What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-05-11 compared with 2025-11-13 · 339 added, 447 removed, 695 unchanged (53% of the section changed)

4 unchanged sentences

(Dollars in thousands, except share and per share amounts)

September 30, 2025

March 31, 2026

December 31, 2025

10 unchanged sentences

Property and equipment, net

10,192 11,048

Right-of-use operating lease assets, net

3 unchanged sentences

12,950 13,250

Note receivable, long-term

Total long-term assets

4 unchanged sentences

Accounts payable and accrued expenses

Notes payable, current portion

Loan payable, current portion

Series A Prime Revenue Sharing Notes, net of debt discount of $ 99 and $ 131 , respectively

Series A Prime Revenue Sharing Notes - related party, net of debt discount of $ 49 and $ 66 , respectively

Loans payable, current portion

Lease liability operating, short-term

1 unchanged sentence

Contract liabilities

Liability for ATD Holdback Shares, at fair value

Other current liabilities

2 unchanged sentences

Long-term Liabilities

Series A Prime Revenue Sharing Notes, net of debt discount of $ 165 and $ 263 , respectively

Series A Prime Revenue Sharing Notes - related party, net of debt discount of $ 82 and $ 132 , respectively

Loan payable, long-term

11 unchanged sentences

Stockholders' equity

Preferred stock, $ 0.0001 par value, 2,000,000 authorized, 505,000 shares designated as Series A and 240,861 shares designated as Series B as of September 30, 2025 and December 31, 2024, respectively.

No preferred stock was issued or outstanding as of September 30, 2025 or December 31, 2024, respectively.

Preferred stock, $ 0.0001 par value, 2,000,000 authorized, 505,000 shares designated as Series A and 240,861 shares designated as Series B as of March 31, 2026 and December 31, 2025, respectively.

No preferred stock was issued or outstanding as of March 31, 2026 or December 31, 2025, respectively.

Common stock, $ 0.0001 par value;

300,000,000 authorized shares;

126,990,085 and 104,700,593 shares issued as of September 30, 2025 and December 31, 2024, respectively;

126,689,228 and 104,541,073 shares outstanding as of September 30, 2025 and December 31, 2024, respectively.

Treasury stock, 300,857 and 159,520 shares as of September 30, 2025 and December 31, 2024, respectively.

137,923,985 and 136,791,826 shares issued as of March 31, 2026 and December 31, 2025, respectively;

137,607,546 and 136,477,697 shares outstanding as of March 31, 2026 and December 31, 2025, respectively

Treasury stock, 316,439 and 314,129 shares as of March 31, 2026 and December 31, 2025, respectively

( 902 ) ( 900 )

12 unchanged sentences

(Dollars in thousands, except share and per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Cost of revenue, excluding depreciation and amortization

6 unchanged sentences

Loss from operations

Other income (expense):

Loss on extinguishment of debt

Other expense:

Interest expense, net

Gain (loss) on remeasurement of ATD Holdback Shares

Loss on offering costs - Prepaid Advance

Gain on the sale of Global Public Safety

Other (expense) income

Total other (expense) income, net

Other expense

Total other expense, net

Loss per common share

12 unchanged sentences

Total Stockholders' Equity

Balance as of July 1, 2025

Stock-based compensation

Issuance upon exercise of stock options

Issuance upon vesting of restricted stock units

Shares withheld upon vesting of restricted stock units

Issuance of common stock pursuant to the 2025 Sales Agreement, net

Balance as of September 30, 2025

Balance as of July 1, 2024

Stock-based compensation

Issuance upon vesting of restricted stock units

Shares withheld upon vesting of restricted stock units

Issuance upon exercise of 2023 Warrants

Shares issued under the Prepaid Advance

Balance as of September 30, 2024

Balance as of January 1, 2026

3 unchanged sentences

Shares withheld upon vesting of restricted stock units

ATD Holdback Shares

Issuance of common stock pursuant to the 2025 Sales Agreement, net

Balance as of September 30, 2025

Balance as of March 31, 2026

Balance as of January 1, 2025

Stock-based compensation

Issuance upon exercise of stock options

Issuance upon vesting of restricted stock units

Shares withheld upon vesting of restricted stock units

Shares issued as part of the ATD Acquisition

Retirement of the 2023 Promissory Notes

2024 Public Offering

Issuance upon exercise of 2023 Warrants

Shares issued under the Prepaid Advance

Balance as of September 30, 2024

ATD Holdback Shares

Issuance of common stock pursuant to the 2025 Sales Agreement

Balance as of March 31, 2025

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3 unchanged sentences

(Dollars in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash Flows from Operating Activities:

6 unchanged sentences

Amortization of intangible assets

Loss due to the remeasurement of the STS Earnout and Contingent Consideration, net

Loss (gain) on remeasurement of ATD Holdback Shares

Gain on sale of property and equipment

Loss on remeasurement of ATD Holdback Shares

Loss on sale of property and equipment

Loss on operating lease abandonment

Loss on financing lease abandonment

Gain on the sale of Global Public Safety

Loss on extinguishment of debt

Loss on the remeasurement of Prepaid Advance

Changes in operating assets and liabilities:

Accounts receivable

Other current assets

Other current assets and deposits

Accounts payable, accrued expenses and other current liabilities

5 unchanged sentences

Proceeds from the sale of property and equipment

Proceeds from the sale of Global Public Safety

Cash paid for ATD acquisition, net

Proceeds from notes receivable

Net cash used in investing activities

1 unchanged sentence

Proceeds from 2025 Sales Agreement, net

Proceeds from public offering

Net proceeds from the Prepaid Advance

Proceeds from notes receivable

Net proceeds from exercise of options

Net proceeds from exercise of warrants

Payments related to financing leases

1 unchanged sentence

Repurchases of common stock

Repayment of STS Notes

Repayment of 2023 Promissory Notes

Net cash provided by financing activities

Net cash (used in) provided by financing activities

Net decrease in cash, cash equivalents and restricted cash

16 unchanged sentences

(“STS”) All Traffic Data Services, LLC (“ATD”) and Rekor Labs, LLC (collectively, the “Company”).

The Company provides roadway intelligence products and services, working to address critical needs in public safety, urban mobility, and transportation management.

The Company's vision is to improve the lives of citizens and the world around them by enabling safer, smarter, and greener roadways and communities.

The Company works towards this vision by collecting, connecting, and organizing the world’s mobility data, and making it accessible and useful to its customers for real-time insights and decisioning for situational awareness, rapid response, risk mitigation, and predictive analytics for resource and infrastructure planning and reporting.

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 services and solutions that serve their current needs and allow them to participate in building 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.

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.

This provides our customers with significantly enhanced situational awareness, rapid response capabilities, risk mitigation strategies, and predictive analytics.

These unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

2 unchanged sentences

GAAP for annual financial statements.

In the opinion of management, these unaudited condensed consolidated interim financial statements reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the Company’s unaudited condensed consolidated financial statements as of and for the periods ended September 30, 2025 and 2024 .

The financial data and other information disclosed in these notes are unaudited.

The results for the three and nine months ended September 30, 2025 , are not necessarily indicative of the results to be expected for the year ending December 31, 2025 .

The results for the three months ended March 31, 2026 , are not necessarily indicative of the results to be expected for the year ending December 31, 2026 .

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10 -K for the full year ended December 31, 2025 .

9 unchanged sentences

Actual results may differ from those estimates under different assumptions or conditions.

Reclassifications

Certain prior-period amounts have been reclassified to conform with the current-period presentation.

Most notably, proceeds from notes receivable, which were previously presented within net cash provided by financing activities, are now presented within net cash used in investing activities on the unaudited condensed consolidated statements of cash flows.

Other reclassifications relate to the aggregation or disaggregation of certain captions within the financial statements.

These reclassifications had no effect on previously reported net loss, total stockholders' equity, or net cash flows in the aggregate.

Liquidity and Going Concern

2 unchanged sentences

These assumptions include, among other factors, its ability to raise additional capital, the expected timing and nature of the Company’s programs and projected cash expenditures and its ability to delay or curtail these programs or expenditures to the extent management has the proper authority to do so and considers it probable that those implementations can be achieved within the look-forward period.

The Company has generated losses and negative operating cashflows since its inception and has relied on external sources of financing to support cash flow from operations.

The Company has generated losses and negative operating cash flows since its inception and has relied on external sources of financing to support cash flow from operations.

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 products and services.

As of and for the nine months ended September 30, 2025 , the Company had working capital of $ 6,959,000 and a net loss of $ 23,681,000 , respectively.

As of and for the three months ended March 31, 2026 , the Company had a working capital deficit of $ 3,727,000 and a net loss of $ 9,361,000 .

Based on the Company's current business plan assumptions and the expected cash burn rate, the Company believes that the existing cash is insufficient to fund its current level of operations.

7 unchanged sentences

Rekor offers a variety of platforms that collect, connect and organize mobility data, making it accessible and useful to its customers for real-time insights and decision-making.

The Company’s chief operating decision maker (“CODM”) is the interim president and chief executive officer.

The Company does not report balance sheet information by segment since it is not reviewed by the CODM.

The Company’s chief operating decision maker (“CODM”) is the president and chief executive officer.

The Company does not report balance sheet information by segment since balance sheet information by segment is not reviewed by the CODM.

The CODM uses net income to assess segment performance.

5 unchanged sentences

The Company will perform a qualitative assessment, to determine its fair value which includes an evaluation of relevant events and circumstances, including macroeconomic, industry and market conditions, the Company's overall financial performance, and trends in the value of the Company's common stock.

As of September 30, 2025 , the Company did not identify any events that would cause it to assess goodwill for impairment.

As of March 31, 2026 , the Company did not identify any events that would cause it to assess goodwill for impairment.

Fair Value of Financial Instruments

The carrying amounts reported in the consolidated balance sheets for accounts receivable, notes receivable and accounts payable approximate fair value as of September 30, 2025 and December 31, 2024 because of the relatively short-term maturity of these financial instruments.

The carrying amount reported for long-term debt and long-term receivables approximates fair value as of September 30, 2025 and December 31, 2024 , given management’s evaluation of the instrument’s current rate compared to market rates of interest and other factors.

The determination of fair value is based upon the fair value framework established by ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820” ).

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date.

ASC 820 also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company.

Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability.

The guidance establishes three levels of inputs that may be used to measure fair value:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities;

quoted prices in markets that are not active;

or other inputs that are observable or can be corroborated by

observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements.

Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities

within the fair value hierarchy.

The Company’s goodwill and other intangible assets are measured at fair value at the time of acquisition and analyzed on a recurring and non-recurring basis for impairment, respectively, using Level 3 inputs.

The Company does not have any Level 1 or Level 2 assets or liabilities.

The Company considers its contingent consideration and ATD Holdback Shares to be Level 3 securities as the fair value measurement is based on significant inputs that are unobservable in the market and thus represents a Level 3 fair value measurement.

There were no changes in levels during the period ended September 30, 2025 .

The following is a rollforward of the company’s contingent consideration liability and ATD Holdback Shares:

STS Contingent Consideration

Balance as of January 1, 2025

Change in fair value

Balance as of September 30, 2025

ATD Holdback Shares

Balance as of January 1, 2025

Loss due to change in fair value

Settlement of ATD Holdback Shares

Balance as of September 30, 2025

The carrying amounts reported in the condensed consolidated balance sheets for accounts receivable, notes receivable and accounts payable approximate fair value as of March 31, 2026 and December 31, 2025 due to the short-term maturity of these instruments.

The carrying amounts reported for long-term debt and long-term receivables also approximate fair value as of March 31, 2026 and December 31, 2025 , based on management’s evaluation of current rates compared to market rates of interest and other relevant factors.

The Company applies the fair value framework established by ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820" ).

Refer to the Company's 2025 Annual Report on Form 10 -K for additional information regarding the Company's fair value measurement policies, including the Level 1, Level 2 and Level 3 input hierarchy.

The Company’s goodwill and other intangible assets are measured at fair value upon acquisition and assessed for impairment on a recurring and non-recurring basis, respectively, using Level 3 inputs.

As of March 31, 2026 and December 31, 2025, the Company had no Level 1, Level 2 or Level 3 assets or liabilities outstanding.

The Company historically considered its STS Contingent Consideration and ATD Holdback Shares to be Level 3 instruments.

The STS Contingent Consideration was remeasured to zero during the year ended December 31, 2025, and the ATD Holdback Shares were settled on January 2, 2025 through the issuance of 664,329 shares of the Company's common stock.

There were no transfers between fair value hierarchy levels during the three months ended March 31, 2026.

Refer to the Company's 2025 Annual Report on Form 10 -K for additional information regarding the changes in fair value of these instruments during the year ended December 31, 2025.

Revenue Recognition

1 unchanged sentence

These offerings include a mixture of data collection, implementation, engineering, customer support and maintenance services, as well as software and hardware.

Revenue is recognized upon transfer of control of promised products and services to the Company’s customers, in an amount that reflects the consideration the Company expects to receive in exchange for those products and services.

ASC 606 is a framework developed by the Financial Accounting Standards Board to improve consistency in revenue reporting under GAAP.

It requires revenue to be recognized upon transfer of control of promised products and services to the Company’s customers, in an amount that reflects the consideration the Company expects to receive in exchange for those products and services.

To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:

5 unchanged sentences

The following table presents a summary of revenue (dollars in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Recurring revenue

1 unchanged sentence

Product and service revenue

7,674 5,035 18,214 15,994

Total revenue

2 unchanged sentences

Recurring revenue includes the Company’s SaaS revenue, subscription revenue, eCommerce revenue and customer support revenue.

The Company generates recurring revenue both from long-term contracts with customers that provide for periodic payments and from short-term contracts that are automatically invoiced on a monthly basis.

The Company’s recurring revenue is generated by a combination of direct sales, partner-assisted sales, and eCommerce sales.

Recurring revenues are generated through the Company’s Software-as-a-Service ("SaaS") model, where the Company provides customers with the right to access the Company’s software solutions for a fee.

The Company generates recurring revenue by a combination of direct sales, partner-assisted sales, and eCommerce sales.

These sales involve both long-term contracts with customers that provide for periodic payments and short-term contracts that are automatically invoiced on a monthly basis.

Where recurring revenue is generated through the Company’s Software-as-a-Service ("SaaS") model, the Company provides customers with the right to access the Company’s software solutions for a fee.

These services are made available to the customer continuously throughout the contractual period.

3 unchanged sentences

These SaaS solutions are considered to have a single performance obligation where the customer simultaneously receives and consumes the benefit, and as such, we recognize revenue for these arrangements ratably over the term of the contractual agreement.

The Company also currently receives recurring revenues under contracts entered into using a subscription model for data collection services and bundled hardware and software over a period.

The Company also currently receives recurring revenue under contracts entered into using a subscription model for data collection services and software over a period.

Payments for these services and subscriptions are received periodically over the term of the agreement and revenue is recognized ratably over the term of the agreement.

9 unchanged sentences

Revenue is recognized ratably over the term of the contract.

Customer support revenue is associated with perpetual licenses and long-term subscription arrangements and consists primarily of technical support and product updates.

The Company’s customer support team is ready to provide these maintenance services, as needed, to the customer during the contract term.

The customer benefits evenly throughout the contract period from the guarantee that the customer support resources and personnel will be available to them.

As customer support is not critical to the customers' ability to derive benefit from their right to use the Company’s software, customer support is considered a distinct performance obligation when sold together with a long-term license for software.

Customer support for perpetual and term licenses is renewable, generally on an annual basis, at the option of the customer.

Customer support for subscription licenses is renewable concurrently with such licenses for the same duration of time.

Revenue for customer support is recognized ratably over the contract period based on the start and end dates of the customer support obligation, in line with how the Company believes services are provided.

Product and service revenue

6 unchanged sentences

Accordingly, for perpetual licenses of functional IP, revenue is recognized at the point-in-time when the customer has access to the software, which normally occurs once software activation keys have been made available to the customer.

Customer support revenue is associated with perpetual licenses and long-term subscription arrangements and consists primarily of technical support and product updates.

The Company’s customer support team is ready to provide these maintenance services, as needed, to the customer during the contract term.

The customer benefits evenly throughout the contract period from the guarantee that the customer support resources and personnel will be available to them.

Customer support for perpetual and term licenses is renewable, generally on an annual basis, at the option of the customer.

Customer support for subscription licenses is renewable concurrently with such licenses for the same duration of time.

The Company also generates revenue through the sale of hardware through its partner program and internal sales force distribution channels.

5 unchanged sentences

Revenue is recognized monthly based on the number of diversion citations collected by the relevant jurisdiction.

The Company also generates revenue through its engineering services, which include short-term data collections services.

The Company also generates revenue through its engineering services.

These services are provided at the request of its customers and the revenue related to these services is recognized over time as the service is completed.

1 unchanged sentence

The following table presents a summary of revenue by customer type (dollars in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Urban Mobility

1 unchanged sentence

Transportation Management

385 651 1,216 2,038

Public Safety

6,831 3,038 13,606 10,102

Total revenue

18 unchanged sentences

Where performance obligations for the remaining term of a contract with a customer are not yet satisfied or have only been partially satisfied as of a particular date, the unsatisfied portion is to be recognized as revenue in the future.

As of September 30, 2025 , the unsatisfied portion of the remaining performance obligation was approximately $ 13,157,000 .

As of March 31, 2026 , the unsatisfied portion of the remaining performance obligation was approximately $ 22,250,000 .

The Company expects to recognize approximately 72 % of this amount as revenue over the succeeding twelve months, and the remainder is expected to be recognized within the next five years thereafter.

3 unchanged sentences

When billing occurs after services have been provided, such unbilled amounts will generally be billed and collected within 60 to 120 days, but typically no longer than over the next twelve months.

Unbilled accounts receivables of $ 2,545,000 and $ 1,623,000 were included in accounts receivable, net, in the unaudited condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024 , respectively.

Unbilled accounts receivables of $ 1,944,000 and $ 1,993,000 were included in accounts receivable, net, in the unaudited condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025 , respectively.

Contract liabilities

1 unchanged sentence

This revenue and the corresponding decrease in liabilities are recognized on a contract-by-contract basis at the end of each reporting period and reflected on the unaudited condensed consolidated balance sheet for such period.

During the nine months ended September 30, 2025 , $ 2,572,000 of the contract liabilities balance as of December 31, 2024 was recognized as revenue.

The services due for contract liabilities described above are shown below as of September 30, 2025 (dollars in thousands):

During the three months ended March 31, 2026 , $ 1,921,000 of the contract liabilities balance as of December 31, 2025 was recognized as revenue.

The services due for contract liabilities described above are shown below as of March 31, 2026 (dollars in thousands):

2026, remaining

3 unchanged sentences

The Company’s restricted cash balances are primarily made up of cash collected on behalf of certain client jurisdictions.

Restricted cash for these client jurisdictions as of September 30, 2025 and December 31, 2024 were $ 253,000 and $ 316,000 , respectively, and correspond to equal amounts of related liabilities.

Restricted cash for these client jurisdictions as of March 31, 2026 and December 31, 2025 were $ 424,000 and $ 297,000 , respectively, and correspond to equal amounts of related liabilities.

Concentrations of Credit Risk

1 unchanged sentence

The United States deposits are federally insured up to $250,000 per insured bank, for each account ownership category.

As of September 30, 2025 and December 31, 2024 , the Company had deposits totaling $ 3,411,000 and $ 5,329,000 , respectively, in multiple U.S.

As of March 31, 2026 and December 31, 2025 , the Company had deposits totaling $ 12,599,000 and $ 16,863,000 , respectively, in multiple U.S.

financial institutions and one Israeli financial institution.

Customer B accounted for 20 % of the unaudited condensed consolidated revenue for the three months ended September 30, 2025.

Customer A accounted for 12 % of the unaudited condensed consolidated revenue for the three months ended September 30, 2024.

No other single customer accounted for more than 10% of the Company’s unaudited condensed consolidated revenues for the three and nine months ended September 30, 2025 and 2024 , respectively.

As of September 30, 2025 , Customer B accounted for 28 % of the Company's unaudited condensed consolidated accounts receivable balance.

As of December 31, 2024 , a single customer accounted for 12 % of the Company's consolidated accounts receivable balance.

Customer A accounted for 15 % of the unaudited condensed consolidated revenue for the three months ended March 31, 2026.

Customer A accounted for 11 % of the unaudited condensed consolidated revenue for the three months ended March 31, 2025.

No other single customer accounted for more than 10% of the Company’s unaudited condensed consolidated revenues for the three months ended March 31, 2026 and 2025 , respectively.

As of March 31, 2026 and December 31, 2025 , Customer A accounted for 10 % and 15 % of the Company's unaudited condensed consolidated accounts receivable balance.

Accounts Payable and Other Current Liabilities

As of September 30, 2025 and December 31, 2024 , amounts owed to board members of $ 71,000 and $ 104,000 were presented as part of accounts payable and accrued expenses on the unaudited condensed consolidated balance sheets.

As of March 31, 2026 and December 31, 2025 , amounts owed to board members of $ 210,000 and $ 75,000 were presented as part of accounts payable and accrued expenses on the unaudited condensed consolidated balance sheets.

A summary of other current liabilities is as follows (in thousands):

September 30, 2025

March 31, 2026

December 31, 2025

2 unchanged sentences

Right of offset to restricted cash

STS Contingent Consideration, at fair value

Other current liabilities

$ 2,351 $ 1,729

New Accounting Pronouncements Effective in Future Periods

In December 2023, the FASB issued ASU 2023 - 09 - Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures, which requires public entities to provide greater disaggregation within their annual rate reconciliation, including new requirements to present reconciling items on a gross basis in specified categories, disclose both percentages and dollar amounts, and disaggregate individual reconciling items by jurisdiction and nature when the effect of the items meet a quantitative threshold.

The guidance also requires disaggregating the annual disclosure of income taxes paid, net of refunds received, by federal (national), state, and foreign taxes, with separate presentation of individual jurisdictions that meet a quantitative threshold.

The guidance is effective for the Company's annual periods beginning January 1, 2025 on a prospective basis, with a retrospective option, and early adoption is permitted.

The Company is currently evaluating the impact of adoption of this standard on its consolidated financial statements and disclosures.

New Accounting Pronouncements Effective in Current Period

In March 2025, the FASB issued ASU 2025 - 05 - Financial Instruments - Credit Losses (Topic 326 ):

Measurement of Credit Losses for Accounts Receivable and Contract Assets, which clarifies the measurement of expected credit losses for accounts receivable and contract assets arising from revenue transactions within the scope of Topic 606.

The amendments require entities to measure expected credit losses for these financial assets using a methodology consistent with the current expected credit loss model while clarifying the interaction between the guidance in Topic 326 and Topic 606.

The guidance in this ASU is effective for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years.

Early adoption is permitted.

The amendments should be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal years of adoption.

The Company adopted ASU 2025 - 05 effective January 1, 2026 on a modified retrospective basis.

The adoption did not have a material impact on the Company's unaudited condensed consolidated financial statements or related disclosures for the three months ended March 31, 2026.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024 - 03 - Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

3 unchanged sentences

The amendments may be applied either ( 1 ) prospectively to financial statements issued for periods after the effective date of this ASU or ( 2 ) retrospectively to all prior periods presented in the consolidated financial statements.

The Company is currently evaluating the impact that the adoption of ASU 2024 - 03 will have on its consolidated financial statements and disclosures.

The Company is currently evaluating the impact that the adoption of ASU 2024 - 03 will have on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025 - 11 - Interim Reporting (Topic 270 ):

Improvements to Interim Reporting Guidance, which is intended to improve the clarity and organization of the interim reporting guidance in Topic 270.

The amendments clarify the scope and presentation requirements for interim financial statements and introduce a general disclosure principle requiring entities to disclose events or transactions occurring since the end of the last annual reporting period that have a material impact on the entity.

The guidance also incorporates certain interim disclosure requirements from other Topics into Topic 270 to improve accessibility of the interim reporting guidance.

The amendments in this ASU are effective for interim reporting periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating the impact that the adoption of ASU 2025 - 11 will have on its consolidated financial statements and related disclosures.

The Company does not believe that any recently issued, but not yet effective, accounting standards, other than the standards discussed above, could have a material effect on the accompanying unaudited condensed consolidated financial statements.

1 unchanged sentence

Additional significant accounting policies of the Company are also described in Note 1 of the Company’s Annual Report on Form 10 -K for the year ended December 31, 2025 .

NOTE 2 – ACQUISITION

ATD Acquisition

On January 2, 2024 ( the “Closing Date”), the Company acquired All Traffic Data Services, LLC, a Colorado limited liability company (“ATD”), pursuant to that certain Interest Purchase Agreement (the “ATD Purchase Agreement”), dated as of the Closing Date, by and among the Company, ATD and All Traffic Holdings, LLC (the “Seller”).

The Seller is a portfolio company of Seaport Capital, a private equity firm.

ATD is engaged in the business of traffic data collection.

Under the terms of the ATD Purchase Agreement, the Company acquired all of the issued and outstanding limited liability company interests of ATD (the “ATD Acquisition”).

The acquisition met the criteria to be accounted for as a business combination in accordance with ASC 805, Business Combinations (“ASC 805” ).

This method requires, among other things, that assets acquired, and liabilities assumed be recognized at their fair values as of the acquisition date and that the difference between the fair value of the consideration paid for the acquired entity and the fair value of the net assets acquired be recorded as goodwill, which is not amortized but is tested at least annually for impairment.

The aggregate purchase price for the interests of ATD was approximately $ 20,576,000 .

The purchase price comprised approximately $ 10,048,000 in cash, which included closing adjustments and 3,496,464 unregistered shares of the Company’s common stock (the “Stock Consideration”), based on a volume weighted average trading price of the Company’s common stock over a thirty consecutive trading day period prior to the date of the ATD Purchase Agreement, which was $ 2.86 .

2,832,135 of the Stock Consideration was issued at closing, while the other 664,329 shares of the Stock Consideration were issued and delivered to the Seller on January 2, 2025.

Subsequent to this transaction these shares were registered on a Form S- 3.

As the total number of ATD Holdback Shares to be issued to the Seller was not fixed, the ATD Holdback Shares were deemed to be liability classified and were measured at fair value each reporting period.

As a result of the transaction, ATD became a wholly-owned subsidiary of the Company and ATD’s key employees have agreed to continue employment with the Company or one of its affiliates.

The Company incurred $ 548,000 in legal and professional fees related to the acquisition which were expensed as incurred and recognized in general and administrative expenses in the consolidated statement of operations, during the year ended December 31, 2024.

In accordance with the acquisition method of accounting for a business combination, the purchase price has been allocated to the assets acquired and liabilities assumed based on their fair values as of the Closing Date.

The table below shows the breakdown related to the purchase price allocation for the acquisition (dollars in thousands):

Consideration

Liability classified holdback shares ( 664,329 shares measured at fair value as of the Closing Date)

Common stock issued ( 2,832,135 shares at closing price of $ 3.14 per share)

Total Consideration

Recognized amounts of identifiable assets acquired and liabilities assumed

Cash and cash equivalents

Accounts receivable

Property and equipment

Right-of-use operating lease assets

Other current assets

Intangible assets

Total assets acquired

Accounts payable and accrued expenses

Lease liability operating

Other current liabilities

Total liabilities assumed

Fair value of identifiable net assets acquired

Purchase price consideration

NOTE 2 - LEASES

The Company has operating leases for office facilities in various locations throughout the United States and Israel.

The Company has operating leases for office facilities in various locations throughout the United States.

Additionally, the Company has financing leases for vehicles it uses for its operations throughout the United States.

4 unchanged sentences

Based on the Company's evaluation, the amendment qualified as a lease modification under ASC 842.

As a result of the modification, the Company recognized a decrease of $ 1,344,000 in both its operating lease liability and the corresponding operating lease right-of-use asset.

Lease cost recognized in our consolidated statements of operations is summarized as follows (dollars in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

As a result of the modification, the Company recognized a decrease of $ 1,344,000 in both its operating lease liability and the corresponding operating lease right-of-use asset ("ROU asset").

In December 2025, the Company determined that the operations of its wholly owned subsidiary, Waycare Technologies LTD ("Waycare"), 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.

The closure was announced to employees on February 23, 2026, and Tel Aviv operations ceased on February 24, 2026.

As a result of the decision to close the Tel Aviv office, the Company identified a triggering event requiring an impairment assessment of the related long-lived assets, including the operating lease ROU asset associated with the Tel Aviv office lease.

The Company determined that the undiscounted future cash flows expected from the use and eventual disposition of the operating lease ROU asset were less than its carrying amount and, accordingly, the asset was written down to its estimated fair value.

The Company estimated the fair value of the operating lease ROU asset to be approximately $0, based on the expected abandonment of the asset with no material residual or sublease value (a Level 3 fair value measurement).

As a result, the Company recognized an impairment charge of $ 2,708,000 related to the operating lease ROU asset associated with the Tel Aviv facility during the year ended December 31, 2025.

This impairment charge was included in asset impairment charges in the consolidated statements of operations for the year ended December 31, 2025.

Refer to the Company's Annual Report on Form 10 -K for the year ended December 31, 2025 for additional information regarding the wind-down of operations in Tel Aviv.

No impairment charges related to the Company's right-of-use assets were recognized during the three months ended March 31, 2026.

In January 2026, the Company entered into an amendment to the lease for its corporate headquarters in Columbia, Maryland that revised the timing of monthly base rent payments through the remaining lease term.

The Company accounted for the amendment as a lease modification that is not a separate contract under ASC 842.

As a result of the modification, the Company recognized a decrease of approximately $ 224,000 in both its operating lease liability and the corresponding ROU asset.

The modification did not result in a gain or loss.

During the three months ended March 31, 2026, the Company exercised its option to terminate its lease for office space in Plano, Texas, effective December 31, 2026.

The Company recognized a loss on lease termination of approximately $ 117,000 , which is included in general and administrative expenses in the condensed consolidated statements of operations.

As a result of the lease termination, the Company recognized a $ 50,000 early termination liability, reduced its operating lease liability by approximately $ 77,000 , and reduced the corresponding right-of-use asset by approximately $ 144,000 .

Lease cost recognized in our unaudited condensed consolidated statements of operations is summarized as follows (dollars in thousands):

Three Months Ended March 31,

Operating lease cost

4 unchanged sentences

Total lease cost

Other information about lease amounts recognized in our consolidated financial statements is as follows:

September 30, 2025

$ 1,044 $ 1,063

Other information about lease amounts recognized in our condensed consolidated financial statements is as follows:

March 31, 2026

December 31, 2025

4 unchanged sentences

Operating leases

12.0 % 12.1 %

Financing leases

Maturities of operating and financing lease liabilities for continuing operations on September 30, 2025 were as follows (dollars in thousands):

Maturities of operating and financing lease liabilities for continuing operations on March 31, 2026 were as follows (dollars in thousands):

Operating Leases

1 unchanged sentence

2026, remaining

$ 1,545 $ 591

Total lease payments

1 unchanged sentence

Maturities of lease liabilities

$ 13,213 $ 1,187

NOTE 3 – SUPPLEMENTAL NON CASH DISCLOSURES OF CASH FLOW INFORMATION

Supplemental disclosures of cash flow information for the nine months ended September 30, 2025 and 2024 were as follows (dollars in thousands):

Nine Months Ended September 30,

Supplemental disclosures of cash flow information for the three months ended March 31, 2026 and 2025 were as follows (dollars in thousands):

Three Months Ended March 31,

Cash paid for interest

Cash paid for taxes

Increase in accounts payable and accrued expenses related to purchases of property and equipment

Increase in accounts payable and accrued expenses related to purchases of inventory

Increase in inventory related to the transfer of property and equipment

Decrease in accounts payable and accrued expenses related to purchases of inventory

Decrease in deposits related to property and equipment received

Decrease in deposits related to Inventory

Abandonment of financing lease

Contract modification resulting in a measurement of an operating lease

Contract termination resulting in a measurement of an operating lease

Non-cash financing activities:

Settlement of ATD Holdback Shares with common stock

Fair market value of shares issued in connection with the acquisition of ATD

Fair value of ATD Holdback Shares at the acquisition date

2023 Promissory Note redemption premium settled in shares of the Company’s common stock

Conversion of Prepaid Advance to common stock

New Leases under ASC-842:

Right-of-use assets obtained in exchange for new finance lease liabilities

2 unchanged sentences

Intangible Assets Subject to Amortization

The following provides a breakdown of identifiable intangible assets, net as of September 30, 2025 and December 31, 2024 (dollars in thousands):

September 30, 2025

The following provides a breakdown of identifiable intangible assets, net as of March 31, 2026 and December 31, 2025 (dollars in thousands):

March 31, 2026

December 31, 2025

Customer relationships

$ 15,300 $ 15,300

Marketing related

Internally capitalized software

16,200 16,200

accumulated amortization

( 3,250 ) ( 2,950 )

Identifiable intangible assets, net

$ 12,950 $ 13,250

These intangible assets are amortized on a straight-line basis over their estimated useful lives.

Amortization expense for the three months ended September 30, 2025 and 2024 was $ 300,000 and $ 1,166,000 , respectively, and for the nine months ended September 30, 2025 and 2024 was $ 900,000 and $ 3,509,000 , respectively, and is presented as part of depreciation and amortization in the unaudited condensed consolidated statements of operations.

Amortization expense for the three months ended March 31, 2026 and 2025 was $ 300,000 in each period and is presented as part of depreciation and amortization in the unaudited condensed consolidated statements of operations.

During the current period there have been no events that would cause the Company to evaluate its intangible assets for impairment.

As of September 30, 2025 , the estimated impact from annual amortization from intangible assets for each of the next five fiscal years and thereafter is as follows (dollars in thousands):

As of March 31, 2026 , the estimated impact from annual amortization from intangible assets for each of the next five fiscal years and thereafter is as follows (dollars in thousands):

2026, remaining

2 unchanged sentences

These notes matured and were fully paid on September 30, 2024, and June 17, 2025, respectively.

As of September 30, 2025 , the aggregate balance of these notes payable was fully satisfied.

As of March 31, 2026 , the aggregate balance of these notes payable was fully satisfied.

Series A Prime Revenue Sharing Notes

4 unchanged sentences

The Company has a related party relationship with Arctis Global, LLC, which invested $ 5,000,000 in connection with the $ 15,000,000 initial closing of the Series A Prime Revenue Sharing Notes.

Interest is based on revenue received from an initial pool of “prime” accounts which are related to contracts from transportation agencies in five states, each of which has been highly rated for their respective unsecured general obligation debt by nationally recognized credit rating agencies.

The Company entered into a base Indenture for the Series A Prime Revenue Sharing Notes as of December 15, 2023 with Argent Institutional Trust Company, as trustee.

The Indenture creates a first priority security interest for the benefit of the holders of all subsequent notes issued under the Indenture.

The Series A Prime Revenue Sharing Notes are payable from a pool of revenues received from contracts with transportation agencies in five states, each of which has been highly rated for their respective unsecured general obligation debt by nationally recognized credit rating agencies.

In connection with the issuance of the Series A Prime Revenue Sharing Notes, the Company entered into a base Indenture (the Indenture), dated December 15, 2023 with Argent Institutional Trust Company, as trustee.

The Indenture creates a first priority security interest in the contract revenues for the benefit of the holders of the Series A Prime Revenue Sharing Notes and all subsequent notes issued under the Indenture.

The Series A Prime Revenue Sharing Notes rank senior to the Company’s existing and future secured and unsecured debt with respect to the pool of revenue securing the Series A Prime Revenue Sharing Notes.

As part of the terms of the Series A Prime Revenue Sharing Notes the Company is required to maintain an interest reserve related to not less than three times the next monthly interest payment.

Under the terms of the Indenture, the Company is required to maintain an interest reserve related to not less than three times the next monthly interest payment.

Additionally, there is a sinking fund requirement which takes effect if the three year value of eligible contracts is less than 170 % of the aggregate outstanding principal amount of Series A Prime Revenue Sharing Notes.

If the sinking fund requirement takes effect, the Company is required to maintain a cash balance sufficient to amortize the principal amount due on all series of Prime Revenue Sharing Notes outstanding under the Indenture in equal monthly installments by the respective due dates of each such series.

The amount related to the interest reserve was $ 500,000 as of September 30, 2025 and is held by a third party and is presented as part of deposits on the consolidated balance sheets.

The Company is not in default of any requirements as they relate to the Series A Prime Revenue Sharing Notes and the sinking fund requirement has not been triggered as of September 30, 2025.

The amount related to the interest reserve was $ 500,000 as of March 31, 2026 and is held by a third party and is presented as part of deposits on the consolidated balance sheets.

The Company is not in default of any requirements as they relate to the Series A Prime Revenue Sharing Notes and the sinking fund requirement has not been triggered as of March 31, 2026.

The Company may prepay the Series A Prime Revenue Sharing Notes at any time up until December 15, 2026 by paying a premium ranging from 103 % to 106%.

Repayment of the Series A Prime Revenue Sharing Notes consisting of all principal, plus any unpaid accrued interest, may also be accelerated by the note holder upon a change in control or event of default.

Interest expense related to the Series A Prime Revenue Sharing Notes was $ 497,000 and $ 497,000 for three months ended September 30, 2025 and 2024 respectively, and $ 1,491,000 and $ 1,490,000 for the nine months ended September 30, 2025 and 2024 , respectively.

For the three months ended March 31, 2026 and 2025 , the Company recognized approximately $ 497,000 in interest expense related to the Series A Prime Revenue Sharing Notes.

Interest Expense

The following table presents the interest expense net of interest income related to the contractual interest and the amortization of debt issuance costs for the Company’s debt arrangements (dollars in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Contractual interest expense

4 unchanged sentences

Schedule of Principal Amounts Due of Debt

The principal amounts due for loans and notes payable are shown below as of September 30, 2025 (dollars in thousands):

The principal amounts due for loans and notes payable are shown below as of March 31, 2026 (dollars in thousands):

2026, remaining

2 unchanged sentences

NOTE 6 – INCOME TAXES

The Company maintains a full valuation allowance against its net deferred taxes, outside of the deferred tax liability related to the indefinite lived intangibles, through September 30, 2025 .

The Company maintains a full valuation allowance against its net deferred taxes, outside of the deferred tax liability related to the indefinite lived intangibles, through March 31, 2026 .

The Company files income tax returns in Israel, the United States and in various states.

Federal, state or foreign income tax audits were in process as of September 30, 2025 .

Federal, state or foreign income tax audits were in process as of March 31, 2026 .

The Company evaluated the recoverability of the net deferred income tax assets and the level of the valuation allowance required with respect to such net deferred income tax assets.

2 unchanged sentences

If it is determined in future periods that portions of the Company’s net deferred income tax assets satisfy the realization standard, the valuation allowance will be reduced accordingly.

For the nine months ended September 30, 2025 and 2024, the Company did not record any interest or penalties related to unrecognized tax benefits.

For the three months ended March 31, 2026 and 2025, the Company did not record any interest or penalties related to unrecognized tax benefits.

It is the Company’s policy to record interest and penalties related to unrecognized tax benefits as part of income tax expense.

The 2019 through 2024 tax years remain subject to examination by the Internal Revenue Service.

As of September 30, 2025 and December 31, 2024 , our evaluation revealed no uncertain tax positions that would have a material impact on the unaudited condensed consolidated financial statements.

For the three and nine months ended September 30, 2025 and 2024 , the Company did not record any expense or benefit related to income tax.

As of March 31, 2026 and December 31, 2025 , our evaluation revealed no uncertain tax positions that would have a material impact on the unaudited condensed consolidated financial statements.

For the three months ended March 31, 2026 and 2025 , the Company did not record any expense or benefit related to income tax.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

4 unchanged sentences

In March 2023, the Company entered into an engagement letter with H.C.

Wainwright & Co., LLC, ("HCW"), related to a capital raise (see NOTE 9 – STOCKHOLDERS ’ EQUITY ).

Wainwright & Co., LLC, ("HCW"), related to a capital raise.

That letter agreement contained provisions for both a “tail” fee due to HCW for any subsequent transactions the Company may enter into during the specified tail period with investors introduced to the Company by HCW during the term of the letter, as well as a right of first refusal ("ROFR") to act as the Company's exclusive underwriter or placement agent on any subsequent financing transactions utilizing an underwriter or placement agent occurring within twelve months from the consummation of a transaction pursuant to the engagement letter.

3 unchanged sentences

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.

On or about October 23, 2023, HCW filed a complaint in New York State Supreme Court asserting a claim for breach of contract against the Company relating to the July Warrant Exercise Transaction.

On or about October 23, 2023, HCW filed a complaint in New York State Supreme Court asserting a claim for breach of contract against the Company relating to purported fees owed as a result of the July Warrant Exercise Transaction.

HCW sought to recover compensatory and consequential damages and certain warrants under its letter agreement with Rekor and other fees, not less than a cash fee of $ 825,000 and the value of warrants to purchase an aggregate of up to 481,100 shares of common stock of the company at an exercise price of $ 2.00 per share as well as attorneys’ fees.

1 unchanged sentence

On March 4, 2024, the court discontinued this lawsuit without prejudice.

On February 29, 2024, HCW initiated the new action with the filing of complaint in New York State Supreme Court.

In this lawsuit, HCW advances the same breach of contract theory and seeks to recover the same damages as sought in the prior now-dismissed lawsuit.

On February 29, 2024, HCW initiated the new action with the filing of a complaint in New York State Supreme Court.

In the new action, HCW advances the same breach of contract theory and seeks to recover the same damages as sought in the prior now-dismissed lawsuit.

In addition, HCW seeks to recover an additional $ 2,156,000 in damages plus the value of warrants to purchase an aggregate of up to 805,000 shares of common stock at an exercise price of $ 3.125 per share in connection with Rekor’s February 2024 offering, which we refer to as the 2024 Public Offering.

2 unchanged sentences

After HCW and Armistice moved to dismiss Rekor’s counterclaims, Rekor filed amended counterclaims on October 1, 2024.

In Q3 2025, Rekor resolved its claims with Armistice and came to a settlement agreement.

The proceeds from the settlement are presented as part of other expense (income) in the condensed consolidated statement of operations.

During the third quarter of 2025, Rekor resolved its claims with Armistice pursuant to a settlement agreement.

The proceeds from the settlement were presented as part of other expense (income) in the condensed consolidated statement of operations in the Company's Annual Report on Form 10 -K for the year ended December 31, 2025.

Rekor now seeks to recover damages from HCW and HCW moved to dismiss the amended counterclaims.

13 unchanged sentences

On September 30, 2025, the OALJ issued an Order in Rekor’s favor, dismissing all aspects of Claimant’s Complaint.

Claimant subsequently submitted a request for appellate review to the Appellate Review Board (“ARB”).

The ARB must accept Claimant’s request for appeal in order to conduct a review of the Order.

The ARB has not yet decided if it will accept Claimant’s request for appeal.

Generally, the decision to conduct a review must be made within thirty ( 30 ) days of the submission of the request.

This deadline is likely delayed/stayed by the government shutdown.

The Company believes these claims are without merit and intends to vigorously defend itself in this administrative proceeding.

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.

The Company's response brief was filed on March 31, 2026.

Complainant filed his reply brief on April 14, 2026.

The matter has now been fully briefed before the ARB and the Company is awaiting findings from the ARB.

The Company does not know when the ARB will issue its finding.

The Company believes these claims are without merit.

The Company intends to vigorously defend itself in this lawsuit.

NOTE 8 – STOCKHOLDERS ’ EQUITY

Authorized Common Stock

On April 22, 2024, following approval by the Company's stockholders, the Company amended its charter to increase the number of authorized shares of common stock from 100,000,000 to 300,000,000 .

The number of authorized shares of the Company’s preferred stock was not affected by this amendment and remained unchanged at 2,000,000 shares.

At Market Issuance Sales Agreement

On February 10, 2025, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with Northland Securities, Inc.

(the “Agent”), pursuant to which the Company could, from time to time, offer and sell shares of the Company’s common stock, par value $ 0.0001 per share (“Common Stock”), having an aggregate offering price of up to $ 25,000,000 .

The Agent was entitled to receive from the Company a commission in an amount equal to (i) 3.0 % of the gross sales price 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.

The Company 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, the Company elected to voluntarily terminate its Sales Agreement.

As of September 30, 2025 the Company issued 18,888,832 shares of its 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.

The Company is authorized to issue 300,000,000 shares of common stock, par value $ 0.0001 per share, and 2,000,000 shares of preferred stock, par value $ 0.0001 per share.

2025 Sales Agreement

On February 10, 2025, the Company entered into an At Market Issuance Sales Agreement (the "2025 Sales Agreement") with Northland Securities, Inc., pursuant to which the Company could, from time to time, offer and sell shares of common stock having an aggregate offering price of up to $ 25,000,000 .

On August 12, 2025, the Company elected to voluntarily terminate the 2025 Sales Agreement.

During the term of the 2025 Sales Agreement, the Company issued an aggregate of 18,888,832 shares of common stock at a weighted average selling price of $ 1.23 per share, generating net proceeds of approximately $ 22,350,000 .

ATD Acquisition

In connection with the acquisition of ATD on January 2, 2024, the Company issued 2,832,135 shares of the Company’s common stock as part of the consideration.

On January 2, 2025, the one year anniversary of closing of the ATD Acquisition, the Company issued and delivered to ATD’s former owners 664,329 holdback shares of the Company’s common stock in full satisfaction of the purchase price for the ATD Acquisition.

The shares issued in connection with the ATD Acquisition have been registered on a resale registration statement on Form S- 3, declared effective by the SEC on June 17, 2024.

2024 Public Offering

On February 9, 2024, the Company issued and sold 10,000,000 shares of its common stock, at an offering price of $ 2.50 per share (the “2024 Public Offering Price”) in a registered public offering by the Company (the “2024 Public Offering”), pursuant to an underwriting agreement with William Blair & Company, L.L.C., as representative of the several underwriters named therein (collectively, the “Underwriters”).

On February 9, 2024, the Underwriters exercised in-full their option to purchase up to 1,500,000 additional shares of common stock at the 2024 Public Offering Price (the “Underwriters’ Option”).

The exercise closed on February 13, 2024.

The net proceeds to the Company for the exercise of the Underwriters’ Option, after deducting the underwriting discounts and commissions and offering expenses payable by the Company of $ 2,388,000 was approximately $ 26,362,000 in aggregate for the 2024 Public Offering including the exercise of the Underwriters’ Option.

Prepaid Advance

On August 14, 2024, the Company entered into a Prepaid Advance Agreement (the “Prepaid Advance”) with YA II PN, Ltd., a Cayman Islands exempt limited company (the “Investor”), an affiliate of Yorkville Advisors Global, LP.

In accordance with the terms of the Prepaid Advance, the Investor advanced $ 15,000,000 to the Company.

After giving effect to the purchase price discount of 6 % provided for in the Prepaid Advance, net proceeds to the Company were $ 14,100,000 .

Pursuant to the terms of the Prepaid Advance, within one year the Company could have received an additional $ 20,000,000 on the same terms as the initial Prepaid Advance, subject to satisfaction of certain conditions.

On October 22, 2024, the Company and the Investor entered into Amendment No.1 to the Prepaid Advance Agreement (the “Amendment”) to eliminate the option for additional advances.

The Company incurred issuance costs and original issuance discounts totaling approximately $ 888,000 associated with the issuance of the Prepaid Advance, which were expensed as incurred as a component of other income (expense) in the consolidated statements of operations for the year ended December 31, 2024.

Due to the various embedded derivatives that would otherwise require separate valuation and bifurcation as derivative liabilities, the Company elected to account for the Prepaid Advance under the fair value option as prescribed by ASC 825.

As of December 31, 2024, the Company has terminated and fully satisfied the outstanding balance of $ 15,000,000 under the Prepaid Advance.

During the year ended December 31, 2024, the Company recorded $ 900,000 in charges related to the settlement of the Prepaid Advance liability.

Redemption of 2023 Promissory Notes

On March 4, 2024, the Company elected to prepay the outstanding 2023 Promissory Notes.

The 2023 Promissory Notes were redeemed at the redemption price of 115 % of the $ 12,500,000 aggregate principal amount of the 2023 Promissory Notes, or approximately $ 14,375,000 , plus accrued and unpaid interest to the redemption date of approximately $ 263,000 (the “Redemption Payment”).

The noteholders elected to accept $ 1,875,000 of the Redemption Payment in the form of 750,000 unregistered shares of the Company’s common stock, par value $ 0.0001 per share, having a value of $ 2.50 per share, with the remainder of the Redemption Payment to be paid in cash.

As a result of the Redemption Payment, the Company recognized a loss on extinguishment of debt of $ 4,693,000 , which included $ 1,875,000 related to the early termination payment and $ 2,818,000 related to unamortized issuance costs.

The shares of common stock issued in connection with the Redemption payment have been registered on a resale registration statement on Form S- 3, declared effective by the SEC on July 30, 2024.

There was no activity related to the Company warrants during the period ended September 30, 2025 .

The table below shows the Company's outstanding warrants as of September 30, 2025 :

2025 Underwriting Agreement

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 registered direct offering of 8,571,428 units at a public offering price of $ 1.75 per unit (the "2025 Underwriting Agreement").

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 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.

After deducting underwriting discounts and commissions and estimated offering expenses, the net proceeds to the Company were approximately $ 13.9 million.

In connection with the offering, the Company entered into a Side Letter Agreement with Anson Advisors Inc.

that, among other things, restricts the Company from entering into Variable Rate Transactions (as defined therein) while any December 2025 warrants issued under the 2025 Underwriting Agreement remain outstanding.

There was no activity related to the Company warrants during the period ended March 31, 2026 .

The table below shows the Company's outstanding warrants as of March 31, 2026 :

2023 Promissory Notes (1)

1 unchanged sentence

2023 Private Warrants (3)

Outstanding warrants as of September 30, 2025

Weighted average strike price of outstanding warrants as of September 30, 2025

Intrinsic value of outstanding warrants as of September 30, 2025

2025 Underwriting Agreement (4)

Outstanding warrants as of March 31, 2026

1,000,000 481,100 2,850,000 8,571,428 12,902,528

Weighted average strike price of outstanding warrants as of March 31, 2026

$ 2.00 $ 1.82 $ 3.25 $ 2.40 $ 2.54

Intrinsic value of outstanding warrants as of March 31, 2026

$ - $ - $ - $ - $ -

On January 18, 2023, in connection with the 2023 Promissory Notes, the Company issued the investors warrants to purchase 6,250,000 shares of its common stock, exercisable over a period of five years, at an exercise price of $ 2.00 per share.

1 unchanged sentence

The remaining warrants were exercisable commencing January 18, 2023 and expire on January 18, 2028.

The 2023 Promissory Notes were redeemed in March 2024;

the warrants remain outstanding in accordance with their original terms.

On March 23, 2023, in connection with the 2023 Registered Direct Offering the Company issued warrants to the placement agent to purchase up to 481,100 shares of common stock.

3 unchanged sentences

These warrants were exercisable commencing July 25, 2023 and expire on January 25, 2029.

( 4 ) On December 16, 2025, in connection with the 2025 Underwriting Agreement, the Company issued warrants to purchase 8,571,428 shares of its common stock.

The warrants have an exercise price of $ 2.40 per share, are immediately exercisable and have a term of seven years from the date of issuance.

These warrants expire on December 16, 2032.

NOTE 9 – EQUITY INCENTIVE PLAN

1 unchanged sentence

The 2017 Plan permits the granting of stock options, stock appreciation rights, restricted and unrestricted stock awards, phantom stock, performance awards and other stock-based awards for the purpose of attracting and retaining quality employees, directors and consultants.

Maximum awards available under the 2017 Plan were initially set at 3,000,000 shares.

In October 2021, the Company announced it had registered an additional 4,368,733 shares of its common stock available for issuance under the 2017 Plan.

On April 29, 2024, the Company filed a registration statement on Form S- 8 solely to register an additional 7,912,216 shares of its common stock available for issuance under the 2017 Plan.

This increase was approved by the Company’s Board of Directors on March 22, 2024, and by the Company’s stockholders on April 18, 2024 at the Company’s annual meeting.

As of March 31, 2026, an aggregate of 15,280,949 shares of common stock were authorized for issuance under the 2017 Plan.

Stock Options

3 unchanged sentences

The vesting period is generally three years with a contractual term of ten years.

For the three and nine months ended September 30, 2025 and 2024 there was no stock compensation expense related to stock options.

A summary of stock option activity under the Company’s 2017 Plan during the period ended September 30, 2025 is as follows:

For the three months ended March 31, 2026 and 2025 there was no stock compensation expense related to stock options.

A summary of stock option activity under the Company’s 2017 Plan during the period ended March 31, 2026 is as follows:

Number of Shares Subject to Option Weighted Average Exercise Price

4 unchanged sentences

( 50,000 ) 0.78

Outstanding and exercisable balance as of September 30, 2025

Outstanding and exercisable balance as of March 31, 2026

373,034 $ 1.17 2.65 $ 13,000

As of September 30, 2025 , there was $ 0 of unrecognized stock compensation expense related to unvested stock options granted under the 2017 Plan.

As of March 31, 2026 , there was $ 0 of unrecognized stock compensation expense related to unvested stock options granted under the 2017 Plan.

Restricted Stock Units

Stock compensation expense related to Restricted Stock Units ("RSUs") for the three months ended September 30, 2025 and 2024 was $ 577,000 and $ 1,148,000 , respectively and for the nine months ended September 30, 2025 and 2024 was $ 2,670,000 and $ 3,430,000 respectively, and is presented based on the awardees' operating department, as general administrative, selling and marketing and research and development expenses in the unaudited condensed consolidated statements of operations.

A summary of RSU activity under the Company’s 2017 Plan for the nine months ended September 30, 2025 is as follows:

Stock compensation expense related to Restricted Stock Units ("RSUs") for the three months ended March 31, 2026 and 2025 was $ 922,000 and $ 1,370,000 respectively, and is presented based on the awardees' operating department, as general administrative, selling and marketing and research and development expenses in the unaudited condensed consolidated statements of operations.

On March 20, 2026, in connection with the Company's amended and restated employment agreement with Robert A.

Berman, the Company's President and Chief Executive Officer, the Company granted 1,000,000 fully vested shares of common stock to Mr.

Berman, with a grant date fair value of $ 0.88 per share, resulting in $ 880,000 of stock-based compensation expense recorded during the three months ended March 31, 2026.

These shares were issued to Mr.

Berman in April 2026.

A summary of RSU activity under the Company’s 2017 Plan for the three months ended March 31, 2026 is as follows:

Number of Shares

5 unchanged sentences

( 178,103 ) 1.45 1.48

Outstanding balance as of September 30, 2025

Outstanding balance as of March 31, 2026

426,078 $ 1.50 1.84

All RSUs granted vest upon the satisfaction of a service-based vesting condition.

As of September 30, 2025 , there was $ 1,126,000 of unrecognized stock compensation expense related to unvested RSUs granted under the 2017 Plan that will be recognized over an average remaining period of 1.12 years.

As of March 31, 2026 , there was $ 482,000 of unrecognized stock compensation expense related to unvested RSUs granted under the 2017 Plan that will be recognized over an average remaining period of 1.5 years.

Rekor Labs Profit Interests

On March 25, 2026, Rekor Labs, LLC (“Rekor Labs”), a consolidated subsidiary of the Company, adopted an amended and restated limited liability company agreement and authorized the issuance of profits interests to certain service providers.

In connection with that authorization, Rekor Labs granted profits interests to certain service providers representing 3.5 % of Rekor Labs’ fully diluted equity as of the grant date, subject to the terms and conditions of the applicable grant agreements and the amended and restated limited liability company agreement.

The profits interests are subject to a participation threshold of $ 5,000 .

The profits interests vest in full upon the consummation of a Fundamental Transaction, as defined in the amended and restated limited liability company agreement, within six months following the grant date, subject to the applicable participant’s continued service through the applicable vesting date.

The Company accounts for the profits interest awards as share-based compensation arrangements under ASC 718, Compensation — Stock Compensation.

Because vesting of the awards is contingent upon the occurrence of a Fundamental Transaction within six months following the grant date, the Company evaluated whether the vesting condition was probable as of March 31, 2026.

As of March 31, 2026, the Company determined that the vesting condition was not probable and, accordingly, no compensation expense was recognized related to the awards during the three months ended March 31, 2026.

The Company will continue to reassess the probability of vesting at each reporting date.

If the vesting condition becomes probable, the Company will recognize compensation expense based on the grant-date fair value of the awards over the requisite service period, including any cumulative catch-up adjustment required under ASC 718.

NOTE 10 – LOSS PER SHARE

The following table provides information relating to the calculation of loss per common share:

Three Months Ended September 30,

Nine Months Ended September 30,

(Dollars in thousands, except per share data)

Three Months Ended March 31,

(Dollars in thousands, except per share data)

Basic and diluted loss per share

$ ( 9,361 ) $ ( 10,874 )

Weighted average common shares outstanding - basic and diluted

136,649,149 106,815,912

Basic and diluted loss per share

$ ( 0.07 ) $ ( 0.10 )

Potentially dilutive securities excluded due to the anti-dilutive effect

As the Company had a net loss for the three and nine months ended September 30, 2025 , the following 6,802,983 potentially dilutive securities were excluded from diluted loss per share:

13,701,640 9,234,891

As the Company had a net loss for the three months ended March 31, 2026 , the following 13,701,640 potentially dilutive securities were excluded from diluted loss per share:

12,902,528 for outstanding warrants, 373,034 related to outstanding options, and 426,078 related to outstanding RSUs.

As the Company had a net loss for the three and nine months ended September 30, 2024 , the following 8,057,179 potentially dilutive securities were excluded from diluted loss per share:

4,331,100 for outstanding warrants, 681,461 related to outstanding options, 664,329 related to the ATD Holdback Shares and 2,380,289 related to outstanding RSUs.

As the Company had a net loss for the three months ended March 31, 2025 , the following 9,234,891 potentially dilutive securities were excluded from diluted loss per share:

4,331,100 for outstanding warrants, 486,866 related to outstanding options, and 4,416,925 related to outstanding RSUs.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

10 unchanged sentences

Specific factors that might cause actual results to differ from our expectations include, but are not limited to:

significant risks, uncertainties and other considerations discussed in this report;

operating risks, including supply chain, equipment or system failures, cyber and other malicious attacks, wars and local conflicts and other events that could affect our operations and the amounts and timing of revenues and expenses;

operating risks, including supply chain, equipment or system failures, cyber and other malicious attacks on international, national, local and Company information infrastructure by rogue businesses or criminal elements or by agents of governments engaged in asymmetric disruptions for competitive, economic, or military reasons, wars and local conflicts and other events that could affect our operations and the amounts and timing of revenues and expenses;

reputational risks affecting customer confidence or willingness to do business with us;

financial market conditions, including the continuation of significant national and global uncertainties that may affect these conditions, and the results of financing efforts;

our ability to successfully identify, integrate and complete acquisitions and dispositions, including the integration of the ATD Acquisition;

our continued ability to successfully access the public markets for debt or equity capital;

our ability to regain and maintain compliance with Nasdaq's continued listing requirements;

political, legal, regulatory, administrative, military and economic conditions and developments in the United States (“U.S.”) and other countries in which we operate and, in particular, the impact of ongoing hostilities in the Middle East and recent and future federal, state and local regulatory proceedings and changes, including legislative and regulatory initiatives associated with our products;

5 unchanged sentences

and international markets and economies;

risks associated with cyberattacks on international, national, local and Company information infrastructure by rogue businesses or criminal elements or by agents of governments engaged in asymmetric disruptions for competitive, economic, or military reasons.

Other significant risks, uncertainties and other considerations discussed in this report.

Investors are cautioned that these forward-looking statements are inherently uncertain.

3 unchanged sentences

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this report and the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”) and any updates contained herein as well as those set forth in our reports and other filings made with the SEC.

Rekor serves governmental and commercial customers by providing advanced roadway intelligence products and services.

Our customers include federal, state and local governments and large commercial customers in the North America, as well as commercial customers in many other countries.

Rekor generates and distributes roadway data used in the management, maintenance and planning of transportation infrastructure.

We have been working for many years to develop and deploy proprietary systems that modernize and improve the collection and use of roadway data.

Our systems employ advanced models developed using machine learning and other recent advances in artificial intelligence (“AI”) to enhance public safety, urban mobility, and transportation management.

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 connected, data-driven infrastructure ecosystem.

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 services and solutions that enable them to achieve their objectives effectively, while simultaneously building 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.

Our approach leverages its AI capabilities to collect, organize and analyze mobility data and distribute it securely and efficiently, making it useful, accessible, and actionable for real-time insights and decision-making.

To implement this vision, we have developed a suite of interconnected AI-driven hardware and purpose-built software platforms.

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 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.

This provides our customers with significantly enhanced situational awareness, rapid response capabilities, risk mitigation strategies, and predictive analytics.

To assist our customers in realizing this vision, we’ve developed purpose-built software platforms and a complimentary suite of interconnected AI-enabled hardware offerings.

We’ve designed these solutions to exploit a set of diverse multi-modal datasets using our proprietary AI technologies, with the objective of delivering unparalleled roadway intelligence.

They enable clients to more effectively monitor, manage, and optimize the movement of vehicles and activities in and around roadways and communities with precision.

Through real-time insights and predictive analytics, our platforms enable 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.

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 is undergoing significant transition in the evolution of its transportation and roadway infrastructure.

For over 70 years, the nation has relied on legacy technologies that depend on analog and manual methodologies, resulting in inefficiencies, rising costs, and preventable safety hazards.

While innovations like sensor technology, Internet of Things (“IoT”), AI, cloud computing, and autonomous vehicles are advancing rapidly, fundamental challenges such as poor roadway quality, traffic congestion, and driver safety continue.

A concentrated recent effort by federal, state and local governments to repair and upgrade the nation’s roadways has provided an exciting opportunity to modernize the nation’s transportation infrastructure and address these challenges.

Since 2018, Rekor has positioned itself to participate in this modernization effort by actively designing, building, testing and deploying its AI solutions through public-private collaborations with departments of transportation (“DOTs”), public safety agencies, and private sector partners.

Rekor is committed to keep a leadership role in laying the foundation of a new digital infrastructure operating system for roadways—and has already delivered proven value across multiple domains:

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 ("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.

A New Operating System for U.S.

We believe that governments in the United States of America are 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 rising costs, inefficiencies, and safety hazards that are now preventable.

Federal, state and local transportation agencies are now looking to implement private-sector innovations like sensor technology, Internet of Things (“IoT”), AI, cloud computing, autonomous vehicles, and smart drones.

These technologies are advancing rapidly and can address fundamental challenges such as poor roadway quality, traffic congestion, and driver safety.

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 complementary technologies through public-private collaborations with departments of transportation (“DOTs”), public safety agencies, and private sector partners.

Rekor is committed to helping lay 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 roadway hazards and reduce incident response times, helping to prevent injuries and fatalities.

Real-time AI monitoring systems detect hazards and reduce roadway fatalities.

Optimized Traffic Flow:

7 unchanged sentences

Uninsured Driver Reduction:

Automated enforcement ensures insurance compliance, improving public safety.

With these forward-thinking infrastructure strategies, Rekor is playing a leading role in reshaping how transportation systems operate.

Its solutions empower agencies to prevent accidents, reduce inefficiencies, and optimize resources, driving smarter, safer, and more efficient roadways across the nation.

Automated enforcement ensures insurance compliance, improving public safety and reducing costs to government and consumers.

By providing advanced AI-driven insights to assist forward-thinking infrastructure managers, Rekor is helping to reshape how transportation systems operate.

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.

Roadway Intelligence

Rekor is a leader in roadway intelligence, committed to supporting the process of revolutionizing transportation systems by collecting, connecting, and organizing the world’s mobility data.

Improving and making effective use of roadway intelligence requires the ability to harness vast amounts and varieties of data from roadways, vehicles, transportation systems, and hundreds of external elements like weather, special events, and work zones, and do the analysis and distribution that transforms them into actionable insights that operators and planners can use productively.

These unique insights permit our customers to enhance public safety, visualize and optimize traffic flows more quickly, and improve other operational efficiencies.

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.

Inspired by the Open System Interconnection (“OSI”) model, Rekor works to integrate fragmented transportation systems into a cohesive, unified network.

Collaborating with government agencies, infrastructure operators, transit providers, and technology partners, we can consolidate hardware, software, and data into a connected platform that delivers smarter, safer, and more efficient roadways.

Our mission extends beyond connectivity—we are building dynamic, AI-enabled networks to modernize traffic management, public safety, and emergency services.

By supporting the establishment of a digital overlay on existing physical infrastructure, Rekor is helping to create 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.

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.

Rekor is committed to revolutionizing transportation systems by collecting, connecting, and organizing mobility data.

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 working toward 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 next-generation digital operating system for roadways, delivering real-time intelligence that powers economic growth, operational excellence, and improved quality of life for communities.

Roadway Intelligence Powered by Rekor

The Rekor One® roadway intelligence engine serves as a central data and analytics platform that integrates multimodal mobility and roadway data into actionable insights.

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.

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.

Within this suite, Rekor has developed specialized AI-powered platforms that serve as core revenue streams:

Rekor Command®:

A cutting-edge, AI-enabled platform that provides Transportation Management Centers with a rapid and holistic view of roadway activity.

By collecting and analyzing multiple real-time and historical data sources efficiently, Rekor Command delivers our customers with actionable alerts for more incidents, at greater speed, transforming roadway management by enabling faster detection, situational awareness, and proactive response.

Rekor Discover®:

Leveraging artificial intelligence models developed through years of supervised machine learning analysis of high-resolution video streams, Rekor Discover fully automates the capture of comprehensive traffic and vehicle analytics across a wide variety of use cases.

Strategically deployed, non-intrusive, video-based camera systems with AI-powered edge processing deliver powerful roadway intelligence and operational efficiencies.

Rekor Scout®:

A versatile platform that enables accurate license plate and vehicle recognition on nearly any IP, traffic, or security camera.

With quick deployment and a web-based interface hosted in the cloud or on-premise, Rekor Scout provides scalable security enhancements for government agencies, law enforcement, businesses, and even residential customers.

Rekor is working towards transforming transportation and mobility data into actionable insights.

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 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.

Rekor’s solutions support a variety of use cases, including:

13 unchanged sentences

Enhanced Roadway Safety

Real-time AI enabled monitoring systems to detect hazards and help reduce roadway fatalities.

Real-time AI monitoring systems to detect hazards and reduce roadway fatalities.

Predictive analytics to anticipate and address potential safety risks.

Optimized Resource Allocation

AI assistance to allow managers to streamline operations and maximize resource allocation.

AI automation to streamline operations and maximize resource allocation.

Improved data accuracy to support better decision-making and strategic planning.

Border & Freight Management

AI-assisted vehicle identification to enhance national security and minimize bottlenecks at borders and ports.

AI-based vehicle identification to enhance national security and minimize bottlenecks at borders and ports.

Weigh-in-Motion (“WIM”) systems for real-time commercial trucking analytics

1 unchanged sentence

Automated enforcement systems to reduce uninsured drivers and improve overall public safety.

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.

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.

Opportunities, Trends and Uncertainties

12 unchanged sentences

This data is a resource that transportation and other agencies are beginning to find valuable uses for.

Notably, the data from these vehicles represent a virtual network that is independent of the infrastructure which is maintained and operated by the public agencies.

Connected vehicle sensors can provide important information related to hazardous conditions, speed variations, intersection performance, and more.

This data can help agencies and municipalities gain more visibility about conditions on their roads, supplementing data from existing infrastructure and allowing transportation information from rural areas that are not served by ITS infrastructure to be integrated into the overall analysis.

New and Expanded Uses for Vehicle Recognition Systems – We believe that reductions in the cost of vehicle recognition products and services will significantly broaden the market for these systems.

Notably, the data from these vehicles represent a virtual network that is independent of the infrastructure maintained and operated by public agencies.

Giving them the tools to efficiently and intelligently collect and use this data can help them gain more visibility about conditions on their roads, supplementing data from existing infrastructure and allowing transportation information from rural areas that are not served by ITS infrastructure to be integrated into the overall analysis.

New and Expanded Uses for Vehicle Recognition Systems – We believe that reductions in the cost of vehicle recognition products and services have significantly broadened the market for these systems.

We also expect the availability of faster, higher-accuracy, lower-cost systems to dramatically increase the ability of crowded urban areas to manage traffic congestion and implement smart city programs.

28 unchanged sentences

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.

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.

As a result, we will need to make significant investments in our business development, marketing and eCommerce activities to increase awareness and market adoption of our products and services within key markets.

If we are able to maintain a sustained presence in the market, the continued development of strategic partnerships and other economies of scale will reduce the level of costs necessary to support sales of our products and services.

However, the speed at which these markets grow to the degree to which our products and services are adopted is uncertain.

Infrastructure Investment and Jobs Act ( “ IIJA ” ) and the Bipartisan Infrastructure Law ( “ BIL ” ) - The IIJA, signed into law on November 15, 2021, provides for significant national investments in the transportation systems in the United States, including over $150 billion in new spending on roadway infrastructure, including intelligent transportation systems.

We believe that there will continue to be bi-partisan support for these programs and that our comprehensive offering of solutions positions the Company well to emerge as a technology leader in the expanded market for roadway intelligence that will benefit from this legislation.

We have identified opportunities to access federal funding streams, and we are working to implement a program that capitalizes on this unprecedented U.S.

federal investment in public safety, homeland security, and transportation infrastructure and ensures that our customers are positioned to capture as much of this extraordinary government spending as possible.

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.

10 unchanged sentences

Cyber Security Risks - Rekor relies on information technology in all aspects of its business.

A significant disruption or failure in the information technology systems could result in services interruptions, safety failures, security violations, regulatory compliance failures, an inability to protect information and assets against intruders, and other operational difficulties.

A significant disruption or failure in the systems used in the information technology sector could result in services interruptions, safety failures, security violations, regulatory compliance failures, an inability to protect information and assets against intruders, and other operational difficulties.

This could result in the loss of assets and critical information and expose the Company to remediation costs and reputational damage.

4 unchanged sentences

Components of Operating Results

The Company derives its revenues primarily from the sale of its roadway data aggregation, traffic management and licensing offerings.

The Company derives its revenues primarily from the sale of its roadway data aggregation, traffic management, public safety and licensing offerings.

These offerings include a mixture of data collection, implementation, engineering, customer support and maintenance services as well as software and hardware.

5 unchanged sentences

Such costs are included in operating expenses.

We expense direct costs of revenues when they incur.

We expense direct costs of revenues when they are incurred.

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.

Personnel costs have been the most significant component of operating expenses and consist of salaries, benefits, bonuses, payroll taxes and stock-based compensation expenses.

General and Administrative

General and administrative expenses consist of personnel costs for our executive, finance, legal, human resources, and administrative departments.

Additional expenses include office leases, professional fees, and insurance.

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.

General and administrative expenses consist of personnel costs for our executive, finance, legal, human resources, and administrative departments, office leases, professional fees, insurance and related expenses.

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.

Our general and administrative expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.

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.

Sales and Marketing

7 unchanged sentences

Other Income (Expense)

Other income (expense) consists primarily of legal settlements, legal judgements, interest income and expense in connection with our debt arrangements, costs associated with the extinguishment of our debt arrangements, gains on the sale of subsidiaries, gains or losses on the sale of fixed assets, gain or losses on the change in fair value of our liabilities, and interest income earned on cash and cash equivalents and note receivables.

Other income (expense) consists primarily of interest expense incurred on our debt arrangements, partially offset by interest income earned on cash and cash equivalents and notes receivable, as well as other items that may include legal settlements, legal judgements, gains or losses on the sale of fixed assets, and gains or losses on the change in fair value of our liabilities.

Income Tax Provision

1 unchanged sentence

We have recorded deferred tax assets for which a full valuation allowance has been provided, including net operating loss carryforwards and tax credits.

We expect to maintain this full valuation allowance for the foreseeable future as it is more likely than not that some or all of those deferred tax assets may not be realized based on our history of losses.

We expect to maintain this full valuation allowance for the foreseeable future as it is more likely than not that some or all of those deferred tax assets will not be realized based on our history of losses.

Critical Accounting Estimates and Assumptions

4 unchanged sentences

Our historical operating results in dollars are presented below.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(Dollars in thousands)

7 unchanged sentences

Loss from operations

Other income (expense):

Loss on extinguishment of debt

Other expense:

Interest expense, net

Gain (loss) on remeasurement of ATD Holdback Shares

Loss on offering costs - Prepaid Advance

Gain on the sale of Global Public Safety

Other (expense) income

Total other (expense) income, net

Comparison of the Three and Nine Months Ended September 30, 2025 and the Three and Nine Months Ended September 30, 2024

Other expense

Total other expense, net

Comparison of the Three Months Ended March 31, 2026 and the Three Months Ended March 31, 2025

Total Revenue

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(Dollars in thousands)

Revenue increased for the three and nine months ended September 30, 2025, compared to the corresponding periods in 2024, primarily due to higher perpetual license sales in Q3 2025.

The increase in revenue for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was driven across each of our revenue streams.

Revenue attributable to our Scout product line increased by $281,000, revenue attributable to our Discover product line increased by $682,000, and revenue attributable to our Command product line increased by approximately $102,000 over the same period.

Cost of Revenue, Excluding Depreciation and Amortization

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(Dollars in thousands)

Cost of revenue, excluding depreciation and amortization

Cost of revenue, excluding depreciation and amortization, decreased for the three and nine month periods ended September 30, 2025, compared to the corresponding prior-year periods, primarily due to a favorable revenue mix of software versus hardware, which resulted in higher margins from increased software license sales.

Cost of revenue, excluding depreciation and amortization, increased by 2% for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to the higher revenue in 2026.

Operating Expenses

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(Dollars in thousands)

6 unchanged sentences

General and Administrative Expenses

General and administrative expenses decreased for the three and nine months ended September 30, 2025 , compared to the prior-year periods.

The decrease was primarily driven by reductions in payroll and related expenses of $1,085,000 and $1,766,000, respectively, as a result of cost-containment initiatives implemented to better align with operations.

In addition, bad debt expense decreased by $591,000 and $798,000, respectively, and professional fees decreased by $571,000 and $390,000, respectively.

General and administrative expenses increased by 14% for the three months ended March 31, 2026 , compared to the three months ended March 31, 2025.

The increase was primarily driven by a $455,000 increase in labor costs, driven by the absence of prior-year salary reductions and compensation arrangements, and a $531,000 increase in professional fees, primarily related to higher legal, accounting and other advisory costs.

Selling and Marketing Expenses

For the three and nine months ended September 30, 2025 , the decrease in selling and marketing expenses was primarily due to a $388,000 and $1,091,000 decrease related to payroll and payroll related costs as a result of cost-containment initiatives implemented to better align with operations.

Selling and marketing expenses decreased by 48% for the three months ended March 31, 2026 , compared to the three months ended March 31, 2025.

This decrease was primarily due to a reduction in payroll and related expenses of approximately $673,000 resulting from cost-containment initiatives implemented to better align operations with our strategic priorities.

Research and Development Expense

For the three and nine months ended September 30, 2025 , the decrease in r esearch and development expenses was primarily due to a $1,000,000 and $3,138,000 decrease related to payroll and payroll related costs as a result of cost-containment initiatives implemented to better align with operations.

For the three months ended March 31, 2026 , the 12% decrease in r esearch and development expenses was primarily due to a reduction in payroll and related expenses of approximately $621,000 resulting from cost-containment initiatives implemented to better align operations with our strategic priorities.

Depreciation and Amortization

The decrease in depreciation and amortization during the period is attributable to an impairment we recognized as of December 31, 2024, following the identification of a triggering event.

Other Income (Expense)

Three Months Ended September 30,

Nine Months Ended September 30,

The decrease in depreciation and amortization during the period is attributable to a reduction in the depreciation base resulting from the impairment of property and equipment recognized in connection with the wind-down of our Tel Aviv operations during the year ended December 31, 2025 .

Other Expense

Three Months Ended March 31,

(Dollars in thousands)

Other income (expense):

Loss on extinguishment of debt

Other expense:

Interest expense, net

Gain (loss) on remeasurement of ATD Holdback Shares

Loss on offering costs - Prepaid Advance

Gain on the sale of Global Public Safety

Other (expense) income

Total other (expense) income, net

For the three months ended September 30, 2025, interest expense increased by 15%, however, for the nine months ended September 30, 2025 interest expense decreased compared to the corresponding period in 2024 due to the early redemption of the 2023 Promissory Notes.

Loss on extinguishment of debt is a result of early redemption of the 2023 Promissory Notes in 2024.

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.

Additionally, in 2024 we recorded non-operating items, including a loss on offering costs related to our Prepaid Advance and a gain on the sale of Global Public Safety.

These items were one-time in nature and did not recur in 2025.

Non-GAAP Measures

Other expense

Total other expense, net

For the three months ended March 31, 2026, interest expense, net decreased by 16%, due to higher interest income from interest-bearing accounts .

Non-GAAP Measures (Unaudited)

EBITDA and Adjusted EBITDA

6 unchanged sentences

The following table sets forth the components of the EBITDA and Adjusted EBITDA for the periods included (dollars in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Interest, net

1 unchanged sentence

Share-based compensation

Loss on extinguishment of debt

(Gain) loss on remeasurement of ATD Holdback Shares

Loss on offering costs - Prepaid Advance

Gain on the sale of Global Public Safety

Adjusted EBITDA

6 unchanged sentences

The following table sets forth the components of the Adjusted Gross Profit and Adjusted Gross Margin for the periods included:

Three Months Ended September 30,

Nine Months Ended September 30,

(Dollars in thousands, except percentages)

Three Months Ended March 31,

(Dollars in thousands, except percentages)

2 unchanged sentences

Adjusted Gross Margin

Adjusted Gross Margin for the three and nine months ended September 30, 2025 increased compared to the three and nine months ended September 30, 2024.

Adjusted Gross Margin for the three months ended March 31, 2026 increased compared to the three months ended March 31, 2025.

The fluctuation in Adjusted Gross Margin is typically correlated to the mix of software sales versus service type work.

5 unchanged sentences

We expect these contracts to provide a more predictable stream of revenues, compared to one-time sales of hardware and software licenses which are generally more difficult to predict.

Our recurring revenue model and revenue retention rates provide significant visibility into our future operating results and cash flow from operations.

Our recurring revenue provides significant visibility into our future operating results and cash flow from operations.

This visibility enables us to better manage and invest in our business.

The following table sets forth our recurring revenue for the periods included (dollars in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Recurring revenue

Recurring revenue increased by 28% for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

We expect to continue to focus on 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.

2 unchanged sentences

Performance Obligations

As of September 30, 2025, we had approximately $13,157,000 of contracts that were closed prior to September 30, 2025 but have a contractual period beyond September 30, 2025.

As of March 31, 2026, we had approximately $22,250,000 of contracts that were closed prior to March 31, 2026 but have a contractual period beyond March 31, 2026.

These contracts generally cover a term of one to five years, in which the Company will recognize revenue ratably over the contract term.

4 unchanged sentences

Lease Obligations

As of September 30, 2025, we had material leased building space at the following locations in the U.S.

Columbia, Maryland – The corporate headquarters

Tel Aviv, Israel

We believe our facilities are in good condition and adequate for their current use.

We expect to improve, replace and increase or decrease facilities as considered appropriate to meet the needs of our planned operations.

As of March 31, 2026, our principal leased facility was our corporate headquarters in Columbia, Maryland.

We also leased office space in Plano, Texas.

As described in Note 2 — Leases, we ceased operations at our previously-occupied office space in Tel Aviv, Israel during the three months ended March 31, 2026.

In January 2026, we entered into an amendment to the lease for our corporate headquarters in Columbia, Maryland that revised the timing of monthly base rent payments through the remaining lease term.

During the three months ended March 31, 2026, we exercised our option to terminate our lease for office space in Plano, Texas, effective December 31, 2026.

In December 2025, we initiated a plan to wind down the operations of our wholly owned subsidiary, Waycare Technologies LTD subsidiary in Tel Aviv, Israel, and consolidate all engineering functions into our U.S.

Tel Aviv operations ceased on February 24, 2026.

In connection with this initiative, during the three months ended March 31, 2026, we incurred employee-related separation costs of approximately $278,000, which are reflected within general and administrative expenses and research and development expenses in our unaudited condensed consolidated statements of operations.

Liquidity and Capital Resources

The following table sets forth the components of our cash flows for the periods included (dollars in thousands):

Nine Months Ended September 30,

Three Months Ended March 31,

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net cash (used in) provided by financing activities

Net decrease in cash, cash equivalents and restricted cash

Net cash used in operating activities for the nine months ended September 30, 2025 had a decrease of $6,970,000, which was primarily attributable to a reduction in our net loss.

The decrease in net cash used in investing activities of $6,580,000 was primarily due to the net cash outflow of $9,222,000 related to the acquisition of ATD.

The decrease in net cash used in investing activities was partially offset by an increase in capital expenditures, which are directly tied to revenue generating contracts.

Net cash provided by financing activities for the nine months ended September 30, 2025 decreased by $10,722,000 from the prior nine month period ended September 30, 2024.

During the nine months ended September 30, 2025, as part of our Sales Agreement, we received net proceeds of $22,350,000.

During the nine months ended September 30, 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.

For the three and nine months ended September 30, 2025 and 2024, we funded our operations primarily through cash from operating activities, the issuance of debt and the sale of equity.

As of September 30, 2025, we had cash and cash equivalents and restricted cash of $3,411,000 and a working capital of $6,959,000, as compared to cash and cash equivalents and restricted cash of $5,329,000 and working capital of $1,707,000 as of December 31, 2024.

Net cash used in operating activities for the three months ended March 31, 2026 decreased by $4,334,000 compared to the three months ended March 31, 2025.

The decrease primarily attributable to a reduction in our net loss of approximately $1,513,000, favorable working capital movements driven primarily by changes in accounts receivable and accounts payable, and lower operating cash outflows resulting from the wind-down of our Tel Aviv, Israel operations, which ceased on February 24, 2026.

Net cash used in investing activities for the three months ended March 31, 2026 increased by $26,000 compared to the three months ended March 31, 2025, primarily due to higher capital expenditures, partially offset by higher proceeds from notes receivable.

Net cash (used in) provided by financing activities for the three months ended March 31, 2026 decreased by $7,552,000 compared to the three months ended March 31, 2025.

During the three months ended March 31, 2025, we received net proceeds of approximately $7,659,000 from the 2025 Sales Agreement, which was terminated in August 2025.

We received no proceeds from the 2025 Sales Agreement during the three months ended March 31, 2026.

Cash outflows during the three months ended March 31, 2026 included scheduled payments related to financing leases.

For the three months ended March 31, 2026 and 2025, we funded our operations primarily through cash from operating activities and the sale of equity.

As of March 31, 2026, we had cash and cash equivalents and restricted cash of $12,599,000 and working capital deficit of $3,727,000, as compared to cash and cash equivalents and restricted cash of $16,863,000 and working capital of $1,640,000 as of December 31, 2025.

Management has assessed going concern uncertainty to determine whether there is sufficient cash on hand, together with expected capital raises and working capital, to assure operations for a period of at least one year from the date these consolidated financial statements are issued, which is referred to as the “look-forward period”, as defined in U.S.

3 unchanged sentences

We attribute losses to non-capital expenditures related to the scaling of existing products, development of new products and service offerings and marketing efforts associated with these products and services.

As of and for the nine months ended September 30, 2025, we had working capital of $6,959,000 and a net loss of $23,681,000.

Our cash decreased by $1,918,000 for the nine months ended September 30, 2025 primarily due to the net loss of $23,681,000, this amount was partially offset by external financing activity.

On February 10, 2025, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with Northland Securities, Inc.

(the “Agent”), 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 (“Common Stock”), having an aggregate offering price of up to $25,000,000.

The Agent is entitled to receive from the Company a commission in an amount equal to (i) 3.0% of the gross sales price 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.

The Company 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, the Company elected to voluntarily terminate its Sales Agreement.

As of September 30, 2025 the Company issued 18,888,832 shares of its 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 related to the issuance cost, as well as 3.0% or $699,000 related to cash commissions provided to the Agent.

See Note 9 – Stockholders’ Equity for details on shares issued under the Sales Agreement.

As of and for the three months ended March 31, 2026, we had working capital deficit of $3,727,000 and a net loss of $9,361,000.

Our cash, cash and cash equivalents and restricted cash decreased by $4,264,000 for the three months ended March 31, 2026 primarily due to the net loss of $9,361,000, this amount was partially offset by non-cash expenses which are highlighted in our condensed consolidated statements of cash flows and favorable working capital movements.

In February 2025, we entered into an At Market Issuance Sales Agreement (the "2025 Sales Agreement") with Northland Securities, Inc.

for the offer and sale of shares of our common stock having an aggregate offering price of up to $25,000,000.

The 2025 Sales Agreement was terminated on August 12, 2025.

We did not receive any proceeds from the 2025 Sales Agreement during the three months ended March 31, 2026, and the agreement is no longer available as a financing source.

See Note 8 — Stockholders' Equity for additional information.

In January 2026, we entered into an amendment to the lease for our corporate headquarters in Columbia, Maryland that revised the timing of monthly base rent payments through the remaining lease term.

The amendment defers a portion of the base rent payments otherwise due during 2026 into 2027, reducing our near-term cash payment obligations.

Total contractual lease payments under the lease were not significantly changed by the amendment.

During the three months ended March 31, 2026, we exercised our option to terminate our lease for office space in Plano, Texas, effective December 31, 2026.

In connection with the termination, we expect to pay a termination fee of approximately $50,000 in 2026, in addition to monthly rent payments through the December 31, 2026 effective date.

Refer to Note 2 — Leases for additional information.

Based on the Company's current business plan assumptions and the expected cash burn rate, the Company believes that the existing cash is insufficient to fund its current level of operations.

3 unchanged sentences

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.

As of September 30, 2025, we did not have any material commitments for capital expenditures.

As of March 31, 2026, we did not have any material commitments for capital expenditures.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements