The original complaint alleges that, throughout the Class Period, defendants failed to disclose material adverse facts about the Company’s true financial condition, business and prospects. Specifically, the complaint alleges that defendants failed to disclose the following adverse facts, among others: (i) the Company was experiencing weakness in its Rocky Mountain sales region due to its decision to not cut prices to the level of its competitors; (ii) the Company’s operating profit margins were being negatively impacted as customers increasingly opted to rent equipment instead of purchasing it; (iii) sales in the Company’s chemicals division were declining due to a decrease in fracing activity; and (iv) as a result of the foregoing, defendants’ positive statements concerning the Company’s guidance and prospects were lacking in a reasonable basis at all relevant times.
On October 31, 2007, Flotek announced its financial results for the third quarter of 2007, the period ended September 30, 2007. That same day, the Company held a conference call with investors and analysts, during which it was revealed, among other things, that all three of the Company’s segments were negatively affected by lower gas prices in the Rocky Mountains. In response to this announcement, the price of Flotek common stock fell $14.35 per share, or 28%, to close at $36.45 per share, on November 29, 2007, on heavy trading volume. Defendants, however, continued to conceal the full extent of the problems at the Company.
Then, on January 23, 2008, Flotek announced that the Company was revising its previously announced guidance for the year ending December 31, 2007. In response to this announcement, the price of Flotek common stock fell $7.60 per share, or 30%, to close at $17.86 per share, on January 24, 2008, on heavy trading volume.
On December 21, 2009, Judge Sim Lake signed the Order granting the motion to appoint the lead plaintiff and co-lead counsel. On February 4, 2010, the lead plaintiff filed a First Amended Complaint. The defendants responded by filing a motion to dismiss on March 29, 2010. On September 29, 2010, the motion to dismiss was granted. The plaintiffs have not been granted leave to file an amended complaint. The action is now dismissed with prejudice.