Settlement Notice of Shareholder Derivative Actions by Latch, Inc. Outlined in Court Order

Notice of Settlement for Shareholder Derivative Actions

In a recent announcement, Latch, Inc., now known as DOOR, has revealed a significant development regarding a shareholder derivative action, which culminated in a settlement approved by the U.S. District Court for the Southern District of New York. This legal action involved claims against certain individuals within the company for breaches of fiduciary duties and alleged misleading disclosures related to financial metrics.

Overview of the Case

The consolidated shareholder derivative action has brought forward serious allegations that implicated several defendants for errors in the company’s financial reporting. Specifically, they were accused of making false statements and omissions concerning Latch's financial performance indicators, such as revenue and annual recurring revenue.

These claims highlighted improper accounting practices that were utilized in the preparation of quarterly and annual financial statements filed with the U.S. Securities and Exchange Commission (SEC). Due to these discrepancies, a need for the restatement of certain financial reports emerged, which, as the action alleges, resulted in both reputational damage and financial harm to Latch.

Despite the gravity of the allegations, the defendants have consistently denied any wrongdoing or liability related to the claims against them. This creates a complex situation where, while the company is taking steps to resolve these issues, it's crucial to acknowledge the vehement denials by those implicated.

Settlement Terms

As part of the settlement reached on July 16, 2026, Latch has consented to implement a series of corporate governance reforms. These reforms are expected to bolster accountability within the company and are outlined in detail in the stipulation associated with the settlement. Notably, these changes are to be upheld for a period of three and a half years.

The settlement also includes a provision for attorneys' fees, with Latch (and its insurers) agreeing to pay $450,000 to Plaintiffs’ Counsel for their legal expenses, pending court approval. Additionally, awards of up to $2,000 are set to be offered to each plaintiff involved in the case.

Upcoming Hearing

A Settlement Hearing is scheduled for October 6, 2026, at 3:30 p.m. in courtroom 14A of the Daniel Patrick Moynihan United States Courthouse, where the fairness and adequacy of the settlement will be evaluated. During this hearing, the court will also discuss the approval of the fees and service awards mentioned above. It's important to note that this settlement does not involve class action claims; thus, individual shareholders do not have recourse for personal financial compensation from this agreement.

Affected Shareholders

Current shareholders of Latch as of July 16, 2026, are encouraged to review the full notice and stipulation associated with the settlement. While their rights may not entitle them to individual compensation from the settlement, their opportunity to attend the hearing allows for an avenue to voice any concerns.

Should shareholders wish to object to any aspect of the settlement, they must adhere to the specified procedures outlined in the notice and ensure that their objections are filed with the court by September 15, 2026.

Conclusion

This settlement represents a pivotal moment for Latch, Inc. in addressing past controversies and enhancing its corporate governance as part of a commitment to better practices moving forward. The outcome of the upcoming court hearing will be crucial in determining the long-term implications for the company's reputation and operational integrity.”