Pursuant to the Order and Final Judgment by U.S. District Judge Gary L. Taylor, entered on June 9, 2004, the Court approves the Settlement as set forth in the Stipulation and finds that the Settlement is, in all respects, fair, reasonable and adequate. The Court further approves the Plan of Allocation.

According to a press release dated March 22, 2004, a Settlement Hearing will be held on June 7, 2004, before the Honorable Gary L. Taylor, at the United States District Court, Central District of California, for the purpose of determining, among other things, whether the proposed settlement of the Litigation for $3,500,000 in cash should be approved by the Court as fair, reasonable and adequate.

As reported by the Company’s FORM 10-Q for the quarterly period ended June 27, 2004 , from February 14, 2002 to March 15, 2002, five purported class action complaints were filed in the United States District Court for the Central District of California against the Company, certain of its current and former officers and directors, and an officer and director of its former subsidiary Silicon Film Technologies, Inc. By stipulated Order dated May 10, 2002, the Court consolidated these actions. Pursuant to the Order, plaintiffs served an amended complaint on July 5, 2002. The amended complaint alleged that defendants made false and misleading statements about the prospects of Silicon Film during the period January 6, 2000 to September 15, 2001, inclusive. The amended complaint asserted claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and SEC Rule 10b-5, and sought damages of an unspecified amount. Defendants’ time to answer or otherwise respond to the amended complaint was September 2002, at which time the Company filed a motion to dismiss the amended complaint. This motion was heard on May 5, 2003, at which time the Court dismissed the amended complaint, but granted the plaintiffs leave to further amend their complaint within 20 days. The plaintiffs filed a second amended complaint on May 27, 2003, reasserting the claims made previously, primarily on the basis of purported greater particularity. The defendants filed a motion to dismiss the second amended complaint on June 24, 2003. This motion was denied on September 22, 2003, and the defendants filed their answer to the second amended complaint on October 6, 2003, denying all of the substantive allegations of that complaint. The Court established a schedule for discovery related to the second amended complaint, with the hearing of any summary judgment motions resulting therefrom to be heard by May 3, 2004.

The original complaint alleges that ISC and certain of its officers and directors violated the Securities Exchange Act of 1934. During the Class Period, defendants repeatedly promised the investing community that the EFS-1 was near completion and would be ready for release shortly. These promises never materialized because defendants, knew but did not disclose to the public, among other things, that EFS-1 suffered from serious and insurmountable technical design flaws. On September 15, 2001, after nearly two years of touting the EFS-1 technology, ISC announced that SFI had suspended operations and was considering bankruptcy. The result being the death-knell of the EFS-1 project. Due to defendants' deceptive and illegal conduct, plaintiff and the other class members purchased their ISC securities at inflated prices. Had plaintiff and the other class members been aware of the truthful condition of the Company and the adverse impact that defendants' statements and omissions were having on the Company, they would not have purchased their shares, or at least not at artificially inflated prices.