According to the Company’s FORM 10-Q For the Quarterly Period Ended September 30, 2006, the plaintiffs moved for leave to file a second consolidated amended complaint. On October 2, 2006, the court ruled in our favor and entered a final order of dismissal of plaintiffs’ case. On October 27, 2006, the plaintiffs filed a Notice of Appeal. Management believes that none of plaintiffs’ claims have merit, and intends to defend the appeal of the case vigorously.

As summarized by the same SEC filing, a consolidated amended complaint was filed in March 2002. In April 2002, the Company filed a motion to dismiss the case. On September 4, 2003, the court issued a ruling dismissing all but one of the plaintiffs’ allegations. The remaining allegation was based on the veracity of a public statement made by one of the Company’s former officers. In August 2004, the Company filed a renewed motion to dismiss and motion for summary judgment as to the remaining allegation, which the court granted in September 2005.

On December 13, 2001, the U.S. District Court for the District of Massachusetts entered the Order signed by U.S. District Judge Nancy Gertner granting the motion to consolidate cases and appoint lead plaintiffs and approve selection of lead counsel. Actions pending in the District of Massachusetts or California were consolidated as part of the In re Art Technology Group, Inc. Securities Litigation, Master File No. 01-cv-11731. The Low Group was appointed as lead plaintiffs and the court further appointed Stull, Stull & Brody and Weiss & Yourman as Co-Lead Counsel and Shapiro, Haber & Urmy LLP as Liaison Counsel.

The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between January 25, 2001 and April 2, 2001. Specifically, as alleged in the complaint, the Company publicly represented, in press releases and public interviews, that it was not subject to the negative trends in the software industry which were effecting the Company's competitors and that its strong revenue growth was not, and would not be, materially affected by the downturn in the technology sector. It is alleged that these statements were knowingly false and misleading because many Art Technology Group clients were technology companies that were negatively impacted by the widespread decrease in technology spending which was underway before the Class Period began, and that many of these customers could not afford to pay the Company for its products. On April 2, 2001, Art Technology Group issued a press release announcing that it will incur a loss of between $0.19 to $0.22 per share for the quarter ending March 30, 2001, which was well-below expectations. In response to this announcement, Art Technology Group's stock price dropped to $5.3125, or 55%, from the prior day's close of $12 per share, on extremely heavy trading volume. Prior to the disclosure of the true facts about Art Technology Group's business, Art Technology Group insiders sold a total of over $8.7 million of their personally-held Art Technology Group stock.