According to a press release dated October 11, 2005, the Complaint charges Lipman and certain of the Company's executive officers with violations of federal securities laws. Among other things, plaintiff claims that defendants' material omissions and dissemination of materially false and misleading statements caused Lipman's stock price to become artificially inflated, inflicting damages on investors. Lipman maintains its principal corporate offices at Rosh Haayin, Israel, and engages in the development, manufacture, marketing and sale of electronic payment systems and solutions worldwide. The Complaint alleges that defendants issued public statements which fraudulently created a false impression concerning the Company's business operations and prospects following the acquisition of Dione, Plc ("Dione"), a United Kingdom-based supplier of "smart card" payment systems. Defendants claimed that the Dione acquisition would add to Lipman's earnings within one year and "provide important new customer relationships that would add critical mass to our U.K. presences."

During the Class Period, defendants touted the Dione acquisition, claiming it would provide "important new customer relationships" and enable the Company to penetrate new markets, among other things. Defendants' public statements, however, misled the public concerning Lipman's ability to leverage purported "operational and technological synergies that exist between the two companies." The Complaint alleges defendants knew or recklessly disregarded and failed to disclosed that the Dione acquisition would not provide an immediate boost to Lipman's earnings or easily establish the Company's presence in the United Kingdom and other European countries. Instead, defendants' statements misled Lipman shareholders and artificially inflated the Company's stock price. Additionally during the Class Period, defendants' materially misleading statements and omissions enabled to Company to complete a secondary offering of 1,973,044 shares at $29.75 per share in May 2005.

The Complaint further alleges that on or around September 28, 2005, less than one year after completing the Dione acquisition, Lipman made a stunning admission that the "weaker than expected performance of Dione" caused the Company to slash its 2005 earnings estimates, from a previous forecast of $1.39 to $1.42 per share, down to $0.88 to $0.98 per share. The Company also announced that it had terminated the employment of Dione CEO Shaun Gray and that the Company anticipated it would take a non-cash impairment charge relating to goodwill and other intangible assets in 2005.

Investor reaction was sharply negative to this news, causing Lipman's share price to plunge nearly 22 percent following the disclosure of the Company's inability to leverage the Dione acquisition to expand Lipman's European market presence.

If you bought Lipman Electronic Engineering, Ltd. securities between October 4, 2004 and September 27, 2005, inclusive, and would like to obtain information about the Lipman Electronic Engineering, Ltd. lawsuit, then you are invited to call (866) 467-1400 to speak with an attorney.