According to the docket posted, on November 2, 3000, the Court entered the Order and Judgment signed by U.S. District Judge Alfred V. Covello. The settlement was approved and the case was closed. Earlier, on November 5, 1998, the plaintiffs filed a Consolidated Amended Class Action Complaint. The defendants responded by filing motions to dismiss on December 28, 1998. On July 6, 1999, the Court issued a ruling denying the motions to dismiss the amended and consolidated complaint. On July 25, 2000, a Stipulation of Settlement was filed.
By the Notice of Pendency of Class Action dated August 18, 2000, a Settlement Fund consisting of $1,800,000, plus interest, has been established. A hearing will be held on October 27, 2000, to determine whether a proposed settlement of the
litigationas set forth in the Stipulation of Settlement dated July 21, 2000, is fair, reasonable and adequate and to consider the application of class counsel for attorneys' fees and reimbursement of expenses.
The original complaint charges the defendants with violations of the Securities Exchange Act of 1934 by the dissemination of materially false and misleading statements relating to Tee-Comm's satellite television division, AlphaStar Television Network, Inc. ("Alphastar").
Specifically, the complaint alleges that Tee-Comm, through Alphastar, provided direct satellite television service in the United States and was in the process of launching service in Canada. Alphastar began broadcasting in the United States in July 1996 but never started broadcasting in Canada. During the Class Period, defendants disseminated a series of materially false and misleading statements concerning Tee-Comm which portrayed the Company in highly positive terms while failing to disclose that the Company was rapidly running out of cash and was not generating sufficient new subscribers and revenue to continue as a going concern. In particular, defendants misrepresented and/or failed to disclose the following facts in summary form: (i) Tee-Comm's inability to fund the costs necessary to establish the Alphastar name in direct television and generate sufficient numbers of subscribers; (ii) Tee-Comm's inability to significantly grow its subscriber base; (iii) the Company's dire financial condition and inability to continue as a "going concern"; (iv) Tee-Comm's inability to complete financing necessary for its survival; and (v) Tee-Comm's dwindling supply of necessary cash and inability to fund operations in the near term. Notwithstanding the Company's dwindling cash and rapidly declining financial condition, defendants repeatedly pronounced their optimism for the Company's continued success and highlighted Alphastar's entrance into the direct television market. In truth and in fact, the Company was on the verge of insolvency at all relevant times and unable to effectively compete against better capitalized and more efficient competitors.
The complaint alleges that at the close of the Class Period, the price of Tee-Comm common stock closed down at $0.50 per share (as of May 21, 1997) -- a decrease of 95% from a Class Period high of $10.1875 per share, reached on September 16, 1996.