Abatix Corporation supplies safety, construction, and industrial products.
The Complaint alleges that Defendants violated the Securities Exchange Act of 1934 by making a series of materially false and misleading statements concerning the Abatix's business agreement with Goodwin Group LLC during the Class Period. Specifically, the Complaint alleges that Abatix knew but failed to disclose certain material facts, including that: (i) the Company had not verified the proprietary nature of RapidCool or that the Company had in fact, obtained the "exclusive worldwide rights to distribute RapidCool;" (ii) that Abatix had not verified that Goodwin Group LLC was the assignee of patents relating to RapidCool products, nor had Defendants verified the ownership of any patent applications filed with respect to the product line; and (iii) Defendants knew but failed to disclose that they had only been permitted to perform limited due diligence on the proprietary nature of RapidCool products before signing the distributorship agreement. As a result, the price of the Company's securities were artificially inflated during the Class Period.
Further, the Complaint alleges that on April 21, 2004, the Company admitted that Abatix's April 14, 2004 press release announcing the signing of an agreement with Goodwin Group LLC to distribute the RapidCool (TM) product line created a significant increase in the price and volume of shares traded, "which the Abatix believes was not warranted by Company developments."
Note: A number of purported class actions Complaints were filed since April 22, 2004. The first Complaint was filed on behalf of all persons or entities that purchased or otherwise acquired Abatix's securities between April 14, 2004 at 5:05 p.m. (EST) and April 16, 2004, at 9:27 a.m. (EST). The subsequent Complaints were filed on behalf of purchasers of the securities of Abatix between April 14, 2004 at 5:05 p.m. and April 21, 2004, at 8:24 a.m. (EST). All dates and times are inclusive.
On May 19, 2004, the Plaintiff in the first filed Complaint titled Sinay, et al. v. Abatix Corporation, et al., docket number 04-cv-00297, filed a Notice of Voluntary Dismissal, and on May 25, 2004, the Court entered the Final Judgment dismissing the Complaint without prejudice. By the Order of the Court dated June 21, 2004, the remaining actions pending in the Northern District of Texas were consolidated under the action titled Family Medicine Specialists. et al. v. Abatix Corporation, et al., docket number 04-cv-00872. Another similar purported class action filed in the U.S. District Court for the Eastern District of Texas was transferred to the Northern District of Texas.
According to a press release dated April 7, 2005, Abatix said that it has reached a preliminary agreement to settle a federal class-action shareholder lawsuit and a second suit filed in state District Court in Dallas. Abatix said it has agreed to settle both suits for $900,000. The Company has been neck deep in shareholder lawsuits since its shares soared from about $4 to almost $17 in April 2004 and then collapsed to $2. Abatix became the target of five lawsuits involving dozens of shareholders alleging that the Company made false statements about RapidCool. Those suits were consolidated into the one federal suit filed in U.S. District Court in Dallas.
By the Order and Final Judgment entered on August 12, 2005, the settlement and the Plan of Allocation were approved as fair, reasonable, and adequate. Plaintiffs' Counsel were awarded 30% of the Gross Settlement Fund in fees, which sum the Court finds to be fair and reasonable, and $23,351.99 in reimbursement of expenses.
