The 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, operations, and prospects. Specifically, Defendants failed to disclose to investors:
- that the Company was experiencing challenges that increased costs, including supply chain disruptions, that impacted the Company’s ability to fund inventory levels and operations;
- that, as a result, it was probable that some portion of the Company’s deferred tax assets would not be realized;
- that as a result, the Company was reasonably likely to record a material valuation allowance to its deferred tax assets;
- that there were material weaknesses in the Company’s internal controls over financial reporting related to income taxes;
- that the foregoing presented liquidity concerns and there was substantial doubt as to the Company’s ability to continue as a going concern;
- and 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.
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