As reported by the the Company’s FORM 10-KSB/A For The Fiscal Year Ended March 31, 2003, in February 2001, the Company reached an out-of-court settlement, which the Court approved in May 2001. Under the terms of the settlement, the Company and the other defendants agreed to pay $595,000 to the plaintiffs, $380,000 of which was paid by the Company's directors' and officers' liability insurance carrier and $215,000 of which was paid by the Company.

Further, according to the same SEC filing, in April 2001, prior to the entry of the final order approving the settlement of the Purported Class Action (the "Class Action Final Order"), the Company commenced separate legal proceedings against Arthur Andersen, LLP ("Andersen"), its former auditor, in the Superior Court for the Judicial District of New London, Connecticut (the "Malpractice Proceedings"). The Malpractice Proceedings sought damages sustained by the Company as a result of Andersen's failure to comply with professional standards in the conduct of certain of its audits of the Company's financial statements. In May 2001, Andersen removed the case to the United States District Court for the District of Connecticut, but the court remanded the complaint to the state court upon the motion of the Company. The Company asserted in the Malpractice Proceedings that Andersen breached its duties to the Company by, among other things, negligently and/or intentionally misrepresenting the Company's true financial condition tothe Company, its Board of Directors and its Audit Committee. Andersen vigorously denied any wrongdoing and filed a counterclaim against the Company alleging claims for fraud, negligence, breach of contract, interpleader and indemnification. In addition, Andersen asserted that the Class Action Final Order interposed an effective bar against any recovery in the Malpractice Proceedings. On June 7, 2001, the Company filed a motion to amend the Class Action Final Order to clarify that it has no application to the Malpractice Proceedings. The court granted the Company's motion, and Andersen appealed the court's decision. In February 2003, the Clerk of the United States Court of Appeals for the Second District entered an Order Voluntarily Dismissing that appeal with Prejudice.

On August 12, 1998, a second purported class action was filed against the Company and certain individuals asserting similar claims under the federal securities laws. The second action also was filed in the United States District Court for the District of Connecticut and purports to be brought on behalf of the named plaintiff Mr. Mark Abrams for the same class period. On January 4, 1999, the Court consolidated the two actions into one. The plaintiffs filed an amended consolidated complaint on May 28, 1999. On December 17, 1999, the plaintiffs requested leave to file a second amended and consolidated complaint. On May 1, 2000, the Court granted the plaintiffs leave to serve that second amended and consolidated complaint.

The first filing charged the Company, its President and Chief Executive Officer, and its Vice President and Chief Financial Officer with violating Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 ("Exchange Act") by concealing accounting irregularities which resulted in overstatements of the Company's earnings during the Class Period.