According to the firm's 10-Q filing dated 8/13/1999, in March 1999, the Company, together with the individually named defendants, entered into a Stipulation and Agreement of Settlement (the "Stipulation") with the plaintiffs, under which the parties have agreed to settle the lawsuit upon the following principal terms: (i) payment of $4,100,000 made by the Company's insurers to plaintiffs; and (ii) the dismissal of the lawsuit against all defendants and related parties, with prejudice, but without any admission of liability or wrongdoing. On May 24, 1999, the court entered a final order and judgement approving the terms of the Stipulation and dismissing all of the claims in this action.

Between July 1997 and September 1997, eight separate lawsuits were filed against the Company and two of its current or former executive officers. In February 1998, the lawsuits were consolidated pursuant to a revised consolidated complaint filed by plaintiffs. The consolidated complaint extended the class period on behalf of a class of persons, other than defendants and their affiliates, who purchased the Company's common stock or call options on the Company's common stock, or who sold put options on the Company's stock, during the period March 6, 1996 through July 30, 1997.

The original complaint charges CTSC and Stephen Katz, CTSC's CEO and Chairman, with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 arising from CTSC's representations regarding its cellular fraud prevention systems and revenue and profits associated therewith. Specifically, the complaint alleges that CTSC and certain of its officers and directors participated in a fraudulent scheme by representing that the technology employed by CTSC with respect to its Blackbird platform was controlled by patents either owned or licensed by CTSC. In reality, the patents covering this technology are owned by at least two other parties, at least one of which is a direct competitor of CTSC.

The complaint further alleges that during the Class Period, based on the representations of CTSC that its technology was "proprietary," CTSC shares soared to reach a high of $21.00 on October 16, 1996. As the truth regarding the false claims of CTSC to have control of the patents underlying their technology was slowly divulged, CTSC shares dropped as low as $5.44 per share on July 22, 1997, closing at $6.125 per share on July 28, 1997, the last day of the Class Period.