Good afternoon, ladies and gentlemen, and welcome to today's Rekor Systems, Incorporated Conference Call. My name is Catherine and I will be your coordinator for today. At this time, all participants are in a listen-only mode. As a reminder, this conference call is being recorded for replay purposes.

Before we get started, I'd like to read you the company's abbreviated Safe Harbor statements.

I'd like to remind you that the statements made in this conference call concerning future revenues, results of operations, financial position, markets, economic conditions, product 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 in such statements. We ask that you refer to the full disclaimers in our earnings release.

You should also review the description of the risk factors contained in our annual and quarterly filings with the SEC. Non-GAAP results will also be discussed on this 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 would now like to turn the presentation over to Mr. Eyal Hen, CFO of Rekor Systems..

Thank you, operator, and good afternoon, everyone. Thank you for joining us. Today, we'll discuss Rekor's results for the second quarter ended June 30, 2021, as well as provide an update on key business topics.

On the call with me today is Robert Berman, President and CEO, who'll be giving you additional updates as soon as I finish with the relevant metrics. Following our prepared remarks, we'll take your question. We continue to generate strong revenue growth year over year.

Revenue for the second quarter of 2021 was $4.3 million, a healthy increase of 60% compared to $2.7 million in revenue for the same period last year. Revenue for six months ended June 30, 2021 was $8.5 million compared to $4.3 million for the same period last year. This is a robust growth of nearly 100% year-over-year.

Our working capital increased to $39.8 million, up from $18.2 million as of December 31, 2020 as a result of our public offering in February 2021. Similar to the first quarter of this year, the increase in our revenues in the second quarter is primarily due to the [expansion] of our product and service offerings.

We're also now reaping the benefits of the strategic marketing initiative we launched at the beginning of 2021. Revenue for our high margin SaaS e-commerce platform increased to $405,000 for the three month period ended June 30, 2021, up 106% year-over-year from $197,000 for the comparable period in 2020.

The Oklahoma Uninsured Vehicle Enforcement Diversion, UVED program, generated revenue of $387,000 in the second quarter and $635,000 for the six months ended June 30, 2021. This is a program we began working on in January for this year to assist the State of Oklahoma in identifying Uninsured Vehicle on the road.

This program can generate significant revenue for state and more importantly, can play significant role in improving highway safety as a contact list compliance measure. Other states and municipalities have shown an interest in this program and are studying it seriously.

Our gross margin for the quarter ended June 30, 2021 was 66%, an increase from the 52% we reported in the comparable 2020 period.

The increase in margin for the second quarter ended June 30, 2021 is primarily attributable to the higher margin software sales, including the increase in the e-commerce revenues, which was higher margin than those associated with our hardware product.

Gross margin for the first half of the year ended June 30, 2021 was 60% compared to 59% in the same period last year. While we anticipate our long term gross margin to be on the range of 60% to 65%, our gross margins can fluctuate quarter to quarter based on our sales mix.

Total operating expenses for the second quarter of 2021 were $7.5 million compared to $4.2 million in the same year last year. We recorded a significant increase in payroll expenses as we continue to add to our headcount in our engineering and sales and marketing teams.

In addition, we extended our sales and marketing efforts and added additional resources to promote our product and services. Finally, we grew hour spend on research and development budget to develop new technologies and improve our line of products.

We'll continue to invest in innovation to retain our competitive edge and continue to develop more and better state-of-the-art solutions to address the growing needs of our customers. Adjusted EBITDA for second quarter ended June 30, 2021 was a loss of $2.9 million as compared to a loss of $2.1 million the same period last year.

Adjusted EBIDA for the six months ended June 30, 2021 was a loss of $6 million as compared to the loss of $4.1 million for the year ago comparable period. The increase in loss was also due to the aforementioned investments in growth initiated. Financial condition and liquidity.

Our cash balance on June 30, 2021 was $69 million, up from $21 million as of December 31, 2020. We also have $13 million held in short-term investments, which have maturity dates greater than three months but less than 12 months. The increase was primarily due to net profits from our public offering in the first quarter of this year.

Our working capital at the end of the quarter stood at $79.8 million. Obviously, this is more than what it necessarily support our near-term operations but has been held to support our M&A activity, which Robert will discuss in shortly.

In summary, we feel very good about the strength of our balance sheet, which provides us financial flexibility to pursue organic and inorganic growth opportunities. We continue to invest in our business in a disciplined manner to position Rekor to be a key participant in the stillness in market for intelligent infrastructure.

Now, I would like to turn the call over to our Chief Executive Oficer, Robert Berman.

Robert?.

Thank you, Eyal. Good afternoon, everyone and welcome. Today, I want to provide a brief update on the path ahead and our strategy. Please note that we will be providing further details on our strategy following our Annual Shareholder Meeting on September 14th.

When we decided to focus on our technology business in 2019, we began a journey with the goal of establishing Rekor as a leader in the emerging intelligent infrastructure sector, the backbone of smart cities. Smart cities are no longer an abstract idea but becoming reality due to necessity.

Three years ago, the United Nations published a report which projected that 68% of the world's population will be living in urban areas by 2050, up from 55% today. This poses a significant challenge to the existing infrastructure and current approach to managing cities.

Sustainable urbanization is key to successful development as United Nations pointed out in its report. With the growth in urban population and a focus on sustainability, aging infrastructure and resource scarcities have become a severe challenge to governments.

All this boils down to a very strong tailwind that can drive demand for our solutions in a rapidly growing market. Engineers and infrastructure experts in the United States have been sounding the alarm for renewed national focus on overhauling our country's infrastructure. USA Interstate Highway System dates to the 1950s.

According to the American Society of Civil Engineers, crowding and poorly maintained roads cost the US more than $160 billion in wasted fuel and time each year. Since 2008, congestion on roads has increased at a compounded annual growth rate of 1% to 3%, outpacing population growth.

The average American is estimated to spend 54 hours a year in traffic up from 42 hours in 2014. Core road surface conditions result in motorists spending nearly $130 billion in extra vehicle repairs and operating costs each year.

The American Society of Civil Engineers estimates US needs to spend as much as $2 trillion on infrastructure over the next five years alone.

The Biden administration and a bipartisan coalition of Congress has recognized this and are finally seeing a willingness to allocate the billions, if not trillions of dollars, needed for the development of renewed infrastructure.

Other developed and developing nations around the globe are also showing a willingness to meet these challenges and commit the funding necessary. A novel approach is need to be taken to address these basic problems.

The efficient movement of billions of people and the goods that sustain them through increasingly congested spaces requires the ability to capture, analyze and act on vast amounts of relevant data quickly, reliably and intelligently. This is important in every aspect from initial design to daily management.

The foundation of smart cities and the networks that connect them in future will be intelligent infrastructure that is designed and managed using the best data and analytical tools available.

Our ambition here at Rekor is to be a leader in this effort to improve the lives, safety and well being of people living in large and small communities around the world.

At Rekor, we're committed to providing the technology and solutions needed to build and maintain intelligent infrastructure, and believe that three key pillars are necessary to be a leader in this nascent and promising industry.

First, the ability to collect holistic and real-time data, combine this with third party sourced information connected vehicles and crowd sourced entities. Second, the ability to analyze this data using cutting edge AI driven software to provide customized solutions for real problems with measurable results.

And last, the ability to monetize these solutions and rapidly expand our geographic footprint. All three pillars are essential to our building and artificial intelligence based ecosystem around smart cities that will enable us to capitalize on the need to improve the efficiency and effectiveness of how cities and communities are run.

By aggregating data, processing data and ultimately, providing immediate solutions to immediate problems, our goal is to optimize the use of limited resources while improving the well being and safety of citizens around the world. The first pillar, the ability to collect real-time data, is the bloodline of our AI engine.

Our hardware uses the latest cutting edge technology to conduct on-device edge AI processing. We're able to aggregate real-time data with very high accuracy even in adverse conditions. Based on our client's needs, we can then combine our data with acquired third-party data to create a holistic and accurate view of what's happening.

Our customers have the ability to view real time images and videos, as well as put historic videos on demand. Our edge processing with on-device AI allows us to offer solutions at a fraction of the data related costs clients would have to pay for products that need consistent data transfer to the cloud.

And the beauty of our approach is that our customers don't have to upgrade to sophisticated optical sensor for our solutions to be effective. We can integrate data from almost any IP camera into our solutions to lower the costs through legacy integration. This is especially important as we address the needs of our commercial clients.

With the Waycare acquisition, we have significantly strengthened our ability to access third-party data. We can overlay this data with our own real-time data to provide a holistic view of the roads. The Waycare acquisition accelerated efforts that were already in progress and would have involved considerably more time and expense.

In particular, it would have been difficult to replicate what Waycare has already achieved in terms of its vendor relationships. What sets us apart from the competition is our software on our algorithms. This is the second pillar. The ability to provide customized solutions via cutting edge AI driven software.

Our AI based solutions can analyze the status quo to provide immediate answers. To do so, the AI needs to be taught. This is not any different than how we humans develop. We crawl, we walk and then we run. It takes time for AI to learn and it becomes increasingly better and smarter.

The more data the AI processes, the smarter it gets and more effective it gets in providing optimized AI driven insights and solutions. And that puts us years ahead of others who are just trying to start developing this technology, and is another reason why Waycare’s ad based technology integrates so well with our overall effort.

Finally, the third pillar is expanding geographic footprint. There is a significant first mover advantage as relationships tend to be sticky, resulting in recurring revenues. This is why we are focusing on growing our footprint. We can do this through acquisitions as we will discuss later or we can achieve this organically.

This entails putting a stake in the ground and we will do this town by town, county by county and city by city. We get a lot of questions from investors who are asking about specific revenue opportunities from our pilot programs. Since we're building an ecosystem, I'd like to help you take a long-term view at our process.

As we develop a relationship with a customer providing one solution, our clients typically ask for additional help in addressing their growing needs. This provides an opportunity to upsell our various products. There are no stronger advocates than happy customers. Word of mouth advertising is the best advertising.

And what we have seen is that if one municipality buys your product and sees immediate benefits, the neighboring municipality wants the same one. There is a multiplier effect, which is not apparent when we initially sign a contract. Our experience is similar to that of Waycare.

If you remember from the presentation we provided last week, Waycare entered a small pilot program in Southern Nevada, which expanded to Northern Nevada, growing total contract value by a factor of 161 times in only three years. This is similar to what we have experienced with other customers.

Each market entry is an investment into future growth, and we are just getting going. We have seen the benefits of moving to SaaS model with recurring revenue. A small revenue opportunity can grow to a stream of recurring revenues with the right solution. This will happen over time.

If we were ready for this and continue to provide our customers with remarkable solutions to their problems. With Rekor One, we provide a complete disruptive intelligent platform that has no equals. We offer hybrid cloud native solutions from the get-go that are system agnostic and able to integrate with a multitude of hardware and software products.

We can also integrate and deploy our solutions across multiple agencies in a given region, incorporating our real-time data with third party provided data to generate solutions for better outcomes. Rekor One uses a modular approach. We have the ability to turn on and off various modules to provide exactly what the client needs.

Our roadway intelligence solutions, which are an element of what we define as intelligent infrastructure, can be provided within the same unified platform. Our short term goal is to add additional functionality and solutions with each module.

And our long-term ambition is to expand the platform to become a provider of all the holistic intelligent infrastructure solutions, which will form the foundations of smart cities. Each module that we add to the platform will depend on the needs of our clients. So we have provided solutions for a large number of use cases.

This allowed us to monetize these relationships assess our solutions and make improvements as needed, whether this is assisting with perimeter traffic and fleet management, permit issuance and usage, hazardous waste, enforcement or improving forest fire monitoring.

The use cases are many and we can use our technology to provide customized solutions to numerous challenges. However, with data comes responsibility. We take privacy concerns very seriously and our proprietary algorithms are created to be in full compliance with the security and privacy requirements of each end user.

All our data we collect passes through our sophisticated and proprietary Personally Identifiable Information, PII, filter that de-identifies and anonymizes the data in an irreversible way before it is incorporated into our roadway intelligence platform. With Rekor One, there are significant economies of scale to be had.

Rekor One helps bridge gaps in information and communication, allowing humans to more efficiently use technology to better collaborate using data, monitoring, analysis and ultimately collaboration. So we are intently focused on three ingredients, data, software and geographic footprint.

With then we can provide a multitude of products and solutions to reduce congestion, improve infrastructure, increase safety and security, promote sustainability, improve efficiency and enhance customer experience. We talked about this on our call last week but I want to reiterate how the Waycare acquisition fits into our broader strategy.

As we mentioned, there is a first mover advantage in this nascent industry. Time is money and we can save both time and money by integrating with Waycare.

We are accelerating speed to market by gaining expansive geographic footprint, faster access to third-party vendor relationships and diverse data sources and adding an innovative software product that complements our offering and differentiates us from our competitors as we are building a comprehensive intelligence platform.

Waycare's current footprint as well as potential opportunities to further expand it and put flags on the map in more states is very valuable. Once we have entered a market and established relationships, we can cross sell and up sell products, gaining a larger share of customers' wallet.

To provide the right solution, we need to feed our AI software an increasing amount of data. It would take us time to replicate what Waycare has already achieved in terms of its relationships, with data partners and its investment in analyzing that data.

These partnerships include the leading OEMs, connected vehicle data providers, telematics solutions and many more members and partners. Our Rekor One platform was built to generate a holistic view of roadways and now we can feed more data into our system by leveraging Waycare's relationships.

Each set of data makes our products smarter and our solutions more sophisticated and valuable. Coming to market with a broad range of products is a key differentiator and there is an advantage to speed to market and putting flags on the map, especially when dealing with public entities.

On many calls, we get asked about the progress on various states and cities. Our answer’s the same. When you're working with government, state cities and municipalities, it takes time to get a yes. It is a long sales cycle that involves proving yourself and building trust. However, once you have won a contract, the same long sales cycle creates a moat.

Revenues tend to be recurring and there is a significant opportunity to cross sell to other agencies. While the Waycare acquisition nicely adds to our footprint, we continue to focus on organic growth and are executing smartly.

In July, we announced that the capital of New York, the City of Albany in partnership with the Albany Police Department, selected Rekor One as a solutions provider for vehicle recognition. We were selected to help maintain the safety and security of the community and its citizens. Some key takeaways from the press release we put out.

First, we won a competitive bid process meeting and exceeding various performance requirements, including lane, capture, solar power operation, using integration with third party applications, unlimited storage and robust vehicle identification capabilities.

This speaks to the strength of our hardware and software, and there should not be any doubts about the strength of our technology. Second, with this win, we have grown our footprint in the US. Our partnership with Albany followed successful implementation in 24 states nationwide.

As mentioned earlier, wins like this generally result in additional wallet share for other cities and municipalities inquiring about our services. This leads me to the final point, is this a big revenue contributor? No, not at this point. But allows us to build a relationship that can have a multiplier effect.

The same is true regarding the press release we put out regarding Waukesha County Park System selecting Rekor One to help maintain the security of each of its eight public parks and to ensure entrance fee compliance. And with each win, we grow our real estate.

We gather additional data to help our AI learn and we build relationships that could drive meaningful revenue opportunities. With each new win, we’re improving our product and enhancing our capabilities. This positions us well in pursuit of becoming a [refining] contributor to intelligent infrastructure.

We will provide a strategic roadmap on how we plan on doing this following our upcoming Annual Shareholder Meeting on September 14th. And with that, I would like to turn the call back to our coordinator for questions..

Thank you, ladies and gentlemen. The floor is now open for questions [Operator instructions]. And I like to turn the floor back to Robert Berman, while we pole for questions..

Operator, thank you. We want to take a couple of email questions first. And the first is from John Knoll. And he's asking for an update on lawsuits. So I think that's an appropriate place to start. We hired Latham Watkins to defend the lawsuits. There has only been one case filed with a lead plaintiff that owns 50 shares.

And I think you all saw the filing that we did in New York court trying to unmask the folks that wrote the research reports that were the basis for the lawsuits. Because we believe that not only were they untrue, unfounded, inaccurate, misleading, but part of a short attack.

And as our lawyer, Chris Clark, likes to say, who's dealt with many of these unfair attack. So we're defending the lawsuits vigorously. And it's unfortunate but we don't think much of them and we'll continue to keep you updated as we move forward.

The second part of the question is with respect to the bills in Florida and Texas? Well, with respect to Florida, we have been engaged in dialog with the Department of Highway Safety since the bill failed. They were one of the agencies that were involved in the process.

And as things have it the way legislation comes together, sometimes things are very quick. And at the end of the day, some agencies get spooked, they don't realize the amount of work that they have to do or don't do. So it also takes sometimes a legislative cycle or two before things pass. But there's interest in Florida for sure.

Actually our Head of Government Affairs is going down there later this month to meet with them and to discuss moving this forward. And the same is true for Texas and other states as well. And we believe that contactless compliance, which is a module within the Rekor One platform is something that we're going to see happen as things evolve.

It just makes sense and that's where the future is. So operator, with that we can move on to questions..

Your first question is coming from Steven Eisman with Neuberger Berman..

Can you give us an update on the MasterCard pilot program?.

We get asked this all the time. And just again, we say over and over again, we are a vendor to MasterCard. We did several pilots with them. They tested their solution, they tested our technology. We haven't placed all of our agreements, our pricing. I can say that they're satisfied with Rekor, they're satisfied with our performance.

But its their product and they're the ones that are working with these large fast food chains. And we really can't speak to the roll out. They've asked us about everything from scheduling, from large rollouts to small rollouts, to things in Europe, to things here, and we provide them all the information, every question.

They said, stand by and that's what we're doing. We're standing by. So we don't believe that MasterCard invested all the time, effort and money they did in this product just for the sake of doing.

So we're hopeful that they're going to start rolling this out at some point in the near future, and we stand ready to provide the services to them they've contracted us for..

Your next question is coming from Zach Cummins with B. Riley..

This is actually Aman Gulani, I'm jumping in for Zach. So my first question.

Can you go into the puts and takes for revenue being essentially flat on a sequential basis? Were there certain projects that did not go live as anticipated?.

It's like everything else. This is a development stage company. And when your revenues as you're starting to grow and scale are the size of our revenues, or sometimes when things get delayed a little bit, it has an impact on your quarter. We deal with a lot of governmental entities. We deal with a lot of large corporate entities.

We deal with integrators that are dealing with the federal government. And things just sometimes take a little bit longer and it is what it is. So if we had $50 million revenue in a quarter and we missed a little bit, you wouldn't notice. But when you're in development stage and you're growing you notice.

But the good news is that I would say that I've always thought that you can judge yourself by the company you keep, and I think Rekor keeps you pretty good company with the partners we have and counterparties that we're in relationships with. So hope that's helpful..

Could you maybe talk about annual revenue run rate and gross margin profile of Waycare? And then maybe if you could touch on maybe for the cross selling opportunities with Rekor and Waycare?.

Eyal will take the financial piece and I'll talk about the cross selling..

Obviously, at this point, this transaction was not closed and we can talk and speak to their financial information. On Rekor, as we always said, long term, our gross margins that we anticipate is 60% to 65% as we grow..

And I'd like to say that with respect to cross selling, I mean, we're most in the same markets. We've created a platform that generates a large amount of holistic real time data.

And some of you may want to take a look at a company that went public today called Otonomo, right? So they sell connected vehicle data and Waycare gets data from them as do others, and there's another company called [Wejo]. Otonomo went public today at evaluation of about $1.3 billion.

Their revenue last year was $400,000, they're expecting $3 million today. Rekor generates a lot of holistic data and Waycare uses a lot of connected vehicle data and other third-party data from crowd sourcing entities and so forth.

And the value of using their applications over our data saved us literally years and a fortune for having to develop the AI applications. So that you can do the predictive intelligence necessary for that particular module, which is incident management, incident response time.

The other thing that I would say is really important and this is something that only Rekor can do, but a lot of Waycare's customers operate traffic management center, so to speak. So you can think about an entity that has a large video wall with hundreds of screens with people sitting there watching those things.

Those are all live video feeds coming into that traffic management center. And we have the ability to put our algorithm on-prem, on a server, point the feeds to our server without interfering whatsoever with what the customer is using it for.

And then pull all the same data that we would get if we had a device operating on the edge right off of that server on-prem, which can feed back into the Waycare platform, and it could also give Waycare the additional ability to do things that they can't do today like offering wrong way alerts and other things related to speed and sustainability and congestion and so forth.

So there's a huge amount of synergy here between Waycare and Rekor. And we've been looking at this market for the longest time, and it's an emerging sector. It's nascent. It's changing every day, the land is shifting underneath us.

You see all of a sudden all these companies in connected vehicle data and other crowd source data becoming part of the discussion around how you create intelligent infrastructure. And I will say that Waycare is a rare asset.

It's a very rare asset because unlike Otonomo and others that provide just data, Waycare has both applications to make use of that data so that there's actually a solution for the end user. And it was just really a great fit for us. And we're lucky that we came across them and that we share common vision as to where the industry is headed.

And we're excited about it and we think it's going to help position Rekor as a leader in the space..

[Operator Instructions] Your next question is coming from Jason Schmidt with Lake Street..

Robert, I just want to follow up on your comments on seeing increasing interest or additional interest from other states on uninsured driving programs.

Just curious if you could quantify that at all, or if this interest has really accelerated the past three months or really remained stable?.

That's a really good question, and I'm glad you asked it. But as I've said in the past that these types of programs, and it's not just uninsured, you've got to think about compliance, the contactless compliance. Look we all know what happened in Minnesota when an officer pulled out what she thought was a taser and she pulled out her gun.

She killed somebody pulling them over from expired tech. This is the 21st century. Maybe we ask our police to do too much and the concept of having petrol cars make less stops and having technology replace that, okay, for expired tags, uninsured motor vehicles, registration compliance, license compliance and so forth makes a lot of sense.

That's something that's going to happen. And we see basically that, that's the case. And we see a lot of dialogue and discussion around that throughout the states and cities, just even over the last few months. And think of it like the lotteries.

I mean, they rolled out and first, you had one, then you had two and now you have a whole bunch and then they're starting to get together and do things together like Powerball and Mega Million. So UVED Program in Oklahoma is an absolute success. For many that don't know, we came in and we replaced an existing vendor that was doing a terrible job.

So that state had already been kind of mine, so to speak, from the standpoint of what the prior vendor did. And the way that we had to come in and straighten that program out was not easy. But look, I think that the state is very happy with it.

I can tell you that the number of uninsured motor vehicles in that state has reduced substantially just since we've been running the program in six months, and that's the goal of the program. It's helping people and the state's happy about it. And it can't be that other states don't see that.

They're going to see that and it's just going to take its natural course..

And then just looking at the Waycare acquisition, I know you went through sort of what attracted you to them sort of their footprint, their vendor relationships and obviously a complementary product portfolio, but there are certainly other companies out there in that same sandbox. Just curious how long you have been familiar with Waycare.

And when they sort of got on your radar screen and ultimately was the reason, or if it was just a combination of these three things that early made them attractive for you guys?.

It was close to nine months ago that we became aware of Waycare. As you know, our CFO is from Israel and he has relationships there. And we became aware of they were doing and we were watching them. And at the same time that we were watching what they were doing, we were watching the other companies that don’t what they do.

Remember, they don't have -- they have some OEM deals for connected vehicle data, but that's not their primary business. Their primary business is making it safer by reducing incident response time and things like that. So they're a rare asset. There's not another company out there that does what Waycare does. So we started looking at them.

We started talking to them. At the same time, for the Rekor One platform, we were looking at what we call the me-too data, which is connected vehicles and crowd sourced data to pull that into Rekor One to sit alongside of our holistic data, which is real time.

Because we knew that we had to have both in order to accomplish what's necessary to provide real solutions to these municipalities. So we've been analyzing all this for the longest time, and Waycare made the most sense to us of all the acquisitions that we were looking at.

And it did take quite a while to get them to the table and get them to take us seriously. So I think, frankly, they're a rare asset and the fact that they decided to sidestep their Series B round and join Rekor is a testament to our business plan..

Your next question is coming from Robert [Lewis]..

Just a couple of questions. From your request for proposals come from these, obviously, government agencies.

What is the normal turnaround time, let's say, from the municipality and the government business?.

So it could range from a few weeks to a few months and even longer, depending on the size of the contract. We have had some success recently with the new program.

Once we launched Rekor One, which is not that long ago, it's only a few months now, we've been able to do something sole source because there isn't another company that provides the same service. And some governmental entities are able to do sole-sourced contracts if they can prove they can't get it elsewhere.

Waycare has had a lot of success in that regard. They've been able to do -- I believe almost all of what they've done has been sole sourced because again, there's no other company that provides what they do. So it may stay this way for a while. It could be a year or two because this is such a young, nascent industry.

But government sales cycles are long. But what happens is you start with a small either pilot or a contract. It evolves to an expansion and then you end up being a trusted partner. And once you're a trusted partner, it is very difficult to dislodge the vendor. It's a very sticky business..

How long does it take you to get the entire state of Oklahoma from when -- I'm sure you started with what you just described. I mean you came back in and basically now I believe you have the whole state. So what was the time element involved in that whole process? And also….

What was there a second part, you can go ahead and ask and I'll answer both..

The second part is basically what is the requested proposals right now ad how many new proposals do you have in-house right now versus a year ago?.

Well, so first with respect to Oklahoma, it was about six months. Oklahoma decided that they were going to terminate their prior vendor, which they did. And once they terminated that vendor, they put out an RFP. I believe it was in the late summer of last year, maybe the early fall of September.

They awarded it in either late October and November and we were obligated to have that system up and running by the end of the first quarter. We actually had it up and running at the beginning of January. So that was a fairly short process for a contract of that size. But remember, Oklahoma is a relatively small state.

So when you talk about other states, I'm not sure that we can replicate the speed to get a whole state up and operating that quickly, but it's certainly not going to be years.

With regard to how many RFPs we see, right now, I can tell you that our company is engaged in a dozen or two dozen pilots that were done without RFPs, and we have a pretty robust RFP center here as we'd like to call it. While Waycare has one as well. We're going to combine both of those.

And I would say at any given time, we're constantly looking at half a dozen to a dozen opportunities..

And the revenue streams on these are what, roughly in the $200,000 to $300,000 range? I mean these pilot programs….

They may start that way, but they evolve like -- I look like Waycare's contract in Southern Nevada was granted in 2018. That was a $30,000 pilot and that contract today is $5.3 million in less than there years.

So again, you get in and in a large part, a lot of these municipalities don't really know -- they know the problems they're trying to solve, they really don't know how to solve them. So once you get in the door, the relationship tends to grow. So I will say that the revenue opportunities can start small and then they grow and they're sticky.

And the other thing that I want to say, and I think your question gives me the opportunity to do it, is several months back, Rekor decided to hire a very well-respected consulting firm to look at this entire space. What I mean by that, the intelligent infrastructure.

Now the concept of smart cities and intelligent roadways and smart mobility, these awards have been thrown around for more than two decades. And frankly, they've been meaningless until now. So we decided to commission a study to look at the total addressable market, the competitive landscape.

And even our consultant, which those of you that come to our Investor Day in September, which is on the same day as our shareholder meeting, you'll find out who that consultant is, and even they're saying how nascent this is and how quickly it's evolving. So this is all happening in real time.

And I can't think of anything else that I've seen in my lifetime that really actually evolved in real time with companies trying to get into the mix other than the Internet back in the middle '90s.

So it's an interesting time and this is an interesting space and folks need to have patience but they also need to be smart and realize who the companies are that are going to succeed in this sector..

Your next question is coming from Mike Latimore with Northland Capital..

This is [Aditya] on behalf of Michael Latimore.

Could you tell me, did you guys recognize any border patrol revenue in this quarter?.

Did you say Custom Border Patrol?.

Border patrol, yes..

So you're referring to the [IT-II] contract. So because it's public, we can talk about it. So the custom border patrol is remitting a five year -- I think it's like a $400 million contract for redoing all of the technology on both inbound and outbound lanes, along with other things, whatever they're doing.

And Rekor's team is with all the bidders that are bidding on it. And the CBP has not yet narrowed the field. They were supposed to do that last month. They haven't done it. They're saying they're doing it at the end of this month. So the original award date was supposed to be the end of this month. Now they're saying September 30th. So we'll have to see.

But again, it's the federal government. September 30th can slip until October. We've had a little bit of revenue from it this quarter, not much. Very little. We expected quite a bit more because we also our team with the incumbent. And the incumbent is still responsible for replacing systems where they have a system value or other problems.

So we didn't have as much revenue from it this quarter as we expected. But we're hoping that they award the contract this fall, because they're going to go redo the whole thing and it's considerable win for Rekor at the end of the day. And I think we have a pretty good shock given that everybody's team with us..

And also, Waycare, is it like the last acquisition for this year or would you guys still be interested in making more acquisitions?.

I think that we have an awful lot of work to do to integrate Waycare and so much opportunity that Waycare and Rekor present together. We're going to focus on that. We are looking at -- always looking at things that where it might be better to buy rather than build little pieces of tech and stuff like that.

But I think we've got -- our plate is full and I think we're going to focus on what we have in hand..

Your next question is coming from Ray [Yakel]..

I appreciate keeping the shareholders up to speed as often as you can. I've been a shareholder with the company since the FDI days. But a lot of my questions have been answered. But I have three.

With the Waycare acquisition and the signed definitive agreement, are you able to start integrating the two into one or do we have to wait until it's completely finalized? My second question is how many applications does Rekor offer for solutions? And do you see that growing? And my third question is the Tesla relationship, we haven't heard much on that since I believe it was put out back in September.

And that's all I have..

Thank you, and thanks for being so patient being a shareholder for such a long time. So the answer to the first question is that we have had lots of dialogue with the Waycare team, and by the way, a really super bunch of smart people, some great talent, about how we would integrate if we had to build on.

So we've already started that road map and we've actually started to work on some of those things and are having meetings almost daily about that because we want to get going as quickly as possible as do they. So we expect that the integration will get done in a relatively short period of time, but it's going to take a lot of work.

That doesn't mean we can't start selling immediately because of the way these two technologies complement each other. Remember, one is sitting over the top of data and the other provides data. So they really work well together.

And again, the natural fit is the ability to make use of incoming video streams in some of their customers' traffic management centers. So the second part of your question with regard to solutions, Rekor's done a lot.

I mean this company’s only really -- I think of it as starting in 2019, although, it's been around for a couple of years prior to that, but that was a completely different business model. We had companies that had nothing to do with what we're doing here. So we had a lot of bandwidth distracted dealing with all that stuff.

And when we turned our focus to the technology in 2019, because we're public we ended up chasing things because we wanted to do the best we could to try to generate revenue and so forth. So we've got 25 or 30 different products in the market. We've got our image processing for tolling, which is automated. We have our e-commerce platform.

We have the products we've put out there for law enforcement. Even though we're not an ALPR company, we still compete in that space and so on and so forth. But our goal has always been the Rekor One platform for intelligent infrastructure, smart cities.

That platform has -- and if you include what the Waycare modules are, has well over 20 different modules to it. So it's incident management. It's event management. It's wrong way detection, things related to sustainability and congestion and the list goes on and on. And of course, any of these things can be turned on, they could be turned off.

So that's what's nice about the platform. And that's going to continue to grow, because as we aggregate more data and as there's more third-party data from companies like [Wejo] and Otonomo and others, we're going to come up with different applications that solve problems. So I think that the answer is that we've got a lot of products out there.

We're not going to stop doing some of the things that we've been doing because we're doing them already, but our focus is going to be on the intelligent infrastructure platform. And again, there's probably close to a couple of dozen products there. So does that -- and Tesla. All I can tell you is that is still being worked on.

If you think government is bad, when you work with large companies, okay, and I know people say, where is Mastercard? I mean, we didn't -- Mastercard announced their product, Rekor didn’t announce it, we couldn't even talk about it. We're still not allowed to talk about who they're working with.

So if you think it's difficult working with government, try working with companies the size of Mastercard and Tesla and others. We move at their pace, okay? It doesn't mean that things aren't moving. Well, you move at their pace.

And I know that everybody on this call and everybody that is an investor in Rekor would like to see things happen sooner and so would we, but we don't control those things. So we'll keep doing the best we can. And when we're able to say something about that stuff, we'll do so. So thank you for the question and I hope that was helpful..

Yes, everything was great. So I appreciate your responses. And definitely, like I said, keeping the shareholders up to speed as often as you can..

This concludes the question-and-answer session. I would now like to turn the floor back to Robert Berman for closing remarks..

Thank you, operator. So look, we're so excited about where we're heading and the opportunity that lies ahead of us. The recent acquisition of Waycare significantly improves our capabilities and it adds to our footprint. It's a transaction. It's not going to result and one and one is three sort of scenario, but we think it could be multiple of this.

And together, we're creating a road map for others to follow. And I think there's a lot of companies trying to figure this space out. And there's a lot of money, if you just look at what packs have done in the last few months, throwing money into the sector everybody's chasing it, but we think we've got it right.

And we've never been so excited about the future. People and investors just have to have patience and recognize this as a development stage company that happens to be public.

So guess what, okay, that's an opportunity, because I don't think SoftBank is going to sell share here or share there of something that they've got in this space right now that they're going to launch in three years. So the core business is intelligent infrastructure. That's what it's always been. And it's early innings for the game.

But I will say this, it's not easy for us to do what we do every day, and we know that you all have lots of questions, and for good reason. You're making an investment in us and you're giving us a chance. And we want to be able to communicate and we want to be able to let you know what is happening. So here's what we're doing.

In September, okay, on the same day as our shareholder meeting at 1:00 o’clock that afternoon, same place, we're going to have an Investor Day. Additional invitations for the Investor Day are going to go out to the shareholders as well. So you got your proxy but you're going to get invited to the Investor Day.

You're going to have a half a dozen speakers there. We're going to be able to release the findings of this report with this very well respected global firm that will be able to put a stake in the ground and say, here is what this new sector is, here's how big this market is and here's where what we're doing fits.

And I will tell you that even some of the large banks, I'm not going to name names, but you guys all know the big ones, their analysts don't even understand the space yet. It's nothing to do with the fact that they should because they can't because nobody understands it. It's all happening in real time.

So we're going to -- I think we're going to surprise everybody in September, and I think people are going to walk out of there and recognize the fact that we're a really good company and we're in the right place at the right time, and we've got the right tools and the right people.

And thanks to all the support we have from our shareholders and opportunity to have success. So appreciate everybody taking time for this call and look forward to seeing you in September..

Thank you, ladies and gentlemen. This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation..