According to the firm's 10-Q filing dated 10/17/2001, the District Court has certified a class for settlement purposes only, and has approved the settlement.

As summarized by the firm's 10-Q filing dated 8/14/2001, on or about December 11, 1998, a purported class action was filed in the United States District Court for the District of Massachusetts on behalf of all purchasers of our common stock during the period from and including September 30, 1997 through July 15, 1998: Fitzer v. Security Dynamics Technologies, Inc., et al., Civil Action No. 98-CV-12496-WGY. The plaintiffs subsequently dismissed without prejudice the claims against Ms. Saris. The plaintiffs asserted that the defendants misled the investing public concerning demand for our products, the strengths of our technologies, and certain trends in our business and sought unspecified damages, interest, costs and fees of their attorneys, accountants and experts. On September 28, 2000, the United States District Court granted the defendants’ motion to dismiss, and entered a judgment dismissing the plaintiffs’ claims with prejudice. On October 18, 2000, the plaintiffs filed in the District Court a notice of appeal from the judgment. After the notice of appeal was filed, the defendants made a motion to the District Court to modify the judgment of dismissal, and to add certain material to the record on appeal. The District Court denied the defendants’ motion, and defendants’ appeal from the denial of the motion was consolidated with the plaintiffs’ appeal. The parties have agreed to settle the case, subject to court approval.

The original complaint charges SDTI and certain officers and directors of the Company during the relevant time period with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint alleges that defendants issued a series of materially false and misleading statements concerning the demand for SDTI's core products, the strength of its technologies and its competitiveness and the trends in its business. Because of the issuance of a series of false and misleading statements, the price of SDTI common stock was artificially inflated during the Class Period.