• Filing Date: 2020-05-13
  • Form Type: 10-Q
  • Description: Quarterly report
3 Months Ended
Mar. 31, 2020
Business Combinations [Abstract]  

OpenALPR Technology Acquisition


On March 12, 2019, the Company completed the acquisition of certain assets and assumed certain liabilities of OpenALPR Technology, Inc. (the “OpenALPR Technology Acquisition”). Consideration paid as part of the OpenALPR Technology Acquisition was: $7,000,000 in cash, subject to adjustment after closing; 600,000 shares of Rekor common stock, valued at $397,000; and $5,000,000 of the 2019 Promissory Notes principal amount, together with an accompanying warrant to purchase 625,000 shares of Rekor common stock, exercisable over a period of five years, at an exercise price of $0.74 per share, valued at $208,000.


The purchase price allocation to the assets acquired and liabilities assumed based on fair values as of the acquisition date. Since the OpenALPR Technology Acquisition occurred on March 12, 2019, the results of operations including OpenALPR Technology Acquisition from the date of acquisition have been included in the Company’s unaudited condensed consolidated statement of operations for the three months ended March 31, 2020.


The final purchase price allocation of the OpenALPR Technology Acquisition is as follows: intangible assets of $7,436,000 and goodwill of $4,934,000 along with net assets acquired of $415,000, and contract obligations assumed of $388,000.


The table below shows the breakdown related to the final purchase price allocation for the OpenALPR Technology Acquisition (dollars in thousands):


Accounts receivable, net   $ 381  
Other current assets, net     13  
Property and equipment, net     21  
Contract liabilities     (388 )
Net assets acquired     27  
Less intangible assets     7,436  
Consideration paid     (12,397 )
Net goodwill recorded   $ 4,934  
Cash consideration   $ 7,000  
Note payable     5,000  
Common stock consideration     397  
Total acquisition consideration   $ 12,397  


Operations of Combined Entities


The following unaudited pro forma combined financial information gives effect to the OpenALPR Technology Acquisition as if it was consummated as of January 1, 2019. This unaudited pro forma financial information is presented for information purposes only and is not intended to present actual results that would have been attained had the acquisition been completed as of January 1, 2019 or to project potential operating results as of any future date or for any future periods.


    Three Months Ended March 31,  
    2020     2019  
    (Dollars in thousands, except per share data)  
Revenue from continuing operations   $ 1,595     $ 1,979  
Net loss from continuing operations     (3,774 )     (1,710 )
Basic and diluted loss per share continuing operations   $ (0.19 )   $ (0.10 )
Basic and diluted number of shares     21,929,768       19,367,619