By the Final Judgment and Order of Dismissal by U.S. District Judge Gary L. Taylor entered on March 19, 1999, the case is terminated.
According to the firm's 10-K filing dated April 13, 2000, in April 1998, the Company entered into a settlement in principle, which was
memorialized in a Memorandum of Understanding (the M.O.U.), with counsel for the
plaintiffs to settle the suits. The Federal Court approved this settlement
agreement on March 15, 1999. Terms of the settlement included cash consideration
of $740,000 and 210,000 shares of the Company's common stock, of which the
Company will issue 80,000 shares and the Company's founder, Osamah S. Bakhit,
contributed 130,000 shares. The Company recorded a legal settlement expense for
the year ended December 31, 1997 of $620,000, of which $480,000 was attributable
to the expected issuance of 80,000 shares of common stock and $140,000 of which
represented the Company's portion of the cash consideration. The 80,000 shares
were issued to the plaintiffs in 1999.
The complaint alleges that the company, certain of its officers and directors, and Cruttenden Roth, the lead underwriter of the company's IPO, violated the Securities Act of 1933 by issuing a false and misleading registration statement and prospectus. The complaint also alleges that Aviation and the officer and director defendants violated the Securities Exchange Act of 1934 by issuing false and misleading statements regarding the company's revenues and earnings. In particular, the company is alleged to have violated generally accepted accounting principles and its own internal revenue recognition requirements. The complaint alleges that the company's accountants then resigned and the stock was delisted.