Rekor Systems, Inc. announced it has filed a lawsuit against former director Viraj Mehta for an alleged breach of fiduciary duty related to the company's December 2025 financing. The complaint, filed on October 16, 2026, in the Delaware Court of Chancery, claims Mehta failed to disclose material conflicts of interest and provided misleading information to the Board of Directors, causing the company to enter into a financing agreement with unfavorable terms.
Key Details
- Allegations: The lawsuit alleges Mehta failed to disclose that his investment fund, Arctis Global LLC, planned to liquidate its entire equity stake (approximately 9% of the company) while retaining its position as a secured creditor. He is also accused of misrepresenting his familiarity with the financing counterparty.
- Financing Impact: The December 2025 financing resulted in the issuance of approximately 8.6 million seven-year warrants and imposed significant restrictions on Rekor's ability to conduct future capital raises.
- Relief Sought: The company is seeking compensatory damages, disgorgement of any personal benefits Mehta received, restitution of his director compensation, and other equitable relief.