Akoustis Technologies, Inc. (NASDAQ:AKTS), a manufacturer of telephone and telegraph apparatus, has been ordered by the U.S. District Court for the District of Delaware to pay a significant sum following a legal dispute with Qorvo Inc (NASDAQ:QRVO). The judgment, issued on Thursday, includes a $38.6 million damages award for infringement and misappropriation, along with additional fees and interest totaling approximately $18.4 million.
The legal proceedings, which culminated in a jury verdict on May 17, 2024, found Akoustis liable for misappropriating trade secrets and infringing on Qorvo patents. The judgment also granted Qorvo injunctive relief, which includes a permanent injunction against Akoustis from using Qorvo's trade secrets and selling certain products that infringe Qorvo's patents.
As part of the injunctive relief, Akoustis is required to remove any Qorvo confidential information from their systems and is subject to audits by Qorvo to ensure compliance. The company is also barred from selling or importing into the U.S. any products found to infringe on Qorvo patents or any similar products.
The financial implications of the judgment have cast uncertainty on Akoustis' financial condition and future prospects. The company is now considering its options, which may include seeking protection under bankruptcy laws depending on its ability to secure financing or identify strategic alternatives.
This development follows Akoustis' previous report filed with the Securities and Exchange Commission on October 16, 2024, detailing the ongoing legal challenges. The company's forward-looking statements caution that there are risks and uncertainties that could impact future results and operations.
The information in this article is based on a press release statement.
In other recent news, Akoustis Technologies has been navigating through a series of significant developments. The company reported a 7% increase in Q3 FY2024 revenues, totaling $7.5 million, and secured multiple orders for its high-band RF filters, including a $13 million order for XBAW® filters for Wi-Fi Access Points.
However, Akoustis is also grappling with substantial legal challenges, having been found liable for trade secret misappropriation and patent infringement. Damages awarded to rival Qorvo Inc. total approximately $38.6 million, with an additional $11.7 million in attorneys' fees.
Akoustis Technologies is also at risk of being delisted from the Nasdaq Capital Market due to non-compliance with the minimum stockholders’ equity requirement and the minimum bid price requirement. However, the company has received an extension from the Nasdaq Hearings Panel to continue its listing, contingent on the company demonstrating compliance by specific deadlines. In response to these challenges, Akoustis has proposed a reverse stock split, pending stockholder approval, and launched a direct stock offering of 50 million shares, managed by Roth Capital Partners (WA:CPAP).
On the leadership front, Akoustis has appointed Kamran Cheema as its new Chief Executive Officer and board member. B.Riley has maintained a Neutral rating for Akoustis Technologies in light of these recent developments. The company also adjourned its 2024 Annual Meeting of Stockholders due to the absence of a quorum, providing additional time for stockholders to vote on the proposals outlined in the company's proxy statement.
InvestingPro Insights
The recent legal judgment against Akoustis Technologies, Inc. (NASDAQ:AKTS) adds to the company's already challenging financial situation. According to InvestingPro data, Akoustis has a market capitalization of just $15.47 million, reflecting the market's concerns about its future. The company's financial health appears precarious, with InvestingPro Tips highlighting that it operates with a significant debt burden and may have trouble making interest payments on its debt.
The legal setback comes at a time when Akoustis is already facing financial difficulties. InvestingPro Tips indicate that the company is quickly burning through cash and is not profitable over the last twelve months. This is further evidenced by the negative operating income of -$50.24 million for the last twelve months as of Q1 2023.
Despite these challenges, analysts anticipate sales growth in the current year, with revenue growing by 2.98% over the last twelve months. However, this growth may not be sufficient to offset the company's financial woes, especially in light of the recent legal judgment.
Investors should note that Akoustis's stock has experienced significant volatility, with a 64.41% return over the last week but a -83.09% return over the past year. This volatility, combined with the company's financial challenges and legal troubles, suggests a high-risk investment profile.
For those considering Akoustis as an investment opportunity, it's worth noting that InvestingPro offers 16 additional tips for this stock, providing a more comprehensive analysis of its financial situation and market position.
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