According to the Company’s FORM 10-K For The Fiscal Year Ended December 31, 1999, on October 21, 1999, the United States District Court for the Northern District of Georgia (Atlanta Division) dismissed the consolidated shareholder class action lawsuits. In dismissing the suits, the Court held that the plaintiffs failed to state an actionable claim of material misrepresentation under the federal securities laws. The Court found that the risks of which the plaintiffs complained, those associated with the Company's transition of certain manufacturing operations to its Manchester, Georgia facility, were specifically disclosed by the prospectus. The Court also rejected plaintiffs' claim that the prospectus described certain unfavorable events as mere risks, when in fact those events had already occurred. The Court held that the prospectus contained ample and meaningful cautionary language specifically directed to the substance of the alleged misstatements. The plaintiffs subsequently filed an appeal with the United States Court of Appeals for the Eleventh Circuit. At the plaintiffs' request, the Court of Appeals dismissed the appeal on December 13, 1999, formally concluding the case.
On October 30, 1998 and December 7, 1998, shareholder suits were filed against the Company and certain individual defendants. An amended consolidated complaint, filed on March 8, 1999, added as a defendant Cordova Capital Partners LP – Enhanced Appreciation, one of the Company's institutional investors. The two lead plaintiffs were Daniel E. Herlihy and Thomas L. O'Hara, Jr., and the other named plaintiff was Jack Edery. The amended consolidated complaint was filed in the U.S. District Court for the Northern District of Georgia (Atlanta Division) and sought class certification and rescissory and/or compensatory damages as well as expenses of litigation. The complaint alleged that the prospectus and registration statement used by the Company in connection with the April 1998 initial public offering of the Company's common stock contained material omissions and misstatements.
The original complaint alleges that Horizon Medical and certain of its officers and directors violated Sections 11 and 15 of the Securities Act of 1933. Specifically, the complaint alleges that the prospectus and registration statement Horizon Medical issued in connection with its initial public offering contained material omissions and misstatements pertaining to the Company's transfer of a significant portion of its manufacturing operations to a new facility, and also failed to disclose material risks associated with Horizon Medical's international operations. The complaint further alleges that certain officers and directors of the Company sold thousands of shares of Horizon Medical common stock realizing millions in proceeds.