Miller v. Thane International, Inc.

Facts

In November 2001, Thane International, Inc. and Reliant Interactive Media Corp. agreed to merge, with Reliant shareholders receiving Thane shares at an imputed merger price of approximately seven dollars per share. The prospectus filed with the Securities and Exchange Commission stated that Thane stock was approved for quotation and trading on the NASDAQ National Market upon completion of the merger, subject to compliance with the minimum bid price requirement of five dollars per share. After the merger was consummated on May 24, 2002, Thane shares commenced trading not on the NASDAQ National Market System but on the NASDAQ Over-the-Counter Bulletin Board. Between May 24 and June 11, 2002, Thane’s shares traded between eight dollars fifty cents and seven dollars, above the merger price. On June 24, 2002, the stock closed at six dollars, and the next day Thane reported disappointing earnings, causing the stock to close at five dollars twenty-five cents and soon drop below five dollars permanently. On August 14, 2002, Thane announced further disappointing quarterly earnings and that it had delayed listing on the NMS to time it with a secondary public offering, but recent business developments had put listing on hold. Thane shares tumbled to one dollar ninety-five cents by August 16, 2002, and in February 2004, Thane bought out existing shareholders at thirty-five cents per share.