According to the Form 10-K/A for the fiscal year ended December 31, 2001, on August 9, 2001, the Company was served with a Complaint which had been
filed on August 8, 2001 in the United States District Court for The Northern
District of Illinois, Eastern Division. The plaintiff subsequently voluntarily dismissed her claims against Akorn, Inc., Mr. Floyd Benjamin and Dr. John N. Kapoor, and, in exchange for the Company's consent to this voluntary dismissal, also provided, through counsel, a written statement that the plaintiff would not reassert her claims against any of the defendants in any subsequent actions. The Company did not provide the plaintiff with any compensation in consideration for this voluntary dismissal.
The complaint charges defendants with violations of federal securities laws by, among other things, issuing a series of materially false and misleading press releases concerning Akorn's financial results and business prospects. Specifically, the complaint alleges that Akorn's financial statements for the year ended December 31, 2000 were materially false and misleading because they were not presented in conformity with Generally Accepted Accounting Principles (``GAAP'') as well as the rules and regulations of the United States Securities and Exchange Commission (``SEC''). As a result, the price of the Company's common stock was artificially inflated throughout the Class Period.