Law Offices of Howard G. Smith, representing investors of SearchMedia Holdings Limited (formerly, Ideation Acquisition Corp.) (“SearchMedia” or the “Company”) (NYSE AMEX:
), has filed a class action lawsuit in United States District Court on behalf of a class (the “Class”) consisting of all persons or entities who purchased SearchMedia common stock between April 1, 2009, and August 20, 2010, inclusive (the “Class Period”). The class action lawsuit was filed in the United States District Court for the Central District of California.
The Complaint charges certain of the Company’s current and former executive officers and directors with violations of federal securities laws. Ideation Acquisition Corp. was a blank-check company formed for the purpose of acquiring one or more businesses through a merger, capital stock exchange, asset acquisition or other similar business combination. On April 1, 2009, the Company announced an agreement to purchase SearchMedia International Limited (“SMIL”), a purported nationwide multi-platform media company in China. On October 30, 2009, Ideation completed the acquisition of SMIL (the “Merger”) and changed its name to SearchMedia.
The Complaint relates to alleged material misstatements and/or omissions in the joint proxy statement and prospectus (the "Proxy/Prospectus") issued in connection with the Merger and other public statements issued during the Class Period related to the Merger and SMIL. The Complaint alleges that throughout the Class Period defendants knew or recklessly disregarded and/or failed to disclose that their public statements concerning SearchMedia and SMIL’s business, operations and prospects were materially false and misleading, including that: (1) SMIL was improperly recognizing revenue; (2) certain of SMIL’s accounts receivable related to sales generated primarily in the in-elevator business were uncollectible; (3) as a result, SMIL’s financial results were overstated; (4) SMIL’s financial results were not prepared in accordance with Generally Accepted Accounting Principles; (5) SMIL lacked adequate internal and financial controls; and (6), as a result of the above, SMIL’s financial statements were materially false and misleading at all relevant times.