VERO BEACH, Fla.- LAWFUEL – The Legal Newswire – The Law Offices of Bruce G. Murphy announces that a class action lawsuit was filed on behalf of all persons who purchased the common stock of Jones Soda Company (“Jones Soda” or the “Company”) [NASDAQ: JSDA]. A copy of the complaint filed in this action is available from the United States District Court for the Western District of Washington, or can be obtained by calling (828) 737-0500 or sending an email to [email protected]
If you purchased the common stock of Jones Soda between November 1, 2006, and August 2, 2007, inclusive (the “Class Period”), and sustained damages, you may, no later than November 5, 2007, request that the Court appoint you as lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as “lead plaintiff.” Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain the Law Offices of Bruce G. Murphy, or other counsel of your choice, to serve as your counsel in this action.
The action is pending in the United States District Court for the Western District of Washington against the Company, and certain of its officers. According to the complaint, defendants violated Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78j(b) and the rules and regulations promulgated thereunder by the SEC, including Rule 10b-5, 17 C.F.R. § 240.10b-5 (the “Class”).
The Complaint alleges that throughout the Class Period, defendants issued numerous, positive but false statements to investors and the market at large that misrepresented the Company’s growth prospects and ability to penetrate new markets. Defendants further issued extremely positive statements about the Company’s new distribution and production agreement with National Beverage Corporation and agreements with numerous major retailers to garner precious shelf space for the Company’s products. Each of these agreements, defendants stated, were cemented and that the Company was poised to realize the financial benefits thereof.
Moreover, Defendant Peter M. von Stolk, the Company’s founder, President, Chief Executive Officer and a Director issued numerous statements that lead the market to believe that major retailers had stocked the Company’s sodas on their shelves for sale, or would be stocked on shelves for sale by a date certain. These statements, however, were false or were issued with such a degree of severe recklessness to render them actionable.
For example, as detailed below, on May 3, 2007 Jones Soda barely posted a profit and issued disappointing results for the quarter that ended March 31, 2007. Mr. van Stolk blamed the weaker than expected earnings on problems converting bottled sodas from high-fructose corn syrup to pure cane sugar, in addition to higher expenses. Nevertheless, he assured investors that the Company was on track to be in 25 percent of the market with the new 12-ounce cans by Memorial Day.
Though the weak earnings were well below Wall Street’s estimates, and the stock price fell 20 percent in after-hours trading before gaining back some ground, it rebounded on news that the Company cut a deal to sell soda at Seahawk’s games (announced a few weeks later), and the Company’s price per share stabilized just above $21 a share.
On August 3, 2007, however, the Company announced that it barely scratched out a profit when earnings for the quarter that ended June 30, 2007 were again well below Wall Street’s expectations. In connection with the release (despite his earlier promises), Mr. van Stolk said this time that the Company’s canned products were not on enough store shelves in time for peak summer sales, which begin during the Memorial Day weekend.
He further stated that 15,200 stores had “basically committed or ordered” products, compared with 1,440 stores six months earlier. He, however, declined to detail say how many stores were carrying Jones Soda currently, even though in March on Cramer’s Mad Money, he listed 15 major chains that would be carrying the cans by Memorial Day.
This news caused the Company’s stock to plummet nearly 23 percent in after-hours trading to $11.70 a share, causing stockholders to suffer significant damages.
As detailed in the Complaint, Mr. van Stolk and five of the six member of the board during an 85-day period this last spring sold huge amounts of their holdings of Jones Soda while touting the Company’s aggressive expansion plan and new arrangements with major retailers. The truth of the matter was that the Company’s plan was not on pace as disclosed. The Company’s beverages were not getting on shelves in time for the summer sales bump. Costs associated with the Company’s new “can” were significantly impacting earnings and Mr. van Stolk falsely portrayed the Company in an overly positive light despite facts that he knew the contrary. Indeed, as detailed in the Complaint, he stated during a conference call with analysts that he saw major sales data from retailers on a daily basis. Accordingly, he knew at all relevant times that the Company’s products were not on the shelves and thus not being sold at a pace that comported with his public statements concerning the Company’s penetration into the $66 billion carbonated soft drink market.
Mr. van Stolk and other members the Company’s Board, however, faired far better. Specifically, less than a week after the van Stolk’s March 8 announcement of strong fourth-quarter earnings and that the Company would be in 25 percent of the retail market by selling at stores including Wal-Mart, Kroger, Safeway and Kmart, he and substantially all of the members of the board began selling their stock en masse.
Mr. van Stolk, for example, sold 140,000 shares March 14 for $2.53 million, which left him with 1.4 million shares. He subsequently exercised his options and bought 250,000 more shares, bringing his total to 1.65 million.
Board member Scott Bedbury sold all 70,000 of his shares from March 13 to 16, for $1.3 million.
Board member Michael M. Fleming exercised options on a total of 55,000 shares March 13 and May 8, and then sold that many shares on those days for a $1 million profit. The options were to expire between 2009 and 2011. After the sale, Mr. Fleming held only 5,000 shares in the Company.
Board member Alfred W. Rossow, Jr. exercised options on 30,000 shares May 9 and sold all the shares the same day for a $600,719 profit. His options were set to expire in 2009 and 2010. After the sale, Mr. Rossow held no direct ownership in the Company.
Board member John J. Gallagher, Jr. exercised options on 20,000 shares May 7 and then sold all those shares for a $276,000 profit June 5, the day before van Stolk disclosed at an investor conference that sales challenges were occurring. The options were set to expire in 2010. After the sale, Mr. Gallagher held no direct ownership in the Company.
Board member Stephen C. Jones exercised options on 15,000 shares May 24 and sold all the shares the same day for a $233,700 profit. The options would have expired in 2011. After the sale, Mr. Jones held no direct ownership in the Company.
Lars Nilsen, the Executive Vice President of Sales at Jones Soda, exercised and sold 3,000 shares March 15 for a $37,290 profit. The options were not set to expire until 2011. After the sale, Mr. Nilsen held no direct ownership in the Company.
As a result of the dissemination of the false and misleading statements set forth in the complaint, the market price of Jones Soda common stock was artificially inflated during the Class Period. In ignorance of the false and misleading nature of the statements described above, and the deceptive and manipulative devices and contrivances employed by said defendants, plaintiffs and the other members of the Class relied, to their detriment, on the integrity of the market price of Jones Soda common stock. Had plaintiffs and the other members of the Class known the truth, they would not have purchased said common stock, or would not have purchased them at the inflated prices that were paid.
Please contact the Law Offices of Bruce G. Murphy for more information about the firm and this action. If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following attorney:
Bruce G. Murphy, Esq.
265 Llwyds Lane
Vero Beach, FL 32963
Phone number: (828) 737-0500