In December 1997, Identix, Inc. and its officers reached an agreement with plaintiffs and their counsel to settle the lawsuit. The settlement was approved by the United States District Court, following notice to the class members, and the lawsuit was dismissed on March 6, 1998.

Identix, Inc. designs, manufactures and markets biometric personal identity and verification systems for security applications and products for law enforcement that scan, analyze and transmit fingerprint images. The analysis of these images is employed by commercial users for physical and data access control, time and attendance measurement and employee background checks. The complaint alleges that the company and certain of its officers and directors made, and failed to correct, materially false statements regarding the company's net income and revenue. In particular, the complaint alleges that the company violated generally accepted accounting principles by failing to disclose material overstatements of revenue. As an example of the improper revenue recognition, the complaint cites a large transaction between the company and a customer whereby the company allegedly recognized revenue on products which it had not yet shipped to the customer. The complaint alleges that the false and misleading statements were part of a scheme by the defendants to inflate artificially the price of the stock.