Greenfield Online Inc., which provides marketing companies with Internet surveys, said Thursday it expects legal and other fees related to a pending class-action lawsuit against it, as well as costs stemming from an investigation, could total up to $3.5 million in the first quarter.
In July and August 2007, two class-action lawsuits were filed on behalf of people who bought stock between Feb. 9 and Sept. 30, 2005, alleging some financial projections in fiscal 2005 were false and misleading.
An audit committee investigation sparked by the lawsuit found there was no evidence for one claim in the lawsuit _ that the size of an online panel was misrepresented. However, the investigation did find accounting errors related to revenue recognition.
The errors misstated net income by less than 1 percent in 2005, 2006 and 2007 and are inconsequential to annual financial statement, Greenfield said.
Greenfield estimates that in the first quarter, the cost of defense of the lawsuit will be $200,000 to $250,000 while one-time costs related to the audit committee investigation will be about $3 million to $3.5 million. Part of the costs may be covered by insurance.
Shares fell 26 cents, or 2.1 percent, to $12.04 during aftermarket electronic trading, after closing up 25 cents at $12.30.
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