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Case Status:    SETTLED
On or around 12/08/2006 (Date of order of final judgment)

Filing Date: November 07, 2002

On August 17, 2007, the Court entered the Order by Judge Jeffrey S. White granting the motion for Disbursement of Funds.

According to the Final Judgment and Order of Dismissal with Prejudice, entered on December 8, 2006, from U.S. District Judge Honorable Jeffrey S. White of the U.S. District Court of the Northern District of California, the case was settled.

In a press release dated August 24, 2006, a hearing will be held on December 8, 2006, for the purpose of determining (1) whether the proposed settlement of the claims in the Litigation for the sum of $1,750,000 in cash should be approved by the Court as fair, reasonable and adequate; (2) whether this Litigation should be dismissed with prejudice as set forth in the Stipulation of Settlement dated as of May 25, 2006; (3) whether the Plan of Allocation is fair, reasonable and adequate and should be approved; and (4) whether the application of Lead Counsel for the payment of attorneys' fees and reimbursement of expenses incurred in connection with this Litigation should be approved. As set forth in the Stipulation of Settlement, Defendants have the right to terminate the Settlement if certain conditions arise.

As previously disclosed by the Company’s FORM 10-Q For The Quarterly Period Ended June 30, 2006, in November 2002, a punitive securities class action captioned Kuehbeck v. Genesis Microchip et al., Civil Action No. 02-CV-05344, was filed against Genesis, the Company’s former Chief Executive Officer, and its former Interim Chief Executive Officer, and amended in July 2003 to include the Company’s Executive Vice President (collectively the “Individual Defendants”) in the United States District Court for the Northern District of California. The complaint alleges violations of Section 10(b) of the Securities and Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder against Genesis and the Individual Defendants, and violations of Section 20(a) of the Exchange Act against the Individual Defendants. The complaint sought unspecified damages on behalf of a purported class of purchasers of Genesis’s common stock between April 29, 2002 and June 14, 2002. In July 2005, the court granted Genesis’s motion to dismiss the case, with prejudice. The plaintiffs filed an appeal to the Ninth Circuit Court of Appeals. The parties signed an agreement to settle the case in March 2006. In August 2006, the court issued an order preliminarily approving the settlement.

The First Amended Class Action Complaint charges defendants' with violations of the federal securities laws. Defendant Genesis manufactures computer chips that are assembled by its customers into flat screen computer monitors. Specifically, the Complaint alleges that during the December 2001 and March 2002 quarters, Genesis shipped approximately 12.3 million computer chips to its customers. However, unbeknownst to investors, and as defendants acknowledged at the end of the Class Period, four million of those units built-up in customers’ inventory during that period as Genesis customers were unable to secure flat screen panels for assembly with Genesis’ computer chips. Defendants, Genesis’ most senior executives, had actual knowledge or the ability to obtain knowledge of the build-up of inventory by virtue of their close working relationship with Genesis’ customers, and were deliberately reckless to the truth concerning that build-up of excess inventory – especially where that build-up in inventory was reflected in reduced orders for Genesis products at the beginning of the Class Period.

The amended complaint alleges that in an April 29, 2002 press release and investor conference call that begins the Class Period (i) defendants denied that there had been any build-up in inventory with their customers, and represented that (ii) Genesis customers had “been the first to receive panels” for assembly with Genesis products, (iii) Genesis was not “seeing any shrinkage in our volumes due to panel supply constraints,” (iv) Genesis had good “visibility” on revenue growth through the end of 2002, and (v) that Genesis’ chips would be shipped in “synch” with the manufacturing of computer monitors by its customers during the June 2002 quarter. Plaintiff and other members of the Class purchased Genesis common stock as Genesis’ stock price rose from $20.25 per share on April 29, 2002 to $28.40 per share on May 16, 2002, in reliance on the truth and accuracy of defendants’ public statements.

The amended complaint further alleges that on June 14, 2002, before the opening of the U.S. securities markets, defendants belatedly acknowledged that, contrary to their Class Period representations, they had actual knowledge that demand had weakened for Genesis products by the time of their April 29, 2002 statements. Whereas Genesis had customer orders in previous quarters sufficient to achieve 80% of revenue projections for the upcoming quarter, at the time of the April 29, 2002 press release and conference call, Genesis had less than 30% of its revenue projections reflected by existing orders and only hoped to receive future orders sufficient to achieve those projections. Further, defendants shocked investors on June 14, 2002 by disclosing that fully four million units of its products were then sitting in its customers’ inventories in anticipation of assembly into computer monitors because of its customers’ inability to secure adequate supplies of flat screen panels, and that inventory “in the channel” would have to be depleted before customers ordered additional Genesis products. Genesis common stock plummeted to $9.02 per share on June 14, 2002, in response to defendants’ disclosures. Genesis’ CEO subsequently resigned ten days after the end of the Class Period amidst questions by stock analysts related to his integrity.

COMPANY INFORMATION:

Sector: Technology
Industry: Semiconductors
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: GNSS
Company Market: NASDAQ
Market Status: Public (Listed)

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COURT: N.D. California
DOCKET #: 02-CV-05344
JUDGE: Hon. Martin J. Jenkins
DATE FILED: 11/07/2002
CLASS PERIOD START: 04/29/2002
CLASS PERIOD END: 06/14/2002
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Wolf Popper, LLP
    845 Third Avenue, Wolf Popper, LLP, NY 10022-6689
    877.370.7703 212.486.2093 · IRRep@wolfpopper.com
No Document Title Filing Date
COURT: N.D. California
DOCKET #: 02-CV-05344
JUDGE: Hon. Martin J. Jenkins
DATE FILED: 05/27/2004
CLASS PERIOD START: 04/29/2002
CLASS PERIOD END: 06/14/2002
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Alexander Law Firm
    152 N. Third Street, Suite 600, Alexander Law Firm, CA 95112
    408.289.1776 · info@alexanderlaw.com
  2. Wolf Popper, LLP
    845 Third Avenue, Wolf Popper, LLP, NY 10022-6689
    877.370.7703 212.486.2093 · IRRep@wolfpopper.com
No Document Title Filing Date