Bragar Eagel & Squire, P.C. Reminds Investors That Class
NEW YORK, March 22, 2023 (GLOBE NEWSWIRE) — Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, reminds investors that class actions have been commenced on behalf of stockholders of Inspirato Incorporated (NASDAQ: ISPO), Kornit Digital Ltd. (NASDAQ: KRNT), and Alico, Inc. (NASDAQ: ALCO), and Catalent, Inc. (NYSE: CTLT). Stockholders still have time to petition the court for the role of lead plaintiff. The link below provides additional information on each case.
Inspirato Incorporated (NASDAQ: ISPO)
Class Period: May 11, 2022 to December 15, 2022
Deadline for Lead Plaintiffs: April 17, 2023
The Complaint alleges that the Company made misleading and false statements to the market. Inspirato’s financial statements for the quarters ending March 31, 2022 and June 30, 2022 (collectively, the “Non-Reliance Periods”) could not be relied upon. Incorrectly applying Accounting Standards Update (ASU No. 2016-02, Leases (Topic 842) (“ASC 842”), resulting in the unreliability of the Non-Reliance Periods. Based on these facts, the Company’s public statements were false and materially misleading throughout the class period. Investors suffered damage when the truth was revealed about Inspirato.
For more information on the Inspirato class action go to: https://bespc.com/cases/ISPO
Kornit Digital Ltd.
Class Period: February 17, 2021 to July 5, 2022
Deadline for Lead Plaintiffs: April 17, 2023
Kornit develops and manufactures digital printing technology for the apparel, textile, and garment industries. The Company’s digital inkjet printers enable end-users to print both direct-to-garment (“DTG”) and direct-to-fabric (“DTF”). DTG printing is where designs and images can be printed directly onto textiles like clothing and apparel. In DTF printing, large rolls of fabric pass through wide inkjet printers that print images and designs directly onto swaths of fabric that are then cut and sewn into a product, and can be used in the fashion and home décor industries. Kornit also sells textile inks, and other consumables to use with its digital printers. Kornit offers customer support contracts that provide technical support and equipment services to its printers.
The Company started offering software services to customers during the Class Period. These include a suite of end–to-end fulfillment and manufacturing solutions, known as KornitX. It provides, among other things: automated production systems and workflow management and inventory control.
The Company’s largest customer is multinational e-commerce company, Amazon.com, Inc. (“Amazon”). Among the largest of Kornit’s other customers during the Class Period were Delta Apparel, Inc. (“Delta Apparel”), a leading provider of activewear and lifestyle apparel products, and Fanatics, Inc. (“Fanatics”), a global digital sports platform and leading provider of licensed sports merchandise. Kornit’s ten largest customers account for more than 60% of its revenue. Accordingly, it was critically important for Kornit to maintain those major customers as well as continue to grow its customer base in order to achieve the Company’s ambitious goal of “becoming a $1 billion revenue company in 2026.”
Throughout the Class Period, Kornit repeatedly touted the purported competitive advantages provided by its technology and assured investors that it faced virtually no meaningful competition in the “direct-to-garment” printing market. Kornit claimed that customers were very interested in its digital printing systems. It also offered consumable products such as textile dyes. Kornit also offered services to assist them with managing their digital printers. Kornit further assured investors that the purportedly strong demand for the Company’s products and services would enable it to maintain its existing customer base and attract new customers that would limit the risks associated with a substantial portion of its revenues being concentrated among a small number of large customers.
These statements and others made during the Class Period were false. In truth, Kornit and its senior executives knew, or at a minimum, recklessly disregarded, that the Company’s digital printing business was plagued by severe quality control problems and customer service deficiencies. Those problems and deficiencies caused Kornit to cede market share to competitors, which, in turn, led to a decrease in the Company’s revenue as customers went elsewhere for their digital printing needs. These misrepresentations led to Kornit’s ordinary shares trading at artificially high prices during the Class Period.
Investors began to learn the truth on March 28, 2022, when Delta Apparel and Fanatics—two of Kornit’s major customers—announced that for months they had collaborated with one of Kornit’s principal competitors to develop a new digital printing technology that directly competed with products and services Kornit offered. Delta Apparel said that it had installed the new technology in four existing digital print facilities and was planning to expand. The utilization of this new, competing technology by Delta Apparel and Fanatics reflected the widespread dissatisfaction of Kornit’s major customers with the Company’s product quality and customer service, and meant that Kornit would likely lose revenue from two of its most important customers.
Kornit reported a net loss for its first quarter 2022. This was despite reporting revenue that was higher than expected. The Company also issued revenue guidance for the second quarter of 2022 that was significantly below analysts’ expectations. Kornit attributed its disappointing guidance to a slowdown in orders from the Company’s customers in the e-commerce segment. Additionally, Kornit admitted that for at most the past two quarters, Kornit knew Delta Apparel, one of its largest customers had acquired digital printing equipment from a Kornit competitor. These disclosures resulted in Kornit’s ordinary shares falling by $18.78, or 33.3%,
Kornit then announced that it would report a significant revenue shortfall for the second quarter 2022 on July 5, 2022 after the market had closed. Kornit forecasted that revenue for the second quarter would be between $56.4 million and $59.4 millions. This is far below the $85 million to $95 million revenue guidance the Company gave less than two months ago, in May 2022. Kornit attributed the substantial revenue miss to “a significantly slower pace of direct-to-garment (DTG) systems orders in the second quarter as compared to our prior expectations.” As a result of these disclosures, the price of Kornit ordinary shares declined by an additional $8.10 per share, or 25.7%.
As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s shares, Plaintiff and other Class members have suffered significant losses and damages.
For more information on the Kornit class action go to: https://bespc.com/cases/KRNT
Alico, Inc. (NASDAQ: ALCO)
Class Period: February 4, 2021-December 13, 2022
Deadline for Lead Plaintiff: April 18, 2023
Alico operates in the U.S. together with its subsidiaries as an agribusiness company and land management firm. The Company operates in two segments. Alico Citrus is a segment that cultivates citrus trees for fresh and processed citrus markets. The Land Management and Other Operations Segment owns and operates land in Collier and Glades Counties. They also lease land for recreational and grazing purposes as well as conservation and mining activities.
Throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Alico had deficient disclosure controls and procedures and internal control over financial reporting; (ii) as a result, the Company had improperly calculated Alico’s deferred tax liabilities over a multi-year period; (iii) accordingly, the Company would likely be required to restate one or more of its previously issued financial statements; (iv) the foregoing would impede the timely completion of the audit of the Company’s financial results in advance of its year-end earnings call; and (v) as a result, the Company’s public statements were materially false and misleading at all relevant times.
Alico released a press release on December 6, 2022 announcing that it was delaying its year-end earnings conference. Specifically, the press release stated that “additional time is required for completion of the audit of its financial results for the period ended September 30, 2022 by its independent registered public accounting firm.”
On this news, Alico’s stock price fell $3.06 per share, or 10.42%, to close at $26.29 per share on December 6, 2022.
Alico released a press release on December 7, 2022 that provided an update on the Company’s delays in reporting fiscal 2022 results and filing the required SEC filings. In the press release, the Company disclosed that “[t]he key item that is requiring such additional time involves evaluation of the proper amount of the Company’s Deferred Tax Liability, particularly certain portions of that Deferred Tax Liability arising in prior fiscal years, including those going back to fiscal year 2019 or possibly several years before fiscal year 2019.”
Finally, on December 13, 2022, Alico filed with the SEC its Annual Report on Form 10-K for the year ended September 30, 2022 (the “2022 10-K”). In the 2022 10-K, Alico “restate[d] the Company’s previously issued audited consolidated balance sheet, audited consolidated statements of changes in equity and related disclosures as of September 30, 2021 included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2021 (the ‘2021 10-K’) previously filed with the SEC and the Company’s previously issued unaudited consolidated balance sheet, unaudited consolidated statements of changes in equity and related disclosures as of the end of each quarterly periods ended June 30, 2022, March 31, 2022, December 31, 2021, June 30, 2021, March 31, 2021 and December 31, 2020 included in the Company’s respective Quarterly Report on Form 10-Q for each of the quarters then ended previously filed with the SEC (together with the 2021 10-K, the ‘Financial Statements’).” The Company also disclosed that “[o]n December 12, 2022, the audit committee (the ‘Audit Committee’) of the board of directors of the Company concluded that the Company’s previously issued Financial Statements can no longer be relied upon due to an error identified during the completion of the 2022 10-K.” Specifically, Alico stated that “[t]he error that led to the Audit Committee’s conclusion relates to the calculation of the deferred tax liabilities for the fiscal years 2015 through 2019, which resulted in a cumulative reduction in the Company’s deferred tax liability, and a corresponding cumulative increase in retained earnings, of approximately $2,512,000 on the Company’s balance sheet as of September 30, 2022.”
On this news, Alico’s stock price fell $2.64 per share, or 9.53%, to close at $25.05 per share on December 14, 2022.
As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages.
For more information on the Alico class action go to: https://bespc.com/cases/ALCO
Catalent, Inc. (NYSE: CTLT)
Class Period: August 30, 2021 to October 31, 2022
Deadline for Lead Plaintiffs: April 25, 2023
This case is about the rise and fall of a company that initially benefited from the COVID-19 pandemic (also referred to herein as “COVID-19,” “COVID,” or the “pandemic”). Catalent was a vaccine producer and one of the COVID recipients. It seemed well placed to take advantage of the growing demand for vaccine manufacturing capacity. Indeed, Catalent almost doubled its business during the first year of the pandemic when the bulk of vaccines were administered. Catalent’s success during the early stages of the pandemic caused its stock price to soar to record highs. By mid-2021, when COVID-related work dropped off, Defendants engaged in accounting and channel stuffing schemes to pad the Company’s revenues. This gave Catalent an appearance of growth and caused its stock price record highs. Catalent cut corners in safety and control procedures at its key production plants to support these plans and keep pace with its ambitious growth targets. Catalent experienced significant sales declines by the end of 2022 and an excess inventory in its supply chain. As a result, Catalent stock dropped to pre-COVID levels causing substantial losses to its investors as they learned that Catalent’s early-COVID revenues were never sustainable, and its Class Period revenues were the product of securities fraud.
Catalent, a multinational corporation which manufactures and packages pharmaceuticals into devices suitable for human consumption (e.g. pre-filled vials, syringes or pills), is an example of a global corporation. pursuant to long-term supply deals with pharmaceutical companies. These products are sold directly by Catalent to pharmaceutical companies, who then sell them to healthcare providers (e.g., hospitals, clinics etc.).), which administer them to patients, who are the end consumers.
Prior to the onset of the pandemic, Catalent’s quarterly revenue averaged approximately $669 million between April 2018 and March 2020. Catalent stock closed at approximately $47.57 per ounce during the time these revenues were reported to market. Catalent was involved in large-scale COVID initiatives, including the filling of vaccines into syringes by Moderna and AstraZeneca. Those projects catapulted the Company’s quarterly revenues to record highs, which averaged approximately $940 million between April 2020 and March 2021, a 40 percent jump over preCOVID revenues. Catalent stock averaged $102.42 per share over the period that the revenue surge was reported.
By mid-2021, as the pandemic wore on, demand for Catalent’s COVID products decreased because vaccinations had already been administered to a large number of potential patients. For example, Centers for Disease Control and Prevention (“CDC”) data indicates that COVID vaccinations in the United States reached an all-time high of 4.5 million doses on April 1, 2021, and averaged 1.5 million daily doses between December 14, 2020 and August 28, 2021. By comparison, CDC data indicates that average daily vaccinations in the United States were under 625,000 during the Class Period.
Catalent reported increasing revenues despite a decline in COVID vaccine demand. It assured investors that there was still strong customer demand during the Class Period. The Class Period saw an average quarterly revenue of $1.2 billion. This was an 80 percent increase on preCOVID-19 revenues, and a 28percent increase over its reported revenues in the first year. Investors were unaware that Defendants had artificially inflated these revenues using fraudulent accounting and channel stuffing strategies to fool investors into believing Catalent was producing sustainable revenue growth. Defendants’ fraud caused Catalent stock to trade at a record high of $142.64 per share on September 9, 2021 and an average closing price of approximately $108.00 per share during the Class Period.
Defendants’ statements during the Class Period were misleading and materially false because they misrepresented or failed disclose the following adverse facts which were known by Defendants, or were recklessly disregard by them:
a. Catalent materially overstated its revenue and earnings by prematurely recognizing revenue in violation of U.S. Generally Accepted Accounting Principles (“GAAP”);
b. Catalent had material weaknesses in its internal control over financial reporting related to revenue recognition;
c.Catalent misrepresented demand for its product while it knowingly sold more product direct to its customers than it could to healthcare providers and end users.
d. Catalent disregarded regulatory rules at key production facilities in order to rapidly produce excess inventory that was used to pad the Company’s financial results through premature revenue recognition in violation of GAAP and/or stuffing its direct customers with this excess inventory; and
e. As a result of the foregoing, Defendants lacked a reasonable basis for their positive statements about the Company’s financial performance, outlook, and regulatory compliance during the Class Period.
Catalent’s misrepresentations were first revealed to the market on August 29, 2022, when the Company disclosed that demand for its COVID-related products was facing substantial headwinds. On this news, Catalent’s stock price declined by 7.4 percent to close at $92.28 per share on August 29, 2022.
Then, on September 20, 2022, a Washington Post report exposed that the release of COVID-19 vaccines produced by Catalent had been delayed by regulators because of improper sterilization at one of Catalent’s key facilities. On this news, Catalent’s stock price declined by 9.3 percent over two trading sessions, to close at $79.06 per share on September 22, 2022.
Catalent announced that its quarterly earnings were below zero. It also lowered its financial guidance to reflect falling demand. The Company also stated that regulatory issues at its key facilities were negatively affecting its financial results. On this news, Catalent’s stock price declined by 31.7 percent over two trading sessions, to close at $44.90 per share on November 2, 2022. Over the course of the Class period Catalent stock dropped from a high of $142.00 to close below $44.90 on November 2, 2022. This is a drop that was more than 68 per cent.
Catalent announced that it had $400 million worth of excess inventory as of November 16, 2022. Further, the Company revealed that it had misrepresented both demand for its products and its ability to predict future demand. On this news, Catalent’s stock price declined by 8.5 percent, over two trading sessions, to close at $42.07 per share on November 17, 2022.
GlassHouse Research published a report on December 8, 2022 claiming Catalent had materially exaggerated its revenues by $568.2 millions in violation of GAAP. The report detailed numerous red flags that were indicative of Catalent’s improper accounting practices. These red flags included the rapid increase in Catalent’s contract asset and inventory balances, declining customer deposits, executive turnover, and recent scrutiny of the Company’s revenue accounting by regulators. The report also described how Catalent’s direct customers were stuffed with excess inventory which “will take years to unwind.” On this news, Catalent’s stock price declined 3.6 percent to close at $45.54 per share on December 8, 2022.
As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of Catalent securities, Plaintiff and other Class members have suffered significant losses and damages.
For more information on the Catalent class action go to: https://bespc.com/cases/CTLT
About Bragar Eagel & Squire, P.C.:
Bragar Eagel & Squire, P.C. The firm is nationally known and has offices in New York City, California, South Carolina. The firm represents institutional and individual investors in complex commercial, securities and derivative litigation in both state and federal courts across the nation. Visit the website for more information. www.bespc.com. Advertising for attorneys Previous results do not guarantee the same outcome.
Contact Information
Bragar Eagel & Squire, P.C.
Brandon Walker, Esq.
Marion Passmore, Esq.
(212) 355-4648
[email protected]
www.bespc.com
