According to the docket, on November 1, 2004, the Court entered the Order by U.S. District Judge Petrese B. Tucker awarding attorneys’ fees and reimbursement of expenses. Further that day, the Court entered the Order and Final Judgment. The case is closed.

In a press release dated August 18, 2004, a settlement of $3,300,000 has been proposed. A hearing will be held be held to determine whether the proposed settlement should be approved by the Court as fair, reasonable, and adequate, and to consider the motion of Plaintiffs' Counsel for attorneys' fees and reimbursement of expenses.

As reported by the Company’s Form 10-Q For The Quarterly Period Ended June 30, 2003, the class action litigation is the result of several complaints filed with the court beginning on October 17, 2001. These actions were consolidated on November 16, 2001. The court approved the selection of the lead plaintiff in the litigation on March 12, 2002. The Company filed a motion to dismiss the consolidated complaint on August 7, 2002. These complaints purport to bring claims on behalf of all persons who allegedly purchased the Company’s common stock between June 29, 2000 and November 1, 2000, for alleged violations of the federal securities laws, including Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 by issuing a materially false and misleading Prospectus and Registration Statement with respect to the initial public offering of the Company’s common stock. Specifically, the complaints allege, among other things, that the Company’s Prospectus and Registration Statement misrepresented and omitted to disclose material facts concerning the Company’s competitors, two of the Company’s prospective products and the Company’s contract with the California HealthCare Foundation. On July 25, 2003, the Judge granted the Company’s motion to dismiss the claims under Section 12(a)(2) of the Securities Act, but denied the Company’s motion to dismiss the claims under Sections 11 and 15 of the Securities Act. The actions seek compensatory and other damages, and costs and expenses associated with litigation.

The original complaint alleges that defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 by issuing a materially false and misleading Prospectus and Registration Statement (the "Prospectus"). The complaint alleges that the Prospectus was materially false and misleading because, among other things, it misrepresented and omitted to disclose material facts concerning two of the Company's products. Specifically, the complaint alleges that the Prospectus highlighted Careleader.com and Caresense.com, which were expected to significantly contribute to the Company's future performance, and provided detailed descriptions of their features, including an anticipated rollout date in 2001. The complaint alleges that these statements were materially false and misleading because they failed to disclose that, given the environment for Internet-based health applications, the Company's Careleader.com and Caresense.com products, which were in development and not complete, would no longer be economically feasible to continue developing. Accordingly, the further development of those products would have to be abandoned and the sales the Company expected from those products would not be realized. On November 1, 2000, the Company announced that it was revising its revenue estimates for 2001, in part, because of its decision to discontinue its Careleader.com and Caresense.com products. In response to this announcement, the price of Carescience common stock dropped to $1.6875 per share.