The original complaint asserts claims against defendants Dyadic International, Inc., and certain directors and officers, for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges operational and financial improprieties perpetrated by the Company and its Asian subsidiaries, and knowingly and/or recklessly approved by the defendants, which culminated in an internal investigation and subsequent firing of the Company's Chairman and Chief Executive Officer. As a result of the improprieties in the Company's Asian subsidiaries and the subsequent internal investigation, the Company has abandoned its Asian operations and the Company's stock, which was artificially inflated as a result of the material omissions and misstatements contained within the Company's publicly filed financial statements and reports, is no longer publicly traded and is at risk of being delisted, resulting in total loss of equity for owners of Dyadic's securities.
On December 13, 2007, U.S. District Judge William P. Dimitrouleas granted the motion to consolidate several cases. On December 14, 2007, the Court approved the motion to appoint Arab Banking Corporation as lead plaintiff and further approved lead plaintiff’s selection of lead counsel. Soon after, the lead plaintiff filed a motion to withdraw as lead plaintiff that was approved by Court Order entered on February 27, 2008. On April 18, 2008, the Court granted the motion to appoint Capital Max, Inc., as lead plaintiff in the case and approved the law firm of Susman Heffner & Hurst LLP as lead counsel. On June 27, 2008, the plaintiff filed an Amended Consolidated Class Action Complaint. On September 15, 2008, the defendants filed several motions to dismiss the Amended Consolidated Class Action Complaint. On November 25, 2008, the Court granted the motions to dismiss filed by certain individual defendants. The Court, however, denied the motion to dismiss filed by the company defendant and one individual defendant. Plaintiffs have until December 22, 2008 to amend their complaint.
On December 22, 2008, the lead plaintiff filed a Second Amended Consolidated Class Action Complaint. In January 2009, the defendants filed several motions to dismiss the Second Amended Consolidated Class Action Complaint. On September 28, 2009, Judge William P. Dimitrouleas granted in part and denied in part the defendants’ motions to dismiss. On February 22, 2010, the plaintiff filed a motion to certify the class.
According to a press release dated April 19, 2010, Dyadic International, Inc. announced an agreement to resolve the consolidated stockholder class action lawsuit against Dyadic and certain of its current and former officers and directors which was initially filed in October 2007. The litigation, Miller v. Dyadic International, Inc. et al, pending in the United States District Court for the Southern District of Florida, asserted class action claims under federal securities laws based on allegations of misstatements and omissions by Dyadic and certain of its current and former officers and directors arising out of alleged improprieties at Dyadic's Asian subsidiaries. The final settlement of this lawsuit is conditioned upon the approval of a Stipulation of Settlement which has been submitted by the parties to the Court. The Stipulation of Settlement provides for payment to the alleged class of $4.8 million in cash to be funded by Dyadic and its insurance carriers. If approved by the Court, the settlement will lead to dismissal of the lawsuit with prejudice. As reported in Dyadic's consolidated financial statements for the year ended December 31, 2009, Dyadic established a reserve in connection with the class action lawsuit which is adequate to cover the costs associated with resolving this matter.
On July 28 2010, Judge William P. Dimitrouleas granted the motion for final approval of the settlement and the motion for attorney fees and expenses. That day, Judge Dimitrouleas dismissed the action with prejudice and closed the case.