Rekor Systems announces new $25 million stock sale agreement

Rekor Systems, Inc. (NASDAQ:REKR), a $214 million market cap company specializing in communications equipment, has entered into a significant financial arrangement, according to a recent 8-K filing with the U.S. Securities and Exchange Commission.

According to InvestingPro data, the company has been experiencing rapid revenue growth of 44% year-over-year, though it faces challenges with cash burn and profitability. On Monday, the Maryland-based manufacturer disclosed an At Market Issuance Sales Agreement with Northland Securities, Inc., allowing for the potential sale of up to $25 million of its common stock.

The agreement stipulates that Rekor Systems may, at its discretion, sell shares from time to time through "at the market" offerings as defined by securities regulations. The company has the flexibility over the next 18 months to direct Northland to purchase shares on its behalf, with certain restrictions on the frequency and amount of sales per day and week. This capital raising initiative comes at a time when InvestingPro analysis shows the company’s current ratio at 0.76, indicating short-term obligations exceed liquid assets.

Northland Securities stands to earn a commission of 3.0% on sales conducted as an agent and 6.0% on shares purchased as a principal. The company is also committed to indemnify Northland and reimburse certain expenses as part of the agreement.

This financial maneuver is facilitated by a shelf registration statement effective as of August 6, 2024, and a prospectus supplement filed on the date of the agreement. The arrangement may be terminated by either party under specific conditions and will automatically end either 18 or 24 months from the date of the agreement, depending on the type of transaction, or upon the sale of all shares under the agreement.

The filing makes clear that this report does not constitute an offer of sale or a solicitation of an offer to buy Rekor’s securities. The sale of securities is subject to registration and qualification under the relevant jurisdiction’s laws.

This strategic move by Rekor Systems provides the company with a flexible option to raise capital as needed, potentially supporting its growth and development initiatives in the communications equipment sector. With an EBITDA of -$36 million in the last twelve months, this financing flexibility could be crucial for the company’s future operations. The information presented is based on statements from the company’s SEC filing and InvestingPro data, which offers comprehensive analysis and 12 additional ProTips about Rekor Systems’ financial health and market position through its detailed Pro Research Report.

In other recent news, AI-based company SoundHound has announced a partnership with Rekor Systems to develop technology for emergency vehicles. Their collaboration will integrate SoundHound’s voice and conversational AI with Rekor’s vehicle recognition software, Rekor Scout®, to enhance the functionality of law enforcement and first responder vehicles.

On another note, Rekor Systems has also expanded its traffic analytics solutions in New Mexico, following a successful initial deployment in January 2024. This expansion marks a significant increase in the adoption of Rekor’s technology throughout the state.

In further developments, Rekor Systems recently announced the resignation of Anne Townsend from its board of directors, a decision made to focus on personal commitments. Lastly, the company reported a positive trajectory in its Q3 2024 earnings call, with a 16% year-over-year increase in Q3 revenues and a 37% increase for the first nine months. Rekor’s Urban Mobility segment has been a primary growth driver, with the company setting sights on achieving positive cash flow by 2025.

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