b'CASES GOODWINinvestors that although the company had missed itsHEXO Corp.: Perez v. Hexo Corp., et al., Case No. revenue guidance by one percent, the companys core1:19-cv-10965-NRB (S.D.N.Y., Nov. 26, 2019)cannabis revenue remained strong and that it expected to improve its adjusted EBITDA in the future due toHEXO Corporation (HEXO) is Canadian-based higher sales, improved gross margins and prudentcompany and a licensed producer and distributor SG&A growth. Further, in an October 2019 pressof branded cannabis products that cater to both release, the company provided an update regardingrecreation and medical use. the construction of its Aurora Sun and Aurora NordicIn January 2019, the company filed a Prospectus 2 facilities, which they stated continued to progress.Supplement to the Amended and Restated Short Form In November 2019 Aurora announced its first quarterBase Shelf Prospectus dated December 14, 2018 in 2020 results, which showed a 25% decline in salesconnection with its public offering, which provided and 33% decline in consumer cannabis revenue.revenue guidance on expected sales and revenue. On a subsequent earnings call, the companys CEOSubsequently, in March 2019, HEXO announced that attributed the decrease in consumer cannabis revenueit planned to acquire Newstrike Brands Ltd., which the to constraints in its distribution networks that causedcompany said would allow it to boost its production a temporary decline in ordering and that its adjustedcapacity to 150,000 kg annually, diversify its domestic EBITDA loss was primarily due to a quarter-over- market penetration and add infrastructure in order to quarter decrease in revenue. The company announcedbecome one of the leading cannabis companies in that it would halt construction on its facilities as partthe world. In the proceeding months, the company of its Corporate Action Plan that would include acontinued to tout its growing revenue and inventory CA$190 million reduction in capital expenditures. Thevalue in press releases and public statements. companys stock subsequently fell over 17% to close at $2.73 per share. On October 4, 2019, the company announced that its Investors filed a putative class action alleging violationsthen-CFO was resigning after only a few months on the of Sections 10(b) and 20(a) of the Exchange Act,job. Within the next few days the companys stock price and Rule 10b-5 against the company and its CEO,fell 6.4%. On October 10, 2019, the company issued a CFO, COO, and President and Executive Chairman.press release announcing preliminary fourth quarter Plaintiffs allege that the company failed to disclosefinancial results and withdrawing its fiscal year 2020 that its revenue in the first quarter of the 2020 fiscalfinancial guidance given that the fourth quarter revenue year would decline or that the company would pausewas going to be well below previously released construction on its facilities. guidance. That same day, the companys stock price fell an additional 35% to $2.85 per share from $3.66.On October 24, 2019, the company announced 200 Investors filed a putative class action alleginglayoffs and that it would be shutting down several of its violations of Sections 10(b) and 20(a) offacilities in Ontario and eliminating certain executive the Exchange Act, and Rule 10b-5 againstroles. The same day, an analyst report scrutinizing the company and its CEO, CFO, COO, andHEXOs recent decisions concluded that the companys President and Executive Chairman. Plaintiffsposition would worsen. The companys stock price continued to drop to $1.79 per share by the end of the allege that the company failed to disclose thatclass period.its revenue in the first quarter of the 2020Investors filed a putative class action alleging violations fiscal year would decline or that the companyof Sections 10(b) and 20(a) of the Exchange Act, and would pause construction on its facilities. Rule 10b-5, against HEXO and its executives for alleged materially false and misleading statements made in connection with the companys financial Plaintiffs have filed motions to appoint a lead plaintiff,reporting. Specifically, plaintiffs alleged that the lead counsel and to consolidate the cases. The case iscompany failed to disclose that the company misstated ongoing. its inventory, engaged in channel-stuffing in order to inflate its revenue figures in order to meet or exceed 16'