According to the docket dated July 26, 2002, on October 2, 2000, U.S. District Judge Thomas J. Whelan granted defendant PricewaterhouseCoopers’ motion to dismiss the Second Amended Complaint with prejudice. A Notice of Appeal was later filed by the plaintiff, and on July 2, 2002, the Court entered the certified copy of the judgment from the Ninth Circuit Court of Appeals affirming the decision of the District Court.

In the Company’s Form 10-K for the fiscal year ended December 31, 1999, on July 30, 1999, the United States District Court for the Southern District of California approved the settlement of certain securities class action lawsuits against the Company and dismissed the lawsuits with prejudice. The settlement provides for the dismissal and release of all claims in these cases in exchange for (a) payment of $2,500,000 by the Company's insurance carrier to the class of plaintiffs, (b) issuance by the Company of 2,304,271 shares of its common stock to the plaintiffs, which is equal to twenty percent of the sum of (i) the number of shares of common stock currently outstanding and (ii) the maximum number of shares issuable upon conversion of the Series E Preferred Stock, and (c) cooperation by the Company with plaintiffs' counsel by providing certain documents and information regarding the claims asserted in the class actions.

The original Complaint alleges that defendants publicly touted the Company's financial growth and its record revenues, while failing to disclose numerous accounting irregularities that caused the Company to substantially overstate its earnings for the years 1996 and 1997. Plaintiff alleges that Altris failed to recognize revenue in accordance with Generally Accepted Accounting Principles and that Altris inflated reported income by maintaining inadequate reserves for bad debts. Plaintiff also alleges that Altris failed to disclose the inadequancy of its system of internal controls, which prevented proper reporting of income and revenues. As a result of the defendants' material misstatements and omissions, plaintiff and the other members of the Class purchased shares of Altris at artificially inflated prices as high as $10 per share, which they would not have done had they known the Company's true financial condition.