| Company: | SearchMedia Holdings Limited |
| Ticker Symbol: | IDI |
| Class Period: | Aug-20-09 to Aug-20-10 |
| Date Filed: | Sep-14-10 |
| Lead Plaintiff Deadline: | Nov-13-10 |
| Court: | Central District of California |
| Allegations: | |
The Complaint charges certain of the Company's current and former executive officers and directors with violations of federal securities laws. Ideation was a blank-check company formed for the purpose of acquiring, through a merger, capital stock exchange, asset acquisition or other similar business combination, one or more businesses. On April 1, 2009, the Company announced an agreement to purchase SearchMedia International Limited ("SMIL"), a purported nationwide multi-platform media company in China. On October 30, 2009, Ideation completed the acquisition of SMIL (the "Merger") and changed its name to SearchMedia.
The Complaint relates to material misstatements and/or omissions in the joint proxy statement and prospectus (the "Proxy/Prospectus") issued in connection with the Merger, as well as other public statements issued during the Class Period related to the Merger and SMIL. The Complaint alleges that throughout the Class Period defendants knew or recklessly disregarded that their public statements concerning SearchMedia and SMIL's business, operations and prospects were materially false and misleading. Specifically, defendants made false and/or misleading statements and/or failed to disclose: (1) that SMIL was improperly recognizing revenue; (2) that certain of SMIL's accounts receivable related to sales generated primarily in the in-elevator business were uncollectible, (3) that, as a result, SMIL's financial results were overstated; (4) that SMIL's financial results were not prepared in accordance with Generally Accepted Accounting Principles; (5) that SMIL lacked adequate internal and financial controls; and (6) as a result of the above, SMIL's financial statements were materially false and misleading at all relevant times.
On August 20, 2010, SearchMedia announced that the historical financial statements of SMIL for the 2007 and 2008 fiscal years would have to be restated and that the financial statements from these periods can no longer be relied upon. SearchMedia informed investors that it estimated that SMIL's revenue in 2007 and 2008 had been overstated by approximately $6 million and $25 million, respectively.
On this news, SearchMedia's stock fell $0.78 per share, or nearly 23%, to close on August 20, 2010, at $2.62 per share on unusually heavy trading volume, and further declined an additional $0.92 per share, more than 35%, to close on August 23, 2010, at $1.70 per share, again on unusually heavy trading volume. Over the course of these two days of trading, SearchMedia's stock declined a combined $1.70 per share, or 50%, from the closing price of $3.40 per share on August 19, 2010.
If you acquired the securities of the defendants during the Class Period you may, no later than the Lead Plaintiff Deadline shown above, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.
