Rekor Systems, Inc. (NASDAQ:REKR) Q4 2022 Earnings Call Transcript

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Robert Berman: You know, it hasn’t at this point, we started it. We had a number of states that we’re interested, why the stage owners — and reduce the number of uninsured motor vehicles on the road. I have no idea. But since we’ve been, which is only a couple of years running the program in Oklahoma, it’s exactly what we told Oklahoma would happen, we’ve reduced the number of uninsured motor vehicles on that state’s roadway by a little over 40%, right, in a self-funded program. I do think over time that given this is 21st century contactless compliance, whether it’s registration or motor vehicle inspections or uninsured, whatever it might be there is better things for a law enforcement officers to be knowing that calling people over for minor traffic infractions.

So this is a system that Rekor built that works well. But again, it’s the same system, that’s after count, count class, and speed. Right. So we need to everybody on this call to understand when we deploy a system, it does all of this, it’s just a matter of toggling on, we’re turning it off, right? If you want, we will turn it on. And you’ll pay for it, we will turn it on, right? So that’s the point. We don’t need to go back out to the highway and install something else, that’s the difference.

Unidentified Analyst: And also towards the affiliate contract maybe or that’s the one to pilot, or can we expect that to be any contract PR in the future?

Robert Berman: Well, it started as a pilot with AWS and we expect it to evolve into more right? And I think that the information that we’ve given the city is such that they understand its value of it and I think we’ll see it expand and it will go from there. And I will tell you that I – as David said, having AWS as a partner and then bulging for the proficiency of our technology is something that’s important. And we’re getting there and it’s just early for maybe because we’re public it’s late, but we’ve only been around for a few years. So it’s still early in this game. Thank you.

Unidentified Analyst: And one other question, I believe with South Carolina, New York and 14 other states are requesting like proof of capability. Two quarters ago, I had mentioned a pilot and how many , you mentioned steering away from the pilots. What’s the difference between like a pilot and improve the capabilities —

Robert Berman: These are major differences — I’ll let David address this. David, maybe you can address the capability and start with South Carolina. Thank you.

David Desharnais: Yes, no problem. So the distinction that I guess you could make of a proof-of-concept versus a proof-of-capability. The proof-of-concept, we’re not trying to prove the concept, the concept has been proven, it’s more of the in that particular environment for that state on those particular roadways, it’s more of the capability that we’re demonstrating to them, that’s something that works, but it’s more of a refinement for their specific needs. They may have a specific type of environment dust – like heavy dust on a road or they may have particular or unique vehicles that are there that from a machine-learning training perspective, we may not have seen enough to train in a way that we want. So the perfect capability is really to put the devices on a roadside on the roadside for them in particular and train for their particular environmental conditions, which is very fast actually.

So that’s what we mean when we say, proof of capability versus a proof-of-concept.

Unidentified Analyst: I’m sorry.

David Desharnais: Oh, yes, indeed, yes. I mean it’s literally like four to six-weeks, maybe initially or six to eight. But I expect that to come down, because there is something called transfer learning on that way. Whereas when you learn it in one environment it closes the gap and multiple other environments at the same time, as you might imagine. So what a proof of capability might take one or two, what is called the sprint and the R&D terms to close on that particular environment that really captures more and more of all the environments we will expect to see in the envelope. So yes, does that answer your question?

Unidentified Analyst: Yes, it definitely does. I appreciate it. And also my last question, I did have one more with Mexico and the technology across 1,800 locations. I don’t remember anything be mentioned in the length of the contract of potential revenue. Can we expect something from that in the near-future?

Robert Berman: Well, it’s a good question. We have now several thousand devices and operating in multi cities and parts of Mexico and different states. It started back with Monterey, a few years ago if you look at our announcements. And when it comes to public safety a lot of these entities — governmental entities that are primarily public safety, law enforcement, they don’t like us to talk about it because the people that they’re using it to keep an eye on find out about it, right? So we do the best we can to accommodate that, right. Well, the good news is that it’s grown, it’s grown in Mexico from 2019 to today to several thousand from a few hundred devices out there and we see that happening in other places as well. Same thing with our business with the U.S. DoD.

It’s grown significantly. If you go back through the years and you look at the contracts we’ve had with DoD, they don’t – we can’t really talk about where the technology is being used. I don’t think they want folks to know where it’s being used, but it’s being used. And I think that what’s important – the importance is that it’s being used, and these are significant contracts.

Operator: And we have reached the end of the question-and-answer session, I’ll now turn the call back over to Robert Berman for closing remarks.

Robert Berman: Yes, thank you. Look, thanks, everybody, and I can tell you looking at the attendance list here. Rekor is very fortunate I feel very fortunate and I’m sure I speak for the rest of the team and we’ve got a really great group of shareholders that have been with us and supported the Company and so far and so. It’s not an easy thing to do, right. And all I can tell you is that if – and I’ve always said this, we’re not we’re public but if we were private, right, you might consider yourself flies on the wall inside of some big DCs office listening to all this stuff and you might not see the Company for a few more years, but that’s what creates the opportunity. Okay, Rekor has been around for just several years, right?

I think we’ve made tremendous progress, it’s been like balancing on ahead of a pen to try to just work because we went public. But as I said in my remarks earlier, we’re no longer startup, okay. This company is after the races and I think in ’23 and beyond, you’re going to see significant growth and consider yourselves very fortunate to be part of a very small club. This is probably going to grow significantly. So with that, I thank everybody for coming to the call. Thank you for all your support.

Operator: And this concludes today’s conference and you may disconnect your lines at this time. Thank you for your participation.

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