By the Final Judgment and Order of Dismissal dated March 27, 2000, U.S. District Judge Warren K. Urbom granted the Settling Parties' Stipulation of Settlement and dismissed the case. Plaintiffs' counsel was awarded attorneys' fees of 30% of the Settlement Fund and reimbursement of litigation expenses in the amount of $458,155.39 together with the interest earned on the cash portion of the award. According to Transcrypt’s Form 10-Q For the Quarterly Period Ended September 30, 2001, the Company issued 3,122,001 and 1,337,999 common shares as payment of a litigation settlement liability recorded on the books for $4,197,000 and $1,799,000.

According to a press release dated March 30, 2000, Transcrypt International, Inc. announced on March 29 that the Honorable Warren K. Urbom of the United States District Court for the District of Nebraska has given final approval of the settlement of the pending shareholders class action suits against the Company and certain of its former officers. The settlement also resolves an identical stockholder class action suit pending in the District Court for Scottsbluff County, Nebraska.

Under the settlement agreement, Transcrypt will transfer 4,460,000 shares of Transcrypt common stock to a settlement fund. The settlement shares have been previously reserved and the transfer of the settlement shares will have no financial effect on the Company's current cash position. In addition, the settlement calls for the Company's Insurance Carriers to provide a cash portion to the settlement fund. Transcrypt would also pay $2,000,000 to the class if there is a purchase of a majority of Transcrypt by acquisition or merger that occurs before January 1, 2001.

The original complaint, filed on behalf of public investors who purchased the common stock of Transcrypt, alleges Transcrypt and certain of its officers and/or directors disseminated materially false and misleading financial statements and press releases reporting financial results. The financial misrepresentations disseminated by defendants during the Class Period created the illusion that Transcrypt was experiencing profitable growth. By misrepresenting Transcrypt's financial condition, defendants were able to portray more attractive financial results and anticipated future growth to investors than would be the case had the truth been disclosed, enabling the individual defendants to sell a large portion of their holdings in the Company at a profit.

On or around March 27, 1998, defendants unexpectedly announced that the Company would be making adjustments to the Company's previously announced financial results. Transcrypt's shares plummeted more than $6 per share on the announcement of this news, approximately 40% of the Company's market value.

Transcrypt is a leading provider of information security and wireless communication products. Transcrypt's information security products prevent the unauthorized interception of sensitive voice and data communications. With more than 800 dealers and distributors in 108 countries worldwide, Transcrypt also ranks as the third-largest manufacturer of land mobile radios in the United States.