By the Order and Final Judgment signed by U.S. District Judge Benson E. Legg on July 26, 2001, the litigation is certified as a class action consisting of all Persons who acquired common stock of Acrodyne from January 1, 1998 through August 14, 2000, inclusive. The Stipulation and Plan of Allocation are approved as fair, reasonable and adequate. Plaintiffs Counsel are awarded 25% of the Gross Settlement Fund, as attorney fees, and $24,865, in reimbursement of expenses.
By the Notice of Pendency and Proposed Settlement of Class Action, the settlement was for (i) $750,000 in cash plus accrued interest and (ii) 1,600,000 warrants to purchase 1,600,000 shares of Acrodyne common stock at a strike price of $1.00 per share, which shall expire five years from the date that the settlement becomes final.
The complaint alleges that Acrodyne and certain of its current and former officers violated the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. In particular, the Complaint claims that Acrodyne improperly overstated its inventory and gross profits during the Class Period, which will require the Company to amend and restate its 1999 year-end results and its results for first quarter ended March 31, 2000. On August 14, 2000, the Company issued a press release announcing that that it would delay the filing the Company's Form 10-Q for the quarter ended June 30, 2000. The Company also disclosed that it planned to amend and restate its financial results for 1999 and the first quarter of 2000, and that it would engage an independent accounting firm for the purpose of conducting a full review of the inventory balances and related activity to determine the extent of any amendment and restatement. As a result of these revelations, Acrodyne's stock price tumbled approximately 37% on August 14, 2000, until Nasdaq halted trading. As of the date of this release, trading has not resumed.