Edgio, Inc. (EGIO) Had Material Weaknesses in its Internal Controls Over Financial Reporting
A shareholder filed a class action on behalf of all persons and entities that purchased or otherwise acquired Edgio, Inc. (NASDAQ: EGIO) between May 11, 2021 and March 12, 2023. Edgio provides software solutions for companies. Edgio’s services include digital content delivery, online video delivery, cloud security, edge computing, cloud storage, and professional services. On June 16, 2022, the Company changed its name from Limelight Networks, Inc. to Edgio, Inc.
According to the complaint, during the class period, defendants failed to disclose to investors that: (1) the sale of Open Edge equipment should be accounted as financing leases; (2) there were material weaknesses in the Company’s internal controls over financial reporting related to Open Edge transactions; and (3) as a result, the Company’s revenue had been overstated in certain periods.
On March 13, 2023, Edgio issued a press release announcing that it will restate its previously issued financial statements for the years ended December 31, 2021 and 2020, as well as the quarterly reports for fiscal 2022 and 2021, because its audit committee “identified an error in the Company’s historic accounting treatment of Edgio’s Open Edge solution.” The Company anticipated the restatements would result in a “reduction to revenue of up to approximately $23.0 million for the nine-month period ended September 30, 2022, up to approximately $16.7 million for the twelve-month period ended December 31, 2021, and up to approximately $6.6 million for the twelve-month period ended December 31, 2020.” As a result, the Company stated that it would be unable to file its annual report on time. On this news, the Company’s share price fell $0.1597, or 15.5%, to close at $0.8703 per share on March 13, 2023.
What Now: Similarly situated shareholders may be eligible to participate in the class action against Edgio. Shareholders who want to act as lead plaintiff for the class must file their papers by June 26, 2023. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
