Rekor Systems, Inc.

PRELIMINARY STATEMENT

1. This action arises from the failure of one Rekor director to disclose material facts about his personal interests to his fellow board members while he steered Rekor into an emergency financing from which he sought to personally benefit to the detriment of Rekor.

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2. In December 2025, Rekor needed capital. Mehta, a Rekor director and the owner and Chief Investment Officer of one of Rekor’s largest stockholders, Arctis Global LLC (“Arctis”), took charge of the process and recommended a financing that put seven-year warrants and restrictions on future capital raises on Rekor’s stockholders. When the Board expressed concern about avoiding selling pressure on the Company’s stock, Mehta told the Board he was “familiar with the prospective buyer” and that the buyer was not expected to sell. By his own later account, he had never heard of the buyer before the underwriter introduced it, which happened the evening before the vote at which he made that statement, and he had no basis for opining on the buyer’s intent.

3. At the same time, Mehta also deliberately kept from the Board that the fund Arctis managed was winding down and would distribute its entire Rekor position, roughly 9% of the Company, to its investors, while keeping a $5 million secured note against Rekor. The fund told its own investors that same month. Yet, Mehta told the Board nothing.

4. The December 2025 financing closed in reliance on Mehta’s recommendations and representations. Upon information and belief, the buyer sold its entire allocation within the quarter, precisely what the Board sought to avoid and what Mehta baselessly asserted should not be a concern. Mehta resigned in January 2026. Twelve days after his lock-up expired, on the record date for Rekor’s annual meeting, his fund distributed every share in kind to its investors and kept its note. Rekor’s annual meeting then failed for want of a quorum in May and again in September. Mehta’s fund went into voluntary liquidation on the day of the first failure and, in Mehta’s words, is now “basically down to just the revenue notes issued to Rekor,” which mature on December 15, 2026.

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5. The Board knew that Mehta ran Arctis and that Arctis was a large stockholder and a secured Rekor creditor. It did not know that the fund was about to divest its stock, that Arctis’s claim via its note against the Company would remain, and that the director recommending the financing was weighing the financing’s terms as a creditor that had already developed a plan to offload the company’s stock. A reasonable director would have wanted to know that before relying on Mehta’s assurances. And Mehta had a duty to disclose it. But Mehta withheld it before the vote, before the closing, and through his resignation.

6. Rekor is left with the consequences. Mehta caused the Company to issue 8,571,428 seven-year warrants and sign a side letter that (1) forecloses an entire category of financing, (2) limits at-the-market sales to prices of at least $1.75, and (3) gives the buyer 30% of every qualifying financing through December 2027. The 12,312,491 shares Mehta reported to the SEC as his own beneficial ownership left the fund bound by no lock-up, ordinary-sale arrangement or voting undertaking in favor of Rekor. Upon information and belief, those shares went unvoted at an annual meeting that could not act for five months for want of quorum. And, upon information and belief, since mid-August 2026 they have been leaving the largest recipient’s custodial position, consistent with sales, into a market in which Rekor’s stock has fallen from about $0.62 to about $0.36. And, as Rekor has disclosed, Rekor faces a $15 million maturity on December 15, 2026, that it cannot meet without refinancing, restructuring or new capital.

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7. Rekor brings this action against Mehta for breach of his fiduciary duty of loyalty and seeks damages, disgorgement, restitution of his director compensation, and related equitable relief. Rekor reserves all claims against all other persons arising from the facts alleged herein.