According to the Company’s FORM 10-K for the fiscal year ended October 31, 2002, on December 13, 2001, plaintiffs filed a notice of appeal to the Ninth Circuit Court of Appeals. On May 2, 2002, the plaintiffs, now as appellants, filed an opening brief alleging the dismissal was in error and should be reversed. The Company filed its answering brief on July 12, 2002, and the appellants filed their reply brief on August 9, 2002. Oral arguments were heard on January 14, 2003 and on January 23, 2003 the Court of Appeals affirmed the District Court’s dismissal.

Previously, according to the same SEC filing, the Company and certain of its present and former officers and directors were named as defendants in four class action lawsuits filed in the United States District Court for the Northern District of California on January 26, 1998, February 5, 1998, March 11, 1998 and March 18, 1998. On June 19, 1998, a Consolidated Amended Complaint was filed by the court-appointed lead Plaintiff. After the court dismissed two amended complaints, plaintiffs filed a Third Amended Complaint on May 10, 2001 that alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act, and Securities and Exchange Commission Rule 10b-5 promulgated under the Securities Exchange Act, in connection with public statements about Versant and its financial performance. On December 4, 2001, the court dismissed the Third Amended Complaint with prejudice due to Plaintiff’s failure to state a claim of their securities fraud action.

The original Complaint alleges that defendants participated in a scheme or common course of conduct to artificially inflate Versant's stock price so that they could maintain their lucrative positions and so that they could dispose of a portion of their own holdings at artificially inflated prices. Furthermore, the complaint alleges that as a result of defendants' false statements, misrepresentations, and omissions, the price of Versant's common stock was artificially inflated during the Class Period and that Versant's stock was then maintained at an artificially inflated level until the defendants disclosed the dismal financial condition of the Company on or about January 13, 1998. These disclosures caused the stock price of Versant to plummet from $9 3/8, on January 12, 1998, to $5 1/8 on January 13, 1998 on volume of 2,528,700 shares, a drop of 45% in one day and a drop of over 70% from the stock's high of $18 1/4 on October 21, 1997.