NEW YORK, Jan. 13, 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 Twist Bioscience Corp (NASDAQ: TWST), Sunlight Financial Holdings, Inc. (NYSE: SUNL), Gaia, Inc. (NASDAQ: GAIA), and Tattooed Chef, Inc. (NASDAQ: TTCF). Stockholders have until the deadlines below to petition the court to serve as lead plaintiff. Additional information about each case can be found at the link provided.
Twist Bioscience Corp (NASDAQ: TWST)
Class Period: December 13, 2019 - November 14, 2022
Lead Plaintiff Deadline: February 10, 2023
Twist, a Delaware corporation with its principal executive offices in South San Francisco, California, is a biotechnology company that manufactures synthetic DNA and DNA products. Synthetic DNA products allow users to design and modify DNA for the purposes of academic research, enhancing specialty chemical production, and developing healthcare treatments, among other uses. Twist’s common stock trades in the United States on the Nasdaq Global Select Market (“NASDAQ”) under the ticker symbol “TWST.”
Throughout the Class Period, Defendants repeatedly assured investors that the Company possessed innovative proprietary technology relating to its synthetic DNA products that positioned Twist for significant future growth. Indeed, Defendants claimed that the Company had already achieved substantial growth during the Class Period, growing from a customer base of approximately 1,300 diagnostic companies, hospitals, research institutions, and others at the end of fiscal year 2019, to approximately 2,900 customers at the end of fiscal year 2021.
Similarly, Defendants reported skyrocketing gross margins, which purportedly grew from 12.8% in fiscal year 2019, to 39.1% in fiscal year 2021, with margins projected to reach 40% for fiscal year 2022.
During the Class Period, Defendants also announced plans to build a “Factory of the Future” in Wilsonville, Oregon (the “Oregon Facility”), which would purportedly provide hundreds of jobs and occupy 110,000 square feet. By August 2022, when Twist reported its financial results for the third quarter of fiscal year 2022, Defendants projected annual capital expenditures between $95 million and $100 million, largely attributable to “building out” this new manufacturing facility.
Plaintiff and other members of the class learned the truth about the Company’s actual financial health on November 15, 2022, when Scorpion Capital (“Scorpion”) published a lengthy report (the “Scorpion Report”) alleging that Twist is “a cash-burning inferno that is not a going concern.” Specifically, Scorpion alleged that, among other things, Twist’s purported DNA chip technology is a “farce” comparable to Theranos Inc.’s now infamous non-existent blood-testing technology, and that the Company’s growth and revenues are unsustainable, among other issues.
According to the Scorpion Report, Twist is perpetuating its fraud through false reporting of capital expenditures and gross margins—which Scorpion claims are actually negative. Indeed, Scorpion’s investigation of the forthcoming Oregon Facility revealed no evidence that the Company is preparing to begin manufacturing there, suggesting that the Company is using the facility to hide large operating expenses as fraudulent capital expenditures.
Scorpion further alleged that the Company’s growth is dependent upon unsustainable pricing strategies, such as using below-cost prices to undercut competitors by as much as 70% to 85%. Ultimately, the Scorpion Report concluded that Twist is “operating a Ponzi-like scheme that will end in bankruptcy.”
In response to the revelations in the Scorpion Report, the price of Twist common stock fell $7.57 per share, or nearly 20%, from a close of $38.00 per share on November 14, 2022, to close at $30.43 per share on November 15, 2022.
This Complaint alleges that, throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts, about the Company’s business and operations. Specifically, as alleged in the Scorpion Report, Defendants overstated the commercial viability of Twist’s synthetic DNA manufacturing technology while engaging in accounting fraud and using unsustainable pricing to inflate the Company’s true financial condition and prospects. As a result of Defendants’ wrongful acts and omissions, and the significant decline in the market value of the Company’s common stock, Plaintiff and other members of the Class have suffered significant damages.
For more information on the Twist class action go to: https://bespc.com/cases/TWST
Sunlight Financial Holdings, Inc. (NYSE: SUNL)
Class Period: January 25, 2021 - September 28, 2022
Lead Plaintiff Deadline: February 14, 2023
Sunlight claims to be a business-to-business-to-consumer point-of-sale (“POS”) financing platform that provides residential solar and home improvement contractors the ability to offer seamless POS financing to their customers when purchasing residential solar systems or other home improvements. The Company claims the resulting loans are facilitated by Sunlight’s proprietary technology platform, Orange® (“Orange®” or the “Platform”), through which Sunlight offers instant credit decisions to homeowners at the POS on behalf of Sunlight’s various capital providers.
Sunlight became a publicly traded company in July 2021 via the business combination of Spartan Acquisition Corp. II, a publicly traded special purpose acquisition company, with Sunlight Financial LLC (“Legacy Sunlight”) (the “Business Combination”).
On September 28, 2022, after the market closed, Sunlight disclosed that it would record a “non-cash advance receivables impairment charge of $30 million to $33 million during the Company’s fiscal quarter ending September 30, 2022.” The Company explained that “the Company was informed of certain actions taken by one of its installer partners to address liquidity issues faced by the installer” which “would likely result in an inability of the Company to collect on advances outstanding to such installer.”
The same day, the Company also issued a press release withdrawing its full-year 2022 outlook due to the “installer liquidity event.” Defendant Matthew Potere was quoted stating, “While our risk exposure with other contractor advances is much smaller (the next three largest partner advances being $10 million, $7 million, and $5 million respectively), we are reunderwriting all contractor partners' advances to further mitigate risk going forward.” (Emphasis added.)
On this news, the Company’s stock price fell $1.44 per share, or 57.1%, to close at $1.08 per share on September 29, 2022, thereby injuring investors.
Throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that the Company lacked effective underwriting and risk evaluation with respect to its contractor advance program; (2) that Sunlight lacked the oversight and periodic monitoring systems necessary to timely detect bad debt associated with its contractor advance program; (3) that the Company lacked effective internal controls over accounting and reporting of non-cash advance receivables; (4) that, as a result, the Company would be forced to take a non-cash advance receivables impairment charge exceeding $30 million; and (5) that, as a result of the foregoing, Defendant’s positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
For more information on the Sunlight class action go to: https://bespc.com/cases/SUNL
Gaia, Inc. (NASDAQ: GAIA)
Class Period: December 26, 2017 - November 7, 2022
Lead Plaintiff Deadline: February 20, 2023
According to the Complaint, the Company made false and misleading statements to the market. Gaia overstated its subscriber count for the first quarter of 2019. The Company failed to maintain appropriate internal controls. Based on these facts, the Company's public statements were false and materially misleading throughout the class period. When the market learned the truth about Gaia, investors suffered damages.
For more information on the Gaia class action go to: https://bespc.com/cases/GAIA
Tattooed Chef, Inc. (NASDAQ: TTCF)
Class Period: March 20, 2021 - October 12, 2022
Lead Plaintiff Deadline: February 21, 2023
On October 12, 2022, after market hours, the Company announced that it would restate its financial statements from March 31, 2021 to the present and revealed for the first time the revenue was overstated by $213,000 and the net loss was understated by $90,000 on the 1Q21 Report. On the 2Q21 Report, the revenue was overstated by $446,000 three months ended June 30, 2021 and $659,000 six months ended June 30, 2021 and the net loss was understated by $4,276,000 three months ended June 30, 2021 and $4,366,000 six months ended June 30, 2021. On the 3Q21 Report, the revenue was overstated by $425,000 three months ended September 30, 2021 and $878,000 nine months ended September 30, 2021 and the net loss was understated by $372,000 three months ended September 30, 2021 and $4,165,000 nine months ended September 30, 2021. On the Annual Report, the revenue was overstated by $5,436,000 ended December 31, 2021.
The Company also made numerous other changes in financial statements that revealed the extent of internal control weaknesses, stating the following, in pertinent part, in its current report filed with the SEC on Form 8-K:
On October 6, 2022, Tattooed Chef, Inc. (the “Company”) received a written notice pursuant to Item 4.02(b) from the Company’s former independent registered public accounting firm, BDO USA, LLP, that the Company’s unaudited interim condensed consolidated financial statements for the quarters ended March 31, 2021, June 30, 2021 and September 30, 2021, and its audited annual consolidated financial statements for the year ended December 31, 2021, and accompanying audit report, each as previously filed with the Securities and Exchange Commission (“SEC”), were materially misstated and should no longer be relied upon and should be restated, because the Company (a) incorrectly recorded expenses related to a multi-vendor mailer program with a large customer as operating expenses rather than as a reduction of revenue; and (b) incorrectly recorded expenses for advertising placement by a marketing services firm on a straight-line basis over the life of the contract rather than when the services were actually rendered. For these reasons, pursuant to Item 4.02(a) the Board, after consultation with the Audit Committee, has also determined that the Company’s unaudited interim condensed consolidated financial statements for the quarters ended March 31, 2022 and June 30, 2022 should no longer be relied upon.
On this news, Tattooed Chefs’ share price fell $0.44 per share, or 9.8%, from its close on October 12, 2022 to open on October 13, 2022 at $4.05 per share, damaging investors.
As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s common shares, Plaintiff and other Class members have suffered significant losses and damages.
For more information on the Tattooed Chef class action go to: https://bespc.com/cases/TTCF
About Bragar Eagel & Squire, P.C.:
Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York, California, and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.
Bragar Eagel & Squire, P.C.
Brandon Walker, Esq.
Melissa Fortunato, Esq.