According to the Company’s FORM 10-Q For The Quarterly Period Ended April 30, 1998, on May 19, 1998, the United States District Court for the Northern District of
Illinois dismissed with prejudice the purported securities fraud class action claim filed against the Company on December 15, 1997 for failure to state a cause of action.
The Complaint in the class action alleges that throughout the Class Period,
Defendants, TRO and two individual defendants, misrepresented to investors that TRO, and particularity its PLATO Education software products, had achieved broad market acceptance and that TRO was in line to achieve, if not exceed, analysts' revenue and earnings projections for fiscal years ending October 31, 1996 and October 31, 1997.
The complaint further alleges that Defendants' statements were materially false and misleading, among other things, because PLATO software had not achieved broad market acceptance. The PLATO software was antiquated software that was not designed to run on a Windows-based operating system. Moreover, PLATO was slow in adapting to the Internet, which would have given its potential customers increased access to its software. According, defendants knew or were reckless in failing to know that the foregoing technical weaknesses in its PLATO software had led to reduced customer demand.