Item 9A. Controls and Procedures
ITEM 9A . CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
An evaluation was carried out under the supervision and with the participation of management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report.
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure.
Based on management’s review, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at December 31, 2023.
Management ’ s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. GAAP and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets; (ii) provide reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP and that our receipts and expenditures are being made only in accordance with authorizations; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements.
Under the supervision and with the participation with our management, including our Chief Executive Officer and Chief Financial Officer, we assessed the effectiveness of our internal control over financial reporting as of the end of the period covered by this report based on the framework in “Internal Control—Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon this assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2023.
In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met.
Attestation Report of Registered Public Accounting Firm
This Annual Report does not include an attestation report of our independent registered public accounting firm because non-accelerated filers are not required to provide such a report.
Changes to Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during our most recent fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS .
Not applicable.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Executive Officers and Directors
The information required by this item will be contained in our definitive proxy statement to be filed with the SEC in connection with our 2023 annual meeting of stockholders, or the Proxy Statement, which is expected to be filed not later than 120 days after the end of our fiscal year ended December 31, 2023, under the captions "Information about the Board of Directors and Committees," "Election of Directors" and "Executive Officers" and is incorporated in this report by reference.
Code of Ethics
We have adopted a Code of Conduct, which serves as our Code of Ethics, which applies to all of our employees, including our executive officers. Our Code of Conduct is available on our website at www.rekor.ai. If we amend or grant a waiver of one or more of the provisions of our Code of Conduct, we intend to satisfy the requirements under Item 5.05 of Item 8-K regarding the disclosure of amendments to or waivers from provisions of our Code of Conduct that apply to our Principal Executive and Principal Financial Officer by posting the required information on our website at the above address. Our website is not part of this Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item will be set forth in the Proxy Statement under the captions "Executive Compensation," "Pay Versus Performance" and "Compensation of Rekor Directors" and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this item will be set forth in the Proxy Statement under the captions "Security Ownership of Certain Beneficial Owners and Management" and is incorporated herein by reference.
ITEM 13 . CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item will be set forth in the Proxy Statement under the captions "Certain Relationships and Related Transactions and Director Independence" and is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item will be set forth in the Proxy Statement under the caption "Ratification of the Appointment of Independent Registered Public Accounting Firm" and is incorporated herein by reference.
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PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES
(a) (1) List Financial Statements
See Index to Financial Statements in Part II, Item 8 of this annual report.
(2) List of Financial Statements Schedules
All applicable schedule information is included in our Financial Statements in Part II, Item 8 of this annual report.
(b) Exhibits Index. We hereby file, as exhibits to this Annual Report, those exhibits listed on the Exhibit Index immediately following the signature page hereto.
Incorporated by Reference
Exhibit Number
Exhibit Description
Form
File No.
Exhibit
FilingDate
Filed/
FurnishedHerewith
2.1
Second Amended and Restated Agreement and Plan of Merger dated July 12, 2017, by and among Novume Solutions, Inc., KeyStone Solutions, Inc., Brekford Traffic Safety, Inc., KeyStone Merger Sub, LLC, and Brekford Merger Sub, Inc.
S-4/A
333-216014
2.1
7/13/17
3.1
Amended and Restated Certificate of Incorporation of Novume Solutions, Inc. as filed with the Secretary of State of Delaware on August 21, 2017
8-K
333-216014
3.1
8/25/17
3.2
Certificate of Amendment to Certificate of Incorporation of Novume Solutions, Inc. as filed with the Secretary of State of Delaware on April 30, 2019
8-K
001-38338
3.1
4/30/19
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3.3
Second Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Rekor Systems, Inc., dated March 18, 2020
8-K
001-38338
3.1
3/18/20
3.5
Amended and Restated Bylaws of Rekor Systems, Inc.
8-K
001-38338
3.2
12/15/21
4.1
Form of Common Stock Purchase Warrant issued by Novume Solutions, Inc. on January 25, 2017
S-4/A
333-216014
4.3
6/9/17
4.2
Form of Common Stock Purchase Warrant issued by Novume Solutions, Inc. on January 25, 2017
S-4/A
333-216014
4.4
6/9/17
4.3
Unsecured Subordinated Promissory Note issued to Harry Rhulen by Novume Solutions, Inc. on September 29, 2017
8-K
000-55833
10.2
10/3/17
4.4
Unsecured Subordinated Promissory Note issued to Suzanne Loughlin by Novume Solutions, Inc. on September 29, 2017
8-K
000-55833
10.3
10/3/17
4.5
Unsecured Subordinated Promissory Note issued to James Satterfield by Novume Solutions, Inc. on September 29, 2017
8-K
000-55833
10.4
10/3/17
4.6
Unsecured Subordinated Promissory Note issued to Lancer Financial Group, Inc. by Novume Solutions, Inc. on September 29, 2017
8-K
000-55833
10.5
10/3/17
4.7
Form of Warrant (January 2023)
8-K
001-38338
4.1
1/23/23
4.8
Form of Senior Secured Note (January 2023)
8-K
001-38338
4.2
1/23/23
4.9
Form of Pre-Funded Common Stock Purchase Warrant (March 2023)
8-K
001-38338
4.1
3/27/23
4.10
Form of Common Stock Purchase Warrant (March 2023)
8-K
001-38338
4.2
3/27/23
4.11
Form of Placement Agent Common Stock Purchase Warrant (March 2023)
8-K
000-38338
4.3
3/27/23
4.12
Form of Common Stock Purchase Warrant (July 2023)
8-K
000-38338
4.1
7/27/23
4.13
Form Series A Prime Revenue Sharing Notes
8-K
000-38338
4.1
12/15/23
4.14
Indenture (Series A Prime Revenue Sharing Notes)
8-K
000-38338
4.2
12/15/23
4.15
First Supplemental Indenture (Series A Prime Revenue Sharing Notes)
8-K
000-38338
4.3
12/15/23
4.16
Second Supplemental Indenture (Series A Prime Revenue Sharing Notes)
8-K
000-38338
4.4
12/15/23
10.1#
2017 Equity Award Plan of Novume Solutions, Inc. (as amended and restated as of September 14, 2021)
10-K
001-38338
10.1
3/31/22
10.2
Assignment and Assumption Agreement, dated as of October 1, 2017, by and between KeyStone Solutions LLC and Novume Solutions, Inc.
8-K
000-55833
10.1
10/3/17
10.3#
Form of Rekor Systems, Inc. Incentive Stock Option Award Agreement
10-K
001-38338
10.18
4/11/19
10.4#
Form of Rekor Systems, Inc. Non-Qualified Stock Option Award Agreement
10-K
001-38338
10.19
4/11/19
10.5#
Employment Agreement with Eyal Hen effective May 15, 2019
8-K
001-38338
10.1
5/21/19
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10.6#
Employment Agreement with Robert Berman effective May 15, 2019
8-K
001-38338
10.2
5/21/19
10.7#
Employment Agreement with David Desharnais dated as of December 10, 2021
8-K
001-38338
10.1
1/3/22
10.8
Form of Rekor Systems, Inc. Restricted Stock Unit Agreement
10-K
001-38338
10.8
3/31/22
10.9
First Amendment to Note Purchase Agreement, dated March 26, 2020, by and among the Company, the Purchasers from time to time party thereto and the Agent.
8-K
001-38338
10.1
3/26/20
10.10
Limited Waiver, dated as of March 26, 2020, by and among the Company and the undersigned Purchasers.
8-K
001-38338
10.2
3/26/20
10.11
Share Purchase Agreement, dated August 6, 2021, by and among Rekor Systems Inc., Waycare Technologies Ltd., the sellers named therein, and Shareholder Representative Services LLC, solely in its capacity as representative of the sellers.
8-K
001-38338
10.1
8/9/21
10.12
Securities Purchase Agreement, dated as of January 18, 2023, by and among the Company and the investors party thereto
8-K
001-38338
10.1
1/23/23
10.13
Form of Securities Purchase Agreement (March 2023)
8-K
001-38338
10.1
3/27/23
10.14
Form of Inducement Offer to Exercise Common Stock Purchase Warrants
8-K
001-38338
10.1
7/25/23
10.15
Form of Subscription Agreement (Series A Prime Revenue Sharing Notes)
8-K
001-38338
10.1
12/15/23
10.16
Interest Purchase Agreement, dated January 2, 2024, by and Among Rekor Systems, Inc., All Traffic Data Services, LLC and All Traffic Holdings
8-K
001-38338
10.1
1/3/24
10.17
Underwriting Agreement, dated as of February 7, 2024, by and between Rekor Systems, Inc. and William Blair & Company, L.L.C., as representative of the several underwriters named therein
8-K
001-38338
1.1
2/9/24
21.1
Subsidiaries of Rekor Systems, Inc.
*
23.1
Consent of Marcum LLP., Independent Registered Public Accounting Firm
*
31.1
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
*
31.2
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
*
32.1
Section 1350 Certification of Chief Executive Officer
**
32.2
Section 1350 Certification of Chief Financial Officer
**
97
Clawback Policy
*
101.INS
Inline XBRL Instance Document
*
101.SCH
Inline XBRL Taxonomy Extension Schema Document
*
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
*
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
*
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
*
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
*
104
Cover Page Interactive Data File (formatted in Inline XBRL and included in Exhibit 101)
*
Filed herewith.
**
Furnished herewith.
#
Indicates management contract or compensatory plan.
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ITEM 16. FORM 10-K SUMMARY
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Rekor Systems, Inc.
/s/ Robert A. Berman
Name:
Robert A. Berman
Title:
Chief Executive Officer
Principal Executive Officer
Date:
March 25, 2024
/s/ Eyal Hen
Name:
Eyal Hen
Title:
Chief Financial Officer (Principal Financial and Accounting Officer)
Date:
March 25, 2024
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Robert A. Berman
Robert A. Berman
Chief Executive Officer
(Principal Executive Officer), Chairman of the Board and Director
March 25, 2024
/s/ Eyal Hen
Eyal Hen
Chief Financial Officer
(Principal Financial and Accounting Officer)
March 25, 2024
/s/ Glenn Goord
Glenn Goord
Director
March 25, 2024
/s/ Paul de Bary
Paul de Bary
Director
March 25, 2024
/s/ David Hanlon
David Hanlon
Director
March 25, 2024
/s/ Steven D. Croxton
Steven D. Croxton
Director
March 25, 2024
/s/ Sanjay Sarma
Sanjay Sarma
Director
March 25, 2024
/s/ Tim Davenport
Tim Davenport
Director
March 25, 2024
/s/ Drew Meyers
Drew Meyers
Director
March 25, 2024
/s/ Anne Townsend
Anne Townsend
Director
March 25, 2024
109