Computerized Thermal Imaging, Inc. ("CTI" or the Company) designs, manufactures and markets thermal imaging devices and services used for clinical diagnosis, pain management and industrial non-destructive testing. Their flagship product, a Breast Cancer Detection System (``BCD System''), was under review by the FDA at the time of this filing.

The original Complaint charges that Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10-b(5). The action arises from damages incurred by the Class as a result of a scheme and common course of conduct by Defendants which operated as a fraud and deceit on the Class during the Class Period. As alleged in the Complaint, CTI admitted that during the Class Period, the Company's ex-President and Chief Operating Officer, David Packer, consistently made representations to the Board, the shareholders of CTI and the public about the status and timing of submissions to the FDA, which were false and misleading at the time they were made and which placed the ultimate approval of the BCD System in jeopardy. As further alleged, due to Defendants' deceptive and illegal conduct, Plaintiff and the other class members purchased their CTI securities at inflated prices and were damaged thereby.

In a press release dated April 23, 2003, CTI announced that the class action litigation against the Company alleging violations of the securities act was dismissed without prejudice by the United States District Court for the District of Oregon on April 17, 2003. In his written opinion, U.S. District Judge Garr M. King concluded that the statements made by the Company, which Plaintiffs alleged were misleading to investors, were either not material, not misleading, or not pled by Plaintiffs with sufficient particularity to constitute a claim. The Court gave Plaintiffs 21 days to re-plead three of the nine claims if the Plaintiffs have additional facts. Judge King's opinion does not allow Plaintiffs to re-plead the remaining claims.

According to the Company’s FORM 10-KSB for the Fiscal Year Ended June 30, 2004, in July of 2004, the United States Court of Appeals for the Ninth Circuit has ruled in CTI's favor in the appeal of the United States District Court decision to dismiss the Plaintiffs' claims in the proceeding entitled IN RE: COMPUTERIZED THERMAL IMAGING, INC., SECURITIES LITIGATION. The Ninth Circuit decision upheld the determination of the District Court to dismiss the Plaintiff's Complaint because it failed to adequately plead a case. On April 17, 2003, the consolidated litigation was dismissed without prejudice by the United States District Court. In a written opinion, the U.S. District Judge concluded that the alleged misstatements were either not material, not misleading, or not pled by Plaintiffs with sufficient particularity to constitute a claim. Upon dismissal of their Complaint, the Plaintiffs did not replead, so the District Judge dismissed the case with prejudice on May 13, 2003.