According to the Company’s FORM 10-K for the fiscal year ended March 31, 2002, on June 20, 2001, Plaintiffs filed a Notice of Appeal with the Eighth Circuit Court of Appeals. Plaintiffs/Appellants served and filed their brief and appendix on August 15, 2001. The Company and its directors filed its response brief on September 14, 2001, and Plaintiffs/Appellants filed and served their reply brief on September 28, 2001. In addition, by letter dated October 26, 2001, Plaintiffs/Appellants advised the court of a recent Eighth Circuit Court of Appeals decision captioned In re Green Tree Financial Corporation Stock Litigation. The Eighth Circuit Court of Appeals held oral argument on March 13, 2002. On July 1, 2002, the Eighth Circuit Court of Appeals affirmed the District Court's dismissal of Plaintiff's claim.

As reported by the same SEC filing, on November 27, 2000, the Company and its directors served a motion and supporting papers to dismiss Plaintiffs' complaint with prejudice for failure to state a claim. Plaintiffs responded to the motion on January 11, 2001, and the Company served and filed its reply on February 1, 2001. A hearing on the motion to dismiss was held on February 13, 2001, before the Magistrate Judge. On April 23, 2001, the Magistrate Judge issued his Report and Recommendation that the case be dismissed with prejudice and on the merits. Plaintiffs objected to the Report and Recommendation, but, by Order dated May 29, 2001, the District Court overruled the objection and adopted the Report and Recommendation and dismissed Plaintiffs' claims with prejudice and on the merits.

As summarized by the Company’s Form 10-Q For the Quarterly Period Ended September 30, 2000, on February 22, 2000, Navarre and the directors served a motion to dismiss the Chen and Poucher complaints for failure to state a claim for which relief can be granted. Thereafter, on February 25, 2000, the court held a hearing on Mr. Chen's and Ms. Poucher's motion to appoint Lead Plaintiffs and Lead Counsel and to consolidate and amend the complaints. The magistrate judge, by Order dated March 1, 2000, denied, without prejudice, the motion to appoint Lead Plaintiffs and Lead Counsel, granted the motion to consolidate the pleadings so that the litigation is now entitled "In re: Navarre Securities Corp. Litigation," denied, without prejudice, the motion to amend, and stayed Navarre and the directors' motion to dismiss pending resolution of the amendment issues, the Lead Plaintiffs issues, and the Lead Counsel issues. Plaintiffs re-filed their motion to appoint Lead Plaintiffs and Lead Counsel, and the court granted in part and denied in part the motion by Order dated April 18, 2000. Plaintiffs filed the amended complaint on September 21, 2000. The amended complaint alleges the same causes of action as set forth in the original complaint, and adds factual allegations regarding primarily the claimed impropriety of Navarre's revenue recognition practices under generally accepted accounting principles. In addition, the class period in the amended complaint is expanded to include purchasers of shares of Navarre Corporation during the time period of November 25, 1998, through July 26, 1999.

The original lawsuit charges Navarre and certain officers of the Company, with violations of the securities laws and regulations of the United States. The lawsuit alleges that defendants issued a series of false and misleading statements during the Class Period concerning the spinning off of a majority - owned subsidiary of the Company. The complaint alleges that defendants' false and misleading statements artificially inflated the price of the Company's stock during the Class Period and that certain insiders took advantage of their inside knowledge of this inflation to sell significant amounts of their personal Company holdings for profits of over $6.3 million.