The original complaint alleges defendants committed securities fraud by issuing false and misleading press releases and financial statements which misled investors regarding Paradigm's true financial condition and its ability to withstand a downturn in the SRAM market. Specifically, defendants prematurely and improperly recognized revenues on shipments of approximately $2 million worth of products to NexGen, Inc. in the fourth quarter of 1995.

According to a Form 10-Q for the Quarterly Period ended September 30, 1999, defendants responded to the complaint on July 27, 1998 by filing a motion to dismiss the complaint for failure to state claims upon which relief can be granted and for various pleading inadequacies. In lieu of opposing the motion, plaintiff filed a first amended complaint. Defendants renewed their motion to dismiss, and on January 20, 1999 the Court issued an order granting the motion and dismissing plaintiff's action and entered judgment thereon. On February 3, 1999, the Court entered an amended judgment clarifying that the judgment is with prejudice. On March 12, 1999, plaintiff filed a notice of appeal. Plaintiff then agreed to dismiss the appeal in exchange for defendant's costs incurred in responding to the appeal and agreement not to pursue any action against the plaintiff for having filed the action. The appeal was dismissed with prejudice on October 25, 1999.