New York, New York, Dec 04, 2019 (Newsfile Corp via COMTEX) -- New York, New York--(Newsfile Corp. - December 4, 2019) - Faruqi & Faruqi, LLP, a leading national securities law firm, reminds investors in HEXO Corp. (NYS:HEXO) ("HEXO" or the "Company") of the January 27, 2020 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
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If you invested in HEXO stock or options between January 25, 2019 and November 15, 2019 and would like to discuss your legal rights, click here : www.faruqilaw.com/HEXO . There is no cost or obligation to you.
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The lawsuit has been filed in the U.S. District Court for the Southern District of New York on behalf of all those who purchased HEXO common stock between January 25, 2019 and November 15, 2019 (the "Class Period"). The case, Perez v. HEXO Corp. et al., No. 1:19-cv-10965 was filed on November 26, 2019.
The lawsuit focuses on whether the Company and its executives violated federal securities laws by making false and/or misleading statements and/or failing to disclose that: (1) HEXO's reported inventory was misstated as the Company was failing to write down or write off obsolete product that no longer had value; (2) HEXO was engaging in channel-stuffing in order to inflate its revenue figures and meet or exceed revenue guidance provided to investors; and (3) HEXO was cultivating cannabis at its facility in Niagara, Ontario that was not appropriately licensed by Health Canada.
On October 4, 2019, HEXO announced the abrupt and immediate resignation of its then-Chief Financial Officer, Michael Monahan. This resignation came just a few months into the job.
On this news, the Company's stock price fell from $4.06 per share on October 4, 2019 to $3.80 per share on October 7, 2019: a $0.26 or 6.40% drop.
Then, on October 10, 2019, HEXO issued a press release providing preliminary Q4 2019 revenue results and withdrew its fiscal year 2020 outlook. In the release, the Company stated that they expected HEXO's net revenue for the fourth quarter to be $14.5 million to $16.5 million, well below previous guidance that called for CAD$24.8 million.
On this news, the Company's stock price fell from $3.68 per share on October 9, 2019 to $2.85 per share on October 10, 2019: a $0.83 or 22.45% drop.
On October 24, 2019, HEXO announced 200 layoffs, which resulted in the subsequent shutting down of several facilities it operated near Niagara Falls, Ontario. Significantly, the cuts included the elimination of executive positions and the departures of Amo Groll, Chief Manufacturing Officer, and Nick Davies, Chief Marketing Officer.
On this news, the Company's stock price fell from $2.69 per share on October 24, 2019 to $2.52 per share on October 25, 2019: a $0.17 or 6.31% drop.
On October 29, 2019, HEXO reported its financial results for the fourth quarter and 2019 fiscal year on Form 40-F, announcing that the Company had taken an impairment on CAD$16.9 million of inventory purchased in the prior period, due to declining market prices. The Company further confirmed that "[c]ultivation has been suspended at the Niagara facility."
On November 15, 2019, the Company issued a press release entitled "HEXO Corp provides additional transparency on licensing," admitting that it grew marijuana in an unlicensed facility in Niagara, Ontario previously owned and operated by Newstrike. The Company admitted that on July 30, 2019, after the Newstrike acquisition closed, HEXO discovered that cannabis was being grown in Block B, which was not adequately licensed. HEXO management immediately ceased cultivation and production activities in the unlicensed space and notified Health Canada.
On this news, the Company's stock price fell from $1.89 per share on November 14, 2019 to $1.79 per share on November 15, 2019: a $0.10 or 5.29% drop.
The court-appointed lead plaintiff is the investor with the largest financial interest in the relief sought by the class who is adequate and typical of class members who directs and oversees the litigation on behalf of the putative class. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Your ability to share in any recovery is not affected by the decision to serve as a lead plaintiff or not.
Faruqi & Faruqi, LLP also encourages anyone with information regarding HEXO's conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
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