Bernstein Liebhard LLP announced today that that approximately six weeks remain to file a motion for lead plaintiff in a class action lawsuit pending against KushCo Holdings, Inc. (“KushCo” or the “Company”) on behalf of a class consisting of all persons and entities who purchased KushCo securities between July 13, 2017 and April 9, 2019, both dates inclusive (the “Class Period”). The action is pending in the United States District Court for the Central District of California and alleges claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder. If you wish to file a motion for lead plaintiff in the KushCo class action, you must move the Court no later than July 1, 2019. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. Your ability to share in any recovery does not require that you serve as lead plaintiff. If you choose to take no action, you may remain an absent class member.
KushCo primarily engages in the wholesale distribution of packaging supplies in the United States, Canada, Europe, and internationally. KushCo also provides vaporizer cartridges, heating technologies, batteries, and disposable units; and hydrocarbon gases, including isobutene, n-butane, propane, ethanol, pre-mixes, custom blends, and other solvents. In the past several years, KushCo has expanded its services through the acquisition of several companies in the cannabis industry. For example, in May 2017, KushCo acquired CMP Wellness LLC (“CMP Wellness”), a privately-held manufacturer and distributor of Med-ePen brand vaporizer pens, cartridges, tanks, and accessories. Then, in May 2018, KushCo acquired Summit Innovations, LLC (“Summit”), a distributor of hydrocarbon products, such as propane and butane, to the legal cannabis industry. Finally, in July 2018, KushCo acquired The Hybrid Creative (“Hybrid”), a self-described premier creative agency for cannabis ventures, including branding, marketing, web, and strategy.
The complaint alleges that throughout the Class Period, Defendants failed to disclose that: (i) KushCo made material accounting errors in connection with its acquisitions of CMP Wellness, Summit, and Hybrid; (ii) as a result, KushCo’s previously issued financial statements as of and for the fiscal years ended August 31, 2018 and August 31, 2017, included in the Company’s Annual Reports on Form 10-K for such periods, and financial statements as of and for the quarterly periods ended May 31, 2017, November 30, 2017, February 28, 2018, May 31, 2018 and November 30, 2018, included in the Company’s Quarterly Reports on Form 10-Q for such periods, could not be relied upon; (iii) KushCo’s net loss for the fiscal year ended August 31, 2018, was more than twice as high than previously reported; and (iv) KushCo and its management’s assurances that its financial statements for those fiscal years and periods were accurate and fairly reported could not be relied upon.
On April 9, 2019, KushCo issued a press release, attached as an exhibit to the Company’s Current Report on Form 8-K (the “April 2019 8-K”), announcing the Company’s decision to restate prior period financial statements for fiscal years 2017 and 2018 for non-cash items related to acquisitions of CMP Wellness, Summit, and Hybrid.
Specifically, the April 2019 8-K disclosed that KushCo had inaccurately accounted for certain shared-settled contingent consideration relating to its CMP Wellness, Summit, and Hybrid acquisitions, by recording their respective earnout arrangements as equity rather than as liabilities.
If you purchased KushCo securities, and/or would like to discuss your legal rights and options, please visit https://www.bernlieb.com/cases/kushco-kshb-lawsuit-class-action-fraud-stock-130/ or contact Joe Seidman toll free at (877) 779-1414 or firstname.lastname@example.org.
Bernstein Liebhard LLP has pursued hundreds of securities, consumer, and shareholder rights cases and recovered over $3.5 billion for its clients. The Firm has been named to The National Law Journal’s “Plaintiffs’ Hot List” thirteen times and been listed in The Legal 500 for ten consecutive years.
You can obtain a copy of the complaint by contacting the clerk of the court for the United District Court for the Central District of California.
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