According to the docket posted, on July 29, 2004, the Court entered the Order and Final Judgment, signed by U.S. District Judge Deborah A. Batts, in favor of the Plaintiffs and against the Defendants. The Court further entered an Amended Judgment on August 30, 2004.
In a Press Release dated June 07, 2003, the defendants in the class actions, Crayfish, Hikari Tsushin, Inc., and the Company's CEO at the time of the Company's public offering, have reached a settlement agreement with the plaintiffs to settle all pending class actions for US$9,000,000. This settlement will not become final until approved by the court. The Company has entered into this settlement agreement solely to avoid any further cost, burden or uncertainty from the class actions, and has not acknowledged any claims alleged by the plaintiffs. Out of US
$9,000,000, US$6,625,000 will be paid by the Company. The Company expects to
expense the settlement payment in the fiscal year ending September 30, 2003.
On October 3, 2001, the Court entered the Memorandum and Order granting the motion for an Order to consolidate all actions. The caption of the consolidated actions shall be "In re Crayfish Company Securities Litigation" and the files of these consolidated actions shall be maintained in one file under Master File No. 00cv6766 (DAB). By the Order, the Court appointed lead plaintiff and approved their selection of lead counsel. On October 11, 2001, the Chang Group filed a motion for reconsideration of the Court’s selection of lead plaintiff and lead counsel. On June 10, 2002, the Court entered the Memorandum and Order granting the motion for reconsideration and granted the Chang Plaintiffs Group’s motions for appointment as lead plaintiff and lead counsel. On July 19, 2002, a Consolidated Amended Complaint was filed, and the defendants responded by filing several motions to dismiss the Consolidated Amended Complaint. On May 17, 2004, the Court entered the Preliminary Order in Connection with Settlement Proceedings.
The original complaint alleges that defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 by issuing a materially false and misleading Registration Statement and Prospectus. As alleged in the complaint, the Prospectus highlighted the Company's relationship with Hikari Tsushin, Inc. ("Hikari"). The complaint alleges that the Prospectus was materially false and misleading because it failed to disclose: (i) that Hikari was suffering from a massive decline in its business which would necessarily impact the future profitability of Crayfish. The business decline at Hikari was significant and pronounced and, as a result, Hikari was considering a restructuring and consolidation of its business operations; (ii) that Hikari's business decline was distracting it from selling Crayfish products. Accordingly, the Company was subject to increased risk and uncertainty as its only sales agent was in disarray; and (iii) as a result of the foregoing, defendants' statements, opinions and projections about the Company were lacking in a reasonable basis at all times.