As summarized by the docket posted, on October 5, 2001, a motion to dismiss the complaint which was later dismissed by the Order signed on September 19, 2002, denying the defendants’ motion to dismiss. On February 6, 2003, Infotopia, Inc. filed a notice of filing of bankruptcy petition and stay. On July 28, 2003, an Agreed Order of consolidation was entered consolidating Case Nos. 4:01CV2027 and 4:01CV2279 are consolidated for purposes of discovery. On November 26, 2003, the Court entered the Order and Notice of Party Dismissal dismissing all claims without prejudice on behalf of the several plaintiffs. On April 13, 2004, the plaintiffs filed a motion for summary judgment against one of the individual defendants. In May 2004, several individual defendants were Ordered dismissed with prejudice or a notice of voluntary dismissal was filed. On May 17, 2004, the Court entered the Memorandum Opinion and Order granting the plaintiffs’ motion for summary judgment. Judgment was entered in favor of the plaintiffs against the individual defendant in the total amount of $1,454,000.00. On May 28, 2004, the Court entered the Order dismissing one of the individual defendants pursuant to a settlement agreement. Further, the Court entered the Order staying the action. According to the Order, having been informed that a petition for relief under Title 11 of the US Code has been filed by or against defendant Infotopia and another individual defendant, further proceedings in this matter will be perpetually stayed and the within matter is hereby closed as related to defendants Infotopia, Inc. and the individual defendant subject to reopening upon written motion of plaintiff's or any party in interest, after either a dismissal of the bankruptcy case or the granting of relief from the stay.
The complaint alleges that the plaintiffs were induced through a series of false and misleading statements made by the company's senior management between June and September 2000 to exercise warrants to purchase Infotopia stock. The stockholders exercised their warrants in mid-September by surrendering promissory notes issued by Infotopia that provided for the return of principal within 270 days together with 10% interest. The stockholders claim that they relied on statements by Hoyng and other officers and directors that the ``Torso Tiger'' sales ``will continue for many years to come'' and that earnings of 20 cents per share could be ``safely projected'' ``for this fiscal year.'' In fact, according to the complaint, Infotopia discontinued the sale of this product as of December 31, 2000 and the company reported a loss of over $16 million dollars for the three months ending November 30, 2000 and a loss of over $26 million for the ten months ended December 31, 2000. Other false and misleading statements alleged in the complaint relate to an announced Letter of Agreement for a $20 million financing package that was characterized in an August 4, 2000 press release as a ``real home run for our company.'' In a letter to the shareholders on September 28, 2000 Hoyng disclosed that the Letter of Agreement was in fact only a letter of intent that never materialized into any financing for Infotopia. The stockholders further assert that the false and misleading statements had the effect of causing the stock price to rise from 12 cents per share on August 23, 2000 to $1.12 per share on September 12, 2000. Several of the insiders sold hundreds of thousands of shares through September 20 realizing substantial profits. The suing stockholders' stock was not registered by the company until over a month later when the stock price had dropped to the 20 cent per share range. Adjusted for a recent 200:1 reverse split, the stock is currently trading at less than a half a cent per share.