On March 5, 2008, the appellant’s motion for voluntary dismissal was granted and the appeal was dismissed.

On November 20, 2007, the Lead Plaintiff filed a Notice of Appeal. According to the Notice, notice is hereby given that court-appointed Lead Plaintiff Steve Bardack hereby appeals to the United State Court of Appeals for the Ninth Circuit from the "Order Denying Lead Plaintiff's Motion Under 15 U.S.C. §78u-4(a)(4)," entered in this action on October 30, 2007.

On October 26, 2007, the Court issued the Order awarding attorneys’ fees and expenses. According to the Order, The Court hereby awards Lead Counsel attorneys' fees of 15% of the Settlement Fund, plus payment of litigation expenses in the amount of $366,493.66.

On July 27, 2007, the Court entered the Final Judgment and Order of Dismissal with Prejudice. According to the court minutes that day, the Court granted the motion to approve the plan of allocation of settlement proceeds and motion to approve the final settlement as the settlement appears fair, adequate, and reasonable. However, the Court is unwilling to approve a motion for attorneys’ fees without some showing of the hours and billing rates. The plaintiff may resubmit a motion for attorneys’ fees and expenses.

On April 30, 2007, a Stipulation of Settlement and Release was filed, allotting $3,500,000 to the Plaintiffs.

According to the Company’s FORM 10-Q for the quarterly period ended June 30, 2006, on September 12, 2002, following the Company’s downward revision of revenue and earnings guidance for the third fiscal quarter of 2002, a series of putative federal class action lawsuits were filed against the Company in the United States District Court, Northern District of California. The complaints alleged that the Company and certain of its present and former officers and directors made misleading statements regarding its business and failed to disclose certain allegedly material facts during an alleged class period of January 23, 2002 through September 12, 2002, in violation of federal securities laws. These actions were consolidated and are proceeding under the caption “In re ESS Technology Securities Litigation.” The plaintiffs seek unspecified damages on behalf of the putative class. Plaintiffs amended their consolidated complaint on November 3, 2003, which the Company then moved to dismiss on December 18, 2003. On December 1, 2004, the Court granted in part and denied in part the Company’s motion to dismiss, and struck from the complaint allegations arising prior to February 27, 2002. On December 22, 2004, based on the Court’s order, the Company moved to strike from the complaint all remaining claims and allegations arising prior to September 10, 2002. On February 22, 2005, the Court granted the Company’s motion in part and struck all remaining claims and allegations arising prior to August 1, 2002 from the complaint. In an order filed on February 8, 2006, the Court certified a plaintiff class of all persons and entities who purchased or otherwise acquired the Company’s publicly traded securities during the period beginning August 1, 2002, through and including September 12, 2002 (the “Class Period”), excluding officers and directors of the Company, their families and families of the defendants, and short-sellers of the Company’s securities during the Class Period. On March 24, 2006, plaintiff filed a motion for leave to amend their operative complaint, which the Court denied on May 30, 2006. The parties are currently negotiating a revised schedule for continuing discovery and resetting a trial date in this action.

The original Complaint charges ESS and certain of its officers and directors with violations of federal securities laws. Among other things, plaintiff claims that defendants' material omissions and the dissemination of materially misleading statements regarding the nature of ESS's revenue and business prospects caused ESS's stock price to become artificially inflated, inflicting damages on investors. The complaint alleges that defendants failed to disclose the declining demand, downward price pressure and increasing commodification of ESS's core product -DVD-processor chips - as new competitors gained market share. The effect of these problems and the true nature of the Company's business prospects were revealed on the last day of the Class Period, and the next day the Company's stock plunged more than 30%.