According to a press release date July 18, 2011, the plaintiffs assert violations of Sections 10(b) and 20(a) of the Securities Exchange Act.
The complaint alleges that the defendants made false statements to the marketplace about its growth and operations, including falsely claiming that it had $130 million in contracts and $15 million in financing. This positive news, according to the Complaint, pushed stock prices up artificially, allowing insiders to carry out an illegal kickback scheme using the company’s own stock.
On April 13, 2010, the company’s former outside auditor wrote to the company stating it was (a) withdrawing its audit opinions for the company for the fiscal years ended 2009 and 2008, which were included in the Form 10-K filed with the SEC on January 13, 2010 and February 12, 2009; (b) confirming that it had already withdrawn its consents on April 8, 2010 relating to Forms S-1 dated April 6, 2010, March 18, 201, and February 5, 2010; and (c) withdrawing its prior consent relative to the Form S-8 dated June 29, 2009. The company included this letter in its a Company Form 8-K filing. The company’s stock dropped on the news.
On August 22, 2011, the Court issued an Order granting the Plaintiffs notice of Voluntary Dismissal without prejudice.