According to a press release dated October 16, 2005, the complaint alleges that during the Class Period, defendants caused Tag-It to issue numerous press releases and file quarterly and annual reports with the SEC, materially misstating its financial condition, accounts receivable and inventory, and falsely stating that the Company, notwithstanding the loss of its largest customers, was expanding its customer base, continuing sales growth, and improving gross margins. Unbeknownst to investors, as a result of the loss of its largest customers in 2003, millions of dollars in inventory became obsolete and millions of dollars in accounts receivable became uncollectible. The complaint further alleges that on or around August 15, 2005, Tag-It stunned the market when it revealed its true financial condition, informing investors that the Company was going to report a "significant operating loss" due to an increase in reserves for accounts receivable and inventory. On this news, Tag-It's share price plummeted 41.38% to $1.36 from the prior days closing of $2.32. On August 22, 2005, the Company further disclosed that it was required to increase its reserve for doubtful accounts by $6.4 million and increase its reserve for inventory obsolescence by $1.55 million.

If you bought Tag-It Pacific, Inc. securities between November 14, 2003 and August 12, 2005, inclusive, and would like to obtain information about the Tag-It Pacific, Inc. lawsuit, then you are invited to call (866) 467-1400 to speak with an attorney.