According to the Company’s FORM 10-Q for the quarterly period ended June 30, 1998, after reviewing the Company's motions to dismiss and for the imposition of sanctions, the plaintiffs have decided to dismiss the case in its entirety and with prejudice. The Company and the other defendants have agreed that they will accept dismissal of the case with prejudice and will not seek the imposition of sanctions against the plaintiffs or their attorneys. An order of dismissal was signed August 10, 1998 in the United States District Court for the Southern District of Florida.

The original complaint alleges that Precision Response and certain of its officers and directors and the lead underwriters of its secondary public offering violated the Securities Act of 1933 by omitting to state material facts necessary to make the statements contained in the Prospectus not misleading. In particular, it is alleged that defendants omitted the financial results for the three months ended Dec. 31, 1996 that revealed a slowing in the company's growth rate and omitted to disclose the existence of a cost cutting program that had been initiated prior to the offering by the company's largest client and main source of revenue, a program that was virtually certain to have a material negative impact on revenue.