The original complaints allege violations of Section 10(b) and 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934. Specifically, plaintiffs allege that the Company violated federal securities laws by: (1) failing to fully and timely disclose purported problems with the Company's "alliance" with Hewlett-Packard along with the effect of such problems on the Company's business prospects, and (2) overstating the Company's receivables during the class period. For relief, plaintiffs seek compensatory damages and/or rescission from the Company as well as an award of the costs and disbursements of the suit.

According to the Company’s FORM 10-Q for the quarterly period ended April 30, 2003, the allegations of two complaints are identical, and the actions were consolidated. On May 28, 2003, plaintiffs in the consolidated action filed an Amended Consolidated Class Action Complaint. The consolidated action, as amended, is purportedly brought on behalf of all public investors who purchased our common stock from December 9, 1999 to June 25, 2001. The amended complaint alleges violations of Section 10(b) and 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934. The amended complaint includes allegations that, during the period from December 9, 1999 to June 25, 2001, we falsely and recklessly overstated revenues in violation of generally accepted accounting principles. We believe that the allegations stated in the amended complaint are without merit, Nevertheless, due to the uncertainties of the litigation process and the continued business distractions, which have and would likely continue, we have reached a tentative settlement agreement with the class plaintiffs by executing a memorandum of understanding (“MOU”) on December 16, 2003. On September 10, 2004, the Court signed the Final Order of Settlement granting final approval of settlement.

By the Notice of Proposed Settlement, the settlement was in the amount of $2,700,000 in cash.