According to a press release dated June 13, 2005, the complaint alleges that throughout the Class Period Navarre and certain of its officers reported quarter after quarter of record results that were purportedly achieved by successful execution of the Company's strategy. As particularized in the complaint, defendants' class period representations concerning the Company's financial results and its business were materially false and misleading for the following reasons: (a) Defendants had materially inflated Navarre's reported income by failing to properly recognize expenses relating to executive deferred compensation; (b) Defendants' seeming success was attributable, in material part, to improper accounting; (c) The Company's financial results, reported in press releases and SEC filings were not, contrary to defendants' express representations, prepared in accordance with generally accepted accounting principles; (d) The certifications signed by defendants, the Company’s CEO and CFO, in Navarre's SEC filings, attesting to the accuracy of the financial results included therein, were false because the financial results were artificially inflated through improper accounting; (e) during the third fiscal quarter of 2005, Navarre improperly recognized millions in deferred tax benefits as income; and (f) Navarre was experiencing a significant slowdown in demand for its anti-virus software products that was materially and negatively impacting its overall business.

On May 31, 2005, Navarre issued a press release announcing that it would postpone release of its fourth quarter and fiscal year 2005 results pending an accounting review focused on the recognition of deferred compensation expense for payments made to one of the defendants, the Company’s CEO, and the classification of fiscal 2005 tax items. In response to this announcement, the price of Navarre common stock dropped from $9.00 per share on May 31, 2005 to $8.02 per share on June 1, 2005, a one-day drop of 10.8% on unusually heavy trading volume.

The complaint further alleges that defendants were motivated to commit the wrongdoing alleged therein so that Navarre insiders, including the Company’s CEO and CFO, could sell their personally held Navarre shares at artificially inflated prices. During the Class Period, insiders sold a total of 1,269,000 shares, for total proceeds of $16,183,254.58.

If you bought Navarre Corp. securities between July 23, 2003 and May 31, 2005, inclusive, and would like to obtain information about the lawsuit, then you are invited to call (866) 467-1400 to speak with an attorney.