Rekor Systems (REKR) 10-Q 16 Aug 21 2021 Q2 Quarterly report Financial data

Cover

Cover - shares	6 Months Ended
	Jun. 30, 2021	Aug. 12, 2021
Cover [Abstract]
Entity Registrant Name	Rekor Systems, Inc.
Entity Central Index Key	0001697851
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Jun. 30, 2021
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2021
Entity Common Stock Shares Outstanding		41,045,291
Document Quarterly Report	true
Document Transition Report	false
Entity Interactive Data Current	Yes
Entity File Number	001-38338
Entity Incorporation State Country Code	DE
Entity Tax Identification Number	81-5266334
Entity Address Address Line 1	7172 Columbia Gateway Drive
Entity Address Address Line 2	Suite 400
Entity Address City Or Town	Columbia
Entity Address State Or Province	MD
Entity Address Postal Zip Code	21046
City Area Code	410
Local Phone Number	762-0800
Security 12b Title	Common Stock, $0.0001 par value per share
Trading Symbol	REKR
Security Exchange Name	NASDAQ

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Current assets
Cash and cash equivalents	$ 69,032,000	$ 20,595,000
Restricted cash and cash equivalents	856,000	412,000
Short-term investments	12,998,000	0
Accounts receivable, net	1,996,000	1,038,000
Inventory	1,357,000	1,264,000
Note receivable, current portion	340,000	340,000
Other current assets, net	1,267,000	469,000
Current assets of discontinued operations	0	2,000
Total current assets	87,846,000	24,120,000
Long-term assets
Property and equipment, net	1,564,000	1,047,000
Right-of-use lease assets, net	277,000	426,000
Goodwill	6,336,000	6,336,000
Intangible assets, net	6,224,000	7,038,000
Investments in unconsolidated companies	0	75,000
Note receivable, long-term	1,190,000	1,360,000
SAFE investment	1,000,000	0
Other long-term assets	127,000	0
Total long-term assets	16,718,000	16,282,000
Total assets	104,564,000	40,402,000
Current liabilities
Accounts payable and accrued expenses	4,130,000	3,898,000
Notes payable, current portion	990,000	0
Loan payable, current portion	911,000	517,000
Lease liability, short-term	142,000	253,000
Contract liabilities	1,782,000	1,126,000
Current liabilities of discontinued operations	129,000	124,000
Total current liabilities	8,084,000	5,918,000
Long-term Liabilities
Notes payable, long-term	0	980,000
Loan payable, long-term	55,000	469,000
Lease liability, long-term	144,000	188,000
Contract liabilities, long-term	1,077,000	958,000
Deferred tax liability, long-term	31,000	24,000
Long term liabilities of discontinued operations	0	5,000
Total long-term liabilities	1,307,000	2,624,000
Total Liabilities	9,391,000	8,542,000
Series A Cumulative Convertible Redeemable Preferred stock, $0.0001 par value; authorized: 505,000 shares authorized at June 30, 2021 and December 31, 2020; issued and outstanding; 0 and 502,327 shares issued and outstanding at June 30, 2021 and December 31, 2020	0	6,669,000
Stockholders' equity
Common stock, $0.0001 par value; authorized; 100,000,000 shares; issued: 41,012,766, shares at June 30, 2021 and 33,013,271 at December 31, 2020; outstanding: 41,032,127 shares at June 30, 2021 and 33,013,271 at December 31, 2020	4,000	3,000
Preferred stock value	0	0
Treasury stock, 19,361 and 0 shares as of June 30, 2021 and December 31, 2020, respectively	(319,000)	0
Additional paid-in capital	148,754,000	68,238,000
Accumulated other comprehensive income	3,000	0
Accumulated deficit	(53,269,000)	(43,050,000)
Total stockholders' equity	95,173,000	25,191,000
Total liabilities and stockholders' equity	104,564,000	40,402,000
Series B Cumulative Convertible Preferred stock [Member]
Stockholders' equity
Preferred stock value	$ 0	$ 0

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	2,000,000	2,000,000
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, authorized	100,000,000	100,000,000
Common stock, issued	41,012,766	33,013,271
Common stock, outstanding	41,032,127	33,013,271
Treasury stock, shares	19,361	0
Series A Convertible Redeemable Preferred Stock [Member]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	505,000	505,000
Preferred stock, issued	0	502,327
Preferred stock, outstanding	0	502,327
Preferred stock, shares designated	505,000	505,000
Series B Convertible Redeemable Preferred Stock [Member]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	240,861	240,861
Preferred stock, issued	0	240,861
Preferred stock, outstanding	0	240,861
Preferred stock, shares designated	240,861	240,861

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Condensed Consolidated Statements of Operations
Revenue	$ 4,274,000	$ 2,677,000	$ 8,491,000	$ 4,273,000
Cost of revenue	1,432,000	1,276,000	3,394,000	1,770,000
Gross profit	2,842,000	1,401,000	5,097,000	2,503,000
Operating expenses:
General and administrative expenses	5,024,000	2,937,000	10,427,000	5,728,000
Selling and marketing expenses	984,000	424,000	1,920,000	795,000
Research and development expenses	1,519,000	819,000	2,741,000	1,362,000
Operating expenses	7,527,000	4,180,000	15,088,000	7,885,000
Loss from operations	(4,685,000)	(2,779,000)	(9,991,000)	(5,382,000)
Other income (expense):
Loss on extinguishment of debt	0	(200,000)	0	(200,000)
Interest expense	(18,000)	(1,086,000)	(50,000)	(2,250,000)
Gain on the sale of business	0	3,636,000	0	3,636,000
Other income	19,000	17,000	34,000	16,000
Total other income (expense)	1,000	2,367,000	(16,000)	1,202,000
Loss before income taxes	(4,684,000)	(412,000)	(10,007,000)	(4,180,000)
Income tax provision	(3,000)	(7,000)	(7,000)	(13,000)
Equity in loss of investee	(74,000)	0	(150,000)	0
Net loss from continuing operations	(4,761,000)	(419,000)	(10,164,000)	(4,193,000)
Net loss from discontinued operations	(1,000)	(199,000)	(4,000)	(213,000)
Net loss	(4,762,000)	(618,000)	(10,168,000)	(4,406,000)
Comprehensive loss:
Net loss from continuing operations	(4,761,000)	(419,000)	(10,164,000)	(4,193,000)
Change in unrealized gain on short-term investments	1,000	0	4,000	0
Total comprehensive loss from continuing operations	(4,760,000)	(419,000)	(10,160,000)	(4,193,000)
Total comprehensive loss	$ (4,761,000)	$ (618,000)	$ (10,164,000)	$ (4,406,000)
Loss per common share from continuing operations - basic and diluted	$ (0.12)	$ (0.03)	$ (0.27)	$ (0.22)
Loss per common share discontinued operations - basic and diluted	0	(0.01)	0	(0.01)
Loss per common share - basic and diluted	$ (0.12)	$ (0.04)	$ (0.27)	$ (0.23)
Weighted average shares outstanding
Basic and diluted	40,972,709	22,829,084	37,657,471	22,224,417

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Changes in Stockholders' (Deficit) Equity - USD ($)	Total	Common Stock	Treasury Stock	SeriesB Preferred Stock Shares [Member]	Additional Paid-In Capital	Accumulated other comprehensive loss	Retained Earnings (Accumulated Deficit)
Balance, shares at Dec. 31, 2019		21,595,653		240,861
Balance, amount at Dec. 31, 2019	$ (9,035,000)	$ 2,000	$ 0	$ 0	$ 19,371,000	$ 0	$ (28,408,000)
Stock-based compensation	337,000	$ 0	0	0	337,000	0	0
Exercise of cashless warrants in exchange for common stock, shares		43,218
Exercise of cashless warrants in exchange for common stock, amount	0	$ 0	0	0	0	0	0
Exercise of warrants in exchange for common stock, shares		555,000
Exercise of warrants in exchange for common stock, amount	411,000	$ 0	0	0	411,000	0	0
Issuance of common stock pursuant to at the market offering, net, shares		538,967
Issuance of common stock pursuant to at the market offering, net, amount	2,177,000	$ 0	0	0	2,177,000	0	0
Exercise of warrants related to series A preferred stock, shares		57,963
Exercise of warrants related to series A preferred stock, amount	60,000	$ 0	0	0	60,000	0	0
Issuance upon exercise of stock options, shares		151,745
Issuance upon exercise of stock options, amount	242,000	$ 0	0	0	242,000	0	0
Preferred stock dividends	(230,000)	0	0	0	0	0	(230,000)
Accretion of Series A preferred stock	(418,000)	0	0	0	(418,000)	0	0
Net loss	(4,406,000)	$ 0	0	$ 0	0	0	(4,406,000)
Balance, shares at Jun. 30, 2020		22,942,546		240,861
Balance, amount at Jun. 30, 2020	(10,862,000)	$ 2,000	0	$ 0	22,180,000	0	(33,044,000)
Balance, shares at Mar. 31, 2020		22,768,757		240,861
Balance, amount at Mar. 31, 2020	(10,350,000)	$ 2,000	0	$ 0	21,959,000	0	(32,311,000)
Stock-based compensation	166,000	$ 0	0		166,000	0	0
Issuance of common stock pursuant to at the market offering, net, shares		2,237
Issuance of common stock pursuant to at the market offering, net, amount	8,000	$ 0	0	0	8,000	0	0
Exercise of warrants related to series A preferred stock, shares		21,101
Exercise of warrants related to series A preferred stock, amount	22,000	$ 0		0	22,000	0	0
Issuance upon exercise of stock options, shares		150,451
Issuance upon exercise of stock options, amount	237,000	$ 0	0	0	237,000	0	0
Preferred stock dividends	(115,000)	0	0	0		0	(115,000)
Accretion of Series A preferred stock	(212,000)	0	0	0	(212,000)	0	0
Net loss	(618,000)	$ 0	0	$ 0		0	(618,000)
Balance, shares at Jun. 30, 2020		22,942,546		240,861
Balance, amount at Jun. 30, 2020	(10,862,000)	$ 2,000	0	$ 0	22,180,000	0	(33,044,000)
Balance, shares at Dec. 31, 2020		33,013,271		240,861
Balance, amount at Dec. 31, 2020	25,191,000	$ 3,000	0	$ 0	68,238,000	0	(43,050,000)
Stock-based compensation	1,906,000	$ 0	0	0	1,906,000	0	0
Exercise of cashless warrants in exchange for common stock, shares		62,921
Exercise of cashless warrants in exchange for common stock, amount	0	$ 0	0	0	0	0	0
Exercise of warrants in exchange for common stock, shares		54,235
Exercise of warrants in exchange for common stock, amount	307,000	$ 0	0	0	307,000	0	0
Exercise of warrants related to series A preferred stock, shares		96,592
Exercise of warrants related to series A preferred stock, amount	100,000	$ 0	0	0	100,000	0	0
Issuance upon exercise of stock options, shares		65,402
Issuance upon exercise of stock options, amount	226,000	$ 0	0	0	226,000	0	0
Preferred stock dividends	(51,000)	0	0	0	0	0	(51,000)
Accretion of Series A preferred stock	(101,000)	0	0	0	(101,000)	0	0
Net loss	(10,168,000)	$ 0	0	0	0	0	(10,168,000)
Public underwriting, shares		6,126,939
Public underwriting, amount	70,125,000	$ 1,000	0	0	70,124,000	0	0
Conversion of series A preferred stock, shares		899,174
Conversion of series A preferred stock, amount	7,775,000	$ 0	0	$ 0	7,775,000	0	0
Conversion of series B preferred stock, shares		517,611		(240,861)
Conversion of series B preferred stock, amount	179,000	$ 0	0	$ 0	179,000	0	0
Issuance upon vesting of restricted stock units, shares		176,621
Issuance upon vesting of restricted stock units, amount	0	$ 0	$ 0	0	0	0	0
Shares withheld upon vesting of restricted stock units, shares			(19,361)
Shares withheld upon vesting of restricted stock units, amount	(319,000)	0	$ (319,000)	0	0	0	0
Change in unrealized gain on short-term investments	3,000	$ 0	$ 0	0	0	3,000	0
Balance, shares at Jun. 30, 2021		41,012,766	(19,361)
Balance, amount at Jun. 30, 2021	95,173,000	$ 4,000	$ (319,000)	0	148,754,000	3,000	(53,269,000)
Balance, shares at Mar. 31, 2021		40,952,877	(19,361)
Balance, amount at Mar. 31, 2021	98,795,000	$ 4,000	$ (319,000)	0	147,615,000	2,000	(48,507,000)
Stock-based compensation	1,125,000	$ 0	0	0	1,125,000	0	0
Exercise of cashless warrants in exchange for common stock, shares		15,309
Exercise of cashless warrants in exchange for common stock, amount	0	$ 0	0	0	0	0	0
Exercise of warrants in exchange for common stock, shares		2,222
Exercise of warrants in exchange for common stock, amount	13,000	$ 0	0	0	13,000	0	0
Exercise of warrants related to series A preferred stock, shares		728
Exercise of warrants related to series A preferred stock, amount	1,000	$ 0	0	0	1,000	0	0
Net loss	(4,762,000)	$ 0	0	0	0	0	(4,762,000)
Issuance upon vesting of restricted stock units, shares		41,630
Issuance upon vesting of restricted stock units, amount	0	$ 0	0	0	0	0	0
Change in unrealized gain on short-term investments	1,000	$ 0	$ 0	0	0	1,000	0
Balance, shares at Jun. 30, 2021		41,012,766	(19,361)
Balance, amount at Jun. 30, 2021	$ 95,173,000	$ 4,000	$ (319,000)	$ 0	$ 148,754,000	$ 3,000	$ (53,269,000)

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Cash Flows from Operating Activities
Net loss from continuing operations	$ (10,164,000)	$ (4,193,000)
Net loss from discontinued operations	(4,000)	(213,000)
Net loss	(10,168,000)	(4,406,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense	24,000	5,000
Depreciation	272,000	169,000
Amortization of right-of-use lease asset	149,000	85,000
Provision for deferred taxes	7,000	0
Share-based compensation	1,906,000	337,000
Amortization of financing costs	10,000	611,000
Amortization of intangible assets	818,000	635,000
Loss due to change in value of equity investments	150,000	0
Loss on extinguishment of debt	0	200,000
Gain on sale of AOC Key Solutions	0	(2,619,000)
Gain on sale of TeamGlobal	0	(1,017,000)
Changes in operating assets and liabilities:
Accounts receivable	(982,000)	(1,116,000)
Inventory	(93,000)	(375,000)
Other current assets	(798,000)	(136,000)
Other long-term assets	(127,000)	0
Accounts payable and accrued expenses	1,365,000	1,096,000
Contract liabilities	775,000	180,000
Lease liability	(155,000)	(96,000)
Net cash used in operating activities - continuing operations	(6,843,000)	(6,234,000)
Net cash used in by operating activities - discontinued operations	(4,000)	(3,887,000)
Net cash used in operating activities	(6,847,000)	(10,121,000)
Cash Flows from Investing Activities
Short-term investment activity, net	(12,995,000)	0
SAFE investment	(1,000,000)
Capital expenditures	(793,000)	(447,000)
Proceeds from sale of AOC Key Solutions	0	3,400,000
Proceeds from sale of TeamGlobal	0	2,300,000
Investment in unconsolidated company	(75,000)	0
Payment of notes payable	(20,000)	0
Proceeds from notes receivable	170,000	0
Net cash (used in) provided by investing activities - continuing operations	(14,713,000)	5,253,000
Cash Flows from Financing Activities
Proceeds from public offering	70,125,000	0
Proceeds from PPP loans	0	874,000
Repayments of notes payable	0	(2,200,000)
Net proceeds from exercise of options	226,000	242,000
Net proceeds from exercise of warrants	307,000	411,000
Net proceeds from exercise of warrants associated with the Series A Preferred Stock	100,000	60,000
Net proceeds from at-the-market agreement	0	2,177,000
Repurchases of common stock	(319,000)	0
Payment of debt modification costs	0	(300,000)
Net cash provided by financing activities - continuing operations	70,439,000	1,264,000
Net provided by financing activities - discontinued operations	0	4,171,000
Net cash provided by financing activities	70,439,000	5,435,000
Net increase in cash, cash equivalents and restricted cash and cash equivalents - continuing operations	48,883,000	283,000
Net (decrease) increase in cash, cash equivalents and restricted cash and cash equivalents - discontinued operations	(4,000)	284,000
Net increase in cash, cash equivalents and restricted cash and cash equivalents	48,879,000	567,000
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period	21,009,000	1,866,000
Cash, cash equivalents and restricted cash and cash equivalents at end of period	69,888,000	2,433,000
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents at end of period - continuing operations	69,032,000	1,933,000
Restricted cash and cash equivalents at end of period - continuing operations	856,000	496,000
Cash and cash equivalents at end of period - discontinued operations	0	4,000
Cash, cash equivalents and restricted cash and cash equivalents at end of period	$ 69,888,000	$ 2,433,000

GENERAL, BASIS OF PRESENTATION,

GENERAL, BASIS OF PRESENTATION, AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
	Jun. 30, 2021
GENERAL, BASIS OF PRESENTATION, AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NOTE 1 - GENERAL, BASIS OF PRESENTATION, AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	NOTE 1 – GENERAL, BASIS OF PRESENTATION, AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES These unaudited condensed consolidated interim financial statements of Rekor Systems, Inc. and its subsidiaries (collectively, the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Accordingly, they do not contain all information and notes required by U.S. 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 position as of June 30, 2021, the unaudited condensed consolidated results of operations, unaudited condensed consolidated statements of shareholders’ equity (deficit) and unaudited condensed consolidated statements of cash flows for the three and six month periods ended June 30, 2021 and 2020. The financial data and other information disclosed in these notes are unaudited. The results for the three and six months ended June 30, 2021, are not necessarily indicative of the results to be expected for the year ending December 31, 2021. 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 year ended December 31, 2020. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. Dollar amounts, except per share data, in the notes to these unaudited condensed consolidated financial statements are rounded to the closest $1,000. Rekor's mission is to provide intelligent infrastructure and insights that build safer, smarter, and more efficient cities around the world. The Company is a leader in the emerging market for intelligent infrastructure and intelligent roadways, making use of artificial intelligence and other recent technological advances to provide advanced solutions for a variety of governmental and commercial needs. With a global footprint across 65 countries, the Company provides actionable and real-time insights to commercial clients as well as government entities. The Company’s vision is to provide innovations that improve the lives, safety and well-being of people using artificial intelligence (“AI”) and other advanced technologies. The Company’s capabilities appeal to businesses and governmental entities in solving a wide variety of real-world mobility and infrastructure-related operational challenges. Using recent advances in data collection, analysis and transmission the Company generates useable solutions that empower smart cities and intelligent roadways. The Company’s suite of solutions has applications in the field of safety and incident management, traffic and infrastructure, logistics, sustainability and green initiatives, and socioeconomic and demographic mobility. The Company’s products and services contribute to building safer, environmentally friendly cities and that roadways operate more efficiently and sustainably. The Company’s solutions can improve the commute of motorists by reducing congestion and optimizing traffic flow. Our solutions track traffic flow, patterns, volume, weight in motion and vehicle classifications to aid in the engineering and planning of modern infrastructures and allow decision makers to measure and reduce the impact of greenhouse gas emissions and vehicle air pollution on communities. The Company seeks to create safer communities by providing government agencies with the technology they need to effectively protect and serve their citizens and provide businesses with solutions to improve customer experience, enhance revenue, reduce operating costs and drive operational efficiency. Customers currently use the Company’s products or services in applications that include public safety, transportation, parking, security, customer experience, operational efficiency and logistics. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires the extensive use of management’s estimates. Management uses estimates and assumptions in preparing consolidated financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and reported revenues and expenses. Actual amounts may differ from these estimates. On an on-going basis, the Company evaluates its estimates, including those related to collectability of accounts receivable, fair value of debt and equity instruments, income taxes and determination of standalone selling prices in contracts with customers that contain multiple performance obligations. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not apparent from other sources. Actual results may differ from those estimates under different assumptions or conditions. Liquidity For all annual and interim periods, management will assess going concern uncertainty in the Company’s unaudited condensed consolidated financial statements to determine whether there is sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the unaudited condensed consolidated financial statements are issued, which is referred to as the “look-forward period”, as defined in U.S. GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, management will consider various scenarios, forecasts, projections and estimates and will make certain key assumptions. These assumptions include, among other factors, its ability to raise additional capital, if necessary, 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 since its inception and has relied on cash on hand, external bank lines of credit, the sale of a note, proceeds from the sale of common stock, proceeds from the private sale of the Company’s non-core subsidiaries, proceeds from note receivables, debt financings and a public offering of its common stock to support cashflow from operations. The Company attributes 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. As of and for the six months ended June 30, 2021, the Company had a working capital of $79,891,000 and comprehensive loss from continuing operations of $10,160,000. The Company’s net cash, from continuing operations, was increased by $48,883,000 for the six months ended June 30, 2021 primarily due to the net proceeds of $70,125,000 from the completion of the Public Offering (see NOTE 10 - STOCKHOLDERS’ EQUITY Management believes that based on relevant conditions and events that are known and reasonably knowable, its current forecasts and projections for one year from the date of the filing of the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q, indicate the Company’s ability to continue operations as a going concern for at least that one-year period. The Company is actively monitoring its operations, the cash on hand and working capital. Should access to funds be unavailable, the Company will need to seek out additional sources of funding. Furthermore, the Company has contingency plans to reduce or defer expenses and cash outlays should operations weaken in the look-forward period or additional financing, if needed, is not available. Goodwill The excess purchase consideration over the fair value of acquired assets and liabilities is recorded as goodwill. The Company will assess goodwill for impairment annually, or more often if events or changes in circumstances indicate that it might be impaired, by comparing its carrying value to the reporting unit’s fair value. During the six months ended June 30, 2021 and 2020, we have not recognized any impairment to goodwill from continuing operations. Equity Method Investments Investments in common stock of entities other than the Company’s consolidated subsidiaries are accounted for under the equity method in accordance with FASB ASC 323, Investments – Equity Method and Joint Ventures Short-Term Investments Short-term investments consist of U.S. Treasury Bills. Short-term investments have maturities of greater than three months but less than a year from the balance sheet date. Short-term investments are carried at fair value and presented as short-term investments on the unaudited condensed consolidated balance sheets. Unrealized gains on investment securities are included in unrealized gain on short-term investments in the unaudited condensed consolidated statements of operations. Treasury Stock Treasury stock is recorded at acquisition cost. Upon disposition of treasury shares gains and losses are recorded as increases or decreases to additional paid-in capital with losses in excess of previously recorded gains charged directly to retained earnings. Fair Value of Financial Instruments The carrying amounts reported in the unaudited condensed consolidated balance sheets for cash and cash equivalents, restricted cash and cash equivalents, short-term investments, accounts receivable and accounts payable approximate fair value as of June 30, 2021 and December 31, 2020, 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 June 30, 2021 and December 31, 2020, 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 Level 1 – Level 2 – Level 3 – 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 considers its note receivable and SAFE investment to be Level 3 investments and that the fair value approximates the carrying value. There were no changes in levels during the six months ended June 30, 2021. Note Receivables In connection with the sale of TeamGlobal in June 2020, the Company received a $1,700,000, five and a half year promissory note due December 2025, that carries an interest rate of 4% and is secured by a first priority security interest in the shares of TeamGlobal. Monthly principal payments on the promissory note began in January 2021. Based on general market conditions, the security interest held by the Company and the credit quality of the buyer at the time of the sale, the Company determined that the fixed interest rate approximates current market rates. Interest income recognized for the three and six months ended June 30, 2021 was $19,000 and $34,000, respectively, and is included as part of other income on the unaudited condensed consolidated statements of operations. Interest income recognized for the three and six months ended June 30, 2020 was $12,000. Revenue Recognition The Company derives its revenues substantially from license and subscription fees for software and related products and services, hardware leases and sales, and other related support services. A portion of the subscription fees are generated through the Company’s eCommerce website rather than through in-person sales. In addition, the Company derives net revenues in connection with certain citation and collection services in connection with the Company’s automated traffic solutions and parking enforcement services. 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. If the consideration promised in the contract includes a variable amount, for example maintenance fees related to hardware, the Company includes an estimate of the amount it expects to receive for the total transaction price, if it is probable that a significant reversal of cumulative revenue recognized will not occur. The Company determines the amount of revenue to be recognized through application of the following steps: ● Identification of the contract, or contracts, with a customer ● Identification of the performance obligations in the contract ● Determination of the transaction price ● Allocation of the transaction price to the performance obligations in the contract ● Recognition of revenue when, or as, performance obligations are satisfied The following table presents a summary of revenue (dollars in thousands): Three Months ended June 30, Six Months ended June 30, 2021 2020 2021 2020 Revenue Licensing and subscription revenue $ 3,175 $ 1,943 $ 6,478 $ 2,793 Automated traffic safety solutions 1,099 734 2,013 1,480 Total revenue $ 4,274 $ 2,677 $ 8,491 $ 4,273 Revenues Licensing and subscription revenue The Company’s revenues are derived principally from fees for technology products and services, including software licenses and subscriptions, hardware leases and sales, and other related support services. Licensing and subscription services include providing, through a web server, access to the Company’s proprietary vehicle recognition software, a self-managed database and a powerful cross-platform application programming interface. The Company’s proprietary software employs a network design to classify images and features that include seamless video analysis and data analytics. Current customers include law enforcement agencies, highway authorities, parking system operators, private security companies, and wholesale and retail operations supporting logistics and customer loyalty programs. Revenue is generally recognized ratably over the contract term. The Company’s subscription services arrangements are non-cancelable and do not contain refund-type provisions. Revenue from the Company’s perpetual software licenses is recognized up-front at the point in time when the software is made available to the customer and the customer is deemed to have a right to use the software. Automated traffic safety solutions Automated traffic safety solutions revenues reflect arrangements to provide traffic safety systems to a number of municipalities in North America. These systems include hardware that identifies red light and school safety zone traffic violations and software that captures and records forensic images and analyzes the images to provide data and supports citation management services. In the first quarter of 2021, the Company launched a new service offering for the State of Oklahoma to support its Uninsured Vehicle Enforcement Diversion (“UVED”) Program. Rekor provides hardware, software and services to identify uninsured motor vehicles, notify owners of non-compliance and assist them in obtaining the required insurance as an alternative to traditional enforcement methods. Revenue is recognized monthly based on the number of camera systems that are operated, or revenue is recognized based on the number of citations collected by the relevant municipality. The Company also installs and maintains public safety systems, which may involve a combination of installation and lease payments or simply software licenses to use the Company’s software in connection with a previously installed camera network. Revenue is recognized at various stages of completion of installation and monthly for lease or license payments. Revenue by Customer Type The following table presents a summary of revenue by customer type (dollars in thousands): Three Months ended June 30, Six Months ended June 30, 2021 2020 2021 2020 Revenue Commercial customers $ 2,751 $ 690 $ 5,859 $ 1,479 Government customers 1,523 1,987 2,632 2,794 Total revenue $ 4,274 $ 2,677 $ 8,491 $ 4,273 Included in commercial customers is revenue that is considered eCommerce revenue. eCommerce revenue is defined by the Company as revenue earned through the Company’s eCommerce platform as well as revenue recognized from its CarCheck product. CarCheck is an application programing interface (“API”) service that analyzes still images of vehicles and responds with license plate data, as well as vehicle make, model, color, and direction of travel and is used by tolling authorities and commercial customers who provided services to them. For the three months ended June 30, 2021 and 2020, the Company recognized eCommerce revenues of $405,000 and $197,000, respectively, which is included in licensing and subscription revenue. For the six months ended June 30, 2021 and 2020, the Company recognized eCommerce revenues of $848,000 and $373,000, respectively. Performance obligations The Company contracts with customers in a variety of ways, including contracts that obligate the Company to perform services over time. Some contracts include performance obligations for several distinct services. For those contracts that have multiple distinct performance obligations, the Company allocates the total transaction price to each performance obligation based on its relative standalone selling price, which is determined based on the Company’s overall pricing objectives, taking into consideration market conditions and other factors. This may result in a deferral or acceleration of revenue recognized relative to cash received for each distinct performance obligation. When the Company recognizes point in time revenue due to the sale of hardware or perpetual software licenses, the impact on the overall unsatisfied performance obligations is relatively small as the Company satisfies its performance obligations when the control of the hardware or software has transferred to the customer. Where performance obligations for a contract with a customer are not yet satisfied or have only been partially satisfied as of a particular date, they are expected to be recognized as revenue in the future. On June 30, 2021, the Company had approximately $15,174,000 of remaining performance obligations not yet satisfied or partially satisfied. The Company expects to recognize approximately 34% of this amount as revenue over the succeeding twelve months, and the remainder is expected to be recognized over the next two to four years thereafter. Unbilled accounts receivable The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled accounts receivables, and contract liabilities on the unaudited condensed consolidated balance sheets. Billed and unbilled accounts receivable are presented as part of accounts receivable, net, on the unaudited condensed consolidated balance sheets. 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 $539,000 and $600,000 were included in accounts receivable, net, in the unaudited condensed consolidated balance sheets as of June 30, 2021 and December 31, 2020, respectively. Contract liabilities When the Company advance bills clients prior to providing services, generally such amounts will be earned and recognized in revenue within the next six months to five years, depending on the subscription or licensing period. These assets and liabilities are reported on the unaudited condensed consolidated balance sheets on a contract-by-contract basis at the end of each reporting period. Changes in the contract asset and liability balances during the six months ended June 30, 2021 were not materially impacted by any other factors. Contract liabilities as of June 30, 2021 and December 31, 2020 were $2,859,000 and $2,084,000, respectively. All contract liabilities as of June 30, 2021 and December 31, 2020 were attributable to continuing operations. During the six months ended June 30, 2021 $730,000 of the contract liabilities balance as of December 31, 2020 was recognized as revenue. The services due for contract liabilities described above are shown below as of June 30, 2021 (dollars in thousands): 2021 $ 1,783 2022 601 2023 340 2024 106 2025 29 Total $ 2,859 Costs to Obtain and Fulfill a Contract Practical Expedients Election Costs to Obtain and Fulfill a Contract In connection with the Company’s services for Oklahoma’s UVED program, the Company installs hardware and software at no additional charge to the end customer. The costs associated with the hardware and software installations are expected to be recouped by the Company over the course of the estimated contract period and thus are capitalized as a cost to fulfill a customer contract and amortized over the estimated contract period. As of June 30, 2021 the Company has capitalized $218,000 of such fulfillment costs, of which $203,000 are presented as part of property and equipment, net in the unaudited condensed consolidated balance sheets. As of December 31, 2020 costs incurred to fulfill contracts in excess of one year had been immaterial. Cash and Cash Equivalents, and Restricted Cash and Cash Equivalents The Company considers all highly liquid debt instruments, including U.S. Treasury Bills purchased with a maturity of three months or less, to be cash equivalents. Cash subject to contractual restrictions and not readily available for use is classified as restricted cash and cash equivalents. The Company’s restricted cash balances are primarily made up of cash collected on behalf of certain client jurisdictions. Restricted cash and cash equivalents for these client jurisdictions as of June 30, 2021 and December 31, 2020 were $856,000 and $412,000, respectively, and correspond to equal amounts of related accounts payable and are presented as part of accounts payable and accrued expenses in the accompanying unaudited condensed consolidated balance sheets. Concentrations of Credit Risk The Company places its temporary cash investments with highly rated quality financial institutions that are federally insured up to $250,000 per account, located in the United States (“U.S.”). As of June 30, 2021 and December 31, 2020, the Company had deposits from continuing operations totaling $69,888,000 in two U.S. financial institutions and $21,007,000 in one U.S. financial institution, respectively. The Company has a market concentration of revenue and accounts receivable from continuing operations related to its customer base. Customer A accounted for less than 10% of the Company’s total revenues for the three months ended June 30, 2021 and 2020, respectively. Customer A accounted for less than 10% and 23% of the Company’s total revenues for the six months ended June 30, 2021 and 2020, respectively. Customer B accounted for 28% and less than 10% of the Company’s total revenues for the three months ended June 30, 2021 and 2020, respectively. Customer B accounted for 16% and less than 10% of the Company’s total revenues for the six months ended June 30, 2021 and 2020, respectively. Customer C accounted for less than 10% and 35% of the Company’s total revenues for the three months ended June 30, 2021 and 2020, respectively. Customer C accounted for less than 10% and 22% of the Company’s total revenues for the six months ended June 30, 2021 and 2020, respectively. As of June 30, 2021, accounts receivable from Company A, Company D and Company E totaled 24%, 21% and 10% of the unaudited condensed consolidated accounts receivable balance. As of December 31, 2020, Company A and Company B accounted for 43% and 20%, respectively, of the unaudited condensed consolidated accounts receivable balance. No other single customer accounted for more than 10% of the Company’s unaudited condensed consolidated revenues for the three and six months ended June 30, 2021 and 2020 or the unaudited condensed consolidated accounts receivable balance as of June 30, 2021 and December 31, 2020. Significant Accounting Policies 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, 2020. New Accounting Pronouncements Effective in the Six Months ended June 30, 2021 In January 2020, the FASB issued ASU 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes New Accounting Pronouncements Effective in Future Periods In June 2016, the FASB issued ASU 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments The Company does not believe that any recently issued, but not yet effective, accounting standards, other than the standard discussed above, could have a material effect on the accompanying unaudited condensed consolidated financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

INVESTMENTS

INVESTMENTS	6 Months Ended
	Jun. 30, 2021
INVESTMENTS
NOTE 2 - INVESTMENTS	NOTE 2 – INVESTMENTS Investments in Unconsolidated Companies In February 2017, the Company contributed substantially all of the assets and certain liabilities related to its vehicle services business to Global Public Safety (the “GPS Closing”). After the GPS Closing, the Company continues to own 19.9% of the units of Global Public Safety. This equity investment does not have a readily determinable fair value and the Company reports this investment at cost, less impairment. As of June 30, 2021 and December 31, 2020 the investment in Global Public Safety had a value of $0. In June 2020, the Company announced a joint venture in which the Company would have a 50 percent equity interest in Roker Inc. (“Roker”). In the third quarter of 2020 and the first quarter of 2021, the Company contributed $75,000 for its 50 percent equity interest for a total investment of $150,000. This investment is accounted for under the equity method. During the three and six months ended June 30, 2021, the Company recognized a loss in its unconsolidated investments of $74,000 and $150,000, respectively. The carrying amount of the Company’s investments are included as part of investments in unconsolidated companies in the unaudited condensed consolidated balance sheets. There were no distributions or earnings received from either investment in the three or six months ended June 30, 2021 or 2020. Roker Simple Agreement for Future Equity (“SAFE”) In April 2021, in exchange for $1,000,000 the Company entered into a SAFE with Roker (the “Roker SAFE”). The Roker SAFE allows the Company to participate in future equity financings, of Roker, through a share-settled redemption of the amount invested (such notional being the “invested amount”). Alternatively, upon the occurrence of a change of control or an initial public offering (other than a qualified financing), the Company has the option to receive either (i) cash payment equal to the invested amount under the SAFE, or (ii) a number of shares of common stock equal to the invested amount divided by the liquidity price set forth in the Roker SAFE. Our investment in the Roker SAFE is recorded on the cost method of accounting and included under SAFE investment on the unaudited condensed consolidated balance sheets and is shown as long-term, as it is not readily convertible into cash. If the Company identifies factors that may be indicative of impairment the Company will review the investment for impairment.

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS	6 Months Ended
	Jun. 30, 2021
DISCONTINUED OPERATIONS
NOTE 3 - DISCONTINUED OPERATIONS	NOTE 3 – DISCONTINUED OPERATIONS During the first quarter of 2020, in connection with the Company’s plan to concentrate on its Technology segment, the Company determined that all of the historical Professional Services segment should be classified as discontinued operations. As part of this plan TeamGlobal, AOC Key Solutions and Firestorm were classified as discontinued operations and presented as part of discontinued operations. AOC Key Solutions Sale On April 2, 2020, the Company entered into a Stock Purchase Agreement (the “AOC Key Solutions Purchase Agreement”) by and among the Company, AOC Key Solutions, and PurpleReign, LLC, a Virginia limited liability company owned by the members of AOC Key Solutions management (the “AOC Key Solutions Buyer”), by which the Company agreed to sell AOC Key Solutions, to the AOC Key Solutions Buyer. The AOC Key Solutions Buyer agreed to purchase all of the outstanding equity interests of AOC Key Solutions for a purchase price of $4,000,000, comprising (i) $3,400,000 in cash, and (ii) a subordinated promissory note (the “Subordinated Note”) in the initial principal amount of $600,000. As of December 31, 2020, the AOC Key Solutions Subordinated Note had been paid in full by the AOC Key Solutions Buyer. TeamGlobal Sale On June 29, 2020, the Company entered into a Stock Purchase Agreement (the “TeamGlobal Purchase Agreement”) by and among the Company, TeamGlobal, and Talent Teams LLC, a Texas limited liability company owned by the members of TeamGlobal’s management (the “TeamGlobal Buyer”), pursuant to which the Company agreed to sell TeamGlobal to the TeamGlobal Buyer. Subject to the terms and conditions of the TeamGlobal Purchase Agreement, the TeamGlobal Buyer agreed to purchase all of the outstanding equity interests of TeamGlobal for a purchase price of $4,000,000, comprising (i) an aggregate of $2,300,000 in cash, and (ii) a secured promissory note (the “Secured Note”) in the initial principal amount of $1,700,000, with such Secured Note secured by a Pledge and Security Agreement (the “Pledge Agreement”) with respect to all the outstanding shares of TeamGlobal being acquired by the TeamGlobal Buyer. The dispositions of AOC Key Solutions and TeamGlobal are the result of the Company’s strategic decision to concentrate resources on the development of its Technology Segment and will result in material changes in the Company’s operations and financial results. As a consequence, the Company is reporting the operating results and cash flows of TeamGlobal, AOC Key Solutions and Firestorm as discontinued operations, including for all prior periods reflected in the unaudited condensed consolidated financial statements and these notes. Pursuant to ASC Topic 205-20, Presentation of Financial Statements - Discontinued Operations The assets and liabilities classified as discontinued operations in the Company’s unaudited condensed consolidated financial statements as of June 30, 2021 and December 31, 2020 are shown below (dollars in thousands): June 30, 2021 December 31, 2020 ASSETS Cash and cash equivalents $ - $ 2 Current assets of discontinued operations - 2 Total assets of discontinued operations $ - $ 2 LIABILITIES Accounts payable and accrued expenses $ 30 $ 31 Lease liability, short term 99 93 Current liabilities of discontinued operations 129 124 Lease liability, long term - 5 Long-term liabilities of discontinued operations - 5 Total liabilities of discontinued operations $ 129 $ 129 The major components of the discontinued operations, net of tax, are presented in the unaudited condensed consolidated statements of operations below (dollars in thousands): Three Months ended June 30, Six Months ended June 30, 2021 2020 2021 2020 Firestorm Global AOC Key Solutions Firestorm Total Firestorm Global AOC Key Solutions Firestorm Total Revenue $ - $ 4,205 $ - $ 5 $ 4,210 $ - $ 10,510 $ 3,392 $ 5 $ 13,907 Cost of revenue - 3,714 - - 3,714 - 9,190 1,866 - 11,056 Gross profit - 491 - 5 496 - 1,320 1,526 5 2,851 Operating expenses: General and administrative expenses 1 579 - - 579 4 1,341 1,284 (4 ) 2,621 Selling and marketing expenses - 40 - - 40 - 79 131 - 210 Operating expenses 1 619 - - 619 4 1,420 1,415 (4 ) 2,831 Income (loss) income from operations (1 ) (128 ) - 5 (123 ) (4 ) (100 ) 111 9 20 Other expense: Interest expense - (76 ) - - (76 ) - (166 ) (74 ) - (240 ) Other income - - - - - - 5 2 - 7 Total other expense - (76 ) - - (76 ) - (161 ) (72 ) - (233 ) Net income (loss) from discontinued operations $ (1 ) $ (204 ) $ - $ 5 $ (199 ) $ (4 ) $ (261 ) $ 39 $ 9 $ (213 )

SUPPLEMENTAL DISCLOSURES OF CAS

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION	6 Months Ended
	Jun. 30, 2021
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
NOTE 4 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION	NOTE 4 – SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Supplemental disclosures of cash flow information for the six months ended June 30, 2021 and 2020 were as follows (dollars in thousands): Six Months ended June 30, 2021 2020 Cash paid for interest - continuing operations $ - $ 994 Cash paid for taxes - continuing operations - - Note received as part of AOC Key Solutions Sale 600 Note received as part of TeamGlobal Sale - 1,700 Paid-in-kind interest transferred from accrued interest to the principal balance of the 2019 Promissory Notes - 1,283 Financing activities: Series A Cumulative Convertible Redeemable Preferred stock dividends included in accounts payable and accrued expenses, settled in common stock (1,005 ) - Series A Cumulative Convertible Redeemable Preferred stock included in temporary equity, settled in common stock (6,770 ) - Series B Cumulative Convertible Preferred stock dividends included in accounts payable and accrued expenses, settled in common stock (179 ) - Adoption of ASC-842 Lease Accounting: Right-of-use lease asset - 132 Lease liability $ - $ (132 )

OPERATING LEASES

OPERATING LEASES	6 Months Ended
	Jun. 30, 2021
OPERATING LEASES
NOTE 5 - OPERATING LEASES	NOTE 5 – OPERATING LEASES We have operating leases for office facilities in various locations throughout the United States. The Company’s leases have remaining terms of one to four years. Certain of the Company’s leases include options to extend the term of the lease or to terminate the lease prior to the end of the initial term. When it is reasonably certain that the Company will exercise the option, the Company will include the impact of the option in the lease term for purposes of determining total future lease payments. Operating lease expense from continuing operations Cash paid for amounts included in the measurement of operating lease liabilities from continuing operations was $171,000 and $64,000 for the six months ended June 30, 2021 and 2020, respectively. In the first quarter of 2021, the Company entered into a new lease agreement for its new headquarters. The lease commencement agreement and date are expected to occur in the third quarter of 2021. As the Company does not have access to the building until the lease commencement agreement is executed, the Company has not recognized the lease as of June 30, 2021. Supplemental balance sheet information related to leases as of June 30, 2021 was as follows (dollars in thousands): Operating lease right-of-use lease assets from continuing operations $ 277 Current portion of lease liability $ 142 Long-term portion of lease liability 144 Total lease liability from continuing operations $ 286 Weighted average remaining lease term - operating leases from continuing operations 2.14 Weighted average discount rate - operating leases 9 % 2021 $ 107 2022 104 2023 84 2024 18 Total lease payments $ 313 Less imputed interest 27 Maturities of lease liabilities $ 286

INTANGIBLE ASSETS

INTANGIBLE ASSETS	6 Months Ended
	Jun. 30, 2021
INTANGIBLE ASSETS
NOTE 6 - INTAGIBLE ASSETS	NOTE 6 – INTANGIBLE ASSETS Intangible Assets Subject to Amortization The following summarizes the change in intangible assets from December 31, 2020 to June 30, 2021 (dollars in thousands): December 31, 2020 Additions Amortization June 30, 2021 Intangible assets subject to amortization from continuing operations Customer relationships $ 362 $ - $ (17 ) $ 345 Marketing related 159 - (35 ) 124 Technology based 5,361 4 (523 ) 4,842 Internally capitalized software 1,156 - (243 ) 913 Intangible assets subject to amortization from continuing operations $ 7,038 $ 4 $ (818 ) $ 6,224 The following provides a breakdown of identifiable intangible assets as of June 30, 2021 (dollars in thousands): Customer Relationships Marketing Related Technology Based Internally Capitalized Software Total Identifiable intangible assets $ 461 $ 327 $ 7,210 $ 1,452 $ 9,450 Accumulated amortization (116 ) (203 ) (2,368 ) (539 ) (3,226 ) Identifiable intangible assets from continuing operations, net $ 345 $ 124 $ 4,842 $ 913 $ 6,224 These intangible assets are being amortized on a straight-line basis over their estimated useful life. Amortization expense attributable to continuing operations for the three months ended June 30, 2021 and 2020 was $409,000 and $321,000, respectively, and for the six months ended June 30, 2021 and 2020 was $818,000 and $635,000, respectively and is presented as part of general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations. As of June 30, 2021, the estimated impact on continuing operations from annual amortization from intangible assets for each of the next five fiscal years and thereafter is as follows (dollars in thousands): 2021 $ 807 2022 1,543 2023 1,363 2024 1,060 2025 1,051 Thereafter 400 Total $ 6,224

DEBT

DEBT	6 Months Ended
	Jun. 30, 2021
DEBT
NOTE 7 - DEBT	NOTE 7 – DEBT Firestorm Notes On January 25, 2017, pursuant to the terms of the Company’s acquisition of Firestorm, the Company issued $1,000,000 in the aggregate form of four unsecured, subordinated promissory notes with interest payable over five years. The principal amount of one of the notes payable is $500,000 payable at an interest rate of 2% and the remaining three notes are evenly divided over the remaining $500,000 and payable at an interest rate of 7%. The notes mature on January 25, 2022. The aggregate balance of these notes payable was $990,000 and $980,000, net of unamortized interest, as of June 30, 2021 and December 31, 2020, respectively, to reflect the amortized fair value of the notes issued due to the difference in interest rates of $10,000 and $20,000, respectively. Paycheck Protection Program Loan On May 26, 2020, the Company entered into a loan agreement with Newtek Small Business Finance, LLC, which provides for a loan in the principal amount of $221,000 (the “Rekor PPP Loan”) pursuant to the Paycheck Protection Program under the CARES Act. The Rekor PPP Loan has a two-year term and bears interest at a rate of 1.0% per annum. Monthly principal and interest payments are deferred for six months after the date of disbursement. On June 3, 2020, the Company’s wholly owned subsidiary, Rekor Recognition Systems, Inc., entered into a loan agreement with Newtek Small Business Finance, LLC, which provides for a loan in the principal amount of $653,000 (the “Rekor Recognition PPP Loan”) pursuant to the Paycheck Protection Program under the CARES Act. The Rekor Recognition PPP Loan has a two-year term and bears interest at a rate of 1.0% per annum. Monthly principal and interest payments are deferred for six months after the date of disbursement. The Rekor PPP Loan and the Rekor Recognition PPP Loan (collectively the “Loans”) may be prepaid at any time prior to maturity with no prepayment penalties. The Loans contain events of default and other provisions customary for a loan of this type. The Paycheck Protection Program provides that the Loans may be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act. The Company used the entire Loans amount for qualifying expenses and has to applied for forgiveness of the Loans in accordance with the terms of the CARES Act. The Loans are presented in loan payable, current portion on the accompanying unaudited consolidated balance sheets. The Small Business Administration (“SBA”), in consultation with the Department of Treasury, issued new guidance that creates uncertainty regarding the qualification requirements for a PPP loan for public companies. The Company’s forgiveness application is being reviewed. 2019 Promissory Notes On March 12, 2019, the Company entered into a note purchase agreement pursuant to which investors, including OpenALPR Technology, Inc. (the “2019 Lenders”) loaned $20,000,000 to the Company (the “2019 Promissory Notes”) and the Company issued to the 2019 Lenders warrants to purchase 2,500,000 shares of Rekor common stock (the “March 2019 Warrants”). The loan bore interest at 16% per annum, of which at least 10% per annum was required to be paid in cash. Any remaining interest accrued to be paid at maturity or earlier upon redemption. The notes also required a $1,000,000 exit fee due at maturity, or a premium if paid before the maturity date, and compliance with affirmative, negative and financial covenants, including a fixed charge coverage ratio and minimum liquidity and maximum capital expenditures covenants. Transaction costs included $403,000 for a work fee payable over 10 months, $290,000 in legal fees and a $200,000 closing fee. As of December 31, 2020, the Company had settled the full amount of the 2019 Promissory Notes. The loan was secured by a security interest in substantially all of the assets of Rekor. The March 2019 Warrants are exercisable over a period of five years, at an exercise price of $0.74 per share, and were valued at $706,000, at the time of issuance. The warrants became exercisable commencing March 12, 2019 and expire on March 12, 2024. The 2019 Promissory Notes had an effective interest rate of 24.87%. As of the first anniversary date of the commencement of the 2019 Promissory Notes $1,283,000 of the paid-in kind interest had not been paid in cash by the Company and per the purchase agreement was added to the principal balance of the 2019 Promissory Notes in March 2020. 2019 Promissory Note Retirement On June 30, 2020, the Company entered into Exchange Agreements with certain 2019 Lenders of the Company’s 2019 Promissory Notes. Subject to the terms and conditions set forth in the Exchange Agreements, approximately $17,398,000 was redeemed in exchange for 4,349,497 shares of the Company’s common stock, at a rate of $4 per share, which was the closing price of the common stock on the date of the Exchange Agreements. On July 15, 2020, the Company completed the Note Exchange. At the time of the Exchange Agreement the net amount of long-term debt redeemed for common stock was $14,688,000. This included the existing principal balance subject to conversion, the portion of the exit fee associated with the which notes subject to conversion, offset by the portion of unamortized issuance costs associated with the notes subject to conversion. There was also $226,000 related to the paid-in-kind (“PIK”) interest associated with the notes subject to conversion that was exchanged as part of the Exchange Agreements. The difference between the market value of the shares issued and the net carrying amount of the obligations above of $2,484,000 was recorded as part of debt extinguishments costs in the accompanying consolidated statements of operations. Following the Note Exchange, approximately $4,398,000 aggregate principal amount of the 2019 Promissory Notes remained outstanding, plus an additional $216,000 related to the exit fee. The Company incurred stock issuance costs of approximately $73,000 related to legal, accounting, and other fees in connection with the Exchange Agreements. These costs are presented as a reduction to additional paid-in capital on the accompanying consolidated balance sheets. On September 16, 2020, the Company issued a cash payment of $5,284,000 to complete the retirement of the remaining aggregate principal balance of the 2019 Promissory Notes. As a result of this optional prepayment, the 2019 Promissory Notes have been fully redeemed pursuant to their terms, and as a result the Company has no further obligations under the Note Purchase Agreement, as amended. The warrants previously issued pursuant to the Note Purchase Agreement remain outstanding pursuant to their terms. Interest Expense The following table presents the interest expense related to the contractual interest and the amortization of debt issuance costs for the Company’s debt arrangements (dollars in thousands): Three Months ended June 30, Six Months ended June 30, 2021 2020 2021 2020 Contractual interest $ 13 $ 805 $ 40 $ 1,639 Amortization of debt issuance costs 5 281 10 611 Total interest expense $ 18 $ 1,086 $ 50 $ 2,250 Schedule of Principal Amounts Due of Debt The principal amounts due for long-term notes payable are shown below as of June 30, 2021 (dollars in thousands): 2021 $ 498 2022 1,432 2023 36 Total 1,966 Less unamortized interest (10 ) Total notes payable $ 1,956 Loan payable, current portion $ 911 Loan payable, long-term 55 Notes payable, current portion 990 Total notes payable $ 1,956

INCOME TAXES

INCOME TAXES	6 Months Ended
	Jun. 30, 2021
INCOME TAXES
NOTE 8 - INCOME TAXES	NOTE 8 – INCOME TAXES The Company accounts for income taxes in accordance with ASC Topic 740. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. In determining the need for a valuation allowance, the Company reviewed both positive and negative evidence pursuant to the requirements of ASC Topic 740, including current and historical results of operations, future income projections, and the overall prospects of the Company’s business. The Company established a valuation allowance against deferred tax assets during 2017 and has continued to maintain a full valuation allowance, outside of the deferred tax liability related to the indefinite lived intangible, through the three months ended June 30, 2021. The Company files income tax returns in the United States and in various states. No U.S. Federal, state or foreign income tax audits were in process as of June 30, 2021. 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. After considering all available facts, the Company fully reserved for its net deferred tax assets, outside of the deferred tax liability related to the indefinite lived intangible, because the Company believes that it is not more likely than not that their benefits will be realized in future periods. The Company will continue to evaluate its deferred tax assets to determine whether any changes in circumstances could affect the realization of their future benefit. 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 six months ended June 30, 2021 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 2017 through 2019 tax years remain subject to examination by the Internal Revenue Service.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	6 Months Ended
	Jun. 30, 2021
COMMITMENTS AND CONTINGENCIES
NOTE 9 - COMMITMENTS AND CONTINGENCIES	NOTE 9 – COMMITMENTS AND CONTINGENCIES On August 19, 2019, the Company filed suit in the United States District Court for the Southern District of New York against three former executives of the Company who were founders of Firestorm (the “Firestorm Principals”)— Rekor Systems, Inc. v. Suzanne Loughlin, et al Following an initial amended complaint, answer and counterclaims, and defendants’ motion for judgment on the pleadings, on January 30, 2020, the Company filed a Second Amended Complaint, which the Firestorm Principals answered together with counterclaims on February 28, 2020. Thereafter, on March 30, the Company moved to dismiss certain counterclaims against certain directors and officers named as counterclaim-defendants, which resulted in the Firestorm Principals voluntarily dismissing the counterclaims against those parties. The Company thereafter filed its response and affirmative defenses to the Counterclaims on April 22, 2020. On April 27, 2020, the Firestorm Principals filed a Motion for Partial Judgment on the Pleadings, which the Company has opposed. In addition, on December 9, 2019, the Firestorm Principals filed a motion for an interim award of expenses and attorney’s fees. With respect to the Firestorm Principals’ motion for judgment on the pleadings, the Court’s November 23, 2020 Order denied that motion in its entirety. In that same Order, the Court granted in part and denied in part the Firestorm Principals’ fee advance motion. On April 27, 2021, the Firestorm Principals filed a notice of motion for partial summary judgment, seeking summary judgment on several of the Company’s claims and the Firestorm Principals’ counterclaims, along with supporting declarations and exhibits. After the Court decided to allow the proposed motion to proceed, the Company, along with counterclaim-defendants Firestorm Franchising, LLC and Firestorm Solutions, LLC, filed their opposition to the partial summary judgment motion on June 21, 2021. The Firestorm Principals filed their reply in support of their partial summary judgment motion on July 9, 2021. In 2020, the Firestorm Principals filed various suits in New York, Delaware and Virginia against directors and officers of the Company, alleging breach of fiduciary duty and libel. At this stage of these litigations, the Company is unable to render an opinion regarding the likelihood of a favorable outcome. The Company intends to continue vigorously litigating its claims against the Firestorm Principals and believes that the Firestorm Principals’ remaining counterclaims and suits against Rekor directors and officers are without merit. At this stage of these litigations, the Company is unable to render an opinion regarding the likelihood of a favorable outcome. The Company intends to continue vigorously litigating its claims against the Firestorm Principals and believes that the Firestorm Principals’ remaining counterclaims and suits against Rekor directors and officers are without merit. On January 31, 2020, the Company’s wholly owned subsidiary, OpenALPR, filed a complaint in the US District Court for the Western District of Pennsylvania against a former customer, Plate Capture Solutions, Inc. (“PCS”) for breach of software license agreements pursuant to which software was licensed to PCS. On June 14, 2020, PCS filed its operative answer to the Complaint. On June 21, 2020, PCS filed a motion to join the Company and another entity, OpenALPR Technology, Inc., as parties to the litigation and made claims against them and counter claims against OpenALPR for defamation, fraud and intentional interference with existing and future business relationships. On July 13, 2020, OpenALPR filed an opposition to the motion for joinder. On November 23, 2020, the Court denied PCS’s Motion for Joinder with prejudice. The case is currently proceeding between OpenALPR and PCS only and is still in its early stages. Rekor believes that OpenALPR has substantial defenses to the counter claims and intends to vigorously defend the allegations of those counter claims. On September 18, 2020, Fordham Financial Management, Inc. (“Fordham”) commenced a lawsuit against the Company in the Supreme Court for the State of New York, New York County. Fordham alleges that the Company breached an underwriting agreement with Fordham. Fordham has brought claims for breach of contract, a declaratory judgment, and attorneys’ fees and expenses, and seeks damages. The Complaint was served on the Company on September 25, 2020. The Company issued a motion to dismiss counterclaims on June 23, 2021, Rekor’s opposition has been filed and Fordham’s reply will be due on August 19, 2021. At this stage of the Fordham litigation, the Company is unable to render an opinion regarding the likelihood of a favorable outcome. However, the Company maintains that Fordham’s claims have no merit. To that end it intends to vigorously litigate this action, to include its pursuit of counterclaims against Fordham for fraud and breach of contract, among other causes of action. In June 2021, a putative shareholder class action lawsuit (captioned Miller v. Rekor Systems, Inc. et al.) was filed in in the United States District Court for the District of Maryland, naming as defendants Rekor Systems, Inc. and certain of its officers. It alleges violations of Sections 10(b) and 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 related to Rekor’s automatic license plate recognition technology and uninsured vehicle enforcement diversion related business and seeks damages on behalf of shareowners who acquired Rekor stock between April 12, 2019 and May 25, 2021. The Company has received service and believes that this lawsuit is without merit and plans to vigorously defend against it. In addition, from time to time, the Company may be named as a party to various other lawsuits, claims and other legal and regulatory proceedings that arise in the ordinary course of business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract, property damage, infringement of proprietary rights, punitive damages, civil penalties or other losses, or injunctive or declaratory relief. With respect to such lawsuits, claims and proceedings the Company accrues reserves when a loss is probable, and the amount of such loss can be reasonably estimated. It is the Company’s opinion that the outcome of these proceedings, individually and collectively, will not be material to the Company’s consolidated financial statements as a whole.

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY	6 Months Ended
	Jun. 30, 2021
Stockholders' equity
NOTE 10 - STOCKHOLDERS' EQUITY	NOTE 10 – STOCKHOLDERS’ EQUITY Common Stock Effective March 18, 2020, the Company adopted and approved an amendment to increase the number of authorized shares of common stock from 30,000,000 to 100,000,000, $0.0001 par value. The rights and privileges terms of the additional authorized shares of common stock are identical to those of the currently outstanding shares of common stock. However, because the holders of common stock do not have preemptive rights to purchase or subscribe for any new issuances of common stock, the subsequent potential issuance of additional shares of common stock will reduce the current stockholders’ percentage ownership interest in the total outstanding shares of common stock. The Amendment and the creation of additional shares of authorized common stock will not alter current stockholders’ relative rights and limitations. Public Offering On February 9, 2021, the Company issued and sold 6,126,939 shares of its common stock (which includes 799,166 shares of common stock sold pursuant to the exercise of an overallotment option) (the “Public Offering”). The net proceeds to the Company, after deducting the underwriting discounts and commissions and estimated offering expenses payable by the Company, were approximately $70,125,000. The shares were sold pursuant to an underwriting agreement with B. Riley Securities, Inc. and Lake Street Capital Markets, LLC, as representatives of the several underwriters named therein under our shelf registration statement on Form S-3 (Registration Statement No. 333-224423) filed by the Company with the SEC that became effective on April 30, 2018. On February 4, 2021, a prospectus supplement and accompanying prospectus were filed with the SEC in connection with the offering and a related registration statement (File No. 333-252735) was filed pursuant to Rule 462(b) promulgated under the Securities Act. Preferred Stock The Company is authorized to issue up to 2,000,000 shares of preferred stock, $0.0001 par value. The Company’s preferred stock may be entitled to preference over the common stock with respect to the distribution of assets of the Company in the event of liquidation, dissolution or winding-up of the Company, whether voluntarily or involuntarily, or in the event of any other distribution of assets of the Company among its shareholders for the purpose of the winding-up of its affairs. The authorized but unissued shares of the preferred stock may be divided into, and issued in, designated series from time to time by one or more resolutions adopted by the Board of Directors of the Company. The Board of Directors of the Company, in its sole discretion, has the power to determine the relative powers, preferences and rights of each series of preferred stock. Series A Cumulative Convertible Redeemable Preferred Stock Of the 2,000,000 authorized shares of preferred stock, 505,000 shares were designated as $0.0001 par value Series A Cumulative Convertible Redeemable Preferred Stock (the “Series A Preferred Stock”). The holders of Series A Preferred Stock were entitled to quarterly dividends of 7.0% per annum per share. The holders of Series A Preferred Stock had a right to convert each share into common stock at an initial conversion price and a specified conversion price which increased annually based on the passage of time beginning in November 2019. The holders of Series A Preferred Stock also had a put right after 60 months from the issuance date to redeem any or all of the Series A Preferred Stock at a redemption price of $15.00 per share plus any accrued but unpaid dividends. The Company had a call right after 36 months from the issuance date to redeem all of the Series A Preferred Stock at a redemption price which increased annually based on the passage of time which began in November 2019. The Series A Preferred Stock contained an automatic conversion feature based on a qualified initial public offering in excess of $30,000,000 or a written agreement by at least two-thirds of the holders of Series A Preferred Stock at an initial conversion price and a specified price which increased annually based on the passage of time beginning in November 2016. Based on the terms of the Series A Preferred Stock, the Company concluded that the Series A Preferred Stock should be classified as temporary equity in the accompanying unaudited condensed consolidated balance sheets as of December 31, 2020. Rekor adjusted the value of the Series A Preferred Stock to redemption value at the end of each reporting period. The adjustment to the redemption value was recorded through additional paid in capital of $0 and $212,000 for the three months ended June 30, 2021 and 2020, respectively, and $101,000 and $418,000 for the six months ended June 30, 2021 and 2020, respectively. The holders of Series A Preferred Stock were entitled to quarterly cash dividends of $0.175 (7% per annum) per share. Dividends accrued quarterly and dividend payments for declared dividends were due within five business days following the end of a quarter. For the six months ended June 30, 2021 and 2020 the Company did not pay cash dividends to shareholders of record of Series A Preferred Stock. Accrued dividends payable to Series A Preferred Stock shareholders were $0 and $952,000 as of June 30, 2021 and December 31, 2020, respectively, and are presented as part of the accounts payable and accrued expenses on the accompanying unaudited condensed consolidated balance sheets. As a result of the closing of the Public Offering in the first quarter of 2021, all of the issued and outstanding Series A Preferred Stock was converted pursuant to the original terms of the agreement into 899,174 shares of the Company’s common stock. Series B Cumulative Convertible Preferred Stock Of the 2,000,000 authorized shares of preferred stock, 240,861 shares were designated as $0.0001 par value Rekor Series B Cumulative Convertible Preferred Stock (the “Series B Preferred Stock”). As part of the TeamGlobal Merger, the Company issued 240,861 shares of $0.0001 par value Series B Preferred Stock. All Series B Preferred Stock was issued at a price of $10.00 per share as part of the acquisition of TeamGlobal. The Series B Preferred Stock had a conversion price of $5.00 per share. Each Series B Preferred Stock had an automatic conversion feature based on the share price of Rekor. The Series B Preferred Stock was entitled to quarterly cash dividends of 1.121% (4.484% per annum) per share. Dividends accrued quarterly and dividend payments for declared dividends were due within five business days following the end of a quarter. The Company did not pay any cash dividends to the Series B Preferred shareholders for the six months ended June 30, 2021 or 2020. Accrued dividends payable to Series B Preferred Stock shareholders were $0 and $167,000 as of June 30, 2021 and December 31, 2020, respectively, and are presented as part of the accounts payable and accrued expenses on the accompanying unaudited condensed consolidated balance sheets. As a result of the volume weighted average share price of the Company’s common stock being over $7.50 for thirty consecutive days, in the first quarter of 2021, all of the Company’s issued and outstanding Series B Preferred Stock was converted pursuant to the original terms of the agreement into 517,611 shares of the Company’s common stock. Warrants A summary of the warrant activity for the Company for the period ended June 30, 2021 is as follows: Series A Preferred Stock Warrants (1) Firestorm Warrants (2) Secure Education Warrants (3) 2018 Public Offering Warrants (4) 2019 Promissory Note Warrants (5) Total Active warrants January 1, 2021 141,789 631,254 66,666 4,886 68,750 913,345 Exercised warrants (96,592 ) - (51,110 ) (1,381 ) (68,750 ) (217,833 ) Outstanding warrants June 30, 2021 45,197 631,254 15,556 3,505 - 695,512 Weighted average strike price of outstanding warrants $ 1.03 $ 3.09 $ 6.06 $ 1.00 $ - $ 3.01 Shares of common stock issued during the three months ended June 30, 2021 96,592 - 51,110 1,280 64,766 213,748 (1) As part of a Regulation A Offering in fiscal year 2016 and 2017, the Company issued warrants to the holders of Series A Preferred Stock (the “Series A Preferred Stock Warrants”). The exercise price for these warrants is $1.03. The expiration date of the Series A Preferred Stock Warrants is November 8, 2023. (2) As part of the acquisition of Firestorm on January 24, 2017, the Company issued warrants to purchase 315,627 shares of its common stock, exercisable over a period of five years, at an exercise price of $2.5744 per share, and warrants to purchase 315,627 shares of its common stock, exercisable over a period of five years, at an exercise price of $3.6083 per share (the “Firestorm Warrants”). The expiration date of the Firestorm Warrants is January 24, 2022. (3) Pursuant to the Company’s acquisition of Secure Education Consultants on January 1, 2018, the Company issued warrants to purchase 33,333 shares of its common stock, exercisable over a period of five years, at an exercise price of $5.44 per share, and warrants to purchase 33,333 shares of its common stock, exercisable over a period of five years, at an exercise price of $6.53 per share (the “Secure Education Warrants”). The expiration date of the Secure Education Warrants is January 1, 2023. (4) On November 1, 2018, in connection with an underwritten public offering of its common stock, the Company issued to the underwriters warrants to purchase 206,250 shares of its common stock (the “2018 Public Offering Warrants”), exercisable over a period of five years, at an exercise price of $1.00 per share. These warrants were exercisable commencing April 27, 2019 and expire on October 29, 2023. (5) On March 12, 2019, in connection with the 2019 Promissory Notes, the Company issued warrants to purchase 2,500,000 shares of its common stock (the “2019 Promissory Note Warrants”), which were immediately exercisable at an exercise price of $0.74 per share, to certain individuals and entities. Of the 2,500,000 warrants, 625,000 were issued as partial consideration for the OpenALPR Technology Acquisition.

EQUITY INCENTIVE PLAN

EQUITY INCENTIVE PLAN	6 Months Ended
	Jun. 30, 2021
EQUITY INCENTIVE PLAN
NOTE 11 - EQUITY INCENTIVE PLAN	NOTE 11 – EQUITY INCENTIVE PLAN In August 2017, the Company approved and adopted the 2017 Equity Award Plan (the “2017 Plan”) which replaced the 2016 Equity Award Plan (the “2016 Plan”). 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. Stock Options Stock options granted under the 2017 Plan may be either incentive stock options (“ISOs”) or non-qualified stock options (“NSOs”). ISOs may be granted to employees and NSOs may be granted to employees, directors, or consultants. Stock options are granted at exercise prices as determined by the Board of Directors. The vesting period is generally three years with a contractual term of ten years. Stock compensation expense related to stock options for the three months ended June 30, 2021 and 2020 was $31,000 and $33,000, respectively, and for the six months ended June 30, 2021 and 2020 was $60,000 and $145,000, respectively, and is presented as part of general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations. A summary of stock option activity under the Company’s 2017 Plan for the period ended June 30, 2021 is as follows: Number of Shares Subject to Option Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding balance at December 31, 2020 1,243,254 $ 1.44 7.57 $ 7,827 Exercised (65,402 ) 3.47 - Forfeited (10,000 ) 0.80 - Outstanding balance at June 30, 2021 1,167,852 1.33 7.09 $ 9,781 Exercisable at June 30, 2021 958,854 $ 1.36 6.91 $ 8,077 As of June 30, 2021, there was $114,000 of unrecognized stock compensation expense related to unvested stock options granted under the 2017 Plan that will be recognized over a weighted average period of 0.94 years. Restricted Stock Units Stock compensation expense related to RSU’s for the three months ended June 30, 2021 and 2020 was $1,094,000 and $133,000, respectively, and for the six months ended June 30, 2021 and 2020 was $1,846,000 and $192,000, respectively, and is presented as part of general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations. A summary of RSU activity under the Company’s 2017 Plan for the six months ended June 30, 2021 is as follows: Number of Shares Weighted Average Unit Price Weighted Average Remaining Contractual Term (Years) Outstanding balance at December 31, 2020 479,984 $ 4.45 2.12 Granted 367,040 13.22 1.79 Vested (195,982 ) 7.54 - Forfeited (67,500 ) 4.32 - Outstanding balance at June 30, 2021 583,542 $ 8.94 1.96 The grant date fair value is based on the estimated fair value of the Company’s common stock on the date of grant. All RSUs granted vest upon the satisfaction of a service-based vesting condition. As of June 30, 2021, there was $4,353,000 of unrecognized stock compensation expense related to unvested RSUs granted under the 2017 Plan that will be recognized over an average remaining period of 1.96

LOSS PER SHARE

LOSS PER SHARE	6 Months Ended
	Jun. 30, 2021
LOSS PER SHARE
NOTE 12 - LOSS PER SHARE	NOTE 12 – LOSS PER SHARE The following table provides information relating to the calculation of loss per common share: Three Months ended June 30, Six Months ended June 30, 2021 2020 2021 2020 (Dollars in thousands, except per share data) Basic and diluted loss per share Net loss from continuing operations $ (4,761 ) $ (419 ) $ (10,164 ) $ (4,193 ) Less: preferred stock accretion - (212 ) (101 ) (418 ) Less: preferred stock dividends - (115 ) (51 ) (230 ) Net loss attributable to shareholders from continuing operations $ (4,761 ) $ (746 ) $ (10,316 ) $ (4,841 ) Net loss from discontinued operations (1 ) (199 ) (4 ) (213 ) Net loss attributable to shareholders $ (4,762 ) $ (945 ) $ (10,320 ) $ (5,054 ) Weighted average common shares outstanding - basic and diluted 40,972,709 22,829,084 37,657,471 22,224,417 Basic and diluted loss per share from continuing operations $ (0.12 ) $ (0.03 ) $ (0.27 ) $ (0.22 ) Basic and diluted loss per share from discontinued operations - (0.01 ) - (0.01 ) Basic and diluted loss per share $ (0.12 ) $ (0.04 ) $ (0.27 ) $ (0.23 ) Common stock equivalents excluded due to anti-dilutive effect 2,446,906 5,074,916 2,446,906 5,074,916 As the Company had a net loss for the three and six months ended June 30, 2021, the following 2,446,906 potentially dilutive securities were excluded from diluted loss per share: 695,512 for outstanding warrants, 1,167,852 related to outstanding options and 583,542 related to outstanding RSUs. As the Company had a net loss for the three and six months ended June 30, 2020, the following 5,074,916 potentially dilutive securities were excluded from diluted loss per share: 1,825,769 for outstanding warrants,974,487 related to the Series A Preferred Stock, 481,722 related to the Series B Preferred Stock, 1,442,738 related to outstanding options and 350,200 related to outstanding RSUs.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	6 Months Ended
	Jun. 30, 2021
SUBSEQUENT EVENTS
NOTE 13 - SUBSEQUENT EVENTS	NOTE 13 – SUBSEQUENT EVENTS Roker Asset Acquisition On July 15, 2021, Roker entered into an Asset Purchase Agreement to obtain certain assets from SecurePark Technologies Inc. (“SecurePark”). SecurePark offers a software-as-a-service parking enforcement platform for municipalities, parking operators, airports, schools, hospitals, security and property management users. The deal was structured as an asset purchase with the seller receiving an undisclosed amount of cash and stock as consideration. As a result of the Asset Purchase Agreement, the Company’s ownership in Roker was reduced from 50% to 48%. Waycare Acquisition On August 6, 2021, Rekor signed a definitive agreement to acquire all of the outstanding shares of Waycare Technologies LTD. (“Waycare”) for approximately $61,000,000 in total consideration consisting of a combination of cash and common stock. The closing of the transaction is subject to customary closing conditions and is currently anticipated to occur during the third quarter of the year ending December 31, 2021. As the Waycare acquisition has not yet closed, the Company is currently in the process of completing the purchase price allocation treating the Waycare acquisition as a business combination. The purchase price allocation for Waycare will be included in the Company’s condensed consolidated financial statements in the third quarter of the year ending December 31, 2021.

GENERAL, BASIS OF PRESENTATIO_2

GENERAL, BASIS OF PRESENTATION, AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
	Jun. 30, 2021
INVESTMENTS
Use of Estimates	The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires the extensive use of management’s estimates. Management uses estimates and assumptions in preparing consolidated financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and reported revenues and expenses. Actual amounts may differ from these estimates. On an on-going basis, the Company evaluates its estimates, including those related to collectability of accounts receivable, fair value of debt and equity instruments, income taxes and determination of standalone selling prices in contracts with customers that contain multiple performance obligations. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not apparent from other sources. Actual results may differ from those estimates under different assumptions or conditions.
Liquidity	For all annual and interim periods, management will assess going concern uncertainty in the Company’s unaudited condensed consolidated financial statements to determine whether there is sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the unaudited condensed consolidated financial statements are issued, which is referred to as the “look-forward period”, as defined in U.S. GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, management will consider various scenarios, forecasts, projections and estimates and will make certain key assumptions. These assumptions include, among other factors, its ability to raise additional capital, if necessary, 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 since its inception and has relied on cash on hand, external bank lines of credit, the sale of a note, proceeds from the sale of common stock, proceeds from the private sale of the Company’s non-core subsidiaries, proceeds from note receivables, debt financings and a public offering of its common stock to support cashflow from operations. The Company attributes 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. As of and for the six months ended June 30, 2021, the Company had a working capital of $79,891,000 and comprehensive loss from continuing operations of $10,160,000. The Company’s net cash, from continuing operations, was increased by $48,883,000 for the six months ended June 30, 2021 primarily due to the net proceeds of $70,125,000 from the completion of the Public Offering (see NOTE 10 - STOCKHOLDERS’ EQUITY Management believes that based on relevant conditions and events that are known and reasonably knowable, its current forecasts and projections for one year from the date of the filing of the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q, indicate the Company’s ability to continue operations as a going concern for at least that one-year period. The Company is actively monitoring its operations, the cash on hand and working capital. Should access to funds be unavailable, the Company will need to seek out additional sources of funding. Furthermore, the Company has contingency plans to reduce or defer expenses and cash outlays should operations weaken in the look-forward period or additional financing, if needed, is not available.
Goodwill	The excess purchase consideration over the fair value of acquired assets and liabilities is recorded as goodwill. The Company will assess goodwill for impairment annually, or more often if events or changes in circumstances indicate that it might be impaired, by comparing its carrying value to the reporting unit’s fair value. During the six months ended June 30, 2021 and 2020, we have not recognized any impairment to goodwill from continuing operations.
Equity Method Investments	Investments in common stock of entities other than the Company’s consolidated subsidiaries are accounted for under the equity method in accordance with FASB ASC 323, Investments – Equity Method and Joint Ventures
Short-Term Investments	Short-term investments consist of U.S. Treasury Bills. Short-term investments have maturities of greater than three months but less than a year from the balance sheet date. Short-term investments are carried at fair value and presented as short-term investments on the unaudited condensed consolidated balance sheets. Unrealized gains on investment securities are included in unrealized gain on short-term investments in the unaudited condensed consolidated statements of operations.
Treasury Stock	Treasury stock is recorded at acquisition cost. Upon disposition of treasury shares gains and losses are recorded as increases or decreases to additional paid-in capital with losses in excess of previously recorded gains charged directly to retained earnings.
Fair Value of Financial Instruments	The carrying amounts reported in the unaudited condensed consolidated balance sheets for cash and cash equivalents, restricted cash and cash equivalents, short-term investments, accounts receivable and accounts payable approximate fair value as of June 30, 2021 and December 31, 2020, 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 June 30, 2021 and December 31, 2020, 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 Level 1 – Level 2 – Level 3 – 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 considers its note receivable and SAFE investment to be Level 3 investments and that the fair value approximates the carrying value. There were no changes in levels during the six months ended June 30, 2021.
Note Receivables	In connection with the sale of TeamGlobal in June 2020, the Company received a $1,700,000, five and a half year promissory note due December 2025, that carries an interest rate of 4% and is secured by a first priority security interest in the shares of TeamGlobal. Monthly principal payments on the promissory note began in January 2021. Based on general market conditions, the security interest held by the Company and the credit quality of the buyer at the time of the sale, the Company determined that the fixed interest rate approximates current market rates. Interest income recognized for the three and six months ended June 30, 2021 was $19,000 and $34,000, respectively, and is included as part of other income on the unaudited condensed consolidated statements of operations. Interest income recognized for the three and six months ended June 30, 2020 was $12,000.
Revenue Recognition	The Company derives its revenues substantially from license and subscription fees for software and related products and services, hardware leases and sales, and other related support services. A portion of the subscription fees are generated through the Company’s eCommerce website rather than through in-person sales. In addition, the Company derives net revenues in connection with certain citation and collection services in connection with the Company’s automated traffic solutions and parking enforcement services. 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. If the consideration promised in the contract includes a variable amount, for example maintenance fees related to hardware, the Company includes an estimate of the amount it expects to receive for the total transaction price, if it is probable that a significant reversal of cumulative revenue recognized will not occur. The Company determines the amount of revenue to be recognized through application of the following steps: ● Identification of the contract, or contracts, with a customer ● Identification of the performance obligations in the contract ● Determination of the transaction price ● Allocation of the transaction price to the performance obligations in the contract ● Recognition of revenue when, or as, performance obligations are satisfied The following table presents a summary of revenue (dollars in thousands): Three Months ended June 30, Six Months ended June 30, 2021 2020 2021 2020 Revenue Licensing and subscription revenue $ 3,175 $ 1,943 $ 6,478 $ 2,793 Automated traffic safety solutions 1,099 734 2,013 1,480 Total revenue $ 4,274 $ 2,677 $ 8,491 $ 4,273 Revenues Licensing and subscription revenue The Company’s revenues are derived principally from fees for technology products and services, including software licenses and subscriptions, hardware leases and sales, and other related support services. Licensing and subscription services include providing, through a web server, access to the Company’s proprietary vehicle recognition software, a self-managed database and a powerful cross-platform application programming interface. The Company’s proprietary software employs a network design to classify images and features that include seamless video analysis and data analytics. Current customers include law enforcement agencies, highway authorities, parking system operators, private security companies, and wholesale and retail operations supporting logistics and customer loyalty programs. Revenue is generally recognized ratably over the contract term. The Company’s subscription services arrangements are non-cancelable and do not contain refund-type provisions. Revenue from the Company’s perpetual software licenses is recognized up-front at the point in time when the software is made available to the customer and the customer is deemed to have a right to use the software. Automated traffic safety solutions Automated traffic safety solutions revenues reflect arrangements to provide traffic safety systems to a number of municipalities in North America. These systems include hardware that identifies red light and school safety zone traffic violations and software that captures and records forensic images and analyzes the images to provide data and supports citation management services. In the first quarter of 2021, the Company launched a new service offering for the State of Oklahoma to support its Uninsured Vehicle Enforcement Diversion (“UVED”) Program. Rekor provides hardware, software and services to identify uninsured motor vehicles, notify owners of non-compliance and assist them in obtaining the required insurance as an alternative to traditional enforcement methods. Revenue is recognized monthly based on the number of camera systems that are operated, or revenue is recognized based on the number of citations collected by the relevant municipality. The Company also installs and maintains public safety systems, which may involve a combination of installation and lease payments or simply software licenses to use the Company’s software in connection with a previously installed camera network. Revenue is recognized at various stages of completion of installation and monthly for lease or license payments. Revenue by Customer Type The following table presents a summary of revenue by customer type (dollars in thousands): Three Months ended June 30, Six Months ended June 30, 2021 2020 2021 2020 Revenue Commercial customers $ 2,751 $ 690 $ 5,859 $ 1,479 Government customers 1,523 1,987 2,632 2,794 Total revenue $ 4,274 $ 2,677 $ 8,491 $ 4,273 Included in commercial customers is revenue that is considered eCommerce revenue. eCommerce revenue is defined by the Company as revenue earned through the Company’s eCommerce platform as well as revenue recognized from its CarCheck product. CarCheck is an application programing interface (“API”) service that analyzes still images of vehicles and responds with license plate data, as well as vehicle make, model, color, and direction of travel and is used by tolling authorities and commercial customers who provided services to them. For the three months ended June 30, 2021 and 2020, the Company recognized eCommerce revenues of $405,000 and $197,000, respectively, which is included in licensing and subscription revenue. For the six months ended June 30, 2021 and 2020, the Company recognized eCommerce revenues of $848,000 and $373,000, respectively. Performance obligations The Company contracts with customers in a variety of ways, including contracts that obligate the Company to perform services over time. Some contracts include performance obligations for several distinct services. For those contracts that have multiple distinct performance obligations, the Company allocates the total transaction price to each performance obligation based on its relative standalone selling price, which is determined based on the Company’s overall pricing objectives, taking into consideration market conditions and other factors. This may result in a deferral or acceleration of revenue recognized relative to cash received for each distinct performance obligation. When the Company recognizes point in time revenue due to the sale of hardware or perpetual software licenses, the impact on the overall unsatisfied performance obligations is relatively small as the Company satisfies its performance obligations when the control of the hardware or software has transferred to the customer. Where performance obligations for a contract with a customer are not yet satisfied or have only been partially satisfied as of a particular date, they are expected to be recognized as revenue in the future. On June 30, 2021, the Company had approximately $15,174,000 of remaining performance obligations not yet satisfied or partially satisfied. The Company expects to recognize approximately 34% of this amount as revenue over the succeeding twelve months, and the remainder is expected to be recognized over the next two to four years thereafter. Unbilled accounts receivable The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled accounts receivables, and contract liabilities on the unaudited condensed consolidated balance sheets. Billed and unbilled accounts receivable are presented as part of accounts receivable, net, on the unaudited condensed consolidated balance sheets. 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 $539,000 and $600,000 were included in accounts receivable, net, in the unaudited condensed consolidated balance sheets as of June 30, 2021 and December 31, 2020, respectively. Contract liabilities When the Company advance bills clients prior to providing services, generally such amounts will be earned and recognized in revenue within the next six months to five years, depending on the subscription or licensing period. These assets and liabilities are reported on the unaudited condensed consolidated balance sheets on a contract-by-contract basis at the end of each reporting period. Changes in the contract asset and liability balances during the six months ended June 30, 2021 were not materially impacted by any other factors. Contract liabilities as of June 30, 2021 and December 31, 2020 were $2,859,000 and $2,084,000, respectively. All contract liabilities as of June 30, 2021 and December 31, 2020 were attributable to continuing operations. During the six months ended June 30, 2021 $730,000 of the contract liabilities balance as of December 31, 2020 was recognized as revenue. The services due for contract liabilities described above are shown below as of June 30, 2021 (dollars in thousands): 2021 $ 1,783 2022 601 2023 340 2024 106 2025 29 Total $ 2,859 Costs to Obtain and Fulfill a Contract Practical Expedients Election Costs to Obtain and Fulfill a Contract In connection with the Company’s services for Oklahoma’s UVED program, the Company installs hardware and software at no additional charge to the end customer. The costs associated with the hardware and software installations are expected to be recouped by the Company over the course of the estimated contract period and thus are capitalized as a cost to fulfill a customer contract and amortized over the estimated contract period. As of June 30, 2021 the Company has capitalized $218,000 of such fulfillment costs, of which $203,000 are presented as part of property and equipment, net in the unaudited condensed consolidated balance sheets. As of December 31, 2020 costs incurred to fulfill contracts in excess of one year had been immaterial.
Cash, Cash Equivalents and Restricted Cash and Cash Equivalents	The Company considers all highly liquid debt instruments, including U.S. Treasury Bills purchased with a maturity of three months or less, to be cash equivalents. Cash subject to contractual restrictions and not readily available for use is classified as restricted cash and cash equivalents. The Company’s restricted cash balances are primarily made up of cash collected on behalf of certain client jurisdictions. Restricted cash and cash equivalents for these client jurisdictions as of June 30, 2021 and December 31, 2020 were $856,000 and $412,000, respectively, and correspond to equal amounts of related accounts payable and are presented as part of accounts payable and accrued expenses in the accompanying unaudited condensed consolidated balance sheets.
Concentrations of Credit Risk	The Company places its temporary cash investments with highly rated quality financial institutions that are federally insured up to $250,000 per account, located in the United States (“U.S.”). As of June 30, 2021 and December 31, 2020, the Company had deposits from continuing operations totaling $69,888,000 in two U.S. financial institutions and $21,007,000 in one U.S. financial institution, respectively. The Company has a market concentration of revenue and accounts receivable from continuing operations related to its customer base. Customer A accounted for less than 10% of the Company’s total revenues for the three months ended June 30, 2021 and 2020, respectively. Customer A accounted for less than 10% and 23% of the Company’s total revenues for the six months ended June 30, 2021 and 2020, respectively. Customer B accounted for 28% and less than 10% of the Company’s total revenues for the three months ended June 30, 2021 and 2020, respectively. Customer B accounted for 16% and less than 10% of the Company’s total revenues for the six months ended June 30, 2021 and 2020, respectively. Customer C accounted for less than 10% and 35% of the Company’s total revenues for the three months ended June 30, 2021 and 2020, respectively. Customer C accounted for less than 10% and 22% of the Company’s total revenues for the six months ended June 30, 2021 and 2020, respectively. As of June 30, 2021, accounts receivable from Company A, Company D and Company E totaled 24%, 21% and 10% of the unaudited condensed consolidated accounts receivable balance. As of December 31, 2020, Company A and Company B accounted for 43% and 20%, respectively, of the unaudited condensed consolidated accounts receivable balance. No other single customer accounted for more than 10% of the Company’s unaudited condensed consolidated revenues for the three and six months ended June 30, 2021 and 2020 or the unaudited condensed consolidated accounts receivable balance as of June 30, 2021 and December 31, 2020.
Significant Accounting Policies	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, 2020. New Accounting Pronouncements Effective in the Six Months ended June 30, 2021 In January 2020, the FASB issued ASU 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes New Accounting Pronouncements Effective in Future Periods In June 2016, the FASB issued ASU 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments The Company does not believe that any recently issued, but not yet effective, accounting standards, other than the standard discussed above, could have a material effect on the accompanying unaudited condensed consolidated financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

GENERAL AND BASIS OF PRESENTATI

GENERAL AND BASIS OF PRESENTATION (Tables)	6 Months Ended
	Jun. 30, 2021
INVESTMENTS
Contract liabilities	2021 $ 1,783 2022 601 2023 340 2024 106 2025 29 Total $ 2,859
Summary of revenue customer	Three Months ended June 30, Six Months ended June 30, 2021 2020 2021 2020 Revenue Commercial customers $ 2,751 $ 690 $ 5,859 $ 1,479 Government customers 1,523 1,987 2,632 2,794 Total revenue $ 4,274 $ 2,677 $ 8,491 $ 4,273
Summary of revenue	Three Months ended June 30, Six Months ended June 30, 2021 2020 2021 2020 Revenue Licensing and subscription revenue $ 3,175 $ 1,943 $ 6,478 $ 2,793 Automated traffic safety solutions 1,099 734 2,013 1,480 Total revenue $ 4,274 $ 2,677 $ 8,491 $ 4,273

DISCONTINUED OPERATIONS (Tables

DISCONTINUED OPERATIONS (Tables)	6 Months Ended
	Jun. 30, 2021
DISCONTINUED OPERATIONS
Team Global Purchase Agreement	June 30, 2021 December 31, 2020 ASSETS Cash and cash equivalents $ - $ 2 Current assets of discontinued operations - 2 Total assets of discontinued operations $ - $ 2 LIABILITIES Accounts payable and accrued expenses $ 30 $ 31 Lease liability, short term 99 93 Current liabilities of discontinued operations 129 124 Lease liability, long term - 5 Long-term liabilities of discontinued operations - 5 Total liabilities of discontinued operations $ 129 $ 129
Discontinued operations	Three Months ended June 30, Six Months ended June 30, 2021 2020 2021 2020 Firestorm Global AOC Key Solutions Firestorm Total Firestorm Global AOC Key Solutions Firestorm Total Revenue $ - $ 4,205 $ - $ 5 $ 4,210 $ - $ 10,510 $ 3,392 $ 5 $ 13,907 Cost of revenue - 3,714 - - 3,714 - 9,190 1,866 - 11,056 Gross profit - 491 - 5 496 - 1,320 1,526 5 2,851 Operating expenses: General and administrative expenses 1 579 - - 579 4 1,341 1,284 (4 ) 2,621 Selling and marketing expenses - 40 - - 40 - 79 131 - 210 Operating expenses 1 619 - - 619 4 1,420 1,415 (4 ) 2,831 Income (loss) income from operations (1 ) (128 ) - 5 (123 ) (4 ) (100 ) 111 9 20 Other expense: Interest expense - (76 ) - - (76 ) - (166 ) (74 ) - (240 ) Other income - - - - - - 5 2 - 7 Total other expense - (76 ) - - (76 ) - (161 ) (72 ) - (233 ) Net income (loss) from discontinued operations $ (1 ) $ (204 ) $ - $ 5 $ (199 ) $ (4 ) $ (261 ) $ 39 $ 9 $ (213 )

SUPPLEMENTAL DISCLOSURES OF C_2

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION (Tables)	6 Months Ended
	Jun. 30, 2021
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Supplemental disclosure of cash flow information	Six Months ended June 30, 2021 2020 Cash paid for interest - continuing operations $ - $ 994 Cash paid for taxes - continuing operations - - Note received as part of AOC Key Solutions Sale 600 Note received as part of TeamGlobal Sale - 1,700 Paid-in-kind interest transferred from accrued interest to the principal balance of the 2019 Promissory Notes - 1,283 Financing activities: Series A Cumulative Convertible Redeemable Preferred stock dividends included in accounts payable and accrued expenses, settled in common stock (1,005 ) - Series A Cumulative Convertible Redeemable Preferred stock included in temporary equity, settled in common stock (6,770 ) - Series B Cumulative Convertible Preferred stock dividends included in accounts payable and accrued expenses, settled in common stock (179 ) - Adoption of ASC-842 Lease Accounting: Right-of-use lease asset - 132 Lease liability $ - $ (132 )

OPERATING LEASES (Tables)

OPERATING LEASES (Tables)	6 Months Ended
	Jun. 30, 2021
OPERATING LEASES
Summary of operating lease	Operating lease right-of-use lease assets from continuing operations $ 277 Current portion of lease liability $ 142 Long-term portion of lease liability 144 Total lease liability from continuing operations $ 286 Weighted average remaining lease term - operating leases from continuing operations 2.14 Weighted average discount rate - operating leases 9 % 2021 $ 107 2022 104 2023 84 2024 18 Total lease payments $ 313 Less imputed interest 27 Maturities of lease liabilities $ 286

INTANGIBLE ASSETS (Tables)

INTANGIBLE ASSETS (Tables)	6 Months Ended
	Jun. 30, 2021
INTANGIBLE ASSETS
Changes in the carrying amount of goodwill by reportable business segment	December 31, 2020 Additions Amortization June 30, 2021 Intangible assets subject to amortization from continuing operations Customer relationships $ 362 $ - $ (17 ) $ 345 Marketing related 159 - (35 ) 124 Technology based 5,361 4 (523 ) 4,842 Internally capitalized software 1,156 - (243 ) 913 Intangible assets subject to amortization from continuing operations $ 7,038 $ 4 $ (818 ) $ 6,224
Change in intangible assets	Customer Relationships Marketing Related Technology Based Internally Capitalized Software Total Identifiable intangible assets $ 461 $ 327 $ 7,210 $ 1,452 $ 9,450 Accumulated amortization (116 ) (203 ) (2,368 ) (539 ) (3,226 ) Identifiable intangible assets from continuing operations, net $ 345 $ 124 $ 4,842 $ 913 $ 6,224
Estimated annual amortization expense	2021 $ 807 2022 1,543 2023 1,363 2024 1,060 2025 1,051 Thereafter 400 Total $ 6,224

DEBT (Tables)

DEBT (Tables)	6 Months Ended
	Jun. 30, 2021
DEBT
Interest expense	Three Months ended June 30, Six Months ended June 30, 2021 2020 2021 2020 Contractual interest $ 13 $ 805 $ 40 $ 1,639 Amortization of debt issuance costs 5 281 10 611 Total interest expense $ 18 $ 1,086 $ 50 $ 2,250
Future principal amounts	2021 $ 498 2022 1,432 2023 36 Total 1,966 Less unamortized interest (10 ) Total notes payable $ 1,956 Loan payable, current portion $ 911 Loan payable, long-term 55 Notes payable, current portion 990 Total notes payable $ 1,956

STOCKHOLDERS' EQUITY (DEFICIT)

STOCKHOLDERS' EQUITY (DEFICIT) (Tables)	6 Months Ended
	Jun. 30, 2021
Stockholders' equity
Summary of warrants	Series A Preferred Stock Warrants (1) Firestorm Warrants (2) Secure Education Warrants (3) 2018 Public Offering Warrants (4) 2019 Promissory Note Warrants (5) Total Active warrants January 1, 2021 141,789 631,254 66,666 4,886 68,750 913,345 Exercised warrants (96,592 ) - (51,110 ) (1,381 ) (68,750 ) (217,833 ) Outstanding warrants June 30, 2021 45,197 631,254 15,556 3,505 - 695,512 Weighted average strike price of outstanding warrants $ 1.03 $ 3.09 $ 6.06 $ 1.00 $ - $ 3.01 Shares of common stock issued during the three months ended June 30, 2021 96,592 - 51,110 1,280 64,766 213,748

EQUITY INCENTIVE PLAN (Tables)

EQUITY INCENTIVE PLAN (Tables)	6 Months Ended
	Jun. 30, 2021
EQUITY INCENTIVE PLAN
Stock option activity	Number of Shares Subject to Option Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding balance at December 31, 2020 1,243,254 $ 1.44 7.57 $ 7,827 Exercised (65,402 ) 3.47 - Forfeited (10,000 ) 0.80 - Outstanding balance at June 30, 2021 1,167,852 1.33 7.09 $ 9,781 Exercisable at June 30, 2021 958,854 $ 1.36 6.91 $ 8,077
Restricted stock units activity	Number of Shares Weighted Average Unit Price Weighted Average Remaining Contractual Term (Years) Outstanding balance at December 31, 2020 479,984 $ 4.45 2.12 Granted 367,040 13.22 1.79 Vested (195,982 ) 7.54 - Forfeited (67,500 ) 4.32 - Outstanding balance at June 30, 2021 583,542 $ 8.94 1.96

LOSS PER SHARE (Tables)

LOSS PER SHARE (Tables)	6 Months Ended
	Jun. 30, 2021
LOSS PER SHARE
Loss per common share	Three Months ended June 30, Six Months ended June 30, 2021 2020 2021 2020 (Dollars in thousands, except per share data) Basic and diluted loss per share Net loss from continuing operations $ (4,761 ) $ (419 ) $ (10,164 ) $ (4,193 ) Less: preferred stock accretion - (212 ) (101 ) (418 ) Less: preferred stock dividends - (115 ) (51 ) (230 ) Net loss attributable to shareholders from continuing operations $ (4,761 ) $ (746 ) $ (10,316 ) $ (4,841 ) Net loss from discontinued operations (1 ) (199 ) (4 ) (213 ) Net loss attributable to shareholders $ (4,762 ) $ (945 ) $ (10,320 ) $ (5,054 ) Weighted average common shares outstanding - basic and diluted 40,972,709 22,829,084 37,657,471 22,224,417 Basic and diluted loss per share from continuing operations $ (0.12 ) $ (0.03 ) $ (0.27 ) $ (0.22 ) Basic and diluted loss per share from discontinued operations - (0.01 ) - (0.01 ) Basic and diluted loss per share $ (0.12 ) $ (0.04 ) $ (0.27 ) $ (0.23 ) Common stock equivalents excluded due to anti-dilutive effect 2,446,906 5,074,916 2,446,906 5,074,916

GENERAL BASIS OF PRESENTATION A

GENERAL BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Revenue	$ 4,274	$ 2,677	$ 8,491	$ 4,273
Automated Traffic Safety Solutions
Revenue	1,099	734	2,013	1,480
Licensing and Subscription
Revenue	$ 3,175	$ 1,943	$ 6,478	$ 2,793

GENERAL, BASIS OF PRESENTATIO_3

GENERAL, BASIS OF PRESENTATION, AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Revenue	$ 4,274	$ 2,677	$ 8,491	$ 4,273
Commercial Customers
Revenue	2,751	690	5,859	1,479
Government Customers
Revenue	$ 1,523	$ 1,987	$ 2,632	$ 2,794

GENERAL BASIS OF PRESENTATION_2

GENERAL BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) $ in Thousands	Jun. 30, 2021USD ($)
INVESTMENTS
2021	$ 1,783
2022	601
2023	340
2024	106
2025	29
Total	$ 2,859

GENERAL BASIS OF PRESENTATION_3

GENERAL BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Working capital	$ 79,891,000		$ 79,891,000
Comprehensive loss from continuing operations			10,160,000
Net cash from continuing operations			48,883,000
Net proceeds			70,125,000
Note Receivables		$ 1,700,000		$ 1,700,000
Interest rate		4.00%		4.00%
Expected life				5 years 5 months 30 days
Interest income	19,000	$ 12,000	34,000	$ 12,000
E-commerce revenues	405,000	$ 197,000	848,000	$ 373,000
Obligations			$ 15,174,000
Obligations percentage			34.00%
Unbilled accounts receivables	539,000		$ 539,000		$ 600,000
Contract liabilities balance	730,000		730,000
Fulfillment cost	218,000		218,000
Property and equipment	203,000		203,000
Restricted cash and cash equivalents	856,000		856,000		412,000
Federally insured	250,000		250,000
Deposits	69,888,000		$ 69,888,000
Deposits in financial institutions					21,007,000
Risk			10.00%
Contract liabilities	1,782,000		$ 1,782,000		1,126,000
Contract liabilities [Member]
Contract liabilities	$ 2,859,000		$ 2,859,000		$ 2,084,000
Customer A | Accounts Receivable
Risk			24.00%		43.00%
Customer A | Revenue
Risk	10.00%	10.00%	10.00%	23.00%
Customer B | Accounts Receivable
Risk					20.00%
Customer B | Revenue
Risk	28.00%	10.00%	16.00%	10.00%
Customer C | Revenue
Risk	10.00%	35.00%	10.00%	22.00%
Customer D | Accounts Receivable
Risk			21.00%
Customer E | Accounts Receivable
Risk			10.00%

INVESTMENTS (Details Narrative)

INVESTMENTS (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended			6 Months Ended
	Feb. 28, 2017	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2020	Apr. 30, 2021
INVESTMENTS (Details Narrative)
Investment cost		$ 0			$ 0		$ 0
Simple Agreement for Future Equity Investment								$ 1,000,000
Equity investment percentage	19.90%						50.00%
Joint venture, ownership interest, contribution paid			$ 75,000	$ 75,000		$ 150,000
Loss on unconsolidated investments		$ 74,000			$ 150,000

DISCONTINUED OPERATIONS (Detail

DISCONTINUED OPERATIONS (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
ASSETS
Current assets of discontinued operations	$ 0	$ 2,000
Liabilities
Long-term liabilities of discontinued operations	0	5,000
Firestorm [Member]
ASSETS
Cash and cash equivalents	0	2,000
Current assets of discontinued operations	0	2,000
Total assets of discontinued operations	0	2,000
Liabilities
Accounts payable and accrued expenses	30,000	31,000
Lease liability, short term	99,000	93,000
Current liabilities of discontinued operations	129,000	124,000
Lease liability, long term	0	5,000
Long-term liabilities of discontinued operations	0	5,000
Total liabilities of discontinued operations	$ 129,000	$ 129,000

DISCONTINUED OPERATIONS (Deta_2

DISCONTINUED OPERATIONS (Details 1) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Firestorm [Member]
Revenue	$ 0	$ 5,000	$ 0	$ 5,000
Cost of Revenue	0	0	0	0
Gross profit	0	5,000	0	5,000
Selling and marketing expenses	0	0	0	0
Income (loss) from operations	(1,000)	5,000	(4,000)	9,000
Interest expense	0	0	0	0
Other income	0	0	0	0
Total other expense	0	0	0	0
Income (loss) from discontinued operations	(1,000)	5,000	(4,000)	9,000
General and administrative expenses	1,000	0	4,000	(4,000)
Operating expenses	$ 1,000	0	$ 4,000	(4,000)
Total [Member]
Revenue		4,210,000		13,907,000
Cost of Revenue		3,714,000		11,056,000
Gross profit		496,000		2,851,000
General and administrative expenses		579,000		2,621,000
Selling and marketing expenses		40,000		210,000
Operating expenses		619,000		2,831,000
Income (loss) from operations		(123,000)		20,000
Interest expense		(76,000)		(240,000)
Other income		0		7,000
Total other expense		(76,000)		(233,000)
Income (loss) from discontinued operations		(199,000)		(213,000)
Global
Revenue		4,205,000		10,510,000
Cost of Revenue		3,714,000		9,190,000
Gross profit		491,000		1,320,000
General and administrative expenses		579,000		1,341,000
Selling and marketing expenses		40,000		79,000
Operating expenses		619,000		1,420,000
Income (loss) from operations		(128,000)		(100,000)
Interest expense		(76,000)		(166,000)
Other income		0		5,000
Total other expense		(76,000)		(161,000)
Income (loss) from discontinued operations		(204,000)		(261,000)
AOC Key Solutions
Revenue		0		3,392,000
Cost of Revenue		0		1,866,000
Gross profit		0		1,526,000
General and administrative expenses		0		1,284,000
Selling and marketing expenses		0		131,000
Operating expenses		0		1,415,000
Income (loss) from operations		0		111,000
Interest expense		0		(74,000)
Other income		0		2,000
Total other expense		0		(72,000)
Income (loss) from discontinued operations		$ 0		$ 39,000

DISCONTINUED OPERATIONS (Deta_3

DISCONTINUED OPERATIONS (Details Narrative) - USD ($)	Apr. 02, 2020	Jun. 29, 2020
AOC Key Solutions
Purchase outstanding equity	$ 4,000,000
Cash	3,400,000
Promissory note principal amount	$ 600,000
Team Global Sale
Purchase outstanding equity		$ 4,000,000
Cash		2,300,000
Promissory note principal amount		$ 1,700,000

SUPPLEMENTAL DISCLOSURES OF C_3

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION (Details) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest, continuing	$ 0	$ 994,000
Cash paid for taxes, continuing operations	0	0
Note received as part of AOC key solutions sales		600,000
Note received as part of TeamGlobal sale		1,700,000
Non-cash operating - paid-in-kind interest transferred to the principal balance of the 2019 Promissory Notes	0	1,283,000
Financing:
Series A Cumulative Convertible Redeemable Preferred stock dividends included in accounts payable and accrued expenses, settled in common stock	(1,005,000)	0
Series A Cumulative Convertible Redeemable Preferred stock included in temporary equity, settled in common stock	(6,770,000)	0
Series B Cumulative Convertible Preferred stock dividends included in accounts payable and accrued expenses, settled in common stock	(179,000)	0
Adoption of ASC-842 Lease Accounting:
Right-of-use lease asset	0	132,000
Lease liability	$ 0	$ (132,000)

OPERATING LEASES (Details)

OPERATING LEASES (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
OPERATING LEASES
Operating lease right-of-use lease assets from continuing operations	$ 277	$ 426
Current portion of lease liability	142	253
Long-term portion of lease liability	144	$ 188
Total operating lease liabilities from continuing operations	$ 286
Weighted average remaining lease term - operating leases from continuing operations	2 years 1 month 20 days
Weighted average discount rate - operating leases	9.00%

OPERATING LEASES (Details 1)

OPERATING LEASES (Details 1) $ in Thousands	Jun. 30, 2021USD ($)
OPERATING LEASES
2021	$ 107
2022	104
2023	84
2024	18
Total lease payments	313
Less imputed interest	27
Maturities of lease liabilities	$ 286

OPERATING LEASES (Details Narra

OPERATING LEASES (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
OPERATING LEASES
Operating lease expense	$ 84,000	$ 56,000	$ 173,000	$ 104,000
Cash paid for amounts included in the measurement of operating lease liabilities from continuing operations			$ 171,000	$ 64,000

INTANGIBLE ASSETS (Details)

INTANGIBLE ASSETS (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2021USD ($)
Intangible assets, ending	$ 6,224
Continuing Operations | Customer Relationships
Intangible assets, beginning	362
Additions	0
Amortization	(17)
Intangible assets, ending	345
Continuing Operations | Marketing Related
Intangible assets, beginning	159
Additions	0
Amortization	(35)
Intangible assets, ending	124
Continuing Operations | Technology Based
Intangible assets, beginning	5,361
Additions	4
Amortization	(523)
Intangible assets, ending	4,842
Continuing Operations | Internally Developed Capitalized Software
Intangible assets, beginning	1,156
Additions	0
Amortization	(243)
Intangible assets, ending	913
Continuing Operations | Intangible Assets Subject to Amortization
Intangible assets, beginning	7,038
Additions	4
Amortization	(818)
Intangible assets, ending	$ 6,224

INTANGIBLE ASSETS (Details 1)

INTANGIBLE ASSETS (Details 1) $ in Thousands	Jun. 30, 2021USD ($)
Identifiable intangible assets	$ 9,450
Accumulated amortization	(3,226)
Identifiable intangible assets, net	6,224
Internally Developed Capitalized Software
Identifiable intangible assets	1,452
Accumulated amortization	(539)
Identifiable intangible assets, net	913
Marketing-Related Intangible Assets
Identifiable intangible assets	327
Accumulated amortization	(203)
Identifiable intangible assets, net	124
Technology-Based Intangible Assets [Member]
Identifiable intangible assets	7,210
Accumulated amortization	(2,368)
Identifiable intangible assets, net	4,842
Customer Relationships
Identifiable intangible assets	461
Accumulated amortization	(116)
Identifiable intangible assets, net	$ 345

INTANGIBLE ASSETS (Details 2)

INTANGIBLE ASSETS (Details 2) $ in Thousands	Jun. 30, 2021USD ($)
INTANGIBLE ASSETS
2021	$ 807
2022	1,543
2023	1,363
2024	1,060
2025	1,051
Thereafter	400
Total	$ 6,224

INTANGIBLE ASSETS (Details Narr

INTANGIBLE ASSETS (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
INTANGIBLE ASSETS
Amortization expense	$ 409,000	$ 321,000	$ 818,000	$ 635,000

DEBT (Details)

DEBT (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
DEBT
Contractual interest	$ 13	$ 805	$ 40	$ 1,639
Amortization of debt issuance costs	5	281	10	611
Total interest expense	$ 18	$ 1,086	$ 50	$ 2,250

DEBT (Details 1)

DEBT (Details 1) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Loans payable, current portion	$ 911,000	$ 517,000
Notes payable, current portion	990,000	$ 0
Long-term Debt [Member]
2021	498,000
2022	1,432,000
2023	36,000
Total	1,966,000
Less unamortized interest	(10,000)
Total notes payable	1,956,000
Loans payable, current portion	911,000
Loans payable, long-term	55,000
Notes payable, current portion	$ 990,000

DEBT (Details Narrative)

DEBT (Details Narrative) - USD ($)	Jun. 03, 2020	Mar. 12, 2019	May 26, 2020	Jan. 25, 2017	Jun. 30, 2020	Jun. 30, 2021	Dec. 31, 2020
Interest rate					4.00%
2019 Promissory Notes [Member]
Maturity date		Mar. 12, 2024
Work fee payable		$ 403,000
Interest rate		16.00%					24.87%
Loan amount		$ 20,000,000
Warrant issued to purchase common stock		2,500,000
Minimum interest rate per annum		10.00%
Exit fee due on maturity		$ 1,000,000
Legal fee		290,000
Closing fees notes		$ 200,000
Exercise period of warrant		5 years
Warrant exercise price		$ 0.74
Principal balance		$ 1,283,000
Warrant exercisable amount		$ 706,000
Firestorm Notes [Member]
Face value of notes acquired				$ 1,000,000
Balance of notes payable						$ 990,000	$ 980,000
Principal amount of notes				500,000
Principal amount of remaining notes				$ 500,000
Interest rate of remaining notes payable				7.00%
Interest rate				2.00%
Maturity date				Jan. 25, 2022
Difference in interest rate of notes issued						$ 10,000	$ 20,000
2019 Promissory Notes Retirement[Member]
Balance of notes payable					$ 5,284,000
Stock issuance costs					73,000
2019 Promissory Notes Retirement[Member] | Exchange Agreements [Member]
Principal amount of notes					$ 4,398,000
Common stock converted					4,349,497
Amount redeemed in exchange of stock					$ 17,398,000
Exchange rate per share					$ 4
Long-term debt redeemed for common stock					$ 14,688,000
PIK interest					226,000
Debt extinguishments costs					2,484,000
Exit fee					$ 216,000
PPP Loan [Member]
Principal amount of notes	$ 653,000		$ 221,000
Interest rate	1.00%		1.00%
Exercise period of warrant	2 years		2 years

STOCKHOLDERS EQUITY (DEFICIT) (

STOCKHOLDERS EQUITY (DEFICIT) (Details)	6 Months Ended
	Jun. 30, 2021$ / sharesshares
Active warrants January 1, 2021	913,345
Exercised warrants	(217,833)
Outstanding warrants June 30, 2021	695,512
Weighted average strike price of outstanding warrants | $ / shares	$ 3.01
Shares of common stock issued during the three months ended June 30, 2021	213,748
Series A Preferred Stock Warrants [Member]
Active warrants January 1, 2021	141,789
Exercised warrants	(96,592)
Outstanding warrants June 30, 2021	45,197
Weighted average strike price of outstanding warrants | $ / shares	$ 1.03
Shares of common stock issued during the three months ended June 30, 2021	96,592
Firestorm Warrants [Member]
Active warrants January 1, 2021	631,254
Exercised warrants	0
Outstanding warrants June 30, 2021	631,254
Weighted average strike price of outstanding warrants | $ / shares	$ 3.09
Shares of common stock issued during the three months ended June 30, 2021	0
2019 Promissory Note Warrants [Member]
Active warrants January 1, 2021	68,750
Exercised warrants	(68,750)
Outstanding warrants June 30, 2021	0
Weighted average strike price of outstanding warrants | $ / shares	$ 0
Shares of common stock issued during the three months ended June 30, 2021	64,766
2018 Public Offering Warrants [Member]
Active warrants January 1, 2021	4,886
Exercised warrants	(1,381)
Outstanding warrants June 30, 2021	3,505
Weighted average strike price of outstanding warrants | $ / shares	$ 1
Shares of common stock issued during the three months ended June 30, 2021	1,280
Secure Education Warrants [Member]
Active warrants January 1, 2021	66,666
Exercised warrants	(51,110)
Outstanding warrants June 30, 2021	15,556
Weighted average strike price of outstanding warrants | $ / shares	$ 6.06
Shares of common stock issued during the three months ended June 30, 2021	51,110

STOCKHOLDERS EQUITY (DEFICIT)_2

STOCKHOLDERS EQUITY (DEFICIT) (Details Narrative) - USD ($)	Feb. 09, 2021	Jan. 01, 2018	Nov. 01, 2018	Jan. 24, 2017	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020	Mar. 12, 2019
Preferred stock, par value					$ 0.0001			$ 0.0001		$ 0.0001
Net proceeds after deducting the underwriting discounts and commissions and estimated offering expenses payable	$ 70,125,000
Preferred stock, authorized					2,000,000			2,000,000		2,000,000
Common stock, par value					$ 0.0001			$ 0.0001		$ 0.0001
Increase number of authorized shares of common stock					30,000,000			30,000,000		30,000,000
Common stock, authorized					100,000,000			100,000,000		100,000,000
Common stock, issued	6,126,939				41,012,766			41,012,766		33,013,271
Common stock sold pursuant to exercise of an overallotment option	799,166
Exercise price for warrants					$ 3.01			$ 3.01
Series A Preferred Stock [Member]
Preferred stock, par value					$ 0.0001			$ 0.0001		$ 0.0001
Preferred stock, authorized					2,000,000			2,000,000		2,000,000
Exercise price for warrants					$ 1.03			$ 1.03
Warrants expiration date								Nov. 8, 2023
Authorized shares of preferred stock, designated					505,000			505,000		505,000
Preferred Stock, redemption price per share					$ 15			$ 15
Preferred Stock dividends, percentage								7.00%
Preferred stock conversion feature initial public offering					$ 30,000,000			$ 30,000,000
Adjustment redemption value recorded through additional paid in capital					0		$ 212,000	$ 101,000	$ 418,000
Preferred stock, cash dividends price per share								$ 0.175
Accrued dividends payable					$ 0			$ 0		$ 952,000
Preferred Stock issued and outstanding converted into common stock						899,174
Series B Preferred Stock [Member]
Preferred stock, par value					$ 0.0001			$ 0.0001		$ 0.0001
Preferred stock, authorized					2,000,000			2,000,000		2,000,000
Preferred Stock dividends, percentage								1.121%		4.484%
Accrued dividends payable					$ 0			$ 0		$ 167,000
Preferred Stock issued and outstanding converted into common stock								517,611
Authorized shares of preferred stock, designated					240,861			240,861		240,861
Preferred stock shares issued price per share					$ 10			$ 10
Preferred Stock conversion price per share					5			5
Weighted average share price of common stock					$ 7.50			$ 7.50
Preferred stock, issued					240,861			240,861		240,861
OpenALPR Technology Acquisition
Warrants to purchase of coomon stock shares											2,500,000
Warrants issued partial consideration											625,000
2018 Public Offering Warrants [Member]
Warrants to purchase of coomon stock shares			206,250
Warrant exercisable period			five years
Exercise price for warrants			$ 1		$ 1			$ 1
Warrants expiration date			Oct. 29, 2023
2019 Promissory Note Warrants [Member]
Warrants to purchase of coomon stock shares											2,500,000
Exercise price for warrants					0			0			$ 0.74
Secure Education Warrants [Member]
Warrants to purchase of coomon stock shares		33,333
Warrant exercisable period		five years
Exercise price for warrants		$ 6.53			6.06			6.06
Warrants expiration date		Jan. 1, 2023
Firestorm Warrants [Member]
Warrants to purchase of coomon stock shares				315,627
Warrant exercisable period				five years
Exercise price for warrants				$ 3.6083	$ 3.09			$ 3.09
Warrants expiration date				Jan. 24, 2022
Firestorm [Member]
Warrants to purchase of coomon stock shares				315,627
Warrant exercisable period				five years
Exercise price for warrants				$ 2.5744
Warrants expiration date				Jan. 24, 2022
Secure Education Consultants [Member]
Warrants to purchase of coomon stock shares		33,333
Warrant exercisable period		five years
Exercise price for warrants		$ 5.44
Warrants expiration date		Jan. 1, 2023

EQUITY INCENTIVE PLAN (Details)

EQUITY INCENTIVE PLAN (Details) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2021USD ($)$ / sharesshares
EQUITY INCENTIVE PLAN
Number of options outstanding, beginning | shares	1,243,254
Number of options, exercised | shares	(65,402)
Number of options, forfeited | shares	(10,000)
Number of options outstanding, ending | shares	1,167,852
Number of options outstanding, exercisable | shares	958,854
Weighted average exercise price outstanding, beginning | $ / shares	$ 1.44
Weighted average exercise price, exercised | $ / shares	3.47
Weighted average exercise price, forfeited | $ / shares	0.80
Weighted average exercise price outstanding, ending | $ / shares	1.33
Weighted average exercise price outstanding, exercisable | $ / shares	$ 1.36
Average remaining contractual term outstanding, beginning	7 years 6 months 25 days
Average remaining contractual term outstanding, ending	7 years 1 month 2 days
Average remaining contractual term, exercisable	6 years 10 months 28 days
Aggregate intrinsic value outstanding, beginning | $	$ 7,827
Aggregate intrinsic value outstanding, ending | $	9,781
Aggregate intrinsic value outstanding, exercisable | $	$ 8,077

EQUITY INCENTIVE PLAN (Details

EQUITY INCENTIVE PLAN (Details 1)	6 Months Ended
	Jun. 30, 2021$ / sharesshares
EQUITY INCENTIVE PLAN
Number of shares outstanding, beginning | shares	479,984
Number of shares, granted | shares	367,040
Number of shares, vested | shares	(195,982)
Number of shares, forfeited | shares	(67,500)
Number of shares outstanding, ending | shares	583,542
Weighted average unit price, beginning | $ / shares	$ 4.45
Weighted average unit price, granted | $ / shares	13.22
Weighted average unit price, vested | $ / shares	7.54
Weighted average unit price, forfeited | $ / shares	4.32
Weighted average unit price, ending | $ / shares	$ 8.94
Weighted average remaining contractual term, beginning	2 years 1 month 13 days
Weighted average remaining contractual term, granted	1 year 9 months 14 days
Weighted average remaining contractual term, ending	1 year 11 months 15 days

EQUITY INCENTIVE PLAN (Detail_2

EQUITY INCENTIVE PLAN (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Stock compensation expense, stock options	$ 31,000	$ 33,000	$ 60,000	$ 145,000
Initial shares			3,000,000
Stock compensation expense, restricted stock units	1,094,000	$ 133,000	$ 1,846,000	$ 192,000
Unvested Stock Options
Unrecognized stock compensation expense	114,000		$ 114,000
Unrecognized stock compensation expense, recognition period			11 months 8 days
Restricted Stock Units [Member]
Unrecognized stock compensation expense	$ 4,353,000		$ 4,353,000
Unrecognized stock compensation expense, recognition period			1 year 11 months 15 days

LOSS PER SHARE (Details)

LOSS PER SHARE (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Net loss from continuing operations	$ (4,761,000)	$ (419,000)	$ (10,164,000)	$ (4,193,000)
Weighted average common shares outstanding - basic and diluted	40,972,709	22,829,084	37,657,471	22,224,417
Basic and diluted loss per share from continuing operations	$ (0.12)	$ (0.03)	$ (0.27)	$ (0.22)
Basic and diluted loss per share	$ (0.12)	$ (0.04)	$ (0.27)	$ (0.23)
Basic and diluted loss per share [Member]
Net loss from continuing operations	$ (4,761,000)	$ (419,000)	$ (10,164,000)	$ (4,193,000)
Less: preferred stock accretions		(212,000)	(101,000)	(418,000)
Less: preferred stock dividends		(115,000)	(51,000)	(230,000)
Net loss attributable to shareholders from continuing operations	4,761,000	(746,000)	(10,316,000)	(4,841,000)
Net loss from discontinued operations	(1,000)	(199,000)	(4,000)	(213,000)
Net loss attributable to shareholders	$ (4,762,000)	$ (945,000)	$ (10,320,000)	$ (5,054,000)
Weighted average common shares outstanding - basic and diluted	40,972,709	22,829,084	37,657,471	22,224,417
Basic and diluted loss per share from continuing operations	$ (0.12)	$ (0.03)	$ (0.27)	$ (0.22)
Basic and diluted loss per share from discontinued operations	0	(0.01)	0	(0.01)
Basic and diluted loss per share	$ (0.12)	$ (0.04)	$ (0.27)	$ (0.23)
Common stock equivalents excluded due to anti-dilutive effect	2,446,906	5,074,916	2,446,906	5,074,916

LOSS PER SHARE (Details Narrati

LOSS PER SHARE (Details Narrative) - shares	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Potentially dilutive securities excluded from loss per share	2,446,906	5,074,916
Options [Member]
Potentially dilutive securities excluded from loss per share	1,167,852	1,442,738
Restricted Stock Units [Member]
Potentially dilutive securities excluded from loss per share	583,542	350,200
Series B Preferred Stock [Member]
Potentially dilutive securities excluded from loss per share		481,722
Series A Preferred Stock [Member]
Potentially dilutive securities excluded from loss per share		974,487
Warrants [Member]
Potentially dilutive securities excluded from loss per share	695,512	1,825,769

SUBSEQUENT EVENTS (Details Narr

SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - USD ($)	Jul. 15, 2021	Jul. 30, 2021
Reduction in ownership percentage	48.00%
Purchase price to acquire outstanding shares		$ 61,000,000