724 Solutions, Inc. is a software company with access and messaging products for the mobile internet, mobile broadband and messaging infrastructure markets.

According to the Company’s FORM 10-Q for the quarterly period ended March 31, 2006, in June 2004, an agreement of settlement was submitted to the Court for preliminary approval. The Court granted the preliminary approval motion on February 15, 2005, subject to certain modifications. On August 31, 2005, the Court issued a preliminary order further approving the modifications to the settlement and certifying the settlement classes. The Court also appointed the Notice Administrator for the settlement and ordered that notice of the settlement be distributed to all settlement class members beginning on November 15, 2005. The settlement fairness hearing was set for April 24, 2006. Following the hearing, if the Court determines that the settlement is fair to the class members, the settlement will be approved. There can be no assurance that this proposed settlement would be approved and implemented in its current form, or at all.

As disclosed by the same SEC filing, the Company has been named in several class actions filed in federal court in the Southern District of New York between approximately June 13, 2001 and June 28, 2001 (collectively the "IPO Allocation Litigation"). The IPO Allocation Litigation was filed on behalf of purported classes of Plaintiffs who acquired the Company's common shares during certain periods. These lawsuits have since been consolidated into a single action and an amended Complaint was filed on or about April 19, 2002. Similar actions have or since been filed against over 300 other issuers that have had initial public offerings since 1998 and all are included in a single coordinated proceeding in the Southern District of New York. In October 2002, the Individual Defendants were dismissed from the IPO Allocation Litigation without prejudice. In July 2003, a committee of the Company's Board of Directors conditionally approved a proposed partial settlement with the Plaintiffs in this matter. The settlement would provide, among other things, a release of the Company and of the Individual Defendants for the conduct alleged in the action to be wrongful in the amended Complaint. The Company would agree to undertake other responsibilities under the partial settlement, including agreeing to assign away, not assert, or release certain potential claims the Company may have against its underwriters. Any direct financial impact of the proposed settlement is expected to be borne by the Company's insurers.

The Complaint alleges violations of Sections 10(b) and 20(a)of the Securities Exchange Act of 1934 (and Rule 10b-5 promulgated thereunder) and Sections 11 and 15 of the Securities Act of 1933, for issuing a Registration Statement and Prospectus that contained material misrepresentations and/or omissions. The Prospectus was issued in connection with the 724 Solutions IPO. The Complaint alleges that the Prospectus was false and misleading because it failed to disclose (i) the Underwriter Defendants agreement with certain investors to provide them with significant amounts of restricted 724 Solutions shares in the IPO in exchange for exorbitant and undisclosed commissions; and (ii) the agreement between the Underwriter Defendants and certain of its customers whereby the Underwriter Defendants would allocate shares in the IPO to those customers in exchange for the customers' agreement to purchase 724 Solutions shares in the after-market at predetermined prices.