According to the docket, on May 15, 2003, the plaintiff filed a notice of appeal from the Judgment awarding sanctions, but on January 29, 2004, the Court entered the certified copy of the Mandate from the Second Circuit Court of Appeals, affirming the Judgment of the District Court.

Previously, as summarized by the docket, on July 19, 2001, the Court entered the Order appointing lead plaintiffs and approving lead plaintiffs’ selection of lead counsel. On August 6, 2001, the plaintiffs filed an Amended Complaint, and the defendants responded by filing motions to dismiss the Amended Complaint. Further, on October 29, 2001, the plaintiffs filed a motion to certify the class action, and on January 3, 2002, the defendants filed a motion for partial summary judgment. On April 29, 2004, the Court entered the Memorandum Order granting in part and denying in part the defendants’ motions to dismiss, dismissing the claims against the accountant defendants. The defendants’ motion for partial summary judgment was deferred and the plaintiffs’ motion for class certification was granted. On August 13, 2004, the plaintiff Ernie De La Fuente filed a motion to dismiss, and on August 23, 2002, the Court entered the Order granting the motion to dismiss and dismissed the case with prejudice. The case was closed, but then the defendants filed a motion to reopen the case, imposing sanctions on the plaintiff and his attorneys in the full amount of DCI Defendants’ reasonable attorney's fees and expenses. On May 20, 2003, the Court entered the Judgment for the defendants and against the plaintiff Ernie De La Fuente. It was ordered that the Plaintiff's motion to dismiss is hereby granted with prejudice and that Sanctions Pursuant to the Private Securities Litigation Reform Act is hereby awarded against Plaintiffs' Counsel Holzer and Holzer, in the amount of $40,000.00 of which $25,344.00 is awarded to DCI Telecommunications, Inc., Joseph J. Murphy, Russell B. Hintz, Larry Shatsoff, John Adams and $14,656.00 is awarded to Schnitzer & Kondub, P.C., Richard S.Kondub, and Ross J. Schnitzer. It was further ordered that sanctions are hereby awarded against Plaintiffs' Counsel Federman and Sherwood in the amount of $83,116.91 of which $52,662.87 is awarded to DCI Telecommunications, Inc., Joseph J. Murphy, Russell B. Hintz, Larry Shatsoff, John Adams and $30,454.04 is awarded to Schnitzer & Kondub, P.C., Richard S.Kondub, and Ross J. Schnitzer.

The original complaint against DCI Telecommunications charges certain of its officers, directors, and auditors with violations of sections 10(b) and 20(a) of the Securities Act of 1934. The complaint alleges accounting fraud, and that DCI Telecommunications issued materially false and misleading financial information concerning its expected, and its purportedly-achieved, revenues and earnings during the Class Period. The complaint alleges that as a result of such misleading information, DCI Telecommunication's securities traded at artificially inflated prices during the Class Period.