According to the Company’s Form 10-K for the fiscal year ended December 31, 2000, the federal court certified the purported class. On December 30, 1998, the federal court granted without leave to amend the defendant's motion to dismiss the second amended complaint in the Head federal action. Plaintiffs filed a notice of appeal to the U.S. Court of Appeals for the Ninth Circuit. On February 2, 1999, the federal court dismissed with prejudice the Beasley action pursuant to its order in the Head action. The individual cases of Head, Molinari, Beasley,& Interactive Data were consolidated into NetManage I (federal claims) and NetManage II (state claims). In November 2000, all were collectively settled, with no admission of guilt, for a cash payment of $5.1 million by NetManage's insurance carriers.

The complaint charges NetManage and certain of its officers and directors with violations of the federal securities laws, which violations involve the issuance of false financial statements and other positive statements, combined with massive insider trading by the individual defendants. The individual defendants sold 715,999 shares of their NetManage stock at artificially inflated prices as high as $24-1/8 per share, pocketing more than $14 million dollars in illegal insider trading proceeds, before the truth concerning NetManage's business and finances was revealed and NetManage's stock price, which had traded as high as $34 per share during the Class Period, collapsed to as low as $10. In addition, defendants used the inflated share value of NetManage stock to acquire other inter-networking software companies.