According to a 10-Q filing dated 04/14/1999, by Memorandum Opinion issued and Final Judgment entered on December 31, 1998, the U.S. District Court for the Southern District of Texas, Houston Division ordered that the defendants' motion to dismiss the amended complaint be granted, ordered that the federal securities fraud claims be dismissed with prejudice, and denied the plaintiff's request for leave to further amend the complaint. The period for appeal of this judgment has expired. The state law claims were dismissed without prejudice to their being refiled in the appropriate state court.

The original complaint alleged that the company prematurely recognized 100% of revenues on purported sales of its products to customers in lesser developed countries in violation of GAAP. The complaint noted that the company's fiscal 1997 10-K disclosed that the company had taken a charge of $11.2 million to cover anticipated losses from default. The complaint also alleged that defendants failed to disclose certain factors that were adversely affecting its performance, including increased competition and that certain customers were delaying purchase of Input/Output systems and awaiting the availability of I/O System Three, which was delayed due to production and development problems.