SAN DIEGO & TEL AVIV, Israel--(BUSINESS WIRE)--Shareholder rights law firm Robbins Arroyo LLP announces that a class action complaint was filed against Ability, Inc. (NASDAQCM: ABIL) in the U.S. District Court for the Southern District of New York. The complaint is brought on behalf of all purchasers of Ability securities between September 8, 2015 and April 29, 2016, for alleged violations of the Securities Exchange Act of 1934 by Ability's officers and directors. Ability provides interception, geolocation, and cyber intelligence tools for security and intelligence agencies, military forces, law enforcement agencies, and homeland security agencies worldwide.
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Ability Accused of Overstating Its Income and Revenue
According to the complaint, on September 8, 2015, Ability issued a press release announcing its merger with Cambridge Capital Acquisition Corporation, touting its successful financial growth and high margins and predicting continued growth at a strong rate. On November 18, 2015, Cambridge emphasized in a filing with the U.S. Securities and Exchange Commission that Ability's revenue this year was expected to be $58 million—triple its revenue the prior year—and net income was expected to be at $20 million—quadruple its net income the prior year. The complaint alleges that Ability officials failed to disclose that the company had overstated its income by failing to account for commissions, that it overstated its operating results by improperly recognizing revenue on multiple element sale transactions, and that it had a material weakness in its internal controls over financial reporting and disclosure controls. Ability's financial statements were therefore not prepared in accordance with Generally Accepted Accounting Principles ("GAAP").
On March 2, 2016, Ability disclosed that it needed to postpone the release of its fourth quarter and full year 2015 financial results until an audit was complete. On March 24, 2016, Ability announced that it received a letter from the Listing Qualifications Department of the NASDAQ Stock Market informing the company that its warrants did not meet the minimum 400 Round Lot Holder requirement for initial listing on the NASDAQ Capital Market and that the staff has initiated procedures to delist the company's warrants from the NASDAQ Capital Market. On May 2, 2016, Ability announced that it would restate its previously-reported financial statements as of December 31, 2014, for the two years in the period then ended and as of June 30 and September 30 in 2015 and 2014, and for the six and nine month periods then ended. On this news, Ability stock fell $2.42 per share, or 33%, to close at $4.90 per share on May 2, 2016.
Ability Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, DDonahue@robbinsarroyo.com, or via the shareholder information form on the firm's website.
Robbins Arroyo LLP is a nationally recognized leader in shareholder rights law. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits, and has helped its clients realize more than $1 billion of value for themselves and the companies in which they have invested.
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