According to the Final Judgment and Order of Dismissal dated November 09, 1998, the Court adopts all defined terms as set forth in the Stipulation of Settlement.
The original complaint filed in February 1997, was filed in the United States District Court for the District of Columbia, and named as defendant Telecommunication Technologies Corporation (Mtel), SkyTel Corporation, and other individual defendants.
In December 1997, the United States District Court for the District of Columbia granted a motion dismissing SkyTel Corp. as a defendant in the litigation, and in January 1998 transferred the case to the United States District Court for the Southern District of Mississipppi. On August 1, 1998, the plaintiffs, the Company and the individual defendants executed a stipulation of settlement. The Stipulation of Settlement between the parties was filed on September 9, 1998. and the settlement received final approval from the United States District Court for the Southern District of Mississippi on November 6, 1998. No appeals were filed and the case has been resolved. Subsequent to the filing of the complaint, the Company, as have other companies involved in private securities litigation, received from the staff of the Securities and Exchange Commission ("SEC") an informal inquiry letter seeking documents pertaining to consultants and products used in the development and operation of the Advanced Messaging Network. The Company cooperated with the SEC staff and has had no contact with the staff since November 1997. See Note 6 of Notes to Consolidated Financial Statements.
The original complaint had two counts, one alleging violations of Section 10(b) of the Exchange Act against all defendants, and one alleging violations of Section 20(a) of the Exchange Act against the Company and defendants Palmer and Puckett. More specifically, the complaint alleges that defendants violated the Securities Exchange Act of 1934 by disseminating false and misleading statements about the demand for Mobile Telecommunications Technologies Corporation's SkyTel 2-way and 1-way paging services as well as the Company's overall financial health. During the Class Period, certain of the defendants sold off between 83% and 100% of their company defendant stock at prices as high as $30-7/8 per share.
Further, the complaint alleges that defendants represented that the Mtel's SkyTel 2-way paging service had been tested prior to rollout, was meeting with stronger than expected demand and would drive Mtel's growth throughout 1996 and beyond. The Complaint alleges that despite defendants' positive representations about SkyTel 2-way paging, Mtel was actually suffering serious technical and operational problems in testing and introducing SkyTel 2-way service, including: (1) holes in network coverage; (2) software malfunctions; (3) shorter than anticipated pager battery life; and (4) other technological problems that were resulting in lost messages, duplicate message transmission and a lack of acknowledgement which was increasing system load and causing system outages. The Complaint also charges that Defendants allegedly misrepresented the strength of Mtel's core 1-way paging business, maintaining that Mtel's 1-way paging business was enjoying strong subscriber growth and experiencing a smooth transition to high-speed FLEX Pagers, despite their knowledge that Mtel's growth in 1-way paging had slowed dramatically, in part because of the Company's inability to obtain sufficient quantities of high-speed FLEX Pagers. The complaint alleges that on January 22, 1996, when Mtel finally admitted that it was unable to provide true nationwide 2-way paging service, that Mtel had suffered a huge loss of $52 million for 1995 and that the Company had violated financial covenants with its lenders, the price of Mtel stock utterly collapsed falling to $14-1/8 per share -- a 60% decline from its Class Period high of over $35-5/8 per share. Thereafter, throughout 1996, as the Defendants disclosed the truth about Mtel's disastrous financial position and ongoing operating losses that Mtel continued to suffer as a result of the failure of its 2-way paging system, the price of Mtel stock declined to as low as $5 per share.