According to a Press Release dated August 3, 2001, a securities class action lawsuit was filed charging defendants with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 for issuing a Registration Statement and Prospectus (the"Prospectus") that contained materially false and misleading information and failed to disclose material information. The Prospectus was issued in connection with MedicaLogic's initial public offering of 5.9 million shares of common stock at $17.00 per share that was commenced on or about December 13, 1999 (the "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 MedicaLogic 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 MedicaLogic shares in the after-market at pre-determined prices.


NOTE: On January 24, 2002, the Company filed a voluntary petition for relief under Chapter 11 of the United States Code.