b'expand the companys presence. At the same time,Neptune Wellness Solutions: however, the company faced challenges prevalentGong v. Neptune Wellness Solutions, in the expanding industry, including overproduction, regulatory delays, and market saturation.Inc., Case No. 2:21-cv-01386 On February 6, 2020, Aurora issued a press release(E.D.N.Y. Mar. 16, 2021)in which it announced a business transformationNeptune Wellness Solutions, Inc. (Neptune) is a Canada-plan to respond to market pressures, includingbased integrated health and wellness company that significant and immediate decreases in selling,owns a portfolio of lifestyle brands and consumer goods, general & administrative (SG&A) expenses andincluding legal cannabis, hemp and nutraceuticals. On capital investment plans. Auroras February 13, 2020July 24, 2019, Neptune acquired North Carolina-based filings with the SEC touted the companys organiccommercial hemp companies SugarLeaf Labs, LLC and growth via strategic acquisitions but included severalForest Remedies LLC (collectively, SugarLeaf). Over impairment charges to goodwill, assets, and property.the next year, Neptune continued to predict increased Despite this, Aurora predicted modest growth forrevenue and higher capital returns based in part on the third quarter of 2020, and issued statements andboth the acquisition of SugarLeaf during fiscal 2020 filings confirming that it was on track with its previouslyand the continuous development of Neptunes cannabis announced business transformation targets. operations across North America.Then, on September 8, 2020, Aurora issued a pressThen, on February 15, 2021, Neptune announced reduced release announcing a number of balance sheetrevenues and a net loss for Q3 2021 of $73,799 stemming adjustments to recognize market realities andprincipally from impairments of goodwill and property, to position the Company for future performance.plant, and equipment and right-of-use assets related to These adjustments included writing down the valuethe 2019 SugarLeaf acquisition. Neptunes stock fell $0.86 of past acquisitions by up to CA$1.8 billion. On thisper share, or 30.71%, on this news, closing on February 16, news, Auroras stock price fell 11.63% to close at2021 at $1.94 per share. On February 17, 2021, Neptune $7.52 per share. followed this by terminating its planned at-the-market Plaintiffs filed a prospective class action against Aurora,offering and replacing it with a registered direct offering, alleging violations of Sections 10(b) and 20(a) of theon which news Neptunes stock price fell $0.21 per share, Exchange Act and Rule 10b-5. According to plaintiffs,or 10.82%, to close the day at $1.73 per share. Aurora misrepresented the true nature of its financesOn March 16, 2021, plaintiff Marvin Gong filed suit on and its progress under its business transformationbehalf of himself and all other persons who purchased plan, hiding the fact that Aurora had overpaid forNeptune stock between July 24, 2019 and February 16, its previous acquisitions and was experiencing2021, alleging violations of Sections 10(b) and 20(a) of the degradation of several assets. Auroras investorsExchange Act and Rule 10b-5. The complaint claims that allegedly bought company stock at artificially inflatedNeptune and its officers failed to disclose that the cost prices and suffered damages when the truth aboutof Neptunes acquisition of SugarLeaf were larger than Auroras financial situation was revealed. Currently,acknowledged, and that it was reasonably foreseeable the case is pending in federal court, with briefing onthat the strain the acquisition placed on the companys the appointment of a lead plaintiff underway. capital reserves would require additional stock offerings. 17'