According Order signed by U.S. District Judge Sven Erik Holmes, the defendants’ motion to dismiss for failure to state a claim was granted. The case was dismissed.

As previously disclosed by the Company’s FORM 10Q for the quarterly period ended: June 30, 1999, on May 29, 1998, a shareholder class action was filed against the Company in the Federal District Court for the Southern District of California. Also named as defendants were Gordon T. Graves and Larry D. Montgomery. The action, which seeks an unspecified amount of damages on behalf of all similarly situated shareholders, alleges that the Company violated federal securities laws by making allegedly false and misleading statements regarding the legality of MegaMania. On July 24, 1998, a similar class action was filed in the Federal Court for the Northern District of Oklahoma. In January 1999, the two cases were consolidated in the Northern District of Oklahoma. On March 22, 1999, the class action plaintiffs filed an amended complaint that also named Clifton E. Lind, the Company's President and Chief Operating Officer, as an additional defendant and included allegations that the Company violated federal securities laws by making allegedly false and misleading statements regarding transactions between the Company and Equipment Purchasing LLC and Equipment Purchasing II LLC. On April 19, 1999, the Company filed its Motion to Dismiss all of the claims of the plaintiffs.

The complaint charges MGAM and certain of its officers with violations of the federal securities laws. Specifically, the complaint alleges that during the Class Period, the defendants artificially inflated the price of MGAM's common stock by failing to disclose that the U.S. Attorney's Offices in Oklahoma had concluded that MGAM's primary source of revenue, its MegaMania game, was an illegal gaming device. Defendants were aware of the U.S. Attorney's investigation of the game, as well as the conclusion it reached in July, 1997, that the game was in fact illegal, but withheld disclosure of the conclusions reached by the U.S. Attorney until after federal agents raided MGAM's headquarters and filed a complaint for forfeiture of MGAM's electronic player stations. By withholding this material information, the MGAM's stock traded at inflated levels during the Class Period.