According to the docket, on December 21, 2005, the Court entered the Final Judgment and Order of Dismissal signed by U.S. District Judge Reginald C. Lindsay. By the Order, the Court approves the settlement as set forth in the Stipulation of Settlement, and the action is dismissed with prejudice. The Plan of Allocation is also approved, and Lead Counsel is awarded the sum of $281,250 cash and $187,500 notes in fees, and $20,724 in reimbursement of expenses. The civil case is terminated.
Pursuant to Court order, two hearings will be held. At the hearing for the Securities Settlement on December 14, 2005, at 3:00 p.m., before the United States District Judge Reginald C. Lindsey, at the United States Courthouse, 1 Courthouse Way, Room 2300, Boston, Massachusetts, the Court will determine: (1) whether the settlement of claims in the Securities Action in the amount of One Million One Hundred Twenty-Five Thousand Dollars ($1,125,000) in cash, plus Seven Hundred Fifty Thousand Dollars ($750,000) face amount of two year 5% subordinated callable notes convertible at $1.75 per share (with full dilution protection), plus accrued interest (collectively, the "Settlement Fund"), should be approved as fair, reasonable and adequate to all the Settling Parties; (2) whether the proposed Plan of Allocation is fair, reasonable and adequate; (3) whether the Securities Action should be dismissed with prejudice as set forth in the Stipulation and Agreement of Settlement dated September 21, 2005, and filed with the Court; and (4) whether the application of Lead Counsel in the Securities Action for an award of attorneys' fees and expenses should be approved.
The second hearing will also be held that day for the Derivative Settlement.
According to a press release dated September 27, 2005, Vaso Active Pharmaceuticals, Inc., announced today that on September 21 and 22, 2005, respectively it and certain of its officers and directors, entered into Agreements to settle the previously reported consolidated securities class action, and derivative lawsuits based on the class action allegations, and filed appropriate papers with the Court seeking dismissal of the actions. The parties to the Agreements are now seeking the Court's preliminary approval of the settlements, following which joint notices of the settlements and claim forms will be sent to appropriate shareholders. Following fairness hearings on the settlements, which have not yet been scheduled, the Court still must decide whether to give final approval of the settlements.
In a press release dated June 2, 2005, Vaso Active Pharmaceuticals, Inc. (VAPH) of Danvers, Massachusetts, announced that the Company entered into a Memorandum of Understanding Concerning Settlement Terms to settle the pending consolidated securities class action lawsuit. Under the terms of the MOU, the lead plaintiffs and the settling defendants agree that the final stipulation will contain a disclaimer of liability consistent with the MOU. Subject to the terms and conditions set forth in the MOU, settling defendants will pay into escrow for the benefit of the class $1,100,000 in cash and $750,000 face amount of 2-year 5% subordinated callable notes convertible at $1.75 per share within 10 business days of preliminary approval of the settlement by the court. In consideration of this payment, the parties will fully and finally release and discharge all claims against each other. The settlement still needs court approval. The Company's insurance carrier has agreed to pay the $1,100,000 cash payment in exchange for a release of its liability under its insurance policy with the Company.
The original complaint charges Vaso Active and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Vaso Active's principal activity is to develop, manufacture and market pharmaceutical products. The Company focuses on vaso active lipid encapsulated, or VALE, transdermal delivery technology drugs.
The complaint alleges that during the Class Period, defendants issued false and misleading statements regarding Vaso Active's key products. The true facts, which were known by each of the defendants but actively concealed from the investing public during the Class Period, were as follows: (a) the Company's claims that its "clinical trial" for its deFEET product was "supervised by independent physicians and analyzed by the New England Medical Center in Boston" Massachusetts was grossly misleading in that: (i) the New England Medical Center had nothing to do with the study associated with the "clinical trial"; (ii) the New England Medical Center was unable to draw any conclusions concerning the effectiveness of the product and played no role in selecting the patients and gathering evidence; and (iii) the trial was not supervised by "independent physicians"; (b) the Company's so-called "clinical trial" was not new or revolutionary but rather more than half a decade old; (c) the American Association of Medical Foot Specialists and its so-called "endorsement" of the Company's deFEET product was of little, if any, value; and (d) contrary to defendants' claim that there was significant demand for the Company's stock at an "institutional level," there was little, if any, institutional demand for the Company's shares.
Further, the complaint alleges that on April 1, 2004, SEC regulators halted trading of Vaso Active stock due to questions about the accuracy of assertions made in the Company's press releases, annual report, registration statement and public statements to investors regarding FDA approval of certain of its products. On March 31, 2004, financial markets were stunned when the SEC halted the trading of the Company's stock. The SEC release questioned the accuracy of assertions made in the company's press releases, annual report, registration statement and public statements to investors. Prior to the disclosure of the adverse facts described above, the Company completed an IPO during December 2003 and a private placement during March 2004, generating over $15 million in illicit proceeds.