Attached files
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 8-K
____________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): June 29,
2020
____________________
REKOR SYSTEMS, INC.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
001-38338
|
81-5266334
|
|
(State
or Other Jurisdiction
of
Incorporation)
|
(Commission
File Number)
|
(IRS
Employer
Identification
No.)
|
|
|
|
|
|
7172 Columbia Gateway Drive, Suite 400, Columbia, MD
21046
|
||
|
(Address
of Principal Executive Offices)
|
||
|
|
||
|
Registrant's
Telephone Number, Including Area Code: (410)
762-0800
|
||
|
|
||
|
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
|
|
☐ Written communications pursuant to Rule 425 under
the Securities Act (17 CFR 230.425)
|
|
☐ Soliciting material pursuant to Rule 14a-12 under
the Exchange Act (17 CFR 240.14a-12)
|
|
☐ Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
|
☐ Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Securities registered pursuant to Section 12(b) of the
Act:
|
Title
of each class
|
Trading
Symbol(s)
|
Name of
each exchange on which registered
|
|
Common
Stock, $0.0001 par value per share
|
REKR
|
The
Nasdaq Stock Market
|
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the
Securities Act of 1933 (§230.405 of this chapter) or Rule
12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this
chapter)
Emerging
Growth Company ☐
If
an emerging
growth company, indicate
by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Item
1.01
Entry
into a Material Definitive Agreement.
Global Technical Services Transaction
On
June 29, 2020, Rekor Systems, Inc. (the “Company”)
entered into a Stock Purchase Agreement (the “Purchase
Agreement”) by and among the Company, Global Technical
Services, Inc., a Texas corporation and wholly owned subsidiary of
the Company (“TeamGlobal”), and Talent Teams LLC, a
Texas limited liability company owned by the members of
TeamGlobal’s management (the “Buyer”), pursuant
to which the Company agreed to sell TeamGlobal, which is a national
staffing firm that provides skilled technical professionals and
maintenance and modification specialists to the aerospace and
aviation maintenance industries, to Buyer.
Subject
to the terms and conditions of the Purchase Agreement, the 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, consisting of $300,000 of cash
received from Buyer and $2,000,000 of cash received from
TeamGlobal, 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 Buyer (the
“Transaction”). The Transaction closed concurrently
with execution of the Purchase Agreement.
The
Purchase Agreement contains customary representations, warranties
and covenants related to TeamGlobal and the Transaction. For a
period of five years, the Company has agreed not to engage in
activities that compete with the Business, nor for a period of two
years solicit customers of TeamGlobal, among other covenants with
respect to TeamGlobal as set forth more fully in the Purchase
Agreement. Both the Company and the Buyer have agreed to indemnify
the other party for losses arising from certain breaches of
covenants contained in the Purchase Agreement and other
liabilities, subject to certain limitations.
The
Purchase Agreement also contains customary representations and
warranties that the Company and the Buyer made to each other as of
the date of the Purchase Agreement. The assertions embodied in
those representations and warranties were made solely for purposes
of the contract between the Company and the Buyer, and may be
subject to important qualifications and limitations agreed to by
the parties in connection with negotiating its terms. Moreover, the
representations and warranties are subject to a contractual
standard of materiality that may be different from what may be
viewed as material to stockholders of the Company, and the
representations and warranties may have been used to allocate risk
between the Company and the Buyer rather than establishing matters
as facts.
The
foregoing descriptions of the Purchase Agreement, the Secured Note,
and the Pledge Agreement do not purport to be complete and are
qualified in their entirety by reference to the complete text of
the Purchase Agreement, Secured Note, and Pledge Agreement,
respectively. A copy of the Purchase Agreement is filed as Exhibit
2.1, and a copy of the Secured Note and the Pledge Agreement are
filed as Exhibits 10.1 and 10.2, respectively, to this Current
Report on Form 8-K and are incorporated by reference
herein.
Note Exchange Transaction
On June
30, 2020, the Company entered into Exchange Agreements with certain
holders (the “Exchange Share Recipients”) of the
Company’s senior secured promissory notes issued pursuant to
that certain Note Purchase Agreement, dated March 12, 2019 (the
“Note Purchase Agreement”), among the Company, the
guarantors from time to time party thereto, U.S. Bank, National
Association, and the Exchange Share Recipients and other purchasers
from time to time party thereto (the “2019
Notes”). Subject to the terms and conditions set forth
in the Exchange Agreements, and in reliance on Section 3(a)(9) of
the Securities Act of 1933, as amended (the “Securities
Act”), approximately $14.6 million aggregate principal amount
of the 2019 Notes, including accreted interest plus certain fees
payable pursuant to the terms of the 2019 Notes, will be redeemed
in exchange for approximately 4,209,000 shares of the
Company’s common stock, par value $0.0001 per share, at a
rate of $4 per share (the “Exchange”). Following
the Exchange, approximately $4.9 million aggregate principal amount
of the 2019 Notes will remain outstanding, and the total number of
shares of the Company’s common stock issued and outstanding
following the Exchange will be approximately 27,151,000. The
Exchange is subject to customary closing conditions, including but
not limited to the receipt of approval from Nasdaq for the listing
of the shares to be issued in the Exchange.
The
foregoing description of the Exchange Agreements does not purport
to be complete and is qualified in its entirety by reference to the
full text of the Exchange Agreements, a form of which is attached
hereto as Exhibit 10.3 and incorporated herein by
reference.
Third Amendment to Note Purchase Agreement
As previously disclosed on the Company’s Current Report on
Form 8-K as filed with the SEC on March 26, 2020, the Company
entered into a First Amendment to Note Purchase Agreement (the
“First Note Amendment”), by and among parties to the
Note Purchase Agreement. Pursuant to the terms of the First Note
Amendment, the maturity date for the notes issued under the First
Note Purchase Agreement was extended from March 11, 2021 to June
12, 2021, unless earlier accelerated pursuant to the terms of the
Note Purchase Agreement, as amended.
As previously disclosed in the Company’s Current Report on
Form 8-K as filed with the SEC on April 6, 2020, the Company
entered into a Partial Release and Second Amendment to Note
Purchase Agreement (the “Second Amendment”), by and
among the parties to the Note Purchase Agreement. Pursuant to the
terms of the Second Amendment, the Company’s wholly-owned
subsidiary AOC Key Solutions, Inc. (“AOC”) was released
as a credit party and the assets related to AOC were released as
collateral, and the Asset Disposition Proceeds terms of the Note
Purchase Agreement were amended to reflect the AOC
sale.
On
June 29, 2020, in connection with the Transaction and the Exchange,
the Company entered into a Partial Release and Third Amendment to
Note Purchase Agreement (the “Third Amendment”), by and
among the parties to the Note Purchase Agreement. Pursuant to the
terms of the Third Amendment, TeamGlobal was released as a credit
party and the assets related to TeamGlobal were released as
collateral, the mandatory prepayments provision of the Note
Purchase Agreement were waived with regard to the sale of
TeamGlobal, the Exchange was authorized, the maturity date of the
2019 Notes remaining outstanding following the completion of the
Exchange was extended to December 31, 2021, and certain other
conforming amendments related to the foregoing were
made.
The
foregoing description of the Third Amendment does not purport to be
complete and is qualified in its entirety by reference to the full
text of the Third Amendment a copy of which is attached hereto as
Exhibit 10.4 and incorporated herein by reference.
Item 2.01
Completion of Acquisition or Disposition of Assets.
The disclosure set forth above in Item 1.01 regarding the
Transaction is incorporated into this Item 2.01 by
reference.
Item
3.02
Unregistered
Sales of Equity Securities.
The
disclosure set forth above under Item 1.01 regarding the Exchange
is incorporated into this Item 3.02 by
reference.
Item
8.01
Other Events.
On June 30, 2020, the Company issued a press release announcing the
Transaction. A copy of this press release is attached hereto as
Exhibit 99.1 hereto and is incorporated by reference
herein.
On July 1, 2020, the Company issued a press release announcing the
Exchange. A copy of this press release is attached hereto as
Exhibit 99.2 hereto and is incorporated by reference
herein.
Forward-Looking Statements
The
Press Releases attached to this Current Report on
Form 8-K contain forward-looking statements within the
meaning of U.S. federal securities laws. Such forward-looking
statements include, but are not limited to, statements regarding
the expectations, hopes, beliefs, intentions, plans, prospects or
strategies of the Company. Any statements contained therein that
are not statements of historical fact may be deemed to be
forward-looking statements. In addition, any statements that refer
to projections, forecasts or other characterizations of future
events or circumstances, including any underlying assumptions, are
forward-looking statements. The words “anticipate,”
“believe,” “continue,” “could,”
“estimate,” “expect,”
“intends,” “may,” “might,”
“plan,” “possible,”
“potential,” “predict,”
“project,” “should,” “would”
and similar expressions may identify forward-looking statements,
but the absence of these words does not mean that a statement is
not forward-looking. The forward-looking statements contained in
the Press Releases are based on certain assumptions and analyses
made by the management of the Company in light of their respective
experience and perception of historical trends, current conditions
and expected future developments and their potential effects on the
Company as well as other factors they believe are appropriate in
the circumstances. There can be no assurance that future
developments affecting the Company will be those anticipated. These
forward-looking statements involve a number of risks, uncertainties
(some of which are beyond the control of the parties) or other
assumptions that may cause actual results or performance to be
materially different from those expressed or implied by these
forward-looking statements. Should one or more of these risks or
uncertainties materialize, or should any of the assumptions being
made prove incorrect, actual results may vary in material respects
from those projected in these forward-looking statements. We
undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as may be required under applicable securities
laws.
Item
9.01.
Financial
Statements and Exhibits
(d)
Exhibits.
The following exhibits are filed herewith:
|
ExhibitNumber
|
Description
|
|
Stock
Purchase Agreement, dated June 29, 2020, by and among Rekor
Systems, Inc., Global Technical Services, Inc. and Talent Teams
LLC.
|
|
|
Secured
Promissory Note dated June 29, 2020.
|
|
|
Pledge
and Security Agreement by and between Rekor Systems, Inc. and
Talent Teams LLC dated June 29, 2020.
|
|
|
Form of
Exchange Agreement
|
|
|
Third
Amendment to Note Purchase Agreement, dated June 29, 2020, by and
among the Company, the Purchasers from time to time party thereto
and the Agent.
|
|
|
10.5
|
Second
Amendment to Note Purchase Agreement, dated April 2, 2020, by and
among the Company, the Purchasers from time to time party thereto
and the Agent (incorporated by reference to Exhibit 10.2 to the
Current Report on Form 8-K as filed with the SEC on April 6,
2020).
|
|
10.6
|
First
Amendment to Note Purchase Agreement, dated March 26, 2020, by and
among the Company, the Purchasers from time to time party thereto
and the Agent (incorporated by reference to Exhibit 10.1 to the
Current Report on Form 8-K as filed with the Securities and
Exchange Commission on March 26, 2020.).
|
|
10.7
|
Note
Purchase Agreement, dated as of March 13, 2019, by and among the
Credit Parties, the Purchasers from time to time party thereto and
the Agent (incorporated by reference to Exhibit 4.3 to the Current
Report on Form 8-K as filed with the Securities and Exchange
Commission on March 18, 2019).
|
|
Press
Release issued on June 30, 2020
|
|
|
Press
Release issued on July 1, 2020
|
†
Schedules and
similar attachments to this Exhibit have been omitted pursuant to
Item 601(a)(5) of Regulation S-K. The Company agrees to furnish
supplementally a copy of such omitted materials to the SEC upon
request.
SIGNATURE
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
|
|
REKOR SYSTEMS, INC.
|
|
|
|
|
|
|
|
|
|
|
Date:
July 6, 2020
|
/s/
Robert A. Berman
|
|
|
|
Name:
Robert A. Berman
Title:
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|