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Good afternoon, ladies and gentlemen, and welcome to today's Rekor Systems Conference Call. My name is Alicia, and I'll be your coordinator for today. As a reminder, this conference is being recorded for replay purposes. Before we start, I want to review the company's abbreviated safe harbor statement. I want to remind you that statements made in this conference call concerning future revenues, results of operations, financial position, markets, economic conditions, products and product releases, partnerships and any other statements that may be construed as a prediction of future performance or events are forward-looking statements. Such statements can involve known and unknown risks, uncertainties and other factors, which may cause actual results to differ materially from those expressed or implied by such statements. We ask that you refer to the full disclaimer in our earnings release. You should also review a description of the risk factors contained in our annual and quarterly filings with the SEC. Non-GAAP results will also be discussed on the call. The company believes the presentation of non-GAAP information provides useful supplementary data concerning the company's ongoing operations and is provided for informational purposes only. I now would like to turn the presentation over to Mr. Robert Berman, Interim President and CEO of Rekor Systems.

Good afternoon, everyone. I'm incredibly proud of what the Rekor team has accomplished this quarter, the best performing quarter in our company's history. So I'm pleased to lead off today's call. But we are going to switch things up a bit today. Before diving into the business and technology updates, I'll first turn the call over to our CFO, Eyal Hen for some important financial and organizational updates. Eyal, the floor is yours. .

Thanks, Joe, and welcome officially to your new role. We've had a long-standing relationship, and I am pleased to see you take on this leadership position. With your prior experience at KPMG and long tenure at Rekor, we are fortunate to have you here and to take the range. As outlined, this quarter represents the third straight quarter of positive results for both investors and the company. We are seeing clear signs that Rekor is reaching a point where the growth of recurring revenue and expanding market demand are aligning with operational discipline to drive sustainable growth. . These results reflect the momentum outlined in our prior announcement, where we stated that Rekor expected record quarterly revenue, along with a significantly improved in adjustment in EBITDA and gross margin. We continue to work towards these objectives. In early October, we achieved a major milestone by securing our largest statewide multiyear contract with the Georgia Department of Transportation valued at a minimum of $50 million over the contracts full term. This contract further validates our leadership in roadway intelligence and data infrastructure providing a long-term growth foundation and 1 of the most strategically important transportation markets in the country. We also received recognition for our work in South Carolina where Rekor technology powers the state's virtual way station network. The program was recently awarded a State Technology Innovation Award we're establishing a nearly 100% accuracy rate and overweight truck targeting, a model that other states can follow. This project showcases Rekor's ability to effectively use AI and connected infrastructure to deliver measurable value and efficiency to state agencies. Furthermore, 3 new and very large states have begun using Rekor Discover. Beyond our core operations, I'd like to briefly mention a new initiative Rekor plans to enter the global detection market. While we can't speak in detail yet, this opportunity builds on Rekor's years of experience in the video analytics for government agencies and particularly law enforcement. For some time, even before deep fakes were in motion and the Publics mind, we've considered the evidential implications of synthetic media and deep fake technologies and position ourselves to protect our customers and the public at large in this critical area. These efforts have now been concentrated in Rekor Labs, which is operating as an independent entity, and there's more to come on this 1 time is right. We continue to see strong performance across our core portfolio. Rekor Discover and Command have generated considerable attention and adoption in the market. More importantly, we are now seeing an organic convergence of these 2 technologies and new RFPs issued by transportation authorities. This reflects a growing industry movement towards integrated data and intelligent solutions, an approach that Rekor has been pioneering for years. Importantly, two, our data-as-a-service business model is proven to be a major differentiator. Agencies increasingly want data without the hardware burden, deployment headaches and maintenance issues. Rekor is perfectly positioned to meet that demand with AI-driven solutions that are scalable, cloud-based and high margin. I also want to take a moment to recognize the continued strength of Rekor Scout. While Discover and Command received much of the public attention, a significant portion of our revenue continues to come from Scout, which remains a cornerstone of our technology portfolio, and a recognized leader in vehicle and license plate recognition. As part of our ongoing effort to strengthen and expand this business, I am pleased to announce that Jennifer, Jen, Candelaria will join Rekor as General Manager of Scout, will be based in our Columbia, Maryland office and report directly to me, brings more than a decade of global leadership experience across North America, Europe, Asia and Latin America and the Caribbean, she has a strong track record in technical sales, product management and business development with prior leadership roles at Motor Oil Solutions and Milestone Systems AI business unit, BriefCam. Her appointment significantly strengthens our overall leadership team and reinforces our commitment to operational excellence across all business lines. As we enter the first quarter of the year and look ahead to 2026, Rekor continues to be positioned for substantial growth. The momentum we've built across our technology platforms, customer base and financial performance underscores that Rekor transformation is delivering lasting value. And we would like to thank our shareholders, employees and partners for their continued trust and support. And lastly, I'd like to publicly thank once again for his dedicated service to Rekor and with that, operator, we'll now turn the call over for questions.

[Operator Instructions] Our first question comes from the line of Louie Dipalma with William Blair.

Good afternoon. Robert and Jona and it was a pleasure working with you, and congrats Jonah on your appointment as CFO. My first question for Robert, what type of product does the Rekor team envision developing with the deep fake detection division? And would the product be software as a service? Or do you imagine it would be more of a solution in which it requires your personnel combined with your software?

So this is Robert. And thanks for the question. And by the way, it's who is assuming the role of CFO. But let me answer you by saying that the product that we had previously announced is being developed by a subsidiary, which is operating independently as Rekor Labs under the management of a Director. And given what's going on in that space and the competition and competition for IP and other things, there's not much more we can say about what we're doing than what we've said. I know that's probably not satisfying, but we expect to get a product in the market in '26. And we just want to be careful. Look, Rekor has a long history of working with AI machine vision, which is video and audio, and this came to our attention back in '23. So it's not something that just kind of popped up 1 day and we decided only got deep fakes right? So we have been looking at it. We actually started developing some technology around it for our customers that we're requesting, okay, this technology. So that's really all we can say about it at this point in time, which is the same or we can

Definitely, definitely exciting. And how should we think about the EBITDA trajectory and margins over the next several quarters, I think you've been able to take OpEx out of the model, and you're also in the process of scaling the Georgia contract, so how should we think of margins and EBITDA?

I think the way you should think about it is exactly what we've been saying. We've always said that we expect as things progress that our margins will increase. We expect that they will stabilize higher than we reported this quarter. And that's just part of the development process of the technology that we're putting in the field. I think the most important thing is what was said earlier about our clients are looking for the Data as a Service business model. They're not interested in technology and hardware and maintenance contracts and so forth. They need the data that they need to operate the roadways. Look, everyone here understands what's happening. You hear all these things about robo taxis and companies doing this and the other thing. Well, the DOTs have to keep pace. They've got to keep the roadway safe. And they have to do that through managing data and the idea of delivering the data as a service as opposed to delivering technology and supplying it, maintaining it as a contractor, is where it's headed, and that means higher margins, longer-term contracts and a better business model for a company like Rekor. So I think it's consistent with where we projected that we were going and we're seeing that, and we're seeing that in the results today. right?

Great. And do you see many other contracts similar to the Georgia contract in your pipeline such that other states will look at Georgia as the model or the paradigm. And they perhaps won't need to do a rigorous RFP process. They can trust that Georgia did the proper due diligence and they can expedite the process and go straight with you.

Yes. Well, look, I think obviously, states procure the way they procure, but I think the good news is that they do follow each other. And at the end of the day, I believe that we're seeing, okay, which we pioneered was the concept of Data as a Service and delivering the solutions that these agencies are looking for, and that's where it's headed, and what we're seeing now, which I think we said during the call, is that this is unprompted, we're seeing RFPs come out that we're responding to that are asking for this business model with the solutions that we have. And what's really interesting about it is we're seeing a convergence of both the Discover and the Command platform. And what I mean by that is when people think about DOTs, they have 2 sides, they have operations which is maintaining roadways, operating the roadway public safety and all the things that go along with that. And then you have more longer-term things like planning for how you maintain your roadways over the next 10, 15, 20 years. And what we're seeing is now that the DOTs are looking to combine that into a sale pane of glass, where they can get the data that they need through 1 supplier, okay, not by buying hardware not by having a contractor install equipment, and you have to worry about is it working? Is it not working? but by a company that says we'll give you all of this data that you need to do both planning and operations with and pay us for the data. And it's not giving you what you need to operate your roadway system that don't pay us, right? And if people think about today's world, everyone's used to getting things as a service. And that's something that I'm proud to say we pioneered, okay? And we fought long and hard to make that business model work, and when we first started years ago, people said, "Oh, I'm not sure that, that's going to work, but that's exactly what we're starting to see. So we're seeing RFPs come from states that again, are unprompted. They're just showing up and they're looking for exactly what Rekor does. And the way we do business, more importantly, they're asking for that from the companies that are going to bid that. And I think Rekor is uniquely positioned to offer those services and solutions because, frankly, we probably heard a lot of it.

[Operator Instructions] Our next question comes from the line of Tim Moore with Clear Street.

All the best for your next phase outside of Rekor . I remember meeting at your headquarters a year ago and speaking many times since then. So good luck with everything. And my first question is about your Command win that you were piloting a few years back in Austin, Texas and the contract clearly came through well in June or so. . So just wondering, is Austin starting to ramp up? Is the plan there to kind of tackle Austin because that's where the pilot was and then really go out to Dallas, Fort Worth and then Houston. Is there any kind of just color you can add on that in the ramp-up? .

That's a great question. Austin has issued a PO, okay, under the RFP quarter 1, so we have an expanded contract with them. I think it's Joe, it's about 3 years. I'm not sure what it is. But it took the full benefit of the pricing that was in and we've been working closely with TxDOT's procurement group, they wanted to kind of roll this out to the other districts in a certain way. And when you work with states, you follow their lead and you do the best you can to support what they're asking you to do. So I think we'll see a successful rollout in Texas beyond Austin, right? And we're just in that process right now with the TxDOT procurement team, right? But look, I just -- one additional thing about our business is it's B2G. We saw Well, the good news is that when you win, you're in and you're there for a long time. And that's the nice thing about this business, right? So it's a double and short, a little painful on the front end. But on the back end, it's very rewarding. And I think that's we're on the back end especially given Georgia and other states like Texas and others as well.

Great. Just to play on that thread of when you're in, which is great. How does the value Discover contracts stack up? Do you think that's like 1/3 the value of what you'll be doing either in Georgia or Texas, just kind of curious?

Look, California is large, but to talk about the size of that potential opportunity, but I'd hate to get ahead of ourselves and the have the folks at Caltrans get all, wait a second, we're just doing this at the other thing, look, it's a massive opportunity and we were pleased to be asked by then to come out and showcase the fact for Caltrans and all their districts and that's exactly what we're doing. But look, we're going to slow things down a bit and being methodical about what we're telling the market. But the good news is tech is being adopted. The business model is being adopted. The states have to do this stuff and Rekor is in a premium position to be able to deliver these services because, again, we pioneered a lot of this. So I think it just is very unique, right?

I just have 1 last question for Al, Joe, Robert, whoever wants to answer it. Now that you nailed down the Texas contract, the extended higher-value Georgia contract, Caltrans, do you expect to do a revenue sharing note again? Because I mean that would definitely help improve liquidity. I'm just kind of curious what the thoughts are around that.

Eyal, you can certainly handle that, transferring it over to Joe .

We are working as part of improving our liquidity. We are working with the banker, as we announced before, to have another series of this note now with Georgia and Texas is coming in to add to the pool that gives us the opportunity to raise money through this revenue sharing tool that we have last 1.5 years. So definitely, yes, we are working towards it. And you will know when it's been exited, but we are working with the banker as we announced before through this second series of notes.

[Operator Instructions] Our next question comes from the line of Mike Latimore with Mawson Capital Markets.

This is Vijay Devar. Should you get a full rate of portion of the new Georgia contract in the fourth quarter.

I'm not sure we caught that.

Can you repeat the question, please? .

Do you expect a full pro rata portion of the new Georgia contract in the fourth quarter? .

Yes, we do. Georgia contract is in full effect since October, and we anticipate to bill them under the new conference team. .

Okay. And tell status of the Discovery deployment in Georgia.

Can you repeat the question again?

The status of discovered deployments in Georgia? .

I think we can't get into the details, but we have new Discover deployments going in, in Georgia and Florida in a couple of other states as well. So I'm not sure that we have those exact numbers. And just so you know kind of towards the end of the year, we shift our resources around because some states slow down work over the Thanksgiving to New Year's holiday and other states allow to work. So -- but trust that we're taking full advantage of working everywhere we can, getting as many systems as possible. I think we put a record number of systems in, in Florida in a very short period of time. And Joe, I'm not sure you guys have those numbers handy, but -- they're going in.

And finally, are cities joining the Georgia procurement contract yet.

The Georgia contract is in full effect. We have a PO from them for the next year. So it went through the whole processes, within the state and in effect as we speak. .

[Operator Instructions] Our next question comes from the line of Ray Yakel, Private Investor. .

Yes. The international market, I believe reported the ITS ERP back on May 19, and Mark was over there earlier in the year. Can you give us any feedback on that? .

Sure. I mean this is new for us, right, because we haven't looked to do business tie the U.S. borders other than with the Scout platform. But we are actively engaged with a number of customers in Europe. And look, the technology looks here looks there. So we hope to be doing business in Europe and outside of the U.S. in 2026. .

And the QSR sector, is that any push for that? Or are you just no revenue there.

Again, it's more scout and it's not something that we're prepared to talk to today about. But look, we are with its vehicle recognition software has some unique tools, which allows for property owners to extract anonymized information from vehicles that are on their property. So that's something that has a lot of commercial application and I think that's an area that we're going to be focused on in 2016. And hopefully, with Jan joining us, we'll be able to produce some real results with that. But I think that's something that we think has some strong opportunities. Look, companies want to know who's on the property, where they're coming from? And if you can do that in an anonymized way, which we can do, and we have some IP, and we have some patents on how we do that, then we expect to take advantage of that in the commercial sector. So it's an area we're certainly focused on. So that's a good question. So thank you

And do you see the technology being used anywhere else, for example, maybe shipping containers, for example, or .

Well, that's a really good question. And without getting into too much detail, I could just tell you that state DOTs on the federal government have a strong interest in tracking what comes in through port on to attract a traveler to a highway and so forth. And that's what makes, again, Rekor unique because not only do we have the ability to do what we do on the roadways with respect to discover, but given the ability to recognized vehicles, also the ability to recognize DOT numbers and other things related to what might be on the side of the shipping container. So yes, that's very much something that we're looking at and working on. And I think it's a really good question. And I think that's, at the end of the day, how all of this kind of gets stitched together and why it has value.

And my last question as a long-term shareholder, do you believe the profitability is what's holding the elevation in the share price and maintaining it there in your opinion? .

Well, this small public company in this world, right? It's just tough, right? But I think -- the good news is that I think we've proven that we can advance the company, we can increase our revenue. We can control our costs. We can do so without impairing revenue, and we can drive the company to profitability. And at the end of the day, it's really the value of the technology. And there's a lot of value to what we've developed, it took years to do. and it's not easily replicated. So I personally expect that, that value is going to monetize in the share price at some point, people are going to realize it. .

You don't expect to slow down in this quarter with the holidays, Thanksgiving, Christmas, New Year's. .

Well, there is some seasonality in our business, certain DOTs do limit the amount of work that you do roadside from Thanksgiving to New Year's, but we're shifting around for those states where we can work and we think there is a good chance that the growth can overcome a little bit of seasonality that you have. But at the end of the day, this stuff really doesn't matter because once the company gets its sea legs, and it grows, it's just going to grow because it's still very early, right? And the more important thing is just the pipeline is there, the adoption is there, the expansion is there, and as I said earlier, the RFPs that we're seeing unprompted from our customers, it just tells you that Rekor is headed in the right direction and we're providing what they want, right? So it's a really big market, and we haven't even touched the tip of the iceberg.

There are no further questions at this time. I'd like to pass the call back over to Robert for any closing remarks. .

Yes, operator, I just want to make sure that there's no further questions from any shareholders. Some times we hear that there were and people they get a chance to ask. But there are no further questions. The queue is clear. .

Yes, that's correct. .

Okay. Well, look, everyone, thank you so much for the support. Thank you for joining the call. And it's early. It's early in the game for Rekor, but I think we've proven that we're headed in the right direction. You just don't land contracts with states the likes that Rekor has and not have something that's really there, okay? So it's a good sign. And again, I think we're headed in the right direction, both with the company's technology as well as the business model. And we're looking forward to a great year in 2026 and seeing you all on the next call. So thank you all. Appreciate it. .