Akoustis Technologies, Inc. (NASDAQ:AKTS), a manufacturer of telecommunication apparatus, is confronting significant financial uncertainty following a recent legal decision, according to a filing with the Securities and Exchange Commission (SEC). On Monday, the U.S. District Court for the District of Delaware issued a ruling partly granting a motion for attorneys' fees related to a lawsuit with Qorvo (NASDAQ:QRVO) Inc.
In the case of Qorvo Inc . vs. Akoustis Technologies, which went to trial on May 17, 2024, the jury found in favor of Qorvo and awarded approximately $38.6 million in damages for trade secret misappropriation. Following this, Akoustis Technologies sought to overturn the damages award and requested a new trial on certain claims. However, the recent court order awarded Qorvo an additional approximately $11.7 million in attorneys' fees.
The total financial impact of the jury verdict and subsequent court order is still under evaluation by Akoustis Technologies. The company has acknowledged that depending on the final judgment, which will include the outcome of their post-trial motions and Qorvo's motions, and their ability to secure financing, they may need to seek bankruptcy protection.
As of September 9, 2024, the District Court has not ruled on the company's post-trial motions or Qorvo's other post-trial motions. Akoustis Technologies and Qorvo will have thirty days to appeal the final judgment once it is rendered. If Akoustis Technologies appeals and posts an appeal bond within thirty days of the final judgment, the damages and attorneys' fees awards will not be enforceable while the appeal is pending.
The company's financial condition and prospects remain uncertain as they continue to assess the verdict's impact on their business operations and financial health. This information is based on a press release statement.
In other recent news, Akoustis Technologies has been facing a potential Nasdaq delisting due to non-compliance with the minimum bid price requirement. In response, the company plans to appeal the decision.
Meanwhile, Akoustis has secured multiple orders for its high-band RF filters, including a $13 million order for XBAW® filters for Wi-Fi Access Points, an $8 million order for Wi-Fi 6E and 7 access point filters, and a $2 million order for Wi-Fi 7 routers. These recent developments highlight the increasing demand for high-speed internet connectivity. In the third quarter of FY2024, the company reported a 7% revenue increase, reaching $7.5 million.
Despite the termination of a Wi-Fi 6E program, Akoustis remains optimistic about the Wi-Fi 7 market and plans to ramp up production. B.Riley maintained a Neutral rating for Akoustis Technologies following the company's Q3 earnings report.
Lastly, Akoustis launched a direct stock offering of 50 million shares, managed by Roth Capital Partners, as part of its strategic approach towards financial management.
InvestingPro Insights
In light of the recent legal challenges faced by Akoustis Technologies, Inc. (NASDAQ:AKTS), insights from InvestingPro provide a clearer picture of the company's financial standing. With a market capitalization of just $7.42 million and a negative P/E ratio reflecting a lack of profitability, the company's financial distress is evident. The Price / Book ratio, at 0.18 for the last twelve months as of Q3 2024, suggests the stock is trading below its book value, which could be of interest to value investors. However, significant concerns arise from the company's gross profit margin, which stands at a negative 5.89%, indicating that Akoustis has been unable to cover its direct costs in the period.
Akoustis's stock price has experienced severe declines, with a 1-year total return of -94.08%, reflecting the market's reaction to the company's ongoing difficulties. Two InvestingPro Tips that are particularly relevant to the company's situation are its significant debt burden and the analysts' consensus that Akoustis will not be profitable this year. These issues are critical for investors to consider when evaluating the company's future, especially in the context of the recent legal ruling. For a more comprehensive analysis, including additional InvestingPro Tips, investors can explore further details on the company's financials and stock performance at https://www.investing.com/pro/AKTS.
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