According to the docket posted, on July 11, 2005, the Plaintiff filed a Notice of Voluntary Dismissal Pursuant to Fed. R. Civ. P. 41(a)(1), and on July 13, 2005, the Court entered the Order dismissing the case signed by U.S. District Judge Charles R. Breyer.
The complaint charges Sharper Image and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Sharper Image is a specialty retailer of products in the electronics, recreation and fitness, personal care, houseware, travel, toy, gifts and other categories.
Specifically, the complaint alleges that during the Class Period, defendants made false and misleading statements regarding the Company's business and prospects. As a result of these false statements, Sharper Image stock traded at inflated levels during the Class Period, whereby the Company's top officers and directors sold more than $18 million worth of their own shares. According to the complaint, the true facts, which were known by each of the defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company businesses, including wholesale, Internet and catalog, were cannibalizing the Company's retail and infomercial sales; (b) the Company's profitability was being adversely affected by a drastic slow down in the Company's key product, the Ionic Breeze family of air purifiers; (c) when defendants attempted to acquire infomercial blocks of time in early 2004, they learned that these extra blocks of time had already been acquired as a result of the Olympics and the Presidential election, and the additional costs associated with infomercial time were seriously impacting the Company's margins associated with the Ionic Breeze family of products; and (d) as a result, the Company's Q2 2004 projections of earnings per share of $0.09-$0.11 were grossly overstated.
The complaint further alleges that on or around August 5, 2004, Sharper Image announced that Q2 2004 results would be much worse than previously represented, with EPS of only $0.03-$0.05 versus prior representations of $0.09-$0.11. As a result of this news, Sharper Image shares fell 23%.