NexCen Brands Inc Case 05/28/2008

JULY 2011 - According to the Notice:

If approved by the Court, the settlement will provide $4,000,000 in cash, plus interest (the “Settlement Amount”), to pay claims of investors who purchased NexCen Stock during the period from March 13, 2007 through May 18, 2008 (the “Class Period”).

The Settlement represents an average recovery of $0.2128 per share of NexCen Stock for the 18.8 million NexCen shares that Lead Plaintiff’s expert estimates were traded and damaged as a result of the alleged misconduct during the Class Period. This estimate solely reflects the average recovery per damaged share of NexCen Stock. This is not an estimate of the actual recovery per share you should expect from the Settlement. Your actual recovery will be lower, and will depend on the aggregate losses of all Class Members, the date(s) you purchased and sold NexCen Stock, the amounts and prices of those transactions, the total number of claims filed, and the administrative costs for completion of the Settlement and distribution of the Settlement Amount.

Attorneys for the Lead Plaintiff (“Class Counsel”) intend to ask the Court to award them fees of up to 30% of the Settlement Amount, and reimbursement of litigation expenses not to exceed $70,000. Collectively, the attorneys’ fees and litigation expenses are estimated to average $0.0676 per damaged share of NexCen Stock. The Court will review and rule on an application for fees and expenses from the attorneys. If approved by the Court, these amounts will be paid from the Settlement Fund.

The Class Members’ approximate recovery from the Settlement, following deduction of attorneys’ fees and expenses approved by the Court, is an average of $0.1452 per damaged share of NexCen Stock. This estimate is based on the assumptions set forth in the preceding paragraphs. Your actual recovery, if any, will vary depending on the dates of your transactions, your purchase and sale price(s) and the number of claims filed. In addition, it will be affected, by a slight increase, by the exclusion of certain potential class members.

In this case Lead Plaintiff contended that NexCen and members of its senior management team violated the federal securities laws by providing investors with allegedly false or misleading information about its business and financial condition. However, the Defendants denied that there was anything improper about the information NexCen or members of its senior management team provided to investors, and deny any wrongdoing whatsoever. Based on his expert’s analysis, Lead Plaintiff believes that, if he prevailed on all the claims on behalf of the Class and the Court accepted his theory of damages, the Class would recover up to approximately $1.95 per damaged NexCen share, before deductions for fees and expenses and assuming that the full amount of the judgment was collected. Defendants believe that, if this case proceeded they would win every claim, and Lead Plaintiff and the Class would recover nothing. Defendants (as described below) deny the allegations in the lawsuit and deny any wrongdoing.

MAY 2008 - The complaint charges NexCen and certain of its officers and directors with violations of the Securities Exchange Act of 1934. NexCen operates as a brand management and franchising company in the United States and internationally. The Company owns, licenses, franchises, and markets a portfolio of brands, including Bill Blass, Waverly, The Athlete’s Foot, Shoebox New York, Great American Cookies, MaggieMoo’s, Marble Slab Creamery, Pretzel Time, and Pretzelmaker.

The complaint alleges that, during the Class Period, defendants issued a series of materially false and misleading statements that misrepresented and failed to disclose: (i) that the Company was able to finance a portion of the Great American Cookies acquisition by agreeing to an accelerated-redemption feature, which would force the Company to pay back half of its borrowing by a certain date; (ii) that the Company was unable to comply with this accelerated-redemption feature, which would reduce the amount of cash available to the Company; (iii) that the Company had no reasonable basis for its earnings guidance for fiscal 2008; and (iv) as a result of the foregoing, the Company’s ability to continue as a going concern was in serious doubt.

Then, on May 19, 2008, the Company announced that it “expects to amend the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007.” The Company also stated that its prior financial guidance for 2008 “is no longer applicable.” Moreover, the Company revealed that it “is actively exploring all strategic alternatives to enhance its liquidity, including potential capital market transactions, the possible sale of one or more of its businesses, and discussions with the company’s lender.” Upon this news, shares of the Company’s stock fell $1.95 per share, or 77%, to close at $0.58 per share, on heavy trading volume.