If you purchased or otherwise acquired the common stock of SmarTalk Teleservices, Inc. ("SmarTalk" or the "Company") (NASDAQ/NQMS: SMTK) between August 14, 1997 and August 10, 1998 (the "Class Period"), the following applies to you. If you did not purchase or otherwise acquire stock during the class period, but simply held the stock, you are not eligible to participate in the suit. Also excluded from the class are the defendants, officers and directors of the company, members of their immediate families and their legal representatives, heirs, successors or assigns and any entity in which any defendant has or had a controlling interest.
The complaint alleges that defendants, while amassing over $50 million in proceeds from insider sales of the SmarTalk stock, concealed from the investing public the fact that they had been committing gross violations of the federal securities laws, including misleading the public by claiming that SmarTalk was expanding its business opportunities through favorable acquisitions and distribution agreements with other companies and that the Company was generating "record" financial results. The complaint alleges that SmarTalk failed to disclose to the investing public that: a) they artificially recognized the sales figures announced during the Class Period; b) they were recognizing revenues prematurely and improperly in violation of GAAP; c) SmarTalk's distributors were not selling prepaid cards at the levels represented; d) SmarTalk's management was encountering severe difficulties in integrating the companies acquired; and e) defendants were not controlling costs.
On August 10, 1998, SmarTalk announced that it was postponing the release of its quarterly results due to SmarTalk's auditors questioning SmarTalk's accounting methods. This news caused SmarTalk shares to drop over 60 percent on extraordinary volume.

Update

This case has been settled. The Claims Administrator for this litigation is Gilardi & Co. LLC. The deadline for submitting a proof of claim was October 31, 2003. If you would like further information about the settlement, please go to www.gilardi.com or call (415) 461-0410.

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