According to the Judgment and Order entered on October 20, 1999, the Court approved the partial settlement and dismissed the action with prejudice. The Plaintiff’s Counsel was awarded fees in the amount of $222,630 and disbursements in the amount of $12,698.13 to be paid from the Settlement Fund. In the Company’s Form 10-KSB For The Fiscal Year Ended October 31, 1999, the reported settlement was in the amount of $742,100.
According to a press release dated September 11, 1998, the Complaint alleges that Swisher and certain of its officers and directors violated the Securities Exchange Act of 1934 by intentionally or recklessly making a series of materially false and misleading statements concerning Swisher's financial results and its business. Specifically, it is alleged that defendants misrepresented Swisher's financial results because Swisher's Dublin franchise sale was not complete even as of Oct. 31, 1997; that the Houston and Charlotte franchise sales were actually related party from transactions and should not have been recorded; that the Company recorded receivables from certain management employees in 1996 and was not repaid through the end of 1997; that the Company overstated a notes receivable due to an undisclosed side agreement whereby the Company agreed to pay the obligor for a consulting contract; that the Company overstated notes receivables and certain other repurchased franchise assets by stating a franchise in Mobile, Alabama was operational when it fact was not, causing a receivable to be recorded in 1996 when it should not have been; and that the company represented a Scottsdale franchise had operating revenue of $200,000 when it in fact had only $80,000 in revenue, causing a subsequent impairment in value of the asset, which should have been recorded in 1996. As a result of these fraudulent transactions, revenues were overstated in 1996 and 1997, and notes receivables, accounts receivables, receivables from management, and assets were overstated in 1996.
Further, the complaint alleges that as a result of these false and misleading statements the price of Swisher common stock was artificially inflated throughout the Class Period causing plaintiff and the other members of the Class to suffer damages.