Rekor Systems, Inc. 10-K

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 Interim President and Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at December 31, 2024. 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 Interim President and 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, 2024. 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. Remediation of Previously Identified Material Weakness Management identified a material weakness during its assessment of internal controls over financial reporting in our Quarterly Report on For 10-Q for the quarter ended March 31, 2024. Specifically, because of the initial accounting treatment related to the acquisition of ATD, we concluded that our controls to address the risks associated with significant and unusual transactions and their impact to our financial reporting were not effectively designed or maintained. Management improved its process around significant and unusual transactions to ensure that the nuances of such transactions are effectively evaluated in the context of the increasingly complex accounting and tax standards. To further strengthen our internal controls, we modified our management review controls over significant and unusual transactions to engage our accounting and tax experts prior to our reporting deadlines to assist in identifying the implications of transactions deemed to be significant and unusual that occurred during the applicable period. During the year ended December 31, 2024, we completed our testing of the design and operating effectiveness of the implemented controls and determined them to be effective. As a result, we have concluded that our material weaknesses have been remediated as of December 31, 2024. Changes to Internal Control over Financial Reporting Except for the remediation of a material weakness identified in Q1 2024, described above, no other changes in internal control over financial reporting occurred during 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting 99 Table of Contents ITEM 9B. OTHER INFORMATION None . No Rule 10b5 - 1 plans were adopted by insiders in Q4 2024. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS . Not applicable. 100 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Executive Officers and Directors The information required by this item will be contained under the captions "Information about the Board of Directors and Committees," "Election of Directors" and "Executive Officers" in our definitive proxy statement to be filed with the SEC in connection with our 2025 annual meeting of stockholders, (the “Proxy Statement”), which is expected to be filed not later than 120 days after the end of our fiscal year ended December 31, 2024, 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. 101 Table of Contents 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 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 4/30/19 102 Table of Contents 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 3.4 Third Certificate of Amendment to Amended and Restated Certificate of Incorporation of Rekor Systems, Inc. as filed with the Secretary of the State of Delaware on April 22, 2024 8-K 001-38338 3.1 4/22/24 3.5 Amended and Restated Bylaws of Rekor Systems, Inc. 8-K 001-38338 3.2 12/15/21 4.1 Form of Warrant (January 2023) 8-K 001-38338 4.1 1/23/23 4.2 Form of Senior Secured Note (January 2023) 8-K 001-38338 4.2 1/23/23 4.3 Form of Common Stock Purchase Warrant (March 2023) 8-K 001-38338 4.2 3/27/23 4.4 Form of Placement Agent Common Stock Purchase Warrant (March 2023) 8-K 000-38338 4.3 3/27/23 4.5 Form of Common Stock Purchase Warrant (July 2023) 8-K 000-38338 4.1 7/27/23 4.6 Form Series A Prime Revenue Sharing Notes 8-K 000-38338 4.1 12/15/23 4.7 Indenture (Series A Prime Revenue Sharing Notes) 8-K 000-38338 4.2 12/15/23 4.8 First Supplemental Indenture (Series A Prime Revenue Sharing Notes) 8-K 000-38338 4.3 12/15/23 4.9 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 April 18, 2024) S-8 333-278990 4.1 4/29/24 10.2# Form of Rekor Systems, Inc. Incentive Stock Option Award Agreement 10-K 001-38338 10.18 4/11/19 10.3# Form of Rekor Systems, Inc. Non-Qualified Stock Option Award Agreement 10-K 001-38338 10.19 4/11/19 10.4# Employment Agreement with Eyal Hen effective May 15, 2019 8-K 001-38338 10.1 5/21/19 103 Table of Contents 10.5# Employment Agreement with Robert Berman effective May 15, 2019 8-K 001-38338 10.2 5/21/19 10.6# Employment Agreement with David Desharnais dated as of December 10, 2021 8-K 001-38338 10.1 1/3/22 10.7 Form of Rekor Systems, Inc. Restricted Stock Unit Agreement 10-K 001-38338 10.8 3/31/22 10.8 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 10.9 Form of Securities Purchase Agreement (March 2023) 8-K 001-38338 10.1 3/27/23 10.10 Form of Inducement Offer to Exercise Common Stock Purchase Warrants 8-K 001-38338 10.1 7/25/23 10.11 Form of Subscription Agreement (Series A Prime Revenue Sharing Notes) 8-K 001-38338 10.1 12/15/23 10.12 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 10.13 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 10.14 Pre-Paid Advance Agreement, dated as of August 14, 2024, by and between Rekor Systems, Inc. and YA II PN, Ltd. 8-K 001-38338 10.1 8/14/24 10.15 Amendment No. 1 to Prepaid Advance Agreement, dated as of October 22, 2024, by and between Rekor Systems, Inc. and YA II PN, Ltd. 8-K 001-38338 10.1 10/22/24 10.16 At Market Issuance Sales Agreement, dated as of February 10, 2025, by and between Rekor Systems, Inc. and Northland Securities, Inc. 8-K 001-38338 1.1 2/10/25 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 10-K 001-38338 97 3/25/24 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. 104 Table of Contents 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: Interim President Chief Executive Officer and Chairman of the Board Principal Executive Officer Date: March 31, 2025 /s/ Eyal Hen Name: Eyal Hen Title: Chief Financial Officer (Principal Financial and Accounting Officer) Date: March 31, 2025 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 Interim President and Chief Executive Officer and Chairman of the Board (Principal Executive Officer) March 31, 2025 /s/ Eyal Hen Eyal Hen Chief Financial Officer (Principal Financial and Accounting Officer) March 31, 2025 /s/ Paul de Bary Paul de Bary Director March 31, 2025 /s/ David Hanlon David Hanlon Director March 31, 2025 /s/ Steven D. Croxton Steven D. Croxton Director March 31, 2025 /s/ Sanjay Sarma Sanjay Sarma Director March 31, 2025 /s/ Tim Davenport Tim Davenport Director March 31, 2025 /s/ Drew Meyers Drew Meyers Director March 31, 2025 /s/ Glenn Goord Glenn Goord Director March 31, 2025 /s/ Viraj Mehta Viraj Mehta Director March 31, 2025 105