| Company: | Merge Technologies, Inc. |
| Ticker Symbol: | NASD: MRGE |
| Class Period: | August 2, 2005 to March 16, 2006 |
| Date Filed: | Mar-22-06 |
| Lead Plaintiff Deadline: | May-22-06 |
| Court: | Eastern District, WI Milwaukee Division |
| Allegations: |
A class action lawsuit has been filed in the United States District Court, Eastern District of Wisconsin, Milwaukee Division, on behalf of all persons who purchased Merge Technologies, Inc. securities (including purchasers of common stock, purchasers of call options, and sellers of put options ("Merge" or the "Company") (Nasdaq: MRGE) between August 2, 2005 through March 16, 2006, inclusive (the "Class Period"), against defendants Merge Technologies, Inc., d/b/a Merge Healthcare, Richard A. Linden, the Company's CEO, President, Director and Chairman of the Executive Committee, and Scott T. Veech, the Company's CFO, Secretary and Treasurer.
The complaint alleges that defendants violated the federal securities laws by issuing materially false and misleading statements throughout the Class Period that had the effect of artificially inflating the market price of the Company's securities.
In particular, the complaint alleges, as it concerns the all-stock merger between the Company and Cedara Software Corp., first announced in January 2005 and completed June 1, 2005, that Merge represented to the investment community that the merger was highly-successful and that the Company maintained a strong financial position, while concealing: (1) that the Company lacked adequate internal controls; and (2) the Company's financial statements for the second and third quarters of 2005 were unreliable; and (3) that the Company's financial projections were irresponsible considering the knowledge defendants possessed concerning the Company's actual financial situation.
As a result, on February 24, 2006, Merge announced that it was delaying the issuance of its fourth quarter 2005 results in order to allow additional time to complete an audit of the Company's financial statements, and in particular, an investigation into the recording of certain large sales contracts as deferred revenue.
Then, on March 17, 2006, Merge reported, inter alia: (1) that the accounting improprieties in fact necessitated that management delay the completion of the Company's financial statements for the fiscal year ended December 31, 2005; (2) that its audit committee, with the assistance of outside counsel, was investigating anonymous complaints; (3) that it anticipates a report of material weaknesses in the Company's internal control over financial reporting; (4) the suspension of its registration statement on Form S-3 relating to issuance of common stock upon exchange of exchangeable shares of "Merge/Cedara ExchangeCo Ltd.;" and (5) that its audit committee concluded that its previously issued financial statements for the second and third quarters 2005, should no longer be relied upon.
Initial news of the Company's improper practices concerning the Cedara merger came as a surprise to investors and caused the stock to decline from its February 23, 2006 close of $24.50 per share to $20.50 by the end of trading on February 24 -- a one day decline of 16.3 percent. The Company's March 17, 2006 announcement of, inter alia, the delay of its fiscal year 2005 financial results and unreliability of second and third quarter 2005 financial results, at the close of trading on March 17, 2006, Merge stock was $15.85, down from a previous day's closing price of $17.97, or an additional 11 percent.
Merge's use of these improper practices served to artificially inflate the Company's reported earnings during the Class Period. Failure to disclose this information constituted material omissions, the ultimate disclosure of which harmed the Company's investors. Accordingly, the Company's Class Period statements concerning its compliance with applicable laws and regulations were false.
If you acquired the securities of the defendants during the Class Period you may, no later than the Lead Plaintiff Deadline shown above, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.
The complaint alleges that defendants violated the federal securities laws by issuing materially false and misleading statements throughout the Class Period that had the effect of artificially inflating the market price of the Company's securities.
In particular, the complaint alleges, as it concerns the all-stock merger between the Company and Cedara Software Corp., first announced in January 2005 and completed June 1, 2005, that Merge represented to the investment community that the merger was highly-successful and that the Company maintained a strong financial position, while concealing: (1) that the Company lacked adequate internal controls; and (2) the Company's financial statements for the second and third quarters of 2005 were unreliable; and (3) that the Company's financial projections were irresponsible considering the knowledge defendants possessed concerning the Company's actual financial situation.
As a result, on February 24, 2006, Merge announced that it was delaying the issuance of its fourth quarter 2005 results in order to allow additional time to complete an audit of the Company's financial statements, and in particular, an investigation into the recording of certain large sales contracts as deferred revenue.
Then, on March 17, 2006, Merge reported, inter alia: (1) that the accounting improprieties in fact necessitated that management delay the completion of the Company's financial statements for the fiscal year ended December 31, 2005; (2) that its audit committee, with the assistance of outside counsel, was investigating anonymous complaints; (3) that it anticipates a report of material weaknesses in the Company's internal control over financial reporting; (4) the suspension of its registration statement on Form S-3 relating to issuance of common stock upon exchange of exchangeable shares of "Merge/Cedara ExchangeCo Ltd.;" and (5) that its audit committee concluded that its previously issued financial statements for the second and third quarters 2005, should no longer be relied upon.
Initial news of the Company's improper practices concerning the Cedara merger came as a surprise to investors and caused the stock to decline from its February 23, 2006 close of $24.50 per share to $20.50 by the end of trading on February 24 -- a one day decline of 16.3 percent. The Company's March 17, 2006 announcement of, inter alia, the delay of its fiscal year 2005 financial results and unreliability of second and third quarter 2005 financial results, at the close of trading on March 17, 2006, Merge stock was $15.85, down from a previous day's closing price of $17.97, or an additional 11 percent.
Merge's use of these improper practices served to artificially inflate the Company's reported earnings during the Class Period. Failure to disclose this information constituted material omissions, the ultimate disclosure of which harmed the Company's investors. Accordingly, the Company's Class Period statements concerning its compliance with applicable laws and regulations were false.
If you acquired the securities of the defendants during the Class Period you may, no later than the Lead Plaintiff Deadline shown above, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.
