is to lead modernization of transportation and roadway infrastructure by delivering innovative, data-driven solutions that redefine roadway intelligence and position the company as a leader in this multi-billion-dollar, competitive market.
As the U.S. invests in digitizing its transportation systems, we are uniquely equipped to provide the technology and expertise needed to create a brighter future for mobility and public safety. 14 Table of Contents Competition We operate in a competitive multi-billion-dollar market that includes companies focused on siloed areas such as ALPR, vehicle recognition technology, data aggregation, insights platforms, and smart city technologies.
Rekor’s subscription-based solutions help to ensure scalability and long-term growth, with hardware sales serving as an entry point to drive adoption in key segments. Also, we continuously canvas the market for strategic acquisitions and partnerships to accelerate innovation and expand our capabilities.
Our subscription-based and data-as-a-service solutions help to ensure scalability and long-term growth, with hardware sales serving as an entry point to drive adoption in key segments. Our efforts are designed to strengthen our leadership in the roadway intelligence industry and enhance its ability to deliver comprehensive, end-to-end solutions.
For over 70 years, the nation has relied on legacy technologies and outdated analog and manual methodologies, resulting in inefficiencies, rising costs, and preventable safety hazards.
A New Operating System for Roadways We believe the United States of America stands at a critical turning point in the evolution of its transportation and roadway infrastructure. For over 70 years, the nation has relied on analog technologies and manual methodologies that have resulted in inefficiencies, rising costs, and preventable safety hazards.
By integrating real-time data from roadway sensors, video, connected vehicles, and external sources like weather and event data, Discover supports the modernization and long-term resilience of transportation networks. The Rekor One® intelligence engine serves as the backbone of these solutions, combining modular design, proprietary edge processing, and AI-driven technologies to aggregate and analyze trillions of data points in real time.
By integrating real-time data from roadway sensors, video, connected vehicles, and external sources like weather and event data, Discover supports the modernization and long-term resilience of transportation networks. We have delivered products and services to a diverse range of customers across public and private sectors.
In 2025, we will be working to extend our reach into smaller communities as we continue to serve medium-large DOT and law enforcement departments with our direct sales representatives. Given that our primary market is state and local governments in the United States, the majority of our sales efforts involve a request for proposal process and/or grant application process.
Given our primary market is state and local governments in the United States, the majority of sales efforts involve request for proposal processes and grant applications. In 2025 and beyond, we continue capturing and submitting proposals and applying for grants, while seeking opportunities to submit concurrently with strategic partners.
What further sets Rekor apart is its ability to seamlessly integrate with existing ecosystem players and platforms. Unlike competitors that require costly rip-and-replace overhauls, Rekor’s solutions operate alongside and on top of existing physical infrastructure and software systems, ensuring minimal disruption.
Unlike competitors requiring costly rip-and-replace overhauls, our solutions operate alongside and on top of existing physical infrastructure and software systems, ensuring minimal disruption. This approach allows customers to adopt our technology in alignment with current workflows, making adoption simple, intuitive, and cost-effective.
While we may continue to offer long-term licenses for certain strategic partnerships, we anticipate that the bulk of our revenue in the future will come from our newer SaaS model. 9 Table of Contents Rekor One ® Intelligence Platform Rekor One ® , is the bedrock of our innovative AI-powered roadway intelligence platforms, serving multiple missions with modular and rapid development capabilities.
While we may continue to offer long-term licenses for certain strategic partnerships, we anticipate that the bulk of our revenue in the future will come from our newer recurring models. Rekor Command ® for Transportation Management Commuters today face continuing congestion, safety risks, and roadway fatalities—challenges amplified by legacy transportation systems that are siloed, reactive, and overwhelmed by unusable data.
By leveraging unmatched expertise in sensor deployment, groundbreaking technologies, and actionable insights that span from physical infrastructure to cloud-based systems, Rekor remains agile, scalable, and highly responsive to customer needs. This combination ensures continued leadership in the rapidly evolving roadway intelligence market.
By leveraging unmatched expertise in sensor deployment, groundbreaking technologies, and actionable insights spanning physical infrastructure to cloud systems, we remain agile, scalable, and highly responsive to customer needs. As governments increasingly focus on technology advancement, AI innovation, and infrastructure modernization, we are uniquely positioned to align with these priorities.
We are committed to staying abreast of our customers' technological developments, adhering to industry standards, and meeting their increasingly stringent demands for performance, productivity, quality, and predictability. As a result, we plan to continue to make significant investments in research and development and data and analytics as we strive to maintain our position as a leader in our field.
We plan to continue making investments in research and development, data, and analytics as we maintain our position as an industry leader.
It offers businesses and individuals around the world a convenient way to purchase our high-value vehicle recognition solutions with just a credit card and a click. The platform allows for self-service sign-up and a range of subscription options while also funneling customers directly to our sales support team if they need more information.
Our eCommerce platform enables us to provide products and services to international customers without requiring large international sales forces. It offers businesses and individuals worldwide convenient access to high-value vehicle recognition solutions with self-service sign-up and subscription options.
Research and Development The highly competitive industries where we compete require that we keep up with the latest technological advancements. As such, our success is reliant upon a consistent and timely release of innovative products, new rich data services, and advanced technologies to the market.
Our Edge Pro camera system is available for purchase directly through the platform with pre-loaded ALPR software activated through online or telephone subscription. Research and Development Success in our highly competitive industries requires consistent and timely release of innovative products, new data services, and advanced technologies.
Rekor Command ® acts as a seamless command center for traffic operations and traffic management centers so they can have a holistic view of their roadways in real-time, and take appropriate action to help improve safety, sustainability, and efficiency for citizens across their communities.
The platform acts as a digital command center for traffic operations and transportation management centers, providing a holistic, real-time view of roadway conditions and enabling faster, more informed decisions that improve safety, reduce congestion, and support sustainability.
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ITEM 1. BUSINESS Overview Rekor is at the forefront of the effort to modernize public safety, urban mobility, and transportation management through cutting-edge artificial intelligence (“AI”)-powered solutions tailored to the unique needs of each market we serve.
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Our vision is to create safer, smarter, and more sustainable roadways and communities, improving the lives of citizens and the world around them. Our products and services collect, connect, and organize mobility data, making it more useful, and accessible, while providing actionable real-time insights to enable better decision-making.
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Through real-time insights and predictive analytics, our platforms drive rapid decision-making, proactive risk mitigation, and streamlined operations across public safety, urban mobility, and transportation systems and agencies, ensuring smarter and safer outcomes for all. As of March 18, 2025, we had 323 employees, of which 319 were full-time and four considered part-time.
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("Rekor Labs"), which is working to commercialize a patent-pending technology for verifying the authenticity of video data. Although this technology was developed to respond to requests from public safety customers, we believe it has broad applicability and should therefore be pursued as a separate venture.
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Department of Transportation declared a national roadway safety emergency, calling for urgent action to address the alarming rise in injuries and fatalities. The American Society of Civil Engineers (“ASCE”) provides a report card for America’s infrastructure every four years. In 2021 ASCE graded overall U.S. infrastructure a C-minus.
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By combining advanced technology, domain expertise, and implementation capacity, Rekor can offer end-to-end roadway intelligence solutions for public agencies and private sector clients.
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Roads, which had been rated C+ in 1988, were rated D, “poor or at-risk,” with over 40% of roadways considered in poor or mediocre condition. ASCE’s most recent report card, released March 25, 2025, showed a slight improvement for overall infrastructure to C, crediting better awareness and increased investment by government for slowing the investment gap.
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Rekor Command® enables municipalities to modernize transportation management by unifying diverse data sources—including connected vehicles, incidents, construction, weather, telematics, transit, and existing infrastructure—into a single AI-driven operational platform. By transforming raw data into real-time and predictive roadway intelligence, Rekor Command® allows agencies to shift from reactive response to proactive, coordinated traffic management.
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The 2025 grade for roads improved modestly to D+, with 39% of roads in poor or mediocre condition and an annual funding gap estimated at $684 billion.
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Built to identify incidents earlier, prioritize response using AI-powered intelligence, and anticipate emerging risks such as elevated crash potential and irregular congestion, Rekor Command® supports collaborative operations across agencies—connecting traffic operators, first responders, maintenance teams, and the public through shared situational awareness and timely communications.
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The report noted that deficiencies jeopardize public safety, contributing to an estimate of over 40,000 roadway deaths in 2023, but also impose significant economic costs, including an estimated average $1,400 per driver cost related to deteriorated and congested roads.
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Rekor Command ® – Roadway Monitoring Application The Roadway Monitoring application provides transportation operators with a real-time, map-based operational view of roadway conditions across their jurisdiction. By aggregating and analyzing data from multiple sources, the application enables agencies to identify emerging disruptions, monitor traffic conditions, and maintain continuous situational awareness of roadway networks.
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Among the top policy objectives that the ASCE’s 2025 report called for was the continuing need to support the development of innovative technologies and ensure that reliable data is collected and released frequently regarding the condition, capacity, operations, maintenance, safety, and resilience of infrastructure systems.
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Rekor Command ® – Incident Management Application The Incident Management application enables agencies to detect, prioritize, and manage roadway incidents from initial alert through resolution. AI-driven analytics help operators identify the most critical events and prioritize response actions based on factors such as persistence, traffic impact, and safety risk.
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Recognizing the urgent need for modernization, the federal government has recently taken significant steps to invest in the transform the nation's infrastructure. The Infrastructure Investment and Jobs Act (“IIJA”) and Inflation Reduction Act (“IRA”) provided historic levels funding for transportation infrastructure system modernization.
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The application also supports coordinated response across operational teams and partner agencies through shared event visibility and workflow management. Rekor Command ® – Advanced Analytics Application The Advanced Analytics application provides agencies with tools to analyze roadway events, measure operational performance, and identify traffic trends across their networks.
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Additionally, the Creating Helpful Incentives to Produce Semiconductors (“CHIPS”) and Science Act provided support for AI-driven innovation and semiconductor production, critical components for modernizing infrastructure through technology.
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Through historical data analysis, reporting, and operational activity logs, agencies can evaluate incident response effectiveness, monitor system performance, and support data-driven transportation planning and investment decisions. Rekor Command ® – Driver and Community Connect Applications The Driver Connect and Community Connect applications enable transportation agencies to disseminate timely and trusted roadway information to travelers and the public.
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These legislative efforts are consistent with the foundation set by President Trump’s 2019 "American AI Initiative" and his most recent 2025 Executive Order 14179, which prioritized public-private collaboration and the adoption of AI technologies across sectors like transportation.
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Through integrations with navigation platforms, connected vehicle ecosystems, and digital communication channels, agencies can deliver real-time alerts regarding incidents, closures, and roadway conditions.
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These federal actions have provided a strategy and funding mechanisms for states to tackle the long-standing challenges of updating outdated, legacy systems for roadway intelligence gathering.
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Rekor Discover ® – Data as a Service Rekor Discover Data as a Service provides agencies and customers with continuously available traffic data and analytics to support roadway safety and operational efficiency. Using AI-based fixed and portable systems, Rekor delivers per-vehicle record data including vehicle counts, FHWA 13-bin classification, speed, traffic patterns, and safety indicators such as near-miss events.
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Inspired by the Open System Interconnection (“OSI”) model, Rekor integrates fragmented transportation systems into a cohesive, unified network. Collaborating with government agencies, infrastructure operators, transit providers, and technology partners, we consolidate hardware, software, and data into a connected platform that delivers smarter, safer, and more efficient roadways.
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This data is available in real time through cloud dashboards, APIs, and standard reporting formats, and can be delivered directly into traffic and operations centers to support monitoring, analysis, and decision-making. Discover also provides vehicle and electric-vehicle insights to support infrastructure planning, sustainability initiatives, and integration with existing operational workflows.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe currently anticipate that for the foreseeable future we will retain all of our future earnings for the development, operation and growth of our business and general corporate purposes. Any future determination to pay dividends on our common stock will be at the discretion of our Board of Directors.
Biggest changeWe have never declared or paid any cash dividends on our common stock and do not intend to pay any cash dividends on our common stock in the foreseeable future. We currently anticipate that for the foreseeable future we will retain all of our future earnings for the development, operation and growth of our business and general corporate purposes.
We implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to our information systems and data depending on the environment. We have an established policy on information security, as well as overall corporate information, workforce and workplace standards policies.
We implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to our information systems and data depending on the environment. We have an established policy on information security, as well as overall corporate information and workforce and workplace standards policies.
Moreover, these types of events could negatively impact consumer spending in the impacted regions or depending upon the severity, globally, which could adversely impact our operating results. 27 Table of Contents Risks relating to our common stock If securities or industry analysts do not publish research or publish inaccurate or unfavorable reports about our business, our stock price and trading volume could decline.
Moreover, these types of events could negatively impact consumer spending in the impacted regions or depending upon the severity, globally, which could adversely impact our operating results. 25 Table of Contents Risks relating to our common stock If securities or industry analysts do not publish research or publish inaccurate or unfavorable reports about our business, our stock price and trading volume could decline.
A successful assertion that we should be collecting sales or other related taxes on our services or paying regulatory fees could result in substantial tax liabilities for past sales, discourage customers from purchasing our services or otherwise harm our business and operating results. 23 Table of Contents Improper disclosure of confidential and personal data could result in liability and harm to our reputation.
A successful assertion that we should be collecting sales or other related taxes on our services or paying regulatory fees could result in substantial tax liabilities for past sales, discourage customers from purchasing our services or otherwise harm our business and operating results. 21 Table of Contents Improper disclosure of confidential and personal data could result in liability and harm to our reputation.
Operating in international markets also requires significant management attention and financial resources. The investment and additional resources required to establish operations and manage growth in other countries may not produce desired levels of revenue or profitability. 26 Table of Contents Our success depends in part on our ability to protect and enforce our intellectual property rights.
Operating in international markets also requires significant management attention and financial resources. The investment and additional resources required to establish operations and manage growth in other countries may not produce desired levels of revenue or profitability. 24 Table of Contents Our success depends in part on our ability to protect and enforce our intellectual property rights.
If an actual or perceived breach of our security occurs, we could be liable under laws and regulations that protect personal or other confidential data resulting in increased costs or loss of revenues and the market perception of our services could be harmed. 24 Table of Contents Our business could be negatively impacted by cyber and other security threats or disruptions.
If an actual or perceived breach of our security occurs, we could be liable under laws and regulations that protect personal or other confidential data resulting in increased costs or loss of revenues and the market perception of our services could be harmed. 22 Table of Contents Our business could be negatively impacted by cyber and other security threats or disruptions.
If our customers become unable to pay amounts owed to us or pay us more slowly, then our cash flow and profitability may suffer significantly. 25 Table of Contents Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations, which could subject our business to higher tax liability.
If our customers become unable to pay amounts owed to us or pay us more slowly, then our cash flow and profitability may suffer significantly. 23 Table of Contents Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations, which could subject our business to higher tax liability.
These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and cause us to take certain actions you desire. 29 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable. ITEM 1C.
These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and cause us to take certain actions you desire. 27 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable. ITEM 1C.
Furthermore, some of our contracts may require us to employ only individuals who have particular government security clearance levels. 22 Table of Contents We may fail to realize the anticipated benefits of acquisitions which we consummate, and we may be subject to business uncertainties.
Furthermore, some of our contracts may require us to employ only individuals who have particular government security clearance levels. 20 Table of Contents We may fail to realize the anticipated benefits of acquisitions which we consummate, and we may be subject to business uncertainties.
Our NOLs at December 31, 2024 may also be impaired under similar provisions of state law and may expire unused or underused, which would prevent us from using our NOL carryforwards to offset future taxable income.
Our NOLs at December 31, 2025 may also be impaired under similar provisions of state law and may expire unused or underused, which would prevent us from using our NOL carryforwards to offset future taxable income.
If we are unable to manage these activities or any revenue declines successfully, our business, financial condition and results of operations could be adversely affected. 21 Table of Contents If we are unable to retain our existing customers, our revenue and results of operations would be adversely affected.
If we are unable to manage these activities or any revenue declines successfully, our business, financial condition and results of operations could be adversely affected. 19 Table of Contents If we are unable to retain our existing customers, our revenue and results of operations would be adversely affected.
If our market does not experience significant growth, or demand for our services decreases, then our business, results of operations, and financial condition could be adversely affected. 20 Table of Contents We depend on component and product manufacturing provided by outsourcing partners, most of which are located outside of the U.S.
If our market does not experience significant growth, or demand for our services decreases, then our business, results of operations, and financial condition could be adversely affected. 18 Table of Contents For our hardware product offerings we depend on component and product manufacturing provided by outsourcing partners, most of which are located outside of the U.S.
Our information security procedures are overseen by our Vice President of Risk Management, supported by our Chief Technology Officer and our IT Manager, who are responsible to provide regular reports to our Interim President and Chief Executive Officer and Chief Financial Officer as well as the Technology and Social Responsibility Committee and the Governance Committee of our Board.
Our information security procedures are overseen by our Vice President of Risk Management, supported by our Chief Technology Officer and our IT Manager, who are responsible to provide regular reports to our President and Chief Executive Officer and Chief Financial Officer as well as the Governance Committee of our Board.
Risks Relating to Our Corporate Structure and Business We are currently not profitable, and we may be unable to become profitable on a quarterly or annual basis. For the year ended December 31, 2024, we had a net loss of $61,410,000 .
Risks Relating to Our Corporate Structure and Business We are currently not profitable, and we may be unable to become profitable on a quarterly or annual basis. For the year ended December 31, 2025, we had a net loss of $31,460,000 .
The price per share at which we may sell additional shares of our common stock or other securities convertible into or exchangeable for our common stock in future transactions may be higher or lower than the price per share paid by investors.
The price per share at which we may sell additional shares of our common stock or other securities convertible into or exchangeable for our common stock in future transactions may be higher or lower than the price per share paid by investors. We do not intend to pay dividends on our common stock for the foreseeable future.
In addition , 9,255,659 shares of our common stock that are subject to outstanding options, restricted stock units and warrants as of March 28, 2025, wil l become eligible for sale in the public market to the extent permitted by the provisions of various vesting agreements, and Rules 144 and 701 under the Securities Act.
In addition , 13,682,656 shares of our common stock that are subject to outstanding options, restricted stock units and war rants as of March 25, 20 26, wil l become eligible for sale in the public market to the extent permitted by the provisions of various vesting agreements, and Rules 144 and 701 under the Securities Act.
Based on shares outstanding as of March 28, 2025, 14,479,276 shares of common stock, or 13.1%, a re beneficially owned by our officers, directors and their affiliated entities, and will be subject to volume limitations under Rule 144 under the Securities Act and various vesting agreements.
Based on shares outstandin g as of March 25, 2026, 4,430,219 shares of common stock, or 3.2%, a re beneficially owned by our officers, directors and their affiliated entities, and will be subject to volume limitations under Rule 144 under the Securities Act and various vesting agreements.
We may be limited in the portion of net operating loss carryforwards that we can offset future taxable income for U.S. federal and state income tax purposes. As of December 31, 2024, we had gross federal and state net operating loss carryforwards, or NOLs, of approximately $190,624,000 and $180,859,000 , respectively.
We may be limited in the portion of net operating loss carryforwards that we can offset future taxable income for U.S. federal and state income tax purposes.
We have experienced and expect to continue to experience significant expenses related to acquisitions and the development of new products and services.
We have experienced and expect to continue to experience significant expenses related to acquisitions and the development of new products and services. We have deliberately incurred losses in the past as we worked to develop, test and popularize our products and services.
Our ability to become profitable in future periods could be impacted by factors that are not in our control, including government activity and regulation, economic instability and other items. e. ,.
Accordingly, we cannot assure that we will be profitable or that our financial performance will sustain a sufficient level to completely support operations at any particular time in the future. Our ability to become profitable in future periods could be impacted by factors that are not in our control, including government activity and regulation, economic instability and other items.
Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.
Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments. 26 Table of Contents We are a “ smaller reporting company ” and, as a result of the reduced disclosure and governance requirements applicable to smaller reporting companies, our common stock may be less attractive to investors.
As of March 28, 2025 , we have a total of 110,912,209 shar es of common stock outstanding .
As of March 25, 2 026 , we have a total of 136 ,578,177 shar es of common stock outstanding .
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Although we have deliberately incurred losses in the past as we worked to develop, test and popularize our products and services, a significant portion of our expenses are fixed in advance and we cannot assure that we will be profitable in the future or that our financial performance will sustain a sufficient level to completely support operations.
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Although the maintenance of these products and services is expected to be significantly less expensive than the initial development, competitive pressure and feedback from customers may result in further development efforts. In addition, significant portion of our expenses are fixed in advance and can only be reduced as on a percentage basis as our revenue increases.
Removed
A lack of future taxable income could adversely affect our ability to use these NOLs.
Added
As of December 31, 2025, we had gross federal and state net operating loss carryforwards, or NOLs, of approximately $229,894,000 and $220,253,000 , respectively, which include both domestic and foreign NOLs as further described in Note 10 to our consolidated financial statements. A lack of future taxable income could adversely affect our ability to use these NOLs.
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On February 10, 2025, we entered into an At Market Issuance Sales Agreement pursuant to which we may, from time to time, offer and sell shares of our common stock having an aggregate offering price of up to $25,000,000. As of March 28, 2025, we issued 5,148,600 shares under the Sales Agreement.
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Any future determination to pay dividends on our common stock will be at the discretion of our Board of Directors.
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We do not intend to pay dividends on our common stock for the foreseeable future. We have never declared or paid any cash dividends on our common stock and do not intend to pay any cash dividends on our common stock in the foreseeable future.
Removed
Our executive officers, directors, principal stockholders and their affiliates will continue to exercise significant influence over our company, which will limit your ability to influence corporate matters and could delay or prevent a change in corporate control.
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As of March 28, 2025, our executive officers, directors, five percent or greater stockholders and their respective affiliates owned in the aggregate approximately 13.1% of our common stock. These stockholders have the ability to influence us through this ownership position and may have a determining role in matters requiring stockholder approval.
Removed
For example, these stockholders may be able to ultimately determine elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest as one of our stockholders.
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The interests of this group of stockholders may not always coincide with your interests or the interests of other stockholders and they may act in a manner that advances their best interests and not necessarily those of other stockholders, including seeking a premium value for their common stock, and might affect the prevailing market price for our common stock. 28 Table of Contents We are a “ smaller reporting company ” and, as a result of the reduced disclosure and governance requirements applicable to smaller reporting companies, our common stock may be less attractive to investors.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our principal executive offices are located at 6721 Columbia Gateway Drive, Suite 400, Columbia, Maryland 21046 and 55a Yigal Alon Street, Tel-Aviv, Israel . We do not own any real property. We do not consider any of our leased properties to be materially important to us.
Biggest changeITEM 2. PROPERTIES Our principal executive office is located at 6721 Columbia Gateway Drive, Suite 400, Columbia, Maryland 21046 . We do not own any real property. We do not consider any of our leased properties to be materially important to us.
While we believe it is necessary to maintain offices through which our services are coordinated, we feel there are sufficient available office rental properties to adequately serve our needs should we need to relocate or expand our operations. 30 Table of Contents
While we believe it is necessary to maintain offices through which our services are coordinated, we feel there are sufficient available office rental properties to adequately serve our needs should we need to relocate or expand our operations. 28 Table of Contents

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOccupational Safety and Health Administration ( “ OSHA ” ) Claim In 2023 two previous employees of the Company (the “Claimants”) filed a complaint with OSHA (the “OSHA Complaints”) against the Company. Shortly after the OSHA Complaints were filed against the Company, the Company filed a position statement to address the OSHA Complaints.
Biggest changeRekor has filed a notice of appeal of that ruling. The Company believes HCW's claims are without merit and intends to vigorously defend itself in this lawsuit. Occupational Safety and Health Administration ( “ OSHA ” ) Claim In 2023 two previous employees of the Company (the “Claimants”) filed a complaint with OSHA (the “OSHA Complaints”) against the Company.
Subsequent to the July Warrant Exercise Transaction, the Company received a letter from HCW claiming entitlement to certain “tail” fees and warrant consideration stemming from the July Warrant Exercise Transaction. The Company believed then, and believes now, that this claim is without merit.
Subsequent to the July Warrant Exercise Transaction, the Company received a letter from HCW claiming entitlement to certain “tail” fees and warrant consideration stemming from the agreement with the warrant holder. The Company believed then, and believes now, that this claim is without merit.
It is the Company’s opinion that the outcome of these proceedings, individually and collectively, will not be material to the Company’s consolidated financial statements as a whole. H.C Wainwright & Co., LLC In March 2023, the Company entered into an engagement letter with H.C. Wainwright & Co., LLC, ("HCW"), related to a capital raise.
It is the Company’s opinion that the outcome of these proceedings, individually and collectively, will not be material to the Company’s consolidated financial statements as a whole. H.C. Wainwright & Co., LLC In March 2023, the Company entered into an engagement letter with H.C.
As a result of this claim and for other reasons articulated to HCW, the Company terminated its engagement letter with HCW, including for cause, which, the Company believes, eliminated both the “tail” provision and the ROFR provision with respect to the engagement letter.
As a result of this claim and for other reasons articulated to HCW, the Company terminated its engagement letter with HCW, including for cause, which, the Company believes, eliminated both the “tail” provision and the ROFR provision with respect to the 2023 Registered Direct Offering.
The Company likewise filed a request for an award of attorneys’ fees. On January 4, 2024, the Office of Administrative Law Judges (“OALJ”) processed the appeals and issued its Notice of Docketing and Order of Consolidation.
OSHA thereby dismissed the complaint. Thereafter, Claimants appealed the determination by filing objections and requesting a hearing before an Administrative Law Judge. The Company likewise filed a request for an award of attorneys’ fees. On January 4, 2024, the Office of Administrative Law Judges (“OALJ”) processed the appeals and issued its Notice of Docketing and Order of Consolidation.
On November 30, 2023, OSHA issued its determination that, based on the information gathered thus far in its investigation, OSHA was unable to conclude that there was reasonable cause to believe that a violation of the statute occurred. OSHA thereby dismissed the complaint. Thereafter, Claimants appealed the determination by filing objections and requesting a hearing before an Administrative Law Judge.
Shortly after the OSHA Complaints were filed against the Company, the Company filed a position statement to address the OSHA Complaints. On November 30, 2023, OSHA issued its determination that, based on the information gathered thus far in its investigation, OSHA was unable to conclude that there was reasonable cause to believe that a violation of the statute occurred.
The parties are next set to appear before the Court on April 24-25, 2025 to address damages. The Company believes these claims are without merit. The Company intends to vigorously defend itself in this lawsuit.
Complainant then has fourteen (14) days from the submission of our brief to file a reply. The Company believes these claims are without merit. The Company intends to vigorously defend itself in this lawsuit.
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Rekor seeks to recover damages from HCW and Armistice. HCW and Armistice have now moved to dismiss the amended counterclaims. Those motions are pending. Discovery is ongoing in the matter. The Company believes HCW's claims are without merit. The Company intends to vigorously defend itself in this lawsuit.
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Wainwright & Co., LLC, ("HCW"), related to a capital raise (see NOTE 13 – STOCKHOLDERS ’ EQUITY ).
Removed
On February 28, 2024, the OALJ issued an Order setting forth a revised schedule governing the case with the start of the hearing scheduled for March 3, 2025. In advance of the March 3, 2025 hearing, the parties agreed to bifurcate the matter into two separate hearings.
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In Q3 2025, Rekor resolved its claims with Armistice. The proceeds are presented as part of other expense (income) in the condensed consolidated statement of operations. Rekor now seeks to recover damages from HCW and HCW moved to dismiss the amended counterclaims. The Court granted HCW’s motion to dismiss Rekor’s counterclaims.
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The first hearing from March 3-5, 2025 was set to address liability and the second from April 24-25, 2025 was set to address damages. The parties were able to settle the claim filed by one employee in advance of the March 3, 2025 hearing. The hearing did proceed for the claim filed by another employee.
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The parties were able to settle the claim filed by one employee in advance of a March 3, 2025 hearing scheduled by the OALJ. After the hearing, at the Court's request, the parties submitted post-hearing briefs in April 2025. On September 30, 2025, the OALJ issued an Order in Rekor’s favor, dismissing all aspects of Claimant’s Complaint.
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The Court did not make a finding on liability at the hearing. The Court has requested that the parties prepare and submit post-hearing briefs on or before April 19, 2025. The Company does not know when the Court will make its findings after the receipt of the briefs.
Added
On November 24, 2025, the Appellate Review Board ("ARB") served a Notice of Appeal Acceptance and indicated they accepted the matter for review. They subsequently set a briefing schedule for the parties. Complainant’s brief was filed on January 22, 2026. Our brief is due on March 31, 2026.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeHolders As of March 28, 2025, there were 48 registered holders of record of our common stock, excluding stockholders for whom shares are held in “nominee” or “street name.” The actual number of common stockholders is greater than the number of record holders and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
Biggest changeHolders As of March 25, 2026, there wer e 47 registered holders of record of our common stock, excluding stockholders for whom shares are held in “nominee” or “street name.” The actual number of common stockholders is greater than the number of record holders and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
Additionally, 664,329 shares were be issued and delivered to the Seller on the twelve-month anniversary of the Closing Date. The ATD Holdback Shares were deemed to be liability based and are measured at fair value each reporting period.
Additionally, 664,329 shares were to be issued and delivered to the Seller on the twelve-month anniversary of the Closing Date. The ATD Holdback Shares were deemed to be liability based and are measured at fair value each reporting period.
Any future determination relating to dividend policy will be made at the discretion of our Board of Directors and will depend on a number of factors, including, but not limited to, our future earnings, capital requirements, financial condition, future prospects, applicable Delaware law, which provides that dividends are only payable out of surplus or current net profits and other factors our Board of Directors might deem relevant. 32 Table of Contents Recent Sales of Unregistered Securities 2023 Promissory Notes with Warrants As previously disclosed under Item 3.02 in the Company’s Current Report on Form 8-K filed with the SEC on January 18, 2023, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company agreed to issue and sell to the investors in a private placement transaction (i) up to $15,000,000 in aggregate principal amount of senior secured promissory notes (the "2023 Promissory Notes"), and (ii) warrants to purchase up to an aggregate of 7,500,000 shares of common stock of the Company.
Any future determination relating to dividend policy will be made at the discretion of our Board of Directors and will depend on a number of factors, including, but not limited to, our future earnings, capital requirements, financial condition, future prospects, applicable Delaware law, which provides that dividends are only payable out of surplus or current net profits and other factors our Board of Directors might deem relevant. 30 Table of Contents Recent Sales of Unregistered Securities 2023 Promissory Notes with Warrants As previously disclosed under Item 3.02 in the Company’s Current Report on Form 8-K filed with the SEC on January 18, 2023, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company agreed to issue and sell to the investors in a private placement transaction (i) up to $15,000,000 in aggregate principal amount of senior secured promissory notes (the "2023 Promissory Notes"), and (ii) warrants to purchase up to an aggregate of 7,500,000 shares of common stock of the Company.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 31 Table of Contents PART II ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the Nasdaq Capital Market under the symbol “REKR”.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 29 Table of Contents PART II ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the Nasdaq Capital Market under the symbol “REKR”.
Added
December 2025 Underwriting Agreement Warrants On December 13, 2025, the Company entered into an underwriting agreement with William Blair & Company, L.L.C., as representative of the several underwriters, relating to an underwritten direct offering of 8,571,428 units at a public offering price of $1.75 per unit (the "2025 Underwriting Agreement").
Added
Each unit consisted of one share of the Company's common stock and one warrant to purchase one share of the Company's common stock. The shares the Company's common stock and warrants comprising the units were immediately separable and were issued separately. The offering closed on December 16, 2025.
Added
Each warrant has an exercise price of $2.40 per share, is immediately exercisable, and expires on December 16, 2032 (seven years from the date of issuance). The warrants are subject to a 9.99% beneficial ownership limitation and contain standard adjustment provisions for stock dividends, splits and similar events.
Added
The warrants may be exercised on a cashless basis if, at the time of exercise, there is no effective registration statement registering the shares of common stock underlying the warrants.
Added
The shares the Company's common stock included in the units that were offered and sold pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-280913), as supplemented by a prospectus supplement dated December 15, 2025.
Added
The warrants were issued in a private placement to a single institutional investor in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended, as a transaction not involving a public offering.
Added
The Company did not register the warrants under the Securities Act, and the warrants may not be offered or sold absent registration or an applicable exemption from registration. The shares the Company's common stock issuable upon exercise of the warrants have been registered for resale pursuant to a registration statement on Form S-3.
Added
In connection with the offering, the Company also entered into a Side Letter Agreement with Anson Advisors Inc. (the “Side Letter”), which includes, among other things, a restriction prohibiting the Company from effecting or entering into any Variable Rate Transaction (as defined in the Side Letter) while any December 2025 warrants remain outstanding.
Added
The Side Letter also provides the investor with participation rights in future firm-commitment underwritten offerings, subject to customary exceptions. The gross proceeds to the Company from the offering were approximately $15.0 million. After deducting underwriting discounts and commissions and estimated offering expenses, the net proceeds to the Company were approximately $13.9 million.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

38 edited+29 added−15 removed78 unchanged
Biggest changeOther Income (Expense) Year ended December 31, Change (Dollars in thousands) 2024 2023 $ % Other income (expense): (Loss) gain on extinguishment of debt $ (4,693 ) $ 527 $ (5,220 ) -991 % Interest expense, net (2,645 ) (3,596 ) 951 26 % Gain on remeasurement of ATD Holdback Shares 599 - 599 - Loss on offering costs - Prepaid Advance (888 ) - (888 ) - Loss on settlement of Prepaid Advance (900 ) - (900 ) - Gain on the sale of Global Public Safety 1,500 - 1,500 - Other expense, net (15 ) (468 ) 453 97 % Total other expense, net $ (7,042 ) $ (3,537 ) $ (3,505 ) -99 % Loss on extinguishment of debt was a result of early redemption of the 2023 Promissory Notes.
Biggest changeOther Income (Expense) Year ended December 31, Change (Dollars in thousands) 2025 2024 $ % Other income (expense): Loss on extinguishment of debt $ - $ (4,693 ) $ 4,693 100 % Interest expense, net (2,297 ) (2,645 ) 348 13 % (Loss) gain on remeasurement of ATD Holdback Shares (120 ) 599 (719 ) -120 % Loss on offering costs - Prepaid Advance - (888 ) 888 -100 % Loss on settlement of Prepaid Advance - (900 ) 900 -100 % Gain on the sale of Global Public Safety - 1,500 (1,500 ) 100 % Other expense, net (115 ) (15 ) (100 ) -667 % Total other expense, net $ (2,532 ) $ (7,042 ) $ 4,510 64 % For the year ended December 31, 2025. the decrease in other expense, net compared to the year ended December 31, 2024, was primarily due to: ● The absence of a $4,693,000 loss on extinguishment of debt recorded during 2024 in connection with the early redemption of the 2023 Promissory Notes. ● The absence of non-operating charges recorded during 2024 related to the Prepaid Advance Agreement. ● Partially offset by the absence of a $1,500,000 gain recognized during 2024 related to the sale of Global Public Safety. ● Partially offset by a $719,000 unfavorable change related to the remeasurement of ATD Holdback Shares and a $348,000 decrease in net interest expense in 2025 compared to 2024. 40 Table of Contents Non-GAAP Measures EBITDA and Adjusted EBITDA We calculate EBITDA as net loss before interest, taxes, depreciation and amortization.
Edge processing allows us to scale a network dramatically without the bandwidth, cost, latency and dependability limitations that are experienced by other networks where raw video needs to be streamed to the cloud for processing. 35 Table of Contents ● Accelerated Business Development and Marketing – Our ability to compete in a large, competitive and rapidly evolving industry will require us to achieve and maintain a visible leadership position.
Edge processing allows us to scale a network dramatically without the bandwidth, cost, latency and dependability limitations that are experienced by other networks where raw video needs to be streamed to the cloud for processing. 33 Table of Contents ● Accelerated Business Development and Marketing – Our ability to compete in a large, competitive and rapidly evolving industry will require us to achieve and maintain a visible leadership position.
Actual results may differ from these estimates under different assumptions or conditions, or if management made different judgments or utilized different estimates. 48 Table of Contents Valuation of long lived assets Fixed assets and amortizable intangible assets are reviewed for impairment as events or changes in circumstances occur indicating that the carrying value of the asset may not be recoverable.
Actual results may differ from these estimates under different assumptions or conditions, or if management made different judgments or utilized different estimates. 46 Table of Contents Valuation of long lived assets Fixed assets and amortizable intangible assets are reviewed for impairment as events or changes in circumstances occur indicating that the carrying value of the asset may not be recoverable.
We expect to maintain this full valuation allowance for the foreseeable future as it is more likely than not that those deferred tax assets may not be realized based on our history of losses. 38 Table of Contents Results of Operations Our historical operating results in dollars are presented below.
We expect to maintain this full valuation allowance for the foreseeable future as it is more likely than not that those deferred tax assets may not be realized based on our history of losses. 36 Table of Contents Results of Operations Our historical operating results in dollars are presented below.
To the extent that events outside of the Company's control have a significant negative impact on economic and/or market conditions, they could affect payments from customers, services and supplies from vendors, its ability to continue to secure and implement new business, raise capital, and otherwise, depending on the severity of such impact, materially adversely affect its operating results. 47 Table of Contents Off-Balance Sheet Arrangements, Contractual Obligations and Commitments As of the date of this Annual Report on Form 10-K, we did not have any off-balance sheet arrangements that have had or are reasonably likely to have a material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital resources or capital expenditures.
To the extent that events outside of our control have a significant negative impact on economic and/or market conditions, they could affect payments from customers, services and supplies from vendors, our ability to continue to secure and implement new business, raise capital, and otherwise, depending on the severity of such impact, materially adversely affect our operating results. 45 Table of Contents Off-Balance Sheet Arrangements, Contractual Obligations and Commitments As of the date of this Annual Report on Form 10-K, we did not have any off-balance sheet arrangements that have had or are reasonably likely to have a material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital resources or capital expenditures.
We expense direct costs of revenues when they incur. 37 Table of Contents Operating Expenses Our operating expenses consist of general and administrative expenses, sales and marketing, research and development and depreciation and amortization. Personnel costs are the most significant component of operating expenses and consist of salaries, benefits, bonuses, payroll taxes and stock-based compensation expenses.
We expense direct costs of revenues when they incur. 35 Table of Contents Operating Expenses Our operating expenses consist of general and administrative expenses, sales and marketing, research and development and depreciation and amortization. Personnel costs are the most significant component of operating expenses and consist of salaries, benefits, bonuses, payroll taxes and stock-based compensation expenses.
The Company's ability to generate positive operating results and execute its business strategy will depend on (i) its ability to continue the growth of its customer base, (ii) its ability to continue to improve its quarterly financial metrics such as net loss and cash used from operating activities (iii) the continued performance of its contractors, subcontractors and vendors, (iv) its ability to maintain and build good relationships with investors, lenders and other financial intermediaries, (v) its ability to maintain timely collections from existing customers, and (vi) the ability to scale its business processes.
Our ability to generate positive operating results and execute our business strategy will depend on (i) our ability to continue the growth of our customer base, (ii) our ability to continue to improve our quarterly financial metrics such as net loss and cash used from operating activities (iii) the continued performance of our contractors, subcontractors and vendors, (iv) our ability to maintain and build good relationships with investors, lenders and other financial intermediaries, (v) our ability to maintain timely collections from existing customers, and (vi) the ability to scale our business processes.
Typically our software sales carry a higher Adjusted Gross Margin. 44 Table of Contents Key Performance Indicators We regularly review several indicators, including the following key indicators, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.
Typically our software sales carry a higher Adjusted Gross Margin. 42 Table of Contents Key Performance Indicators We regularly review several indicators, including the following key indicators, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.
Critical Accounting Estimates Our discussion and analysis of our financial condition and results of our operations is based upon our audited consolidated financial statements as of and for the years ended December 31, 2024 and 2023, which have been prepared in accordance with U.S. GAAP.
Critical Accounting Estimates Our discussion and analysis of our financial condition and results of our operations is based upon our audited consolidated financial statements as of and for the years ended December 31, 2025 and 2024, which have been prepared in accordance with U.S. GAAP.
General The information provided in this discussion and analysis of Rekor’s financial condition, and results of operations covers the years ended December 31, 2024 and 2023.
General The information provided in this discussion and analysis of Rekor’s financial condition, and results of operations covers the years ended December 31, 2025 and 2024.
We currently expect to recognize approximately $12,036,000 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.
We currently expect to recognize approximately $17,701,000 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.
As of December 31, 2024, we had appro ximately $14,450,000 of performance obligations with respect to contracts that were closed prior to December 31, 2024 but have a contractual period beyond December 31, 2024 . These contracts generally cover a term of one to five years, during which the Company will recognize revenue ratably over the contract term.
As of December 31, 2025, we had appro ximately $25,921,000 of performance obligations with respect to contracts that were closed prior to December 31, 2025 but have a contractual period beyond December 31, 2025 . These contracts generally cover a term of one to five years, during which the Company will recognize revenue ratably over the contract term.
In 2024, we completed the acquisition of 100% of the issued and outstanding limited liability company interests of All Traffic Data Systems (“ATD”). 34 Table of Contents Acquisitions and Dispositions On January 2, 2024, we completed the acquisition of All Traffic Data Services, LLC (“ATD”) for an aggregate purchase price of $20,576,000.
In 2024, we completed the acquisition of 100% of the issued and outstanding limited liability company interests of All Traffic Data Services, LLC (“ATD”). 32 Table of Contents Acquisitions and Dispositions In 2024, we completed the acquisition of All Traffic Data Services, LLC (“ATD”) for an aggregate purchase price of $20,576,000.
On February 10, 2025, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with Northland Securities, Inc., pursuant to which the Company may, from time to time, offer and sell shares of the Company’s common stock, par value $0.0001 per share, having an aggregate offering price of up to $25,000,000.
On February 10, 2025, we entered into an At Market Issuance Sales Agreement (the "Sales Agreement") with Northland Securities, Inc. (the "Agent"), pursuant to which we could, from time to time, offer and sell shares of our common stock, par value $0.0001 per share ("Common Stock"), having an aggregate offering price of up to $25,000,000.
The following table sets forth our recurring revenue for the periods included (dollars in thousands): Year ended December 31, 2024 2023 Change $ % Recurring revenue $ 22,590 $ 20,755 $ 1,835 9 % We expect to continue efforts to secure long-term contracts with recurring revenue as part of our business model, which is intended to cause recurring revenue growth in future periods to continue to increase.
The following table sets forth our recurring revenue for the periods included (dollars in thousands): Year ended December 31, 2025 2024 Change $ % Recurring revenue $ 23,865 $ 22,590 $ 1,275 6 % We expect to continue efforts to secure long-term contracts with recurring revenue as part of our business model, which is intended to cause recurring revenue growth in future periods to continue to increase.
ITEM 6. [RESERVED] 33 Table of Contents ITEM 7.
ITEM 6. [RESERVED] 31 Table of Contents ITEM 7.
During the year ended December 31, 2024, as part of our 2024 Public Offering and Prepaid Advance, we received net proceeds of $26,362,000 and $14,100,000, respectively, these proceeds were partially offset by the repayment of our 2023 Promissory Notes.
During the year ended December 31, 2024, we received net proceeds of $26,362,000 from our public offering and net proceeds of $14,100,000 from the Prepaid Advance Agreement, which were partially offset by the repayment of $12,500,000 of our 2023 Promissory Notes.
The following table sets forth the components of the EBITDA and Adjusted EBITDA for the periods included (dollars in thousands): Year ended December 31, 2024 2023 Net loss $ (61,410 ) $ (45,685 ) Provision for income taxes 45 32 Interest expense, net 2,645 3,596 Depreciation and amortization 9,493 7,894 EBITDA $ (49,227 ) $ (34,163 ) Share-based compensation 4,829 4,352 Loss (gain) on extinguishment of debt 4,693 (527 ) Impairment of intangible assets 10,214 - Loss on offering costs - Prepaid Advance 888 - Loss on settlement of Prepaid Advance 900 - Gain on the sale of Global Public Safety (1,500 ) - Loss due to the remeasurement of the STS Earnout and Contingent Consideration, net 100 384 Impairment of SAFE agreement - 101 Adjusted EBITDA $ (29,103 ) $ (29,853 ) 43 Table of Contents Adjusted Gross Profit and Adjusted Gross Margin Adjusted Gross Profit is a non-GAAP financial measure that we define as revenue less cost of revenue, excluding depreciation and amortization.
The following table sets forth the components of the EBITDA and Adjusted EBITDA for the periods included (dollars in thousands): Year ended December 31, 2025 2024 Net loss $ (31,460 ) $ (61,410 ) Provision for income taxes 42 45 Interest expense, net 2,297 2,645 Depreciation and amortization 6,258 9,493 EBITDA $ (22,863 ) $ (49,227 ) Share-based compensation 2,908 4,829 Loss on extinguishment of debt - 4,693 Asset impairment charges 3,754 10,214 Loss on offering costs - Prepaid Advance - 888 Loss on settlement of Prepaid Advance - 900 Gain on the sale of Global Public Safety - (1,500 ) (Gain) loss due to the remeasurement of the STS Earnout and Contingent Consideration, net (1,900 ) 100 Adjusted EBITDA $ (18,101 ) $ (29,103 ) 41 Table of Contents Adjusted Gross Profit and Adjusted Gross Margin Adjusted Gross Profit is a non-GAAP financial measure that we define as revenue less cost of revenue, excluding depreciation and amortization.
Beyond the many recurring federal grant programs that could support customer purchases, and the $350 billion in American Rescue Plan Act allocations that public agencies are receiving now, we are particularly excited about the prospect of benefitting from the following new grant sources that are contained in the IIJA: $200 million annually for a “Safe Streets and Roads for All” program that would make competitive grants for state projects that significantly reduce or eliminate transportation-related fatalities. $150 million for the current administration to establish a grant program to modernize state data collection systems $500 million for the Strengthening Mobility and Revolutionizing Transportation (“SMART”) Grant Program that would support demonstration projects on smart technologies that improve transportation efficiency and safety. ● Recent Acquisition - In the current year, Rekor has acquired one subsidiary as part of its plans to advance its appeal to national and local transportation agencies.
Beyond the many recurring federal grant programs that could support customer purchases, and the $350 billion in American Rescue Plan Act allocations that public agencies are receiving now, we are particularly excited about the prospect of benefitting from the following new grant sources that are contained in the IIJA: $200 million annually for a “Safe Streets and Roads for All” program that would make competitive grants for state projects that significantly reduce or eliminate transportation-related fatalities. $150 million for the current administration to establish a grant program to modernize state data collection systems $500 million for the Strengthening Mobility and Revolutionizing Transportation (“SMART”) Grant Program that would support demonstration projects on smart technologies that improve transportation efficiency and safety. ● Challenges to Executing on the Corporate Strategy – As an acquirer and integrator of established technology companies in the ITS industry, there is an inherent risk associated with the successful implementation and execution of the strategy.
However, our general and administrative expenses have decreased as a percentage of our revenue and, to the extent we continue to be successful in generating increased revenue, we expect our general and administrative expenses to decrease as a percentage of our revenue over the long term.
However, our general and administrative expenses have decreased as a percentage of our revenue and, to the extent we continue to generate increased revenue and realize efficiencies from these actions, we expect our general and administrative expenses to decrease as a percentage of our revenue over the long term.
The following table sets forth the components of the Adjusted Gross Profit and Adjusted Gross Margin for the periods included (dollars in thousands) : Year ended December 31, 2024 2023 (Dollars in thousands, except percentages) Revenue $ 46,028 $ 34,933 Cost of revenue, excluding depreciation and amortization 23,344 16,499 Adjusted Gross Profit $ 22,684 $ 18,434 Adjusted Gross Margin 49.3 % 52.8 % Adjusted Gross Margin for the year ended December 31, 2024 decreased from 52.8% to 49.3% compared to the year ended December 31, 2023 .
The following table sets forth the components of the Adjusted Gross Profit and Adjusted Gross Margin for the periods included (dollars in thousands) : Year ended December 31, 2025 2024 (Dollars in thousands, except percentages) Revenue $ 48,450 $ 46,028 Cost of revenue, excluding depreciation and amortization 21,379 23,344 Adjusted Gross Profit $ 27,071 $ 22,684 Adjusted Gross Margin 55.9 % 49.3 % Adjusted Gross Margin for the year ended December 31, 2025 increased from 49.3% to 55.9% compared to the year ended December 31, 2024 .
Year ended December 31, (Dollars in thousands) 2024 2023 Revenue $ 46,028 $ 34,933 Cost of revenue, excluding depreciation and amortization 23,344 16,499 Operating expenses: General and administrative expenses 30,676 27,038 Selling and marketing expenses 7,858 7,347 Research and development expenses 18,766 18,271 Impairment of intangible assets 10,214 - Depreciation and amortization 9,493 7,894 Total operating expenses 77,007 60,550 Loss from continuing operations (54,323 ) (42,116 ) Other income (expense): (Loss) gain on extinguishment of debt (4,693 ) 527 Interest expense, net (2,645 ) (3,596 ) Gain on remeasurement of ATD Holdback Shares 599 - Loss on offering costs - Prepaid Advance (888 ) - Loss on settlement of Prepaid Advance (900 ) - Gain on the sale of Global Public Safety 1,500 - Other expense, net (15 ) (468 ) Total other expense, net (7,042 ) (3,537 ) Loss before income taxes (61,365 ) (45,653 ) Provision for income taxes 45 32 Net loss $ (61,410 ) $ (45,685 ) 39 Table of Contents Comparison of the Years Ended December 31, 2024 and 2023 Revenue Year ended December 31, Change (Dollars in thousands) 2024 2023 $ % Revenue $ 46,028 $ 34,933 $ 11,095 32 % The increase in revenue for the year ended December 31, 2024, compared to the year ended December 31, 2023, was primarily attributable to our Urban Mobility product line.
Year ended December 31, (Dollars in thousands) 2025 2024 Revenue $ 48,450 $ 46,028 Cost of revenue, excluding depreciation and amortization 21,379 23,344 Operating expenses: General and administrative expenses 25,177 30,676 Selling and marketing expenses 6,172 7,858 Research and development expenses 14,596 18,766 Asset impairment charges 3,754 10,214 Depreciation and amortization 6,258 9,493 Total operating expenses 55,957 77,007 Loss from continuing operations (28,886 ) (54,323 ) Other income (expense): Loss on extinguishment of debt - (4,693 ) Interest expense, net (2,297 ) (2,645 ) (Loss) gain on remeasurement of ATD Holdback Shares (120 ) 599 Loss on offering costs - Prepaid Advance - (888 ) Loss on settlement of Prepaid Advance - (900 ) Gain on the sale of Global Public Safety - 1,500 Other expense, net (115 ) (15 ) Total other expense, net (2,532 ) (7,042 ) Loss before income taxes (31,418 ) (61,365 ) Provision for income taxes 42 45 Net loss $ (31,460 ) $ (61,410 ) 37 Table of Contents Comparison of the Years Ended December 31, 2025 and 2024 Revenue Year ended December 31, Change (Dollars in thousands) 2025 2024 $ % Revenue $ 48,450 $ 46,028 $ 2,422 5 % The increase in revenue for the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily attributable to our Public Safety product line.
Rekor cannot determine with certainty whether existing third-party patents or the issuance of any future third party patents would require any of its operating subsidiaries to alter their respective technologies, obtain licenses or cease certain activities. Should the Company be unable to defend against such claims, the Company’s business, operating results, and financial condition can be adversely affected.
Rekor cannot determine with certainty whether existing third-party patents or the issuance of any future third party patents would require any of its operating subsidiaries to alter their respective technologies, obtain licenses or cease certain activities.
Other than as discussed above and elsewhere in this Annual Report on Form 10-K, we are not aware of any trends, events or uncertainties that are likely to have a material effect on our financial condition. 36 Table of Contents Components of Operating Results Revenues The Company derives its revenues primarily from the sale of its roadway data aggregation, traffic management and licensing offerings.
Other than as discussed above and elsewhere in this Annual Report on Form 10-K, we are not aware of any trends, events or uncertainties that are likely to have a material effect on our financial condition.
We have certain contractual obligations for future payments. See Note 7 to our consolidated financial statements for our required operating and financing lease payments and Note 9 for our required debt payments.
We have certain contractual obligations for future payments. See Note 7 to our consolidated financial statements for our required operating and financing lease payments and Note 9 for our required debt payments. Recent Developments Effective January 14, 2026, Timothy Davenport and Viraj Mehta each resigned from the Board of Directors. Mr.
As of December 31, 2024 , we had unrestricted cash and cash equivalents of $5,329,000 and working capital of $1,707,000, as compared to unrestricted cash and cash equivalents of $15,713,000 and working capital of $8,100,000 as of December 31, 2023 .
As of December 31, 2025 , we had restricted cash of $297,000, cash and cash equivalents of $16,566,000 and working capital of $1,640,000, as compared to restricted cash of $316,000 cash, cash and cash equivalents of $5,013,000 and working capital of $1,707,000 as of December 31, 2024 .
The increase in net cash used in investing activities was primarily due to the net cash outflow of $9,222,000 related to the acquisition of ATD. Net cash provided by financing activities for the year ended December 31, 2024 decreased by $14,147,000 from the year ended December 31, 2023.
Net cash used in investing activities for the year ended December 31, 2025, decreased by $6,858,000, which was primarily attributable to the absence of the $9,222,000 net cash outflow related to the acquisition of ATD in the prior year, partially offset by higher capital expenditures during the year.
We expect to improve, replace and increase facilities as considered appropriate to meet the needs of our planned operations. 46 Table of Contents Liquidity and Capital Resources The net cash flows from operating, investing and financing activities for the periods below were as follows (dollars in thousands): Year ended December 31, 2024 2023 Change $ % Net cash used in operating activities - continuing operations $ (32,469 ) $ (32,178 ) $ (291 ) -1 % Net cash (used in) provided by investing activities (9,370 ) 270 (9,640 ) -3570 % Net cash provided by financing activities 31,455 45,602 (14,147 ) -31 % Net (decrease) increase in cash, cash equivalents and restricted cash and cash equivalents - continuing operations $ (10,384 ) $ 13,694 $ (24,078 ) -176 % Net cash used in operating activities for the year ended December 31, 2024, increased by $291,000, which was primarily attributable to an increased loss which was offset by non-cash adjustments during the year, primarily the loss on extinguishment of debt of $4,693,000.
We expect to improve, replace and increase facilities as considered appropriate to meet the needs of our planned operations. 44 Table of Contents Liquidity and Capital Resources The net cash flows from operating, investing and financing activities for the periods below were as follows (dollars in thousands): Year ended December 31, 2025 2024 Change $ % Net cash used in operating activities $ (20,372 ) $ (32,469 ) $ 12,097 37 % Net cash used in investing activities (2,172 ) (9,030 ) 6,858 76 % Net cash provided by financing activities 34,078 31,115 2,963 10 % Net increase (decrease) in cash, cash equivalents and restricted cash $ 11,534 $ (10,384 ) $ 21,918 211 % Net cash used in operating activities for the year ended December 31, 2025, decreased by $12,097,000, which was primarily attributable to a lower net loss, partially offset by lower non-cash adjustments during the year, primarily a $6,460,000 decrease in impairment charges, $4,693,000 loss on extinguishment of debt, and $900,000 loss on settlement of prepaid advance recognized in the prior year, as well as lower amortization of intangible assets and share-based compensation, and changes in working capital.
We expect our general and administrative expenses to continue to remain high for the foreseeable future due to the costs associated with our growth and the costs of accounting, compliance, legal, insurance, and investor relations as a public company.
We expect our general and administrative expenses to continue to reflect actions taken to align our cost structure with current revenue levels, while continuing to include the costs associated with operating as a public company, including accounting, compliance, legal, insurance and investor relations.
Lastly, in the fourth quarter of 2023, we raised $14,330,000 related to our Series A Prime Revenue Sharing Notes. For the years ended December 31, 2024 and 2023 , we funded our operations primarily through cash from operating activities, the issuance of debt and the sale of equity.
These activities were partially offset by scheduled repayments of our STS Notes and payments related to financing leases in both periods. For the years ended December 31, 2025 and 2024 , we funded our operations primarily through cash from operating activities, the issuance of debt and the sale of equity.
The Company has generated losses and negative operating cashflows since its inception and has relied on external sources of financing to support the cash flow from operations.
We have generated losses and negative operating cashflows since our inception and have relied on external sources of financing to support our cash flow from operations. We attribute losses to non-capital expenditures related to the scaling of existing products and services, development of new products and services and marketing efforts associated with these existing and new products and services.
As a result of the forementioned factors and their potential future impact, the Company recognized an impairment charge of $10,214,000 as of December 31, 2024. 41 Table of Contents Depreciation and Amortization The increase in depreciation and amortization during the year is attributable primarily to the intangible assets that were acquired as part of our acquisition of ATD.
As a result of that analysis and updated projections on future cash flows, we recognized an impairment charge of $10,214,000 as of December 31, 2024. 39 Table of Contents Depreciation and Amortization The decrease in depreciation and amortization during the year ended December 31, 2025, is attributable to an impairment that we recognized as of December 31, 2024, following the identification of a triggering event.
Selling and Marketing Expenses The increase in selling and marketing expenses during the year ended December 31, 2024, compared to the year ended December 31, 2023, was primarily due to a $610,000 increase as result of the acquisition of ATD.
Selling and Marketing Expenses The decrease in selling and marketing expenses during the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily due to a $1,670,000 decrease in payroll and payroll related expenses driven by cost-efficiency initiatives implemented to better align with operations.
Amounts related to the prepayment of the contract related to the performance obligation for a service period that is not yet met are recorded as part of our contract liabilities balance. 45 Table of Contents Lease Obligations As of December 31, 2024 , we had significant leased building space at the following locations: ● Columbia, Maryland – The corporate headquarters ● Tel Aviv, Israel We believe our facilities are in good condition and adequate for their current use.
Amounts related to the prepayment of the contract related to the performance obligation for a service period that is not yet met are recorded as part of our contract liabilities balance.
Impairment of Intangible Assets As a result of sales performance being below expectation in part due to slower customer adoption, longer sales cycles and market conditions, the Company identified a triggering event and performed an analysis of its intangible assets.
As a result, we identified a triggering event and performed an analysis of its intangible assets.
In this process, we must exercise caution, recognizing the inherent uncertainties and limitations of our estimations and financial analysis while striving to provide feasible plan. Business Combinations We account for business combinations by recognizing the fair value of acquired assets and liabilities. The excess purchase consideration over the fair value of acquired assets and liabilities is recorded as goodwill.
In this process, we must exercise caution, recognizing the inherent uncertainties and limitations of our estimations and financial analysis while striving to provide a feasible plan. New Accounting Pronouncements See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 1 — Business and Significant Accounting Policies”. 47 Table of Contents
The Company attributes losses to non-capital expenditures related to the scaling of existing products and services, development of new products and services and marketing efforts associated with these existing and new products and services. As of and for the year ended December 31, 2024, the Company had working capital of $1,707,000 and a net loss of $61,410,000.
As of and for the year ended December 31, 2025, we had working capital of $1,640,000 and a net loss of $31,460,000.
Research and Development Expense Research and development expenses during the year ended December 31, 2024, compared to the year ended December 31, 2023, remained consistent.
Research and Development Expense Research and development expenses during the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily due to a $3,774,000 decrease in payroll and payroll related expenses driven by cost-efficiency initiatives implemented to better align with operations.
Removed
We acquired one of the leading existing providers of traffic data services in the United States.
Added
Should the Company be unable to defend against such claims, the Company’s business, operating results, and financial condition can be adversely affected. ● Strategic Consolidation of Engineering Operations - Subsequent to year end, we announced a strategic consolidation of our global engineering operations, including transitioning engineering activities from Israel to our United States-based teams and consolidating key product development and technology functions in the United States.
Removed
This acquisition has led to increased visibility for the Company among national and state level DOTs in the United States. ● Challenges to Executing on the Corporate Strategy – As an acquirer and integrator of established technology companies in the ITS industry, there is an inherent risk associated with the successful implementation and execution of the strategy.
Added
This initiative is intended to improve operational efficiency, enhance coordination across product development, delivery and customer-facing teams, and better align our cost structure with current revenue levels.
Removed
During the year ended December 31, 2024, revenue attributable to our Urban Mobility product line was $28,688,000 compared to $16,773,000 for the year ended December 31, 2023. During the year ended December 31, 2024, revenue attributable to our ATD acquisition was $10,125,000 and is included as part of our Urban Mobility revenue stream.
Added
We expect to incur one-time costs in connection with the transition, including employee-related separation costs and other exit-related costs, and the timing and amount of realized savings and incurred costs may differ from our current expectations.
Removed
Cost of Revenue, Excluding Depreciation and Amortization Year ended December 31, Change (Dollars in thousands) 2024 2023 $ % Cost of revenue, excluding depreciation and amortization $ 23,344 $ 16,499 $ 6,845 41 % For the year ended December 31, 2024, cost of revenue, excluding depreciation and amortization increased compared to prior year primarily due to an increase in personnel and other direct costs such as hardware that were incurred to support our increase in revenue.
Added
This initiative could impact the timing of certain longer-range product development initiatives and may not achieve the anticipated savings. ● Video Verification - In 2024, we developed and applied for a patent on a procedure to identify the time, place and device on which a video was recorded and provide the means to verify whether it had been altered.
Removed
The costs of revenue increased at a higher rate than our revenue increased as our mix of revenue shifted to more labor intensive activities. As we continue to deploy our technology, we anticipate our margins to improve.
Added
Although initially developed to support public safety clients, we believe there may be significant demand for such a product in the insurance and news media markets, as well as others. Pending the approval of our patent applications relating to the product, we have developed an application that can be installed on certain cameras and a companion website.
Removed
Additionally, during the year ended December 31, 2024, $3,672,000 of the increase was related to our acquisition of ATD. 40 Table of Contents Operating Expenses Year ended December 31, Change (Dollars in thousands) 2024 2023 $ % Operating expenses: General and administrative expenses $ 30,676 $ 27,038 $ 3,638 13 % Selling and marketing expenses 7,858 7,347 511 7 % Research and development expenses 18,766 18,271 495 3 % Impairment of intangible assets 10,214 - 10,214 - Depreciation and amortization 9,493 7,894 1,599 20 % Total operating expenses $ 77,007 $ 60,550 $ 16,457 27 % General and Administrative Expenses For the year ended December 31, 2024, the increase in general and administrative expenses compared to the year ended December 31, 2023, was primarily due to: ● a $2,150,000 increase in payroll and payroll related expenses which includes $1,294,000 related to our operations of ATD. ● a $661,000 and $323,000 increase in rent and utility expense, respectively, which are primarily related to the additional leases as part of the ATD acquisition. ● a $269,000 increase in insurance expense which is primarily related to higher premiums and the addition of the ATD operations. ● a $236,000 increase in board fees, excluding share-based compensation due to the additional board members in 2024.
Added
This product is sufficiently different in its potential end user market and functionality that we believe it should be pursued as a separate venture. Consequently, the intellectual property for this technology has been transferred to Rekor Labs, LLC. ("Rekor Labs") and we have established a separate board of managers to concentrate on the commercialization of the product.
Removed
As part of the redemption, we recorded accelerated debt issuance costs of $2,818,000 and a Redemption Payment of $1,875,000 which we settled through the issuance of common stock. Interest expense decreased period over period due to the early redemption of the 2023 Promissory Notes.
Added
Subsequent to year end, we announced certain actions intended to further align our cost structure with current revenue levels, as discussed above under "Opportunities, Trends and Uncertainties." 34 Table of Contents Components of Operating Results Revenues The Company derives its revenues primarily from the sale of its roadway data aggregation, traffic management and licensing offerings.
Removed
In connection with the sale of Global Public Safety , we recognized a gain on the sale of the business of $1,500,000 during the year ended December 31, 2024.
Added
During the year ended December 31, 2025, revenue attributable to our Public Safety product line was $17,401,000 compared to $14,807,000 for the year ended December 31, 2024. This increase was primarily due to higher perpetual license sales in 2025.
Removed
On August 14, 2024, we entered into a Prepaid Advance Agreement under which funds were advanced to the Company and the lender had the ability to satisfy the advance in exchange for shares in the Company. We incurred issuance costs and original issuance discounts totaling approximately $888,000 associated with the issuance of the Prepaid Advance.
Added
Cost of Revenue, Excluding Depreciation and Amortization Year ended December 31, Change (Dollars in thousands) 2025 2024 $ % Cost of revenue, excluding depreciation and amortization $ 21,379 $ 23,344 $ (1,965 ) -8 % For the year ended December 31, 2025, cost of revenue, excluding depreciation and amortization decreased compared to prior year primarily due to a favorable revenue mix of software versus hardware, which resulted in higher margins from increased software license sales. 38 Table of Contents Operating Expenses Year ended December 31, Change (Dollars in thousands) 2025 2024 $ % Operating expenses: General and administrative expenses $ 25,177 $ 30,676 $ (5,499 ) -18 % Selling and marketing expenses 6,172 7,858 (1,686 ) -21 % Research and development expenses 14,596 18,766 (4,170 ) -22 % Asset impairment charges 3,754 10,214 (6,460 ) -63 % Depreciation and amortization 6,258 9,493 (3,235 ) -34 % Total operating expenses $ 55,957 $ 77,007 $ (21,050 ) -27 % General and Administrative Expenses For the year ended December 31, 2025, the decrease in general and administrative expenses compared to the year ended December 31, 2024, was primarily due to: ● a $2,960,000 decrease in payroll and payroll related expenses primarily due to cost-efficiency initiatives implemented to better align with operations. ● a $1,900,000 decrease in expense attributable to the remeasurement of the contingent consideration associated with the acquisition of STS. ● a $594,000 decrease in bad debt expense attributable to the absence of a significant, nonrecurring write-off recorded in the prior year.
Removed
Additionally, during the year the Company elected to terminate the Prepaid Advance Agreement. All amounts due were settled and we recorded $900,000 in charges related to the settlement of the Prepaid Advance liability. 42 Table of Contents Non-GAAP Measures EBITDA and Adjusted EBITDA We calculate EBITDA as net loss before interest, taxes, depreciation and amortization.
Added
There was no comparable charge recognized in 2025. ● a $289,000 decrease in professional fees due to the absence of higher accounting fees such as those associated with the acquisition of ATD in 2024. ● a $332,000 decrease in board fees, including lower share-based compensation as part of cost-efficiency initiatives.
Removed
During the year ended December 31, 2023, as part of our 2023 Promissory Notes and the 2023 Registered Direct Offering, we received net proceeds of $11,100,000 and $9,159,000, respectively. Additionally, in the third quarter of 2023, we received gross proceeds of $10,996,000 related to the exercise of warrants associated to the 2023 Registered Direct Offering.
Added
Asset impairment charges In December 2025, the Company determined that the operations of its wholly owned subsidiary, Waycare Technologies LTD, located in Tel Aviv, Israel, were no longer sustainable given the entity's operating cost structure. The Company initiated a plan to wind down the Tel Aviv operations and consolidate all engineering functions into its U.S. facilities.
Removed
See Note 16 to our consolidated financial statements for additional information related to the Sales Agreement.
Added
As a result, the Company recognized total impairment charges of $3,754,000 during the year ended December 31, 2025, consisting of $1,046,000 related to property and equipment and $2,708,000 related to the operating lease ROU asset. During 2024, sales performance was below expectations, driven in part by slower customer adoption, extended sales cycles and market conditions.
Removed
When determining the fair value of assets acquired and liabilities assumed, we make estimates and assumptions, especially with respect to intangible assets such as identified customer relationships and trade names. We generally determine the fair value of acquired customer relationships using the multi-period excess earnings method, a form of the income approach.
Added
Performance obligations may decline or increase significantly as large contracts approach their expiration date and are then renewed. 43 Table of Contents Lease Obligations As of December 31, 2025 , we had significant leased building space at the following locations: ● Columbia, Maryland – The corporate headquarters ● Tel Aviv, Israel In December 2025, the Company determined that the operations of its wholly owned subsidiary, Waycare Technologies LTD, located in Tel Aviv, Israel, were no longer sustainable given the entity's operating cost structure.
Removed
Estimates in valuing identifiable intangible assets include, but are not limited to, projected revenue growth rates, customer retention rates and an appropriate discount rate. Our estimate of fair value is based upon assumptions we believe to be reasonable, but which are inherently uncertain and, as a result, actual results may differ from estimates.
Added
The Company initiated a plan to wind down the Tel Aviv operations and consolidate all engineering functions into its U.S. facilities. We believe our facilities are in good condition and adequate for their current use, although we have consolidated engineering operations in the United States and are no longer using our Tel Aviv office.
Removed
During the measurement period, we may make adjustments to the fair value of assets acquired and liabilities assumed, with offsetting adjustments to goodwill. New Accounting Pronouncements See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 1 — Business and Significant Accounting Policies”. 49 Table of Contents
Added
Net cash provided by financing activities for the year ended December 31, 2025 increased by $2,963,000 from the year ended December 31, 2024.
Added
During the year ended December 31, 2025, we received net proceeds of $22,350,000 from the At Market Issuance Sales Agreement (the "2025 Sales Agreement") and $13,891,000 from the underwriting agreement with William Blair & Company, L.L.C., that we entered into in December 2025 relating to an underwritten direct offering (the "2025 Underwriting Agreement").
Added
The Agent was entitled to receive from us a commission in an amount equal to (i) 3.0% of the gross sales prices per share sold through it as agent in agency transactions and (ii) 6.0% of the purchase price per share sold to the Agent, as principal in principal transactions.
Added
We incurred issuance costs of approximately $245,000 related to legal, accounting, and other fees in connection with the Sales Agreement. These costs were charged against the gross proceeds of the Sales Agreement and presented as a reduction to additional paid-in-capital on the accompanying consolidated balance sheets. On August 12, 2025, we elected to voluntarily terminate our Sales Agreement.
Added
As of December 31, 2025, we issued 18,888,832 shares of our common stock at a weighted average selling price of $1.23 per share in accordance with the Sales Agreement. Net cash provided from the Sales Agreement was $22,350,000 after paying $245,000 in issuance costs, as well as 3.0%, or $699,000 related to cash commissions provided to the Agent.
Added
On December 13, 2025, we entered into the 2025 Underwriting Agreement with William Blair & Company L.L.C., as representative of the several underwriters, relating to an underwritten registered direct offering of 8,571,428 units at a public offering price of $1.75 per unit.
Added
Each unit consisted of one share of our common stock and one warrant to purchase one share of our common stock at an exercise price of $2.40 per share. The warrants are immediately exercisable and expire on December 16, 2032. The offering closed on December 16, 2025. Gross proceeds from the offering were approximately $15.0 million.
Added
After deducting underwriting discounts and commissions and estimated offering expenses, the net proceeds were approximately $13.9 million. We intend to use the net proceeds for working capital, capital expenditures and general corporate purposes.
Added
The December 2025 offering, together with the proceeds from the Sales Agreement, contributed to the increase in our cash and cash equivalents from $5,013,000 as of December 31, 2024 to $16,566,000 as of December 31, 2025. In connection with the December 2025 offering, we entered into a Side Letter Agreement with Anson Advisors Inc. (the “Side Letter”).
Added
Among other things, the Side Letter prohibits us from effecting or entering into any “Variable Rate Transaction” (as defined in the Side Letter) while the investor holds any of the December 2025 warrants, which expire on December 16, 2032.
Added
A “Variable Rate Transaction” generally includes any transaction in which we issue or sell securities that are convertible into, exchangeable for, or represent the right to receive shares of common stock at a price that is subject to being reset at a future date based on trading prices or volumes, or upon the occurrence of specified events.
Added
This restriction may limit the types of financing instruments available to us during the period in which the warrants remain outstanding. The Side Letter also provides the investor with participation rights in future firm-commitment underwritten offerings, subject to customary exceptions.
Added
Davenport had served on the Board since January 2023, and Mr. Mehta had served on the Board since May 2024. The resignations were not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies, or practices. Effective March 25, 2026, Prof. Sanjay Sarma resigned from the Board of Directors. Prof.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeItem 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 34 Item 7A. Quantitative and Qualitative Disclosures about Market Risk. 50 Item 8. Financial Statements and Supplementary Data. 50 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 99
Biggest changeItem 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 32 Item 7A. Quantitative and Qualitative Disclosures about Market Risk. 48 Item 8. Financial Statements and Supplementary Data. 48 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 98

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