Plaintiffs v Afexa Life Sciences Inc.
Cold-FX Maker Settles Class Action Lawsuits
Afexa Life Sciences Inc., maker of the popular cold and flu treatment Cold-FX, has reached a settlement with investors who accused the company of misleading financial statements after the disappointing launch of its product in the United States. The lawsuits were launched in Ontario and Alberta in August 2007 against the company, some of its officers, former directors and former auditor and relate to an ambitious launch of Cold-FX in the U.S. market in 2006.
The class action alleged the company's financial statements were misleading for the year ended Sept. 30, 2006, and its interim unaudited financial statements for the first quarter of fiscal 2007. The company reported revenue of about $47 million in 2006. However, it later said those figures were based on volume of product delivered to U.S. retailers to stock their store shelves. Expected Cold-FX sales didn't materialize south of the border and some of product was returned.
The $7.1-million settlement comes after the company, formerly known as CV Technologies, reached an agreement with the Alberta Securities Commission related to "wrongly recognizing revenue" from its Cold-FX sales to U.S. retailers. The settlements come as the Edmonton-based company rebrands under new management, tries to build up its sunken share price and prepares for its role as an official supplier at the 2010 Winter Olympics. The settlements also come ahead of the upcoming flu season, which is a crucial sales period for Afexa and has heightened awareness this year thanks to the menacing swine flu.
The proposed class action included investors who bought the company's shares between Dec. 11, 2006, which is when the company said it would enter the U.S. market, and March 23, 2007, when it announced U.S. sales had disappointed and could have a " serious impact" on its cash position.
Strosberg, whose Windsor, Ont.-based firm Sutt Strosberg LLP handled the legal action alongside Siskinds LLP of London, Ont., said the case would have likely involved a long battle through the courts.
Afexa claims its Cold-FX product strengthens the immune system and helps prevent and relieve cold and flu infections.
For more information please contact:
Sutt Strosberg LLP
600 Westcourt Place
251 Goyeau Street
Windsor ON N9A 6V4
Windsor: 519.258.9333
Fax: 519.258.9527 | 866.316.5311
Toronto: 416.362.7272 | 800.435.3446
Fax: 416.362.2475 | 800.440.3778
Detroit: 313.962.0137
Fax: 313.962.0139
