On August 24, 2006, the Court again entered an Order signed by U.S. District Judge Napoleon A. Jones Jr., granting the defendant's motion to Third Amended Consolidated Complaint dismissed with prejudice.

On March 10, 2004, the Court entered the Order signed by U.S. District Judge Napoleon A. Jones Jr. granting the defendants' motion to dismiss third amended consolidated complaint with prejudice. On November 7, 2004, the plaintiff filed a Notice of Appeal. On August 21, 2006, the Court entered the Judgment from the U.S. Court of Appeals. According to the Judgment, the Ninth Circuit Court of Appeals affirmed in part, vacated in part and remanded the action back to the District Court.

As summarized by the Company’s Form 10-Q for the quarterly period ended June 30, 2003 in April 2001, an alleged stockholder of the Company filed an alleged class action complaint against the Company and certain of its officers and directors in the United States District Court for the Southern District of California on behalf of purchasers of the Company’s common stock during the period between October 16, 2000 and January 24, 2001. Thereafter, five additional and virtually identical lawsuits have been filed. The most recent of these lawsuits allege claims on behalf of purchasers of the Company’s common stock during the period between October 16, 2000 and March 28, 2001 (the “Class Period”). The cases allege that during the Class Period, the Company made false statements about its business and results causing its stock to trade at artificially inflated levels. Based on these allegations, the cases allege that the Company and the others named in the cases violated the Securities Exchange Act of 1934. The Company has retained counsel to defend these cases. On February 8, 2002, the Court appointed a lead plaintiff and lead counsel and ordered the consolidation of the cases. The Court gave the plaintiffs until March 25, 2002 to file a consolidated amended complaint. On March 25, 2002, plaintiffs filed a first consolidated and amended complaint. The first consolidated and amended complaint alleges a new class period of July 13, 2000 through March 28, 2001 and adds alleged claims under the Securities Act of 1933 arising from the Company’s secondary public offering in October 2000. On April 29, 2002, the Company filed a motion to dismiss and a motion to strike the first consolidated and amended complaint. On March 25, 2003, the Court executed an order granting with leave to amend the Company’s motion to dismiss and giving plaintiffs until May 27 to file an amended complaint. On May 27, 2003, plaintiffs filed a second amended consolidated complaint for violation of federal securities laws. On June 13, 2003, the Company filed a motion to dismiss and a motion to strike the second amended consolidated complaint for violation of federal securities laws. On July 21, 2003, the court took the Company’s motions under submission.

The original complaint alleged that beginning on or about October 16, 2000, defendants embarked on a scheme to defraud investors in order to artificially boost JNI's stock price by making false and misleading statements about the Company's products and business. Defendants' scheme enabled JNI to complete a $382 million secondary stock offering pursuant to a Registration Statement and Prospectus dated October 19, 2000, and allowed certain JNI officers and directors to reap millions of dollars from the sale of their stock into the secondary offering at artificially inflated prices. Following the secondary offering, at least two analysts issued extremely favorable reports on JNI based on statements made by JNI management, causing the Company's stock price to increase to $126 per share. Contrary to defendants' positive statements during the Class Period, on January 24, 2001, JNI announced lower than expected financial results for its fourth quarter 2000, and on March 28, 2001 revealed that its first quarter 2001 revenues would be only $20-21 million. Following the Company's March 28, 2001 announcement, the price of JNI stock dropped to $7-3/8, or 94% below its Class Period high.

Note: JNI, located in San Diego, is a designer and supplier of Fibre Channel hardware and software products that link servers and data storage devices to form storage area networks known as SANs. The Company markets application-specific integrated circuits, a broad range of Fibre Channel host bus adapters and software that facilitates advanced SAN device integration and management.