OpenALPR Technology, Inc. — Audited Financial Statements, December 31, 2018 and 2017
Exhibit filed with Novume Solutions, Inc. / Rekor Systems, Inc. Form 10-K
U.S. Securities and Exchange Commission
https://www.sec.gov/Archives/edgar/data/1697851/000165495419005692/ex99_1openalpraudit.htm
(CIK 0001697851)

NOTE 1 – ORGANIZATION AND BUSINESS ACTIVITY

OpenALPR Technology, Inc. ("OpenALPR" or the "Company"), is an S Corporation organized in the state of Florida on June 5, 2015 and headquartered in Boston, Massachusetts.

OpenALPR provides Automatic License Plate Recognition software used by both law enforcement and commercial clients to analyze digital images and video streams to identify license plates. License plate information, along with vehicle make, model, color, and direction of travel, are converted to data in real time, with the capability for recognition of thousands of plates per hour depending on hardware configuration. The OpenALPR software uses artificial intelligence to extract information from video streams and images.

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NOTE 6 (excerpt) — SALE OF NET ASSETS TO REKOR

On November 14, 2018, the Company entered into an Asset Purchase Agreement ("Open ALPR Purchase Agreement") with Rekor pursuant to which the Company will sell certain assets including software and customer lists, and transfer certain liabilities, as defined ("OpenALPR's Net Assets").

On February 15, 2019, the Company entered into Amendment No. 1 to the OpenALPR Purchase Agreement, pursuant to which the parties agreed to amend the components of the original $15,000,000 Base Purchase Price to $7,000,000, subject to adjustment after closing, issue a promissory note in the amount of $5,000,000, and issue 600,000 shares of Rekor common stock, with a stated value of $5 per share, as consideration for the acquisition of OpenALPR's Net Assets.

On March 8, 2019, the Company entered into Amendment No. 2 to the OpenALPR Purchase Agreement which eliminated the prior purchase price adjustment set forth in the OpenALPR Purchase Agreement, as amended, and replaced it with an adjustment for prepaid maintenance contracts, as defined.

On March 12, 2019, the Company completed the sale of certain assets and liabilities to Rekor Recognition Systems, Inc. ("Rekor Recognition"). Consideration received was as follows: $7,000,000 in cash, subject to adjustment after closing; 600,000 shares of Rekor common stock; and $5,000,000 in a promissory note, which is due and payable on March 11, 2021 and bears interest at 16%, as defined, together with an accompanying warrant to purchase 625,000 shares of Rekor common stock, exercisable over a period of five years, at an exercise price of $0.74 per share, valued at $208,125. The note also requires a premium, if paid before the maturity date, a $250,000 exit fee due at maturity, and compliance with covenants by Rekor.

NOTE 7 – SUBSEQUENT EVENTS

As detailed in Note 6 above, on March 12, 2019, the Company sold certain assets liabilities to Rekor through Rekor Recognition.