RADNOR, Pa., July 26, 2021 (GLOBE NEWSWIRE) — The law firm of Kessler Topaz Meltzer & Check, LLP announces that a securities fraud class action lawsuit has been filed in the United States District Court for the Northern District of Maryland against Rekor Systems, Inc. (NASDAQ: REKR) (“Rekor”) f/k/a Novume Solutions, Inc. (NASDAQ: NVMM) (“Novume”) on behalf of those who purchased or acquired Rekor securities between April 12, 2019 and May 25, 2021, inclusive (the “Class Period”).
Deadline Reminder: Investors who purchased or acquired Rekor securities during the Class Period may, no later than August 30, 2021, seek to be appointed as a lead plaintiff representative of the class. For additional information or to learn how to participate in this litigation please contact Kessler Topaz Meltzer & Check, LLP: James Maro, Esq. (484) 270-1453; toll free at (844) 887-9500; via e-mail at [email protected]; or click https://www.ktmc.com/rekor-systems-class-action-lawsuit?utm_source=PR&utm_medium=link&utm_campaign=rekor
Rekor, through its subsidiaries, provides vehicle identification and management systems based on artificial intelligence in the U.S., Canada, and internationally. Rekor was formerly known as “Novume Solutions, Inc.” before changing its name to “Rekor Systems, Inc.” on April 30, 2019. One of the main drivers of Rekor’s business is its automatic license plate recognition (“ALPR”) technology, which Rekor has pitched to investors as a major market opportunity since at least 2018. For example, Rekor has consistently touted the purportedly lucrative prospects of its uninsured vehicle enforcement diversion (“UVED”) partnership with the State of Oklahoma (“Oklahoma”), under which Rekor receives compensation and commission fees in exchange for using its technology to scan vehicle license plates and compare them against a database to identify vehicles without auto-insurance. Fueled by management commentary, Rekor’s stock price has ballooned under the market perception that the Oklahoma UVED partnership is not only lucrative, but the first stepping-stone to capturing similar deals with other municipalities.
The Class Period commences on April 12, 2019, the day after Rekor filed an annual report on a Form 10-K, post-market, reporting Rekor’s financial and operating results for the quarter and year ended December 31, 2018 and touting Rekor’s newly acquired ALPR technology and its purported competitive strengths. Throughout the Class Period, the defendants represented that Rekor’s ALPR technology could disrupt the current ALPR market, downplayed Rekor’s larger competitors, and touted Rekor’s opportunities for growth in the ALPR space.
The truth began to emerge on May 10, 2021, when a bill authorizing the establishment of a state UVED program was excluded from the Texas Legislature’s Daily House Calendar and left pending in a state committee. Because May 10, 2021 was the deadline for the Texas UVED bill to move from the committee, news sources reported significant market speculation that the bill was dead. On a post-market earnings call that same day to discuss Rekor’s first quarter 2021 financial results, Robert A. Berman, Rekor’s President and Chief Executive Officer, also indicated that Rekor may not secure a UVED agreement with Texas.
Following this news, Rekor’s stock price fell $5.20 per share, or 27.5%, to close at $13.71 per share on May 10, 2021.
Then, on May 26, 2021, private investor Western Edge published a report addressing Rekor, entitled “Rekor Systems: Lackluster Growth Runway And Exaggerated Insurance Scheme Raise Substantial Downside Risk.” The Western Edge report alleged, among other things, that global competition was “miles ahead” of Rekor in ALPR development and market establishment, “realized results suggest management’s potential revenue guidance could be overstated by up to 80%,” and that investors were at risk of facing a “massive downside if [Rekor’s] growth doesn’t show up.” The Western Edge report also found that the revenue prospects for Rekor’s Oklahoma UVED partnership were significantly overstated. Finally, the Western Edge report pointed out that municipalities were unlikely to adopt legislation allowing Rekor’s ALPR-related services because of state and local privacy laws and related public concerns, as well as general antipathy towards targeting lower-income communities that cannot afford auto-insurance.
Following this news, Rekor’s stock price fell $0.44 per share, or 3.93%, to close at $10.77 per share on May 26, 2021.
The complaint alleges that throughout the Class Period, the defendants made false and/or misleading statements and/or failed to disclose that: (1) Rekor’s ALPR technology and UVED-related business is outclassed by global competitors with an established, dominant market share; (2) it was unlikely that states would pass legislation authorizing deals similar to Rekor’s Oklahoma UVED partnership because of, inter alia, state and local privacy laws and related public concerns; (3) Rekor’s UVED partnership was not as profitable as the defendants had led investors to believe because of known impediments to enrollment rates and costs associated with the partnership; (4) accordingly, Rekor had overstated its potential revenues, profitability, and overall ALPR- and UVED-related business prospects; and (5) as a result, Rekor’s public statements were materially false and misleading at all relevant times.
Rekor investors may, no later than August 30, 2021, seek to be appointed as a lead plaintiff representative of the class through Kessler Topaz Meltzer & Check, LLP or other counsel, or may choose to do nothing and remain an absent class member. A lead plaintiff is a representative party who acts on behalf of all class members in directing the litigation. In order to be appointed as a lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not affected by the decision of whether or not to serve as a lead plaintiff.
Kessler Topaz Meltzer & Check, LLP prosecutes class actions in state and federal courts throughout the country involving securities fraud, breaches of fiduciary duties and other violations of state and federal law. Kessler Topaz Meltzer & Check, LLP is a driving force behind corporate governance reform, and has recovered billions of dollars on behalf of institutional and individual investors from the United States and around the world. The firm represents investors, consumers and whistleblowers (private citizens who report fraudulent practices against the government and share in the recovery of government dollars). The complaint in this action was not filed by Kessler Topaz Meltzer & Check, LLP. For more information about Kessler Topaz Meltzer & Check, LLP please visit www.ktmc.com.
Kessler Topaz Meltzer & Check, LLP
James Maro, Jr., Esq.
280 King of Prussia Road
Radnor, PA 19087
(844) 887-9500 (toll free)