According to Osicom Technologies, Inc.’s Form 10-K for the fiscal year ended January 31, 2001, on November 6, 2000, the court granted final approval to the settlement of the consolidated shareholder class actions pending in Federal district court in Los Angeles against the Company and certain present and former officers, and dismissed the actions against all defendants with prejudice. The settlement, which was entered into without any admission of liability by any of the defendants, provided for an aggregate cash payment to class members of $3.75 million, plus accrued interest from September 1, 2000, if any, less approved attorneys' fees and related expenses. The settlement was funded by the Company’s insurance carrier.
The Complaint charges that Osicom and certain of its officers
and directors violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 by issuing materially false and
misleading statements to the investing public concerning a
purported exclusive contract with an overseas customer.
Specifically, the Complaint alleges that defendants materially
misrepresented the Company's prospects in connection with the
agreement by misrepresenting the value of the contract to be
worth more than $90 million over two years, when, in fact, the
agreement merely required the customer to pay $175,000 towards
certain design costs and provided no real commitment to purchase
any of the Company's product. The Complaint alleges defendants
artificially inflated the price of the Company's securities.
The complaint further alleges that on or around April 20, 1999, Osicom issued a press release stating that it had received no orders from the customer. Bloomberg News subsequently reported the details of the contract the following
day. The market reaction to the news was disastrous. Recently,
the price of Osicom's common stock traded as high as $28 3/4 per
share. On April 21, 1999, Osicom's common stock price plummeted
to $10 / per share before trading was halted by NASDAQ.