BALA CYNWYD, Pa., Feb. 28, 2002 (PRIMEZONE) -- The following statement was issued today by the law firm of Schiffrin & Barroway, LLP:
Notice is hereby given that a class action lawsuit was filed in the United States District Court for the District of New Jersey on behalf of all purchasers of the common stock of Medi-Hut Co., Inc. (Nasdaq:MHUT) ("Medi-Hut" or the "Company") from April 4, 2000 through February 4, 2002, inclusive (the "Class Period"). The case is pending in the United States District Court for the District of New Jersey. The address of the courthouse is Martin Luther King, Jr. Federal Building and U.S. Courthouse, 50 Walnut Street, Newark, New Jersey 07101.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Schiffrin & Barroway, LLP (Marc A. Topaz, Esq. or Stuart L. Berman, Esq.) toll free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at info@sbclasslaw.com.
The complaint seeks damages for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The defendants are Medi-Hut; Joseph A. Sanpietro, Medi-Hut's President and Chief Executive Officer; Laurence M. Simon, Chief Financial Officer of the Company; Robert Russo, Treasurer of Medi-Hut; Vincent Sanpietro, Secretary of Medi-Hut; and James G. Aaron and James S. Vacarro, both members of the Company's Board of Directors.
Plaintiff has alleged that defendants knowingly and recklessly disseminated materially false and misleading statements and omissions that misrepresented the Company's business, operations and financial performance. As stated in plaintiff's complaint, Medi-Hut misled the investing public by failing to disclose that a Medi-Hut vice president had a controlling interest in Larval Corp. ("Larval"), the Company's largest customer. Specifically, Medi-Hut failed to disclose that Lawrence Marasco, Medi-Hut's Vice President for Sales and Marketing, had a controlling interest in Larval. During fiscal year 2001, sales to Larval accounted for 62% of Medi-Hut's revenues.
Because Lawrence Marasco had a controlling interest in one of Medi-Hut's customers, generally accepted accounting principles dictated that Medi-Hut identify sales to that customer as related party transactions. The Company, however, failed to disclose the true nature of its sales to Larval. Indeed, each report Medi-Hut filed with the Securities and Exchange Commission during the Class Period, including quarterly and annual reports, was devoid of any reference to the fact that one of its largest customers was controlled by a Company employee. These reports were disseminated to shareholders and/or were publicly available to potential investors.
Plaintiff alleges that the misrepresentations and omissions by defendants influenced the views of stock market analysts and the investing public and brought about an unrealistic assessment of the Company's performance and prospects; and that, as a result, Medi-Hut's stock traded at artificially inflated prices throughout the Class Period.
On February 4, 2002, the nature of the relationship between Medi-Hut, Lawrence Marasco and Larval Corp. was revealed. The market, recognizing that a majority of the Company's revenues in fiscal year 2001 were generated via sales to a related party, reacted swiftly and severely. By the close of business on February 4, shares of Medi-Hut had lost 51% of their value, falling $3.41 to $3.29 in unusually heavy trading. Four days later, Grant Thorton LLP ("Grant Thorton") resigned its position as Medi-Hut's independent auditor after only two weeks. Grant Thorton served as the Company's auditors from January 24, 2002 through February 8, 2002.
Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Schiffrin & Barroway, LLP, which has significant experience and expertise prosecuting class actions on behalf of investors and shareholders. For more information on Schiffrin & Barroway, or to sign-up to participate in this action online, please visit www.sbclasslaw.com.
If you are a member of the class described above, you may move the Court to serve as lead plaintiff of the class. If you seek to be appointed lead plaintiff, you must file a motion to serve as lead plaintiff not later than April 29, 2002 in the United States District Court for the District of New Jersey.
The Private Securities Litigation Reform Act of 1995 (the "PSLRA") sets forth certain requirements for any person seeking to serve as a lead plaintiff. The PSLRA provides that the Court shall appoint as lead plaintiff the member or members of the class that the court determines to be most capable of adequately representing the interests of class members. In determining the "most adequate plaintiff," the PSLRA provides that the Court shall adopt a rebuttable presumption that the most adequate plaintiff is the person or group that has either filed a complaint or made a motion for appointment as lead plaintiff, has the largest financial interest in the relief sought by the class, and otherwise satisfies the requirements of Rule 23 of the Federal Rule of Civil Procedure. See 15 U.S.C. Section 78u-4 (a)(3)(b)(iii). Any member of the proposed class may seek to be appointed as lead plaintiff, even if that person has not filed a complaint.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca