SOURCE: Kahn Gauthier Swick, LLC

November 08, 2006 19:35 ET

KGS Announces First Filing of Shareholders Securities Fraud Class Action Against Pegasus Wireless Corp. (PGWC.OB) - (OTC BB)

NEW ORLEANS, LA -- (MARKET WIRE) -- November 8, 2006 -- Kahn Gauthier Swick, LLC ("KGS") has filed the first class action lawsuit in the United States District Court for the Northern District of California, on behalf of shareholders who purchased, exchanged or otherwise acquired the common stock of Pegasus Wireless Corp. ("Pegasus" or the "Company'') (OTCBB: PGWC) between December 22, 2005 and September 5, 2006 (the "Class Period").

Pegasus and certain of its officers and directors are charged with issuing a series of materially false and misleading statements in violation of Section 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. Beginning with an August 24, 2006 report published by The MotleyFool.com, investors were shocked and alarmed to learn a series of disturbing reports on Pegasus and its management, including: (1) Pegasus failed to disclose CEO Jasper Knabb's and CFO Stephen Durland's close business ties with convicted felons, securities fraudsters and the like; (2) Pegasus failed to disclose a series of related party transactions and the manner in which Knabb purchased more than $26 million in Pegasus stock; (3) Pegasus withheld pertinent information involving Knabb's history with penny stock companies with suspicious trading patterns. The revelation of this news caused Pegasus shares to decline almost 25% on volume of almost 2 million shares from the closing price of $7.60 per share two days earlier.

At the close of the Class Period, over Labor Day weekend, a report by Barron's revealed that: (1) Knabb had previously been arrested for possible insurance fraud; (2) Two former Knabb companies -- BIFS Technologies, formerly Biofiltration Systems, and Wireless Frontier -- evidenced suspected stock and market manipulation; (3) Pegasus failed to disclose the truth concerning the novelty and uniqueness of its products and the foreseeability to compete in the current marketplace. Following the Barron's report, on September 5, 2006, the first day of trading after the Labor Day weekend, shares of Pegasus plummeted to a trading low of $1.10 per share, falling over 36.5% on huge volume of almost 18 million shares.

If you wish to serve as lead plaintiff in this case, you must move the Court no later than 60 days from today. Any member of the purported class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. If you would like to discuss your legal rights, you may e-mail or call KGS, without obligation or cost to you. You may contact Managing Partner Lewis Kahn of KGS direct, toll free 1-866-467-1400, ext., 100, or 504-648-1850, or by email at lewis.kahn@kglg.com.

SPECIAL NOTICE: While federal law does not prohibit other lawyers from "announcing" this lawsuit, Kahn Gauthier Swick is the law firm that researched, investigated, drafted and filed the securities fraud case against Pegasus. If you are a Pegasus shareholder who decides to contact one of these lawyers, Kahn Gauthier Swick reminds you to fully interview any lawyer to assure that they fully understand the facts surrounding the Pegasus claims our firm has filed in Court.

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