UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORID A
CASE NO. 03-CV-20459-MARTINEZ/DUB E
AMY LIU and ANTOINE KASPRZAK, on behalf of themselves and all others similarly situated,
Plaintiffs, vs.
CREDIT SUISSE FIRST BOSTON CORPORATION, CREDIT SUISSE FIRST BOSTON, INCORPORATED, CREDIT SUISSE FIRST BOSTON-USA, CREDIT SUISSE FIRST BOSTON, CREDIT SUISSE GROUP, AIRSPAN NETWORKS, INC ., BSQUARE CORP., BLUE COAT SYSTEMS, INC . (FORMERLY "CACHEFLOW, INC ."), COMMERCE ONE, AMENDED COMPLAINT- INC., CORILLIAN CORP., CENTILLIUM CLASS ACTIO N COMMUNICATIONS, INC ., E MACHINES, JURY TRIAL DEMANDE D INC., EFFICIENT NETWORKS, INC ., EPIPHANY, INC ., HANDSPRING, INC ., INTERNAP NETWORK SERVICES CORP., LANTE CORP. (SBI AND COMPANY, real party in interest), LIGHTSPAN PARTNERSHIP, INC., MCDATA CORPORATION, NEW FOCUS, INC ., SIMPLEX SOLUTIONS, INC . (CADENCE DESIGN SYSTEMS, INC ., real party in interest), SUPPORTSOFT, INC . (formerly "SUPPORT.COM"), TANNING TECHNOLOGY CORP ., TUMBLEWEED COMMUNICATIONS CORP . ,
Defendants .
Come now the plaintiffs and hereby offer this amended complaint which is substituted fo r and replaces the original complaint . All defendants in the original complaint which are not i n this amended complaint are hereby dismissed without prejudice . Plaintiffs makes the following allegations, except as to allegations specifically pertaining to Plaintiffs and their counsel, based upon the investigation undertaken by Plaintiffs' counsel, which included without limitation : (a) reviews of documents from the Credit Suisse First Bosto n
Corporation and its Technology Group relating to the solicitation, execution, pricing, sales, an d tracking of securities offerings for the corporate issuers named herein ; (b) reviews of computer files from Credit Suisse First Boston Corporation and its Technology Group relating to th e solicitation, execution, pricing, sales, and tracking of securities offerings for the corporate issuer s named herein ; (c) reviews of documents and computer files from the Credit Suisse First Boston
Corporation and its Technology Group relating to the interaction within the Technology Group between its investment bankers and its research analysts for the corporate issuers named herein ;
(d) reviews of documents from the Credit Suisse First Boston Corporation and its Technolog y
Group relating to the investment partnerships between the employees of the Technology Group and the Credit Suisse Group, Credit Suisse First Boston (the Swiss Bank), Merchant Capital,
Inc., and the Credit Suisse First Boston Corporation; (e) reviews of research reports published b y
Credit Suisse First Boston Corporation relating to the corporate issuers named herein ; (f) reviews of the prospectuses of each corporate issuer named herein ; and (g) an analysis of publicly- available news articles and reports, stock price history data, public filings, press releases and other matters of public records, and believe that substantial evidentiary support will exist for th e allegations set forth herein after a reasonable opportunity for discovery .
NATURE OF ACTION
This is a class action on behalf of all purchasers of the common stock of the followin g issuer companies during the Class Periods described herein : Airspan Networks, Inc. ; Bsquare
Corp . ; CacheFlow, Inc . ; Commerce One, Inc . ; Corillian Corp . ; Centillium Communications, Inc .; 2 e Machines, Inc . ; Efficient Networks, Inc. ; E .piphany, Inc. ; Handspring Inc.; InterNAP Network
Services Corp. ; Lante Corp . ; Lightspan Partnership, Inc . ; McData Corp .; New Focus, Inc .;
Simplex Solutions , Inc. ; Support.com, Inc. ; Tanning Technology Corp.; Tumbleweed
Communications Corp . ; (collectively hereinafter, the "Issuers") who suffered damages as a resul t of purchasing such stocks.
SUMMARY OF CLAIMS
1 . This is an action for damages arising out of Defendants' concerted scheme t o defraud the market . Defendants conspired prior to each Issuer's IPO to manipulate the price o f numerous stocks in their post-IPO after-markets by disseminating fraudulent selling statement s instructing Investors to purchase Issuer's stock because Issuer was going to experience strong and/or increasing revenue growth in their future quarterly revenues . In conjunction with these statements.
Defendants simultaneously issued fraudulently understated analyst's revenue projections that bot h
CSFBC and its co-conspirator, the Issuer, believed would be exceeded by the Issuer's actual revenues. These statements regarding strong and/or increasing revenue growth were made by th e
Defendants in order to condition the public market to expect "upside surprises" in the Issuer's futur e financial performance . In some blatant instances, the Pre-IPO statements indicated that the revenu e estimates were purposely under-estimated or conservative, but failed to disclose by how much .
Further, in order to create upward price momentum in Issuer's stock and/or to condition the publi c market to perceive Issuer's stock as valuable and desiring of a premium valuation, Defendant s conspired to manipulate the price of numerous stocks by fraudulently understating each Issuer' s offering IPO price, and making limited disclosure to select members of the investing public .
3 2 . Thereafter, Defendants conspired to artificially inflate the Issuer's post-IPO stoc k price by issuing research reports about Issuer that continued to fraudulently understate the revenu e projections that both CSFBC and its co-conspirator, the Issuer, knew would be exceeded by th e
Issuer's actual revenues . Simultaneously, Defendants made statements within these same researc h reports designed to condition the public market to expect "upside surprises" (over the Defendants ' estimates) in the actual revenues to be reported by the Issuer. These statements included references to the strong and/or increasing revenue growth of Issuer, as well as statements that the revenu e estimates might be under-estimated, or overly conservative, or likely to be beaten, or susceptible t o an "upside surprise," or some other similar statement suggesting that the revenue estimates were to o low. This was misleading because the Defendants knew in fact that the estimates were too lo w because they had been discounted for the very purpose of creating an "upside surprise " artifice. The purpose of these fraudulent statements was to influence the stock price to rise higher than it would have risen otherwise . When, in accordance with Defendants' scheme, Issuer did issue revenu e results that exceeded the publicly disseminated estimates, Defendants drew much attention to that a s a significant event within their analysts' Reports, in support of the analysts' buy recommendations .
Further still, Defendants would, on occasion, fraudulently raise their remaining revenue estimates for Issuer to additionally condition the public market to expect "upside surprises" in the Issuer' s future financial performance.
3 . The Class was damaged when the scheme by design ended , or when Defend ants' false reports were revised to approximate actual revenues (thereby eliminating the expectation o f upside surprise), or when it became publicly known that upside revenue surprises were not going to continue. The fraudulent conditioning of the market by the Defendants, as described above, to expect continuing upside revenue surprises had artificially inflated the stock prices . This
4 manipulation of the market was unknown to public investors who were damaged in excess o f
$1,000,000,000, when the scheme collapsed .
JURISDICTION AND VENU E
4. This Court has jurisdiction over the subject matter of this action pursuant to 28
U.S.C. § 1331 and 1337, Section 27 of the Securities Exchange Act of 1934 (the "Exchange Act")
(15 U.S.C . § 78aa), Section 22(a) of the Securities Act of 1933 (the "Securities Act") (15 U .S.C. §
77v), and 28 U.S .C . § 1367(a).
5 . This action arises under Sections 10(b) of the Exch ange Act (15 U.S.C. § 78j(b) and
78(a)) and SEC Rule lOb-5 promulgated thereunder (17 C.F.R. § 240.1Ob-5), Section 20(a) of the
Exchange Act, Sections 12(a)(2) and 15 of the Securities Act (15 U.S .C . § § 771 (a)(2) and 77o).
6. Venue is proper in this district pursuant to Section 27 of the Exchange Act and
Section 22 of the Securities Act and pursuant to the co-conspiracy venue doctrine . At all times herein mentioned, Defendant Credit Suisse First Boston Corporation maintained an office in and transacted business in this district at 1111 Brickell Avenue, in Miami, Florida . Various acts important to Defendants' scheme were committed in this district, including, but not limited to th e publication and/or dissemination of Defendants' false statements.
7. In connection with the acts alleged in this complaint, Defendants, directly or indirectly, used the means and instrumentalities of interstate commerce, including, but not limite d to, the mails, interstate telephone communications, and the facilities of the national securitie s markets in connection with the purchase and sale of securities.
5 PARTIES
Plaintiffs
8 . Plaintiff Amy Liu, personally and as successor in interest to the estate of he r deceased husband, Peter Lin, purchased Commerce One securities in the open market during th e
Commerce One Subclass Period .
9. Plaintiff Antoine Kasprzak personally purchased 1,000 shares of Airspan Networks ,
Inc. securities in the open market during the Airspan Networks, Inc. Subclass Period.
10 . Plaintiff Robert Tenney, who has filed a Motion seeking appointment as Lead
Plaintiff, purchased over 20,000 shares of Commerce One Securities in the open market during the
Commerce One Subclass Period .
Defendants
11 . Defendant CREDIT SUISSE FIRST BOSTON CORPORATION ("CSFBC") is an investment bank. CSFBC is a corporation organized and existing under the laws of the
Commonwealth of Massachusetts. At all relevant times, CSFBC was a registered broker-dealer and member of the National Association of Securities Dealers, Inc . ("NASD"). CSFBC was a lead underwriter for the initial public offerings ("IPOs") completed by each of the Issuers, defined belo w and listed in Exhibit A hereto. CSFBC maintains an office in Miami, Florida through which various false statements were disseminated. At all relevant times, CSFBC had a duty to promptly disseminate truthful and accurate information with respect to the IPOs and the Issuers .
12. CSFBC is a wholly-owned subsidiary of Defendant CREDIT SUISSE FIRST
BOSTON (USA), Inc . ("CSFB-USA") . CSFB-USA is also a Delaware corporation .
13 . CSFB-USA is a wholly-owned subsidiary of Defendant CREDIT SUISSE FIRS T
BOSTON, INC . ("CSFBI"). CSFBI is a Delaware corporation .
6 14. CSFBI is jointly owned by the Defendant Swiss Bank CREDIT SUISSE FIRS T
BOSTON ("CS") and the Defendant Swiss holding comp any, CREDIT SUISSE GROUP ("CSG") .
CSG, in addition to partially owning CSFBI, also wholly owns CS . CS and CSG are Swiss business entities.
15 . On or about November 3, 2000, CS acquired an underwriter, Donaldson Lufkin &
Jenrette Inc ("DLJ"). As a result of this acquisition, CSFBI changed its org anizational structure, and
CSFBC, one of CSFBI's (and CS' s) principal U .S . registered broker-dealers, became a subsidiary of
DLJ, and DLJ changed its name to Credit Suisse First Boston (USA), Inc . ("CSFB-USA")
16. At all material times, Frank Quattrone, George Boutros, and William ("Bill") Brad y
(collectively "QBB") were employed directly by CS to manage and operate CSFBC's (and CS's )
Technology Group (the "Technology Group") . QBB, John Hodge, and Jack Tejavanija were members of the investment banking team hired to start-up the Technology Group.
17 . At times, the institutional Defendants CSFBC ( including its Technology Group) ,
CSFB-USA, CSFBI, CS, CSG will be referred to collectively as the "Bank Defendants. "
Issuer Defendants
18. Issuer Defendant AIRSPAN NETWORKS, INC . ("Airspan") is headquartered within this district in Boca Raton, Florida . At all relevant times Eric D . Stonestrom was the Chie f
Executive Officer ("CEO") for the company, and signed the Registration Statement for th e
Offering. At all relevant times, Joseph J . Caffarelli was the Senior Vice President and Chie f
Financial Officer ("CFO") for the company, and signed the Registration Statement for th e company's public offering ("Offering" )
19. Issuer Defendant CENTILLIUM COMMUNICATIONS, INC. ("Centellium") i s headquartered in Fremont, California . At all relevant times Faraj Aalaei was the CEO and a
7 Director for the company, and signed the Registration Statement for the Offering . At all relevant
times, John W. Luhtala was the Vice President and CFO for the company, and signed the
Registration Statement for the Offering.
20. Issuer Defendant CORILLIAN CORP .("Corillian") is headquartered in Beaverton,
Oregon. At all relevant times Ted F . Spooner was the CEO and Chairman for the company, and
signed the Registration Statement for the Offering . At all relevant times, Steven Sipowicz was the
CFO and Secretary for the company, and signed the Registration Statement for the Offering.
21 . Issuer Defendant EFFICIENT NETWORKS, INC . ("Efficient") is headquartered in
Dallas, Texas. At all relevant times Mark A. Floyd was the CEO, President, and Chairman for the
company, and signed the Registration Statement for the Offering . At all relevant times, Jill S.
Manning was the Vice President and CFO for the company , and signed the Registration Statement
for the Offering.
22. Issuer Defendant E MACHINES, INC . ("E Machines") is headquartered in Irvine ,
California. At all relevant times Stephen A . Dukker was the CEO and a Director for the company , and signed the Registration Statement for the Offering . At all relevant times, Steven H . Miller was the CFO, Secretary, and Vice President for the company , and signed the Registration Statement for the Offering .
23 . Issuer Defendant LANTE CORP . (SBI AND COMPANY, real party in interest)
("Lante") is headquartered in Chicago, Illinois. At all relevant times C. Rudy Puryear was the CEO ,
President, and a Director of the company, and signed the Registration Statement for the Offering.
At all relevant times, Brian Henry was the Vice President and CFO for the company, and signed the
Registration Statement for the Offering .
24. Issuer Defendant LIGHTSPAN PARTNERSHIP, INC . ("Lightspan") i s
8 headquartered in San Diego, California. At all relevant times John T. Kernan was the CEO and
Chairman for the company, and signed the Registration Statement for the Offering . At all relevant times, Kathleen R. Mcelwee was the Vice President and CFO for the company, and signed the
Registration Statement for the Offering.
25 . Issuer Defendant MCDATA CORPORATION (" McData") is headquartered in
Broomfield, Colorado . At all relevant times John F. McDonnell was the CEO, President, and
Chairman for the company, and signed the Registration Statement for the Offering . At all relevan t times, Dee J. Perry was the Vice President and CFO for the company, an d signed the Registration
Statement for the Offering.
26. Issuer Defendant SIMPLEX SOLUTIONS, INC . (CADENCE DESIGN
SYSTEMS, INC ., real party in interest) ("Simplex") is headquartered in Sunnyvale , California. At all relevant times Penelope A . Herscher was the CEO and Chairman for the company, and signe d the Registration Statement for the Offering . At all relevant times, Luis P. Buhler was the CFO for the company, and signed the Registration Statement for the Offering.
27 . Issuer Defendant SUPPORTSOFT, INC . (formerly "SUPPORT .COM")
("Softsupport") is headquartered in Redwood City, California. At all relevant times Radha R . Basu was the CEO, President, and a Director for the company, and signed the Registration Statement fo r the Offering. At all relevant times, Brian M . Beattie was the CFO and Senior Vice President for th e company, and signed the Registration Statement for the Offering .
28. Issuer Defendant TANNING TECHNOLOGY CORP . ("Tanning") is headquartered in Denver, Colorado . At all relevant times Larry G. Tanning was the CEO, President, and
Chairman for the company, and signed the Registration Statement for the Offering . At all relevan t
9 times, Henry F. Skelsey was the Vice President, CFO, and a Director for the company, and signe d the Registration Statement for the Offering .
29. Issuer Defendant TUMBLEWEED COMMUNICATIONS CORP . ("Tumbleweed")
is headquartered in Redwood City, California . At all relevant times Jeffrey C . Smith was the CEO,
President, and Chairman for the company, and signed the Registration Statement for the Offering.
At all relevant times, Joseph C. Consul was the Vice President and CFO for the company, an d signed the Registration Statement for the Offering .
30. The individuals identified in paragraphs 16 through 27 are hereinafter sometimes referred to as the "Issuer Individuals . "
31 . The Issuer Defendants (identified in paragraphs 16 through 27) will at times be referred to collectively as the "Issuer Defendants ."
32. The Bank Defendants and the Issuer Defendants are, at times, referred to collectivel y as the "Defendants."
GROUP PLEADING
33 . All Issuer Individuals are appropriately treated as a group for pleading purposes ; and it is also appropriate to presume that the false and misleading information conveyed in eac h
Issuer's Registration Statements, Prospectuses, Research Reports, and other public filings, pres s releases, and other publications as alleged herein are the collective actions of the narrowly define d group of Issuer Individuals identified above . Each of the Issuer Individuals, by virtue of his hig h level position with an Issuer, directly participated and was integrally involved in the management o f the Issuer, was directly involved in the day to day operations of the Issuer and was privy t o confidential proprietary information concerning the Issuer, its operations, finances, financia l condition, products, and present and future business prospects as alleged herein . Such Issuer
10 Individuals were personally involved in drafting, producing, reviewing, authorizing, and/o r disseminating the false and misleading statements alleged herein, and/or were provided with copie s of misleading research reports by CSFBC (or the Technology Group), Issuer's press releases,
Issuer's SEC filings, and other alleged misleading publications of, or about, the Issuer prior to o r shortly after their issuance, were aware that the false and misleading statements were being issue d regarding that Issuer and approved or ratified these statements .
34 . CSFBC was a managing underwriter of each of the Issuer ' s offerings identified by their prospectus dates in Exhibit A and Exhibit B below . CSFBC had a duty to ensure that complete, accurate, and truthful information with respect to the Issuer's operations, financia l condition, earnings, and future business prospects was contained in the Registration Statement and
Prospectus, pursuant to which the offering was made . As part of each offering, CSFBC purported to conduct or participate in an investigation known as a "due diligence" investigation, into th e financial condition, business operations, prospects and financial, accounting, and management control systems of each Issuer .
CONSPIRACY AND CONCERTED ACTIO N
35 . In committing the wrongful acts alleged herein, Quattrone, Boutros, and Brad y
("QBB"), the Technology Group, CSFBC and each of the Issuer Defendants (collectively , hereinafter the "Conspirators") pursued a conspiracy, common enterprise, and/or common course of conduct and acted in concert with and conspired with one another, in furtherance of their commo n plan, scheme, or design relating to each Issuer . During all relevant times hereto, the Conspirators , and each of them, initiated a course of conduct with the purpose and effect, inter alia, to fraudulently obtain money from the investing public by deceiving them with the artifices describe d above in paragraphs 1 and 2 . In furtherance of this plan, conspiracy, and course of conduct, the Conspirators, and each of them, took the actions as herein set forth. All Defendants pursued the common goal of conditioning the market to ensure that increases in stock price occurred as a resul t of fraudulently preplanned events .
36. QBB, the Technology Group, and CSFBC were collectively the central actors in the conspiracy (the "Core Conspirators"). They initiated conspiracies with each of the Issuers, creating nineteen different conspiracies , that operated in a nearly identical manner . These Core Conspirators developed the system of fraud described herein, recruited the Issuer Defendants to participate in th e wrongful acts, and ultimately executed the conspiracy with each of the Issuers .
37. Each Issuer Individual, because of his or her position of control and authority as a n officer and/or director of the Issuer, was able to and did control the contents of the various quarterl y and annual financial reports, research reports, revenue data, SEC filings, and press releases for th e
Issuer with which he or she was employed . The Core Conspirators provided each Issuer Defendan t with copies of that Issuer's reports, releases, and filings alleged to have been misleading herein prio r to or shortly after their issuance and the Issuer Individuals had the ability and opportunity to prevent their issuance or to cause them to be corrected. Because of their Board membership and/o r executive and managerial positions with the Issuers, each of the Issuer Individuals had access t o non public information about that Issuer's actual revenue expectations, business, finances, an d future business prospects via access to internal corporate documents, conversations, and connection s with corporate officers and employees, attendance at Board meetings and committees thereof and via reports and information provided to them in connection therewith .
38 . The Conspirators accomplished their conspiracy, common enterprise, or commo n course of conduct of artificially inflating the price of Issuers' stock through the issuance of false an d misleading quarterly and annual reports,research reports, SEC filings and reports, and press release s
12 to the public, which manipulated, misrepresented, and failed to disclose the true facts regardin g
Issuers' revenues, earnings, markets, business, management, financial condition, and futur e prospects. Each of the Conspirators was a direct and substantial participant in the conspiracy , common enterprise, and common course of conduct complained of herein .
39. Each of the Defendant Conspirators is sued both individually and as a co- conspirator, and the liability of each arises from the fact that each engaged in all or part of the unlawful acts charged herein . In addition, there are other unknown persons, who conspired in th e commission of the wrongs alleged herein . Each of the Defendants acted knowingly or in such a reckless or grossly negligent manner as to constitute a fraud and deceit upon Issuers' shareholders .
PLAINTIFFS' CLASS ACTION ALLEGATIONS
40 . Plaintiffs bring this action as a class action pursuant to Federal Rule of Civi l
Procedure 23(b)(1) and, in the alternative, (b)(3) on behalf of themselves and the members of a class
("Class") of Plaintiffs, consisting of all persons and entities who purchased common stock of eac h
Issuer during the dates set forth below in Exhibit A, inclusive (the "Class Period"), and who wer e damaged thereby.
41 . The Class Period is comprised of nineteen Subclass Periods as set forth in Exhibit A below. Each Subclass of Plaintiffs consists of all persons and entities who purchased that Issuer' s securities in the open market during that Subclass Period . Some of the Subclass Periods begin wit h the aftermarket purchases immediately subsequent to an Issuer' s initial offering, but none of the
Subclass Periods include purchases made in conjunction with the Initial Public Offering . Excluded from the Class are the Defendants, conspirators identified herein but not sued, officers and director s of the Company, the members of their immediate families and their legal representatives , heirs, successors, or assigns, and any entity in which Defendants have or had a controlling interest . Also
13 excluded from the Class are purchasers who sold their stock during the class period and earned a
profit.
42 . As alleged herein, Defend ants knowingly or recklessly disseminated materially false
and misleading information to the investing public regarding, inter alia, the Issuers' revenue
expectations . Defendants' conduct had the intended effect of creating false expectations amon g purchasers that the Issuers would continually exceed revenue expectations, thereby artificiall y
inflating the prices Plaintiffs paid for Issuers' securities during the Class Period .
43 . Shares of Issuers' securities were outstanding and actively and openly traded on th e
NASDAQ, an efficient market in which the price of the Issuers ' stocks reflected publicly disseminated information about each Issuer, and millions of shares were traded during the Clas s
Period.
44. The members of the Class are so numerous that joinder of all members is impracticable . While the exact number of Class members is unknown to Plaintiffs at this time and can only be ascertained through appropriate discovery, Plaintiffs believe that there are at leas t thousands of members of the Class . Record owners and other members of the Class may be identified from records maintained by the Issuers or their transfer agents and may be notified of the pendency of this action by mail, using the form of notice similar to that customarily used i n securities class actions .
45 . Plaintiffs' claims are typical of the claims of the members of the Class as al l members of the Class are similarly affected by Defendants' wrongful conduct in violation of federa l law as alleged herein.
46. Plaintiffs will fairly and adequately protect the interests of the members of the Clas s and has retained counsel competent in class and securities litigation .
14 47 . Common questions of law and fact exist as to all members of the Class an d
predominate over any questions affecting solely individual members of the Class . Among the questions of law and fact common to the Class are :
a. whether the federal securities laws were violated by Defendants' acts as alleged
herein;
b. whether Defendants participated in and pursued the common course of conduct
complained of herein ;
c. whether documents, press releases and other statements disseminated to th e
investing public and the Issuers' shareholders during the Class Period misrepresented materia l
facts about the business, financial condition, and future business prospects of Issuers ;
d. whether statements made by Defendants to the investing public during the Class
Period misrepresented material facts about the business, future prospects, and finances of th e
Issuers;
e. whether the Prospectus, Analysts' Research Reports, and other public statement s
made by Defendants misrepresented and/or failed to disclose material facts ;
f. whether the market prices of Issuers' securities during the Class Period wer e
artificially inflated due to the material misrepresentations and omissions and failure to correct
the material misrepresentations and omissions complained of herein ; and
g. whether the members of the Class have sustained damages and, if so, the prope r
measure of damages .
48 . A class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable . Furthermore, as the damages suffered by individual Class members may be relatively small, the expense and burden of
15 individual litigation make it impossible for members of the Class to individually redress the wrong s done to them . There will be no difficulty in the management of this class action.
THE TECHNOLOGY GROUP PITCHES : "POP AND PERFORMANCE "
49. In marketing the scheme described in paragraphs I and 2 above to prospective IP O clients, the Technology Group used Marketing Slides which broadly referred to the scheme as "Po p and Performance" of the prospective client's stock price. The "Pop" resulted from conducting an initial public offering ("IPO") for each Issuer at a per-share offering p rice that reflected a deep discount to the true belief as to its value so that almost immediately post-IPO, the price of the issue d stock would increase to a price significantly higher than the IPO offering-price . Prior to the IPO ,
CS and/or CSFBC's sales staff made selective disclosures of the fact of the discounting of the IPO pricing to members of the investing public . As a result of these selective disclosures regarding th e discounting, there was informational asymmetry between "in the know" buyers and other buyers .
As the "in the know buyers" bought the stock at its discounted price level, other buyers were attracted to the stock because of its signific ant price gains in that first day. As a result of this interest in the first day price gains and/or as a result of then learning of the discount, other buyers were induced to also purchase the stock, thus creating upward price momentum- a "Pop"-up in th e stock price.
50 . The "Performance" resulted from CSFBC and each Issuer fraudulently conditionin g of the market. This was accomplished by their knowingly disseminating falsely-discounted expectations about the Issuer's prospective financial performance (including false reports o f expected revenues), while simultaneously disseminating statements to the public encouraging the m to purchase the stock because of the Issuer's strong and/or increasing revenue growth and/or th e possibility of upside surprises in Issuer's revenues versus the stated expectations.
16 CSFBC'S OPPORTUNITY TO COMMIT FRAU D
51 . Typically, investment bankers are the direct liaison between an investment bank and a company in executing an IPO . Executing IPOs, as well as other financing transactions fo r companies, is their primary employment function .
52. In July of 1998, CS hired Quattrone and several other investment bankers to run a technology investment banking group (the Technology Group) for CS and its subsidiary CSFBC .
53 . At all relevant times, the Technology Group's operations were based in Silicon
Valley. At all relevant times, Quattrone was the head of the Technology Group, and he was grante d the authority by CS and/or CSFBC to employ and terminate employees in the Technology Group a t will .
54. Quattrone was granted unusual autonomy by CS and/or CSFBC to structure the
Technology Group as he saw fit, including an integration of investment banking activities with equity-research analysts' activities .
55 . In furtherance of this strategy, Quattrone established a separate research departmen t for his Technology Group ("Technology Research Team"), which included equity research analysts that would publish CSFBC research reports on technology companies with which CSFBC di d business or was attempting do business.
56 . The Technology Research Team reported directly to Quattrone. Quattrone supervised and paid the Technology Research Team . Quattrone had the power to hire and fire analysts.
57. Internal organizational charts, as well as organizational charts presented to clients , clearly indicated Quattrone's authority and control over both Technology Investment Banking an d
Technology Equity Research .
17 58. Equity research analysts disseminate information to the public markets regarding companies' expected financial performance . This information is disseminated both orally and through the writing of periodic research reports, which are widely disseminated to the publi c market. The public markets view this information as material, and its dissemination by an analys t can affect the price of a company's stock. Here, Defendants were aware of the effect caused b y analyst reports and incorporated those reports at the core of their fraud scheme .
59. The Technology Research Team included a number of "All-Star" analysts who wer e recognized in the public marketplace and whose published reports influenced prices of the securitie s on which they reported . The prospect of receiving research coverage from one of these influentia l
"All-Star" analysts in the Technology Research Team increased the likelihood that a compan y would select CSFBC for its prospective IPO .
60. The Technology Group, under Quattrone's direction, used the direct involvement o f the Technology Research Team' research analysts in all stages of the IPO process (Pre-IPO, IP O
Marketing, and Post-IPO) as a marketing device to lure potential clients to its IPO practice . The public was largely unaware of the link between research and banking at CSFBC, and therefore, it trusted and relied upon CSFBC' s research reports.
61 . A Technology Group presentation slide detailed the involvement of analysts from the Technology Research Team in the IPO process as follows :
"Pre-IPO: Significant `front-end' effort to position company's story in prospectus and roadshow; Sales force `teach-in' to begin communicating the IPO opportunity."
"IPO Marketing: Active involvement on roadshow . . . ."
18 "Post-IPO : Detailed report issued immediately after 25-day quiet perio d expires; Timely communication with the market as company event s dictate . . . "
62 . Analysts in the Technology Research Team published research reports on each of the companies that the Technology Group brought public in an IPO .
63 . Quattrone and the investment bankers in the Technology Group exerted direc t influence on what the research analyst in the Technology Research Team wrote in their publishe d research reports.
64 . As Forbes reported on September 23, 2001 :
[I]n Quattrone's shop, research was expected to serve the bankers' interests . . . [O]thers say he tried to bully them . "I'll have you out of here Monday morning if you say that " . . . managing director recalls Quattrone telling an analyst who wanted to issue a less than flattering report about a client. "Do you want to work in this firm? Do you want to be a team player? When it comes time for bonus review, all this will b e remembered."
65. The Technology Group maintained, and carried out, a policy of only participating in
IPOs in which CSFBC was the "Lead" manager or, at a minimum, a "Co-Lead" manager of the underwriting.
66. The Lead or Co-Lead manager (also referred to as the "bookrunning" Manager(s) ) of an IPO exerts a dominant position over any other investment banking syndicate-members wh o are involved in the selling of the Issuer's stock in the IPO . This includes dominance ove r conducting the due diligence of a company's financial condition, the review and dissemination o f expectations about a company's future financial performance, and the final determination of th e company's stock price in the IPO .
19 67. The Technology Group was able to richly capitalize on its enhanced operatin g structure, moving to the forefront in all technology IPOs. As reported in Bloomberg News on June
27, 2001, "[I]n 2000, Quattrone's group was the undisputed king of the tech initial public offering business. It was one of Wall Street's top moneymaking endeavors, completing 47 deals-one out of every four computer, software, Internet and semiconductor initial public offerings . "
Additionally, on June 28, 2001, Bloomberg News issued a follow-up report stating that CSFBC wa s
"the No. 1 underwriter of initial stock sales for computer, software, Internet and semiconducto r companies in 1999 and 2000, garnering 24 percent of the market ."
CSFBC'S MOTIV E
68 . CSFBC, Quattrone, and each member of the Technology Group, had a direct financial incentive to (1) conduct as many IPOs as possible, and (2) take steps to ensure that a n
Issuer's stock price rose after the IPO . CSFCB and the Technology Group benefitted from the frau d scheme in the following ways: (1) payment of investment banking fees ; (2) payment related to secondary offerings ; (3) profits (actual and expected) from secret pre-IPO investments ; (4) allocations of lucrative IPO shares; (5) increased commissions as a result of market making activity ; and (6) other ancillary benefits, including bonuses, publicity and the like .
69. CSFBC profited directly from investment banking fees collected from taking a company to IPO . The more IPOs performed, the more fees CSFBC collected . The fees CSFBC earned from the IPOs conducted for the Issuers herein exceeded $159,390,000 .
70. Quattrone and members of his Technology Group also profited directly fro m conducting as much IPO business as possible, due to a revenue-sharing agreement between
Quattrone and the Technology Group and CSFBC . The agreement compensated them with half o f
20 the revenue (after certain costs) generated by the Technology Group . The profit was to be
distributed by Quattrone to himself and his Technology Group employees .
71 . As The Wall Street Journal reported on May 3, 2001, " [w]ith a revenue-sharing
agreement with CSFB after certain costs, the [Quattrone] group had as much as $500 million t o divide among its members in 1999, according to some former and current CSFB employees . "
72. Additionally, as The Wall Street Journal reported on November 13, 2001, "Mr .
Quattrone's pay was based on production . Thus, during the heady days for technology stocks, when
CSFB was the premier underwriter of such offerings, he earned huge annual sums that approache d
$100 million, the people familiar with the firm say ."
73 . These huge fees provided CSFBC with a motive to execute the fraud scheme.
74. Analysts with CSFBC's Technology Group were also compensated from th e
Technology Group's share of IPO revenue .
75 . CSFBC' s standard practice was to compensate its research analysts for their participation in generating investment banking business. As The Wall Street Journal reported on
May 6, 2002, "[ c]opies of job-offer letters from . . . Credit Suisse First Boston to candidates for research-analyst positions show that Wall Street analysts are paid, in part, for investment-banking business they help generate."
76. In addition to their financial interest in conducting as much IPO business as possible,
CSFBC, Quattrone, and the members of the Technology Group (including the other investment bankers and the research analysts in the Technology Research Team) had a financial interest i n taking actions that would cause Issuers' stock prices to rise after the IPO .
77. Successfully creating a "Pop" (i.e., where an Issuer's stock price at IPO trades on it s first day at a price that is higher than its offering price) drew attention to CSFBC's IPO business .
21 CSFBC promoted its ability to create and sustain outsized economic returns . CSFBC sought to
increase future demand for its IPO services .
78. In addition, after the IPO date, CSFBC profited from its activities as a market-make r
(buying and selling stocks for the public in the aftermarket for a fee) in the Issuers' stock . CSFBC
and the Technology Group' s scheme was to manufacture the perception among buyers that large
economic returns accrued to holders of an Issuer's stock after a CSFBC (Technology Group) -le d
IPO . This had the desired effect of attracting additional buying demand and consequently trading volume that would not otherwise have occurred . Thus, CSFBC increased its profits from market- making trading.
79. Quattrone separately established for his Technology Group a private client services group, which engaged primarily in first-day trading in certain IPOs . Accounts in this group were offered only to venture capitalists, executives of high-tech companies, and others who did business , or might do future business, with the Technology Group . These accounts were referred to internally as "Friends of Frank ."
80. Allocations from an IPO became profitable when a stock appreciated in value fro m its IPO offering price (particularly where there was immediate appreciation) . By doling out these lucrative stock allocations to potential clients (the "Friends of Frank") they were consequently lure d into doing future business with Quattrone, the Technology Group, and CSFBC .
81 . In addition, Quattrone and his associates sought to profit personally from CSFBC' s underwriting activities by establishing hedge funds to invest in Issuers about to undertake an IP O with CSFBC:
• Credit Suisse First Boston Venture Fund I., L.P. ;
22 • QBB Management I, LLC (the general partner of Credit Suisse First Boston Ventur e
Fund I, L.P.);
• Credit Suisse First Boston Technology Group Fund I, L .P. • Credit Suisse First Boston Technology Group II L .P. ;
• Interwoven Equity Investors LL C
• InterTrust Equity Investors LLC • Emachines Equity Investors LLC • Onvia Equity Investors LLC • CSFB Technology Holdings 2000, LLC • CSFB Technology Holdings 2001, L.P. • Credit Suisse First Boston Technology Group Fund 2001, L.P.
82. These hedge funds "purchased" pre-IPO stock from an Issuer client at prices far below the IPO offering price and then sold the stock after conducting the Issuer's IPO . As reported
in The Wall Street Journal reported on May 3, 2001 :
Mr. Quattrone and two top CSFB aides-George Boutros and William Brady, his mergers and corporate-finance chiefs, respectively-were general partners of the fund through a partnership named QBB Management. The general partnership allowed the three executives to invest personally in the companies the fund invested in, some of which Mr. Quattrone's group brought public only months later . . . .
[Quattrone] and two colleagues made a total of about $2 million after
paying a bargain price for shares of Interwoven, Inc ., an internet software firm, a few months before CSFB took Interwoven public, according t o regulatory filings .
83 . These funds were instrumental to the Technology Group's overall fraudulent scheme, because inter alia, they allowed the Technology Group to curry favor with potential clients of its IPO services because of the perception that the Group would consequently have an interest i n
23 making the client's stock price rise, and also they allowed the members of the Technology Group t o profit directly from their fraudulent activities.
84. CSFBC also sought to profit from these activities , allocating money to Quattrone to
similarly invest on its behalf in cheap pre-IPO stock in clients about to go public .
85. As The Wall Street Journal reported on May 3, 2001 :
As part of his deal with CSFB, which he joined in 1998, Mr . Quattrone was given $25 million each year to invest for the firm in potential
underwriting clients about to go public . Mr. Quattrone told associates the
fund would not only help the bank win underwriting business, but deliver
a rich investment return as well .
86. In addition to the hedge funds, CSFBC also engaged in pre-IPO venture capital investments in several of its IPO offerings through other venture capital affiliates .
87. CSFBC also profited from its scheme by requiring ce rtain of the Issuers to conduc t secondary offerings from which it generated lucrative fees . Additionally, CSFBC was paid fees by the Issuers to provide services in connection with other transactions.
TECHNOLOGY GROUP'S AND CSFBC'S ACTUAL KNOWLEDGE (SCIENTER )
88 . CSFBC and the Technology Group had actual knowledge that their misstatement s and omissions were fraudulent, and they engaged in a marketing effort to sell their fraudulen t scheme. As part of this effort, the Technology Group presented prospective clients with a two-fol d measure by which its IPOs were distinct from its competitors : (1) stock prices increased more on the first day of trading for CSFBC-led IPOs than its competitors; and (2) stocks continued to increase in price in the subsequent days and months beyond the first day's closing price . In a slide
(entitled "Which Firm's IPOs Have the Right Combination of Pop and Performance?") used in its marketing presentations , CSFBC compared its performance to its chief competitors, Goldman Sachs 24 and Morgan Stanley, on these combined measures . CSFBC boasted that its IPOs outperformed
those of its chief competitors in both the percentage of IPOs then trading above their offering price
and the percentage of IPOs then trading above their first day's closing price .
89. To achieve its aim of a substantial jump in Issuers ' stock prices on the day of IP O
issue, the Technology Group knowingly set the proposed offering price-range at a deep discount
compared to its actual belief of the Issuers' actual value .
90. The Technology Group then communicated the actual value and the discounted
proposed offering price-range to CSFBC's sales staff. In each case, this discounting was
communicated through either or both of two documents : an internal "Equity Sales Book" and a
"Sales Points Broadcast." Together, these two documents were sometimes referred to as the "Sales
Memo."
91 . CSFBC's sales staff used the Sales Memo to communicate with, create interest in ,
and subsequently sell the Issuers' IPO stock to select members of the investing public .
92 . Both the fraudulently understated IPO offering price and CSFBC' s communicatio n
of the discount to limited members of the investing public prior to the offering were material factors that caused the price of Issuers' stock to increase during the first day trading .
93 . CSFBC established Issuers' final IPO stock prices based on this discounted price range, knowing that the price would rise .
94. On the day of the offering, as the price of Issuers' stock rose substantially, excessive demand was created for Issuers' stock . This caused the stock to rise higher in its first days o f trading than it otherwise would have, boosting the price above its true value.
95. The Technology Group and CSFBC conducted a detailed valuation analysis to form
a belief as to the actual value of Issuer's company, and to determine a stock price correspondin g
25 with that value. Part of this valuation analysis included an analysis of the relative valuations o f
Issuers' comparable public companies .
96. The Technology Group employed various financial spreadsheet models in
connection with determining the Issuers' offering price. These included the "Comps model," whic h
calculated the relative valuations of public companies comparable to the Issuer ; the "IPO model, "
which determined the actual valuation of an Issuer's company ; the "IPO matrix," which determine d
the range of valuations for an Issuer's company equating with a range of potential IPO prices;
and/or other financial models including some hybrid combinations of the above models .
97. These models performed several functions , including determining an actual
valuation of an Issuer's company ; determining the relative valuations of public companie s
comparable to the Issuer's ; and determining the range of valuations for an Issuer's compan y equating with a range of potential IPO prices.
98. The Technology Group 's fraudulent understating of Issuers ' stock price range was often referred to as the "IPO Discount ." In some instances, this discounting was performed explicitly in the spreadsheet models through the language used and/or the functionality of th e models. At other times the Technology Group performed the IPO Discount implicitly by setting a discounted pricing range after it completed its valuation analysis .
99. For instance, in the Technology Group's pre-IPO Sales Memo for Lightspan
Partnership, Inc., entitled "Sales Force Book," which was directed towards the CSFBC (and CSFB ) sales force, the Technology Group discussed the upcoming IPO . In that Sales Memo, the discount was referred to explicitly as the "IPO Discount Range," and was described as "15%-25%." A footnote to its valuation analysis stated that the Technology Group "Assumes IPO discount at midpoint of 15% - 25% IPO discount range."
26 100. In each instance, CSFBC had actual knowledge of the offer price discounting, bot h
because it knowingly completed the act of discounting and also because it communicated the discount to CSFB through the internal Sales Memo, and/or the internal "Investment Bankin g
Committee Memo" ("IBC Memo"), and/or the internal "Equity Valuation Committee Memo"
("EVC Memo") .
101 . In each instance, the Issuer had actual knowledge of the discounting described above because it had discussed with the Technology Group the pricing of the Issuer's stock in the IPO , and/or the Technology Group gave to the Issuer summary pages from the spreadsheet-model s described above as part of the valuation analysis . These summary pages showed the actua l valuation of the Issuer's company, the relative valuations of the Issuer's comparable publi c companies, and the range of valuations for the Issuer's company equating with a range of potentia l
IPO prices .
102 . Further, prior to each IPO, CSFBC, and the Issuer conspired to, agreed to, an d subsequently established the initial forecasted quarterly and annual revenues that were to b e disseminated to the public at a substantially lower level than the actual revenues that CSFBC, th e
Technology Group, and Issuer expected the Issuer would ea rn. This part of the scheme was known as the "Performance" or "Upside Surprise," CSFB fraudulently understated revenue data in order for the Issuer ' s stock price to increase in the days an d months subsequent to the Issuer 's first day closing price.
103 . The Technology Group summarized this device , scheme, or artifice in a slide used i n a presentation to an Issuer (while the Technology group was in the process of preparing the Issuer' s
IPO) :
27 "The initial street forecast" revenue and net income is structured as a level of revenue and income that enables management to continually exceed expectations based on management's expected internal plan . "Initial street forecast" revenue should approximate research analyst projections .
104. In carrying out the scheme (where the disseminated forecast of an Issuer's future
revenues was fraudulently undersstated), the Technology Group's investment bankers receive d
financial information from each Issuer. This included each Issuer's internal projected incom e
statement, which showed internal revenue projections .
105 . CSFBC's Technology Group bankers then inserted this information into their own
financial spreadsheet model or models, which were constructed to formulaically discount th e
projected annual and/or quarterly revenues inputted from the Issuer's information . In many
instances, this discounting functionality was programmed into the same financial spreadsheet
models described in the above paragraphs, and in those instances, those models were used t o
achieve the same purpose .
106. The discounting described above was often referred to in the Technology Group' s
financial spreadsheet models with terms such as the "haircut," "waterfall," or "corporate judgment ."
107. In the course of further developing the use of research analysts' projections in thi s scheme, the Technology Group constructed and utilized an additional financial spreadsheet model.
This additional model was referred to as the "Waterfall" model, from which was derived a
"Waterfall" chart used in many presentations.
108. The "Waterfall" model combined several, sequential future occurrences in which an
Issuer's actual revenue in a period exceeded the revenue previously forecasted for that period, an d coupled each of these occurrences with a consequent upward revision to all remaining revenu e forecasts for Issuer. This model combined these consequent upward revisions in a pyramid fashion, 28 so that the revisions could be included in calculating the initial quarterly and annual revenues to be
forecast for the Issuer, based upon what the Issuer's revenues were actually expected to be. In so
doing, the Issuer's revenues actually expected to occur in future forecasted periods would, by
design, continually exceed not only the initial forecasts, but also upward revisions to the forecast s
for all periods in the forecast . In some instances, the Waterfall model was merged into the same
financial spreadsheet models described above .
109 . After conducting this understating of the Issuer's financial projection of revenues ,
the investment bankers of the Technology Group then distributed to both the Issuer and th e
Technology Research Team's research analysts a new projected income statement for the Issuer that
contained the discounted revenue projections.
110. The Issuer then adopted, or incorporated, these discounted fin ancial projections into the forecast information it disseminated in connection with the IPO and/or disseminated thereafter.
111 . The Technology Research Team's research analysts then used these discounte d
financial projections to create discounted financial projections for the Issuer that wer e
approximately similar. As described above in paragraph 103, the goal of this aspect of the scheme
or artifice was that :
. . ."Initial street forecast" revenue should approximate research analys t projections .
112. These false financial forecasts by the Technology Research Team (which were based on the discounted financial projections of the Issuer) were then used by the Technolog y
Group, Technology Research Team analysts, and CSFBC in the IPO sales process of the Issuer' s stock offering.
29 113. The Technology Group prepared its standard Sales Memo for each Issuer's IPO an d attached therein (typically in the "Equity Sales Book" portion) the Technology Research Team' s financial forecast for the Issuer, which included a projected income statement .
114. This Sales Memo was then distributed to CSFBC' s sales force for use in buildin g market interest to sell the Issuer's IPO. The information contained in the Sales Memo was communicated to members of the investing public by CSFBC's sales force, including information from the projected income statement of the Issuer, which incorporated the fraudulently understated financial projections . The fraudulent projections were not disclosed to the public .
115 . This Sales Memo also contained selling statements instructing Investors to purchase
Issuer's stock because Issuer was going to experience strong and/or increasing revenue growth i n their future quarterly revenues . In some blatant instances these selling statements indicated that th e revenue estimates were purposely under-estimated or conservative, but failed to disclose by ho w much.
116 . After the expiration of the quiet period following the IPO, the Technology Research
Team's research analysts published research reports on the Issuer that included a projected income statement incorporating the discounted financial projections . In all initial research reports, CSFB C rated each of the Issuers as a "Buy" or "Strong Buy ." Further, statements were made within these same research reports to condition the public market to expect "upside surprises" (over the projecte d estimates) in the actual revenues to be reported by the Issuer. These statements included references to the strong and/or increasing revenue growth of Issuer, as well as statements that the revenue estimates were under-estimated, or overly conservative, or likely to be beaten, or susceptible to a n
"upside surprise," or some other similar statement suggesting that the revenue estimates were to o low.
30 CSG AND CS ASSIST AND PARTICIPATE
117. John M. Hennessy was a member of the Board of Directors of CSG in 1998 throug h
June of 2001 . He was also simultaneously Chairman of Private Equity of CS during all or part of
the same period of time.
118. Allen D. Wheat was a member of the Executive Board of CSG in 1998 through part
of 2001 . He was also simultaneously Chairman of the Executive Board of CS, as well as Chie f
Executive Officer of CS during all or part of the same period of time .
119. Richard Thornburgh is a member of the Board of Directors of CSG and previousl y
occupied this position in 1998 through 2001 . He also served as Chief Financial Officer and/or Chie f
Risk Officer for CSG throughout the same period of time, and presently also serves as Chief Risk
Officer. In addition to his duties with CSG, he was also Vice Chairman of the Executive Board o f
CS from April 1, 1999 through 2000, and some or all of 2001 . Simultaneously, for all or some part
of that time , he also served as Chief Financial Officer for CS.
120 . Charles Ward was a member of the Executive Board of CS in 1998, 1999, 2000, and
some or all of 2001 . He was also simultaneously Co-Head of Investment Banking and Private
Equity for CS during some or all of the same period of time.
121 . Defendant David A . DeNunzio was Head of Private Equity of CS in 1998, 1999 , and most or all of 2000 .
122. Edward Nadel, an attorney, was elected Vice President of Merchant Capital, Inc . in
January of 2000. Throughout the period of time from January 1999 through December of 2000, h e served as Vice President and/or in-house counsel for the Legal and Compliance Department of C S and/or Private Equity of CS.
31 123. Merchant Capital, Inc. ("Merchant Capital") was established on January 28, 1994. It is and/or was incorporated in the State of Delaware . Merchant Capital is and/or was an indirec t wholly owned subsidiary of Credit Suisse First Boston Management Corporation, and has as it s parent companies CS and/or CSG . At all relevant times, David Denunzio, Allen Wheat, and Joh n
Hennessy were members of the Board of Directors of Merchant Capital, and were its sole member s until January of 2000. At all relevant times, Charles Ward was an officer and/or agent of Merchan t
Capital empowered with the authority to contract on its behalf .
124. All material commitments and capital outlays by Merchant Capital were reviewed by its Board of Directors .
125 . In July of 1998, QBB signed an employment agreement (dated June 30, 1998) wit h
CS. As part of that agreement, CS agreed to establish a venture capital fund , with QBB as its managers. Although a de. facto partnership existed between QBB and CS, a legal entity for the fund was not formed until a later time .
126. In September 1998, QBB made the first investment in a pre-IPO Issuer, registere d under a CS subsidiary, Merchant Capital, as a holding vehicle until the fund entity was established .
127. On January 1, 1999, QBB executed an "Operating Agreement of QBB Management
I, LLC." The agreement was signed by QBB . The Agreement stated in part the following :
6.3 Signing Authority of Certain Members .
Without limiting in any way the restrictions and limitations on the authority of the Members set forth in this Agreement, any contract, agreement, deed, lease, note or other document or instrument executed on behalf of the Company by any Member shall be deemed to have been duly executed; no other Member's signature shall be required in connection with the foregoing and third parties shall be entitled to rely upon eac h
32 Member's authority under the provisions of this sentence without otherwise ascertaining that the requirements of this Agreement have bee n satisfied.
128 . In January of 1999, the Credit Suisse First Boston Venture Fund I, LP (the "Ventur e
Fund") was established by execution of a "Limited Partnership Agreement" (the "Agreement" )
The Agreement was dated January 1, 1999. It was executed with the signatures of Charles Ward as an officer and/or agent of Merchant Capital . and of George Boutros as Managing Member and/o r authorized agent of QBB Management I, LLC (a Delaware LLC ). The Agreement was between
QBB Management and Merchant Capital, Inc . directly, but included specific contractual provision s relating to CS .
129. The Agreement organized the capital structure of the Venture Fund as follows :
Merchant Capital contributed 99% of the equity and was entitled to 80% of the profits, while QB B
Management I LLC contributed 1% of the equity and was entitled to 20% of the profits . The
Agreement provided for a total capital commitment to the Venture Fund of $75,000,000 .
130 . In addition, the Agreement stated the following:
1 .1 Specific Definitions. As used in this Agreement :
CSFB shall mean Credit Suisse First Boston, a Swiss Bank havin g international operations, together with its subsidiaries and Affiliates .
6.17 Special Investment Procedures to Protect Limited Partner
(a) It is acknowledged by the Partner that the Limited Partner is a regulated entity which (directly or through Affiliates) may be engaged i n
33 business activities with actual or prospective Portfolio Companies of th e Partnership .
(b) Not less than three business days prior to the closing of each Partnership investment in new Portfolio Securities (other than an investment previously authorized pursuant to this Section 6 .17), the General Partner shall provide the Limited Partner with notice (via personal delivery or facsimile) of such anticipated closing. Such notice shall include the name and principal field of business of the issuer of such Securities, the principal terms of such Securities and the number of such Securities to be acquired by the Partnership. If within two business days after such notice, the Limited Partner provides the General Partner with notice (via personal delivery or facsimile) that such investment is prohibited by this Section 6.17, the Partnership shall not consummate such investment. In the case of an excuse pursuant to Section 6 .17(c)(iii), the giving of any notice by the Limited Partner shall require the approval of the Global Head or Deputy Global Head of Corporate and Investment Banking of Credit Suisse First Boston. Any such notice shall include a reasonable description of the Limited Partner's basis for concluding that such investment is prohibited by this Section 6 .17 and, in the case of an excuse pursuant to Section 6 .17(c)(iii), such notice shall state that the approval required pursuant to the preceding sentence has been obtained. If the Limited Partner does not provide such notice in such manner, such investment shall be deemed to have been authorized pursuant to this Section 6.17.
(c) An investment shall be prohibited by this Section 6 .17 only if such investment would :
(i) Cause the Limited Partner or CSFB or an Affiliate thereof to be i n violation of the Bank Holding Company Act or any other legal or regulatory regime to which the Limited Partner or CSFB is subject, the 34 consequences of which violation would be material to the Limited Partner or CSFB and which violation cannot reasonably be avoided ;
(ii) Subject the Limited Partner or CSFB or an Affiliate thereof to ne w or additional legal or regulatory requirements compliance with which would constitute a material burden that cannot reasonably by avoided ; or
(iii) Legally or practically preclude or otherwise cause any adverse effect on the ability of the Limited Partner, CSFB or an Affiliate thereof to engage in activities in the ordinary course of its business, including, but not limited to, the inability or diminished ability of such Person to trade the Securities of, write research on, or otherwise deal with or in the Securities of a Portfolio Company that is the subject of the proposed investment or any other Person, provided that the adverse impact associated with such preclusion or other adverse effect is reasonably estimated by the Limited Partner to exceed $2 million in the aggregate .
7.6 Withdrawal and Removal of the General Partner; Modification of General Partner 's Authority.
(b) The General Partner may be removed by the Limited Partner, but only for Cause.
(d) In the event that none of George Boutros, William J . B. Brady, and Frank P. Quattrone are employed by the Limited Partner, CSFB or an Affiliate of the Limited Partner or CSFB, the Limited Partner may elect (via notice to the General Partner) to become co-equal with the General Partner in making management decisions for the Partnership. Following 35 such election, all decisions and actions specified in this Agreement to b e made or taken by the General Partner shall require the approval of the Limited Partner as well as the General Partner.
131 . On June 3, 1999, QBB Management I, LLC . filed with the state of Delaware as a partnership .
132 . On June 3, 1999, the Venture Fund filed as a partnership with the state of Delaware .
Its general partner is QBB Management I, LLC (QBB are the members) and its sole limited partner is Merchant Capital, Inc .
133 . Although QBB was responsible for contributing 1% of the capital for the Ventur e
Fund with Merchant Capital contributing the remaining 99%, Merchant Capital actually funde d each investment in its entirety through August 2000 by loaning QBB its 1% portion of the contribution. Northpoint Partnership Management and CSFB Product Control each maintained a schedule and record of such payments .
134. Beginning in the fall of 1999, CS (or one of its wholly-owned subsidiaries) created several Limited Liability Companies through which Technology Group employees could share i n the investments held by the Venture Fund of those companies about to engage in an IPO . Each of the LLCs was established to hold only the security of the company about to launch its IPO.
Employees paid the Venture Fund for a portion of the Fund's securities and, in exchange, th e
Venture Fund transferred a percentage of its holdings in that particular investment to the employe e
LLC . The Funds were paid directly to Merchant Capital since the Venture Fund was not ye t maintaining a separate accounting.
36 135 . Several of the above described LLCs were formed: including EMachines Equity
Investors, LLC. The table below details pertinent information regarding the EMachines LLC.
Venture Fund Date LLC Date Entity Title Stock type Initial Entity Employees IPO Date Investment Date Established Subscribed
EMachines Equity Series A 8/18/1999 10/14/1999 10/15/1999 3/24/2000 Investors, LL C
136. In January of 2000, the Board of Directors of Merchant Capital Inc. adopted changes
to its corporation by unanimous written consent through a signed resolution entitled "Written
Consent of Board of Directors." At the time of that writing, and for all or some part of the tim e
period prior to the writing, which writing began with the employment of Frank Quattrone, Willia m
("Bill") Brady, and George Boutros, the Board of Directors of Merchant Capital consisted entirel y
of the same three members : David Denunzio, Allen Wheat, and John Hennessy .
137. Merchant Capital expanded the number of Directors of the company to seven, and appointed as new directors Mark Patterson, Richard Thornburgh, Charles Ward, and Fran k
Quattrone to serve with the three existing directors . This was significant because, inter alia,
Quattrone was promoted to a position of authority over the CSG and CSFB subsidiary whic h
funded his Technology Group's pre-IPO venture investing activity and this promotion placed hi m alongside executives and/or board members of CSFB and CSG in making decisions for that entity.
In addition, Edward S. Nadel was elected to the office of Vice President of the Company.
138. In addition, in that written consent, the Directors stated--
37 WHEREAS, the Company intends to form one or more funds to make investments related to the Technology Group of Credit Suisse First Boston (the "Tech Fund") for the purpose of providing investment opportunities to certain employees of the Credit Suisse First Boston business unit of Credit Suisse First Boston . . . .
RESOLVED , that the appointment of the Company as the General Pa rtner, with a general partnership interest in each of the Employee Funds, is hereby approved . . . .
RESOLVED, that a special sub-committee of the Board of Directors of the Company (the "Technology Sub-Commi ttee"), consisting of Frank Quattrone, Richard Thornburgh, and Charles Ward be established for the purpose of managing the Tech Fund.
139. In following through its passed resolutions, as described immediately above,
Merchant Capital established in early 2000 two larger funds to allow employees of CS and/or
CSFBC to invest in Venture Fund securities that were not previously offered . Credit Suisse First
Boston Technology Group Fund I, LP ("Tech Fund I") was established January 7, 2000 and allowed
employees to participate in investments made in 1998 and 1999 . Credit Suisse First Boston
Technology Group Fund II, LP ("Tech Fund IP") was established March 22, 2000 and encompassed all investments made in 2000 . The two funds closed their initial funding (the date employees subscribed) on May 3, 2000.
140. Merchant Capital was the sole general partner of both Tech Fund I and Tech Fund
II, while the limited partners for each entity were subscribing employees from the Technology
Group.
141 . Like the employee LLCs, Tech Fund I purchased from the Venture Fund a percentage of the investments made by the Fund.
38 142. Investments initiated in 2000 were held in a holding entity, CSFB Technolog y
Holdings 2000, LLC, which was composed of the following members : Venture Fund , Tech Fund II, and EMA Partners Fund 2000, L .P . CSFB Technology Holdings 2000, LLC was established Jul y
28 of 2000, filed with the state of Delaware on July 31 of 2000.
143 . In addition to the investment by Tech Fund II in shares of Multilink as described immediately above, additional shares of Series B stock of Multilink were also held by the Venture
Fund.
144. Upon information and belief, CSFBC and/or CS/CSG invested additional monies i n the Issuers, with the intent of participating in the profits reaped by the fraud scheme .
ISSUERS' MOTIVE
145 . Each Issuer had a strong interest in having its stock price trade dramatically higher than the IPO offering price. Issuers believed that the IPO pop would attract additional buying demand by other investors that would not otherwise have occurred . Additionally, this perception of large economic returns would increase the amount of publicity afforded to the Issuer from its IPO.
Further, the increase in trading price increased each Issuer's market capitalization .
146. Each Issuer also had a direct financial interest in influencing the stock price so i t would appreciate post-IPO as much as possible . This was for several reasons, including but no t limited to: (1) each Issuer's stock would be more attractive to potential purchasers in any futur e stock offerings by that Issuer because, in part, the rise in the Issuer's stock price from the IPO woul d be suggestive of further stock price rises for new purchasers, (2) any future sales of stock by the
Issuer to the public at a higher stock price would raise money at a higher dollar-for-equity rate than had been garnered in the IPO, and (3) a higher stock price for the Issuer would be advantageous in seeking acquisition or merger opportunities with other companies .
39 147. Issuer Individuals also had a direct financial incentive in having the stock price appreciate as much as possible after the IPO because they owned stock in the Issuer, and a higher stock price directly increased their personal wealth. In addition, a "lockup agreement" made with
CSFBC in connection with the IPO of each Issuer prevented the Issuer Individuals from selling their shares of the Issuer for a period of time after the IPO date. It was, thus, in their best interest for the
Issuer's stock price to continue to rise post-IPO, at least until such time as they could sell their shares and realize profits . Moreover, upon information and belief, each of the Issuer Individuals received compensation from the Issuer that was linked to the performance of the stock price .
148. CSFBC and the Technology Group represented to each Issuer that a higher stock price, post-IPO, would be advantageous in effectuating further sales of the Issuer's stock in so- called "Piggyback Offerings." CSFBC and the Technology Group also represented to Issuer
Individuals that they would be able to shorten the period of time that they were required to hold their existing stock in the Issuer (as required by the "lockup agreement"), and participate as sellers in these Piggyback Offerings of Issuer's stock .
149 . As The Wall Street Journal reported on February 17, 2000, CSFB used "piggyback" transactions to accelerate corporate insider's financial gains from public offerings :
Corporate executives are supposed to be bound for a time before they can cash in on the price run-ups in their companies' IPOs . But now, some executives have been given a key to indirectly open those lockup agreements .
The secret lies not just in the typical `follow on' sale to an initial public offering - that is, additional sales of new stock by the company . Instead, the trendy maneuver is a hybrid stock offering dubbed a piggyback offering.
40 It works like this : Before the expiration of the traditional lockup period that keeps corporate executives and other insiders from selling, the company returns to the market with a new sale of stock that includes both new shares from the company and those held by the insiders .
In the past, insiders - including venture capitalist and other founding investors-would have had to wait at least six months to sell any of their shares after an IPO . With the piggybacks, they can unload a portion of their holdings in as little as 90 days .
Some of Wall Street's biggest firms, which once rigidly held new companies to lockup agreements, have eased up . . . Credit Suisse Group's Credit Suisse First Boston . . . are among the firms that have led piggyback deals so far this year.
ISSUERS' OPPORTUNITY
150. It is unusual even among employees working for the same investment bank that investment bankers would have direct influence over, and be able to explicitly conspire with, the research analysts.
151 . As reported in Bloomberg News on May 3, 2001 :
"Normally, there's a sort of dotted-line relationship between analysts and investment banking," said Samuel Hayes, a professor of investment banking at Harvard Business School . "In this case, Frank Quattrone had total supervision of these people . It was a doomed relationship ."
152 . The Technology Group and CSFBC presented to each Issuer an unusual opportunity
(as described above) to manipulate upward the price of the Issuer's stock at the IPO using a discounting method, and, post-IPO, through the dissemination of false financial expectations,
41 including the publication of misleading equity research and by conditioning the market (a s described. above in paragraphs 1 and 2) .
ISSUERS' ACTUAL KNOWLEDGE (SCIENTER)
153 . Each Issuer had actual knowledge of the fraudulently understated offering price because, as stated above in paragraphs 88-116, and incorporated herein, each Issuer had discussion s with the Technology Group regarding the pricing of the Issuer's stock for the IPO. In conjunction with these pricing discussions, each Issuer received from the Technology Group summary pages as described above. These summary pages included the Technology Group's analysis of the Issuer .
This analysis showed the fair valuation of the Issuer 's company, the relative valuations of comparable public companies, and a range of potential IPO prices representing alternate valuations for the Issuer's company.
154 . Each Issuer was explicitly aware that the final pricing determination of the Issuer' s stock by CSFBC at the IPO date was based on this fraudulently understated price range because th e purpose of the discussions was to decide on the Issuer's pricing.
155 . In addition, each Issuer also had actual knowledge that the forecasts of the Issuer' s future revenues (that were to be disseminated and published) were discounted substantially belo w what the Issuer's and CSFCB' s actual expectations were of the Issuer's future revenues .
156 . Each Issuer had actual knowledge about the discounting of revenue forecast s because the Technology Group had explained to each Issuer , in language identical or similar to that found in the presentation referred to in paragraph 103 above, the purpose and strategy of discounting forecasted revenues in conjunction with the IPO.
42 157 . Furthermore, each Issuer had delivered to the Technology Group's investmen t bankers, as described above in paragraph 104, the Issuer's projected income statement, showing th e
Issuer's actual expected revenue projections .
158 . Each Issuer subsequently received from the Technology Group's investment bankers, as described above in paragraph 109, a new projected income statement for the Issuer that contained the fraudulently understated revenue projections.
159. And further, prior to the IPO, bankers from the Technology Group and analysts from the Technology Research Team jointly met with each Issuer, as described above. At these meetings, the bankers and analysts conducted due diligence and review of a final version of eac h
Issuer's discounted financial projections and/or the financial forecast by the Technology Researc h
Team based on the discounted financial projections . These final meetings were documented i n
CSFBC's internal EVC Memos and also in CSFBC's internal IBC Memos.
160. Each Issuer also received from the Technology Group a copy of its projected income statement, which included the fraudulent financial projections . The income statement was prepared by the analysts of the Technology Research Team for use both in selling the IPO by CSFBC and also for post-IPO research reports to be issued by the Technology Research Team .
161 . The Sales Memo was to be used by CSFBC prior to the IPO to assist its sales force in selling the Issuer's IPO. The Sales Memo included a projected income statement for the Issuer , which contained the fraudulent financial projections .
162. Each Issuer received a copy of the research reports published by the analysts of the
Technology Research Team after the IPO . These reports included a projected income statement fo r the Issuer, with discounted financial projections .
43 MISTATEMENTS AND OMISSIONS IN UNDERWRITER'S SALES MEM O
163 . CSFBC's Sales Memo contained statements regarding the fraudulent understating o f each Issuer's IPO offering price, or offering price range . The Sales Memo was the basis for
CSFBC's sales pitches to potential buyers of Issuers' stock . . These statements are described with particularity for each Issuer in Exhibit E below .
164 . These statements omitted, however, to state the material fact that the discounting o f each Issuer's offering price, or offering price range, was actually greater than was indicated in th e
Sales Memo. This is because the discounting as described in the Sales Memo was based on a comparison of stock prices to estimated revenues (typically called "revenue multiples"), yet the fac t that the estimated future revenues of the Issuer had been additionally discounted was not disclosed .
165. CSFBC was required to disclose its fraudulent understating of Issuer's estimated revenues because the omission made the statements regarding the discounting of each Issuer's IP O offering price, or offering price range, misleading by significantly understating the actual discount presented in the Sales Memo.
166. Additionally, CSFBC 's Sales Memo contained statements regarding the forecaste d revenues of each Issuer, including a projected income statement for each Issuer . These statements are described with particularity for each Issuer in Exhibit E below .
167. CSFCB omitted to state the material fact that the Issuer-forecasted quarterly and annual revenues had been fraudulently understated to a substantially lower level than the actua l revenues expected by the Issuer , CSFBC, and the Technology Group (including the research analysts).
168. The material fact about the additional discounting of each Issuer's forecaste d revenues was a necessary disclosure. Without it, the statements in the Sales Memo regarding th e
44 forecasted revenues of each Issuer were misleading because they significantly understated the actua l amounts of revenues that were expected to be earned by each Issuer .
169 . Further, CSFBC' s Sales Memo contained statements for inducing Investors to purchase Issuer's stock on the proposition that Issuer was going to experience strong and/or increasing revenue growth in their future quarterly revenues . In some instances, theses statement s indicated that the revenue estimates were purposely under-estimated or conservative, but failed t o disclose by how much .
170. These statements omitted the material fact that the revenue estimates had bee n fraudulently understated to a substantially lower level than the actual revenues expected by th e
Issuer, CSFBC, and the Technology Group (including the research analysts), and thus any "upside surprise" that occurred as a result was at least partly fictional and consequently revenue growth wa s not as strong, or increasing as fast, as it appeared to be .
171 . The misstatements and omissions in the Sales Memos, as described above, were made with CSFBC' s actual knowledge.
172 . The misstatements and omissions in the Sales Memos, as described above, were made with each Issuer's actual knowledge .
173. The statutory safe harbor provided for forward-looking statements under ce rtain circumstances does not apply to any of the allegedly false statements pleaded herein regardin g
CSFBC's Sales Memo because those statements were made in connection with an initial public offering of stock, and such statements are excepted under 15 U.S.C. § 78u-5(b) .
174 . The "Bespeaks Caution " doctrine does not apply to the allegedly false statements pleaded herein. The false statements substantially affected the "total mix" of information provide d to investors, and there were no meaningful reasonably-specific cautionary statements that identified 45 important factors that could cause actual results to differ materially from those in the purportedly forward-looking statements ; in addition, the particular speaker knew that the particular forward- looking statement was false, and/or the forward-looking statement was authorized and/or approved by an executive officer of CSFBC and/or of the Issuer company who knew that those statement s were false when made .
MISTATEMENTS AND OMISSIONS IN EACH ISSUER'S PROSPECTU S
175. Each Issuer's IPO Prospectus contained false statements listing p rincipal factors considered in determining the public offering price . These statements are described with particularity for each Issuer in Exhibit C .
176. These statements omitted to state the material fact that that CSFBC, the Technology
Group and each Issuer had knowingly established the proposed fraudulently understated offerin g price range (and consequently the public offering price) at a deep discount compared to CSFBC's , the Technology Group's and the Issuer' s true belief of the Issuer's actual value .
177. Defendants were required to disclose their fraudulent understanding of the offerin g price, because that fact was material . Without it, the statements in the Prospectus listing the principal factors considered in determining the public offering price were misleading because the y seriously misrepresented the actual process used to determine each Issuer's offering price .
178 . In addition, each Issuer's Prospectus omitted to state the material fact that thi s discounting had been communicated to select members of the investing public by CSFBC' s sales staff to create interest in, and subsequently sell the Issuer's IPO .
179. The information about this should have been disclosed to members of the investin g public. The information was material to the price of the security and by omitting to disclose it in th e
46 Prospectus, investors who relied solely on the statements in the Prospectus (regarding the principal factors considered in determining the public offering price) were defrauded .
180. CSFBC made the misstatements and omissions in each Issuer's IPO Prospectus, a s described above, with actual knowledge .
181 . The Issuers made the misstatements and omissions in each Issuer's IPO Prospectus, as described above, with actual knowledge .
182 . The statutory safe harbor provided for forward-looking statements under certai n circumstances does not apply to any of the allegedly false statements pleaded herein regarding the
Issuers' prospectuses . To the extent, however, that there were any false forward-looking statements , the statutory safe harbor does not apply to any of the allegedly false statements pleaded herei n regarding Issuer's Prospectus because those statements were made in connection with an initia l public offering of stock, and such statements are excepted under 15 U .S.C. § 78u-5(b) of the statute .
183 . The "Bespeaks Caution" doctrine does not apply to the false statements allege d herein. Those statements substantially altered the "total mix" of information provided to investors , and there were no meaningful, reasonably-specific cautionary statements that identified importan t factors that could cause actual results to differ materially from those in the purportedly forward- looking statements ; in addition, the particular speakers knew that the particular forward-looking statements were false, and/or the forward-looking statements were authorized and/or approved b y an executive officer of CSFBC and/or of the Issuer company who knew that those statements were false when made .
47 MISTATEMENTS AND OMISSIONS IN CSFBC'S RESEARCH REPORT S
184. CSFBC published research reports for each Issuer that contained statement s discussing the revenues of each Issuer, including a projected income statement for each Issuer.
These statements are described with particularity for each Issuer in Exhibit D below .
185. These statements failed to reveal, however, the material fact that the forecaste d quarterly and annual revenues had been artificially discounted to a substantially lower level than th e actual revenues expected by the Issuer and CSFBC, ( including its research analysts).
186. Defendants were required to disclose artificial discounting of each Issuer's revenue s because those revenues were a material fact. Without such disclosures, the statements in th e research reports discussing the forecasted revenues (and the projected income statement) of eac h
Issuer were misleading since those statements purport to accurately present the objective beliefs o f its authors. The authors were in fact engaging in a fraudulent scheme to purposely understate th e actual revenues expected to be earned by each Issuer . Investors who relied in good faith upon th e veracity of these forecasts were duped into expecting each Issuer to earn lower revenues than wer e actually expected .
187 . Further, CSFBC made statements within these same research reports about the strong and/or increasing revenue growth of Issuer, as well as statements that the revenue estimate s for Issuer might be under-estimated, or overly conservative, or likely to be beaten, or susceptible t o an "upside surprise," or some other similar statement suggesting that the revenue estimates were to o low. These statements were misleading because the Defendants knew in fact that the estimates were too low because they had been discounted for the very purpose of creating an "upside surprise " artifice .
48 188 . CSFBC made the misstatements and omissions in the research repo rts, as describerd above, with actual knowledge .
189. The Issuers had actual knowledge of the misstatements and omissions made b y
CSFBC in the research reports, as describerd above .
190 . The statutory safe harbor provided for forward-looking statements under certain circumstances does not apply to any of the allegedly false statements pleaded herein regardin g
CSFBC's Research Reports . Those statements merely repeated or elaborated upon statement s previously made in connection with the initial public offering of each Issuer's stock, but they di d not alter the basis of the falsehoods . . Such statements are excepted from any protection under 1 5
U.S .C. § 78u-5(b) of the statute .
191 . Alternatively, to the degree that the statutory safe harbor applies to any forward- looking statements pleaded herein, Defendants are still liable because, the speakers knew that th e forward-looking statements were false when issued, and/or the forward-looking statements were authorized and/or approved by an executive officer of CSFBC, and/or of the Issuer company wh o knew that those statements were false when made. In addition, there were no meaningful cautionary statements identifying important factors that could cause actual results to diffe r materially from those in the purportedly forward-looking statements .
192 . The "Bespeaks Caution" doctrine does not apply to the false statements allege d herein, because those statements substantially affected the "total mix" of information provided t o investors, and there were no meaningful reasonably-specific cautionary statements that identified important factors that could cause actual results to differ materially from those in the purportedl y forward-looking statements . In addition, the speakers knew that the forward-looking statement s were false, and/or the forward-looking statements were authorized and/or approved by an executiv e
49 officer of CSFBC and/or of the Issuer company, who knew that those statements were false whe n made.
FRAUDULENT SCHEME AND DECEITFUL COURSE OF BUSINES S
193 . The fraudulent misstatements and omissions described in paragraphs 163-192 above and incorporated herein were individual components of the Conspirators' larger fraudulent schem e described above in paragraphs 1-3 above, and incorporated herein .
194. CSFBC, as the center and nexus of the conspiracy, engaged in this fraudulent scheme in its regular course of business, including the development of standardized practices an d models to assist their scheme .
195 . CSFBC repeated this fraudulent scheme with each new Issuer 's IPO performed by its Technology Group . By virtue of its repetition, this fraudulent scheme became a deceitful cours e of business for CSFBC .
MATERIALITY OF FRAUD
196. CSFBC made misstatements in its Sales Memo for each Issuer . CSFBC misstate d the actual process by which it determined each Issuer's IPO offering price or price range, and i t omitted the fact that the discounting it described in the Sales Memo was actually greater than wa s indicated. These statements and omissions were material because there was a substantial likelihoo d that a reasonable investor would consider the misstated and/or withheld information to b e significant since that information directly concerned the price at which the IPO was being offered .
197 . CSFBC, in each Issuer's Sales Memo, also made material misstatements and omissions regarding the Issuer's forecasted revenues. CSFBC misstated the actual revenue forecasts for each Issuer, and omitted the fact that it and the Issuer had artificially and substantially discounted their revenue forecasts for the Issuer . These misstatements and omissions were material 50 because it was substantially likely that a reasonable investor would consider the information tha t was misstated and/or withheld significant because that information directly concerned the financia l prospects of the Issuer's company, and those prospects were a material basis for determining th e price of the Issuer's stock.
198. CSFBC and each Issuer made mate rial misstatements and omissions in Issuer's IP O
Prospectus regarding the factors considered in establishing the Issuer's public offering price .
CSFBC and each Issuer omitted to disclose the fact that they had knowingly established th e proposed offering price range (and consequently the public offering price) at a substantial discoun t compared to their belief of Issuer's actual market value . These misstatements and omissions were material because it was substantially likely that a reasonable investor would consider th e information significant since that information directly concerned the price at which the stock wa s offered.
199. In conjunction with the misstatements and omissions described immediately above ,
CSFBC also omitted to disclose the fact that the discounting process had been communicated by it s sales staff to select members of the investing public to create interest in, and subsequently sell th e
Issuer's IPO. This omission was material because there was a substantial likelihood that a reasonable investor would have found this withheld information significant since it bore directly o n the price at which the IPO was offered and the prices at which the stock would trade after the IPO .
CSFBC, in the published research reports for each Issuer, made material misstatements and omissions. CSFBC misstated the forecasted revenues for each Issuer (including the projected income statement for each Issuer) and omitted the fact that these forecasts had been artificiall y discounted to a substantially lower level than the actually expected revenues . These misstatement s and omissions were material because there was a substantial likelihood that a reasonable investor
51 would consider the information significant because it directly concerned the financial prospects o f the Issuer's company, and those prospects were a material basis for determining the price ofIssuer's stock.
200. The fraudulent misstatements and omissions were individual components of the
Conspirators' larger fraudulent scheme (involving "Pop and Perform ance"). The intende d combined effect of the Conspirators' fraud was to directly affect the price of an Issuer's stock by falsely causing the stock price to jump substantially on the day of the IPO and then falsely causing i t to continue to rise and/or to sustain its growth in subsequent months . Consequently, it wa s substantially likely that a reasonable investor would consider the misstated and/or withhel d information significant since the scheme directly affected the price of the stock .
RELIANCE AND TRANSACTION CAUSATION
201 . Each Issuer and CSFBC ( as underwriter for each Issuer's IPO), had a fiduciary duty to the investing public, in connection with each Issuer's IPO . Each had a fiduciary duty to offer truthful and accurate information in the statements disseminated about the Issuer in conjunctio n with the IPO. In addition, each had a fiduciary duty to state any material fact that was necessary t o assure that the statements made were not misleading, in light of the circumstances in which the y were made. The misstatements and omissions by each Issuer and CSFBC in CSFBC' s Sales Memo breached that fiduciary duty . Plaintiffs and other members of the Class reasonably relied on th e integrity of those statements and would not have purchased the Issuer's stock at the prices they paid , or at all, if they had been aware that the market prices had been artificially and falsely inflated by
Defendants' misleading statements and purposely concealed omissions .
202 . In addition, or in the alternative, the misstatements and omissions by CSFBC and each Issuer in CSFBC's Sales were used to create a market for each Issuer's stock in its IPO .
52 Plaintiffs and the other members of the Class reasonably relied on that information to create a n accurate price for the securities in advance of their being publicly traded, and would not hav e purchased the Issuer's stock at the prices paid, or at all, had they been aware that the market price s had been artificially and falsely inflated by Defendants' misleading statements and purposely concealed omissions .
203 . Each Issuer and CSFBC (as underwriter for each Issuer's IPO), had a fiduciary duty to offer truthful and accurate information in the statements disseminated about the Issuer in conjunction with the IPO, and to not omit to state any mate rial fact necessary to make those statements made, in light of the circumstances made, not misleading. The misstatements and omissions made by each Issuer and CSFBC in the Issuer's IPO breached that fiduciary duty .
Plaintiffs and the other members of the Class reasonably relied on the integrity of those statement s and would not have purchased the Issuer's stock at the prices they paid, or at all, had they been aware that the market prices had been artificially and falsely inflated by Defendants' misleadin g statements and purposely concealed omissions.
204. In addition, or in the alternative, the misstatements and omissions made by each
Issuer and CSFBC in the Issuer's IPO were used to create a market for each Issuer's stock in it s
IPO . Plaintiffs and the other members of the Class reasonably relied on that information to create a fair price for the securities in advance of their being publicly traded, and would not have purchased
Issuer's stock at the prices they paid, or at all . if they had been aware that the market prices ha d been artificially and falsely inflated by Defendants' misleading statements and purposely concealed omissions.
205. CSFBC had a fiduciary duty to the investing public to offer truthful and accurat e information in the statements it disseminated about each Issuer, and to not omit to state any materia l
53 fact necessary to make those statements made , in light of the circumstances made, not misleading.
Likewise, each Issuer had an identical duty where it either co-authored statements with CSFBC, or was substantially entangled with CSFBC in the dissemination and/or creation of statements. The misstatements and omissions made by each Issuer and CSFBC in CSFBC 's research reports breached that fiduciary duty. Plaintiffs and the other members of the Class reasonably relied on th e integrity of those statements and would not have purchased the Issuer's stock at the prices they paid , or at all, had they been aware that the market prices had been artificially and falsely inflated b y
Defendants' misleading statements and purposely concealed omissions .
206. In addition, or in the alternative, the misstatements and omissions by CSFBC an d each Issuer in CSFBC's research reports destroyed the integrity of the market for Issuer's stock .
Plaintiffs and the other members of the Class reasonably relied on the integrity of the market fo r
Issuer's stock and would not have purchased Issuer's stock at the prices they paid, or at all, if they had been aware that the market prices had been artificially and falsely inflated by Defendants ' misleading statements and purposely concealed omissions .
LOSS CAUSATION
207. By reason of Defendants' false and misleading statements and omissions, the price of the Issuers' common stock was artificially inflated throughout the Class Period and all person s who purchased such stock during the Class Period, including Plaintiffs and the members of th e
Class, were damaged by paying artificially inflated prices .
208. During the class period, the market value of technology IPO Stocks were based o n forecasted (forward) revenues (and/or Revenue Multiples) . As stated by CSFBC in their Researc h
Reports and Sales Memos regarding Issuers' stocks :
54 [T]he market, which currently is valuing stocks based on revenu e multiples. . . (CSFBC.' Research Report: CacheFlow, Inc., 12/15/1999 )
"Like many high growth communications equipment and technology IPOs, [Issuer's] value is based on forward revenue multiples ." (CSFB Sales Memo : C'acheFlow, Inc., 11/1999)
209. During the class period, stock prices of technology IPO Stocks rose because their actual results exceeded or beat revenue forecasts . Because CSFBC and the Issuers rigged the system, the market reacted favorably to revised projections . As stated by CSFBC in their Research
Reports and Sales Memos regarding Issuers' stocks :
"We believe there is material upside to our forecasts over the next few years and are therefore relatively comfo rtable paying an outsized multiple today, for the prospect of future upside" (CSFBC Research Report : Efficient Networks, Inc., 8/9/1999)
"Reasons to Own the Stock. . . . We believe there is material upside to our forecasts over the next few years and are therefore relatively comfortable paying an outsized multiple today, for the prospect of future upside ." (CSFBC Research Report : Efficient Networks, Inc., 10/11/1999)
"Given the current trading range of the stock we would be a buyer of [Issuer] on weakness , but expect our price target could rise as the potential for revenue upside remains very strong." (CSFBC Research Report : CacheFlow, Inc ., 1211511999)
"Stock is probably slightly ahead of itself but believe news flows over the next few months will be positive and upside to revenue targets ve ry probable given strong momentum . . ." (CSFBC Research Report: Efficient Networks, Inc., 8/26/1999) 55 "We believe that potential upcoming catalysts include : - Revenue ahead of our upwardly revised expectations ." (CSFBC Research Report: Handspring Inc., 1/17/2001 )
210. During the class period, stock prices of technology IPO Stocks rose in anticipation of forecasts being exceeded by actual results . As stated by CSFBC in their Research Reports an d
Sales Memos regarding Issuers' stocks :
"Given steady price appreciation since the IPO, we believe current price levels factor in some of the near-term upside created by an aggressive ramp-up in sales . . ." (CSFBC Research Report : Handspring Inc., 7/17/2000)
211 . CSFBC and the Issuers, by means of the misstatements and omissions, and also by the general fraud, manipulated the revenue forecasts of each Issuer so that the Issuer's actual result s would continually exceed the forecasts.
212. CSFBC' s and the Issuers' manipulation of revenues, as part of their artifice and deceptive scheme, could not continue indefinitely. This was due partly to the fact that the origina l revenue forecast established and disseminated for Issuer were set at the IPO, and the discountin g was based only upon information available at the IPO . Further, as CSFBC revised its forecasts to create a spike, the revised forecasts began to approximate to actual performance until the tw o merged and there was no further room for an upside surprise .
213 . When each Issuer failed to continue the trend which had been established since th e
IPO of consecutively and sequentially posting actual revenue results that exceeded those which had been forecasted, the fraud effectively ended and purchasers of the inflated stocks were damaged .
214. Each Issuer's stock price suffered substantially from the discontinuation of thi s fictitious, and fraudulently created, trend of revenue outperformance relative to forecasts .
56 CS AND CSG AIDED AND ABETTED CSFBC'S FRAU D
215 . As detailed below and incorporated herein by reference , the CSFBC violated Section
10(b) of the Exchange Act, 15 U .S .C. Section 78j(b), and SEC Rule I Ob-5 promulgated thereunder.
This violation was independent of CS and CSG.
216. At all relevant times, CS had a direct and active relationship with QBB and also the
Technology Group . CS directly employed QBB and simultaneously employed the remainder of th e
Technology Group through CS's and CSG's wholly owned subsidiaries . In addition, the contract with
QBB provided for CS's direct, active, and continuing investment in the activities of QBB and th e
Technology Group by requiring CS to create and fund venture investment funds for (and with) QBB an d the Technology Group.
217. CS subsequently created those venture investment funds for (and with) QBB and the
Technology Group, invested substantial sums of monies (at least $75 million) in those funds, and shared the profits from those funds (by written agreement ) with QBB and the Technology Group.
218. CS conducted these venture investment fund activities with QBB and the Technolog y
Group through its wholly owned subsidiary Merchant Capital . At all relevant times, the materia l commitments and capital outlays of Merchant Capital were reviewed and/or authorized by CS an d
CSG's Board of Directors. Prior to January of 2000 , Merchant Capital's Board of Directors consiste d entirely of executive officers and board members of CS and CSG-- including Allen Wheat (th e
Chairman of the Executive Board of CS, as well as the Chief Executive Officer of CS and member o f
CSG's Executive Board), John M . Hennessy (the Chairman of Private Equity of CS and member o f
CSG's Board), and David A. DeNunzio (the Head of Private Equity of CS). In January of 2000, th e board membership was expanded to include Richard Thornburgh (the Vice Chairman of the Executiv e
Board of CS, the Chief Financial Officer of CS and CSG, and member of CSG' s Board of Directors),
Charles Ward (a member of the Executive Board of CS, and the Co-Head of Investment Banking an d
57 Private Equity for CS), and Edward Nadel (in-house consel and a member of the Legal and Compliance
Department of CS and Private Equity of CS) . At all relevant times, CS and CSG had knowledge of, directed, and authorized the activities of Merchant Capital through their common executive officers and directors on the board of Merchant Capital .
219. Although the initial funds were set up as coinvestments between CS and QBB, C S loaned QBB monies for their portion of the venture investment funds . CS authorized and allowed QBB and the Technology Group to make their first venture investment directly through one of its subsidiaries,
Merchant Capital, and CS co-mingled the stock held on behalf of QBB and CS in this subsidiary with its own stock. In addition, CS sold and/or transferred stock it owned in its own subsidiaries to the venture funds of QBB and the Technology Group . CS at all times, by virtue of contractual provision, had advance notice of the venture fund investments made by QBB and the Technology Group ; further, CS at all times had the authority and power to prevent those investments and to terminate the funds .
220 . These funds were instrumental to the Technology Group's overall fraudulent scheme, because inter alia, they allowed the Technology Group to curry favor with potential clients of its IPO services, and allowed the members of the Technology Group to profit directly from their fraudulent activities.
221 . CS and CSG had a general awareness that its role was part of an overall activity that wa s improper. Executive members and/or senior managers of CS had raised concerns about the propriety and/or legality of these employee venture funds . Instead of curtailing these activities, however, CS attempted to structure the funds to distance itself from those activities in an unsuccessful attempt to avoid liability .
222. As acknowledged by the concerns voiced by the executive officers and/or senior managers of CS (including concerns about conflicts of interest), these venture fund transactions were not part of CS or CSG's normal course of business . Prior to investing in these venture investment fund s
58 with QBB and the Technology Group, upon information and belief, CS and CSG had not engaged in business arrangements with its employees whereby CS or CSG co-invested with and/or permitted its employees (or employees of its subsidiaries), who had decision-making responsibilities regarding the underwriting of securities for corporate clients of CS (or its subsidiaries) and/or advisory relationships with corporate clients of CS (or its subsidiaries) to be direct investors in those same corporate clients .
223 . CS or CSG knew or should have known that the investments were improper, because
CS and CSG had a special duty to the investing public by virtue of their underwriting, investment advisory, and broker-dealer operations . In addition, CS and CSG knew or should have known that its continuing support and financing of QBB and the Technology Group would be relied upon by th e
investing public because CS's special duties to them included adequate supervision of these subgroups to ensure compliance with all applicable rules and regulations . To the extent that CS was silent, and failed to disclose the fraud or improper activities, it was at all times under a duty to disclose these for the reasons stated above .
224. CS knowingly and substantially assisted QBB and the Technology Goup in their fraudulent scheme. CS, despite its knowledge of impropriety, committed the following acts : (1) CS established and continued to operate the initial venture funds before alternative structures were proposed, (2) CS continued to establish and operate new venture funds utilizing the alternative structures, (3) CS appointed a member of QBB (specifically, Frank Quattrone) to the Board of its sam e subsidiary (Merchant Capital) which it used to provide capital to these venture funds, (4) CS directed its subsidiary (Merchant Capital) to continue and expand its venture fund activities with QBB and the
Technology Group, including the formation of new employee venture funds, and (5) CS created special sub-committees in its subsidiary (Merchant Capital) for the purposes of managing newly formed venture funds with the Technology Group and QBB .
59 225. These activities by the common board members of CSG and Merchant Capital represented a knowing and substantial assistance to the fraudulent activities of the Technology
Group, and were undertaken with CSG's actual knowledge or general awareness of the activities of the Technology Group . CSG, despite its knowledge of impropriety, authorized the following acts : (1 )
Merchant Capital to establish and continue to operate the initial venture funds before alte rnative structures were proposed (2) Merchant Capital to establish and operate new venture funds utilizing the alternative structures (or a variant thereof) proposed by outside counsel , (3) the appointment of a member of QBB (specifically, Frank Quattrone) to Merchant Capital's Board, (4) Merchant Capital to continue and expand its venture fund activities with QBB and the Technology Group , including the formation of new employee venture funds, and (5) Merchant Capital 's creation of special sub- committees for the purposes of managing newly formed venture funds with the Technology Group and
QBB.
226. Further, at all relevant times, QBB and the Technology Group could not have ca rried out or continued their fraudulent scheme without CS and CSG' s explicit involvement. In addition, CS and
CSG at all times had the authority and power to prevent the venture fund activities of the Technology
Group and QBB, to terminate existing venture funds with them, to prevent future investments by those venture funds , and to terminate the employment of QBB , the Technology Group collectively , and any employee of the Technology Group individually .
227 . CS and CSG are a highly regulated entities, and some of their duties extend from that status. CS and CSG were severely reckless in these duties or reckelessly disregarded them for the reasons stated above . CS and CSG's reckless conduct included ignoring the truth in the face of false representations .
60 INSIDER TRADING IN THE AFTERMARKET BY CSFB C
228. After each IPO, the Bank Defendants sold the Issuer's stock that the Bank
Defendants had purchased prior to the IPO through venture capital investments by the hedge funds established by QBB and the Technology Group, and/or through other venture capital affiliates of th e
Bank Defendants.
229. At the time that the Bank Defendants sold the Issuer stock that they had bought pre-
IPO as described above, they were in possession of material, non-public information affecting the price of the publicly traded stock .
230. The Bank Defendants were in possession of this material information both from their fiduciary role as the underwriter of each Issuer's IPO and from their complicity with eac h
Issuer in the public dissemination of fraudulent information regarding the expected financia l performance of the Issuer. The dissemination of fraudulent information included the publication of research reports by CSFBC and/or the Technology Group's research analysts that knowingly contained fraudulent information .
231 . The material information possessed by the Bank Defendants at the time of thei r stock sales included:
a. That CSFBC and the Issuer had established the initial forecasted revenues tha t would be maintained and disseminated to the public by CSFBCB' s research analysts at a substantially lower level than the actual level of expected revenues which the Issuer compan y expected to earn, and CSFBC expected the Issuer company to earn, in the respective periods, such that actual reported revenues would exceed the forecasted revenues and thus create the fiction of a n
"upside surprise."
61 b. that the Issuer company had performed better than the research analysts projections, in accordance with the scheme.
c. that these artificial upside surprises were material, and had a positive effect o n the publicly traded stock price .
d. that where multiple quarterly periods had been reported with these artificia l upside surprises, the positive effect on the publicly traded stock price had been cumulative .
e. And also, that upward estimate revisions of forward quarterly and/or annual estimates of revenues and/or earnings that had occurred in the interim period since the origina l estimates disseminated in conjunction with the IPO, or immediately after the IPO, were artificia l because the upward revisions had been pre-planned prior to the dissemination of the origina l estimates and the original revenue projections had been discounted to such an extent as to allow no t only the Issuer company to beat the initial expectations, but also to allow the analyst to make multiple upward revisions to their published revenue projections which the Issuer company coul d continue to beat sequentially .
f. that these artificial upward estimate revisions of forward quarterly and/or annual estimates of revenues an d/or earnings were material , and had a positive effect on the publicly trade d stock price .
g. that where multiple artificial upward estimate revisions of forward quarterl y and/or annual estimates of revenues and/or earnings had occurred, the positive effect on the publicl y traded stock price had been cumulative.
h. that the price at which the Underwriter was selling its Pre-IPO stock to th e public in the aftermarket was inflated by the positive effect of the artificial upside surprises and an y artificial upward estimate revisions .
62 232. The Bank Defendants sold the Issuers' stock that they had purchased pre-IPO to th e public marketplace in the aftermarket period at prices that were inflated by these materia l misrepresentations . The Bank Defendants had knowledge of these material misrepresentations, an d were complicit in them, but the fact of the misrepresentations was unknown to the public marketplace .
INSIDER TRADING IN THE FOLLOW-ON (SECONDARY) OFFERING BY THE ISSUER
233 . This subsection applies only to those Issuers who had Secondary Offerings, as identified in Exhibit B ("Secondary Offerings") below.
234 . At the time of each Issuer's Secondary Offering, the Issuer possessed (through it s executive officers and/or directors) material, non-public information affecting the price of that
Issuer's publicly traded stock.
235. The Issuers sold some of their stock in the Secondary Offering at a price that wa s inflated by these material misrepresentations. Each Issuer had knowledge of these materia l misrepresentations, and were complicit in them, but the fact of the misrepresentations was unknown to the public marketplace.
PURPOSEFUL DESTRUCTION OF EVIDENCE OF WRONGDOIN G
236. In anticipation of litigation, and to eliminate evidence of wrongdoing, members o f the Technology Group, at the direction of its senior management, purposely destroyed records, files , and other relevant evidence relating to the violations of securities laws alleged in this complaint .
237. On December 5, 2000, Quattrone circulated an e-mail within the Technology Grou p urging the destruction of documents by the Technology Group due to a pending investigation .
63 238. Despite circulation of a memo by CSFBC's counsel decrying document destruction, upon information and belief, CSFCB condoned the continued destruction of evidence . In fact, after circulation of the CSFBC December 5, 2000 memo, a copy of the memo urging destruction was taped to the Technology Group shredder, where it remained despite the memo by CSFBC' s counsel.
KNOWINGLY FALSE STATEMENTS- JOINT AND SEVERAL LIABILIT Y
239. The Defendants and each of them are jointly and severally liable for the alleged fraud, since, as discussed in the paragraphs above, each of them knowingly made misstatements an d omissions and each of them knew that the Plaintiffs and other Members of the Class were likely t o reasonably rely on them.
240. Therefore, the exception provided for in the Private Securities Litigation and Refor m
Act ("PSLRA") which maintains that parties who make knowingly false statements in connection with securities fraud are to be held jointly and severally liable for liability in connection with that fraud applies herein .
FIRST CLAIM : FOR VIOLATIONS OF SECTION 10(b) OF THE EXCHANGE ACT AND RULE 10b-5 PROMULGATED THEREUNDER BY BANK DEFENDANTS (B Y PLAINTIFFS AND CLASS MEMBERS AGAINST BANK DEFENDANTS )
241 . Plaintiffs incorporate by reference and reallege the allegations as set forth above .
242. This Count is based upon Section 10 (b) of the Exchange Act, 15 U. S.C. Section
78j(b), and Rule l0b 5 promulgated thereunder .
243. During the Class Period, the Bank Defendants, singularly and in concert, engaged i n a plan, scheme, and unlawful conspiracy and course of conduct, pursuant to which they knowingl y and/or recklessly engaged in acts, transactions, practices, and courses of business which operated a s a fraud upon Plaintiffs and other members of the Class, and made various untrue statements o f material facts and omitted to state material facts necessary in order to make the statements made not 64 misleading to Plaintiffs and other Class members . The purposes and effect of said scheme was to create the illusion of ever rising stock prices so that Bank Defendants could profit from the sale o f resulting over-priced securities owned by them, profit from increased underwriting and marke t making fees resulting from the price manipulation, and induce Plaintiffs and the members of the
Class to purchase common stock at artificially inflated prices.
244. During the Class Period, the Bank Defendants, pursuant to said plan, scheme, and unlawful conspiracy and course of conduct, knowingly and recklessly issued, caused to be issued , and participated in the issuance of false and misleading statements to the investing public whic h were contained in the various documents and releases specified herein, and failed to disclos e material facts to the investing public .
245. The Bank Defendants knew or recklessly disregarded the fact that the aforesaid acts and practices, misleading statements, and omissions would adversely affect the price of eac h
Issuer's common stock.
246. The Bank Defendants herein knew or recklessly disregarded the fact that th e aforesaid acts and practices, misleading statements, and omissions would adversely affect the abilit y to market the Issuer's common stock . The Bank Defendants, by acting as hereinabove described , did so knowingly or in such a reckless or grossly negligent manner as to constitute a deceit an d fraud upon Plaintiffs and the members of the Class .
247. The Bank Defendants are liable as direct particip ants in the wrongs complained o f herein. The Bank Defendants had a duty to promptly disseminate accurate and truthful information with respect to Issuer's operations, financial condition, and anticipated revenues so that the price o f the Issuer's common stock would be based on truthful and accurate information . The Bank
65 Defendants participated in the wrongdoing complained of in order to create and continue the illusion of Issuers' prospects for growth and increased profitability .
248. As a result of the dissemination of the aforementioned false and misleading reports , releases and financial statements, the price of each Issuer's common stock was artificially inflated throughout the Class Period . In ignorance of the purposeful scheme designed, inter alia, to create the expectation of ever rising stock prices, which was concealed by the Bank Defendants, Plaintiff s and the members of the Class purchased Issuer securities at artificially inflated prices relying upo n the integrity of the securities markets and were damaged thereby .
249. Had Plaintiffs and the members of the Class known of the materially adverse information not disclosed by the Bank Defendants, they would not have purchased the securities of
Issuer at all or, if so, not at the artificially inflated prices they did .
250. By virtue of the foregoing, the Bank Defendants each violated Section 10(b) of th e
Exchange Act and Rule I Ob- 5 promulgated thereunder .
251 . As a direct and proximate result of Bank Defendants' wrongful conduct, Plaintiffs and other members of the Class suffered damages in connection with their purchases of the Issuers ' securities during the Class period.
SECOND CLAIM : FOR VIOLATIONS OF SECTION 10(b) OF THE EXCHANGE ACT AND RULE 10b-5 PROMULGATED THEREUNDER BY ISSUER DEFENDANTS (BY PLAINTIFFS AND/OR CLASS MEMBERS AGAINST EACH ISSUER )
252. Plaintiffs incorporate by reference and reallege the allegations as set forth above .
253 . This Count is based upon Section 10(b) of the Exchange Act, 15 U.S.C . Section
78j(b), and Rule I Ob 5 promulgated thereunder .
254. During the Class Period, the Issuer Defendants, singularly and in concert, engaged i n a plan, scheme, and unlawful conspiracy and course of conduct, pursuant to which they knowingl y
66 and/or recklessly engaged in acts, transactions, practices, and courses of business which operated a s a fraud upon Plaintiffs and other members of the Class, and made various untrue statements o f material facts and omitted to state material facts necessary in order to make the statements made not misleading to Plaintiffs and other Class members . The purposes and effect of said scheme was t o create the illusion of ever rising stock prices so that Issuer Defendants could profit from the sale of resulting over-priced securities owned by them and induce Plaintiffs and the members of the Clas s to purchase common stock at artificially inflated prices.
255 . During the Class Period, the Issuer Defendants, pursuant to said plan, scheme, an d unlawful conspiracy and course of conduct, knowingly and recklessly issued, caused to be issued , and participated in the issuance of false and misleading statements to the investing public whic h were contained in the various documents and releases specified herein, and failed to disclos e material facts to the investing public .
256. The Issuer Defendants knew or recklessly disregarded the fact that the aforesaid act s and practices, misleading statements , and omissions would adversely affect the price of the Issuer' s common stock .
257. The Issuer Defendants herein knew or recklessly disregarded the fact that th e aforesaid acts and practices, misleading statements, and omissions would adversely affect the ability to market the Issuer's common stock . The Issuer Defendants, by acting as hereinabove described , did so knowingly or in such a reckless or grossly negligent manner as to constitute a deceit an d fraud upon Plaintiffs and the members of the Class.
258. The Issuer Defendants are liable as direct participants in the wrongs complained o f herein. The Issuer Defendants had a duty to promptly disseminate accurate and truthful informatio n with respect to Issuer's operations, financial condition, and revenues so that the price of the Issuer' s
67 common stock would be based on truthful and accurate information . The Issuer Individuals, because of their position of control and authority, were able to and did, directly or indirectly, contro l the content of the various financial reports, statements, and press releases of Issuer . The Issuer
Defendants participated in the wrongdoing complained of in order to create and continue the illusion of unpredictability of Issuers' prospects for revenue growth .
259. As a result of the dissemination of the aforementioned false and misleading reports, releases and financial statements, the price of the Issuer's common stock was artificially inflated throughout the Class Period. In ignorance of the purposeful scheme designed, inter alia, to create the expectation of ever rising stock prices, which was concealed by the Issuer Defendants, Plaintiffs and the members of the Class purchased Issuer securities at artificially inflated prices relying upo n the integrity of the securities markets and were damaged thereby .
260. Had Plaintiffs and the members of the Class known of the materially adverse information not disclosed by the Issuer Defendants, they would not have purchased the securities of
Issuer at all or, if so, not at the artificially inflated prices they did.
261 . By virtue of the foregoing, the Issuer Defendants each violated Section 10(b) of th e
Exchange Act and Rule I Ob-5 promulgated thereunder .
262. As a direct and proximate result of Issuer Defendants' wrongful conduct, Plaintiffs and other members of the Class suffered damages in connection with their purchases of the Issuers ' securities during the Class period.
THIRD CLAIM: FOR CSFBC'S VIOLATIONS OF SECTION 20(a) OF THE EXCHANGE AC T (BY ALL PLAINTIFFS AND CLASS MEMBERS AGAINST CSFBC ONLY )
263. Plaintiffs incorporate by reference and reallege the allegations as set forth above .
This claim for relief is based on Section 20(a) of the Exchange Act .
68 264. As alleged above, at all relevant times CSFBC employed the Technology Group a s an agent of its corporation . CSFBC, by virtue of its corporate position of control, authority , employment, and/or contract was a controlling person of the Technology Group within the meaning of Section 20(a) of the Exchange Act.
265 . At all relevant times, pursuant to its position of control, CSFBC possessed the powe r to direct, or cause the direction of, the Technology Group' s management, operations, business, and
Policies. In addition, CSFBC possessed the power to directly or indirectly control or influence th e specific corporate policy that governed the Technology Group' s management, operations, business, and Policies. As such and at all relevant times, CSFBC was a controlling person of the Technolog y
Group within Section 20(a) of the Exchange Act .
266 . In addition, CSFBC as an underwriter and/or broker and/or dealer had a duty to th e public with respect to the Technology Group. CSFBC failed in this duty by, among other things , failing to maintain adequate oversight and/or hiring and/or training standards for the Technolog y
Group. Further, CSFBC failed to adequately supervise the Technology Group, and failed to enforc e any adequate st andards which they had.
267. By reason of their position of control over the Technology Group, as alleged above ,
CSFBC is liable jointly and severally with and to the same extent as the Technology Group is liabl e to Plaintiffs and the other members of the Class for the damages which they suffered in connection with their purchases of Issuers' securities during the Class Period as a result of the wrongful conduc t alleged herein.
69 FOURTH CLAIM : FOR CS'S VIOLATIONS OF SECTION 20(a) OF THE EXCHANGE ACT (BY ALL PLAINTIFFS AND CLASS MEMBERS AGAINST CS ONLY )
268 . Plaintiffs incorporate by reference and reallege the allegations as set forth above .
This claim for relief is based on Section 20(a) of the Exchange Act.
269. As alleged above, at all relevant times CS wholly owned CSFBC and/or the
Technology Group . CS, by virtue of its ownership position of CSFBC and/or the Technolog y
Group and control, authority, employment, and/or contract was a controlling person of CSFB C and/or the Technology Group within the meaning of Section 20(a) of the Exchange Act .
270 . At all relevant times, pursuant to its position of control , CS possessed the power t o direct, or cause the direction of, CSFBC and/or the Technology Group's management, operations, business, and Policies . In addition, CS possessed the power to directly or indirectly control or influence the specific corporate policy which governed CSFBC and/or the Technology Group' s management, operations, business, and Policies . As such and at all relevant times, CS was a controlling person of CSFBC and/or the Technology Group within Section 20(a) of the Exchange
Act.
271 . In addition, CS as an investment advisor and/or broker and/or dealer had a duty t o the public with respect to CSFBC and/or the Technology Group . CS failed in this duty by, amon g other things, failing to maintain adequate oversight and/or hiring and/or training standards fo r
CSFBC and/or the Technology Group . Further, CS failed to adequately supervise CSFBC and/or the Technology Group, and failed to enforce any adequate standards which they had .
272. By reason of their position of control over CSFBC and/or the Technology Group, as alleged above, CS is liable jointly and severally with and to the same extent as CSFBC and/or th e
Technology Group is liable to Plaintiffs and the other members of the Class for the damages whic h
70 they suffered in connection with their purchases of Issuers' securities during the Class Period as a result of the wrongful conduct alleged herein.
FIFTH CLAIM: FOR CSG'S VIOLATIONS OF SECTION 20(a) OF THE EXCHANGE ACT (BY ALL PLAINTIFFS AND CLASS MEMBERS AGAINST CSG ONLY )
273 . Plaintiffs incorporate by reference and reallege the allegations as set forth above .
This claim for relief is based on Section 20(a) of the Exchange Act.
274 . As alleged above , at all relevant times CSG wholly owned CSFBC. CSG, by virtue of its ownership position of CSFBC and/or the Technology Group and control, authority , employment, and/or contract was a controlling person of CSFBC and/or the Technology Group within the meaning of Section 20(a) of the Exchange Act .
275 . At all relevant times, pursuant to its position of control, CSG possessed the power to direct, or cause the direction of, CSFBC and/or the Technology Group's management, operations , business, and Policies . In addition, CSG possessed the power to directly or indirectly control o r influence the specific corporate policy which governed CSFBC and/or the Technology Group' s management, operations, business, and Policies. As such and at all relevant times, CSG was a controlling person of CSFBC and/or the Technology Group within Section 20(a) of the Exchange
Act.
276. In addition, CSG as an investment advisor and/or broker and/or dealer had a duty to the public with respect to CSFBC and/or the Technology Group . CSG failed in this duty by, among other things, failing to maintain adequate oversight and/or hiring and/or training standards for th e
CSFBC and/or the Technology Group . Further, CSG failed to adequately supervise the Technology
Group, and failed to enforce any adequate standards which they had.
71 277. By reason of their position of control over CSFBC and/or the Technology Group, a s alleged above, CSG is liable jointly and severally with and to the same extent as CSFBC and/or th e
Technology Group is liable to Plaintiffs and the other members of the Class for the damages whic h they suffered in connection with their purchases of Issuers ' securities during the Class Period as a result of the wrongful conduct alleged herein.
SIXTH CLAIM: FOR EACH ISSUER'S VIOLATIONS OF SECTION 20(a) OF THE EXCHANGE ACT (BY ALL PLAINTIFFS AND CLASS MEMBERS AGAINST EACH ISSUER ONLY )
278. Plaintiffs incorporate by reference and reallege the allegations as set forth above .
This claim for relief is based on Section 20(a) of the Exchange Act .
279. As alleged above, at all relevant times each Issuer employed its Issuer Individuals .
Each Issuer, by virtue of its corporate position of employment, control, and authority was a controlling person of its Issuer Individuals within the meaning of Section 20(a) of the Exchang e
Act.
280. At all relevant times, pursuant to its position of control, each Issuer possessed th e power to direct, or cause the direction of, its Issuer Individuals' management, operations, business , and Policies. In addition, each Issuer possessed the power to directly or indirectly control or influence the specific corporate policy which governed its Issuer Individuals' management, operations, business, and Policies. As such and at all relevant times, each Issuer was a controlling person of its Issuer Individuals within Section 20(a) of the Exchange Act .
281 . By reason of its position of control over its Issuer Individuals, as alleged above, eac h
Issuer is liable jointly and severally with and to the same extent as its Issuer Individuals are liable to
Plaintiffs and the other members of the Class for the damages which they suffered in connectio n
72 with their purchases of each Issuer's securities during the Class Period as a result of the wrongfu l conduct alleged herein .
PRAYER FOR JUDGMENT AND RELIE F
WHEREFORE, Plaintiffs pray for judgment and relief as follows :
I . Declaring that this lawsuit is properly maintainable as a class action and certifying Plaintiffs as representatives of the Class ;
2 . Awarding compensatory damages against Defendants individually, jointly and severally in an amount not yet fully ascertained, which when determined with sufficient specificity will be alleged and proved at trial ;
3 . Prejudgment interest at the maximum rate allowable by law ;
4. Enjoining Defendants' wrongful conduct ;
5 . Awarding to Plaintiffs and the Class Members disgorgement o f
Defendants' profits and commissions ;
6. Awarding Plaintiffs their costs and disbursements and reasonable allowances for Plaintiffs' counsels' and experts', fees and expenses;
7. Awarding Plaintiffs and the Class Members restitution and rescission a s permitted by law ;
8. Punitive damages in an amount to be determined at trial ;
9. Granting such other and further relief as the Court may deem just an d proper.
73 JURY TRIAL DEMAND
Plaintiffs hereby demand a jury trial pursuant to Federal Rules of Civil Procedure
Rule 38(b) .
Dated: ( LL S
De er W. ehvnen Claudio Ried i Lehtinerz Vargas & Riedi, P .A. 7700 N. Kendall Drive, Suite, 303 Miami, Florida 3315 6 (305) 279-1166 Telephone (305) 279-1365 Facsimile [email protected]
Dated: ~~ '--q vVaA Jo G. Waits (pro bac vice admission t6 be applied for) Dunaway & Watts, L. L. P. 15 Office Park Circle, Suite 211 Post Office Box 53116 8 8inni gham, Alabama 35223 Telephone: (205) 879-2856 Facsimile: (205) 879-2882 j [email protected]
74 INDEX KEY:
For Exhibits C, D, & E "+ESTIMATES " -- Fraudulent Revenue Estimate s These statements, in both the Sales Memos and also the Research Reports, omitted to reveal the material fact that the forecasted revenues had been artificially discounted to a substantially lower level than the actual revenues expected by the Issuer, CSFBC, and the Technology Group (including the research analysts) . The material fact of the artificial discounting of the Issuer's forecasted revenues was a necessary disclosure . Without it, these statements in the research reports discussing the forecasted revenues (and the projected income statement) of each Issuer were misleading since they purport to accurately present the objective beliefs of its author(s) . The author(s) were in fact engaging in a fraudulent scheme to purposely understate the actual revenues expected to be earned by the Issuer. This fraudulent understatement of revenues complemented other statements made by them about the Issuer regarding the Issuer's prospects for strong and/or increasing revenue growth, so as to have the overall effect of creating the false appearance that Issuer was legitimately exceeding expectations, and thus result in public market being conditioned to expect "upside surprises' in Issuer's future revenue performance. These misstatements and/or omissions were made with CSFBC and the Issuer' s actual knowledge .
"+SURPRISES " -- Fraudulent Statement of Surprise These statements are fraudulent because the Technology Group (including the research analysts), CSFBC, and the Issuer Defendant fully expected actual revenues to exceed the artificially discounted estimates . The material fact that the actual expectation of the Technology Group (including the research analysts), CSFBC, and the Issuer Defendant was that the Issuer would exceed the revenue estimate was a necessary disclosure . Without it, these statements were misleading since these statements purport to accurately present the objective beliefs of its author(s) . The author(s)were in fact fully expecting that the revenue estimate would be exceeded by the actual results since they were engaging in a fraudulent scheme to purposely understate the expected revenues . These fraudulent statements of surprise complemented other statements made about an Issuer suggesting that the revenue estimates might be under-estimated, or overly conservative, or likely to be beaten, or susceptible to an "upside surprise," or some other similar statement suggesting that the revenue estimates were too low. By conditioning the market with these latter types of statements, and then having the Issuer actually beat expectations and publishing statements of surprise or confidence at the outperformance, the sum-effect was to condition the public market to expect "upside surprises' in Issuer's future revenue performance. These misstatements and/or omissions were made with CSFBC and the Issuer' s actual knowledge .
Index Key For Exhibits C, D, E Pg # I of3 "+REVISIONS " -- Fraudulent Revisions of Revenue Statemen t These statements are fraudulent because the Technology Group (including the research analysts), CSFBC, and the Issuer Defendant fully expected actual revenues to exceed the artificially discounted estimates . The statements correcting forecasted revenues based on the fraudulent "surprises" failed to disclose the material fact that the new forecasts still included a substantial artificial discounting compared to the actual revenues expected . Further, in many instances, the statements upwardly revising the forecasted revenue expectations had been pre-planned fraudulently. The material fact that the upward revisions were not the result of an unexpected event, but were rather pre-planned, and/or that the actual expectation was that the Issuer would exceed even the new revenue estimate, was a necessary disclosure . Without it, these statements were misleading since these statements purport to accurately present the objective beliefs of its author(s). The author(s) in fact fully expected that the new revenue estimate would be exceeded by the actual results since they continued to engage in a fraudulent scheme to purposely understate the expected revenues . These fraudulent statements of surprise complemented other statements made about an Issuer suggesting that the revenue estimates might be under-estimated, or overly conservative, or likely to be beaten, or susceptible to an "upside surprise," or some other similar statement suggesting that the revenue estimates were too low . By conditioning the market with these latter types of statements, and then having the Issuer actually beat expectations-only to publish statements of surprise or confidence at the outperformance-- the sum-effect was to condition the public market to expect "upside surprises' in Issuer's future revenue performance . These misstatements and/or omissions were made with CSFBC and the Issuer' s actual knowledge .
"+CAUTIONARY " -- Fraudulent Correction of Revenue Statement These were statements by an analyst about an Issuer which suggested that the revenue estimates might be under-estimated, or overly conservative, or likely to be beaten, or susceptible to an "upside surprise," or some other similar statement suggesting that the revenue estimates were too low . The material fact that the actual expectation of the Technology Group (including the research analysts), CSFBC, and the Issuer Defendant was that the Issuer would exceed the revenue estimate, as well as the material fact that the revenue estimates had been purposely, and fraudulently discounted to ensure that they would be exceeded were both necessary disclosures . Without them, these statements were misleading since these statements purported to accurately present the objective beliefs of its author(s) . The author(s)were in fact fully expecting that the revenue estimate would be exceeded by the actual results since they were engaging in a fraudulent scheme to purposely understate the expected revenues . These fraudulent statements of surprise complemented other statements made about an Issuer, as described above and incorporated herein, and had the sum-effect o f
Index Key For Exhibits C, D, E Pg#2of3 conditioning the public market to expect "upside surprises" in Issuer's future revenue performance These misstatements and/or omissions were made with CSFBC and the Issuer' s actual knowledge .
"+GROWTH" -- Fraudulent Correction of Revenue Statement These statements are fraudulent because they omitted to reveal the material fact that the forecasted revenues had been artificially discounted to a substantially lower level than the actual revenues expected by the Issuer, CSFBC, and the Technology Group (including the research analysts) . The combination of this omission with these statements had the overall effect of creating the false appearance that Issuer was legitimately exceeding expectations, and thus the public market was conditioned to expect "upside surprises" in Issuer's future revenue performance . These misstatements and/or omissions were made with CSFBC and the Issuer's actual knowledge .
"+IPO Discount " -- Fraudulent Correction of Revenue Statemen t These statements are fraudulent because, et al ., they are not fully disclosed to the public, nor were they disclosed in the prospectus for the Issuer's IPO . These statements about the discounting were made through CS and/or CSFBC's sales staff only to select members of the investing public. As a result of these select disclosures regarding the discounting, there was informational asymmetry between "in the know" buyers and other buyers . These misstatements and/or omissions were made with CSFBC and the Issuer' s actual knowledge .
"+BASIS" -- Fraudulent Correction of Revenue Statement These statements are not necessarily fraudulent ; however, they demonstrate the Defendant's true belief that the prices of Issuers' stocks were primarily influenced by the perception of Issuer's prospects for revenue growth .
Index Key For Exhibits C, D, E Pg#3of3 EXHIBIT A: Subclass Periods and IPO Dates Exhibit A: Subclass Periods and IPO Dates (Note: Subclass Periods do not include purchasers in the IPO )
s obclass IPO S~bclW Subclas ISSUER NAME TICKER Prospectus PerhA P iod keta Qd Date Be i .. Elias 1 Airspan Networks, Inc. AIRN 7/19/2000 7/20/2000 1/31/200 1 2 Bsquare Corp. BSQR 10/19/1999 12/7/2000 7/6/200 1 3 CacheFlow, Inc. CFLO 11/18/1999 12/7/2000 1/31/200 1 4 Commerce One, Inc. CMRC 7/1/1999 12/7/2000 4/4/200 1 5 Corillian Corp . CORI 4/12/2000 4/12/2000 4/24/200 1 6 Centillium Communications CTLM 5/23/2000 5/24/2000 5/11/200 1 7 e Machines Inc. EEEE 3/24/2000 3/24/2000 6/19/200 8 Efficient Networks Inc . EFNT 7/ 14/ 1999 7/15/1999 1/2/200 1 9 E.piphany Inc. EPNY 9/21/1999 12/7/2000 3/2/2001 10 Handspring Inc . HAND 6/20/2000 12/7/2000 3/27/2001 11 InterNAP Network Services Corp. INAP 9/29/1999 12/7/2000 3/5/200 1 12 Lante Corp . LNTE 2/10/2000 2/11/2000 10/3/200 13 Lightspan Partnership Inc . LSPN 2/10/2000 2/10/2000 8/16/200 14 McData Corp . MCDT 8/9/2000 8/9/2000 3/9/2001 15 New Focus Inc. NUFO 5/17/2000 12/7/2000 3/6/2001 16 Simplex Solutions Inc . SPLX 5/2/2001 5/2/2001 10/24/2001 17 Support.com Inc. SPRT 7/18/2000 7/19/2000 4/19/2001 18 Tanning Technology Corp . TANN 7/22/1999 7/23/1999 7/5/200 19 Tumbleweed Communications Corp. TMWD 8/5/1999 8/6/1999 10/18/200 EXHIBIT B : Secondary Offerings Exhibit B : Secondary Offerings
ospectus Dat~,~ for Secondary ISSUER NAi TICKER Pr U#erin Efficient Networks Inc. EFNT 2/2/2000 Tumbleweed Communications Corp. TMWD 7/26/2000 EXHIBIT C: Misstatements and Omissions in Each Issuer's Prospectus Issuer Name Airs an Networks Inc. Report Title Prospectus Author(s) Credit Suisse First Boston, Deutsche Banc Alex . Brown, Lehman Brothers, U .S. Bancorp Piper Jaffray Prospectus Date July 19, 2000 Page Number 71-72 Fraudulent Prior to this offering, there has been no public market for our common stock . The Statement initial public offering price has been determined by negotiations between us and th e representatives. The principal factors considered in determining the public offerin g price included :
• the information set forth in this prospectus and otherwise available to th e representative s • the history and the prospects for the industry in which we compete • the ability of our management • the prospects for our future earnings • the present state of our development and our current financial conditio n • the general condition of the securities markets at the time of this offerin g • the recent market prices of, and the demand for, publicly-traded common stock o f generally comparable companie s Reason Why This statement is fraudulent because it omitted to state the material fact tha t Fraudulent CSFBC and the Issuer had knowingly set the proposed offering price range (an d consequently the public offering price) at a deep discount compared to CSFBC's an d the Issuer's true belief of the Issuer's actual value . The material fact about the discounting of the Issuer's offering price range and offering price was a necessar y disclosure. Without it, the above statements are misleading because they seriousl y misrepresent the actual process used to determine each Issuer's offering price . In addition, the Prospectus omitted to state the material fact that thi s discounting had been communicated to select members of the investing public b y CSFBC, CSFB-US, or CSFBI's sales staff to create interest in, and subsequently sel l the Issuer's IPO . The information about this selective disclosure to members of th e investing public was a necessary disclosure . The information was material to the price of the security and by omitting to disclose it in the Prospectus, investors wh o relied solely on the statements in the Prospectus (regarding the principal factor s considered in determining the public offering price) were fraudulently disadvantage d vis-a-vis those investors who had received the selective disclosure .
EXHIBIT C : Misstatements and Omissions in Each Issuer 's Prospectus (Page 1 of 19) Issuer Name BS uare Report Title Prospectus Author (s) Credit Suisse First Boston, Lehman Brothers, A .G. Edwards & Sons, Inc ., Wit Capital Corporation Prospectus Date October 19, 1999 Page Number 64 Fraudulent Prior to this offering, there has been no public market for our common stock . The Statement initial public offering price was determined by negotiation between us and th e underwriters and does not reflect the market price of the common stock following th e offering. The principal factors that were considered in determining the publi c offering price include : * the information in this prospectus and otherwise available to the underwriters ; * market conditions for initial public offerings ; * the history and the prospects for the industry in which we will compete ; * the ability of our management ; * the prospects for our future earnings ; * the present state of our development and our current financial condition ; * the recent market prices of, and the demand for, publicly traded common stock o f generally comparable companies; and * the general condition of the securities markets at the time of this offering. Reason Why This statement is fraudulent because it omitted to state the material fact tha t Fraudulent CSFBC and the Issuer had knowingly set the proposed offering price range (an d consequently the public offering price) at a deep discount compared to CSFBC's an d the Issuer's true belief of the Issuer's actual value . The material fact about the discounting of the Issuer's offering price range and offering price was a necessar y disclosure. Without it, the above statements are misleading because they seriousl y misrepresent the actual process used to determine each Issuer's offering price . In addition, the Prospectus omitted to state the material fact that thi s discounting had been communicated to select members of the investing public b y CSFBC, CSFB-US, or CSFBI's sales staff to create interest in, and subsequently sel l the Issuer's IPO. The information about this selective disclosure to members of th e investing public was a necessary disclosure . The information was material to the price of the security and by omitting to disclose it in the Prospectus, investors wh o relied solely on the statements in the Prospectus (regarding the principal factor s considered in determining the public offering price) were fraudulently disadvantaged vis-a-vis those investors who had received the selective disclosure .
EXHIBIT C : Misstatements and Omissions in Each Issuer's Prospectus (Page 2 of 19) Issuer Name Cacheflow Inc. Report Title Prospectu s Author (s) Morgan Stanley Dean Witter, Credit Suisse First Boston, Dain Rausher Wessel s Prospectus Date November 18, 199 9 Page Number 15 Fraudulent Prior to this offering, you could not buy or sell our common stoc k Statement publicly . An active public market for our common stock may not develop or b e sustained after this offering . The initial public offering price was negotiated and determined with the representatives of the underwriters based on several factors . This price may vary from the market price of the common stock after this offering . The market price of the common stock may fluctuate significantly in response to th e following factors : variations in our quarterly operating results ; changes in financial estimates or investment recommendations b y securities analysts ; changes in market valuations of Internet-related and networkin g companies ; announcements by us or our competitors of significant contracts , acquisitions, strategic partnerships, joint ventures or capita l commitments ; loss of a major customer ; additions or departures of key personnel ; and fluctuations in stock market prices and volumes. Reason Why This statement is fraudulent because it omitted to state the material fact tha t Fraudulent CSFBC and the Issuer had knowingly set the proposed offering price range (an d consequently the public offering price) at a deep discount compared to CSFBC's an d the Issuer's true belief of the Issuer's actual value . The material fact about the discounting of the Issuer's offering price range and offering price was a necessar y disclosure. Without it, the above statements are misleading because they seriousl y misrepresent the actual process used to determine each Issuer's offering price . In addition, the Prospectus omitted to state the material fact that thi s discounting had been communicated to select members of the investing public b y CSFBC, CSFB-US, or CSFBI's sales staff to create interest in, and subsequently sel l the Issuer's IPO . The information about this selective disclosure to members of th e investing public was a necessary disclosure . The information was material to the price of the security and by omitting to disclose it in the Prospectus, investors who relied solely on the statements in the Prospectus (regarding the principal factor s considered in determining the public offering price) were fraudulently disadvantaged vis-a-vis those investors who had received the selective disclosure .
EXHIBIT C: Misstatements and Omissions in Each Issuer's Prospectus (Page 3 of 19) Issuer Name Commerce One Inc . Report Title Prospectus Author(s) Credit Suisse First Boston, Donaldson, Lufkin & Jenrette, U .S. Bancorp Piper Jaffray Prospectus Date July 1, 199 9 Page Number 7 1 Fraudulent Prior to this offering, there has been no public market for our commo n Statement stock. The initial public offering price has been determined by negotiation betwee n the representatives and us . The principal factors considered in determining the publi c offering price included :
- the information in this prospectus and available to the representatives ; - the history and the prospects for the industry in which we will compete ; - our management's ability; - the prospects for our future earnings ; - the present state of our development and our current financial condition ; - the general condition of the securities markets at the time of this offering; and - the recent market prices of, and the demand for, publicly traded common stock o f generally comparable companies.
Reason Why This statement is fraudulent because it omitted to state the material fact tha t Fraudulent CSFBC and the Issuer had knowingly set the proposed offering price range (an d consequently the public offering price) at a deep discount compared to CSFBC's an d the Issuer's true belief of the Issuer's actual value . The material fact about the discounting of the Issuer's offering price range and offering price was a necessar y disclosure. Without it, the above statements are misleading because they seriousl y misrepresent the actual process used to determine each Issuer's offering price . In addition, the Prospectus omitted to state the material fact that thi s discounting had been communicated to select members of the investing public b y CSFBC, CSFB-US, or CSFBI's sales staff to create interest in, and subsequently sel l the Issuer's IPO . The information about this selective disclosure to members of th e investing public was a necessary disclosure . The information was material to the price of the security and by omitting to disclose it in the Prospectus, investors wh o relied solely on the statements in the Prospectus (regarding the principal factor s considered in determining the public offering price) were fraudulently disadvantage d vis-a-vis those investors who had received the selective disclosure .
EXHIBIT C : Misstatements and Omissions in Each Issuer' s Prospectus (Page 4 of 19) Issuer Name Corillian Corp. Report Title Prospectus Author(s) Credit Suisse First Boston, Chase H&Q, Donaldson, Lufkin & Jenrette, Friedma n Billings Ramse y Prospectus Date April 12, 2002 Page Number 63-64 Fraudulent Before this offering, there has been no public market for our common stock . The Statement initial public offering price was determined by negotiation between us and the underwriters and does not reflect the market price of the common stock following th e offering. The principal factors considered in determining the public offering pric e include: • the information in this prospectus and otherwise available to the underwriters ; • market conditions for initial public offerings ; • the history and the prospects for the industry in which we will compete ; • the ability of our management; • the prospects for our future earnings ; present state of our development and ou r current financial condition ; • the general condition of the securities markets at the time of this offering ; and • the recent market prices of, and the demand for, publicly traded common stock o f generally comparable companies. Reason Why This statement is fraudulent because it omitted to state the material fact tha t Fraudulent CSFBC and the Issuer had knowingly set the proposed offering price range (an d consequently the public offering price) at a deep discount compared to CSFBC's an d the Issuer's true belief of the Issuer's actual value . The material fact about the discounting of the Issuer's offering price range and offering price was a necessar y disclosure . Without it, the above statements are misleading because they seriousl y misrepresent the actual process used to determine each Issuer's offering price . In addition, the Prospectus omitted to state the material fact that thi s discounting had been communicated to select members of the investing public b y CSFBC, CSFB-US, or CSFBI's sales staff to create interest in, and subsequently sel l the Issuer's IPO . The information about this selective disclosure to members of th e investing public was a necessary disclosure . The information was material to the price of the security and by omitting to disclose it in the Prospectus, investors wh o relied solely on the statements in the Prospectus (regarding the principal factor s considered in determining the public offering price) were fraudulently disadvantaged vis-a-vis those investors who had received the selective disclosure .
EXHIBIT C: Misstatements and Omissions in Each Issuer' s Prospectus (Page 5 of 19) Issuer Name Centillium Communications, Inc . Report Title Prospectus Author(s) Credit Suisse First Boston, Robertson Stephens, Salomon Smith Barney Prospectus Date May 23, 2000 Page Number 54 Fraudulent Prior to this offering, there has been no public market for our common stock . The Statement initial public offering price will be determined by negotiation between us and th e underwriters. The principal factors to be considered in determining the publi c offering price include : * the information in this prospectus and otherwise available to the underwriters ; * the history and the prospects for the industry in which we will compete ; * the ability of our management ; * the prospects for our future earnings ; * the present state of our development and our current financial condition ; * the general condition of the securities markets at the time of this offering ; and * the recent market prices of, and the demand for, publicly traded common stock o f generally comparable companies. Reason Why This statement is fraudulent because it omitted to state the material fact tha t Fraudulent CSFBC and the Issuer had knowingly set the proposed offering price range (and consequently the public offering price) at a deep discount compared to CSFBC's an d the Issuer's true belief of the Issuer's actual value . The material fact about the discounting of the Issuer's offering price range and offering price was a necessar y disclosure . Without it, the above statements are misleading because they seriousl y misrepresent the actual process used to determine each Issuer's offering price . In addition, the Prospectus omitted to state the material fact that thi s discounting had been communicated to select members of the investing public b y CSFBC, CSFB-US, or CSFBI's sales staff to create interest in, and subsequently sel l the Issuer's IPO. The information about this selective disclosure to members of th e investing public was a necessary disclosure . The information was material to the price of the security and by omitting to disclose it in the Prospectus, investors wh o relied solely on the statements in the Prospectus (regarding the principal factor s considered in determining the public offering price) were fraudulently disadvantage d vis-a-vis those investors who had received the selective disclosure .
EXHIBIT C : Misstatements and Omissions in Each Issuer' s Prospectus (Page 6 of 19) Issuer Name eMachines Report Title Prospectus Author(s) Credit Suisse First Boston, Chase H&Q, Roberston Stephens, Salomon Smith Barney Prospectus Date March 24, 2000 Page Number 70 Fraudulent Prior to this offering, there has been no public market for our commo n Statement stock. The initial public offering price has been determined by negotiation betwee n us and the underwriters . The principal factors considered in determining the publi c offering price included : the information in this prospectus and otherwise available to th e underwriters; the history and the prospects for the industry in which we will compete ; the ability of our management; the prospects for our future earnings; the present state of our development and our current financia l condition ; the general condition of the securities markets at the time of thi s offering; and the recent market prices of, and the demand for, publicly traded common stock o f generally comparable companies . Reason Why This statement is fraudulent because it omitted to state the material fact tha t Fraudulent CSFBC and the Issuer had knowingly set the proposed offering price range (an d consequently the public offering price) at a deep discount compared to CSFBC's an d the Issuer's true belief of the Issuer's actual value . The material fact about the discounting of the Issuer's offering price range and offering price was a necessar y disclosure . Without it, the above statements are misleading because they seriousl y misrepresent the actual process used to determine each Issuer's offering price . In addition, the Prospectus omitted to state the material fact that thi s discounting had been communicated to select members of the investing public b y CSFBC, CSFB-US, or CSFBI's sales staff to create interest in, and subsequently sel l the Issuer's IPO. The information about this selective disclosure to members of th e investing public was a necessary disclosure . The information was material to the price of the security and by omitting to disclose it in the Prospectus, investors wh o relied solely on the statements in the Prospectus (regarding the principal factors considered in determining the public offering price) were fraudulently disadvantaged vis-a-vis those investors who had received the selective disclosure .
EXHIBIT C : Misstatements and Omissions in Each Issuer ' s Prospectus (Page 7 of 19) Issuer Name Efficient Networks Inc - Report Title Prospectus Author(s) Credit Suisse First Boston, BancBoston Robertson Stephens, Volpe Brown Whelan & Company Prospectus Date July 14, 1999 Page Number 68 Fraudulent Prior to this offering, there has been no public market for the common stock . The Statement initial public offering price has been determined by negotiation between us and th e representatives. The principal factors considered in determining the public offerin g price included : the information set forth in this prospectus and otherwise available t o the representatives ; the history and the prospects for the industry in which we wil l compete ; the ability of our management ; the prospects for our future earnings ; the present state of our development and our current financial condition ; the genera l condition of the securities markets at the time of this offering ; and the recent market prices of, and the demand for, publicly-traded common stock of generall y comparable companies . Reason Why This statement is fraudulent because it omitted to state the material fact tha t Fraudulent CSFBC and the Issuer had knowingly set the proposed offering price range (an d consequently the public offering price) at a deep discount compared to CSFBC's an d the Issuer's true belief of the Issuer's actual value . The material fact about the discounting of the Issuer's offering price range and offering price was a necessar y disclosure. Without it, the above statements are misleading because they seriousl y misrepresent the actual process used to determine each Issuer's offering price . In addition, the Prospectus omitted to state the material fact that thi s discounting had been communicated to select members of the investing public b y CSFBC, CSFB-US, or CSFBI's sales staff to create interest in, and subsequently sel l the Issuer's IPO . The information about this selective disclosure to members of th e investing public was a necessary disclosure . The information was material to the price of the security and by omitting to disclose it in the Prospectus, investors wh o relied solely on the statements in the Prospectus (regarding the principal factor s considered in determining the public offering price) were fraudulently disadvantaged vis-a-vis those investors who had received the selective disclosure .
EXHIBIT C: Misstatements and Omissions in Each Issuer's Prospectus (Page 8 of 19) Issuer Name E Pi han Inc . Re ort Title Prospectus Author(s) Credit Suisse First Boston, Hambrecht & Quist, Merrill Lynch & Co . Prospectus Date September 21, 1999 Page Number 68 Fraudulent Prior to the offering, there has been no public market for our commo n Statement stock . The initial public offering price for the common stock was determined b y negotiation between the representatives and us and does not reflect the market pric e of the common stock following the offering . Among the principal factors considere d in determining the initial public offering price were : - the information in this prospectus and otherwise available to th e representative s - market conditions for initial public offering s - the history of and prospects for the industry in which we wil l compet e - the ability of our managemen t - our prospects for our future earning s - the present state of our development and our current financia l condition - the recent market prices of, and the demand for, publicly traded common stock of generally comparable companies, an d - the general condition of the securities markets at the time of thi s offering Reason Why This statement is fraudulent because it omitted to state the material fact tha t Fraudulent CSFBC and the Issuer had knowingly set the proposed offering price range (an d consequently the public offering price) at a deep discount compared to CSFBC's an d the Issuer's true belief of the Issuer's actual value . The material fact about the discounting of the Issuer's offering price range and offering price was a necessar y disclosure. Without it, the above statements are misleading because they seriousl y misrepresent the actual process used to determine each Issuer's offering price . In addition, the Prospectus omitted to state the material fact that thi s discounting had been communicated to select members of the investing public b y CSFBC, CSFB-US, or CSFBI's sales staff to create interest in, and subsequently sel l the Issuer's IPO . The information about this selective disclosure to members of th e investing public was a necessary disclosure . The information was material to the price of the security and by omitting to disclose it in the Prospectus, investors who relied solely on the statements in the Prospectus (regarding the principal factor s considered in determining the public offering price) were fraudulently disadvantaged vis-a-vis those investors who had received the selective disclosure .
EXHIBIT C : Misstatements and Omissions in Each Issuer's Prospectus (Page 9 of 19) Issuer Name Handsprin g Report Title Prospectus Author(s) Credit Suisse First Boston, Merrill Lynch & Co ., Donaldson, Lufkin & Jenrette, U .S. Bancorp Piper Jaffray Prospectus Date June 20, 2000 Page Number 60 Fraudulent Prior to this offering, there has been no public market for the common stock . The Statement initial public offering price was determined by negotiation between us and th e underwriters. The principal factors considered in determining the public offerin g price include : * the information set forth in this prospectus and otherwise available to th e underwriters ; * the history and the prospects for the industry in which we will compete ; * the ability of our management ; * the prospects for our future earnings ; * the present state of our development and our current financial condition ; * the general condition of the securities markets at the time of this offering ; and * the recent market prices of, and the demand for, publicly traded common stock o f generally comparable companies. Reason Why This statement is fraudulent because it omitted to state the material fact tha t Fraudulent CSFBC and the Issuer had knowingly set the proposed offering price range (an d consequently the public offering price) at a deep discount compared to CSFBC's an d the Issuer's true belief of the Issuer's actual value . The material fact about the discounting of the Issuer's offering price range and offering price was a necessar y disclosure. Without it, the above statements are misleading because they seriousl y misrepresent the actual process used to determine each Issuer's offering price . In addition, the Prospectus omitted to state the material fact that thi s discounting had been communicated to select members of the investing public b y CSFBC, CSFB-US, or CSFBI's sales staff to create interest in, and subsequently sel l the Issuer's IPO . The information about this selective disclosure to members of th e investing public was a necessary disclosure . The information was material to the price of the security and by omitting to disclose it in the Prospectus, investors wh o relied solely on the statements in the Prospectus (regarding the principal factor s considered in determining the public offering price) were fraudulently disadvantaged vis-a-vis those investors who had received the selective disclosure .
EXHIBIT C: Misstatements and Omissions in Each Issuer's Prospectus (Page 10 of 19) Issuer Name InterNAP Network Services Corp Report Title Prospectus Author(s) MORGAN STANLEY DEAN WITTER, CREDIT SUISSE FIRST BOSTON , DONALDSON, LUFKIN & JENRETTE, HAMBRECHT & QUIST Prospectus Date September 29, 199 9 Page Number 69 Fraudulent Prior to this offering, there has been no public market for the common stock . The Statement public offering price for the shares of common stock has been determined b y negotiations between us and the representatives of the underwriters . Among th e factors considered in determining the public offering price were our record o f operations, our current financial position and future prospects and our industry i n general, the experience of our management, sales, earnings and certain of our othe r financial and operating information in recent periods, the price-earnings ratios, price - sales ratios, market prices of securities and certain financial and operatin g information of companies engaged in activities similar to ours. Reason Why This statement is fraudulent because it omitted to state the material fact tha t Fraudulent CSFBC and the Issuer had knowingly set the proposed offering price range (an d consequently the public offering price) at a deep discount compared to CSFBC's an d the Issuer's true belief of the Issuer's actual value . The material fact about the discounting of the Issuer's offering price range and offering price was a necessar y disclosure. Without it, the above statements are misleading because they seriousl y misrepresent the actual process used to determine each Issuer's offering price . In addition, the Prospectus omitted to state the material fact that thi s discounting had been communicated to select members of the investing public by CSFBC, CSFB-US, or CSFBI's sales staff to create interest in, and subsequently sel l the Issuer's IPO . The information about this selective disclosure to members of th e investing public was a necessary disclosure . The information was material to the price of the security and by omitting to disclose it in the Prospectus, investors wh o relied solely on the statements in the Prospectus (regarding the principal factor s considered in determining the public offering price) were fraudulently disadvantage d vis-a-vis those investors who had received the selective disclosure .
EXHIBIT C : Misstatements and Omissions in Each Issuer's Prospectus (Page 11 of 19) Issuer Name Lante Corporation Report Title Prospectu s Author(s) Credit Suisse First Boston, Deutsche Banc Alex . Brown, Thomas Weisel Partners LLC, Friedman Billings Ramsey Prospectus Date February 10, 2000 Page Number 60-6 1 Fraudulent Prior to this offering, there has been no public market for our common stock . The Statement initial public offering price was determined by negotiation between us and th e representatives, and may not reflect the market price for our common stock that ma y prevail following this offering. We considered, among others, the following principa l factors in determining the initial public offering price : * the information in this prospectus and otherwise available to the representatives ; * market conditions for initial public offerings ; * the history of and prospects for the industry in which we will compete ; * our past and present operations ; * our past and present earnings and current financial position ; * the ability of our management ; * our prospects for future earnings ; * the present state of our development and our current financial condition ; * the recent prices of, and the demand for, publicly traded common stock of generall y comparable companies ; and * the general condition of the securities markets at the time of this offering. Reason Why This statement is fraudulent because it omitted to state the material fact tha t Fraudulent CSFBC and the Issuer had knowingly set the proposed offering price range (an d consequently the public offering price) at a deep discount compared to CSFBC's an d the Issuer's true belief of the Issuer's actual value . The material fact about the discounting of the Issuer's offering price range and offering price was a necessar y disclosure. Without it, the above statements are misleading because they seriousl y misrepresent the actual process used to determine each Issuer's offering price . In addition, the Prospectus omitted to state the material fact that thi s discounting had been communicated to select members of the investing public b y CSFBC, CSFB-US, or CSFBI's sales staff to create interest in, and subsequently sel l the Issuer's IPO . The information about this selective disclosure to members of th e investing public was a necessary disclosure . The information was material to th e price of the security and by omitting to disclose it in the Prospectus, investors wh o relied solely on the statements in the Prospectus (regarding the principal factor s considered in determining the public offering price) were fraudulently disadvantaged vis-a-vis those investors who had received the selective disclosure .
EXHIBIT C: Misstatements and Omissions in Each Issuer's Prospectus (Page 12 of 19) Issuer Name Li hts an Partnership, Inc. Report Title Prospectus Author(s) CREDIT SUISSE FIRST BOSTON, THOMAS WEISEL PARTNERS LLC, U .S . BANCORP PIPER JAFFRA Y Prospectus Date February 10, 2000 Page Number 79 Fraudulent Prior to this offering, there has been no public market for the commo n Statement stock. The initial public offering price will be determined by negotiation between u s and the representatives . The principal factors to be considered in determining th e public offering price include the following : - the information included in this prospectus and otherwise available to th e representatives; - market conditions for initial public offerings ; - the history of, and the prospects for, the industry in which we wil l compete; - the ability of our management ; - the prospects for our future earnings ; - the present state of our development and our current financial condition ; - the general condition of the securities markets at the time of thi s offering; and - the recent market prices of, and the demand for, publicly-traded common stock o f companies that are generally comparable to us. Reason Why This statement is fraudulent because it omitted to state the material fact tha t Fraudulent CSFBC and the Issuer had knowingly set the proposed offering price range (an d consequently the public offering price) at a deep discount compared to CSFBC's an d the Issuer's true belief of the Issuer's actual value . The material fact about the discounting of the Issuer's offering price range and offering price was a necessar y disclosure. Without it, the above statements are misleading because they seriousl y misrepresent the actual process used to determine each Issuer's offering price . In addition, the Prospectus omitted to state the material fact that thi s discounting had been communicated to select members of the investing public b y CSFBC, CSFB-US, or CSFBI's sales staff to create interest in, and subsequently sel l the Issuer's IPO. The information about this selective disclosure to members of th e investing public was a necessary disclosure . The information was material to the price of the security and by omitting to disclose it in the Prospectus, investors wh o relied solely on the statements in the Prospectus (regarding the principal factor s considered in determining the public offering price) were fraudulently disadvantaged vis-a-vis those investors who had received the selective disclosure .
EXHIBIT C: Misstatements and Omissions in Each Issuer's Prospectus (Page 13 of 19) Issuer Name McData Report Title Pros ectus Author(s) Credit Suisse First Boston, Deutsche Banc Alex . Brown, Merrill Lynch & Co. Prospectus Date August 9, 2000 Page Number 84 Fraudulent Prior to this offering, there has been no public market for the Class B common stock . Statement The initial public offering price has been determined by negotiation between us and the representatives . The principal factors considered in determining the publi c offering price included : * the information set forth in this prospectus and otherwise available to th e representatives; * the history and the prospects for the industry in which we will compete ; * the ability of our management ; * the prospects for our future earnings ; * the present state of our development and our current financial condition ; * the general condition of the securities markets at the time of this offering ; and * the recent market prices of, and the demand for, publicly-traded common stock o f generally comparable companies . Reason Why This statement is fraudulent because it omitted to state the material fact tha t Fraudulent CSFBC and the Issuer had knowingly set the proposed offering price range (an d consequently the public offering price) at a deep discount compared to CSFBC's an d the Issuer's true belief of the Issuer's actual value . The material fact about the discounting of the Issuer's offering price range and offering price was a necessar y disclosure. Without it, the above statements are misleading because they seriousl y misrepresent the actual process used to determine each Issuer's offering price . In addition, the Prospectus omitted to state the material fact that thi s discounting had been communicated to select members of the investing public b y CSFBC, CSFB-US, or CSFBI's sales staff to create interest in , and subsequently sel l the Issuer's IPO . The information about this selective disclosure to members of th e investing public was a necessary disclosure . The information was material to the price of the security and by omitting to disclose it in the Prospectus, investors wh o relied solely on the statements in the Prospectus (regarding the principal factor s considered in determining the public offering price) were fraudulently disadvantaged vis-a-vis those investors who had received the selective disclosure .
EXHIBIT C : Misstatements and Omissions in Each Issuer 's Prospectus (Page 14 of 19) Issuer Name New Focus Report Title Prospectus Author(s) CREDIT SUISSE FIRST BOSTON, CHASE H&Q, U .S. BANCORP PIPE R JAFFRAY, CIBC WORLD MARKET S Prospectus Date May 17, 200 0 Page Number 1 7 Fraudulent The initial public offering price will be determined based on negotiations between u s Statement and the representatives of the underwriters, based on factors that may not b e indicative of future market performanc e Reason Why This statement is fraudulent because it omitted to state the material fact tha t Fraudulent CSFBC and the Issuer had knowingly set the proposed offering price range (an d consequently the public offering price) at a deep discount compared to CSFBC's an d the Issuer's true belief of the Issuer's actual value . The material fact about the discounting of the Issuer's offering price range and offering price was a necessar y disclosure. Without it, the above statements are misleading because they seriousl y misrepresent the actual process used to determine each Issuer's offering price . In addition, the Prospectus omitted to state the material fact that thi s discounting had been communicated to select members of the investing public by CSFBC, CSFB-US, or CSFBI's sales staff to create interest in, and subsequently sel l the Issuer's IPO . The information about this selective disclosure to members of th e investing public was a necessary disclosure . The information was material to the price of the security and by omitting to disclose it in the Prospectus, investors wh o relied solely on the statements in the Prospectus (regarding the principal factor s considered in determining the public offering price) were fraudulently disadvantage d vis-a-vis those investors who had received the selective disclosure .
EXHIBIT C: Misstatements and Omissions in Each Issuer's Prospectus (Page 15 of 19) Issuer Name Simplex Solutions Inc. Report Title Prospectus Author(s) Credit Suisse First Boston, Robertson Stephens, SG Cowen Prospectus Date May 2, 200 1 Page Number 87-8 8 Fraudulent Prior to the offering, there has been no public market for the common stock . The Statement initial public offering price for the common stock was determined by negotiatio n between us and the underwriters, and does not reflect the market price for th e common stock following the offering . The principal factors considered i n determining the initial public offering price included : * the information in this prospectus and otherwise available to the underwriters ; * market conditions for initial public offerings ; * the history of and prospects for the industry in which we will compete ; * the ability of our management ; * our prospects for future earnings ; * the present state of our development and our current financial condition ; * the recent market prices of, and the demand for, publicly traded common stock o f generally comparable companies; and * the general condition of the securities markets at the time of this offering. Reason Why This statement is fraudulent because it omitted to state the material fact tha t Fraudulent CSFBC and the Issuer had knowingly set the proposed offering price range (an d consequently the public offering price) at a deep discount compared to CSFBC's an d the Issuer's true belief of the Issuer's actual value . The material fact about the discounting of the Issuer's offering price range and offering price was a necessar y disclosure. Without it, the above statements are misleading because they seriousl y misrepresent the actual process used to determine each Issuer's offering price . In addition, the Prospectus omitted to state the material fact that thi s discounting had been communicated to select members of the investing public by CSFBC, CSFB-US, or CSFBI's sales staff to create interest in, and subsequently sel l the Issuer's IPO . The information about this selective disclosure to members of th e investing public was a necessary disclosure . The information was material to the price of the security and by omitting to disclose it in the Prospectus, investors wh o relied solely on the statements in the Prospectus (regarding the principal factor s considered in determining the public offering price) were fraudulently disadvantage d vis-a-vis those investors who had received the selective disclosure .
EXHIBIT C : Misstatements and Omissions in Each Issuer's Prospectus (Page 16 of 19) Issuer Name Support.Com Inc. Report Title Prospectus Author(s) Credit Suisse First Boston, Chase H&Q, Bear, Stearns & Co . Inc ., Wit SoundVie w Prospectus Date July 18, 2000 Page Number 79 Fraudulent Before this offering, there has been no public market for the common stock . The Statement initial public offering price was determined by negotiation between us and th e representatives. The principal factors considered in determining the public offerin g price include : the information included in this prospectus ; market conditions for initial public offerings; the history and the prospects for the industry in which we will compete ; the ability of our management ; our prospects for our future earnings; the present state of our development and our financial condition ; the general condition of the securities markets at the time of thi s offering; and the recent market prices of, and the demand for, publicly traded common stock o f generally comparable companie s Reason Why This statement is fraudulent because it omitted to state the material fact tha t Fraudulent CSFBC and the Issuer had knowingly set the proposed offering price range (an d consequently the public offering price) at a deep discount compared to CSFBC's an d the Issuer's true belief of the Issuer's actual value . The material fact about the discounting of the Issuer's offering price range and offering price was a necessar y disclosure . Without it, the above statements are misleading because they seriousl y misrepresent the actual process used to determine each Issuer's offering price . In addition, the Prospectus omitted to state the material fact that thi s discounting had been communicated to select members of the investing public by CSFBC, CSFB-US, or CSFBI's sales staff to create interest in, and subsequently sel l the Issuer's IPO . The information about this selective disclosure to members of th e investing public was a necessary disclosure . The information was material to the price of the security and by omitting to disclose it in the Prospectus, investors wh o relied solely on the statements in the Prospectus (regarding the principal factor s considered in determining the public offering price) were fraudulently disadvantage d vis-a-vis those investors who had received the selective disclosure .
EXHIBIT C: Misstatements and Omissions in Each Issuer's Prospectus (Page 17 of 19) Issuer Name Tanning Technology Corp. Report Title Prospectus Author(s) Credit Suisse First Boston, Salomon Smith Barney, CIBC World Markets , ING Barings, Adams, Harkness & Hill, Inc . Prospectus Date July 12, 199 9 Page Number 67 Fraudulent Prior to this offering, there has been no public market for our commo n Statement stock. The initial public offering price has been determined by negotiation betwee n us and the representatives, and does not reflect the market price for our common stock following this offering . Among the principal factors considered in determinin g the initial public offering price were: the information in this prospectus and otherwise available to th e representatives ; market conditions for initial public offerings ; the history of and prospects for the industry in which we will compete ; our past and present operations; our past and present earnings and current financial position ; the ability of our management; our prospects for future earnings ; the present state of our development and our current financial condition ; the recent market prices of, and the demand for, publicly traded common stock o f generally comparable companies; the general condition of the securities markets at the time of this offering ; and other relevant factors . Reason Why This statement is fraudulent because it omitted to state the material fact tha t Fraudulent CSFBC and the Issuer had knowingly set the proposed offering price range (an d consequently the public offering price) at a deep discount compared to CSFBC's an d the Issuer's true belief of the Issuer's actual value . The material fact about the discounting of the Issuer's offering price range and offering price was a necessar y disclosure. Without it, the above statements are misleading because they seriously misrepresent the actual process used to determine each Issuer's offering price . In addition, the Prospectus omitted to state the material fact that thi s discounting had been communicated to select members of the investing public b y CSFBC, CSFB-US, or CSFBI's sales staff to create interest in, and subsequently sel l the Issuer's IPO . The information about this selective disclosure to members of th e investing public was a necessary disclosure . The information was material to th e price of the security and by omitting to disclose it in the Prospectus, investors wh o relied solely on the statements in the Prospectus (regarding the principal factor s considered in determining the public offering price) were fraudulently disadvantage d vis-a-vis those investors who had received the selective disclosure .
EXHIBIT C: Misstatements and Omissions in Each Issuer 's Prospectus (Page 18 of 19) Issuer Name Tumbleweed Communication s Report Title Prospectus Author(s) Credit Suisse First Boston, Hambrecht & Quist, ING Baring s Prospectus Date August 5, 1999 Page Number 67 Fraudulent Before this offering, there has been no public market for our common stock . The Statement initial public offering price has been determined by negotiation between th e representatives and us . The principal factors considered in determining the publi c offering price included : the information in this prospectus and available to th e representatives; the history and the prospects for the industry in which we wil l compete ; our management's ability ; the prospects for our future earnings ; the present state of our development and our current financial condition ; the general condition of the securities markets at the time of this offering ; and the recent market prices of, an d the demand for, publicly traded common stock of generally comparable companies . Reason Why This statement is fraudulent because it omitted to state the material fact tha t Fraudulent CSFBC and the Issuer had knowingly set the proposed offering price range (an d consequently the public offering price) at a deep discount compared to CSFBC's and the Issuer's true belief of the Issuer's actual value . The material fact about the discounting of the Issuer's offering price range and offering price was a necessary disclosure. Without it, the above statements are misleading because they seriousl y misrepresent the actual process used to determine each Issuer's offering price . In addition, the Prospectus omitted to state the material fact that thi s discounting had been communicated to select members of the investing public b y CSFBC, CSFB-US, or CSFBI's sales staff to create interest in, and subsequently sel l the Issuer's IPO . The information about this selective disclosure to members of th e investing public was a necessary disclosure . The information was material to the price of the security and by omitting to disclose it in the Prospectus, investors wh o relied solely on the statements in the Prospectus (regarding the principal factor s considered in determining the public offering price) were fraudulently disadvantage d vis-a-vis those investors who had received the selective disclosure .
EXHIBIT C: Misstatements and Omissions in Each Issuer 's Prospectus (Page 19 of 19) EXHIBIT D : Misstatements and Omissions in CSFBC's Research Reports _ rye Airspa~workji4 Inc. - AIRN Report Title Initiating with a Buy on Airspan Network s Author(s) Marc A . Cabi, Randy Abram s Date of August 14, 2000 Statement Page Number I Fraudulent We are initiating with a Buy and revenue estimates for 00/01 of 30.5M/58.OM and EPS estimates for 00/01 of (0 .91)/(0.64) . Statement Reason Why +Estimates Fraudulent Report Title Initiating with a Buy on Airspan Network s Author(s) Marc A . Cabi, Randy Abram s Date of August 14, 2000 Statement Page Number 3 Fraudulent We see potential for the company's large pipeline to yield upside to our projections, especially for 2001 . Statement Reason Why +Cautionar y Fraudulent Report Title Initiating with a Buy on Airspan Network s Author(s) Marc A . Cabi, Randy Abrams Date of August 14, 200 0 Statement Page Number 8
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 1 of 262) Fraudulent Airspan Networks N Statement
Exhibit 2 Comparable Company Analysis Stock Disc ./Pre m. SHS Equity 5-Yr. E P FIRM VALU E Price to LTM % Ch OUT Market Gr. Rate REVENUE COO(E) C01(E ) COMPANY FYEI 8/11/00 High Low YTD (MIL) Value LTGR) CO E) C01 E Revs (1) Revs (1 )
AIRSPAN NETWORKS INC 12199 AIRN 17.44 .64% 8% NM 38 .4 $670 50.0% 31 58 21 .6x 11 .5x Reason Why +Estimates Fraudulent Re ort Title Initiating with a Buy on Airspan Network s Author(s) Marc A . Cabi, Randy Abrams Date of August 14, 2000 Statement Page Number 9 Fraudulent Airspan Networks CNEW BONN Statement
Exhibit 3 Airspan Quarterly Operating Result s In ff ousands, except per share data Jarmw Cwti&idad kcorne ent 1999 3101E ---Fiscal earn December Calendar Year Totals (Amounts in $000s) MarA JunA SepE DecE MarE JunE SepE De CE 1999A 2000E 2001 E Net Sales 5,661 6 ,662 5.000 10 ,000 11 .000 13,000 15,000 19.000 12.480 30 ,523 58,000 Reason Why +Estimates Fraudulent
Report Title Airspan unveils advanced platform. Pipeline continues to gro w Author(s) Marc A . Cabi, Randy Abram s Date of October 2, 2000 Statement
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 2 of 262) Page Number I Fraudulent Given several recent new contracts and strong backlog going into the quarter, we believe the quarter's revenue is tracking ahead of our expectation s Statement and see upside to the quarter . Reason Why +Cautionar y Fraudulent Report Title Airspan unveils advanced platform . Pipeline continues to gro w Author(s) Marc A . Cabi, Randy Abram s Date of October 2, 2000 Statement Page Number 3-4 Fraudulent Based on success securing new contracts, we also see potential for upward revisions to Statement estimates . Reason Why +Cautionar y Fraudulent Report Title Airspan unveils advanced platform . Pipeline continues to gro w Author(s) Marc A . Cabi, Randy Abram s Date of October 2, 200 0 Statement Page Number 4 Fraudulent Exhibit 2 Statement Comparable Company Analysis SDock Dlsc .,Prem. SHS Equity 5-Yr . EPS FIRM VALUE PH c* to LTM Ch OUT Market Gr . Rate REVENUE 000(E ' C01IE 1 COMPANY (FYEY 8111 . 00 High Low YTD (MI L Value LTGR COO El C01(E 1 Revs 1 Revs 1
AIRSPAN NETWORKS INC 12 .991 AJRN 17 .44 -64 ' . 8% NM 38 .6 $670 50 .0% 31 50 21 .6x 11 .5x Reason Why +Estimate s Fraudulent Report Title Airspan unveils advanced platform . Pipeline continues to gro w Author(s) Marc A . Cabi, Randy Abram s Date of October 2, 2000 Statement Page Number 5
Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 3 of 262) Fraudulent r Airspan Networks B0 9mTON Statement
Exhibit 3 Airspan Quarterly Operating Result s S In inousan ds . except per shag data iCa edticcme 1 2IO1E_° _ isca earn December Mut 2001F alondar Year Total s (Amounts in $000s ) MarA JunA SepE DeCE MarE JunE SepE DocE 1999A 2000E 2001 E Net Sales 5,661 6.862 8. 000 10 .000 11.000 13 ,000 15 ,000 19 .000 12 .480 30 .523 58 .00 0 Reason Why +Estimate s Fraudulent
Report Title Off to a Great Start Author(s) Marc A . Cabi, Randy Abrams, Tim Lon g Date of October 18, 2000 Statement Page Number 1 Fraudulent Airspan reported solid results in its first quarter as a public company . Revenues of $8 .8 million were 10% higher than our estimate . Statement Reason Why +Surprises Fraudulent
Report Title Off to a Great Start Author(s) Marc A . Cabi, Randy Abrams, Tim Lon g Date of October 18, 2000 Statement Page Number 1 Fraudulent We have improved confidence in our 2000 revenue estimate of $31 million and our 2001 revenue estimate of $58 million . Statement Reason Why +Estimate s Fraudulent
Report Title Off to a Great Start Author(s) Marc A . Cabi, Randy Abrams, Tim Lon g
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 4 of 262) Date of October 18, 200 0 Statement Page Number 1 Fraudulent We believe our 2001 estimate could be conservative if the company is successful in signing new customers . Statement Reason Why +Cautionar y Fraudulent Report Title Off to a Great Start Author(s) Marc A . Cabi, Randy Abrams, Tim Long Date of October 18, 2000 Statement Page Number 2 Fraudulent September quarter results were better than expected on all fronts . Revenues, gross margins and operating loss per share all exceeded our Statement expectations. Reason Why +Surprises Fraudulent Report Title Off to a Great Start Author(s) Marc A . Cabi, Randy Abrams, Tim Lon g Date of October 18, 2000 Statement Page Number 2 Fraudulent Revenues of $8 .8 million were 10% above our estimate . Revenues grew by 28% sequentially and by 150% on a year-over-year basis . Statement Reason Why +Surprises Fraudulent Report Title Off to a Great Start Author(s) Marc A . Cabi, Randy Abrams, Tim Lon g Date of October 18, 2000 Statement Page Number 2-3 Fraudulent We are expecting revenues to increase by 150% to $31 .3 million in 2000 and to increase by 85% to $58 million in 2001 . Statement
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 5 of 262) Reason Why +Estimates Fraudulent Report Title Off to a Great Start Author(s) Marc A. Cabi, Randy Abrams, Tim Long Date of October 18, 200 0 Statement Page Number 3 Fraudulent We believe Airspan is currently bidding on several contracts that could provide upside to our estimates . Statement Reason Why +Cautionary Fraudulent Report Title Off to a Great Start Author(s) Marc A . Cabi, Randy Abrams, Tim Long Date of October 18, 200 0 Statement Page Number 3 Fraudulent Exhibit 2 Statement Comparable Company Analysis Prks M Rawnue EPS Plan Value ! Sibs SYSTEMS COMPAWES Tkdur 10116000 L C99 C01JE) C99 CWE) C01 C99 C C61 BROADBAND WIRELESS SUPPLIERS Alnpan AIRW 7.56 290 12 31 56 (1 .37) (0.91) (0.67 17.3x 7 .1x 3.7x Reason Why +Estimate s Fraudulent
Report Title Off to a Great Start Author(s) Marc A . Cabi, Randy Abrams, Tim Lon g Date of October 18, 2000 Statement Page Number 5
Exhibit D: Misstatements and Omissions in CSFBC' s Research Reports (Page 6 of 262) Fraudulent Airspan Networks Statement
Exhibit 3 Airspan Quarterly Operating Results 4 in Mnn :ani1 nrront nor chso nata
Fiscal Year Ends Decembe r Forecast Erro r Y-o-Y Change Sequential Change & Shares in Thousands ) 03:00A. 03 :99E DIFF %CHG 03 :00A 03:99A RIFF °.CHG 03:00A 02:OOA DIFF %CH G Net Sales 3,509 5. 5 . Reason Why +~ urprnses Fraudulent Report Titl e Off to a Great Start Marc A. Cabi, Randy Abrams, Tim Long Date of October 18, 2000 Statement Page Number 6 Fraudulent Airspan Networks Statement
Exhibit 3 Airspan Quarterly Operating Results $ in thousands, opt oar spas data . rnent.19g9.2Qo1E 2000E 2001E Calendar Year Total s MarA JunA SepA DecE MarE JunE Se E DecE 1999A 2000E 2001 E 5,661 6 .862 5,801 10,000 11,000 13,000 15,000 19,000 12,480 31,324 58,00 0 Reason Why +Estimates Fraudulent
Report Title More Orders Announced Author(s) Marc A. Cabi, Randy Abrams, Tim Long Date of October 20, 200 0 Statement Pa a Number 1
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 7 of 262) Fraudulent These orders give us increased confidence in our December revenue estimate of $10 million and our 2001 revenue estimate of $58 million . Statement Reason Wh y +Estimates Fraudulent Report Title More Orders Announce d Author(s) Marc A. Cabi, Randy Abrams, Tim Long Date of October 20, 2000 Statement Page Number 1 Fraudulent Additional contracts could cause us to raise these estimates . Statement Reason Why +Cautionary Fraudulent Report Title More Orders Announce d Author(s) Marc A . Cabi, Randy Abrams, Tim Long Date of October 20, 2000 Statement Page Number 2 Fraudulent The recent orders give us increased confidence in our December revenue estimate of $10 million and our 2001 revenue estimate of $58 million . Statement Reason Why +Estimate s Fraudulent Report Title More Orders Announce d Author(s) Marc A . Cabi, Randy Abrams, Tim Long Date of October 20, 200 0 Statement Page Number 2 Fraudulent Additional contracts could cause us to raise these estimates . Statement Reason Why +Cautionary Fraudulent
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 8 of 262) Report Title More Orders Announce d Author(s) Marc A . Cabi, Randy Abrams, Tim Lon g Date of October 20, 2000 Statement Page Number 5 Fraudulent Airspan Networks ~ BONN Statement
Exhibit 3 Airspan Quarterly Operating Results $ In thousands. mpt per sham data
Fiscal Year Ends December 2000E 2001E Calendar YearTotal s (Amounts in $000s1 MarA JunA SepA DecE MarE JunE SO PE DecE 1999A 2000E 200 1 Not Sales 5,661 6.862 6 ,801 10,000 11 .000 13,000 15 ,000 19. 000 12,480 31 .324 58,00 0 Reason Why +Estimates Fraudulent 'End of AIRN
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 9 of 262) . I$su BS DARE Co . `ration - BS . Report Title Initiating coverage of Bsquare with a Buy ratin g Author(s) Michael Kwatinetz, Hans Roderich, Jake Hindelong, Peter Nurnber g
Date of November 24, 199 9 Statement Page I Number Fraudulent 2000 and 2001 revenue forecasts of $50 .9MM and $67 .1MM have significant upsid e Statement Reason Why +Estimate s Fraudulent Report Title Initiating coverage of Bsquare with a Buy ratin g Author(s) Michael Kwatinetz, Hans Roderich, Jake Hindelong, Peter Nurnber g
Date of November 24, 199 9 Statement Page 5 Number Fraudulent 2000 and 2001 revenue forecast of $50 .9MM and $67.IMM have significant upside . We're forecasting Q499 . 2000 and 2001 revenue of $10 .5MM, Statement $50.9MM and $67.IMM.This represents yr/yr growth of 45%, 30% and 32%, respectively. Reason Why +Estimate s Fraudulent Report Title Initiating coverage of Bsquare with a Buy ratin g Author(s) Michael Kwatinetz, Hans Roderich, Jake Hindelong, Peter Nurnber g
Date of November 24, 199 9 Statement Page 5 Number Fraudulent Upside is likely to be driven by greater-than anticipated revenue and gross margins . Statement
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 10 of 262) Reason Why +Cautionar y Fraudulent Report Title Initiating coverage of Bsquare with a Buy ratin g Author(s) Michael Kwatinetz, Hans Roderich, Jake Hindelong, Peter Nurnberg
Date of November 24, 1999 Statement Page 8 Number Fraudulent Statement Bsquare Summary of Quarterly Earning s Fiscal Year ended December 3 1 ($ thousands )
1998 1999E 2000E 2001E 1998 1999E 2000E 2001 E Total Revenue % Increas e March 5.49 8 .81 11 .22 15 .11 March 201 .1", 60.45% 27.4% 34 .7 % June 5.31 9.73 12 .12 16 .02 June 76.8?~. 83.3% 24.51 32 .2 % September 6 .58 10.03 13.21 17.30 September 46.0% 52.5% 31 .6% 31 .0% December 7.23 10.48 14.39 18.69 December 42 .50,. 45 .0%, 37 .3% 29 .8 % Total 24 .61 39.06 50.94 67 .13 Total 70.8% 58.7% 30 .4% 31 .8 % Reason Why +Estimates Fraudulent
Report Title Highlights from the CSFB Technology Conference : BSQUARE tracking towards our Q4 $0 .00 EPS estimate and likely to beat our $10.5MM revenue forecast Author(s) Michael Kwatinetz, Hans Roderich, Jake Hindelong, Peter Nurnberg
Date of December 2,, 199 9 Statement Page 1 Number Fraudulent Bsquare appears to be to tracking towards our Q4 $0.00 EPS estimate ; and more importantly, we expect them to beat our $10 .5MM revenue forecast Statement
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 11 of 262) Reason Why +Estimates Fraudulent Report Title Highlights from the CSFB Technology Conference : BSQUARE tracking towards our Q4 $0.00 EPS estimate and likely to beat our $10.5MM revenue forecas t Author(s) Michael Kwatinetz, Hans Roderich, Jake Hindelong, Peter Nurnber g
Date of December 2„ 1999 Statement Page 2 Number Fraudulent We expect Bsquare to beat our Q4 $10.5MM revenue forecast, due to higher-than-expected royalty and service revenue . Statement Reason Why +Estimates Fraudulent Report Title Highlights from the CSFB Technology Conference : BSQUARE tracking towards our Q4 $0.00 EPS estimate and likely to beat our $10 .5MM revenue forecas t Author(s) Michael Kwatinetz, Hans Roderich, Jake Hindelong, Peter Nurnber g
Date of December 2„ 199 9 Statement Page 2 Number Fraudulent Based on these numbers, we believe the company will come in ahead of our $10 .5MM revenue forecast. Statement Reason Why +Estimate s Fraudulent
Report Title Q499 preview: Bsquare on track to at least at least breakeven, and is likely to beat our $10 .5MM revenue forecas t Author(s) Michael Kwatinetz, Hans Roderich, Jake Hindelong, Peter Nurnber g Date of January 24, 2000 Statement Page 1 Number
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 12 of 262) Fraudulent Bsquare appears on track to at least break-even, and is likely to beat our $10 .5MM revenue forecast, up 32 % Statement Reason Why +Estimates Fraudulent Report Title Q499 preview: Bsquare on track to at least at least breakeven, and is likely to beat our $10 .5MM revenue forecas t Author (s) Michael Kwatinetz, Hans Roderich, Jake Hindelong, Peter Nurnber g Date of January 24, 200 0 Statement Page 2 Number Fraudulent We believe Bsquare is on track to at least meet our Q499 break-even, and revenue is likely to exceed our $10 .5MM revenue forecast, up 32% . Statement Reason Why +Estimates Fraudulent
Report Title Q499 preview: Bsquare on track to at least at least breakeven, and is likely to beat our S10 .5MM revenue forecas t Author(s) Michael Kwatinetz, Hans Roderich, Jake Hindelong, Peter Nurnber g Date of January 24, 200 0 Statement Page 2 Number Fraudulent Factoring in the 40-50 new design wins this quarter and total billable hours for its 225 chargeable employees (discussed in our Dec . 2 note from the Statement CSFB Annual Technology Conference), we derive potential revenue of $14-18MM . While we think it will be several quarters to get up to that ru n rate, it does imply that Bsquare is likely to come out ahead of our 10 .5MM revenue forecast . Reason Why +Estimates Fraudulent
Report Title Q499 preview: Bsquare on track to at least at least breakeven, and is likely to beat our $10 .5MM revenue forecast Author(s) Michael Kwatinetz, Hans Roderich, Jake Hindelong, Peter Nurnber g Date of January 24, 200 0 Statement Page 2 Number
Exhibit D : Misstatements and Omissions in CSFBC' s Research Reports (Page 13 of 262) Fraudulent Upside to revenue is likely to be driven by higher-than-expected design wins which result in increased services revenue . Statement Reason Why +Cautionary Fraudulent Report Title Q499 preview: Bsquare on track to at least at least breakeven, and is likely to beat our $10 .5MM revenue forecast Author(s) Michael Kwatinetz, Hans Roderich, Jake Hindelong, Peter Nurnber g Date of January 24, 2000 Statement Page 3 Number Fraudulent Statement Bsq ua re Corp . Summa ry of Quarterly Earning s YearEnding December3 l ($Millions)
1998 1999 2000E 2001 E 1998 1999 2000E 2001 E venue °,: Inc re ase March $5.49 $8 .91 $11 .22 $15 .1 1 March 201 .1% 00 .4% 27 .4% 34 .7°%. .lone $5.31 $9 .13 $12 .12 S16 .1-1 2 June 76 .8% 83 .3% 24 .5° . 32 .21 o ptembe . SC. .58 $10 .0 3 $13 .21 517 .3 Sev!ember 46 .0°.% 52 . 5% 31 .6° . 31 .0 ° December $7 .23 $10 . 48 $14 . 39 $ 18 .6 9 December 42 .5% 45 .0% 37 . 3% 29.8° % Total 524 .61 539 . 06 $50 . 94 $67 .1 3 Total 70 0 .9 % 58 .7% 3 0 .41. . 31 .@%
Reason Why I +Estimates Fraudulent
Report Title Bsquare reported higher-than-expected Q499 EPS of $0.02 on above-forecast revenue, as CE market appeared to gain momentum . We're raising our 2000 revenue and earnings forecast Author (s) Michael Kwatinetz, Hans Roderich, Jake Hindelong, Peter Nurnberg Date of January 28, 2000 Statement Page 1 Number Fraudulent We're raising our 2000 revenue and EPS forecast to $52 .9MM and $0 .07 from $50.9MM and $0 .06 Statement
Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 14 of 262) Reason Why +Revisions Fraudulent Report Title Bsquare reported higher-than-expected Q499 EPS of $0.02 on above-forecast revenue, as CE market appeared to gain momentum . We're raising our 2000 revenue and earnings forecast Author(s) Michael Kwatinetz, Hans Roderich, Jake Hindelong, Peter Nurnberg Date of January 28, 2000 Statement Page 2 Number Fraudulent Upside was driven primarily by higher than forecast revenue . We're increasing our 2000 revenue and EPS estimates to $52 .9MM and $0 .07 from Statement $50.9MM and $0 .06. Reason Why +Revisions Fraudulent Report Title Bsquare reported higher-than-expected Q499 EPS of $0.02 on above-forecast revenue, as CE market appeared to gain momentum . We're raising our 2000 revenue and earnings forecast Author(s) Michael Kwatinetz, Hans Roderich, Jake Hindelong, Peter Nurnberg Date of January 28, 2000 Statement Page 4 Number Fraudulent Bsq ua re Corp , Statement Summary ofQuarterly Earning s Year Ending December 3 1 ($Millions)
1998 1999 2000E 2001 E 1998 1999 2000E 2001 E Revenue °,:lncrease March 55 .49 $8.81 $11 .82 515 .63 Afa2h 201 .1% 60 .4% 34 .1% 32 .2 % ,Jana $5 .31 S9.73 $12 .53 $16 .56 A; r,- 76 .8% 83 .3% 28.7% 32 .2 % 4+ptembe1 56 .58 510.03 $13 .65 517 .89 ptember 46 .0% 52 .5%. 36 .1% 31 .0 % December 57 .23 $11 .36 514 .88 519 .32 December 42 .5% 57 .1% 31 .0% 29 .8 % Tota I 524 .61 .539.94 552 .88 569 .40 Total 70 .9% 62 .3°%0 32.4% 31 .2 % Reason Why +Estimates Fraudulent
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 15 of 262) Report Title Assuming Coverage w/ Buy ; Strong IQ; Raising Ests . Author(s) Erach D . Desai Date of April 28, 2000 Statement Page 2 Number Fraudulent Stronger-than-Anticipated IQ Report : Revenues of $13 .3mm vs our $11 .8mm . Statement Reason Why +Surprises Fraudulent Report Title Assuming Coverage w/ Buy ; Strong IQ ; Raising Ests . Author(s) Erach D . Desai Date of April 28, 2000 Statement Page 2 Number Fraudulent Raising Our Estimates : CYOO revenues go to $55 .Omm vs. $53.0mm Statement previously . Reason Why +Revisions Fraudulent Report Title Assuming Coverage w/ Buy ; Strong IQ ; Raising Ests . Author(s) Erach D . Desai Date of April 28, 2000 Statement Page 2 Number Fraudulent Raising Our Estimates : CY01 revenues go to $72 .0mm vs . $69.4mm previously. Statement Reason Why +Revisions Fraudulent
Report Title Expect Solid 2Q Report ; Establishing,$30 P
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 16 of 262) Author(s) Erach D . Desai, Andrew J. Singer Date of July 25, 2000 Statement Page Number Fraudulent Expect BSQUARE to report a strong 2Q with revenues of $13 .5mm (or higher). Statement Reason Why +Estimates Fraudulent
Report Title Stellar 2Q ; Rising Estimates & PT ; Reiterate Bu y Author(s) Erach D . Desai, Andrew J. Singe r Date of July 28, 2000 Statement Page 1 Number Fraudulent Stellar 2Q Report : BSQUARE reported strong revenues of $15 .7mm (+56% y/y, +18% q/q), which were about 15% higher than expectations . Statement Reason Why +Surprise s Fraudulent Report Title Stellar 2Q; Rising Estimates & PT ; Reiterate Buy Author(s) Erach D . Desai, Andrew J. Singe r Date of July 28, 2000 Statement Page 1 Number Fraudulent With sequential revenue growth anticipated for 3Q, CYOO revenues likely go to $60-$62mm (from $55 .1mm), with EPS of $0 .16-$0.19 (from $0 .11). Statement Reason Why +Revisions Fraudulent
Report Title Stellar 2Q; Raising Estimates & P T
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 17 of 262) Author(s) Erach D . Desai, Andrew J . Singer Date of July 31, 2000 Statement Page 1 Number Fraudulent BSQUARE reported strong revenues of $15 .7mm which were about 15% higher than expectations . Statement Reason Why +Surprise s Fraudulent Report Title Stellar 2Q; Raising Estimates & P T Author(s) Erach D . Desai, Andrew J . Singer Date of July 31, 2000 Statement Page 1 Number Fraudulent Raising Revenue and EPS Estimates : CYOO revenues go to $62mm (from $55 .1mm), with EPS of $0 .19 (from $0 .11). For CY01, revenues rise t o Statement $77mm, with EPS going to the $0 .22 (from $0 .14). Reason Why +Revisions Fraudulent Report Title Stellar 2Q; Raising Estimates & PT Author(s) Erach D . Desai, Andrew J . Singer Date of July 31, 200 0 Statement Page 2 Number Fraudulent Review of Stellar 2Q Report : BSQUARE reported strong revenues of $15 .7mm (+56% y/y, +18% q/q), which were about 15% higher than Statement expectations. Reason Why +Surprises Fraudulent Report Title Stellar 2Q ; Raising Estimates & PT Author(s) Erach D. Desai, Andrew J . Singer
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 18 of 262) Date of July 31, 2000 Statement Page 3 Number Fraudulent Raising Estimates: As BSQUARE continues to meaningfully exceed our expectations, we are once again raising our forward estimates . Key changes : Statement CYOO : With sequential revenue growth anticipated for 3Q, CYOO revenues go to $62mm (from $55 .1mm), with EPS of $0 .19 (from $0 .11) . CY01 : Revenues rise to $77mm (-25% growth ; from previous estimate of $72 .Omm) with EPS of $0 .22 (from $0 .14) . Reason Why +Revisions Fraudulent
Report Title 3Q Looking Solid Author(s) Erach D . Desai, Andrew J . Singe r Date of September 25, 200 0 Statement Page 1 Number Fraudulent Revenues of $16 .0-16.5mm should be modestly better than our $16 .Omm estimate. Statement Reason Why +Estimate s Fraudulent Report Title 3Q Looking Solid Author(s) Erach D . Desai, Andrew J . Singer Date of September 25, 2000 Statement Page 3 Number Fraudulent Revenues of $16 .0-$16 .5mm should be modestly better than our $16 .0mm estimate. Statement Reason Why +Estimate s Fraudulent
Report Title Strong 3Q Drives Higher Estimates ; Reiterate Bu y Author(s) Erach D . Desai, Andrew J . Singe r
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 19 of 262) Date of October 27, 2000 Statement Page 1 Number Fraudulent Strong 3Q Report : 3Q revenues of $16 .6mm (+66% y/y, +6% q/q) were above our $16 .0mm estimate . Statement Reason Why +Surprises Fraudulent Report Title Strong 3Q Drives Higher Estimates ; Reiterate Bu y Author(s) Erach D . Desai, Andrew J . Singe r Date of October 27, 2000 Statement Page 3 Number Fraudulent Strong 3Q Report : As we had previously previewed, BSQUARE reported 3Q results that were ahead of expectations . Revenues of $16 .6mrn (+66 % Statement y/y, +6% q/q) were above our $16 .Omm estimate, and better than prior guidance of 4-5% sequential growth . Reason Why +Surprises Fraudulent Report Title Strong 3Q Drives Higher Estimates ; Reiterate Bu y Author(s) Erach D . Desai, Andrew J . Singe r Date of October 27, 2000 Statement Page 4 Number Fraudulent Upside Leads to Higher Estimates : Essentially notching up revenue assumptions, as well as higher operating margins . Specifically: Statement 4Q00: Raising revenues from $17 .0mm to $17.5mm, reflecting prior management guidance of 4-6% sequential growth . Reason Why +Revisions Fraudulent Report Title Strong 3Q Drives Higher Estimates ; Reiterate Bu y Author(s) Erach D . Desai, Andrew J . Singe r Date of October 27, 2000 Statement
Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 20 of 262) Page 4 Number Fraudulent CY01 : Raising revenues from $77 .Omm to $80 .Omm, which implies a conservative Statement 26-27% y/y growth rate . Reason Why +Revision s Fraudulent Report Title Strong 3Q Drives Higher Estimates ; Reiterate Buy Author(s) Erach D . Desai , Andrew J. Singer Date of October 27, 2000 Statement Page 4 Number Fraudulent For CY02, we are modeling a 25% top-line growth rate, with growth fueled even more strongly by product revenues . We are establishing CY0 2 Statement revenue and EPS targets of $100 .0mm and $0.34, respectively. Reason Why +Estimates Fraudulent
Report Title Devices Opportunity Remains Intact; Reiterate Bu y Author(s) Erach D . Desai, Andrew J . Singe r Date of January 26, 200 1 Statement Page I Number Fraudulent Reports Solid 4Q : As previewed, BSQR reported revenues of $17.9mm (+57% y/y), vs . our $17 .5mm estimate. Statement Reason Why +Surprise s Fraudulent Report Title Devices Opportunity Remains Intact; Reiterate Buy Author(s) Erach D . Desai, Andrew J . Singe r Date of January 26, 2001 Statement
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 21 of 262) Page 1 Number Fraudulent Estimate Changes : Despite economic uncertainties, management reiterated confidence in existing conservative estimates. Our 1Q01 is unchanged . Statement CYO 1 revenues rise by $1mm and EPS is now $0 .26, vs. $0.24. CY02 revenues also rise by $1mm and EPS is now $0 .36, vs. $0.34. Reason Why +Revision s Fraudulent J 21 Report Title CSFB Tech Intra-Dail y Author(s) Joe Mano Date of April 26 . 2001 Statement Page I Number Fraudulent We are modeling total revs of $17 .5mm (+32% y/y, -2% q/q) vs . consensus of $18 .4mm. Statement Reason Why +Estimate s Fraudulent . , End - R _
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 22 of 262) . ._ . „- - :C Reflow Inc. - CFL0 - - _ - Report Title Beyond Bandwidth - Content Management is the Next Wav e Author(s) Paul J . Weinstein, CF A Date of December 15, 199 9 Statement Page 1 Number Fraudulent Our revenue/EPS estimates for FY2000/01 are $23.5/$71 .6 mm and ($0 .90)/($0 .36) . Statement Reason Why +Estimate s Fraudulent Report Title Beyond Bandwidth - Content Management is the Next Wav e Author(s) Paul J . Weinstein, CFA Date of December 15, 199 9 Statement Page 2 Number Fraudulent With the release of FQ2 results last night, our revenue and operating earning/loss projections have already been revised upwards (see Exhibit 1) , Statement illustrating both the inherent growth potential within the market and the conservative nature of our initial estimates . Reason Why +Revisions Fraudulent Report Title Beyond Bandwidth - Content Management is the Next Wav e Author(s) Paul J . Weinstein, CFA Date of December 15, 199 9 Statement Page 2 Number
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 23 of 262) Fraudulent Exhibit 1 Statement Revenue and Income Adjustment s
Q2-00 (A) Q3-00 Q4- 00 2000 2001 Revenue At IPO 4.6 6 .2 8.1 22.4 67. 9 Current 4 .8 6 .5 8 .5 23.5 71 . 6 Reason Why +Revisions Fraudulent 71 Report Title Beyond Bandwidth - Content Management is the Next Wave Author(s) Paul J . Weinstein, CF A Date of December 15, 1999 Statement Page 2 Number Fraudulent The rapid growth in the sales force, from 5 to 50 sales teams in less than a year, should lead to upside revenue surprises. Statement Reason Why +Cautionar y Fraudulent Report Title Beyond Bandwidth - Content Management is the Next Wav e Author(s) Paul J. Weinstein, CF A Date of December 15, 1999 Statement Page 9 Number Fraudulent Exhibit 7 Statement Valuation Matrix Valuatons as of 12114199
Stock Disc . /Prem . SHS Equity 5-Yr. EPS FIRM VALU E Price to LTM OUT Market Gr . Rate REVENUE CY99(E :I CY00(E) CY01(E ) COMPANY (FYE) 12,14.99 Hi (1h Low MIL' Value (LTGR C99 E1 C00 E) C01 E Revs(l) Revs ( 1' Revs f 1
CACHEFLOW INC 4100 CFLO $141 .50 -22% 32% 36 . 3 $ 5,136 100.0!0 16 50 141 311 . 6x 103 . 7x 36 .5 x
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 24 of 262) Reason Why +Estimates Fraudulent Report Title Beyond Bandwidth - Content Management is the Next Wav e Author(s) Paul J. Weinstein, CFA Date of December 15, 1999 Statement Page 1 0 Number Fraudulent Exhibit 8 CacheFlow Inc. Quarterly Operating Result s Statement Results In mIIIIansexoe pt per share 2000(E) 2001 1 s n r s n r 1
Revenue 3.612 4. 838 6.531 8 .491 10 .953 14.787 19 .666 26 .1% 7 .036 23 .472 71 .662 Reason Why +Estimates Fraudulent
Report Title Update and Re-iteration of Bu y Author(s) Paul J . Weinstein, CFA Date of January 28, 200 0 Statement Page 1 Number Fraudulent Our FQ3 revenue and EPS ests . of $6 .5 mm and $(0 .29) will likely prove conservative with upward revisions to forward estimates likely . Statement Reason Why +Cautionary Fraudulent Report Title Update and Re-iteration of Bu y Author(s) Paul J . Weinstein, CF A Date of January 28, 2000 Statement Page 2 Number
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 25 of 262) Fraudulent Our conviction in near term top and bottom line estimates is very strong and we believe there is upside to our $6.5 mm revenue and $0 .29 loss Statement estimates for the quarter endin g Reason Why +Cautionary Fraudulent e port Title Update and Re-iteration of Buy Author(s) Paul J. Weinstein, CFA Date of January 28, 200 0 Statement Page 2 Number Fraudulent With sales team productivity expected to improve rapidly starting in FQ4, we think there is an upward bias to revenue estimates . Statement Reason Why +Cautionary Fraudulent Report Title Update and Re-iteration of Bu y Author (s) Paul J. Weinstein, CFA Date of January 28, 200 0 Statement Page 5 Number Fraudulent Exhibit 1 Statement CacheFlow Inc . Quarterly Operating Results Results in miiilans except per share 1999 (A) 2000(E) s n s n 1
Revenue 0.81 1 .06 2.20 2.94 3. 61 4 .84 6 .53 8 .49 7 .04 23 .47 71 .5 6 Reason Why +Estimate s Fraudulent
Report Title Update and Reiteration of Buy Author(s) Paul J . Weinstein, CF A Date of February 2, 2000 Statement
Exhibit D: Misstatements and Omissions in CSFBC ' s Research Reports (Page 26 of 262) Page 1 Number Fraudulent Our FQ3 revenue and EPS ests . of $6 .5 mm and $(0 .29), respectively, will likely prove conservative with upward revisions to forward estimates Statement likely . Reason Why +Cautionar y Fraudulent Report Title Update and Reiteration of Bu y Author(s) Paul J. Weinstein, CFA Date of February 2, 2000 Statement Page 2 Number Fraudulent Our conviction in near-term top- and bottom-line estimates is very strong, and we believe there is upside to our $6 .5mm revenue and $(0.29) EPS Statement loss estimates for the quarter ending January 2000 based on improving sales productivity and healthy new customer wins . Reason Why +Cautionar y Fraudulent Report Title Update and Reiteration of Bu y Author(s) Paul J. Weinstein, CFA Date of February 2, 2000 Statement Page 6 Number Fraudulent Exhibit 1 Statement CacheFlow Inc. Quarterly Operating Result s $ In mllllons . except pEr share data 1999(A) 2000(E) is n r s n
Revenue 0 .81 1 .08 2 . 20 2.94 :.61 4 .84 6. 53 8 .49 7 .04 23A7 71 .56 Reason Why +Estimates Fraudulent Report Title Starting off the Public Company Experience on the Right Foo t
Author(s) Paul J . Weinstein, CF A
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 27 of 262) Date of February 17, 2000 Statement Page 1 Number Fraudulent FQ3 results were well above expectations ; revenue grew 66% sequentially vs . 35%E; loss of $0 .24 slightly better on stronger margins and Statement operating expenses . Reason Why +Surprise s Fraudulent Report Title Starting off the Public Company Experience on the Right Foo t
Author(s) Paul J. Weinstein, CF A Date of February 17, 2000 Statement Page 1 Number Fraudulent Fiscal 2000/01 revenue assumptions rise to $28 mm and $112 mm, from $23 mm and $72 mm, increases of 21% and 55% respectively . Statement Reason Why +Revisions Fraudulent Report Title Starting off the Public Company Experience on the Right Foo t
Author (s) Paul J . Weinstein, CF A Date of February 17, 2000 Statement Page 2 Number Fraudulent Last night CacheFlow reported FQ3 results that were well above what we or the Street had forecast . Revenue increased 66% sequentially (vs . 33% Statement estimate) to $8 .0 mm on the strength of new products (3000 and 5000) and growing sales force productivity . Reason Why +Surprise s Fraudulent Report Title Starting off the Public Company Experience on the Right Foo t
Author(s) Paul J . Weinstein, CFA
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 28 of 262) Date of February 17, 2000 Statement Page 2 Number Fraudulent The Quarter - Lots of Momentum in Sales and Bookings Highlighting the quarter was the revenue growth - up 265% vs . last year and 66 % Statement sequentially - which at $8 mm surpassed our $6 .5 mm estimates easily . Reason Why +Surprises Fraudulent Report Title Starting off the Public Company Experience on the Right Foo t
Author(s) Paul J. Weinstein, CFA Date of February 17, 200 0 Statement Page 2 Number Fraudulent Our fiscal 2000/01 revenue assumptions rise to $28 mm and $112 mm, from $23 mm and $72 mm, increases of 21% and 55% respectively . Statement Reason Why +Revisions Fraudulent Report Title Starting off the Public Company Experience on the Right Foo t
Author(s) Paul J . Weinstein, CFA Date of February 17, 200 0 Statement Page 6 Number Fraudulent Exhibit 1 Statement CacheFlow Inc. Quarterly Operating Results ResuIts In millions except per snare
1999 (k, 2000(E1 2001(E ) s Znd r s n s n 1 )
Revenue Q8 1 .1 2 .2 2 .9 3. 6 4 .8 8 .0 11 .2 16 .0 22 .5 30 .6 42 .9 7.0 27 .7 112. 1
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 29 of 262) Reason Why +Estimates Fraudulent
Report Title CacheFlow Adds HWP As A Partne r Author(s) Paul J . Weinstein, CF A Date of February 23, 2000 Statement Page 1 Number Fraudulent CacheFlow announced a two part agreement with Hewlett-Packard yesterday which gives us even greater confidence in our recent positive estimate Statement revisions and provides additional room for upside revenue/EPS surprises . Reason Why +Cautionar y Fraudulent
Report Title Expanding International Opportunity - CacheFlow Adds Alcatel As Distribution Partner Author(s) Paul J. Weinstein, CFA Date of February 25, 2000 Statement Page 2 Number Fraudulent Exhibit 1 Statement CacheFlow Quarterly Operating Result s Results In millions except per share
1 999(Aj . 000(E) 2001(E) s n r s n r s n r )
Rsuenue 0 .8 1 .1 2 .2 2 .9 3.6 4 . 8 8 .0 11 .2 16.0 22.5 30 .6 42 .9 7 .0 27 .7 112. 1 Reason Why +Estimates Fraudulent
Report Title Assuming Coverage with a Buy : Going with the Flo w Author(s) Paul J . Weinstein, CF A Date of May 12, 2000 Statement
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 30 of 262) Page 1 Number Fraudulent With sales growth accelerating in a benign pricing environment, we believe that CFLO should meet or beat our fiscal fourth quarter revenu e Statement forecast of $11 .25 mm and EPS estimate of $(0.22). Reason Why +Estimate s Fraudulent Report Title Assuming Coverage with a Buy : Going with the Flow Author(s) James P . Parmelee, Amit Chopra, Christian Jend e Date of May 12, 2000 Statement Page 3 Number Fraudulent We believe that CFLO should meet or beat our fiscal fourth quarter revenue forecast of $11 .25 million and EPS estimate of $(0.22). Statement Reason Why +Estimate s Fraudulent Report Title Assuming Coverage with a Buy : Going with the Flo w Author(s) James P . Parmelee, Amit Chopra, Christian Jend e Date of May 12, 2000 Statement Page 5 Number Fraudulent Exhibit I Statement CacheFlow Inc. Quarterly Operating Results Results In millions except per snare 11911A 2000E 2001(E ' ]u If St n r s n r
Revenue 0.8 1 .1 2 .2 2. 9 3 .6 4 .8 8 .0 11 . 2 16 .0 22.5 30 .6 42.9 7 .0 27 .7 112 . 1 Reason Why +Estimate s Fraudulent
Report Title CFLO Reports Q4 Earnings ; Results Reflect Expanding Sales and Distribution Effort s Author(s) James P . Parmelee, Amit Chopra, Christian Jend e
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 31 of 262) Date of May 18, 2000 Statement Page 1 Number Fraudulent We are raising top-line forecasts to $124M (from $112M) in F2001 . Statement Reason Why +Revisions Fraudulent
Report Title CFLO Reports Q4 Earnings ; Results Reflect Expanding Sales and Distribution Efforts Author(s) James P . Parmelee, Amit Chopra, Christian Jend e Date of May 18, 2000 Statement Page 2 Number Fraudulent Revenue increased 59% sequentially (vs . our 40% estimate) to $12 .8 mm on the increasing productivity from the sales force, broadenin g Statement distribution channels, and strength of new products (3000 and 5000) . Reason Why +Surprises Fraudulent Report Title CFLO Reports Q4 Earnings ; Results Reflect Expanding Sales and Distribution Efforts Author(s) James P. Parmelee, Amit Chopra, Christian Jend e Date of May 18, 2000 Statement Page 2 Number Fraudulent Outstanding revenue growth once again highlights the quarter's performance . CFLOs Q4 revenue was up 335% vs . last year and 59% sequentiall y Statement - which at $12 .8 mm easily beat our $11 .25 mm estimate . Reason Why +Surprise s Fraudulent
Report Title CFLO Reports Q4 Earnings ; Results Reflect Expanding Sales and Distribution Effort s Author(s) James P . Parmelee, Amit Chopra, Christian Jend e Date of May 18, 2000 Statement
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 32 of 262) Page 4 Number Fraudulent Management's upbeat and healthy outlook regarding future business prospects leads us to accelerate our revenue assumptions . Statement Reason Why +Cautionary Fraudulent Report Title CFLO Reports Q4 Earnings ; Results Reflect Expanding Sales and Distribution Efforts Author(s) James P . Parmelee, Amit Chopra, Christian Jend e Date of May 18, 2000 Statement Page 6 Number Fraudulent Exhibit 1 Statement CacheFlow Inc . Quarterly Operating Results Results In mllllons except per share 1999 A) 2000(A 2001( E s n .3rd s n r St U n r
Revenue 0 .8 1 .1 2 .2 2. 9 3.6 4 . 8 8.0 12 .8 17 .5 24 .5 34 .0 48 .0 7 .0 112 .1 124 . 0 Reason Why +Estimates Fraudulent
Report Title Feeling the Flow : Re-iterating Buy Ratin g Author(s) Amit Chopra, Andrew McCulloug h Date of August 15, 2000 Statement Page 3 Number Fraudulent Table 1 Statement CacheFlow Income Statemen t ($'s in millions) Q1 WAr MA Q4- IA Q1017 Q201F. Q3 01 F_ all Revenue $3 .6 $4.8 8.0 $12 .8 $29.3 $17.3 $24 .2 $35 .1 49.8 S126 .3 1 Reason Why +Estimate s Fraudulent
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 33 of 262) Report Title Everyone Else is Playing Cache-U p Author(s) Amit Chopra, Andrew McCulloug h Date of August 16, 2000 Statement Page 3 Number Fraudulent Table 1 Statement Quarterly Income Statemen t (S in muluonsi Q] O Q A 2 WA : . 3 A Q4OW ff : ,.- 101A 41E Q3 0 1 Revenue $ 3.6 .8 58.0 $12 .8 S29 .31 $72 .3 31 .3 $44 .0 $61 .6 $159.4 Reason Why +Estimates Fraudulent
Report Title Free CacheFlow: Revisiting the Story and Reiterating Buy Ratin g Author(s) Amit Chopra, Andrew McCulloug h Date of August 17, 2000 Statement Page 16 Number Fraudulen t Exhibit 1 4 Statement CacheFlow Income Statement SInmllbns wmptpr share M3 -- -- ' '- QI QUA 2Oltd 1 690 1 DIE-. 01E Q! 011 1#I _ Y 211014 Revenue $3 .6 $4.8 $8.0 $12.8 $29.3 $l? .. ?4.2 $35 .1 $~19 .R $126 .3 Reason Why +Estimate s Fraudulent
Report Title Caching In : Raising Price Target to $190 to Reflect Increasingly Upbeat Market Expectation s Author(s) Amit Chopra, Andrew McCulloug h Date of September 26, 2000 Statement
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 34 of 262) Page 6 Number Fraudulent Exhibit 7 CacheFlow Income Statemen t Statement $ In ThIbns, avxept par 5nae dale 1 MIA 0A =:_ 3 O 4 000 F 109A 01 O1 A =. : E B gm-,FY' Revenue S3 .6 54 .8 S8 .0 512 .8 529 .3 522 .4 53 1.4 544 .0 561 .6 5159 .4 Reason Why +Estimate s Fraudulent
Report Title CSFB Tech Dail y Author(s) Amit Chopr a Date of November 22, 2000 Statement Page 2 Number Fraudulent On November 21, CFLO reported Q2 fiscal 2001 results, with sales of $32 .5 million versus our forecast of $31 .4 million . Statement Reason Why +Surprises Fraudulent
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 35 of 262) mme>~e One -. CRC Report Title Initiating Coverage with a BUY and $68 Price Target on a Global Leader in Electronic Procuremen t Author(s) Bill Burnham, Jamie Earl e Date o f July 26, 1999 Statement Page Number 1 Fraudulen t With $30MM+ in backlog and an accelerating business environment, we believe Commerce One can meet our conservative revenue estimates o f Statement $12.8MM in 1999 and $35 .6MM in 2000 . Reason Why +Estimate s Fraudulent Report Title Initiating Coverage with a BUY and $68 Price Target on a Global Leader in Electronic Procuremen t Author(s) Bill Burnham, Jamie Earl e Date of July 26, 1999 Statement Page Number 2 Fraudulent As a result of its strong business model and substantial partnerships, we estimate that Commerce One currently has almost $30MM in backlog an d Statement could generate another $10-$15MM in backlog before the year is out . With this in mind, we believe that our 1999 revenue estimate of $12 .8MM is very conservative, as is our 2000 estimate of $35 .6MM in revenues . Reason Why +Cautionary Fraudulent Report Title Initiating Coverage with a BUY and $68 Price Target on a Global Leader in Electronic Procuremen t Author(s) Bill Burnham, Jamie Earl e Date o f July 26, 1999 Statement Page Number 3 Fraudulent .. . we are initiating coverage with a buy rating and setting a 12 month price target of $68 or 20X our 2001 revenue estimate of $87MM . . . Statement Reason Why +Estimate s Fraudulent Report Title Initiating Coverage with a BUY and $68 Price Target on a Global Leader in Electronic Procurement Author(s) Bill Burnham, Jamie Earl e Date of July 26, 1999 Statement Page Number 1 1 Fraudulent In terms of total revenues, we expect that Commerce One should generate about $13MM in revenues in 1999, $36MM in 2001 and $87MM in 2001 , Statement
Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 36 of 262) Reason Why +Estimates Fraudulent Report Title Initiating Coverage with a BUY and $68 Price Target on a Global Leader in Electronic Procuremen t Author(s) Bill Burnham, Jamie Earl e Date of July 26, 1999 Statement Page Number 1 3 Fraudulent Commerce one 3131198 6130198 9/30198 12/31/98 1998 3/31199 6130199 9/30/99 12/31/99 1999 Statement Income Statement Act. Act . Act. Act. Total Act Est . Est. Est Tota l
License fees 0.0 0.5 0.5 0.7 1 .6 1.5 1 .8 2.4 3.2 8.8 Services 0.1 0.2 0.3 0.3 0.9 0.6 0.9 1 .0 1 .3 3.9 Transactions ------0.0 0.0 0.1 0.1 Total Revenue 0.1 0.7 0.7 1.0 2.6 2.1 2.7 3.5 4.5 12.8 Reason Why +Estimate s Fraudulent Report Title Initiating Coverage with a BUY and $68 Price Target on a Global Leader in Electronic Procuremen t Author(s) Bill Burnham, Jamie Earl e Date of July 26, 1999 Statement Page Number 1 4 Fraudulent Commerce One 3131100 6130100 9/30100 12/31/00 2000 Statement Income Statement Est . Est. Est. Est. Total
License fees 4.3 5 .2 6 .7 8.6 24. 7 Services 1 .7 2.1 2.7 3.5 9. 9 Transactions 0.1 0.2 0.3 0 .4 1 . 0 Total Revenue 6.0 7.5 9 .6 12.5 35. 6 Reason Why +Estimates Fraudulent
Report Title Reports Strong Q2; Raising Top and Bottom Line Estimate s
Author (s) Bill Burnham, Jamie Earle Date of July 29, 1999 Statement Page Number 1
Exhibit D : Misstatements and Omissions in CSFBC 's Research Reports (Page 37 of 262) Fraudulen t Last night after the close, Commerce One reported Q2 financial results, including revenue of $4.2MM and EPS of ($0 .61), beating our estimates b y Statement $1 .5MM and $0 .12, respectively . Reason Why +Surprises Fraudulent Report Title Reports Strong Q2; Raising Top and Bottom Line Estimate s
Author(s) Bill Burnham, Jamie Earl e Date of July 29, 1999 Statement Page Number I Fraudulen t We are raising our 1999 revenue estimate by 37% to $17 .5MM and our 2000 revenue estimate by 19% to $42 .2MM. Statement Reason Why +Revisions Fraudulent Report Title Reports Strong Q2; Raising Top and Bottom Line Estimate s
Author (s) Bill Burnham, Jamie Earl e Date of July 29, 1999 Statement Page Number 2 Fraudulen t Yesterday after the close, Commerce One reported its second quarter financial results, including revenue of $4 .2MM and a net loss of ($0.69)/share, Statement beating our estimates by $1 .5MM on the top line and by $0.12/share on the bottom line . Reason Why +Surprises Fraudulent Report Title Reports Strong Q2; Raising Top and Bottom Line Estimate s
Author(s) Bill Burnham, Jamie Earl e Date o f July 29, 1999 Statement Page Number 4 Fraudulent Due to this quarter's strong financial performance we are revising our estimates significantly upward . Specifically, we are increasing our 1999 revenu e Statement estimates by 37% or $4 .7MM to $17.5MM up from $12 .7MM. We are also increasing our 2000 revenue estimate by 19% or $6 .6MM to $42.2MM from $35 .6MM. Reason Why +Revisions Fraudulent Report Title Reports Strong Q2; Raising Top and Bottom Line Estimates
Author(s) Bill Burnham, Jamie Earl e
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 38 of 262) Date of July 29, 199 9 Statemen t Page Number 5 Fraudulent Commerce One 3131199 6/30199 9130199 12/31/99 1999 3/31)00 6130100 9130100 12/31100 2000 Statement Inccrne Statement Act. Act. Est. Est. Total Est. Est Est Est. Total
License fees 1 .5 2.3 2.8 3.6 10.1 4.5 5.9 7.1 8.6 26.0 Services 0 .6 1 .9 2.2 2.5 7.2 2.8 3.4 4.0 4.8 15.0 Transactions - - 0.0 0.1 0.1 0.1 0.2 0.4 0.5 1 .2 Total Revenue 2.1 4.2 5.0 6.1 17.5 7.4 9.4 11 .5 13.9 42.2 Reason Why +Estimates Fraudulen t
Report Title Transferring Coverage - Expect to See Positive News From PSFT User Conferenc e Author(s) George Gilbert, Brent Thill Date of August 30, 1999 Statement Page Number 3 Fraudulent Commerce One 3131199 6130199 9130199 12131/99 1999 3131 A0 6130100 9..30/00 12131100 2000 Statement Income Statement Act. Act. Est. Est. Total Est. Est Est. Est. Tota l
License fees 1 .5 2.3 2.8 3.6 10.1 4.5 5.9 7.1 8.6 26.0 Serviced 0.6 1.9 2.2 2.5 7.2 2.8 3.4 4 .0 4.8 15 .0 Transactions 0.0 0.1 0.1 0.1 0.2 0.4 0.5 1 .2 Total Revenue 2.1 4.2 5.0 6.1 17.5 7.4 9.4 11 .5 13.9 42.2 Reason Why +Estimates Fraudulent
Report Title The Business Model Under the Cover s
Author(s) George Gilbert, Brent Thill Date of September 13, 199 9 Statement Page Number 9 Fraudulent Commerce One 3131/99 6130199 9130199 12/31199 1999 3131100 6130100 9130100 12131/00 2000 Statement Income Statement Act. Act. Est. Est Total Est. Est. Est. Est. Total
License fees 1 .5 2.3 2.8 3.6 10 .1 4.5 5.9 7.1 8 .6 26.0 Services 0.6 1.9 2.2 2.5 7.2 2.8 3.4 4.0 4 .8 15.0 Transactions - - 0.0 0.1 0.1 0.1 0.2 0.4 0 .5 1 .2 Total Revenue 2.1 4.2 5.0 6.1 17.5 7.4 9.4 11 .5 13 .9 42.2
Exhibit D : Misstatements and Omissions in CSFBC 's Research Reports (Page 39 of 262) Reason Why +Estimate s Fraudulent
Report Title Flips on Afterburners in Q 3
Author (s) George Gilbert, Brent Thil l Date of October 19, 199 9 Statement Page Number 1 Fraudulen t Q3 revenues of $10 .4M blew by our $5 .2M estimate. Statement Reason Why +Surprises Fraudulent Report Title Flips on Afterburners in Q 3 Author (s) George Gilbert, Brent Thil l Date o f October 19, 199 9 Statement Page Number 1 Fraudulent Raising CY99 and CYOO revenue estimates to $28 .6M and $61 .1 M Statement (114% growth), from $17 .5M and $42.2M, respectively. Reason Why +Revisions Fraudulent Report Title Flips on Afterburners in Q 3
Author(s) George Gilbert, Brent Thil l Date of October 19, 199 9 Statement Page Number 2 Fraudulent 03 Earnings Snapshot Statement Table I Significantly Raising CY99 and CYOO Revenue Estimates CY99E CYOOE Now Old Change Now Old Chang e Rev $28 .6M $17 .5M +$11 .1M $61 .1M $42 .2M +$18.9M Reason Why +Revisions Fraudulent
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 40 of 262) Report Title Flips on Afterburners in Q 3
Author(s) George Gilbert, Brent Thil l Date of October 19, 1999 Statement Page Number 2 Fraudulen t Revenue: CMRC reported total revenues of $10.4M, significantly exceeding our $5 .OM revenue expectation by $5 .4M . Statement Reason Why +Surprise s Fraudulent Report Title Flips on Afterburners in Q 3
Author(s) George Gilbert, Brent Thil l Date of October 19, 199 9 Statement Page Number 5 C~ff FIRST Fraudulen t Commerce One Statement
Table 4 Income Statemen t data in thousands , except per share
- - - FY1999E b Ouartor ------FY2000E b Quarter------Y e a r Endod Doconlb,r -- - Yar o0 n 00 S n 09 n,, 88F m . ,5 5 F Jinn 88F Sen nnF n- OA F 199N 1999F 20nn F License revenue 1 .456 r' 2 .270 7 .778 8 .342 9 .045 9 .950 10 .977 12 .29 2 1 .633 19 .846 42 .26 4 Service revenue 64 .9 1 8.3. 2. 2_555_ 3_525_ i 1 1 S L 4 41rL . 5 & - : .3.G-- A74r, 18 R1 4 Total revenue $2 .104 54 .202 510 .363 $11 .917 13 .109 14 .420 15 .862 17 .G86 52 .563 529 .586 0 E1 .07 8 Reason Why +Estimate s Fraudulent
Report Title CSFB Tech Dail y
Author(s) George Gilbert, Brent Thil l Date of Tuesday, October 19, 1999 Statement Page Number 1 Fraudulent Q3 revenues of $10 .4M blew by our $5 .2M. Statement
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 41 of 262) Reason Why +Surprises Fraudulent Report Title CSFB Tech Daily Author(s) George Gilbert, Brent Thil l Date of Tuesday, October 19, 1999 Statement Page Number 1 Fraudulent Raising CY99 and CYOO revenue estimates to $28 .6M and $61 .1M (114% growth), from $17 .5M and $42 .2M, respectivel y Statement Reason Why +Revisions Fraudulent
Report Title First Edition Summary Key Action Call s Author(s) Chris Vroom Date of Tuesday, July 11, 2000 Statement Page Number 2 Fraudulen t Expect rev of $206m for '00 & $400m for '01 . Statement Reason Why +Estimate s Fraudulent Report Title First Edition Summary Key Action Call s Author(s) Chris Vroom Date of Tuesday, July 11, 200 0 Statement Page Number 2 Fraudulent For g2'00, expect $43m in rev & $(0 .15) in eps, representing a 50% sequential growth rate . Expect upside to our ests . Statement Reason Why +Cautionar y Fraudulent
Report Title The King of B2B Marketplaces . Author(s) Christopher E. Vroom, Brent Thill, John S . Byun Date of December 21, 2000 Statement Page Number 5
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 42 of 262) Fraudulent Exhibit 31 Statement Earnings Model Commerce One Inc. (NASDAQ : CMRC) Quarterly Statement of Earning s
;S thousands, except EPS) 1099A 2099A 3Q99A 4Q99A 1999A 1000A 2000A 3000A 4000E 2000 E License revenue 1 .456 2 .270 7,778 13 .067 24 .571 27 .121 40 .953 65,863 78 .750 212,687 Service revenue 648 1 932 L ML 3 821 8 .986 7 988 21 .751 46,821 96 250 172,710 Network revenue Total revenues $ 2,104 $4, 202 $10, 363 $16, 888 $33 , 557 $35,009 $62 ,704 $112 , 684 175,000 385,397 18~2998 Reason Why +Estimates Fraudulent Report Title The King of B2B Marketplaces . Author(s) Christopher E. Vroom, Brent Thill, John S . Byun Date of December 21, 2000 Statemen t Page Number 6 Fraudulent Exhibit 3 2 Statement Earnings Model - Pro Forma for AppNet Acquisition (for reference ) Commerce One Inc . (NASDAQ : CMRC) Quarterly Statement of Earnings - Pro forma for AppNet acquisition
(S thousands, except EPS) 1Q99A 2Q99A 3Q99A 4Q99A 1999A 1000A 2QOOA 3000A 4000E 2000E 2001 E License revenue 1 .456 2,270 7,778 13 .067 24 .571 27,121 40,953 65 .863 78 .750 212 .687 371,700 Service revenue 20291 .GG5 32 .681 38 .726 118 .693 5^ 619 72 9O@ H7 58E 96 250 309,465 349 .81 3 Network revenue 91486 Total revenues $21,747 $299,265 $40,459 $51,793 $143,264 $79,740 $ 113 .861 $153,551 175,000 522,152 812 998 Reason Why +Estimate s Fraudulent
Report Title The King of B2B Marketplaces . Author(s) Christopher E. Vroom, Brent Thill, John S . Byun Date of December 26, 2000 Statement Page Number 56 Fraudulent In the Q4, we expect Commerce One to report revenue of $175 million-a 55% sequential increase on a reported basis and a 14% increase on a pr o Statement forma basis) Reason Why +Estimates Fraudulent Report Title The King of B2B Marketplaces .
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 43 of 262) Author(s) Christopher E. Vroom, Brent Thill, John S . Byun Date of December 26, 2000 Statement Page Number 56 Fraudulent We are forecasting sequential license revenue growth of approximately 20%, but continued evidence of strong sales momentum suggests tha t Statement significant upside to our estimate is likely. Reason Why +Cautionar y Fraudulent Report Title The King of B2B Marketplaces . Author(s) Christopher E. Vroom, Brent Thill, John S . Byun Date of December 26, 2000 Statement Page Number 59 Fraudulent Commerce One, Inc . s BOSTON Statement
Exhibit 36 Quarterly Income Statement , FY 99A-01 E
$thousands . except EPS) 1 0 99A 2Q99A 3 0 99A 4 0 99A 1999A 1000A 2000A 3000A 4000E 2000E 2001 E
License revenue 1 .456 2 .270 7 .778 13.067 24 .57 1 27 .121 40 .953 65.863 73 .750 212.687 371 .70 0 Service revenu e 648 132 2,5 32 1 32 8 .98 6 7 688 21 .751 46.821 96 .250 172 71 0 349,81 3 Network revenu e 91 .486 Total revenues $2 .104 $4,202 $10 , 363 $16, 888 $33 , 557 $35,009 $62,704 $ 112.684 175,000 385,397 812,99 8 Reason Why +Estimates Fraudule nt
Report Title CSFB Tech Daily Author(s) Christopher E. Vroom/Brent Thill , Date of Wednesday, January 10, 200 1 Statement Page Number 2 Fraudulent Commerce One will show solid momentum in both buy-side procurement deployments and private marketplace traction and will post license fe e Statement revenues from the mega-exchanges for the first time . Our revenue estimate is $175 m Reason Why +Estimates Fraudulent
Report Title Strong and Clean Across the Board - Stellar Q4 Results Cap A Solid Year Author(s) Christopher E. Vroom, CFA, Brent Thill, Ian W . Toll, John S. Byun
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 44 of 262) Date of January 18, 200 1 Statement Page Number 1 Fraudulent The company reported $191 .4m in Q4 revenues (up 70% sequentially) with LPS of ($0 .05), handily exceeding our estimates of $175 .Om and ($0 .07). Statement Reason Why +Surprises Fraudulent Report Title Strong and Clean Across the Board - Stellar Q4 Results Cap A Solid Yea r Author(s) Christopher E. Vroom, CFA, Brent Thill, Ian W . Toll, John S . Byun Date of January 18, 200 1 Statement Page Number 1 Fraudulent We are raising our 2001 revenue estimate from $813 million to $915 million . Statement Reason Why +Revisions Fraudulent Report Title Strong and Clean Across the Board - Stellar Q4 Results Cap A Solid Yea r Author(s) Christopher E. Vroom, CFA, Brent Thill, Ian W . Toll, John S . Byun Date of January 18, 200 1 Statement Page Number 1 Fraudulent We are establishing a 2002 revenue estimate of $1 .2 billion . Statement Reason Wh y +Estimate s Fraudulent Report Title Strong and Clean Across the Board - Stellar Q4 Results Cap A Solid Yea r Author(s) Christopher E. Vroom, CFA, Brent Thill, Ian W . Toll, John S . Byun Date of January 18, 200 1 Statement Page Number 3 Fraudulent The company reported $191 .4m in Q4 revenues with LPS of ($0.05), handily exceeding our estimates of $175 .Om and ($0 .07). Statement Reason Why +Surprise s Fraudulent Report Title Strong and Clean Across the Board - Stellar Q4 Results Cap A Solid Year Author(s) Christopher E. Vroom, CFA, Brent Thill, Ian W . Toll, John S . Byun Date of January 18, 2001 Statement
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 45 of 262) Page Number 4 Fraudulent Estimates go up Statement Mgmt guided to 2001 revenues of $900 - $925 million versus their previous guidance of $800 - $825 million . The company continues to expect to cross-over to operating EPS breakeven in Q2/01 . We are raising our estimates as follows, and publishing a 2002 estimate for the first time . Exhibit I CSFB Estimate Revisions
Pnor Revised Prsor Revised New
($ thousands, except EPS) 1 1 E 1001E 2001E 2001E 2002E
License revenue 86.258 93600 371,700 411,781 509,19 1 Service revenue 86.258 95.680 349813 394,361 439,41 2 Network revenue 12.985 18 .720 91 .4 108,927, 251,978 Total revenues 185,5001 208000 812.99R 915,0881 120058 1
Reason Why +Revisions Fraudulent Report Title Strong and Clean Across the Board - Stellar Q4 Results Cap A Solid Year Author(s) Christopher E. Vroom, CFA, Brent Thill, Ian W . Toll, John S. Byun Date of January 18, 2001 Statemen t Page Number 5 Fraudulent Commerce One, Inc . sUIE BOSTON Statement
Exhibit 1 Quarterly Income Statement , FY 99A-02 E
($thousands . except E PSI 1999A 1000A 2000A 3000A 4QOOA 2000A 1 10 01E 21001E 3001E 41001E 2001E 2002 E License revenue 24 .571 27 .121 40 .953 65,863 89,340 223 277 93,600 99 .778 105 .764 112.639 411 .781 509 .19 1 Service revenue 8 .986 RA8 21 1 46821 1' '150 178 .519 95 .680 98 .669 99,888 100.123 394 .361 439 .41 2 Network revenue 18 .720 23 ,28,1 29 379 37 c :4 108127 251 .97 8 Total revenues $ 33,557 $35,009 $62 ,704 $112, 684 $191 , 399 401,796 208,000 221 ,728 235 ,032 250, 309 915,068 1,200 .58 1 Reason Why +Estimates Fraudulent
Report Title Assuming Coverage of B2B Leaders Author(s) Erik Swords, Brent Thill, Ian W. Toll Date of February 5, 200 1 Statement Page Number 3
Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 46 of 262) Fraudulent Statement Commerce On e Income Statement (data in thousands , except per share)
- FY2000 by Quarter --- -- FY2001 E by Qua rter -- Fiscal Year Ends Decembe r Mar 00 Jun 00 Sep 00 Dec 00 Mar 01 E Jun 01 E Sep 01 E Dec 01 E 2000 2001 E 2002 E License revenue 27,121 40 .953 65 .863 89 .340 93,600 99 .778 105 .764 112,639 223 .277 411 .781 509,19 1 Service revenue 7 .888 21,751 46 .821 102 .059 95 .680 98,669 99,888 100 .123 178 .519 394.361 439 .41 2 Network revenue -- --- _ _ 1 s 720 23,281 20 379 57 54 ; _ 108 Q22 251979 Total revenue 35 .009 62 .704 112 .684 191 .399 208 .000 221,728 235 .032 250.309 $401 .796 $915,068 $1,200,58 1 Reason Why +Estimate s Fraudulen t
Report Title Analyst Day Paints Positive Outloo k Author(s) John Byun, Erik Swords, Brent Thill, Ian W . Tol l Date of February 9, 200 1 Statement Page Number 6 Fraudulen t Statement Commerce One Income Statement (data in thousands, except per share)
- FY2000 by Quarter -- -- FY2001E by Quarter - Fiscal Year Ends Decembe r Mar 00 Jun 00 Sep 00 Dec 00 Mar 011E Jun 011 E Sep 011E Dec 011E 2000 2001 E 2002E License revenue 27,121 40 .953 65 .863 89.340 93,600 99 .778 105 .764 112 .639 223 .277 411 .781 509,191 Service revenue 7 .888 21 .751 46 .821 102 .059 95 .680 98.669 99 .888 100,123 178,519 394,361 439 .41 2 Network revenue ------.18720 23 281 29 379 37 .546 -- 108 2.7 251 .978 Total revenue 35 .009 62 .704 112 .684 191,399 208 .000 221,728 235.032 250 .309 $401 .796 $915.068 $1 .200,58 1 Reason Why +Estimate s Fraudulen t
Report Title Downgrading to a Buy from a Strong Bu y
Author(s) John Byun, Erik Swords, Brent Thill, Ian W . Toll Date of March 2, 200 1 Statement Page Number 3
Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 47 of 262) Fraudulent Statement Commerce On e Income Statement ( data in thousands, except per share)
-- FY2000 by Qua rter -- - FY2001E by Quarter -- Fiscal Year Ends Decembe r Mar 00 Jun 00 Se t) 00 Dec 00 Mar 01E Jun 01E Se 01 Dec 01E 2000 2001E 002E License revenue 27 .121 40.953 65,863 89,340 93,600 99 .778 105 .764 112 .639 223,277 411 .781 509,191 Service revenue 7,888 21,751 46.821 102 .059 95,680 98,669 99 .888 100 .123 178 .519 394 .361 439.41 2 Network revenue -- 18720 2 .~ 281 379 37.54 -- 108927 25(978 Total revenue 35,009 62,704 112,684 191 .399 208 .000 221 .728 235.032 250 .309 S401,796 $915.068 $1,200 .58 1 Reason Why +Estimates Fraudulent nd f CMRC
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 48 of 262) Coritlian Corporation - CORI Report Title Initiating Coverage with a Buy Rating and $37 Price Target Author(s) James Marks, Mark St . Marie Date of May 8, 2000 Statement Page 4 Number Fraudulent Translated into share prices, we believe that the company should be able to generate revenues of close to $500 million by 2005, with operatin g Statement margins approaching 20%, or earnings of roughly $60 million . Reason Why +Estimates Fraudulent Report Title Initiating Coverage with a Buy Rating and $37 Price T arget Author(s) James Marks, Mark St . Marie Date of May 8, 2000 Statement Page 5 Number Fraudulent It should also be noted that our $38 million revenue estimate for Corillian in 2001 was formulated before it signed three large bank deals in a matte r Statement of months. An upward revision in this estimate would, of course, narrow the price/revenue multiple . Reason Why +Cautionar y Fraudulent Report Title Initiating Coverage with a Buy Rating and $37 Price Target Author(s) James Marks, Mark St . Marie Date of May 8, 2000 Statement Page 7 Number Fraudulent We believe that the company should be able to generate revenues of close to $500 million by 2005, with operating margins approaching 20%, o r Statement earnings of roughly $60 millio n Reason Why +Estimates Fraudulent
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 49 of 262) Report Title Initiating Coverage with a Buy Rating and $37 Price Target Author(s) James Marks, Mark St. Marie Date of May 8, 2000 Statement Page 8 Number Fraudulent Exhibit 1 Statement Income Statement
1 r" E 2000E 3c 0E 4ClOOE 1001E 2001E 3w1 E 4001E 195€ 1999 2000E x301 E
RwanuQ% 2.925 4 .255 5. 200 5.890 7,030 8 .740 10 .486 11 .662 3.393 7,736 18.350 3 7,91 8 Reason Why +Estimates Fraudulent
Report Title Releases 1Q00 Earnings Report
Author(s) James Marks, Mark St . Marie Date of May 9, 2000 Statement Page 2 Number Fraudulent Announces 1Q00 earnings. Corillian last night reported revenues of $3 .3 million, bettering our estimate of $2 .9 million, versus $1 .4 million in th e Statement year ago quarter, and $2 .7 million in 4Q99. Reason Why +Surprise s Fraudulent Report Title Releases 1Q00 Earnings Report
Author(s) James Marks, Mark St . Marie Date of May 9, 2000 Statement Page 8 Number
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 50 of 262) Fraudulent We believe that the company should be able to generate revenues of close to $500 million by 2005, with operating margins approaching 20%, o r Statement earnings of roughly $60 million .
Revenues in 2005, $M Soo Reason Why +Estimates Fraudulent Report Title Releases 1Q00 Earnings Report
Author(s) James Marks, Mark St . Marie Date of May 9, 2000 Statement Page 6 Number Fraudulent It should also be noted that our $38 million revenue estimate for Corillian in 2001 was formulated before it signed three large bank deals in a matte r Statement of months. An upward revision in this estimate would, of course, narrow the price/revenue multiple . Reason Why +Estimates Fraudulent Report Title Releases 1Q00 Earnings Report
Author(s) James Marks, Mark St . Marie Date of May 9, 2000 Statement Page 9 Number Fraudulent Corillian CX BD N Statement
Exhibit 1 Income Statement
1000 2000E 3000E 4CDOE 1001E 21111E 3u01E 4001E 1998 1 CKA 2000E 2001 E
Rwonuos 3.255 4 .255 5.280 5890 7, 030 9 .740 10. 486 11 .66 2 3 .393 7 .7 36 18.680 37.9 19
Exhibit D: Misstatements and Omissions in CSFBC' s Research Reports (Page 51 of 262) Reason Why +Estimates Fraudulent
Report Title Initiated Coverage with a Buy Rating and $37 Price Target
Author (s) James Marks, Mark St . Marie Date of May 26, 2000 Statement Page 4 Number Fraudulent Translated into share prices, we believe that the company should be able to generate revenues of close to $500 million by 2005, with operatin g Statement margins approaching 20%, or earnings of roughly $60 million . Reason Why +Estimates Fraudulent Report Title Initiated Coverage with a Buy Rating and $37 Price Target
Author(s) James Marks, Mark St . Marie Date of May 26, 2000 Statement Page 1 4 Number Fraudulent It should also be noted that our $38 million revenue estimate for Corillian in 2001 was formulated before it signed three large bank deals in a matte r Statement of months. An upward revision in this estimate would, of course, narrow the price/revenue multiple . Reason Why +Cautionar y Fraudulent Report Title Initiated Coverage with a Buy Rating and $37 Price Target
Author(s) James Marks, Mark St . Marie Date of May 26, 2000 Statement Page 16 Number
Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 52 of 262) Fraudulent We believe that the company should be able to generate revenues of close to $500 million by 2005, with operating margins approaching 20%, o r Statement earnings of roughly $60 million . At a 50 multiple, that would translate into roughly $80 per share in 2004 . Using a 30% expected return, or discoun t rate, that would equate to $37 per share one year from now, forming the basis for our Buy recommendation and our $37 12-month price target . Revenues in 2005, $ millions 500 Reason Why +Estimate s Fraudulent Report Title Initiated Coverage with a Buy Rating and $37 Price Targe t
Author(s) James Marks, Mark St . Marie Date of May 26, 2000 Statement Page 20 Number CREW Fraudulent Corillian S BOSTON Statement
Exhibit 1 2 Income Statement
1000 2000E 3000E 4000E 1001E 2001E 3001E 4001E 1998 1999 2000E 2001 E
Revenues 3.255 4 .255 5.257 5. 913 7.055 8 .755 10 . 502 11 . 700 3.393 7. 736 18 .680 38 .01 2 Reason Why +Estimate s Fraudulent
Report Title Corillian reports 2nd quarter earnings; trounces revenue estimates . Author(s) James Marks, Mark St . Marie Date of July 26, 2000 Statement Page Number Fraudulent Revenues trounce estimates . Revenues came in at $5 .7 million, an increase of 76% sequentially and well ahead of our estimate of $4 .3 million . Statement Reason Why +Surprises Fraudulent
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 53 of 262) Report Title Corillian reports 2nd quarter earnings; trounces revenue estimates . Author(s) James Marks, Mark St. Marie Date of July 26, 2000 Statement Page 1 Number Fraudulent Increasing Revenue Estimates. We are encouraged by the level of execution that this quarter's revenue surprise indicates, and the upside potential tha t Statement this quarter's large contract signings represent . Accordingly we are increasing our revenue estimates for to $6.4 million from $5 .3 million for 3Q2000 and to $22 .7 million from $18 .7 million for 2000. Reason Why +Revisions Fraudulent Report Title Corillian reports 2nd quarter earnings; trounces revenue estimates . Author(s) James Marks, Mark St . Mari e Date of July 26, 2000 Statement Page 3 Number Fraudulent Revenues above Expectations Revenues came in at $5 .7 million, an increase of 76% sequentially and well ahead of our estimate of $4 .3 million . Statement Reason Why +Surprises Fraudulent
Report Title Corillian reports 2nd quarter earnings; trounces revenue estimates . Author(s) James Marks, Mark St . Mari e Date of July 26, 2000 Statement Page 3 Number Fraudulent We had expected sequential revenue growth of 31%, rather than the 76% posted by the company . The company recognizes revenue on a percentage Statement of completion basis, and the upside for the quarter stems from the company reaching key milestones for client projects more quickly than anticipated . Reason Why +Surprises Fraudulent Report Title Corillian reports 2nd quarter earnings ; trounces revenue estimates .
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 54 of 262) Author(s) James Marks, Mark St . Marie Date of July 26, 2000 Statement Page 3 Number Fraudulent We expect healthy sequential growth of about 12% heading into 3Q2000, with this growth driven by partial revenue recognition from this quarter' s Statement signings . Accordingly we are increasing our revenue estimates for to $6.4 million from $5.3 million for 3Q2000 and to $22 .7 million from $18 .7 million for 2000. Reason Why +Revisions Fraudulent Report Title Corillian reports 2nd quarter earnings ; trounces revenue estimates . Author(s) James Marks, Mark St . Marie Date of July 26, 2000 Statement Page 5 Number Fraudulent Corillian WFM-i FIRST w Statement
Exhibit 1 Income Statement 1000 2000 3000E 4000 E 1001E 2001E 3001E 4001 E 1999 2000E 2001 E
Revenues 3.255 5,723 6,440 7 ,350 9, 200 9.500 10 ,925 12 .065 7.736 22 .766 40,69 0 Reason Why +Estimates Fraudulent
Report Title Recent spate of deal announcements points to continued momentum . Author(s) James Marks, Mark St . Marie Date of September 15, 200 0 Statement Page 1 Number
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 55 of 262) Fraudulent We are raising our September quarter revenue estimates for Corillian by 13% to $7.3 million from $6.4 million . Our FY2000 revenue estimate i s Statement going to $24 .0 million from $22 .8 million and from $40 .7 million to $42 .4 million in FY 01 . Reason Why +Revisions Fraudulent Report Title Recent spate of deal announcements points to continued momentum . Author(s) James Marks, Mark St . Marie Date of September 15, 2000 Statement Page 4 Number Fraudulent Due to execution on its large contracts, we are raising our September quarter revenue estimates for Corillian by 13% to $7 .28 million from $6 .44 Statement million and FY2000 revenues to $24 .0 million from $22 .8 million . We are also raising our full year estimates for FY2001, to $42.4 million from $40.7 million, as the company's top line should benefit from the strong implementation pipeline established by the signings announced in the secon d half of 2000 . Reason Why +Revisions Fraudulent Report Title Recent spate of deal announcements points to continued momentum . Author(s) James Marks, Mark St . Marie Date of September 15, 2000 Statement Page 5 Number FRU Fraudulent Corillian BOGMN Statement
Exhibit I Income Statement CORILLIAN INCOME STATEMEN T
1099 2099 3099 4099 1030 2000 3000E 4000E 1001E 2001E 3001E 4001E 1998 1999 2000E 2001 E
Revenues 1,405 1 .337 2 .287 2 . 707 3 .255 5,723 7, 280 7 , 770 8 .200 10 .000 11 . 500 12.?00 3,393 7. 7 34 24 , 028 42,40 0 Reason Why +Estimates Fraudulent
Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 56 of 262) Report Title Reports September Quarter Revenues 31 % Above Estimates . Author(s) James Marks, Mark St . Mari e Date of October 24, 2000 Statement Page 1 Number Fraudulent Reports Revenues 31% above Estimates . Corillian last night reported September quarter revenues of $9 .5 million versus our estimate of $7 .3 million, Statement an increase of 66% from June quarter revenues of $5 .7 million . Reason Why +Surprises Fraudulent Report Title Reports September Qua rter Revenues 31% Above Estimates . Author(s) James Marks, Mark St . Marie Date of October 24, 2000 Statement Page 1 Number Fraudulent Raising Revenue Estimates . We have increased our revenue estimates for the December quarter and FY2001 to $10 .9 million from $7 .8 million an d Statement to $54.7 million from $42 .4 million, respectively . Reason Why +Revisions Fraudulent Report Title Reports September Quarter Revenues 31% Above Estimates . Author(s) James Marks, Mark St . Marie Date of October 24, 2000 Statement Page 1 Number Fraudulent In April of 2000, when Corillian went public, 2000 and 2001 revenue estimates were only $18 .3 million and $37.9 million, respectively, versus $29 .3 Statement and $54 .7 million today-a testament to the company's high level of execution in a short period of time . Reason Why +Revisions Fraudulent Report Title Reports September Quarter Revenues 31 % Above Estimates . Author(s) James Marks, Mark St . Marie
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 57 of 262) Date of October 24, 2000 Statement Page 1 Number Fraudulent December Quarter Outlook Positive for Revenues and Gross Margins . The company has indicated December quarter revenues of $10-11 million . We Statement believe that may even be conservative as the company expects both the Bank One and Wachovia implementations to close by year end, triggerin g si nificant revenue recognition. Reason Why +Cautionar y Fraudulent Report Title Reports September Quarter Revenues 31 % Above Estimates . Author(s) James Marks, Mark St . Mari e Date of October 24, 2000 Statement Page 4 Number Fraudulent Corillian 90SMN Statement
Exhibit 1 Income Statemen t CORILLIAN INCOME STATEMENT
1099 2Q99 3099 4099 1000 2000 3000 4000E 1001E 2001E 3001E 4601E 1998 1999 2000E 20D1 E
Revenues 1 .405 1 .337 2.297 2 707 3. 255 5 .723 9. 515 10.850 11 .400 13 .000 14 .375 15,075 3 .393 7 .736 29.343 54.73 0 Reason Why +Estimates Fraudulent
Report Title Corillian acquires bank-technology consulting firm . Author(s) James Marks, Art Bender Date of November 18, 2000 Statement Page 3 Number
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 58 of 262) Fraudulent Corillian BOSTTON Statement
Exhibit 1 Income Statement
CORILLIAN INCOME STATEMENT
1099 2099 3499 4099 1000 2000 3000 4000E 1001E 2001E 3001E 4001E 1990 1909 2000E 2001 E
Revenues 1 .405 1 .337 2.297 2 .707 3,255 5 .723 9. 515 10 .050 11 .400 13 .000 14. 375 15.97 5 3 .393 7 736 29.343 54 .730 Reason Why +Estimates Fraudulent
Report Title Corillian reports December quarter earnings ; beats revenue estimates ; ups guidance. Author(s) James Marks, Sam John, Date of February 7, 200 1 Statement Page 1 Number Fraudulent Revenue above estimates . Corillian last night reported September quarter revenues of $12 .4 million ($11 .2 million excluding revenues form the Statement Hatcher acquisition) versus our estimate of $10 .9 million, an increase of 30% from September quarter revenues of $9 .5 million . Reason Why +Surprises Fraudulent
Report Title Corillian reports December qua rter earnings ; beats revenue estimates ; ups guidance. Author (s) James Marks, Sam John, Date of February 7, 200 1 Statement Page 1 Number Fraudulent Raising revenue estimates .. .. again . We have increased our revenue estimates for the March quarter and FY2001 to $14 .1 million from $11 .5 million Statement and to $71 .5 million from $54 .7 million, respectively . Reason Why +Revisions Fraudulent Report Title Corillian reports December quarter earnings ; beats revenue estimates ; ups guidance.
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 59 of 262) Author(s) James Marks, Sam John, Date of February 7, 200 1 Statement Page 1 Number Fraudulent In April of 2000, when Corillian went public, 2000 and 2001 revenue estimates were only $18 .3 million and $37 .9 million, respectively . Actual Statement revenue for 2000 came in 62% above the original estimate at $29 .7 million (excluding Hatcher), and our estimate for 2001 (excluding Hatcher) stand at $57 million today- a testament to the company's high level of execution in a short period of time. Reason Wh y +Surprises Fraudulent Report Title Corillian reports December quarter ea rnings; beats revenue estimates ; ups guidance. Author(s) James Marks, Sam John, Date of February 7, 200 1 Statement Page I Number Fraudulent We are increasing our revenue estimate to account for organic growth and the acquisition of Hatcher Associates. Statement Reason Wh y +Revisions Fraudulent Report Title Corillian reports December quarter earnings ; beats revenue estimates ; ups guidance. Author(s) James Marks, Sam John, Date of February 7, 200 1 Statement Page 4 Number
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 60 of 262) FIREff Fraudulent Corillian suss BOSMN Statement
Exhibit 1 Income Statemen t CORILLIAN INCOME STATEMEN T
1099 2099 3099 4099 1000 2000 3000 4000 1001E 2001E 3001E 4001E 1998 1999 2000 2001 E
Revenues 1 .405 1 .337 2.287 2,707 3,255 5 .723 9 .515 12 ,359 14 .125 17,121 19.112 21 .098 3 .393 7.73E 30.853 71,456 Reason Why +Estimate s Fraudulent End of CORI
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 61 of 262) Centitlium. Coyontunicatio Inc. ..CTLM Report Title Initiating Coverage on CTLM with Buy Rating and $75 Price Target : Pure Play IC Provider Enabling DSL Broadband . Author(s) Charlie Glavin, CFA, Regina Eberhart, Genia Jones Date of June 19, 2000 Statement Page Number 7 Fraudulent Anticipate Triple Digit Y/Y Revenue Growth through 2002 We have conservatively estimated that Centillium's 2000 revenue will come in a t Statement $24 million, growing 165% to $63 million in 2001 . Reason Why +Estimates Fraudulent Report Title Initiating Coverage on CTLM with Buy Rating and $75 Price Target : Pure Play IC Provider Enabling DSL Broadband . Author(s) Charlie Glavin, CFA, Regina Eberhart, Genia Jone s Date of June 19, 2000 Statement Page Number 8 Fraudulent We also believe that we have been very conservative with our estimates as they only reflect the potential for revenue attained off of current desig n Statement wins . Reason Why +Cautionar y Fraudulent Report Title Initiating Coverage on CTLM with Buy Rating and $75 Price Target : Pure Play IC Provider Enabling DSL Broadband . Author(s) Charlie Glavin, CFA, Regina Eberhart, Genia Jone s Date of June 19, 2000 Statement Page Number 10
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 62 of 262) ~ I mlw Fraudulent Centilliurn BOSTON Statement
Exhibit 3 Income Statement 19 99 2000 200 1 01 02 03 04 FYE O1A. 02E 03E 04E FYE 01E WE 03E WE FYE (SMillionsi u-y Jun -gu Il r, tlar-yu K- 9ar-00 " A SPD•OO rpf-( ll Uer_"00 AL-01 11L O=- LIL venues 50 .05 $0 .66 k Net re 50.85 52 .19 53.74 54.72 $5 .59 56.31 57 .10 523.72 58 .86 $ 11 .95 $17 .81 523 .97 $62 .60 Reason Why +Estimates Fraudulent
Report Title CTLM: Quarterly Earnings Previe w Author (s) Charlie Glavin, CFA, Regina Eberhart, Genia Jone s Date of July 11, 200 0 Statement Page Number 1 Fraudulent We believe that CTLM can easily exceed our (conservative) revenue estimate of $5.6 million for the company's June quarter, reflecting greater tha n Statement 18% sequential growth . Reason Why +Cautionar y Fraudulent Report Title CTLM: Quarterly Earnings Previe w Author (s) Charlie Glavin, CFA, Regina Eberhart, Genia Jone s Date of July 11, 200 0 Statement Page Number 2 Fraudulent We believe that CTLM can easily exceed our (conservative) revenue estimate of $5 .6 million for the company's June quarter, reflecting greater tha n Statement 18% sequential growth . Reason Why +Cautionar y Fraudulent Report Title CTLM: Quarterly Earnings Previe w Author(s) Charlie Glavin, CFA, Regina Eberhart, Genia Jone s
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 63 of 262) Date of July 11, 2000 Statement Page Number 3 Fraudulent Centillium * F N Statement
Exhibit 1 Income Statement 163U 2000 200 1 01 02 03 04 FYE 01A 02E 03E 04E FYE OlE 02 E 03E 04E FY E i3 Millions, kLg JuL& Se°_9 ,; Dec-99 Dc- Alar-Ql ALL Seo-00 L__ to tilau Jun_Ol SUL IC-01 jg;u Nat revenues $0 .05 $0 .66 $0 .85 52 .19 $3 .14 $4.72 $5 .59 $6.31 $7.10 $23 .72 $8.86 $11 .95 S1? .81 $23 .97 562.60 Reason Why +Estimate s Fraudulent
Report Title Maintain Buy rating, Increasing Price Target to $100 on Strong Revenue Growth and Explosive Target Market . Author (s) Charlie Glavin, CFA, Regina Eberhart, Caroline Moon, Genia Jone s Date of July 20, 2000 Statement Page Number I Fraudulent Centillium posted impressive 100%+ Q/Q revenue growth in 2Q00, with higher than anticipated topline results ($9 .7M versus our $5 .6M Statement expectations), and a slew of design wins that should fuel future growth . Reason Why +Surprises Fraudulent Report Title Maintain Buy rating, Increasing Price Target to $100 on Strong Revenue Growth and Explosive Target Market . Author(s) Charlie Glavin, CFA, Regina Eberhart, Caroline Moon, Genia Jone s Date of July 20, 200 0 Statement Page Number I Fraudulent We are raising our revenue estimates for 2000 to $45 MM (from $24 Statement MM) and for 2001 to $100 MM (from $63 MM) . Reason Why +Revision s Fraudulent
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 64 of 262) Report Title Maintain Buy rating, Increasing Price Target to $100 on S trong Revenue Growth and Explosive Target Market . Author(s) Charlie Glavin, CFA, Regina Eberhart, Caroline Moon, Genia Jones Date of July 20, 200 0 Statement Page Number 2 Fraudulent Centillium reported sequential revenue growth of over 100%, posting results of Statement $9.7 million, which beat our revenue estimates of $5 .6 million for the quarter by almost 75% . Reason Why +Surprise s Fraudulent Report Title Maintain Buy rating, Increasing Price Target to $100 on Strong Revenue Growth and Explosive Target Market . Author(s) Charlie Glavin, CFA, Regina Eberhart, Caroline Moon, Genia Jones Date of July 20, 2000 Statement Page Number 3 Fraudulent Raising Revenue Estimates to $45 MM in 2000 and $100 MM in 2001 We are raising our revenue estimates on CTLM to $45 million in 200 0 Statement (formerly $24 million) and an even $100 million in 2001 (up from $63 million) . Reason Why +Revisions Fraudulent Report Title Maintain Buy rating, Increasing Price Target to $100 on Strong Revenue Growth and Explosive Target Market . Author(s) Charlie Glavin, CFA, Regina Eberhart, Caroline Moon, Genia Jone s Date of July 20, 2000 Statement Page Number 4 Fraudulent Exhibit I Statement Previous vs . Revised Estimates Revenues 342000E 2000E 2001 E old $6 .3 $23 .7 $62 .6 NOW $14 $45 S10 0 Source: CSFB Technology G roup estimates . Reason Why +Estimates Fraudulent Report Title Maintain Buy rating, Increasing Price Target to $100 on Strong Revenue Growth and Explosi ve Target Market .
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 65 of 262) Author(s) Charlie Glavin, CFA, Regina Eberhart, Caroline Moon, Genia Jone s Date of July 20, 2000 Statement Page Number 6 Fraudulent Centillium F N Statement
Exhibit 2 Income Statement 1999 2000 200 1 at 02 03 04 FYE 01 Q2A 03E 04E FYE WE 02E 03E 04E FY E J$ MWiions) Mar-99 Jun-99 So 99 Dec -99 Dec-99 Mar- 00 Jun- 00 Sap-00 Dec-00 Dec-00 Mar-0 1 Jun - 01 Say-01 Dec-01 Doc-01 W revenues $0 .1 $0 .7 $0 .9 $2.2 $3.7 $4. 7 $9.8 $ 14.0 $16.5 $49.0 $ 19 .8 $23 .4 $26 .8 $30.1 $100.0 Reason Why +Estimate s Fraudulent
Report Title Maintained Buy Rating, Increased Price Target to $100 on Strong Revenue Growth and Explosive Target Market . Author(s) Charlie Glavin, CFA, Regina Eberhart, Caroline Moon, Genia Jone s Date of August 4, 2000 Statement Page Number 1 Fraudulent We have raised our revenue estimates for 2000 to $45 MM (from $24 MM) and for 2001 to $100 MM (from $63 MM) . Statement Reason Why +Revisions Fraudulent Report Title Maintained Buy Rating, Increased Price Target to $100 on Strong Revenue Growth and Explosive Target Market . Author(s) Charlie Glavin, CFA, Regina Eberhart, Caroline Moon, Genia Jone s Date of August 4, 2000 Statement Page Number 2 Fraudulent July 19, Centillium reported sequential revenue growth of over 100%, posting results of $9 .7 million, which beat our revenue estimates of $5 .6 Statement million for the quarter by almost 75 Reason Why +Surprise s Fraudulent
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 66 of 262) Report Title Maintained Buy Rating, Increased Price Target to $100 on Strong Revenue Growth and Explosive Target Market . Author(s) Charlie Glavin, CFA, Regina Eberhart, Caroline Moon, Genia Jone s Date of August 4, 2000 Statement Page Number 4 Fraudulent Raise Revenue Estimates to $45 MM in 2000 and $100 MM in 2001 We have raised our revenue estimates on CTLM to $45 million in 200 0 Statement (formerly $24 million) and an even $100 million in 2001 (up from $63 million) . Reason Why +Revisions Fraudulent Report Title Maintained Buy Rating, Increased Price Target to $100 on Strong Revenue Growth and Explosive Target Market . Author(s) Charlie Glavin, CFA, Regina Eberha rt, Caroline Moon, Genia Jones Date of August 4, 2000 Statement Page Number 4 Fraudulent Statement Exhibit 2 Previous versus Revised Estimate s EPS 302000E 2000E 2001 E Old ($0 .24) ($0.91) ($0.64) New (S0.19) ($0.82) ($0.53)
Revenues 302000E 2000E 2001 E Old S6.3 $23.7 $62.6 New S14 S45 $100
Source: CSFB Technology Group estimates. Reason Why +Estimate s Fraudulent Report Title Maintained Buy Rating, Increased Price Target to $100 on S trong Revenue Growth and Explosive Target Market . Author(s) Charlie Glavin, CFA, Regina Eberhart, Caroline Moon, Genia Jone s Date of August 4, 2000 Statement Page Number 6
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 67 of 262) Fraudulent Centillium a Fe roN Statement
Exhibit 3 Qua rterly Income Statement , FY 1999A-2001 E 1999 2000 2001
($ Millions) Mar-99 Jun-99 Ser -99 Dec-90 De c-99 Idar-00 Jun-00 Se -00 Dec -00 Dec-00 Mar-01 Jun-01 Seo-01 Dec-01 Dec-01 Net revenues $0.1 $0.7 $0.9 $2 . 2 $3.7 $4.7 $9.8 $14 .0 $16.5 $45.0 $19 .8 $23. 4 $26 .8 $30 .1 $1 00 . 0 Reason Why +Estimate s Fraudulent
Report Title CTLM : Quarter Previe w Author(s) Charlie Glavin, CFA, Regina Eberhart, Caroline Moo n Date of October 3, 200 0 Statement Page Number 1 Fraudulent While we have modeled revenue of $14 million for the September (up 44% from June), we would not be surprised to see approach, if not exceed th e Statement $16 million level (50-60% growth). Reason Why +Cautionary Fraudulent Report Title CTLM : Quarter Previe w Author(s) Charlie Glavin, CFA, Regina Eberhart, Caroline Moo n Date of October 3, 2000 Statement Page Number 2 Fraudulent While we have modeled revenue of $14 million for the September (up 44% from June), we would not be surprised to see approach, if not exceed th e Statement $16 million level (50-60% growth). Reason Wh y +Cautionary Fraudulent Report Title CTLM : Quarter Previe w Author(s) Charlie Glavin, CFA, Regina Eberhart, Caroline Moo n
Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 68 of 262) Date of October 3, 200 0 Statement Page Number 3 Fraudulent Centillium Fi N Statement
Exhibit I Income Statement
1999 2000 200 1 Q1 02 03 04 FYE 01 02A 03E 04E FYE 0 1E 02E 03E 04E FYE ( $ Millions ) Afar-99 Jun-99 SeoA9 Dec-99 Dec-99 Mar-00 Jun -00 Seo-00 Dec-00 Dec-00 Alar_O1 Jun-01 Sen-01 Dec -0I Dec-0 1 Net revenues $0 .1 $0 .7 $0 .9 $2 .2 5.3.7 5.4 .7 $9. 8 $ 14 .0 $ 16 .5 $45 . 0 519 .8 $23.4 $ 26.8 $30 . 1 $100. 0 Reason Why +Estimates Fraudulent
Report Title CTLM Reports Strong Upside for 3Q and Guidance ; Raising Estimate s Author(s) Charlie Glavin, CFA, Regina Eberhar t Date of October 18, 200 0 Statement Page Number 1 Fraudulent CTLM posted another quarter of very strong upside-revenues of $17 .7 mm came in at 80%+ Q/Q growth in 3Q, higher than our $14 mm estimate s Statement and previewed expectations . Reason Why +Surprises Fraudulent Report Title CTLM Reports S trong Upside for 3Q and Guidance ; Raising Estimate s Author(s) Charlie Glavin, CFA, Regina Eberhar t Date of October 18, 2000 Statement Page Number I Fraudulent We raise revenue estimates for 2000 to $54 .5 MM (was $45 MM) and for 2001 to $136 MM (was $100 MM) . Statement Reason Why +Revisions Fraudulent
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 69 of 262) Report Title CTLM Reports Strong Upside for 3Q and Guidance ; Raising Estimate s Author(s) Charlie Glavin, CFA, Regina Eberhar t Date of October 18, 2000 Statement Page Number 2 Fraudulent Centillium reported sequential revenue growth of over 80% to $17.7 million, which beat our revenue estimates of $14 million for the quarter as wel l Statement as our preview expectations outlined in our Quarter Preview (see First Call 10/3/2000) . Reason Why +Surprises Fraudulent Report Title CTLM Reports Strong Upside for 3Q and Guidance ; Raising Estimate s Author(s) Charlie Glavin, CFA, Regina Eberhar t Date of October 18, 2000 Statement Page Number 3 Fraudulent Raising Revenue Estimates to $55 MM in 2000 and $137 MM in 200 1 Statement We are raising our revenue estimates on CTLM to $54 .5 million in 2000 (formerly $45 million) and an even $137 million in 2001 (up from $10 0 million) . Reason Why +Revisions Fraudulent Report Title CTLM Reports Strong Upside for 3Q and Guidance ; Raising Estimate s Author(s) Charlie Glavin, CFA, Regina Eberha rt Date of October 18, 200 0 Statement Page Number 4 Fraudulent Exhibit 1 Statement previous vs. Revised Estimate s Revenues 402000E 2000E 2001 E Old $16.5 $45 $10 0 New $22.4 $55 $13 7 Source : CSFB Technology Group estimates .
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 70 of 262) Reason Why +Revisions Fraudulent Report Title CTLM Reports Strong Upside for 3Q and Guidance ; Raising Estimate s Author(s) Charlie Glavin, CFA, Regina Eberhar t Date of October 18, 200 0 Statement Page Number 4 Fraudulent However, we believe that we have been very conservative with both our revenue estimates and cost assumptions in our model and believe tha t Statement significant leverage remains . Reason Why +Cautionary Fraudulent Report Title CTLM Reports Strong Upside for 3Q and Guidance ; Raising Estimate s Author(s) Charlie Glavin, CFA, Regina Eberhar t Date of October 18, 2000 Statement Page Number 5 Fraudulent Centillium BOSMN Statement
Exhibit 2 Income Statement 1999 2000 200 1 01 02 03 04 FYE 01 02 03A 04E FYE O1E 02E 03E 04E FY E ($ Millions ) Ma r-99 Jun-99 Sep-99 Dec-99 latQ2 Jun-00 Sep-00 Dec-00 Dec-00 Mar-01 Jun-01 1 Dec-01 Dec-0 1 Net revenues $0.1 $0 .7 $0.9 32.2 $3 .7 34 .7 $ 9.8 $17. 7 $22. 4 $54 .5 $26 .85 $31 .67 336 .3 $40 .9 $135 .7 Reason Why +Estimates Fraudulent
Report Title CTLM Reports Strong Upside for 3Q and Guidance ; Raising Estimate s
Author(s) Charlie Glavin, CFA, Regina Eberhar t Date of November 8, 2000 Statement
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 71 of 262) Page Number I Fraudulent On October 17, CTLM posted another quarter of very strong upside- revenues of $17 .7 mm came in at 80%+ Q/Q growth in 3Q, higher than our Statement $14 mm estimates and previewed expectations . Reason Wh y +Surprise s Fraudulent Report Title CTLM Reports Strong Upside for 3Q and Guidance ; Raising Estimates
Author(s) Charlie Glavin, CFA, Regina Eberhar t Date of November 8, 2000 Statement Page Number 1 Fraudulent We raised revenue estimates for 2000 to $54 .5 MM (was $45 MM) an d Statement for 2001 to $136 MM (was $100 MM) . Reason Why +Revisions Fraudulent Report Title CTLM Reports Strong Upside for 3Q and Guidance ; Raising Estimates
Author(s) Charlie Glavin, CFA, Regina Eberhar t Date of November 8, 2000 Statement Page Number 2 Fraudulent On October 17, Centillium reported sequential revenue growth of over 80% to $17.7 million, which beat our revenue estimates of $14 million fo r Statement the quarter as well as our preview expectations outlined in our Quarter Preview (see First Call note of 10/3/2000) . Reason Wh y +Surprises Fraudulent Report Title CTLM Reports Strong Upside for 3Q and Guidance ; Raising Estimates
Author(s) Charlie Glavin, CFA, Regina Eberhart Date of November 8, 200 0 Statement Page Number 2
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 72 of 262) Fraudulent Exhibit 1 Statement CTLM 3Q00 Results versus Expectation s Fiscal Year Ends December f5 & Shares in Millions) 3000A 3000E DIFF %CHG 3000A 2000A DIFF %CHG Net Sales $17.66 $14. 00 $3.66 26 .13% 517.66 59 .75 $7.91 81 .0 %% Reason Why +Surprise s Fraudulent Report Title CTLM Reports Strong Upside for 3Q and Guidance ; Raising Estimate s
Author(s) Charlie Glavin, CFA, Regina Eberhar t Date of November 8, 200 0 Statement Page Number 6 Fraudulent Raising Revenue Estimates to $55 MM in 2000 and $137 MM in 200 1 Statement We have raised our revenue estimates on CTLM to $54 .5 million in 2000 (formerly $45 million) and $137 million in 2001 (up from $100 million) . Reason Why +Revisions Fraudulent Report Title CTLM Reports Strong Upside for 3Q and Guidance ; Raising Estimate s
Author (s) Charlie Glavin, CFA, Regina Eberhar t Date of November 8, 2000 Statement Page Number 6 Fraudulent Exhibit 6 Statement Previous versus Revised Estimate s
Revenues 4Q200DE 2000E 2001 E Old $16.5 S45 S100 New $22.4 $55 S137
Reason Why +Revisions Fraudulent
Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 73 of 262) Report Title CTLM Reports Strong Upside for 3Q and Guidance ; Raising Estimate s
Author(s) Charlie Glavin, CFA, Regina Eberhart Date of November 8, 2000 Statement Page Number 7 Cll~i FIRST Fraudulent Centillium ls111lA! 90~T'ON Statement
Exhibit 7 Income Statement , FY 1999A-2001 E 3 in millions, except per-share da ta 199 200 0 200 1 01 02 03 04 FYE 01 02 03A 04E FY E 01E 02E 03E 04E FY E (3 Millions) Mar-99 Jun-99 Se P-99 Dec-99 Dec- 99 Afar-00 Jun -0 0 Sep-0 0 Dec-00 Dec-0 0 Mar-0 1 Jun-01 Sep-01 Dec-01 Dec-0 1 Net revenues $0 .1 $0 .7 $0 .9 $2.2 $3 .7 34.7 $9 .8 $17 . 7 $22 .4 $54 . 5 $ 26 .85 $31 .67 336 . 3 $40 .9 $135 . 7 Reason Why +Estimate s Fraudulent
Report Title CTLM: Earnings Preview Author(s) Charlie Glavin, CFA, Regina Eberhar t Date of January 10, 200 1 Statement Page Number 1 Fraudulent We believe that CTLM should report revenue slightly above our $22-2 3 Statement million estimate and a loss of ($0 .10), with a modest increase in forward guidance . Reason Why +Estimates Fraudulent Report Title CTLM: Earnings Preview Author (s) Charlie Glavin, CFA, Regina Eberhar t Date of January 10, 200 1 Statement Page Number 3
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 74 of 262) Fraudulent Table 1 Statement Income Statement
1999 2000 200 1 at 02 03 0 4 FYE 01 0 2 03A 04E FYE WE 02E 03E 04E FY E ($ Millions) ?Aar-99 Jun-99 Sea 99 Dec-99 Dec-99 Mar-00 Jun - 00 X00 De c- DO Dec -0 0 61g-0l Jun - 01 Sep -01 Dec-01 Dec-0 1 Net revenues $0 .1 $0 .7 $0.9 $2 .2 $3 .7 $4 .7 $9 .8 $17. 7 $22 .4 $64 .5 $26 .85 $31 .67 536.3 540.9 $135. 7 Reason Why +Estimates Fraudulent
Report Title Solid 4Q00 Means Breakeven in June - 3 Quarters Earl y Author (s) Charlie Glavin, CFA, Regina Eberhar t Date of January 24, 200 1 Statement Page Number 1 Fraudulent CTLM posted strong upside in 4Q00 -revenues grew 38% Q/Q to $24.3 mm (vs . our $22 mm estimate), and also inched closer to profitability Statement reporting EPS of $(0.05), vs. a forecasted loss of 10 cents . Reason Why +Surprise s Fraudulent
Report Title Solid 4Q00 Means Breakeven in June - 3 Quarters Earl y Author (s) Charlie Glavin, CFA, Regina Eberhar t Date of January 24, 200 1 Statement Page Number I Fraudulent We raise revenue estimates for 2001 to $145 MM (was $135 MM) and EPS to a gain of $0 .04, from $(0.29) . Statement Reason Why +Revisions Fraudulent Report Title Solid 4Q00 Means Breakeven in June - 3 Quarters Earl y Author(s) Charlie Glavin, CFA, Regina Eberhar t Date of January 24, 200 1 Statement Page Number 2
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 75 of 262) Fraudulent Centillium reported 4Q00 EPS of $(0 .05) on sequential revenue growth of 38% to $24 .3 million, beating our expectations for a loss of $(0 .10) on Statement revenue of $22 million for the quarter outlined in our Quarter Preview (see First Call 1/10/2001). Reason Why +Surprises Fraudulent Report Title Solid 4Q00 Means Breakeven in June - 3 Quarters Earl y Author(s) Charlie Glavin, CFA, Regina Eberhar t Date of January 24, 200 1 Statement Page Number 2 Fraudulent Exhibit I Statement Previous vs. Revised Estimates Revenues 1Q2001E 2001 E Old $26.8 $135. 7 New $30.0 $145. 0 Reason Why +Revisions Fraudulent Report Title Solid 4Q00 Means Breakeven in June - 3 Quarters Earl y Author(s) Charlie Glavin, CFA, Regina Eberha rt Date of January 24, 200 1 Statement Page Number 4 Fraudulent Raising 2001 Revenue Estimate to $145 MM ; Plenty of Upside Remain s Statement We are raising our revenue estimates on CTLM to $145 million in 2001 (up from $135 million), based on the current ramp of new products an d customers, plus the company's design win pipeline. Reason Why +Revisions Fraudulent Report Title Solid 4Q00 Means Breakeven in June - 3 Quarters Earl y Author(s) Charlie Glavin, CFA, Regina Eberhart Date of January 24, 200 1 Statement Page Number 5
Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 76 of 262) FIRST Fraudulent Centillium BQ6TON Statement
Exhibit 2 Income Statement 1999 2000 200 1 01 02 0 3 04 FYE 01 02 03 04A FYE 01E 02E 03E 04E FYE (3 Millions, Mar-99 Jun-99 Sep-99 Dec-99 Dec-99 R1ar-00 Jun -00 Sep-00 Dec-00 Dec-00 Mar-01 Jun-') 1 Sep-01 Dec-01 Dec-0 1 Net revenues $0 .1 $0 .7 $0 .9 $2. 2 $3 .7 $4 .7 $9 .8 $17 .7 $24.3 $56 .5 $30 .0 $34 .0 $38 . 3 $42. 7 $145. 0 Reason Why +Estimates Fraudulent
Report Title March Quarter Previe w Author(s) Charlie Glavin, CFA, Regina Eberhart Date of April 10, 200 1 Statement Page Number 1 Fraudulent We believe that CTLM should report revenue in line with our $30 mm estimate and a loss of ($0 .03); we also believe that in spite of the curren t Statement market uncertainty, the company is likely to stand by its previous CY01 guidance of $145 million or so . Reason Why +Estimates Fraudulent Report Title March Quarter Previe w Author(s) Charlie Glavin, CFA, Regina Eberha rt Date of April 10, 200 1 Statement Page Number 2 Fraudulent We believe that CTLM should report revenue in line with our $30 million estimate and a loss of ($0 .03) ; we also believe that given the current Statement market uncertainty, the company is likely to stand by its previous CY01 guidance of $145 million or so . Reason Why +Estimate s Fraudulent Report Title March Quarter Previe w Author(s) Charlie Glavin, CFA, Regina Eberhart
Exhibit D : Misstatements and Omissions in CSFBC 's Research Reports (Page 77 of 262) Date of April 10, 200 1 Statement Page Number 3 Fraudulent Centillium U MN Statement
Exhibit 1 Income Statement 1599 200 0 200 1 0 1 0 2 0 3 04 FYE Q1 02 Q3 04A FYE QlE Q2E WE 04E FY E (S Millions] Mar-99 Jun-99 Sep - 09 Dec-99 Dec - 99 Mar-0 0 Jun-00 Sep -Q0 Dec-00 Dec-0 0 Mar-01 Jun-01 Sep-01 Dec-01 Dec-0 1
Net revenues $0 .1 $0 .7 $0 .9 $2 .2 $3 .7 $4 . 7 $9 .8 $17 .7 $24 . 3 $56. 5 $30 .0 $34 .0 $38.3 $42 .7 $145. 0 Reason Why +Estimate s Fraudulent
Report Title Three Words You Didn't Expect to Hear this Quarter- "Estimates Raised Significantly" Author(s) Charlie Glavin, CFA, Regina Eberhar t Date of April 18, 200 1 Statement Page Number 1 Fraudulent We are raising estimates for 2001 to $167 mm and $0 .23 (was $145mm and $0 .04), on strong demand and solid 2Q visibility for 30% Q/Q growth . Statement Reason Why +Revisions Fraudulent Report Title Three Words You Didn't Expect to Hear this Quarter- "Estimates Raised Significantly" Author(s) Charlie Glavin, CFA, Regina Eberhar t Date of April 18, 200 1 Statement Page Number 2 Fraudulent We estimate that revenue will come in at $167 million (prior estimate was $145 million) an d Statement EPS of $0.23 (versus our old estimate of $0 .04). Reason Why +Estimates Fraudulent
Exhibit D : Misstatements and Omissions in CSFBC' s Research Reports (Page 78 of 262) Report Title Three Words You Didn't Expect to Hear this Quarter- "Estimates Raised Significantly " Author(s) Charlie Glavin, CFA, Regina Eberhar t Date of April 18, 200 1 Statement Page Number 2 Fraudulent Exhibit I Statement Previous vs. Revised Estimate s Revenues 202001E 2001 E Old $34 .0 $145 . 0 New $41 .5 $167 . 0
EP S Old $0 .00 $0.04 New $0.06 $0.2 3 Source: CSFB Technology Group estimates .
Reason Why +Revisions Fraudulent Report Title Three Words You Didn't Expect to Hear this Quarter- "Estimates Raised Significantly " Author(s) Charlie Glavin, CFA, Regina Eberhar t Date of April 18, 200 1 Statement Page Number 6 Fraudulent Centilliurn N Statement
Exhibit I Income Statement 1 1 1999 2000 200 U l 02 03 04 01 0 2 0 3 04 FYE 01A Q2E 03E WE FYE (S Millions) Mar-99 Jun-99 Sep-99 Dec-99 Dec -9 9 Mar-00 Jun-00 Sea-0 0 Dec-00 Dec-00 Mar-0 1 Jun-01 Sea- 01 Dec-01 Dec-U 1 Netrevenues 30 .1 $0 .7 $0 .9 $2 . 2 $3 .7 $4 .7 $9 . 8 $17.7 $24 .3 356 .6 $31 .9 $41 .4 $44 .7 $49 .0 $167. 0 Reason Why +Estimate s Fraudulent °_ . J. of CTLM
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 79 of 262) IssuerName : . . EMachines, Inc. - EEEE Report Title Initiating Coverage with a Buy Rating with FY 2000 an d 2001 Estimates of ($0.03) and $0 .1 1
Author(s) Joel Pitt Date of April 26, 2000 Statement Page Number 5
Fraudulent 1998 1999 2000E 2001E 1998 1999 2000E 2001 E Statement Hardware Revenue °, o Increas e March X0.0 $137 .4 $223 .1 $2899 .7 Mach na na 62.4% 29 .8°,0 J,.^e C0.0 213.9 187 .4 275.2 Jane na na -12 .4% 46 .89. Se !ernber 0.0 155.3 243 .6 316.5 Se.+ember na na 56.9% 29 .9 % December 58.3 305 .6 353 .3 395.6 Dcfember na 424 .4% 15.6% 12 .0 % Total $59 .3 $812 .2 $1 .007 .5 $1,277.0 Total na 1293 .7% 24.0°! 26.8 %
Internet Revenue % Increas e March $0.0 $i-i0 $2.7 $10 .1 Mara? na na nmf 278 .2 % Ave 0.0 0 .0 3.8 11 .2 June no na nmf 197.4 % September 0.0 0 .6 5.7 13 .1 September no na 836 .1 % 129.6 % December 0.0 1 .5 9.2 15.6 Dumber no nmf 526.5% 69.1 % Total $0.0 $2.1 $21 .4 $50 .0 Total na nmf 927 .4% 133.9%
Total Revenue % Increas e March $0.0 $137 .4 $225 .8 $299 .8 Mich na na 64.3% 32.81 . Jun e 0.0 213 .9 191 .2 286 .5 June na na -10 .6% 49.8 % September 0.0 155 .9 249 .4 329 .6 Ser+emaer na na 60.0% 32.2 0 December 58.3 3 07 .1 362 .5 411 .2 December na 427.0% 18 .0% 13.49 . Total $58 .3 $814 .3 $1 .028 .8 $1 .327 .0 Total na 1297.3% 26.3% 29.0 %
Reason Why +Estimates Fraudulent
Report Title $0.01 Q1 EPS is Well Above Consensus (and Our) ($0 .05) Estimate . Raising 2000 EPS Estimate to $0 .05 from ($0 .03). Author(s) Joel Pit t Date of April 28, 2000 Statement
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 80 of 262) Page Number 1 Fraudulent At $246.4 million, up 79%, QI PC sales were $23 .3 million higher than our forecast (accounting for $0.01 of the EPS upside) . Unit sales increase d Statement 82% to 521,000 units . Reason Wh y +Surprises Fraudulent Report Title $0.01 Q1 EPS is Well Above Consensus (and Our) ($0 .05) Estimate . Raising 2000 EPS Estimate to $0.05 from ($0 .03). Author(s) Joel Pit t Date of April 28, 2000 Statement Page Number I Fraudulent Internet-related revenue grew 131 %n sequentially to $3 .4 million, comfortably exceeding our $2.7 million estimate (and accounting for $0.01 of Statement upside.) Gross margin on Internet-related revenue was 90% . Reason Why +Surprise s Fraudulent Report Title $0.01 Q 1 EPS is Well Above Consensus (and Our) ($0.05) Estimate . Raising 2000 EPS Estimate to $0.05 from ($0 .03).
Author(s) Joel Pitt Date of April 28, 2000 Statement Page Number 3 Fraudulent Q1 PC revenue of $246.4 million was $23 .1 million above our estimate of $223 .1 million . Unit shipments in the quarter were up 82% year-over - Statement year to 521,000 units . We estimate that upside in PC revenue accounted for $0 .01 of earnings upside (see Table 1) . Reason Why +Surprise s Fraudulent Report Title $0.01 Q1 EPS is Well Above Consensus (and Our) ($0 .05) Estimate . Raising 2000 EPS Estimate to $0.05 from ($0 .03). Author(s) Joel Pitt Date of April 28, 2000 Statement Page Number 3 Fraudulent Internet-related revenue grew 126% sequentially to $3 .4 million. This was $700K more than our estimate of $2 .7 million and accounted for roughl y Statement $0.01 of the $0 .06 upside in EPS .
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 81 of 262) Reason Why +Surprises Fraudulent Report Title $0.01 Q1 EPS is Well Above Consensus (and Our) ($0 .05) Estimate . Raising 2000 EPS Estimate to $0.05 from ($0 .03). Author(s) Joel Pitt Date of April 28, 2000 Statement Page Number 5 Fraudulent Table Machines : 01 00 Estimated vs. Actual Results Statement in millions . except per share data. fiscal year ending December
Estimated Actual Difference Impac t Hardware Revenue $223 .1 $246 .4 S23 .3 Add $0 .01 Internet Revenue 2 .7 3.4 0.7 Add 0 .0 1
Reason Why +Surprise s Fraudulent Report Title $0.01 Q1 EPS is Well Above Consensus (and Our) ($0 .05) Estimate . Raising 2000 EPS Estimate to $0.05 from ($0 .03). Author(s) Joel Pitt Date of April 28, 2000 Statement Page Number 6
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 82 of 262) Fraudulent Table 2 eMachines: Statement of Qua rterly Earnings 199 8-2001 E - Pa rt I Statement in millions, except per share data . fiscal year ending December 1998 1999 2000E 2001E 1998 1999 2000E 2001 E Hardware Revenue % Increase March $0.0 $137 .4 5246 .4 $304 .7 March na na 79.3% 23.6%4. June 0.0 213.9 197 .1 289 .5 June na na -7.8% 46.8° 0 September 0.0 155.3 256 .3 332 .9 September na na 65.0% 29.9%'%c. December 58.3 305.6 371 .6 416 .1 December na 424 .4% 21 .6% 12.0% Total $58.3 $812 .2 $1 .071 .4 $1 .343.1 Total na 1293.7% 31.9% 25.4%
Internet Revenue % Increas e March $0.0 $0.0 $3.4 $10 .7 March na na nmf 215.0% June 0.0 0 .0 4.1 11 .9 June na na nmf 187.2% September 0.0 0 .6 6.3 13.9 September na na 931 .1% 120.8% December 0.0 1 .5 9.8 16.2 December na nmf 564.6% 65.9% Total 50.0 52.1 $23.6 $52 .7 Total na nmf 1034.6% 123.4%
Total Revenue % Increas e March $0.0 $137.4 S249.8 $315.4 March na na 81 .8% 26 .2% June 0.0 213.9 201 .3 301 .4 June na na -5.9% 49.7 % September 0.0 155.9 262 .5 346.8 September na na 68 .4% 32 .1 % December 58.3 3071 381 .3 432.3 December na 427.0% 24 .2% 13 .4 % Total $58 .3 $814 .3 $1,095 .0 $1 .395 .8 Total na 1297 .3% 34.5% 27.5% Reason Why +Estimate s Fraudulent
Report Title $0.01 QI EPS Is Well above Consensus and Our $(0 .05) Estimate. Raising 2000 EPS Estimate to $0 .05 from $(0 .03). Author (s) Joel Pitt Date of May 2, 2000 Statement Page Numbe Fraudulen t tntesirnet-related revenue grew 131% sequentially to $ 3.4 million, comfortably exceeding our $2 .7 million estimate (and accounting for $0.01 of Statement de.) Gross margin on Internet-related revenue was 90%.
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 83 of 262) Reason Why +Surprise s Fraudulent Report Title $0.01 Q1 EPS Is Well above Consensus and Our $(0 .05) Estimate . Raising 2000 EPS Estimate to $0.05 from $(0 .03). Author(s) Joel Pitt Date of May 2, 2000 Statement Page Number 2 Fraudulent Q1 PC revenue of $246.4 million was $23 .1 million above our estimate of $223 .1 million . Unit shipments in the quarter were up 82% year ove r Statement year to 521,000 units . We estimate that upside in PC revenue accounted for $0 .01 of earnings upside (see Table 1) . Reason Why +Surprises Fraudulent Report Title $0.01 Q1 EPS Is Well above Consensus and Our $(0 .05) Estimate. Raising 2000 EPS Estimate to $0 .05 from $(0 .03). Author (s) Joel Pitt Date of May 2, 2000 Statement Page Number 2 Fraudulent Internet-related revenue grew 126% sequentially to $3 .4 million . This was $700K more than our estimate of $2 .7 million and accounted for roughl y Statement $0.01 of the $0.06 upside in EPS . Reason Why +Surprises Fraudulent Report Title $0.01 Q1 EPS Is Well above Consensus and Our $(0 .05) Estimate . Raising 2000 EPS Estimate to $0.05 from $(0 .03). Author (s) Joel Pitt Date of May 2, 2000 Statement Page Number 4 Fraudulent Table 1 Statement eMachines : Q1 00 Estimated versus Actual Results S i m il lions, except per share data Estimated Actual Difference Impac t Hardware Revenue $223 .1 $246 .4 $23 .3 Add $0 .0 1 Internet Revenue 2 .7 3 .4 0.7 Add 0 0 1 Total Revenue 225 .8 249 .8 24 . 1
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 84 of 262) Reason Why +Surprises Fraudulent Report Title $0.01 Q 1 EPS Is Well above Consensus and Our $(0 .05) Estimate . Raising 2000 EPS Estimate to $0.05 from $(0.03) . Author(s) Joel Pit t Date of May 2, 2000 Statement Page Number 5 Fraudulent Table 2 Statement eMachines: Statement of Quarterly Earnings 1998-2001 E $ in millions, except per share data 1998 1999 2000E 2001 E Total Revenue March $0 .0 $137 .4 $249 .8 $315.4 June 0 .0 213 .9 201 .3 301 . 4 September 0 .0 155 .9 262 .5 346. 8 Deceinber 58 .3 307 .1 381 .3 432. 3 Total $58 .3 $814 .3 $1 .095 .0 $1 .395 .8 Reason Why +Estimates Fraudulent
Report Title More than a Low-End PC Company : Profitable Consumer Retail Sales Provide Basis for Internet Related Revenue s Author(s) Joel Pitt Date of May 12, 2000 Statement Page Number 14 Fraudulent We've made relatively conserva-tive assumptions in our model with regard to eMachines' hot key revenues and believe there could be considerabl e Statement upside (Table 12) . Reason Why +Cautionary Fraudulent Report Title More than a Low-End PC Company : Profitable Consumer Retail Sales Provide Basis for Internet Related Revenue s Author (s) Joel Pitt
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 85 of 262) Date of May 12, 2000 Statement Page Number 2 1 Fraudulent Table 1 7 Statement eMachines : Statement of Quarterly Earnings 1998-2001 E 5 ii millions . except per share data 1998 1999 2000E 2001E 1998 1999 2000E 2001 E
Total Revenue % Increase March $0.0 $137 .4 $249 .8 $315 .4 March na na 81 .8% 26.2 % June 0.0 213 .9 201 .3 301 .4 June na na -5.9% 49.7 % September 0.0 155.9 262 .5 346 .8 September na na 68.4% 32 .1 % December 58.3 307 .1 381 .3 432 .3 December na 427.0% 24.2% 13 .4 % Total $58 .3 $814 .3 S1 .095 .0 $1,395 .8 Total na 1297 .3% 34.5°!° 27.5%
Reason Why +Estimates Fraudulent
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 86 of 262) Issuer Name.. Efficlead Networks Inc. - EFNT Report Title Broadband Bandwidth - The Digital Age Opium Author(s) Paul J. Weinstein, CF A Date of August 09, 1999 Statement Page 6 Number Fraudulent Exhibit 6 Statement Summary Financial Statistic s
1998 1999( E) 2000(E) 2001(E) Total revenue 3 .4 14 .8 53.0 118 .4 Reason Why +Estimate s Fraudulent Report Title Broadband Bandwidth - The Digital Age Opiu m Author(s) Paul J. Weinstein, CF A Date of August 09, 1999 Statement Page 10 Number Fraudulent Exhibit 8 Efficient Networks Qua rterly Operating Results Statement Results in millions except per share 1999(E) 2000(E) 1st n 3rd s Znd Revenues 1 .2 1 .9 4 .1 7 .7 9 .5 11 .2 13 .% 1R 6 14 .A 52.0 119 A Reason Why +Estimates Fraudulent
Report Title Broadband Bandwidth-The Digital Age Opiu m Author(s) Paul J . Weinstein, CFA
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 87 of 262) Date of August 16, 199 9 Statement Page 1 3 Number Fraudulent Statement Exhibit 1 0 Summa ry Financial Statistic s dollars in millions
1998 1999 (E) 2000( E) 2001(E) Total revenue 3 .4 14.8 53.0 118. 4 Reason Why +Estimates Fraudulent Report Title Broadband Bandwidth -The Digital Age Opiu m Author(s) Paul J. Weinstein, CF A Date of August 16, 199 9 Statement Page 2 1 Number Fraudulent Our revenue estimates of $53 million in 1999 and $118 million in 2000 presume unit volume shipments of roughly 260,000 and 350,000, Statement respectively (Exhibit 18) . Reason Why +Estimates Fraudulent Report Title Broadband Bandwidth -The Digital Age Opiu m Author(s) Paul J. Weinstein, CF A Date of August 16, 199 9 Statement Page 23 Number
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 88 of 262) Fraudulent Exhibit 2 0 Efficient Networks Qua rterly Operating Results Statement reslits in millions, except per share
1999 (E) 2000(E ) s n r s n r
Revenues 1 .2 1 .9 4 .1 7 .7 9 5 11 .2 13.G 18 .61 14 .8 53 .0 118 .4 Reason Why +Estimates Fraudulent
Report Title DSL Remains Hot - EFNT Results Should Show Upside Author(s) Paul J. Weinstein, CF A Date of October 11, 1999 Statement Page 1 Number Fraudulent Our $9 .5 mm revenue estimate for FQ1 has upside given the momentum of large-scale DSL roll outs ; Statement Reason Why +Estimate s Fraudulent Report Title DSL Remains Hot - EFNT Results Should Show Upsid e Author(s) Paul J . Weinstein, CF A Date of October 11, 199 9 Statement Page 2 Number Fraudulent Revenue . Our revenue forecast of $9 .5 mm, up 700% from the prior year (24% sequentially) reflects the powerful DSL momentum the marke t Statement has experienced over the last year. Reason Wh y +Estimates Fraudulent Report Title DSL Remains Hot - EFNT Results Should Show Upsid e Author(s) Paul J . Weinstein, CF A
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 89 of 262) Date of October 11, 199 9 Statement Page 2 Number Fraudulent We would note that revenue upside is very likely (better than $ 10 mm) but some of that upside will be re-invested back in the business, thus our Statement 12 cent loss estimate is likely to be accurate . Reason Why +Cautionary Fraudulent Report Title DSL Remains Hot - EFNT Results Should Show Upside Author (s) Paul J. Weinstein, CFA Date of October 11, 199 9 Statement Page 5 Number Fraudulent Exhibit 1 Efficient Networks Qua rterly Operating Results Statement Results in millions except per share 1999(A) 2000(E) 4th s n r s n r t
Revenue 0 .7 1 .2 1 .9 4 .1 7 .7 9 .5 11 .2 13 .6 18 .6 14 .8 53 .0 118 .4 Reason Why +Estimates Fraudulent
Report Title Surging Revenue Confirms DSL Market Acceleratio n Author (s) Paul J. Weinstein, CFA Date of October 21, 199 9 Statement Page 1 Number Fraudulent Revenue of $12 .2 mm was 27% ahead of expectations prompting roughly 30% increases in our FY 00/01 revenue to $69/$159 mm fro m $53/118 ; loss Statement Reason Why +Surprises Fraudulent
Exhibit D : Misstatements and Omissions in CSFBC' s Research Reports (Page 90 of 262) Report Title Surging Revenue Confirms DSL Market Acceleratio n Author(s) Paul J. Weinstein, CF A Date of October 21, 1999 Statement Page 2 Number Fraudulent Sales of $12 .2 mm (up 58% sequentially) surged past our $9 .5 mm estimate as EFNT continues to diversify its market opportunity with a Statement growing list oflarge customer accounts . Reason Why +Surprise s Fraudulent +Revisions Report Title Surging Revenue Confirms DSL Market Acceleratio n Author(s) Paul J. Weinstein, CF A Date of October 21, 1999 Statement Page 3 Number Fraudulent Statement Exhibit 1 Revenue Adjustments
01 :00 02:00 Q3:00 Q4:00 2000(E) 2001(E ) Revenue Estimates At IPO 9.5 11 .2 13.6 18.6 53.0 118.4 Current 12.2 14 .6 17.8 24 .4 69.0 158. 7 Upward Revision 2 .6 3 .4 4 .2 5.8 16.0 40. 3 Reason Why +Revisions Fraudulent Report Title Surging Revenue Confirms DSL Market Acceleration Author(s) Paul J. Weinstein, CF A Date of October 21, 1999 Statement
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 91 of 262) Page 6 Number Fraudulent Exhibit 1 Efficient Networks Qua rterly Operating Results Statement Results in millions except per share
1999( A) 2000(E ) 1st 2nd Mr - 4th 0 1st 2nd 3rd
Revenues 1 .2 1 .9 4 .1 7 .7 12 .2 14 .6 17 .8 24.4 14 .8 69 .0 158 . 7 Reason Why +Estimates Fraudulent
Report Title Surging Revenue Confirms DSL Market Acceleratio n Author(s) Paul J. Weinstein, CF A Date of October 25, 199 9 Statement Page 1 Number Fraudulent Revenue of $12 .2 million was 27% ahead of expectations, prompting roughly 30% increases in our FY 00/01 revenue to $695159 million from Statement $53/118 ; Reason Why +Surprises Fraudulent +Revisions Report Title Surging Revenue Confirms DSL Market Acceleratio n Author(s) Paul J . Weinstein, CF A Date of October 25, 1999 Statement Page 2 Number Fraudulent Consistent with our preview earlier this month, the DSL space remains red hot . Efficient announced FQI results on October 21, posting a higher- Statement than-anticipated revenue number of $12 .2 million (up 68% qtr/qtr and up tenfold versus a year ago), beating our top-line estimates by roughl y 28%, demonstrating its ability to capitalize on the highly favorable DSL market . Reason Why +Surprises Fraudulent Report Title Surging Revenue Confirms DSL Market Acceleratio n
Exhibit D : Misstatements and Omissions in CSFBC 's Research Reports (Page 92 of 262) Author(s) Paul J . Weinstein, CF A Date of October 25, 1999 Statement Page 2 Number Fraudulent Sales of $12 .2 million (up 58% sequentially) surged past our $9 .5 million estimate as EFNT continues to diversify its market opportunity with a Statement growing list of large customer accounts . Reason Why +Surprises Fraudulent Report Title Surging Revenue Confirms DSL Market Acceleration Author(s) Paul J . Weinstein, CF A Date of October 25, 199 9 Statement Page 3 Number Fraudulent Exhibit 1 Statement Revenue Adjustments 01 :00 02:00 03 :00 04: 00 2000(E) 2001(E) Revenue Estimates At IPO 9.6 11 .2 13 .6 18.6 53 .0 118 .4 Current 12.2 14 .6 17 .8 24 .4 69.0 158 .7 Upward Revision 2.6 3 .4 4 .2 5.8 16.0 40 .3 Reason Why +Revisions Fraudulent Report Title Surging Revenue Confirms DSL Market Acceleratio n Author(s) Paul J . Weinstein, CF A Date of October 25, 199 9 Statement Page 6 Number
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 93 of 262) Fraudulent Exhibit 3 Efficient Networks Qua rterly Operating Result s Statement Results in millbns exce pt per share 1999(A ) 2000(E) St 213 0 r s ME Q r Revenues 1 .2 1 .9 4 .1 7 .7 12 .2 14 .i 17 .8 24 .4 14 . F9.n 158 .7 Reason Why +Estimates Fraudulent
Report Title Reinstating Coverage on Efficient Networks after Closing of its FlowPoint Acquisitio n Author(s) Paul J . Weinstein, CF A Date of December 27, 1999 Statement Page 2 Number Fraudulent As shown in Exhibit I , we are raising our 2000/01 revenue estimates to $101/$250 mm from $69/$159mm previously, reflecting the nearly 60 % Statement bump in revenue and an improvement in the rate at which Efficient could reach profitability . Reason Why +Revisions Fraudulent Report Title Reinstating Coverage on Efficient Networks after Closing of its FlowPoint Acquisitio n Author(s) Paul J . Weinstein, CF A Date of December 27, 1999 Statement Page 2 Number
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 94 of 262) Fraudulent Exhibit 1 Statement Revenue Adjustments F 02:00 FQ3 :00 FQ4:00 2000 200 1 Revenue Estimates Following F01 Results 14.6 17.8 24 .4 69 .0 158 .7 Current 17.6 30.8 39 .9 100 .5 250 .2 Upward Revision 3.0 13.0 15 .5 31 .5 91 .5
Source : CSFB Technology Group analysis. Reason Why +Revisions Fraudulent Report Title Reinstating Coverage on Efficient Networks after Closing of its FlowPoint Acquisitio n Author(s) Paul J . Weinstein, CF A Date of December 27, 1999 Statement Page 2 Number Fraudulent We are increasing our revenue numbers by $31 .5 and $91 .5 for 2000 and 2001, respectively. For FQ2, our revised revenue number is 17 .6, whic h Statement assumes incremental revenue from FlowPoint of between $1 and 3 million . Reason Why +Revisions Fraudulent Report Title Reinstating Coverage on Efficient Networks after Closing of its FlowPoint Acquisitio n Author(s) Paul J. Weinstein, CF A Date of December 27, 1999 Statement Page 6 Number Fraudulent Exhibit 2 Efficient Networks Qua rterly Operating Results Statement $ in millions. except per share data 1999(A) 2000(E ) st n r s n 3rd Q 4th Q
Revenues 1 .2 1 .9 4 .1 7.7 12 .2 17 .G 30 .8 39 .9 14 .8 1010 .5 250 .2
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 95 of 262) Reason Why +Estimates Fraudulent
Report Title CSFB Tech Dail y Author (s) Paul J . Weinstein, CF A Date of January 18, 200 0 Statement Page 1 Number Fraudulent Revenue of $26.4 mm was 50% higher than our $17 .6 mm estimates, growing 117% vs .the prior quarter due to strong ILEC demand ; Statement Reason Why +Surprise s Fraudulent
Report Title Reinstating Coverage on Efficient Network s Author(s) Paul J. Weinstein, CF A Date of February 8, 200 0 Statement Page I Number Fraudulent Our FY 2000/01 revenue assumptions are now $128/$333 mm, roughly a 30% increase from $101/$250 mm previously . Statement Reason Why +Revisions Fraudulent Report Title Reinstating Coverage on Efficient Network s Author(s) Paul J. Weinstein, CF A Date of February 8, 2000 Statement Page 2 Number Fraudulent We are revising our revenue estimates significantly to reflect the blow-out quarter EFNT reported in January - revenue of $26 .4 mm was 50 % Statement ahead of our $17.6 mm estimate.
Exhibit D : Misstatements and Omissions in CSFBC' s Research Reports (Page 96 of 262) Reason Why +Revisions Fraudulent Report Title Reinstating Coverage on Efficient Network s Author(s) Paul J. Weinstein, CF A Date of February 8, 2000 Statement Page 2 Number Fraudulent Exhibit 1 Statement Revenue Adjustments
F02:00 (A) FQ3 :00 FQ4 : 00 2000 2001 Revenue Estimate s Previous 17.6 30.8 39.9 100.5 250. 2 Current 26.4 40.6 48.6 127 .8 332. 5 Upward Revision 8 .8 9.7 8.7 27 .2 82. 3
Source : CSFB Technology Group estimates Reason Why +Revisions Fraudulent Report Title Reinstating Coverage on Efficient Network s Author(s) Paul J. Weinstein, CF A Date of February 8, 2000 Statement Page 2 Number Fraudulent The $26 .4 mm in revenue for FQ2 (50% above ur $17 .6 mm estimates) included $3 mm from FlowPoint which became part of FNT for the las t Statement two weeks of the quarter . This upside prompted an increase in our FY 2000/01 revenue to $128/$333 from $101/$250 mm previously . Reason Why +Revisions Fraudulent Report Title Reinstating Coverage on Efficient Network s
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 97 of 262) Author(s) Paul J. Weinstein, CF A Date of February 8, 200 0 Statement Page 5 Number Fraudulent Exhibit 3 Statement Efficient Networks Qua rterly Operating Result s R9suIt5 In millions except per share 1999(A) 2000(E) s n r St U n r ( )
Revenues 1 .2 1 .9 4 .1 7 .7 12 .2 26 .4 40 .6 48 . 6 14 .8 127 .8 332 .5 Reason Why +Estimates Fraudulent
Report Title Reinitiating Coverage on Efficient Networks Author(s) Paul J. Weinstein, CFA Date of February 9, 200 0 Statement Page Number Fraudulent Our FY 2000/01 revenue assumptions are now $128/$333mm, roughly a 30%, increase from $101/$250mm previously . Statement Reason Why +Revisions Fraudulent Report Title Reinitiating Coverage on Efficient Network s Author(s) Paul J. Weinstein, CF A Date of February 9, 200 0 Statement Page 2 Number Fraudulent We are revising our revenue estimates significantly to reflect the blowout quarter EFNT reported in January- revenue of $26 .4mm was 50% Statement ahead of our $17.6mm estimate. Reason Why +Revisions Fraudulent
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 98 of 262) Report Title Reinitiating Coverage on Efficient Networks Author(s) Paul J. Weinstein, CF A Date of February 9, 2000 Statement Page 2 Number Fraudulent Exhibit 1 Statement Revenue Adjustments FQ2:00 (A) FQ3:00 FQ4: 04 2000 2001 Revenue Estimate s Previous 17 .6 30.8 39 .9 100.5 250 .2 Current 26 .4 40.6 48 .6 127.8 332 .5 Upward Revision 8 .8 9.7 8 .7 27.2 82 . 3 Source: CSFB Technology Groupestmates. Reason Why +Revisions Fraudulent Report Title Reinitiating Coverage on Efficient Networks Author(s) Paul J . Weinstein, CF A Date of February 9, 2000 Statement Page 2 Number Fraudulent The $26 .4mm in revenue for FQ2 (50% above our $17 .6mm estimates) included $3mm from FlowPoint, which became part of EFNT for the las t Statement two weeks of the quarter . This upside prompted an increase inour FY 2000/01 revenue to $128/$333 from $101/$250mm previously . Reason Why +Revisions Fraudulent Report Title Reinitiating Coverage on Efficient Networks Author(s) Paul J . Weinstein, CF A Date of February 9, 2000 Statement
Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 99 of 262) Page 5 Number Fraudulent Exhibit 3 Efficient Networks Qua rt erly Operating Results Statement $ in millions. except per share data 1999 ( A) 2000(E ) s Znd 3rd Q 4th U Is n r -4th Q 2000T) MUM) Revenues 1 .2 1 .9 4 .1 7.7 12 .2 26 .1 40 .6 48 .c 14 .8 127 .8 332 . 5 Reason Why +Revisions Fraudulent
Report Title Raising Numbers on Efficient Again ! Author(s) Paul J. Weinstein, CF A Date of March 15, 200 0 Statement Page 1 Number Fraudulent We are raising our FQ3 (March) revenue to $50.3 mm from $40 .6 mm while much of the Street remains in the low $40 mm range . Statement Reason Why +Revisions Fraudulent Report Title Raising Numbers on Efficient Again ! Author(s) Paul J. Weinstein, CF A Date of March 15, 200 0 Statement Page 1 Number Fraudulent Our FY 2000/01 revenue increases to $144/$367 mm from $128/$332 mm previously, about 10-13% to reflect what we believe is sustaine d Statement business from ILEC's, new Data CLECs, ISPs, PTTs, and incremental revenue from the FlowPoint acquisition . Reason Why +Revisions Fraudulent Report Title Raising Numbers on Efficient Again ! Author(s) Paul J. Weinstein, CF A
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 100 of 262) Date of March 15, 2000 Statement Page 2 Number Fraudulent Our March 2000 quarterly revenues are increased from $40 .6 mm to $50 .3 mm to reflect increasing acceleration across all customer classes . Statement Reason Why +Revisions Fraudulent Report Title Raising Numbers on Efficient Again ! Author(s) Paul J. Weinstein, CF A Date of March 15, 2000 Statement Page 2 Number Fraudulent We think there are numerous large customers that could turn on in FQ4 and the first part of FY 2001, consequently we boosted our FY 2000/0 1 Statement revenue by 10-13% to $144/$367 mm from $128/$332 mm previously, resulting in FY 00/01 EPS of($ .035)/$0.85 vs . ($0.36)/$0.80 previously . Reason Why +Revisions Fraudulent Report Title Raising Numbers on Efficient Again ! Author(s) Paul J. Weinstein, CF A Date of March 15, 2000 Statement Page 5 Number Fraudulent Exhibit 1 Efficient Networks Qua rt erly Operating Result s Statement Results in millions except per share 1999 ( A) 2000(E) 15t 0 n Is n r 4th U ' --Tm) 200011:1 zmrm R~venu -~s 1 .2 1 .9 4 .1 7.7 12 .2 26 .4 5 6 .3 55 .3 14 .8 144 .2 367 .0 Reason Why +Estimates Fraudulent
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 101 of 262) Report Title Raising Numbers on Efficient Again ! Author(s) Paul J. Weinstein, CFA Date of March 17, 2000 Statement Page 1 Number Fraudulent We are raising our FQ3 (March) revenue to $50 .3 mm from $40 .6 mm while much of the Street remains in the low $40 mm range . Statement Reason Why +Revisions Fraudulent Report Title Raising Numbers on Efficient Again ! Author(s) Paul J. Weinstein, CFA Date of March 17, 2000 Statement Page Number Fraudulent Our FY 2000/01 revenue increases to $144/$367 mm from $128/$332 mm previously, about 10-13% to reflect what we believe is sustaine d Statement business from ILECs, new data CLECs, ISPs, PTTs, and incremental revenue from the Flow-Point acquisition . Reason Why +Revisions Fraudulent Report Title Raising Numbers on Efficient Again ! Author (s) Paul J. Weinstein, CFA Date of March 17, 2000 Statement Page 2 Number Fraudulent Our March 2000 quarterly revenues are increased from $40 .6 mm to $50 .3 mm to reflect increasing acceleration across all customer classes . Statement Reason Why +Revision s Fraudulent Report Title Raising Numbers on Efficient Again ! Author(s) Paul J . Weinstein, CF A
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 102 of 262) Date of March 17, 200 0 Statement Page 2 Number Fraudulent Consequently we boosted our FY 2000/01 revenue by 10-13% to $144/ $367 mm, respectively, from $128/$332 mm previously, resulting in F Y Statement 00/01 EPS of ($ .035)/$0.85, respectively, versus ($0 .36)/$0.80 previously . Reason Why +Revisions Fraudulent Report Title Raising Numbers on Efficient Again ! Author(s) Paul J . Weinstein, CF A Date of March 17, 200 0 Statement Page 4 Number Fraudulent Exhibit 1 Efficient Networks Qua rt erly Operating Result s Statement Results in millions except per share data 1999(A) 2000(E ) s n Jrd St Q n r 4th Revenues 1 .2 1 .9 4 .1 7.7 12.2 2G.4 56 .3 55 .3 14 .8 144 .2 367 .0 Reason Why +Estimate s Fraudulent
Report Title CSFB Tech Dail y Author(s) James P . Parmelee Date of Arpil 19, 2000 Statement Page 3 Number Fraudulent Excluding one-time charges, EFNT reported FQ3 :00 revenue of $61 .7M (23% above our ests) and EPS of $(0 .16). Statement Reason Why +Surprises Fraudulent
Exhibit D : Misstatements and Omissions in CSFBC ' s Research Reports (Page 103 of 262) Report Title CSFB Tech Dail y Author (s) James P . Parmelee Date of June 16, 2000 Statement Page 1 Number Fraudulent Separately, we estimate EFNT's FQ4 :00 is tracking favorably to our $80 million top-line and 23 .6% gross margin estimate ; We would assign th e Statement highest probability to sales of at least $85 million to $90 million and a gross margin of at least 25% providing visibility to the company achievin g breakeven in the 9/00 quarter: Reason Why +Cautionary Fraudulent
Report Title Highlights From CSFB Dallas Bus Tou r Author(s) James P . Parmelee, Monica M . Matyjaskiewicz, Leslie D . Mallon Date of June 28, 2000 Statement Page 1 Number Fraudulent We estimate FQ4 :00 is tracking very favorably to our view ; Assign highest probability to revenue of at least in the mid- $90M range, gros s Statement margin above 25% and book-to-bill greaterthan 1 .0; Reason Why +Estimate s Fraudulent Report Title Highlights From CSFB Dallas Bus Tou r Author(s) James P . Parmelee, Monica M . Matyjaskiewicz, Leslie D . Mallon Date of June 28, 2000 Statement Page 4 Number Fraudulent Efficie nt Network s Statement Historical and Projected Income Statemen t /5 in MOW a nd.. : a rny I per share t.n I : fIica! rear end. June :r+r F1999A F2000E F22001 E IQ 2Q iQ 4Q IQA -'QA 3QA 4QF IQE 2QE 3QE 4QE F1999A F2000E F2001F.
SALES 1 .174 1 .850 1, 115 7.689 12,171 26,424 61 .749 80,000 100,000 125 ,000 156,000 199,000 14,828 1811444 576,00 0
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 104 of 262) Reason Why +Estimates Fraudulent
Report Title Blow-Out Qua rter! Reiterate Bu y Author(s) James P . Parmelee, Monica M . Matyjaskiewicz, Leslie D . Mallon Date of July 18, 200 0 Statement Page Number Fraudulent EFNT reported FQ4 :00 revs of $102M and $(0 .03) in EPS, significantly outpacing our $80M sales and $(0.20) EPS ests ; IncreasingF200 1 Statement revenue forecast to $675M from $576M andboosting EPS to $0 .70 from $0.60. Reason Why +Surprise s Fraudulent +Revisions Report Title Blow-Out Quarter! Reiterate Bu y Author(s) James P . Parmelee, Monica M . Matyjaskiewicz, Leslie D . Mallon Date of July 18, 2000 Statement Page I Number Fraudulent We view our ests as conservative and believe the potential exists for actual results to significantly exceed our projections ; Statement Reason Why +Cautionary Fraudulent Report Title Blow-Out Quarter! Reiterate Buy Author(s) James P . Parmelee, Monica M . Matyjaskiewicz, Leslie D . Mallon Date of July 18, 2000 Statement Page 2 Number Fraudulent We are raising our F2001 top-line projection 17% to $675 million from $576 million and our earnings per share estimate to$0 .70 from $0 .60. Statement
Exhibit D : Misstatements and Omissions in CSFBC 's Research Reports (Page 105 of 262) Reason Why +Revisions Fraudulent Report Title Blow-Out Quarter! Reiterate Bu y Author(s) James P . Parmelee, Monica M . Matyjaskiewicz, Leslie D . Mallon Date of July 18, 2000 Statement Page 2 Number Fraudulent We view these estimates as conservative and believe the potential exists for actual results to significantly exceed our projections . Statement Reason Why +Cautionar y Fraudulent
Report Title Blow-Out Quarter! Reiterate Bu y Author(s) James P . Parmelee, Monica M . Matyjaskiewicz, Leslie D . Mallon Date of July 18, 2000 Statement Page 2 Number Fraudulent Efficient Networks reported FQ4:00 revenue of $102 million, 27 .3% higher than our official estimate of $80 million and 13% above ou r Statement previewed range of $90 million. Reason Why +Surprises Fraudulent
Report Title Blow-Out Quarter! Reiterate Bu y Author(s) James P . Parmelee, Monica M . Matyjaskiewicz, Leslie D . Mallon Date of July 18, 2000 Statement Page 6 Number
Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 106 of 262) Fraudulent F:fftieit Net~%ork s Statement Historical and Protected Income Statemen t /S in thwaonds : except per share data . fiseni year end, June 30
FI999A F2000 E F2001 E IQ 2Q 3Q 4Q IQA 2QA ?QA 4QA IQE 2QE 3QE 4QE F1999A F2000E F2001 E
SALES 1 . 174 1,850 4,115 7.689 12,171 26,424 61 .749 101,859 127,000 152 , 000 181 .000 215,000 14, 828 202 ,203 675 .000 Reason Why +Estimate s Fraudulent
Report Title Despite SBC Concerns, Business Trends Strong ; Reiterate BU Y Author(s) James P . Parmelee, Monica M . Matyjaskiewicz, Leslie D . Mallon Date of August 3, 2000 Statement Page 4 Number Fraudulent Efficient Network s Histori cal and Protected Income Statemen t Statement /S in thou ands : except per share dater: fiscal rear ends June 30 1
F 1999A F2000 :\ F2001 E IQ 2Q 3Q 4Q IQ.A _'QA 3Q .A 4QA IQF. 'QE 3QE 4QE FI999.2k F201i0A F200I E
SALES 1 .174 1 .8 10 4,115 7.689 12 , 171 26 , 424 61 .749 101899 127 .000 152,000 181 .000 215.000 14, 828 202,203 675,000 Reason Why +Estimate s Fraudulent
Report Title Update and Implications of SBC's DSL Announcement Author(s) James P . Parmelee, Monica M . Matyjaskiewicz, Leslie D . Mallon, Steve M . Edney Date of August 21, 2000 Statement Page Number Fraudulent We remain comfortable that EFNT's quarter is tracking favorably to our $127 million topline, 32% gross margin, and break-even projection ; Statement Reason Why +Estimates Fraudulent
Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 107 of 262) Report Title Update and Implications of SBC's DSL Announcement Author(s) James P . Parmelee, Monica M . Matyjaskiewicz, Leslie D . Mallon, Steve M . Edney Date of August 21, 2000 Statement Page 6 Number Fraudulent We remain comfortable that Efficient's quarter is tracking favorably to our $127 million top-line, 32% gross margin, and break-even projection . Statement Reason Why +Estimate s Fraudulent Report Title Update and Implications of SBC's DSL Announcemen t Author (s) James P . Parmelee, Monica M . Matyjaskiewicz, Leslie D . Mallon, Steve M . Edney Date of August 21, 200 0 Statement Page 8 Number Fraudulent Efficient Networks Historical and Projected locomr Statenxn l Statement /F in thousands : esctptper i hare damn : fa cai tear end. June 30j
F 1999A F2000 .A F200I E IQ 2Q 3Q 4Q IQ .', Q. 3Q :\ 4QA IQE 2QE 3QE 4QE F1999A F2000A F200I E
SALF_S 1,171 1,850 4.115 7,689 12.171 26,424 6 1,749 101 ,859 127,000 152,000 181 .000 215,000 14,028 202 1 03 675 .000 Reason Why +Estimate s Fraudulent
Report Title CSFB Tech DailyWednesday , Author (s) Parmelee/Matyjaskiewic z
Date of September 13, 200 0 Statement Page 2 Number
Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 108 of 262) Fraudulent We estimate the qtr is tracking in-line to slightly above our $127M sales and breakeven EPS projections ; Statement Reason Why +Estimates Fraudulent
Report Title Fundamentals Improving, Reiterate BUY ; FQI :01 Preview Author(s) James P . Parmelee, Monica M . Matyjaskiewicz, Steve M . Edney Date of October 17, 2000 Statement Page I Number Fraudulent We project EFNT will report FQ1 :01 results in-line to slightly above our $127 million top-line forecast; Statement Reason Why +Estimate s Fraudulent Report Title Fundamentals Improving, Reiterate BUY ; FQ1 :01 Preview Author(s) James P . Parmelee, Monica M . Matyjaskiewicz, Steve M . Edney Date of October 17, 2000 Statement Page 2 Number Fraudulent We project the company will report FQ1 :01 results in-line with our $127 million top-line and breakeven earnings per share estimates . Statement Reason Why +Estimates Fraudulent
Report Title Fundamentals Improving, Reiterate BUY ; FQ1 :01 Preview Author(s) James P . Parmelee, Monica M . Matyjaskiewicz, Steve M . Edney Date of October 17, 2000 Statement Page 8 Number
Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 109 of 262) Fraudulent Efficient N tip orks Statement Historical and Projected Income Statemen t (S ;n 1houkanels : exeepf per .i/vre data : !lieu! Pear ends hint, uj
F1999A F2000A F200I E IQ 2Q 3Q 4Q 1QA 2QA .1Q .A 4QA IQE 2QE 3QE 4QE FI999A F2000A F200I E SALES 1 .174 1,850 1 1 15 7,689 12 . 171 26,424 61 . 749 101 .859 127 .000 152 . 000 181 .000 215.000 14 .020 202 .203 675,00 0 Reason Why +Estimate s Fraudulent
Report Title Solid FQ1 :01 Results ; Outlook Upbeat Paced by New Customer Momentum ; Boosting Ests Author(s) James P. Parmelee, Monica M . Matyjaskiewicz, Steve M . Edney Date of October 19, 2000 Statement Page 1 Number Fraudulent EFNT reported FQ1 :01 revs of $127M, in-line with our forecast, and EPS of $0 .10, significantly outpacing our break-even projection ; Boosting Statement F2001 revenue to $691M from $675M and raising EPS to $0.82 from $0 .70. Reason Why +Revisions Fraudulent Report Title Solid FQ1 :01 Results ; Outlook Upbeat Paced by New Customer Momentum ; Boosting Ests Author(s) James P. Parmelee, Monica M . Matyjaskiewicz, Steve M . Edney Date of October 19, 2000 Statement Page 2 Number Fraudulent We are adjusting our F2001 top-line projection to $691 million from $675 million and raising our earnings per share estimate to $0 .82 fro m Statement $0.70. Reason Why +Revision s Fraudulent Report Title Solid FQ1 :01 Results ; Outlook Upbeat Paced by New Customer Momentum ; Boosting Ests Author(s) James P. Parmelee, Monica M . Matyjaskiewicz, Steve M . Edney Date of October 19, 2000 Statement
Exhibit D: Misstatements and Omissions in CSFBC' s Research Reports (Page 110 of 262) Page 2 Number Fraudulent We view these estimates as conservative and believe the potential exists for actual results to exceed our projections, particularly in calendar 200 1 Statement as voice over DSL (VoDSL) shipments ramp . Reason Why +Cautionar y Fraudulent Report Title Solid FQ1 :01 Results; Outlook Upbeat Paced by New Customer Momentum ; Boosting Ests Author(s) James P . Parmelee, Monica M. Matyjaskiewicz, Steve M . Edney Date of October 19, 2000 Statement Page 6 Number Fraudulent Effi knt Net''orks Statement Historical and Proj ected Income Statemen t 0% in ihaeisdnds : rr< F1999A F2000A F2001 E IQ 2Q 3Q 4Q IQA 2Q. ?QA 4QA IQA 2QE ?QE 4QE F1999A F2000A F200I F SALES 1 . 174 1,850 4 , 11' 7.689 12 .171 26,424 61,749 101 .849 127126 154 .000 186.000 224 ,006 1 .4 828 202 1 03 691 .22 6 Reason Why +Estimates Fraudulent End of NT Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 111 of 262) Issu r;Tme E i a Inc. - >EPNY Report Title Initiating Coverage with a STRONG BU Y Author(s) George Gilbert, Brent Thill Date of October 18, 199 9 Statement Page Number I 1 Fraudulent We believe our financial projections for EPNY are conservative and that the company has high visibility into its future performance. Statement Reason Why +Cautionary Fraudulent Report Title Initiating Coverage with a STRONG BU Y Author(s) George Gilbert, Brent Thil l Date of October 18, 199 9 Statement Page Number 15 Fraudulent E .piphan y Income Statemen t Statement {d- in Ihcu, and , . . .pr pei haie •-- Y 99 by uarter --- -•- Y1999 by ua rt er --• . .. FY2000E by Quarter --• --- Year Ended December- - Y ar 9R Jun 99 e° qg VAf_u Ma, 99 mutt 4g o 99 Dec 94 l)ec OOE 199 9 License revenue 137 396 737 946 1 .136 1793 2 . 141 2 .593 3 .154 3 .924 4 .632 5 .495 2 .216 7 .653 17205 32 .66 1 Service revenue DQ 242. 3-7 425 2513 1.437 1 751 2114 9528 9-021 3_424 1..83k 7161 6.060 12 .912 21210 Total revenue 5227 $636 $1 .112 $1 402 51 . 894 53 .230 53 .892 54 .697 5682 6 .945 8 .05E 9 .393 53 .377 $13713 530 .076 553 .87 1 Reason Why +Estimate s Fraudulent Report Title Building Rome in a Day Author(s) George Gilbert, Brent Thill Date of October 21, 199 9 Statement Page Number I Fraudulent Q3 revenues of $5 .3M easily beat our $3 .9M estimate. Statement Reason Why +Surprise s Fraudulent Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 112 of 262) Report Title Building Rome in a Da y Author(s) George Gilbert, Brent Thil l Date of October 21, 199 9 Statement Page Number I Fraudulent Raising CYOO revenue estimate by $8 .8M to $38 .9M (128% growth) from $30 .1M, and raising and CYO1 by $8 .5M to $62 .4M (60% growth) fro m Statement $53.9M. Reason Why +Revisions Fraudulent Report Title Building Rome in a Day Author(s) George Gilbert, Brent Thil l Date of October 21, 199 9 Statement Page Number 2 Fraudulent Raising CYOO and CY01 Revenue Estimate s Statement (year ends December) FYOOE CY01 E New Old Change (%) New Old Change (% ) Rev $38.9M $30 .1 M +$8.8M (29%) $62 .4M $53. 9M +$8 .5M (16%) Reason Why +Revisions Fraudulent Report Title Building Rome in a Da y Author(s) George Gilbert, Brent Thil l Date of October 21, 199 9 Statement Page Number 2 Fraudulent Revenue: EPNY reported total revenues of $5 .3M, exceeding our $3 .8M revenue expectation by $1 .5M . . .65% sequential revenue growth exceeded Statement our 21% estimat e Reason Why +Surprises Fraudulent Report Title Building Rome in a Da y Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 113 of 262) Author(s) George Gilbert, Brent Thil l Date of October 21, 199 9 Statement Page Number 5 Fraudulent E .piphan y 1noema Statemen t Statement id .. in lhourandr rrcep1 per rha rei -- . FY1999 b O uart°r •• • . . . FY1999E b Quart°r •• - --- FY2000E b ' Quarter --• --- Y°ar Endad 0 ° cemb°r ••• Ilan 96 pn 9 9 5°9L Doc 9_8 M ar 99 J ., 39 S o o 9 9 pg. 2 3E All ay 99 0 S un 80 S un 00 ❑ ° u 29. ICE Lc°nsu r°vgnu° 137 396 737 946 1 . 136 1 .793 2 .704 3 .299 3 .866 4 .477 5 .162 5 .936 2 .216 6 .932 19442 32 .76 9 Service revenue U 2Aa 310. 4110. j50. 1 437 2 640 3 709. 3961 4 .471 5 169 , 044 1 1F1 R 135 19444 29.19L Total revenue $227 5636 51 .112 51 .402 $1 .894 $ 3 .230 55 .344 56 .599 7 .7 27 8 .948 10 . 331 11 .880 53 .377 $ 17 .067 538 .886 562 .36 6 Reason Why +Estimates Fraudulent Report Title Tees up Hole #1 with SportsLine .com USA Author(s) George Gilbert, Brent Thil l Date of October 27, 199 9 Statement Page Number 3 Fraudulent E .piphan y Statement 5a° ^°^` --- FY1998 b Q uarter ------FY1999E 6 uert ° r ------FY2000E b uanar ------Year Ended Uacon boy •-- KALIj !un 98 9°° 9A DAG-IL Yar 99 Jnn 91j ian 99 n°r. °°F Yar OOE Jun OOF San 006 flee 000 1992 1 221E 7 000E 'unt o L ie en ce revenue 13 : 396 737 946 1 136 1,793 2 . 704 3 .299 3 . 866 4 .4T7 5 .162 5,936 2 .216 9 932 19,442 32,78 9 Service r6venu : 90. jjL 37 0. 40. 9 2.96 1 417 2 629. 1 inn t 91 4 4 7 1 5 169 5 0 44 1 1 6 1 B 1 3 1 1 G 444 2. 50 7 Intel rovcnu° 5227 563E 51 .112 51 402 51 .894 53 .230 55 . 344 56 .599 7 .727 8 .948 10 .331 11 .880 53 .377 517 .067 538 . 886 562 .36 6 Reason Why +Estimates Fraudulent .. Report Title CSFB Tech Daily Author(s) George Gilbert, Brent Thill Date of January 11, 2000 Statement Page Number 2 Fraudulent Reports Preliminary Q4 Earnings Statement EPNY reported better than expected prelimi nary Q4:99 financial results yesterday . Reason Why +Surprises Fraudulent Exhibit D : Misstatements and Omissions in CSFBC' s Research Reports (Page 114 of 262) Report Title CSFB Tech Daily Author(s) George Gilbert, Brent Thill Date of January 11, 2000 Statement Page Number 2 Fraudulent Total revenue increased 521% y/y to $8 .7M, $2.1M higher than our $6.6M expectation . Statement Reason Wh y +Surprises Fraudulent Report Title Q4: Joe Dimaggio Would be Proud of Flawless Consistenc y Author(s) George Gilbert, Brent Thill Date of January 27, 200 0 Statement Page Number 1 Fraudulent As preannounced, EPS of ($0 .24) on total revenue of $8 .7M (up 522% y/y) easily beat our estimates of ($0 .32) on total revenue of $6 .6M. Statement Reason Why +Surprise s Fraudulent Report Title Q4: Joe Dimaggio Would be Proud of Flawless Consistenc y Author(s) George Gilbert, Brent Thill Date of January 27, 200 0 Statement Page Number I Fraudulent Raising 2000 revenue estimate by $16 .8M to $55 .7M (190% y/y growth) ; raising 2001 revenue estimate by $44 .4M to $106 .8M (92% y/y growth) . Statement Reason Why +Revisions Fraudulent Report Title Q4: Joe Dimaggio Would be Proud of Flawless Consistenc y Author(s) George Gilbert, Brent Thill Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 115 of 262) Date of January 27, 2000 Statement Page Number 2 Fraudulent Table 1 Statement Raising Estimate s 2000E 2001 E New Old Change New Old Change Rev $55.7M $38. 9M +$16.8M $106.8M $62 .4M +$44.4M Reason Why +Revisions Fraudulent Report Title Q4: Joe Dimaggio Would be Proud of Flawless Consistenc y Author(s) George Gilbert, Brent Thill Date of January 27, 2000 Statement Page Number 2 Fraudulent Revenue: EPNY reported EPS of ($0 .24) on total revenue of $8 .7M, well above our expectations of ($0.32) and $6 .6M, respectively. Statement Reason Why +Surprise s Fraudulent Report Title Q4: Joe Dimaggio Would be Proud of Flawless Consistenc y Author(s) George Gilbert, Brent Thill Date of January 27, 2000 Statement Page Number 5 Fraudulent E .piphan y °`°me 5 t-' - Statement m . ~ a in mans an a . . e . . epi p a : n a r . - - - F Y 1 9 9 9 b C r u a r l e i -- • • - F Y 2 D I O E b O uarloi - - - --• FY2001E b 0uartor --- • . . Y .8 End .d O .cam hey --- N ., 99 Jun 993 Sty 99 Dec F9 Ma, 0 Jun 0 0 s QQE Do, OOE Mar 01 lun PIE Seo O1 c 01 1998 1999 0 2991 E License re 1 . 136 79 2 .704 4 . 528 5 .4 79 6 . 67 6 a 7 .824 9270 1 1 .023 13 . 008 15 .310 17 .682 2 . 216 10 .161 29 . 188 5722 3 Ssrv ice lava nue 151 143 7 2840 4_1.98 SMl 951 -U-t &.22L .121 11912 1191 is 111 . 1_L41 4521- °-6-477 49532 T e 81 .894 52 .230 55 .344 58 .714 10 .481 2 .54 2 14 . 937 17 .701 20 .841 24 .420 28 .191 13 .000 53 .377 519 .182 355 .666 5106 .755 Reason Why +Estimates Fraudulent Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 116 of 262) Report Title Breakfast with Della.com Author (s) George Gilbert, Brent Thil l Date of February 7, 2000 Statement Page Number 3 Fraudulent Epiphan y Statement .an`°°e aumin 51t°1e°r.us .~na ra` -.-FY1999 by Ouaite r FY2010E b Ouartei -- --- FY2001E 0 Ouarler - --- Yaar Ended December -- - R1 . 1 99un De c M-L21- Jun 0 Seo DOE Dec 0 _t Mar 91 L Jun OlE Se° O1E Dec OIE 199 6 t000 200 1 License re 1 . 136 1 .79 . 2b . 704 1 .628 5 .4 79 6 .575 7 . 024 9 310 11 .023 13 .0 0 8 15 .310 17 .882 2 .216 10,161 29 .168 57 .2 2 3 Se rota vice r .o, sue .$g j••43•7• 2 610 9 10 6 S 002 5 969 jet l 9 q~ 1 t 1 112 y~gL ~& L1it 5.021 2 .6 .477 12_71 Tlrevcn ua S1 .994 13 .230 55.344 38 .714 10 .481 12 .542 11 .937 17 .707 20 .611 24 .420 26 .191 :3000 53 .377 319 . 162 555 . 665 5106 .75 5 Reason Why +Estimates Fraudulent Report Title Re-Instating Coverage with a STRONG BUY and $110 12- month Price Target - Redefining Customer Interaction in a Multi-Channe l Environmen t Author(s) Brent Thill, John Torre y Date of June 1, 200 0 Statement Page Number 2 Fraudulent Table 1 Statement Raising Revenue Estimates with Close of Octane Acquisitio n 2000E 2001 E New Old Change New Old Change Rev $93.2M $55 .7M +$37. 5M $196 .IM$106 .8M +$89.3M Reason Why +Revisions Fraudulent Report Title Re-Instating Coverage with a STRONG BUY and $110 12- month Price Target - Redefining Customer Interaction in a Multi-Channe l Environmen t Author(s) Brent Thill, John Torre y Date of June 1, 200 0 Statement Page Number 8 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 117 of 262) Fraudulent Epiphany Statement Income Statement (data in thousands except per share] -- FYI 999 by Quarter -- -- FY2000E by Quarter --- -- FY2001 E by Quarte r •- -- Year Ended December - Mar 99 Jun 99 Se0 99 Dec 99 Mar00 Jun wk: Seo 68E Dec OOE Mar 01E Jun O7 E Sep OtE Dec 01 E 1999 1999 2IXIOE 2001 E License revenue 1 .136 1 .793 2 .704 4528 8268 11 ,493 15.285 16.495 22 .083 26 .058 30 .670 35 .823 2 .216 10.161 53.540 114 .634 Serica -nu . 75 1437 Z&43 41 6 6.147 0$44 11779 13647 16 .144 197. 6 0 21668 4 852 1161 9.021 39617 81 .424 Total reranue 51 .894 53 .230 55. 344 $8.714 14 .415 20,037 26.564 32,142 38 .227 44 .818 52.3 38 60 .675 83.377 $19.182 $93.157 $196,056 Reason Why +Estimates Fraudulent Report Title Expect Solid Q2 ; Pipeline Strengthenin g Author(s) Brent Thill, John Torre y Date of June 30, 2000 Statement Page Number 3 Fraudulent Epiphan y Statement income Statemen t (data in thousanns, eacipt per share, -- FY1999 by Qua rter -- -- FY2000E b Quartz -- -- FY2001 E b Quarter -• -- Year Ended December -- Mar 99 Jun 99 Sep 99 Dec 99 Mar 00 Jun O0E Sao OOE Dac 00E Mar 01E Jun OtE 59001E 04o OIE 1998 1999 2000E 2001 E Liaanse re .'enue 1 .136 1 .793 2 .704 4 .528 8 .268 11 .493 15 .285 18.495 22 .083 26.058 30.670 35 .823 2216 10 .161 53 .540 114 .634 Servirn re-wen". I. 5fl 1.4:Z 2.t4 .] 9.190 5 .107 8. 3 11 279 11647 16.]93 18 760 21668 24 9b3 1161 `x.'.-'21 30 617 81.424 Total re venue 61 .894 53,230 55.344 58 .714 14 .41 , 20.037 26, .`f+t 32.142 38 .227 44.818 52,338 60.675 53 .377 519 .182 593,157 $196 .058 Reason Why +Estimates Fraudulent Report Title Q2 Results : Holding the Inside Position on the Racetrac k Author(s) Brent Thill, John Torre y Date of July 20, 2000 Statement Page Number 1 Fraudulent Q2:00 revenue up 659% y/y and 70% q/q to $24.5M, $4.5M or 22% above our estimate . Statement Reason Why +Surprise Fraudulent Report Title Q2 Results : Holding the Inside Position on the Racetrac k Author(s) Brent Thill, John Torre y Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 118 of 262) Date of July 20, 200 0 Statement Page Number 1 Fraudulent Raising 2000 revenue estimates to $115 .5M (502% growth) from $93 .2M (386% growth) . Raising 2001 revenue estimates to $242 .5M (110 % Statement growth) from $196.1M (110% growth) . Reason Why +Revisions Fraudulent Report Title Q2 Results : Holding the Inside Position on the Racetrac k Author(s) Brent Thill, John Torrey Date of July 20, 200 0 Statement Page Number 2 Fraudulent Table 1 Statement Raising Revenue Estimates 2000E 2001 E New Old Change New Old Change Rev $115. 5M$93.2M +$22. 3M $242.5M$196 . 1l 1 +$46.4M Reason Wh y +Revisions Fraudulent Report Title Q2 Results : Holding the Inside Position on the Racetrac k Author(s) Brent Thill, John Torrey Date of July 20, 2000 Statement Page Number 4 Fraudulent Revenue: EPNY reported total Q2:2000 revenue of $24 .5M and EPS of ($0 .12), 22% above our revenue expectation and an almost ridiculou s Statement $0.14 better than our EPS estimate . . .Q2 represented the 4th consecutive quarter of 60%+ sequential revenue growth following the company's IPO . Reason Wh y +Surprises Fraudulent Report Title Q2 Results : Holding the Inside Position on the Racetrac k Author(s) Brent Thill, John Torrey Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 119 of 262) Date of July 20, 200 0 Statement Page Number 5 Fraudulent Epiphan y Statement Income Statemen t Nara in Mo.-n& e,c opt pa J,oru1 -- FY1999 b Quarter -- --- FYYOOOE Quarter -•- - FY20D1E b • Quarter --- -- Year Ended December •-- a n Dec 99 Mai un 00 ec ar un eu U It L) ec U It: 159y luliut Ljoenserewme 1 .136 1,193 2 .8134 4, 528 8 ,268 14 ,293 19 .286 23 .348 26. 850 30.877 35,510 40.835 2 ,216 10 , 161 652C4 134,871 Seemreverue L59 iA3L 2.M £16 JAL 10.2 1533@ 1H .S31 21 715 25,6111 AI £824 1.16-1 am 50272 198.414 Totalrermue 51 .804 55230 $ 4344 $8 .714 14 .415 24 ,519 34 ,635 41,908 48, 585 55959 64 .312 73.660 33 ,377 $19 . 182 $ 115,476 5242 485 Reason Why +Estimates Fraudulent Re ort Title Q3 Tracking Strong ; Meeting with Management Confirms Momentum Author(s) Brent Thill, John Torrey Date of August 25, 2000 Statement Page Number 3 Fraudulent Epiphan y Statement Income Sta temen t data in thousands. accept pa . share) - FYI 999 by Quarter - - FY2000E by Quarter •-• -- FY2001 E by Quarter --- -- Year Ended Dece mber - - Mar 99 Jun 99 Sep 99 Dec 99 Mar 00 Jun 00 S 0 Dec OOE M r 01 Jun 01 E Sao QIE Qec01E 199e 1999 20DOE 02 01 E Lkense revemre 1 .136 1 .793 2 .704 4 .939 B 260 14 293 19.296 23 .348 26 .850 30 .87' 35.500 40.835 2 .216 10161 65 .204 13407 1 Service re,enue Z511 143' 9 640 F _ 10 26 15339 18 vS! 21 71S 25 081. 29 icil X2.924 1 161 SL21 11 Totalre,i :nwe $1894 $6230 55.344 58 .714 14 .415 24 .519 34 .635 41 .908 48 .965 55959 61 .302 736!;n 53 .377 519.182 5115476 $ 242.485 Reason Why +Estimate s Fraudulent Report Title Highlights from NY Roadtri p Author(s) Brent Thill, John Torre y Date of September 6, 2000 Statement Page Number 3 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 120 of 262) Fraudulent Epiphan y Statement Incomo Statamont data In thousands ncopt pct shatci ••- FY1999 by Quarter -- -- FY2000E by Quart er -- -- FY2001E by Quarter -- -- Year Endad Doumbor-- Mar99 Jun99 Sop 99 Doc 99 Mar00 Jun 00 Soo WE Doc 00E Mar Ot E Jun U1F 5 oD01E Doc01E 1998 1999 2000E 2001 E Licensenrvenuc 1 .136 1 .753 2 .704 4, 528 8 .268 14 .293 19 .296 23 .348 25,850 30 .877 35 .509 40 .835 2. 216 10 .161 65.204 134 .07 1 Service revenue = 1417 2r'• Qfl ~,lfi, 6 147 10726 15 33q 18 .560 21 .715 2E. 081 287ZjA ZMA 11F1 021 x72 ]QUTA Total revenue $ 1 .854 $3 .230 $ 5,344 58. 714 14415 24,519 34 .635 41 .908 48 .565 55.959 64 .302 73.660 $ 3.377 519 .182 5115.476 $24248 5 Reason Why +Estimates Fraudulent Report Title Focus on Quality, Not Quantit y Author(s) Brent Thill, John Torre y Date of September 20, 2000 Statement Page Number I Fraudulent We are very confident EPNY can meet or exceed our $34.6M total rev and ($0 .34) est . Statement Reason Why +Estimates Fraudulent Report Title Focus on Quality, Not Quantity Author(s) Brent Thill, John Torre y Date of September 20, 2000 Statement Page Number 3 Fraudulent Epiphan y Statement Income Statamom data In thousands, except per shale ; ••- FY1999 Quarter - - -- FY2000E by Quarter -- •- FY2001E D Ouartar -• -- Year Ended December -- Mar 99 Jun 99by San 99 Doc 99 .,it 00 Jun 00 sop out: Doc OOE Mar 01E Jun 01E SeD O 1E Dec 01E 1998 1999 2000E 2001 E License ~oznue 1,136 1 .793 2,704 4,528 8168 14 .293 19 .290 23 .348 26.850 30 .817 35,509 40 .835 2 .216 10 .161 65,204 134 .01 1 Se rvice revenue j 1 .437 2 .02 4 . 184 6-147 ]L j26 15174 1 9 56Ci 21 .715 7S 081 28 79-k 32 R24 1 .161 .,,:21 zn 272 10841 4 Tc(alrevnue 51 .894 53 .230 55,344 50 . 714 1-0415 24 .519 34 .635 41 .908 48.565 55 .959 64 .302 73 .663 53 .377 519 .182 $115 .476 $242485 Reason Why +Estimates Fraudulent Report Title eBusiness Applications - Q3 Earnings Previe w Author(s) Brent Thill , John Torrey, George Gilbert, Erik Sword s Exhibit D: Misstatements and Omissions in CSFBC ' s Research Reports (Page 121 of 262) Date of October 4, 2000 Statement Page Number 20 Fraudulent Table 1 6 Statement EPNY Forecasts , FYE Decembe r EPNY Q3 : OOE 2000E 2001 E (in millions. except per share anmounts ) License $15 .3 $65 .2 $121.1 .1 Service 15.3 50 .3 108.4 Total Revenue $34 .6 $115 .5 $242.5 Reason Why +Estimates Fraudulent Report Title eBusiness Applications - Q3 Earnings Previe w Author(s) Brent Thill, John Torrey, George Gilbe rt, Erik Swords Date of October 4, 2000 Statement Page Number 20 Fraudulent We remain confident that EPNY will exceed our Q3 revenue and EPS estimates of $34 .6M and ($0 .34). respectively . Statement Reason Why +Cautionar y Fraudulent Report Title eBusiness Applications - Q3 Earnings Preview Author(s) Brent Thill, John Torrey, George Gilbert, Erik Sword s Date of October 4, 2000 Statement Page Number 21 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 122 of 262) Fraudulent E.piphan y Statement In-o 9taternont (data in thousands. .w-pt p.r nhNt -- FY1999 by Ouanor -- -- FY2000E by Qua rter -- - -- FY2001E by Quertor --- -- Year Ended December -- 19ar 93 1Y0 99 S80 93 D- Mar 00 Jun GO RSn F n8L90E M,aL i 3un 016 SS2_01E {!SE 1 1998 200OF 2001 F License revenue 1 .136 1 .793 2.704 4 .528 8 .26.9 14 .293 19 .496 23 .348 26 .850 30 .877 35 .509 40 835 2.216 10 .161 65.204 134 .07 1 Serum rerooue = 1431 2590 4 . 186 ;147 10 1 26 1r, pia 19560 2171 25081 7,aZr. 1 32824 110 :1 9f121 SO 27P 10841 4 Trial revenue $ 1 .894 53,230 3`-344 $8. 714 14,415 24 .519 34 .635 41 .908 48 .505 55,959 64 .302 73560 93377 $19,182 $115,476 $242,48 5 Reason Why +Estimates Fraudulent Report Title Built for Speed ; 60% Seq . Growth Blows Away Consensu s Author(s) Brent Thill, John Torrey Date of October 20, 2000 Statement Page Number 1 Fraudulent Hard to poke any holes in Q3 results . Total rev up 632% y/y and 60% q/q to $39 .1M, $4.5M or 13% above our estimate . Statement Reason Why +Surprises Fraudulent Report Title Built for Speed ; 60% Seq . Growth Blows Away Consensu s Author (s) Brent Thill, John Torrey Date of October 20, 2000 Statement Page Number 1 Fraudulent Raising 2000 rev ests by $10M to $125 .4M (554% growth) . Raising 2001 rev ests by $31 .5M to $274 .IM (119% growth) . Statement Reason Why +Revision s Fraudulent Report Title Built for Speed ; 60% Seq . Growth Blows Away Consensu s Author(s) Brent Thill, John Torre y Date of October 20, 2000 Statement Page Number 2 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 123 of 262) Fraudulent Table 1 Statement Raising Revenue Estimates 2000E 2001 E New Old Chanae New Old Chanae Rev $125.4M$115.5M +$9.9M $274.1M$242.5M +$31 .G M Reason Why +Revision s Fraudulent Report Title Built for Speed ; 60% Seq . Growth Blows Away Consensu s Author(s) Brent Thill, John Torrey Date of October 20, 2000 Statement Page Number 2 Fraudulent Revenue: EPNY reported Q3 :00 revenue of $39 .1M and EPS of ($0 .17), 13% above our revenue estimate and $0 .17 better than our EPS estimate . Statement Reason Why +Surprises Fraudulent Report Title Built for Speed ; 60% Seq . Growth Blows Away Consensu s Author(s) Brent Thill, John Torrey Date of October 20, 2000 Statement Page Number 5 Fraudulent Epiphan y Statement Income Statement Idala in thousands. except per share) -- FY1999 by Quartet -- - FY2000E Clued . --- -- FY2001E Quarter -- --Year Ended December - Mar 99 Jun 99 Seo De c 99 84 Mar 0 Jun 00 SeD 00 22s..44E Mar OlE J un 0lE §EILQ.1E Dec OlE i 2fl i 2 200E 2001 E ❑cens . revenue 1 .136 1 793 2 .704 4 .528 8 .269 14 .293 21 .382 25 .872 29 .753 34, 216 39 .348 45251 2.211 10.161 69 .815 148 .56 8 7 Service revenue Z~U L !9Z Z.¢JU 41% 6_U7 10 .226 17 .758 21 .487 25.140 29 .U33 33 334 38 X I Li J. Uid 55618 121` .512 Total revenue $ 1 .834 53 230 55 .344 58 .714 14 .4 15 2 4 .519 39 .140 47 359 54 .893 63 .253 72RA3 83 .252 $3.377 519 .182 $125 .433 5274 .080 Reason Why +Estimates Fraudulent Report Title Built for Speed; 60% Seq . Growth Blows Away Consensu s Author(s) Brent Thill, John Torrey Exhibit D : Misstatements and Omissions in CSFBC 's Research Reports (Page 124 of 262) Date of November 2, 200 0 Statement Page Number 1 Fraudulent Hard to poke any holes in Q3 results . Total revenue up 632% y/y and 60% q/q to $39 .1 M, $4 .5M or 13% above our estimate. Statement Reason Why +Surprise s Fraudulent Report Title Built for Speed ; 60% Seq . Growth Blows Away Consensu s Author(s) Brent Thill, John Torre y Date of November 2, 200 0 Statement Page Number I Fraudulent Raising 2000 revenue estimates by $1OM to $125 .4M (554% growth) . Statement Raising 2001 revenue estimates by $31 .5M to $274 .1M (119% growth) . Reason Why +Revisions Fraudulent Report Title Built for Speed ; 60% Seq . Growth Blows Away Consensu s Author(s) Brent Thill, John Torre y Date of November 2, 200 0 Statement Page Number 2 Fraudulent Revenue EPNY reported Q3 :00 revenue of $39 .IM and EPS of ($0 .17), 13% above our revenue estimate and $0 .17 better than our EPS estimate. Statement Reason Wh y +Surprises Fraudulent Report Title Built for Speed ; 60% Seq . Growth Blows Away Consensus Author(s) Brent Thill, John Torre y Date of November 2, 200 0 Statement Page Number 4 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 125 of 262) Fraudulent Table 3 Statement Income Statement , FY1999A-2001 E $ in thousands, except per-share dat a Epiphany 1come slatenen) (data in t1fl anck, exce{A per stwe) -- FY1999 Quarter -- - FY200DE byQtarter - . FY2001E Ctuater - - Year Ended December - Mar 99 Jun Sep 99 Dec 99 m 00 Jun 00 _ Dec OOE Mar 01 Jun UIE eo 01 Dec ME 1998 19% 2XIDE 2001 E Lirsre,ernw 1,136 1,793 2,704 4 .528 8,268 14.293 21 .382 25,87 2 29,753 7.4216 39 34 3 45.251 2 .216 10 .161 119.815 148,56 8 Ser•.ice fevenue 7$f; 1 .437 2 .640 4 18ti B 47 J 6 17 758 21 .487 251 411 "rte 1 :C+1 3f3I 1 1 1111 91 9 .9il 11 31 2 Talal cs' ni WI $1,894 53,230 95 .34.1 98 .714 14 .415 24.519 39 .140 47 .359 54.893 63 .2ri3 72 .683 83.252 83 .377 919 .182 $125433 5274 .08 0 Reason Why +Estimates Fraudulent Report Title Q4 Ahead of Ests ; New 911 of Customer Interaction Author(s) Brent Thill, John Torrey , Date of January 26, 200 1 Statement Page Number I Fraudulent Total rev $49 .2M, $1 .8M above our estimate. Statement Reason Wh y +Surprises Fraudulent Report Title Q4 Ahead of Ests ; New 911 of Customer Interaction Author(s) Brent Thill, John Torrey , Date of January 26, 200 1 Statement Page Number I Fraudulent Based on strong visibility and mix towards higher margin license revenue, we are raising CY01 rev ests by $3M to $277M (118% growth) . Raising Statement EPS by $0 .02 to ($0 .10) . Establishing CY02 ests of $401M (45% growth) and $0 .41 . Reason Why +Revisions Fraudulent Report Title Q4 Ahead of Ests ; New 911 of Customer Interactio n Author(s) Brent Thill, John Torrey , Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 126 of 262) Date of January 26, 200 1 Statement Page Number 2 Fraudulent Once again, it was hard to find any weakness in Q4' s results . Total revenue upside was driven by 38% license growth (vs 21% est), EPS was $0.04 Statement better than our expectations (($0.08) vs ($0.12)), Reason Why +Surprises Fraudulent Report Title Q4 Ahead of Ests ; New 911 of Customer Interactio n Author(s) Brent Thill, John Torrey , Date of January 26, 200 1 Statement Page Number 2 Fraudulent Revenue: EPNY reported Q4:00 revenue of $49.2M and EPS of ($0 .08), 4% above our revenue estimate and $0.04 better than our EPS estimate. Statement Reason Why +Surprises Fraudulent Report Title Q4 Ahead of Ests ; New 911 of Customer Interactio n Author(s) Brent Thill, John Torrey , Date of January 26, 200 1 Statement Page Number 5 Fraudulent Epiphany Statement Income Statement (data in thousands . ex cept per share) - FY2000E by Qua rt er - -- F Y2001 E by Quarter -- --- Year Ended December - - Mar 00 Jun 00 Son 00 Doe 00 Mar Oir Jun OlE ; 41E Dec 01E ] .4 2004E 2901E 21m2E License revenue 8,268 14.293 21 . 382 29 .560 32 .948 38 .220 44 .526 51 .873 10 .161 73 .493 167 .568 247 .968 Service re venue 6.147 10. 22 17. 75 19 .657 21 .957 25 .097 28 987 33 .480 2-Q21 78 109 520 15367 1 Total revenue 14,415 24, 519 39. 140 49 .207 54 .905 63 .317 73 .513 85 .353 $19 .182 5127 .281 $277 .087 5401 .639 Reason Why +Estimates Fraudulent END OF EPNY Exhibit D : Misstatements and Omissions in CSFBC' s Research Reports (Page 127 of 262) S11> Stock isc . ram . qw r. Price to Uhl k.Ch OUT Marke t Gr. Rate REVENUE C00(E) COt'E' I COMPANY FYE 7/14:00 High Low YTD MIL Valu e (LTGR) COO(E) C01 El Revs 1 Revs ( 1 Handspring HAND 35.25 -1% 59% NM 147 .0 5.192 12. 5% 219 514 23 .7* 10 .1 * Reason Why +Estimates Fraudulent Report Title Initiating with a BUY - Delivering Mobile Computing and the Interne t Author(s) Marc A . Cabi, Brian Blai r Date of July 17, 2000 Statement Page Number 6 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 128 of 262) Table 2 Fraudulent Handspring Income Statemen t 99 Statement 1 9-200 1 Handspring - Consolidated Income Statement. 1999-2001 E Fiscal Year Ends t c. 31 FY2000E FY200IE FY2002 £ FY Ending Jun 30 CY Ending Dec 3 1 $ d Shares i n Millions S A DecA MarchA JunE Se E DecE MarchE JunE SeptE DecE 2000E 2001E 2000E 2001 E Net Sales 15 .8 34 .3 44.3 58.4 81 .8 90. 0 110 .6 137 .3 175.9 04 .4 340.8 21A9 513. 0 Reason Why +Estimates Fraudulent Report Title Expanding the Handheld Market, Raising Number s Author(s) Marc A . Cabi, Brian Blai r Date of July 21, 2000 Statement Page Number I Fraudulent Handspring reported solid results for FQ4 :00 after the market close yesterday. The company generated revenue of $51 .8 vs. our $44.6, and net loss Statement of $0.13 per diluted share vs. our estimate of $0 .15. Reason Why +Surprises Fraudulent Report Title Expanding the Handheld Market, Raising Number s Author (s) Marc A. Cabi, Brian Blai r Date of July 21, 2000 Statement Page Number 1 Fraudulent We are revising our revenue estimates upward for the upcoming quarter to 62 .3 million from 58 .4 million . Statement Reason Why +Revisions Fraudulent Report Title Expanding the Handheld Market, Raising Number s Author(s) Marc A . Cabi, Brian Blai r Date of July 21, 2000 Statement Page Number 2 Fraudulent Handspring reported results ahead of expectations for FQ4 :00. . .The company generated revenue Statement of $51 .8 vs. our estimate of $44 .6, Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 129 of 262) Reason Wh y +Surprises Fraudulent Report Title Expanding the Handheld Market, Raising Numbers Author(s) Marc A . Cabi, Brian Blai r Date of July 21, 2000 Statement Page Number 2 Fraudulent We are revising our revenue estimates upward for the upcoming quarter to 62 .3 million from 58 .4 million. Statement Reason Why +Revision s Fraudulent Report Title Expanding the Handheld Market, Raising Numbers Author(s) Marc A . Cabi, Brian Blai r Date of July 21, 2000 Statement Page Number 4 Table 1 Fraudulent Handspring Income Statement 2000 - 200 1 Statement Handspring - Consolidated Income Statement 1999 .2001 E Fiscal YearEnds Dec . 31 FY2000A FY2001E FY Ending Jun 3 0 CY Ending Doc 3 1 (5 & Shares in Millions) Seto DocA MarchA JunA Se E DocE MarchE JunE 2000E 2001E 2000E 2001 E Not Sales 15 .8 34 .3 51 .8 62 .3 91 .8 90 .0 110 .611 101 .9 344 .7 11 230 .2 513 . 8 Reason Why +Estimate s Fraudulent Report Title Delivering Mobile Computing and the Internet Author(s) Marc A . Cabi, Brian Blai r Date of August 8, 2000 Statement Page Number 20 Fraudulent We are projecting fiscal year 2000/2001 revenue of $101 .9 /344.7 million respectively, which we will come predominantly from sales of the Viso r Statement handheld computer devices . Reason Why +Estimates Fraudulent Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 130 of 262) Report Title Delivering Mobile Computing and the Internet Author(s) Marc A . Cabi, Brian Blai r Date of August 8, 2000 Statement Page Number 22 Exhibit 1 0 Fraudulent Handspring Income Statement. FY 1999 A -2001 E Statement S In millions , except per snare cola Han ri- Conadidated Income Statement 1999-2601 E Fiscal Year Ends Dec . 31 FY2000A FY2001E FY2002E FY Ending Jun 3 0 Sr A De: A M rchA Jun Se ptE DocE MarchE Jun Se E DenE MarchE JuneE 2000E 20 :5 i Net Sales 15 .8 343 51 .811 62 .3 818 90.0 110 .6 11 137 .3 175 .9 177.0 200 .011 101.9 344 .7 Reason Why +Estimates Fraudulent Report Title Quarter Preview - Beating Estimates Hand over Fis t Author(s) Marc A . Cabi, Randy Abram s Date of October 13, 2000 Statement Page Number I Fraudulent We expect revenue and EPS to meet and beat our forecasted targets of $62 .3M in revenue and EPS of ($0 .12), exceeding unit sales of 225K . Statement Reason Why +Cautionar y Fraudulent Report Title Quarter Preview - Beating Estimates Hand over Fis t Author(s) Marc A . Cabi, Randy Abram s Date of October 13, 2000 Statement Page Number 4 Fraudulent We believe that this quarter is well in line to beat our estimates and feel optimistic about revenue upside during much of FY :01 . Statement Reason Why +Cautionar y Fraudulent Report Title Quarter Preview - Beating Estimates Hand over Fis t Author(s) Marc A . Cabi, Randy Abram s Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 131 of 262) Date of October 13, 2000 Statement Page Number 5 Fraudulent Table 1 Handspring Income Statement, 2000-200 2 Statement Fecal Yaer Ends Dec . 31 FY20POA FY2001 E FY2002E FY Endin Jun 3 0 (38 Shares in Milliane) Sc to DccA MarchA JunA SeptE DecE MarchE JunE Sc [E DecE MarchE JuneE 2000E 2601 E Net Sales 15 .8 34.3 51 .8 62.3 81 .8 90.0 110 .61 1 137 .3 175 .9 177 .0 200 .01 1 101 .9 341. 7 Reason Why +Estimates Fraudulent Report Title Handspring - Blow out Quarter, Raising Estimate s Author(s) Marc A . Cabi, Randy Abrams, Ray Sharma, Irving H o Date of October 17, 2000 Statement Page Number I Fraudulent Handspring reported record revenues for FY01 : Q1 of $70.5M and EPS of ($0 .08),beating our estimates of $62 .3M and EPS of ($ .12). Statement Reason Why +Surprises Fraudulent Report Title Handspring - Blow out Quarter, Raising Estimate s Author(s) Marc A . Cabi, Randy Abrams, Ray Sharma, Irving H o Date of October 17, 2000 Statement Page Number I Fraudulent We are increasing our December quarter revenue estimates to $105M from $81 .8M and FY :01 estimates to $408 .5M from $345M based on growt h Statement prospects going into the holiday season . We are introducing our FY02 estimate of $705M and loss of ($0 .03) . Reason Why +Revisions Fraudulent Report Title Handspring - Blow out Quarter, Raising Estimate s Author(s) Marc A . Cabi, Randy Abrams, Ray Sharma, Irving H o Date of October 17, 200 0 Statement Page Number T 2 Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 132 of 262) Fraudulent Handspring reported record FYOI :Q1 revenues of $70 .5M and EPS of ($0 .08), beating our estimates of $62 .3M and EPS of ($0 .12) . Statement Reason Wh y +Surprises Fraudulent Report Title Handspring - Blow out Quarter, Raising Estimates Author(s) Marc A . Cabi, Randy Abrams, Ray Sharma, Irving H o Date of October 17, 200 0 Statement Page Number 2 Fraudulent As a result, we are increasing our FY01 :Q2 revenue estimates to $105M from $81 .8M Statement Reason Wh y +Revisions Fraudulent Report Title Handspring - Blow out Qua rter, Raising Estimates Author(s) Marc A . Cabi, Randy Abrams, Ray Sharma, Irving H o Date of October 17, 200 0 Statement Page Number 2 Fraudulent Our FY :01 revenue estimate is increasing to $408M from $345M . We are also introducing FY :02 estimates of $705M with a narrow loss o f Statement ($0.03). Reason Why +Revisions Fraudulent Report Title Handspring - Blow out Quarter, Raising Estimates Author(s) Marc A . Cabi, Randy Abrams, Ray Sharma, Irving H o Date of October 17, 200 0 Statement Page Number 4 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 133 of 262) Fraudulent Table 1 Statement Handspring Income Statement 2000-200 2 Handspring - Consolidated Income Statement. 1999-2001 E FiscaI Year Ends Dec . 31 FY2001 E FY2002E FY Ending Jun 30 7.7 Ending Dec 31 1 (S 8. Shares in Millions ! SeptE DecE MarchE Jun E SeptE DecE MarchE JuneE 2000E 2001E 2002 E 2000 E 2001 E Net Sales 70 .5 105 .0 105 .0 128 .0 145.0 175.0 180 .0 205 . 0 101 . 9 408.5 705.0 261 .7 553 . 0 Reason Why +Estimates Fraudulent Report Title Handspring - Blow out Quarter, Raising Estimate s Author(s) Marc A . Cabi, Randy Abrams, Ray Sharma, Irving H o Date of October 17, 2000 Statement Page Number 5 Fraudulent Table 2 Statement Handspring Fiscal Q1 : 01 Segment Analysis Handspring - FY01 :Q1 :00 Income Statement Analysi s Fiscal Year Ends December Forecast Erro r Y -o-Y Change Sequential Chang e $ & Shares In Millions) Se •01A Sep-01E DIFF %CHG Sep-01A Se 00A DIFF %CHG Sep-01A Jun-OOA DIFF %CH G Net Sales is 70. 5 $ 62 . 3 8 .2 13. 2% $ 70 . 5 $ - S 70 . 5 #DIV1i S 70 .5 S 51 . 8 $ 18. 7 36.1% Reason Why +Surprises Fraudulent Report Title PC Industry Loss is Gain for Handspring and Mobile Device s Author(s) Marc A. Cabi, Randy Abrams, Ray Sharma, Irving Ho Date of December 15, 200 0 Statement Page Number 3 Fraudulent Table 1 Statement Handspring Income Statement 2000-200 2 Handspring - Consolidated Income Statement, 1999-2001 E Fiscal Year Ends Dec. 31 FY2001 E MY2002E FY Ending Jun 30 CY Endin Dec 3 1 $ & Shares in Millions) I S tE DecE MarchE JunE SeptE DecE MarchE JuneE 2000E 2001E 2002 E 2000E 2001 E Net Sales 70 .5 105 .0 105 .0 128 .01 1 145 .0 175 .0 180 .0 205 .011 101.9 408.5 705 .01 1 261 .7 553 .0 Reason Why +Estimates Fraudulent Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 134 of 262) Report Title Strong Holiday Season to Likely Drive Strong Q2/01 Result s Author(s) Marc A . Cabi, Randy Abrams, Ray Sharma, Irving H o Date of January 12, 200 1 Statement Page Number I Fraudulent Handspring reports its Q4/00 results after the close on Tuesday Jan . 16th . Our estimates are $105 million in revenues and EPS (ex amortization) o f Statement ($0.14). Reason Why +Estimate s Fraudulent Report Title Strong Holiday Season to Likely Drive S trong Q2/01 Results Author(s) Marc A . Cabi, Randy Abrams, Ray Sharma, Irving H o Date of January 12, 200 1 Statement Page Number I Fraudulent We believe there is upside to our estimates due to strong execution, overall strength in the devices segment and a relatively strong holiday sellin g Statement season . Reason Wh y +Cautionary Fraudulent Report Title Strong Holiday Season to Likely Drive Strong Q2/01 Result s Author(s) Marc A . Cabi, Randy Abrams, Ray Sharma, Irving H o Date of January 12, 200 1 Statement Page Number 2 Fraudulent Handspring reports its Q2/01 results after the close on Tuesday Jan . 16th . Our estimates for the quarter are $105 million in revenue and EP S Statement (excluding amortization) of ($0 .14). Reason Why +Estimate s Fraudulent Report Title Strong Holiday Season to Likely Drive Strong Q2/01 Result s Author(s) Marc A . Cabi, Randy Abrams, Ray Sharma, Irving H o Date of January 12, 2001 Statement Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 135 of 262) Page Number 2 Fraudulent We believe that there is upside to our estimates due to strong execution and overall strength in the devices segment . Statement Reason Why +Cautionary Fraudulent Report Title Strong Holiday Season to Likely Drive Strong Q2/01 Results Author(s) Marc A . Cabi, Randy Abrams, Ray Sharma, Irving H o Date of January 12, 200 1 Statement Page Number 3 Fraudulent Table 1 Handspring Income Statement FY2000-2002E Statement . rr Fie l Year Ende June 30 FY2001E FY2002E FY Ending June 30 CY Ending Dec 31 58ShareeinMiIIh rn S to DecE MarchE JunE S E DecE MarchE Jun.E 2000A 2001E 2002E 2000E 2001 E Net Sales 11 70.5 105.0 105 .0 128.011 145 .0 175 .0 180.0 205.011 101 .9 408.5 705 .0 261 .7 N. Reason Why +Estimates Fraudulent Report Title Raising Estimates - Agai n Author(s) Marc A. Cabi, Randy Abrams, Ray Sharma, Irving Ho Date of January 17, 200 1 Statement Page Number I Fraudulent Handspring reported its FYQ2 :01 results beating our revenue estimates by over 10% at $115 .6M and our operating margin forecasts by nearly 50 % Statement at ($9.3)M . Reason Why +Surprises Fraudulent Report Title Raising Estimates - Again Author(s) Marc A . Cabi, Randy Abrams, Ray Sharma, Irving Ho Date of January 17, 200 1 Statement Page Number I Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 136 of 262) Fraudulent We are raising our estimates on Handspring based on our belief that it will be one of the primary beneficiaries of exploding growth in the handhel d Statement sector and will continue to differentiate itself with superior product offerings . Reason Why +Revision s Fraudulent Report Title Raising Estimates - Agai n Author(s) Marc A . Cabi, Randy Abrams, Ray Sharma, Irving H o Date of January 17, 200 1 Statement Page Number I Fraudulent We are raising our FYQ3 :01 revenue projection from $105M to $120M and our EPS estimates from ($ .16) to $( .06) . We are also taking our FY :0 1 Statement revenue targets to $441M and our FY :01 EPS estimates to $( .26). Reason Why +Revisions Fraudulent Report Title Raising Estimates - Agai n Author(s) Marc A . Cabi, Randy Abrams, Ray Sharma, Irving H o Date of January 17, 200 1 Statement Page Number 2 Fraudulent Handspring reported its FYQ2 :01 results beating our revenue estimates by overl0% at $115 .6M Statement Reason Why +Surprise s Fraudulent Report Title Raising Estimates - Agai n Author(s) Marc A . Cabi, Randy Abrams, Ray Sharma, Irving H o Date of January 17, 200 1 Statement Page Number 2 Fraudulent Based on HAND's strong performance we are raising our FYQ3 :01 revenue projection from $105M to $120M Statement Reason Why +Revisions Fraudulent Exhibit D : Misstatements and Omissions in CSFBC ' s Research Reports (Page 137 of 262) Report Title Raising Estimates - Agai n Author(s) Marc A . Cabi, Randy Abrams, Ray Sharma, Irving H o Date of January 17, 200 1 Statement Page Number 2 Fraudulent We are also taking our FY :01 revenue targets to $441M and our FY :01 EPS estimates to $( .26). Statement Reason Why +Revisions Fraudulent Report Title Raising Estimates - Agai n Author(s) Marc A . Cabi, Randy Abrams, Ray Sharma, Irving H o Date of January 17, 200 1 Statement Page Number 3 Fraudulent We believe that potential upcoming catalysts include : Statement Revenue ahead of our upwardly revised expectation s Reason Why +Cautionar y Fraudulent Report Title Raising Estimates - Agai n Author(s) Marc A . Cabi, Randy Abrams, Ray Sharma, Irving H o Date of January 17, 200 1 Statement Page Number 4 Fraudulent Table 1 Statement Handspring Income Statement 2000-200 2 . . Consolidated Income 2000-2003 E Fiscal Year Ends June 30 FY2000A FY2001E FY Ending June 30 CY Ending Dec 3 1 ($ & Shares in Millions ; Seto DecA MarchA Jun Seto DecE MarchE JunE 2000E 2001E 2002E 2000E 2001E 2002 E Net Safes - 15 .8 '34.3 ',l .A 10 .5 115 .6 120.0 1-15 .011 101.9 441 .1 705 .0 272.3 515.0 881 .1 Reason Why +Estimate s Fraudulent Report Title Raising Estimates - Again Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 138 of 262) Author(s) Marc A . Cabi, Randy Abrams, Ray Sharma, Irving H o Date of January 17, 200 1 Statement Page Number 5 Fraudulent Table 2 Statement Income Statement Forecast Analysis Q2 :01 Handspring - FY02 :02:00 Income Statement Anal ysis Fiscal Year Ends June 30 Fore ca st Erro r Y- o-Y Change Sequential Chang e $ & Shares in Millions Dec- 01A Dec-01E RIFF °JCHG Dec-01A Dec-OOA DIFF M. CHG Dec-01A Sep-OOA DIFF %CH G Net Sales 115. 6 105. 0 10 .6 10 .1%1$ 115. 6 $ 15.8 $ 99 .8 632 .2% $ 115 . 6 $ 70.5 $ 45 .1 64 .0 % Reason Why +Estimate s Fraudulent Report Title `EDGEing' into a new product categor y Author(s) Marc A . Cabi, Randy Abrams, Mike Harde n Date of March 13, 200 1 Statement Page Number 6 Fraudulen t Table 5 Statement Handspring Income Statement 2000-2002 Handspring Consolidated Income Statement, 2000-2003 F Fiscal Year Ends June 30 FY2000A FY2001E 11 FY Ending June 30 CY Ending Dec 3 1 +$ & Shares in Millions ? Seto DecA MarchA Jun Seto DecE MarchE JunE 2000E 2001E 2002E 2000E 2001E 2002 E Net Sales - 15 .P 34 .3 ~,1 q 7!", 115 .6 12 .0 135 . 0 101 . 9 441 . 1 705 .0 272 .3 575 .0 581 . 1 Reason Why +Estimates Fraudulent End of. ND Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 139 of 262) -ISsuer- , ute lnte JAP Network Services Corporation - INAP Report Title Creating the Virtual Backbone ; Initiating with a Bu y Author(s) Todd Raker, Brad Stephens Date of October 25, 1999 Statement Page 4 Number Fraudulent We are projecting sales to increase 487 .6% in 1999 to $11 .5 million and 285 .9% in 2000 to $44 .4 million . Statement Reason Why +Estimates Fraudulent Report Title Creating the Virtual Backbone ; Initiating with a Bu y Author(s) Todd Raker , Brad Stephens Date of October 25, 1999 Statement Page 1 8 Number Fraudulent Table 1 1 Statement Key Revenue Metrics 19991: 21111111. 2001 f: 313 1 :\ 6i344 .t 9!311 12! 3 1 31,31 6/3 9 9 13 11 1213 1 ari l 6 13 0 93 0 12/3 1 Number of Customers 90 120 178 252 357 445 606 738 617 1101 1339 155 4 Qtr. over Qtr. Change - 33.3" 48 .35 41 .6% 4 1 .7% 24 .6% 36 .2 11% 21 .8`• 10.7:% 34 .8%6 21 .6% 16 .1 % Yr . over Yr. Change - - - - 296.7`; 270.8% 240 .4` 192 .9% 128.9` 1474% 121 .0% 110 . 6 ° Multiple of Circuits "Customer 1 .47 1 .33 1 .35 1 .37 1 .39 1 .41 1 .43 1 .45 1 .47 1 .49 1 .51 1 .5 4 Qtr . over Qtr. Change 1 .59 1 .5`% 1 .5% 1 .,54 15 `/, 1 .5% 1 .5 1 % 1 .5`6 1 .5° % Yr over Yr . Change - - - - -5 .3%% 5 .9%:% 5 .9% 5 .9" 5.9` 5 9 Monthly Rev i Circuit (Ks1 3 .142 4,500 4 .568 4,636 4,705 4,776 4 .848 4,920 4 .994 5 .,169 5 .145 5,22 2 Qtr. over Qtr . Change - 43.2,: 5% 1 .5 ` Yr . over Yr. Change - - - - 498% 6 . 6.?` . 6 1° . 1% n" ?`_ 6 .1% 6 1 % Revenue 1 .244 2 .166 3 .291 4 .798 6 .999 8.983 12 .596 15 .796 18.11 0 7 24 .987 31 .292 37 .39 5 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 140 of 262) Reason Why +Estimates Fraudulent Report Title Creating the Virtual Backbone; Initiating with a Buy Author(s) Todd Raker, Brad Stephen s Date of October 25, 1999 Statement Page 1 9 Number Fraudulent Table 1 2 Statement Annual Income Statement, 1995-2005E $ in millions, except per-share dat a (Fiscal Year Ends Dec.) 1996 1997 1998 1999E 2000E 2001E 2002E 2003E 2004E 2005E Total Sales $ 0 .044 $ 1 .045 $ 1 .957 $11 .499 $ 44 .374 $111 .681 $218 .997 $342 .005 $ 499 .957 $680 .988 Reason Why +Estimates Fraudulent Report Title Creating the Virtual Backbone; Initiating with a Bu y Author(s) Todd Raker, Brad Stephen s Date of October 25, 1999 Statement Page 2 1 Number Fraudulent Table 1 4 Statement Projected Quarterly Income Statement, 1999-2000 S in millions, except per-share data 1999E Full Year 2000E Full Yea r (Fiscal Year Ends Dec .) 3131A 6/ 30A 9/30 12/31 1999E 3131 6130 9130 12/31 2000 E Total Sales $ 1 .244 $ 2 .166 $ 3 .291 .$v 4 .798 $ 11 .499 $ 6 .999 $ 8.983 S 12 .596 $ 1 5.796 $ 44.374 Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 141 of 262) Reason Why +Estimate s Fraudulent Report Title Reports Stellar Quarter . Reiterate Buy . Author (s) Todd Raker, Brad Stephe n Date of November 9, 1999 Statement Page 1 Number Fraudulent The company reported revenue of $3 .6 million, exceeding our estimate of $3 .3 million by 9% . Statement Reason Wh y +Surprises Fraudulent Report Title CSFB Tech Intra-Dail y Author(s) Todd Raker Date of December 2, 1999 Statement Page 2 Number Fraudulent We believe that business is tracking above our estimates in the fourth quarter and we believe that management may raise formal guidance . Statement Reason Why +Cautionar y Fraudulent Report Title Creating the Internet Expresslane - Avoiding Peering Reinstating Coverage with a Buy . Author(s) Todd Raker, Brad Stephens Date of April 13, 2000 Statement Page 3 Number Fraudulent We expect InterNAP to show strong revenue growth in the future . We are projecting sales to increase 381% in 2000 to $60 .2 million and 182% i n Statement 2001 to $169.5 million . Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 142 of 262) Reason Why +Estimate s Fraudulent Report Title Creating the Internet Expresslane - Avoiding Peering Reinstating Coverage with a Buy . Author(s) Todd Raker, Brad Stephens Date of April 13, 200 0 Statement Page 4 Number Fraudulent Fourth quarter revenue was $5 .5 million, exceeding our estimate by 15% . Statement Reason Why +Surprises Fraudulent Report Title Solid Quarter - Reiterate Buy . Accelerating the Internet . Author(s) Todd Raker, Brad Stephen s Date of April 25, 2000 Statement Page I Number Fraudulent InterNAP reported a 1Q2000 that comfortably outperformed our expectations . Actual revenues increased 62% sequentially to $8 .9 million . Statement Reason Why +Surprises Fraudulent Report Title Solid Quarter - Reiterate Buy. Accelerating the Internet . Author(s) Todd Raker, Brad Stephens Date of April 25, 2000 Statement Page Number Fraudulent First quarter revenue was $8 .9 million, exceeding our estimate by 7% . Statement Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 143 of 262) Reason Why +Surprise s Fraudulent Report Title Solid Quarter - Reiterate Buy . Accelerating the Internet . Author(s) Todd Raker, Brad Stephen s Date of April 25, 2000 Statement Page 3 Number Fraudulent Revenue growth trounces estimates . InterNAP reported revenues of $8 .9 million for the first quarter 2000, an increase of 615% year over year and Statement 62% sequentially . The quarter's revenue was 7% greater than our estimates for the quarter . Reason Why +Surprises Fraudulent Report Title Solid Quarter - Reiterate Buy . Accelerating the Internet . Author(s) Todd Raker, Brad Stephen s Date of April 25, 2000 Statement Page 3 Number Fraudulent Table 1 Statement Strong Revenue Growth Actual Expected Deviation Deviation Results Results $) (%) Actual Actua l Q1' OCR 01,00 minus minus 3131 ;00 3.,'31 1,'00 expected ex acte d Total Revenue 8 .891 8.300 0 .59 1 Reason Why +Surprises Fraudulent Report Title Solid Quarter - Reiterate Buy . Accelerating the Internet . Author (s) Todd Raker, Brad Stephen s Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 144 of 262) Date of April 25, 2000 Statement Page 8 Number Fraudulent Table 5 Statement Annual Income Statement , 1996-2005E $ in millions, except per-share data FiscaI Year Ends Dec.'s 1996 1997 1998 1999A 2000E 2001E 2002E 2003E 2004E 2005 E Total Sales $ 0 .044 $ I .C-145 $ 1 .95 7 $12 520 $ 60 .791 5169 .500 5. 333 .000 $ 5571 000 $ 917 .000 51 .403 .040 Reason Why +Estimates Fraudulent Report Title Solid Quarter - Reiterate Buy . Accelerating the Internet . Author(s) Todd Raker, Brad Stephen s Date of April 25, 2000 Statement Page 1 0 Number Fraudulent (left side of table cut off in original research report ) Statement Table 7 Projected Qua rterly Income Statement, 1999-2000 $ in millions, except per-share data 1999A Full Year 2000E Full Yea r ml Year Ends Dec .) 3/31 6/30 9130 12/31 1999A 3131A 6/30 9/30 12/31 2000 E iI Sales $ 1 .244 $ 2 .166 $ 3 .613 S 5.497 $ 12 .520 $ 8.891 $ 11 .900 $ 17.000 $ 23 .000 $ 60 .79 1 Reason Why +Estimate s Fraudulent Report Title Solid Quarter-Reiterate Buy . Accelerating the Internet . Author(s) Todd Raker, Brad Stephen s Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 145 of 262) Date of May 2, 2000 Statement Page 1 Number Fraudulent InterNAP reported a 1Q2000 that comfortably outperformed our expectations . Actual revenues increased 62% sequentially to $8 .9 million . Statement Reason Why +Surprise s Fraudulent Report Title Solid Quarter-Reiterate Buy . Accelerating the Internet . Author(s) Todd Raker, Brad Stephen s Date of May 2, 2000 Statement Page 2 Number Fraudulent First quarter revenue was $8 .9 million, exceeding our estimate by 7% . Statement Reason Why +Surprise s Fraudulent Report Title Solid Quarter-Reiterate Buy . Accelerating the Internet . Author(s) Todd Raker, Brad Stephen s Date of May 2, 2000 Statement Page 3 Number Fraudulent Revenue growth trounces estimates . InterNAP reported revenues of $8 .9 million for the first quarter 2000, an increase of 615% year over year an d Statement 62% sequentially . The quarter's revenue was 7% greater than our estimates for the quarter . Reason Why +Surprises Fraudulent Report Title Solid Quarter-Reiterate Buy . Accelerating the Internet . Author(s) Todd Raker, Brad Stephen s Date of May 2, 2000 Statement Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 146 of 262) Page 3 Number Fraudulent Table 1 Statement Strong Revenue Growth Actual Expected Deviation Deviation Results Results ($) N Actual Actua l 011,00 Q1' 00 minus minus 3/31/00 3131?00 expected expected Total Revenue 8 .891 8.300 0.591 ~7'i~ Reason Why +Surprises Fraudulent Report Title Solid Quarter-Reiterate Buy . Accelerating the Internet. Author(s) Todd Raker, Brad Stephen s Date of May 2, 2000 Statement Page 8 Number Fraudulent Table 5 Statement Annual Income Statement, 1996-2005E $ in millions, except per-share dat a Fiscal Year Ends De c.l 1996 1997 1998 1999A 2000E 2001E 2002E 2003E 2004E 2005 E Total Sales $ 0 .944 $ 1 .045 $ 1 .957 312 .520 $ 60.791 5169 .500 5 333 .000 $ 5570 .000 $ 917 .000 $1 .403 .00 0 Reason Why +Estimates Fraudulent Report Title Solid Quarter-Reiterate Buy . Accelerating the Internet . Author(s) Todd Raker, Brad Stephen s Date of May 2, 2000 Statement Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 147 of 262) Page 10 Number Fraudulent Left side of table was cut off in original repor t Statement Table 7 Projected Quarterly Income Statement, 1999-2000 S In millions , except per-share data 1999A Full Year 2000E Full Year al Year Ends Dec.) 3/31 6130 9..30 12131 1999A 3l31A 6/30 9130 12 31 2000E l Sales $ 1 .244 S 2 . 166 $ 3.613 $ 5 .497 E 12 .520 $ 8 .891 S 11 .900 $ 17 .000 $ 23.000 $ 60 .79 1 Reason Why +Estimates Fraudulent Report Title Solid Quarter-Reiterate Buy . Accelerating the Internet . Author(s) Todd Raker, Suji DeSilva Date of September 7, 2000 Statement Page I Number Fraudulent On July 25, InterNAP reported a second quarter that comfortably outperformed our expectations . Actual revenues increased 53% sequentially to Statement $13.6 million . Reason Why +Surprises Fraudulent Report Title Solid Quarter-Reiterate Buy . Accelerating the Internet . Author (s) Todd Raker, Suji DeSilva Date of September 7, 2000 Statement Page 1 Number Fraudulent We are raising our revenue estimates, with 2000 estimate rising to $65 .3 million from $60 .8 million and 2001 to $202 million from 170 million . Statement Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 148 of 262) Reason Why +Revision s Fraudulent Report Title Solid Quarter-Reiterate Buy . Accelerating the Internet . Author(s) Todd Raker, Suji DeSilva Date of September 7, 2000 Statement Page 2 Number Fraudulent Given the solid traction demonstrated in the first two quarters, we are raising our revenue estimate from $60 .8 million to $65.3 million in 2000 and Statement from $169.5 million to $202 million in 2001 . Reason Why +Revisions Fraudulent Report Title Solid Quarter-Reiterate Buy . Accelerating the Internet . Author(s) Todd Raker, Suji DeSilva Date of September 7, 2000 Statement Page 3 Number Fraudulent Second quarter revenue was $13 .6 million, exceeding our estimate by 15%. Statement Reason Why +Surprises Fraudulent Report Title Solid Quarter-Reiterate Buy . Accelerating the Internet. Author(s) Todd Raker, Suji DeSilva Date of September 7, 2000 Statement Page 3 Number Fraudulent Revenue growth beats estimates . InterNAP reported revenues of $13 .6 million for the second quarter 2000, an increase of 530% year over year and Statement 53% sequentially . The quarter's revenue was 15% greater than our estimates for the quarter . Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 149 of 262) Reason Why +Surprise s Fraudulent Report Title Solid Quarter-Reiterate Buy . Accelerating the Internet . Author(s) Todd Raker, Suji DeSilv a Date of September 7, 200 0 Statement Page 3 Number Fraudulent Statement Table 1 Strong Revenue Growth Actual Expected Deviation Deviation Results Results (s '%' Actual Actua l Q2'00 Q2' 00 minus minus 6'30;00 6030.00 expected expected Total Revenue 13 .647 11 .900 1 .747 15%, Reason Why +Surprises Fraudulent Report Title Solid Quarter-Reiterate Buy . Accelerating the Internet . Author(s) Todd Raker, Suji DeSilva Date of September 7, 2000 Statement Page 9 Number Fraudulent Table 5 Statement Annual Income Statement, 1996-2005E $ in millions, except per-share data (Fiscal Year Ends Dec . ) 1996 1997 1998 1999A 2000E 2001E 2002E 2003E 2004E 2005E Total Sales $ 0 .044 $ 1 .045 $ 1 .957 $ 12 .520 $ 67 .338 $ 202 .000 $ 405 .000 $ 700 .000 $ 1,120 .000 $ 1 .690 .00 0 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 150 of 262) Reason Why +Estimates Fraudulent Report Title Solid Quarter-Reiterate Buy . Accelerating the Internet . Author(s) Todd Raker, Suji DeSilva Date of September 7, 2000 Statement Page 1 1 Number Fraudulent Table 7 Statement Quarterly Income Statement , 1999A-2000 E $ in millions, except per-share data 1999A Full Year 2000E Full Yea r (Fiscal Year Ends Dec . ) 3131 6/30 9/30 12131 1999A 3131A 6/30A 9130 12/31 2000E Total Sales $ 1 .244 $ 2 .166 $ 3 . 613 $ 5 .497 $ 12.520 S 8.891 $ 13 .647 $ 19 .300 $ 25.500 $ 67 .338 Reason Why +Estimates Fraudulent Report Title Management Increases 2001 Revenue Guidance, Reduces Capital Expenditure Expectations . Author(s) Todd Raker, Suji DeSilva Date of December 15, 2000 Statement Page I Number Fraudulent InterNAP hosted a conference call last night providing detailed 2001 financial guidance . Bottom line, our revenue estimate moves from $202 .0 to Statement $220.0 next year. Reason Why +Revision s Fraudulent Report Title Management Increases 2001 Revenue Guidance, Reduces Capital Expenditure Expectations . Author(s) Todd Raker, Suji DeSilva Date of December 15, 2000 Statement Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 151 of 262) Page 2 Number Fraudulent Bottom line : our revenue estimate moves from $202 .0 to $220.0 next year. Statement Reason Why +Revision s Fraudulent Report Title Management Increases 2001 Revenue Guidance, Reduces Capital Expenditure Expectations . Author(s) Todd Raker, Suji DeSilva Date of December 15, 2000 Statement Page 3 Number Fraudulent Table 1 Statement Projected Qua rterly Income Statement, 2000-2001 $ in millions, except per-share data 2000E Full Year 2001E Full Yea r (Fiscal Year Ends Dec 3131A 6130A 9130A 12131 2000E 3131E 6130E 9130E 12131E 2001 E Total Sales $ 8 .891 $ 13. 647 $ 20 .220 $ 25.500 $ 68 .258 $ 33 .500 $ 43 .000 $ 55 .000 $ 70 .500 $ 202 .000 Reason Why +Estimates Fraudulent Report Title Management Increases 2001 Revenue Guidance, Reduces Capital Expenditure Expectations . Author(s) Todd Raker, Suji DeSilva Date of December 19, 2000 Statement Page I Number Fraudulent The bottom line is that our revenue estimate moves from $202 .0 million to $219.1 million next year . Statement Reason Why +Revisions Fraudulent Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 152 of 262) Report Title Management Increases 2001 Revenue Guidance, Reduces Capital Expenditure Expectations . Author(s) Todd Raker, Suji DeSilva Date of December 19, 2000 Statement Page 2 Number Fraudulent Our revenue estimate moves from $202 .0 million to $219 .1 million next year . Statement Reason Why +Revisions Fraudulent Report Title Management Increases 2001 Revenue Guidance, Reduces Capital Expenditure Expectations . Author(s) Todd Raker, Suji DeSilva Date of December 19, 2000 Statement Page 2 Number Fraudulent Table 1 Statement Guidance as Provided by Managemen t S in minions 1401E 2001E 3001E 46101E 2001 E Revenue 33. 700 4d . 00 0 59.900 82A00 220 .00 0 Reason Why +Estimates Fraudulent Report Title Management Increases 2001 Revenue Guidance, Reduces Capital Expenditure Expectations . Author (s) Todd Raker, Suji DeSilv a Date of December 19, 2000 Statement Page 6 Number Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 153 of 262) Fraudulent Table 3 Statement Annual Income Statement, 1996-2005E $ in millions, except per-share data (Fiscal Year Ends Dec .) 1996 1997 1998 1999A 2000E 2001E 2002E 2003E 2004E 2005 E Total Sales $ 0 .044 $ 1 .045 $ 1 .957 $ 12 .520 $ 68 .258 $ 219 .100 $ 427 .000 $ 580 .000 $ 768 .000 $ 993 .000 Reason Why +Estimates Fraudulent Report Title Management Increases 2001 Revenue Guidance, Reduces Capital Expenditure Expectations . Author (s) Todd Raker, Suji DeSilva Date of December 19, 2000 Statement Page 7 Number Fraudulent Table 4 Statement Historical Quarterly Income Statement , 1998-1999 $ in millions, except per-share dat a Full Year 1998 Full Year 1999 E (Fiscal Year Ends Dec) 1997 3131 6130 9130 12131 1998 3131E 6/30E 9130E 12131E 1999 E Total Sales 1 .045 0.314 0 .417 0 .472 0 .754 1 .957 1 .244 2 .166 3 .613 5 .497 12 .52 0 Reason Why +Estimates Fraudulent Report Title Management Increases 2001 Revenue Guidance, Reduces Capital Expenditure Expectations . Author (s) Todd Raker, Suji DeSilva Date of December 19, 200 0 Statement Page 8 Number Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 154 of 262) Fraudulent Table 5 Statement Projected Quarterly Income Statement, 2000-200 1 $ in millions, except per-share data 2000E Full Year 2001E Full Year (Fiscal Year Ends Dec) 3'3IA 6'30A 910A 12'31E 2000E 3 ;31E 6:90E 9-30E 1231E 2001 E Total Sales 3 8 .891 3 13 .647 1 20 .220 $ 25.500 i, 68.258 33 .700 44 .000 59 .000 1 82 .400 5 219 .100 Reason Why +Estimates Fraudulent Report Title Internet Infrastructure Earnings Previe w Author(s) Todd Raker, Suji DeSilva, Jonathan Feeney, Kristen Bartholdso n Date of January 16, 200 1 Statement Page 12 Number Fraudulent For the fourth quarter of 2000, we forecast $25 .5 million revenue, a 26% sequential increase, and a loss of ($0 .43) per share Statement Reason Why +Estimate s Fraudulent Report Title Internet Infrastructure Earnings Previe w Author(s) Todd Raker, Suji DeSilva, Jonathan Feeney, Kristen Bartholdso n Date of January 16, 200 1 Statement Page 12 Number Fraudulent For 2001, we forecast $219 .1 million of revenue and loss of ($1 .93) per share . Statement Reason Why +Estimate s Fraudulent Report Title Internet Infrastructure Earnings Preview Author(s) Todd Raker, Suji DeSilva, Jonathan Feeney, Kristen Bartholdso n Date of January 16, 200 1 Statement Exhibit D: Misstatements and Omissions in CSFBC' s Research Reports (Page 155 of 262) Page 1 3 Number Fraudulent InterNAP Network Services Corp . (INAP) - Projected Quarterly Income Statement 2000-200 1 Statement 2000E Full Year 2001E Full Yea r (Fiscal Year Ends Dec.) 3131A 6130A 9130A 12/31E 2000E 3131E 6130E 9130E 12131E 2001 E Total Sales $ 8 .891 $ 13 .647 $ 20 .220 $ 25. 500 $ 68258 $ 33 .700 $ 44.000 $ 59.000 $ 82400 $ 219.100 Reason Why +Estimate s Fraudulent Report Title Quarter In-Line with Expectations . No Change to 2001 Estimates - Reiterate Buy . Author(s) Todd Raker, Suji DeSilva, Kristen Bartholdson Date of January 23, 200 1 Statement Page I Number Fraudulent InterNAP reported a fourth quarter slightly ahead of our expectations . Actual revenues increased 33% sequentially to $26 .9 million . Statement Reason Why +Surprise s Fraudulent Report Title Quarter In-Line with Expectations . No Change to 2001 Estimates - Reiterate Buy . Author(s) Todd Raker, Suji DeSilva, Kristen Bartholdson Date of January 23, 200 1 Statement Page 2 Number Fraudulent InterNAP's fourth quarter was slightly ahead of our expectations of $25 .5M and a reported loss of $0 .43 per share . Statement Reason Why +Surprises Fraudulent Report Title Quarter In-Line with Expectations . No Change to 2001 Estimates - Reiterate Buy . Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 156 of 262) Author(s) Todd Raker, Suji DeSilva, Kristen Bartholdson Date of January 23, 200 1 Statement Page 2 Number Fraudulent Third quarter revenue was $26 .9 million, representing 33% sequential growth, and exceeding our estimate of $25 .5 by 5%. Statement Reason Why +Surprise s Fraudulent Report Title Quarter In-Line with Expectations . No Change to 2001 Estimates - Reiterate Buy . Author(s) Todd Raker, Suji DeSilva, Kristen Bartholdson Date of January 23, 200 1 Statement Page 4 Number Fraudulent Revenue growth beats estimates . InterNAP reported revenues of $26 .9 million for the fourth quarter 2000, an increase of 289% year over year and Statement 33% sequentially . The quarter's revenue was 5% greater than our estimates for the quarter . Reason Why +Surprise s Fraudulent Report Title Quarter In-Line with Expectations . No Change to 2001 Estimates - Reiterate Buy . Author(s) Todd Raker, Suji DeSilva, Kristen Bartholdson Date of January 23, 200 1 Statement Page 4 Number Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 157 of 262) Fraudulent Table 1 Statement Revenue Growth Actual Expected Deviation Deviation Results Results ($) (%) Actual Actua l 03' 00 03' 00 minus minus 9./30100 9/30/00 expected expects-d Total Revenue 26.855 25.500 1 .355 5 % Reason Why +Surprises Fraudulent Report Title Quarter In-Line with Expectations . No Change to 2001 Estimates - Reiterate Buy . Author(s) Todd Raker, Suji DeSilva, Kristen Bartholdson Date of January 23, 200 1 Statement Page 8 Number Fraudulent Table 4 Statement Annual Income Statement, 1996-2005 E $ in millions, except per-share data (Fiscal Yea Ends Dar.) 1996 1997 1998 1999A ?DOOR 2001E 20O E 200.3E 2ME 2006E Total Sales $ 0.044 S 1.015 $ 1.957 $ 12,92D $ 69.613 $ 219.100 $ 427.000 $ 59).O(X) S 766000 $ 993030 Reason Why +Estimate s Fraudulent Report Title Quarter In-Line with Expectations. No Change to 2001 Estimates - Reiterate Buy . Author (s) Todd Raker, Suji DeSilva, Kristen Bartholdson Date of January 23, 200 1 Statement Page 9 Number Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 158 of 262) Fraudulent Table 5 Statement Historical Qua rterly Income Statement, 1998-99 $ in millions, except per-share data 1998 Full Year 1999E (Fiscal Yea Ends Dec .) 3/31 6130 9/30 12131 1998 3131E 6f30E '30E 12131E 1999 E Total Sales 0 .314 0.417 0 .472 0 .754 1.957 1 .244 2.166 3.613 5A97 12 .520 Reason Why +Estimates Fraudulent Report Title Quarter In-Line with Expectations . No Change to 2001 Estimates - Reiterate Buy . Author(s) Todd Raker, Suji DeSilva, Kristen Bartholdson Date of January 23, 200 1 Statement Page 1 0 Number Fraudulent Table 6 Statement Projected Quarterly Income Statement , 1999-2000 $ in millions, except per-share data 20M FdI Year 2001E (Fecal Yea 6-cis am,) 331 6/30 9'30 1231 200DA WE 61 9WE 1231E Total Sales $ &N $ 13647 $ 20.2') $ 26.856 $ 69.613 $ 3171X) $ 44.000 $ 58.000 $ 82.400 Reason Why +Estimates Fraudulent r .End of INAP Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 159 of 262) e Lante Co oration - L Report Title At the Vertex of the eMarkets Tornad o Author (s) Mark Wolfenberger, Wayne Sega l Date of March 10, 200 0 Statement Page Number I Fraudulent Anticipate significant upside rev surprise (25+%) in QI & accelerating Q/Q growth from Q4 vs our $12 .2M rev est. Statement Reason Why +Cautionary Fraudulent Report Title At the Vertex of the eMarkets Tornad o Author (s) Mark Wolfenberger, Wayne Sega l Date of March 10, 200 0 Statement Page Number 3 Fraudulent Figure 1 : Lante Earnings Model FY98A-FY01 E $ in millions, except per share data Statement rLante Corporation (LNTE) FY Ends Dec Buy/$9 0 19100 IY9N t)I-Mar 0'-Ju11 03-'cp (u-1kc IVOV t11-nt:,r (J'_-Jon c) ;-~•p 04-I)c Ivuo Pvu l nrncd 1clu :d Aeitr..l Aeuia l li,IjI Re,enuc . 15 .4 4' ' .I I I .t, In C_' 13 .1) 14, 15 .1 535 70 . 0 the Qtr 01r IS •. 46; .. . 3)1', _ . • . '•• „ kc,cnu,' 15 .4 4 .') i t " .3 Ilb ;i)) 1_1 .2 11 .0 14_' 15 .1 54 .E )J ) Reason Why +Estimate s Fraudulent Report Title Execution Excellence ; Estimates Left In Dus t Author(s) Mark Wolfenberger, David Sturtz, Barry Chubri k Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 160 of 262) Date of April 26, 2000 Statement Page Number I Fraudulent LNTE reported 1Q00 (1st public qtr) results soundly thrashing estimates : revs $17.IM vs $12.2M est. and EPS ($0 .03) vs ($0.05) est . Statement Reason Why +Surprises Fraudulent Report Title Execution Excellence ; Estimates Left In Dust Author(s) Mark Wolfenberger, David Sturtz, Barry Chubri k Date of April 26, 200 0 Statement Page Number I Fraudulent Business great, raising numbers : F00 to $80.1M (larger than our initial F01 est .) vs. $54.5M and F01 $115M vs . $79M . Expect plenty of headroo m Statement for upside from here. Reason Why +Revisions Fraudulent Report Title Execution Excellence ; Estimates Left In Dust Author(s) Mark Wolfenberger, David Sturtz, Barry Chubri k Date of April 26, 200 0 Statement Page Number 3 Fraudulent Figure 1 : Lante Earnings Model FY98A-FY01 E Statement $ in millions, except per share data "Lante Corporation (LNTE) FY Ends Dec Buy/$60 4J25/00 Pln .ti QI -nl,,r (,_'-hln r,3-Sep 04-nec Ivey O)I-n[.Ir 11_-Ju11 O ;-ti-p Q4-Dec Ivuu FYI) I Actual A Iual Actual Actual Aclu I Int :,l Ito rnw . 15 .4 -1 .11 7 .I L) .1, 11 .6 1" .0 17 .1 I0.u _I .n ±n 80 .1 115 .0 cheQlr.QIr Ia!,^ . 3(1„•, 5'' 47,, ., II" . 11"x• In"„ Rev 'nues I5 .3 4 .4 7 .1 Q . 11 .0 13 .0 17 .1 14.11 '_1!1 23 .0 1!LI I I5 . 0 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 161 of 262) Reason Why +Estimates Fraudulent Report Title On the Road in N Y Author(s) Mark Wolfenberger, David Sturtz, Ba rry Chubri k Date of May 8, 2000 Statement Page Number I Fraudulent Despite significant increase in ests following 40% rev upside in Ql, model remains among most conservative in Internet services space . Statement Accordingly, believe solid upside remains to our $80M & $115M rev ests in FY00 & FY01, given model assumes 48% realization in both years . Reason Why +Cautionary Fraudulent Report Title On the Road in N Y Author(s) Mark Wolfenberger, David Sturtz, Barry Chubrik Date of May 8, 2000 Statement Page Number 3 Fraudulent Figure 1 : Lante Earnings Model FY98A-FY01 E Statement $ in millions, except per share data rLante Corporation (LNTE) FY Ends De c Buy/$60 4!25100 I 'J' QI-Ntar 02-hm Q3-ticp (s4-I)cc F)'99 (1I-M r 112-Pun Q3-Sell Q4 .) c 11"00 I'O P Actual Actual Actual ,\ctuaI Actual rot,,! R,eiiii , U .4 49 7 .1 t .) H6 6 3 .0 17 .1 I°, .II 21 .0 2 ;u 10 .1 t 15 .n " chy, QIr QIr I ~ .1 469 ;. 47-,, 1 I" . I I",. IIP . kc1-1 nucs 15 .4 49 ? .I 9 .? 1 1 .6 ;3 .0 I% .I I~t .n 21 .0 _'3J) 0,, .l Iljl) Reason Wh y +Estimates Fraudulent Report Title Mid-Quarter Update - Top-line Accelerating, Raising Estimate s Author(s) Mark Wolfenberger, David Sturtz, Barry Chubrik Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 162 of 262) Date of June 8, 2000 Statement Page Number 1 Fraudulent Q2 tracking well ahead . Raising rev ests $2 .5M to $21 .5M, while believe strong rev upside remains . Statement Reason Why +Revisions Fraudulent Report Title Mid-Quarter Update - Top-line Accelerating, Raising Estimate s Author(s) Mark Wolfenberger, David Sturtz, Barry Chubri k Date of June 8, 2000 Statement Page Number 1 Fraudulent Raising FY00 & FY01 rev ests to $88.2M & $123 .5M from $80 .IM & $115M, respectively reflecting continued strong pipe of biz. Statement Reason Why +Revisions Fraudulent Report Title Mid-Quarter Update - Top-line Accelerating, Raising Estimate s Author(s) Mark Wolfenberger, David Sturtz, Barry Chubri k Date of June 8, 2000 Statement Page Number 2 Fraudulent Figure 1 : Lante Earnings Model FY98A-FY01 E Statement $ in millions, except per share data Lante Corporation (LNTE) FY Ends De c Buy/$6 0 617100 r)4\ (,I-nl .lr 0'-ILI11 03-la, (,4-LXc r~<,•, (II-Mai Q'-nItl 0 -tia, Il4-oic I) II) I'(n I A :I)II A I1IuI nilu ❑ I \ .'lual Aan . I IoIul Rcsc•ou . . 15 .4 4 . ( I I) '-0 I' .I _ : .(, s> .2 12 t 5 . .. . the (ltr:Qtr I5•. .. 41 . iu", . : .. . a? .• IU• . Re\cnuc> 1 ` .4 4 .u 7 .1 v . : 11 .6 ~ .(1 171 21 5 26j) ls .' 1 2 Reason Why +Estimates Fraudulent Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 163 of 262) Report Title Opinion/Estimate Changes Author(s) Mark Wolfenberger Date of July 25, 2000 Statement Page Number 5 Fraudulent LNTE reported its 2nd public qtr results well ahead of expectations: $23 .6M revs vs . our recently upwardly revised $21 .5M, up impressive 38% Statement seq. Reason Why +Surprises Fraudulent Report Title Opinion/Estimate Change s Author(s) Mark Wolfenberger Date of July 25, 2000 Statement Page Number 5 Fraudulent Raising 2000 rev & EPS to $95 .3M & $(0 .03) from $88.2M & $(0 .11), resp. Increasing 2001 rev & EPS to $138 .1M & $0 .08 from $128.5M & Statement $0.03. Reason Why +Revisions Fraudulent Report Title Clearly A More Languid Environment : Significantly Lowering Price Targe t Author(s) Mark Wolfenberger, David Sturtz, Barry Chubri k Date of August 30, 2000 Statement Page Number 3 Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 164 of 262) Fraudulent Figure 1 : Lante Earnings Model FY98A-FY01 E Statement $ in millions, except per share data rLante Corporation (LNTE ) FY Ends De c Buy/$1 5 8/30/00 I'r 1 .1 (11-\{ .il If'-It111 ~I :-S p ~1~-~)~l 1)"), 111-\)If (),-Illll ()4-))ii 1'~I111 I\11 1 .\/111 ;11 :\if~1 :11 . +iIII .II .\OU,II .\iIl1 .lI \cIU :1 I 11 .11 R,\~ nll~ . 1 ~ .1 4 .V .I ') . ]1 .6 ; .il ~ .l, n .(1 ' 1 .5 Ali ' I ;5 I IIL (llr QI I .~•,,~ 4611 :11" . _ . n 47' :\", . 111'• 111" . , R1 1 1 ; .4 4 .`) I 9,1 I I : n I' .I I?.~ . I Reason Why +Estimates Fraudulent T l :End of I NM Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 165 of 262) er; lame - The -Li hts an-Partnersh Inc. - LSPN Report Title Bringing Together Parents, Students and Teachers through the Power of the Internet . Initiate with Strong Bu y Author(s) Greg Cappelli, Scott Wilson Date of March 6, 2 000 Statement Page Number 4 Fraudulent We believe there is significant upside in these estimates as we have given the company very little credit for potential Internet and Broadband base d Statement revenue. Reason Why +Cautionary Fraudulent Report Title Bringing Together Parents, Students and Teachers through the Power of the Internet. Initiate with Strong Bu y Author(s) Greg Cappelli, Scott Wilson Date of March 6, 2 000 Statement Page Number 1 1 Fraudulent The Lightspan Partnership, Inc. Statement Table 3 Quarterly Income Statement , 2000E - 2001 E $ In millions , except per share data : Janua ry 1lscal year 1000A 2000A 3000A 4000E 2000E 1001E 2001E 3001E 4001E 2001 E Revenue : Licensing (reporled) - 0 .49 0 .38 0 .87 44 .53 21 .45 1423 12 .25 92 .4 6 Licensing ( pro forma '' j 3.58 8 77 7 .67 6 .99 26 .98 5 .78 13 .38 14 .23 12 .25 4564 Se rv ices 1 .22 157 1 .93 1 .20 5 .92 137 1 .43 1 .55 1 .61 5 .9 5 Hardware 1 .00 2.17 1 .66 1 .53 6 .35 1 .01 2 .17 1 .89 1 .94 7 .0 2 Subscription 0.41 0.43 0 .40 0 .52 1 .76 0 .50 0 .71 0 .87 1 .22 33 0 Advertising 0.00 0 00 0 .00 0 03 0 .03 0 .16 0 .16 0 .20 0 .22 07 3 E-Commerce 0.00 0.00 0 .00 0 .00 0 .00 001 0 .04 0 .09 0 .11 01 5 Total Revenue 6.21 12.94 11 .63 10 .26 41 .05 8 . 83 17 .88 13 .8 3 17 .35 62 .89 Reason Why +Estimate s Fraudulent 00022 Report Title Bringing Together Parents, Students and Teachers through the Power of the Internet . Initiate with Strong Bu y Author(s) Greg Cappelli, Scott Wilso n Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 166 of 262) Date of March 6, 2 00 0 Statement Page Number 1 2 Fraudulent The Lightspan Partnership, Inc . Statement Table 4 Annual Income Statement . 2000 E-2002E $ in millions. except per snare data: January rascal year 2000E 2001E 2002E Revenue : Licensing ;reported . rI .U.7 92 .46 57.02 Licensing ipso forma' 26 .98 45.64 57.02 Services 5 .92 5.95 7.40 Hardvware 6 .35 7.02 12.1 5 Subscription 1 .76 3.30 6.34 Advertising ()-j C4. 4 .59 E-Commence ~~ .C00 0.25 1 .1 5 Total Revenue 41 .05 62.89 88.65 Reason Why +Estimate s Fraudulent Report Title LSPN Fourth Quarter Results Exceed Expectations ; Reiterate Strong Buy. Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister Date of March 8, 2000 Statement Page Number 1 Fraudulent LSPN reported fourth (January) quarter results significantly above our estimates . Pro forma revenues of $13 .5 million were 32% above ou r Statement estimate of $10 .3 million . . . Reason Why +Surprises Fraudulent Report Title LSPN Fourth Quarter Results Exceed Expectations ; Reiterate Strong Buy. Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister Date of March 8 . 2000 Statement Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 167 of 262) Page Number I Fraudulent LSPN's strong January results gives the company momentum as it enters its first fiscal year as a public company and gives us added confidence i n Statement our fiscal year 2001 and 2002 revenue estimates of $62 .9 million and $88.9 million, respectively . Reason Why +Estimates Fraudulent Report Title LSPN Fourth Quarter Results Exceed Expectations ; Reiterate Strong Buy. Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister Date of March 8, 2000 Statement Page Number 3 Fraudulent Table 1 Statement LSPN Janua ry Qua rter Compariso n $ in millions ; except per share data 4Q99 4Q99 Actual Estimated % Differenc e Revenue : Licensing (reported} S1 .72 50 .36 351 .5% Licensing (pro forma' 9 .59 6 .99 37.3°"o Services 1 .83 1 .20 52.3°x; Hardware 1 .54 1 .53 0.9°10 Subscription 0.54 0.52 5. 1 Advertising 0 .03 0.03 -8.4° o E-Commerce 0 .00 0.00 NM Total Revenue 13.53 10.26 31 .9%0 Reason Why +Surprise s Fraudulent Report Title LSPN Fourth Quarter Results Exceed Expectations ; Reiterate Strong Buy. Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister Date of March 9, 2000 Statement Exhibit D : Misstatements and Omissions in CSFBC 's Research Reports (Page 168 of 262) Page Number 1 Fraudulent LSPN reported fourth (January) quarter results significantly above our estimates . Pro forma revenues of $13 .5 million were 32% above our Statement estimate of $10 .3 million , Reason Why +Surprises Fraudulent Report Title LSPN Fourth Quarter Results Exceed Expectations ; Reiterate S trong Buy. Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister Date of March 9, 200 0 Statement Page Number 2 Fraudulent LSPN reported fourth (January) quarter results significantly above our estimates . Statement Reason Why +Surprises Fraudulent Report Title LSPN Fourth Quarter Results Exceed Expectations ; Reiterate Strong Buy. Author (s) Greg Cappelli, Scott Wilson, Eric Sledgiste r Date of March 9, 200 0 Statement Page Number 2 Fraudulent Our fiscal year 2001 and 2002 revenue estimates are $62 .9 million and $88 .9 million, respectively . Statement Reason Why +Estimate s Fraudulent Report Title LSPN Fourth Quarter Results Exceed Expectations ; Reiterate Strong Buy. Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister Date of March 9, 200 0 Statement Page Number 2 Fraudulent LSPN reported pro forma revenue of $13 .5 million, which was 32% above our estimate of $10.3 million . Statement Reason Wh y +Surprises Fraudulent Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 169 of 262) Report Title LSPN Fourth Quarter Results Exceed Expectations ; Reiterate Strong Buy . Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister Date of March 9, 2000 Statement Page Number 3 Fraudulent Table 1 Statement LSPN Janua ry Qua rter Compariso n in millions : except per share data 4099 4Q99 Actual Estimated °"o Difference Revenue: Licensing (reported) $1 .72 50.38 351 .5%, Licensing ;pro forma' 9 .59 6.99 37 .3% Services 1 .83 1 .20 52 .3% Hardware 1 .54 1 .53 0 .9% Subscription 0 .54 0.52 5 .1 % Advertising 0 .03 0.03 -8.4% E-Commerce 0.00 0.00 NMM Total Revenue 13 .53 10.26 31 .9% Reason Why +Surprises Fraudulent Report Title LSPN Fou rth Quarter Results Exceed Expectations ; Reiterate Strong Buy. Author (s) Greg Cappelli, Scott Wilson, Eric Sledgister Date of March 9, 2000 Statement Page Number 5 Fraudulent LSPN reported fourth (January) quarter results ahead of expectations . LSPN reported fourth (January) quarter results significantly above our Statement estimates . Pro forma revenues of $13 .5 million were 32% above our estimate of $10 .3 million . . . Reason Why +Surprises Fraudulent Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 170 of 262) Report Title LSPN Fourth Quarter Results Exceed Expectations ; Reiterate Strong Buy . Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister Date of March 9, 2000 Statement Page Number 6 Fraudulent LSPN's strong January results gives the company momentum as it enters its first fiscal year as a pub lic company and gives us added confidence in Statement our fiscal year 2001 and 2002 revenue estimates of $62 .9 million and $88.9 million, respecti vely. Reason Why +Estimates Fraudulent Report Title LSPN Fourth Quarter Results Exceed Expectations ; Reiterate Strong Buy . Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister Date of March 9, 2000 Statement Page Number 7 Fraudulent The Lightspan Partnership, Inc . Statement Table 2 Quarterly Income Statement . 2000A - 2001 E $ In millions, except per sha re data : J anua ry fiscal year Revenue : Licensing (reporredj - - 1149 1 .72 2 21 45 60 22 .96 13.08 12 .22 93 .7 6 Licensing ( pro forrna ' ) 3 .58 8 17 7 .64 9 .59 29 . 58 5 79 14 .59 13.0 8 12. 22 45 .6 8 Se rvices 1 .22 1 57 1 .93 1 R3 6 .55 1 .36 1 .42 1 .54 1 60 5 .9 3 Hardware 1 .00 2 .17 1 .66 1 .54 G .37 1 .11 2 .26 1 79 1 .94 7 .0 2 Subscrip tion 0.41 0 .43 0 .40 0 .54 1 79 0 .49 0 .70 0 .86 1 20 3 2 5 Adve rt ising 0.00 1100 0 .00 0 .03 0 03 0 .16 0 .16 0 .20 022 0 1 3 E-Commerce 0 .00 0 .00 0 .00 0 .00 0 .00 0 .01 0 .04 0. 09 0 11 0 .2 5 Total Re v enue 6 .21 12 .94 11 .63 13 .53 44 .32 8 .84 19 .18 17.55 17.29 62 .8 6 Reason Why +Estimates Fraudulent Report Title LSPN Fourth Quarter Results Exceed Expectations ; Reiterate Strong Buy. Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister Date of March 9, 2000 Statement Page Number 8 Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 171 of 262) Fraudulent The Lightspan Pa rtnership, Inc. Statement Table 4 Annual Income Statement . 2000A-2002 E $ in millions . exapt per sha re data ; January 1lscal yea r 2000A 2001E 2002 E Revenue: Licensing (reported : 2.21 93.76 57.26 Licensing pro forma' 29 .52 45.68 57.26 Services P'. 55 5 .93 7.45 Hard-&ire x6 .37 7.+12 12.24 Subscription 1 .79 3 .25 6.25 Adverti si ng 11.0{ 1-P.73 4.59 E-Commerce 0 .Gr' 0 .25 1 .1 5 Total Revenue 44 .32 62.86 88.94 Reason Why +Estimates Fraudulent Report Title LSPN Fourth Quarter Results Exceed Expectations ; Reiterate Strong Buy . Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister Date of March 13, 2000 Statement Page Number I Fraudulent LSPN reported fourth (January) quarter results significantly above our estimates . Pro forma revenues of $13 .5 million were 32% above ou r Statement estimate of $10 .3 million , Reason Why +Surprises Fraudulent Report Title LSPN Fourth Quarter Results Exceed Expectations ; Reiterate Strong Buy . Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister Date of March 13, 2000 Statement Page Number 2 Exhibit D : Misstatements and Omissions in CSFBC 's Research Reports (Page 172 of 262) Fraudulent LSPN reported fourth (January) quarter results significantly above our estimates . Statement Reason Why +Surprises Fraudulent Report Title LSPN Fourth Quarter Results Exceed Expectations ; Reiterate Strong Buy . Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister Date of March 13, 2000 Statement Page Number 2 Fraudulent LSPN's strong January quarter results give the company momentum as it enters its first fiscal year as a public company . Our fiscal year 2001 and Statement 2002 revenue estimates are $62 .9 million and $88.9 million, respectively . Reason Why +Estimate s Fraudulent Report Title LSPN Fourth Quarter Results Exceed Expectations ; Reiterate Strong Buy . Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister Date of March 13, 2000 Statement Page Number 2 Fraudulent LSPN reported pro forma revenue of $13 .5 million, which was 32% above our estimate of $10.3 million . Statement Reason Wh y +Surprises Fraudulent Report Title LSPN Fourth Quarter Results Exceed Expectations ; Reiterate Strong Buy . Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister Date of March 13, 2000 Statement Page Number 3 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 173 of 262) Fraudulent Table 1 Statement LSPN Janua ry Qua rter Comparison S in millions! except per share data 4Q99 4Q99 P tual Estimated Difference Revenue : Licensing (reported) $1 .72 X0.38 Licensing (pro lonnal 9.59+ 6.99 31 .3% Services 1 .83 1 .20 52 .3)%, Hard,aare 1 .54 1 .53 0 .9% Subscription 0 .54 0.52 5.11911 Advertising 0 .03 0.03 -8 .4% E-Commerce 0.00 0.00 NM Total Revenue 13.53 10.26 312'' Reason Why +Surprises Fraudulent Report Title LSPN Fourth Quarter Results Exceed Expectations ; Reiterate Strong Buy. Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister Date of March 13, 2000 Statement Page Number 6 Fraudulent LSPN reported fourth (January) quarter results ahead of expectations . LSPN reported fourth (January) quarter results significantly above ou r Statement estimates . Pro forma revenues of $13 .5 million were 32% above our estimate of $10 .3 million, Reason Why +Surprise s Fraudulent Re ort Title ------LSPN ------Fourth- Quarter Results Exceed Expectations ; Reiterate Strong Buy. Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister Date of March 13, 2000 Statement Page Number 6 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 174 of 262) Fraudulent LSPN's strong January results gives the company momentum as it enters its first fiscal year as a public company and gives us added confidence i n Statement our fiscal year 2001 and 2002 revenue estimates of $62 .9 million and $88 .9 million, respectively. Reason Why +Estimates Fraudulent Report Title LSPN Fourth Quarter Results Exceed Expectations ; Reiterate Strong Buy. Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister Date of March 13, 2000 Statement Page Number 7 Fraudulent Table 2 Statement Quarterly Income Statement, 2000A-2001 E S in nliNionns , except per share data ; January fiscal yea r 1000A 2000A 3000A 4QOOA 2000A 1 0 01E 2Q01E 3Q01E 4Q01E 2001 E Revenue : Licensing (reported) - - 0 .49 1 .72 2 .21 45.60 22.86 13 .08 12 .22 93 .76 Licensing (pro forma' } 3 .58 8 .77 7.64 9 .59 29.58 5.79 14.59 13 .08 12 .22 45 .6 8 Services 1 .22 1 .57 1 .93 1 .83 6.55 1 .36 1 .42 1 .54 1 .60 5 .9 3 Hardware 1 .00 2 .17 1 .66 1 .54 6.37 1 .01 2 .28 1 .79 1 .94 7 .0 2 Subscription 0 .41 0 .43 0.40 0 .54 1 .79 0.49 0 .70 0 .86 1 .20 3 .2 5 Advertising 0 .00 0 .00 0.00 0.03 0 .03 0.16 0.16 0 .20 0 .22 0 .7 3 E-Commerce 0 .00 0 .00 0.00 0.00 0.00 0.01 0 .04 0 .09 0 .11 0 .2 5 Total Revenue 6 .21 12 .94 11 .63 13.53 44 .32 8.84 19 .18 17 .55 17 .29 62 .8 6 Reason Why +Estimates Fraudulent Report Title LSPN Fourth Quarter Results Exceed Expectations ; Reiterate Strong Buy. Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister Date of March 13, 2000 Statement Page Number 8 Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 175 of 262) Fraudulent The Lightspan Partnership, Inc . Statement Table 3 Annual Income Statement . 2000A-2002E $ in niIIons, except per share data; Janua I6cal ear 2000A 2001E 2002E Revenue : Licensiric (report9di 2 .21 93.76 57.26 Licensing ipln form it 1 29 .55 4E5 .68 57 .2 6 Services E .55 5.93 7.45 Hardware X5 .37 7 .02 12.24 Subscription 1 .79 3.25 P .25 Advertising 0.03 1).73 4 .59 E-Commence 0 .00 0 . 25 1 .1 5 Total Revenue 44 .32 62.86 88.94 Reason Why +Estimate s Fraudulent Report Title Bringing Together Parents, Students, and Teachers through the Power of the Internet-Reiterate Strong Bu y Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister, Michael Husma n Date of March 29, 2000 Statement Page Number I Fraudulent LSPN recently reported fourth (January) quarter results significantly above our estimates . Pro forma revenues of $13 .5 million were 32% above ou r Statement estimate of $10 .3 million, . . . Reason Why +Surprise s Fraudulent Report Title Bringing Together Parents, Students, and Teachers through the Power of the Internet-Reiterate Strong Bu y Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister, Michael Husma n Date of March 29, 2000 Statement Page Number 52 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 176 of 262) Fraudulent LSPN reported fourth (January) quarter results significantly above our estimates . Statement Reason Why +Surprise s Fraudulent Report Title Bringing Together Parents, Students, and Teachers through the Power of the Internet-Reiterate Strong Bu y Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister, Michael Husman Date of March 29, 2000 Statement Page Number 52 Fraudulent LSPN's strong January results gives the company momentum as it enters its first fiscal year as a public company and gives us added confidence i n Statement our fiscal year 2001 and 2002 revenue estimates of $62 .9 million and $88.9 million, respectively . Reason Why +Estimate s Fraudulent Report Title Bringing Together Parents, Students, and Teachers through the Power of the Internet-Reiterate Strong Bu y Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister, Michael Husman Date of March 29, 2000 Statement Page Number 52 Fraudulent LSPN reported pro forma revenue of $13 .5 million, which was 32%, above our estimate of $10 .3 million . Statement Reason Why +Surprise s Fraudulent Report Title Bringing Together Parents, Students, and Teachers through the Power of the Internet-Reiterate Strong Bu y Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister, Michael Husma n Date of March 29, 2000 Statement Page Number 53 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 177 of 262) Fraudulent Exhibit 4 7 Statement January Quarter Compariso n in millions : except per share data 4Q99 4Q9 9 Actual Estirnated A Dittc!ronc e Revenue : Licensing (re-ported) $1 .72 $0.38 351 .5% Licensing (pro torrnat i 9.59+ 1399 37.3% Services 1 .83 1 .20 52.3';x% Hardware 1 .54 1 .53 0.91x.; Subscription 1 . 4 0.52 5.1 % Advertising 0 .03 0.03 -8.4% E-Commerce 0.00 0.00 NM Total Revenue 13.53 10.26 31 .9% Reason Why +Surprises Fraudulent Report Title Bringing Together Parents, Students, and Teachers through the Power of the Internet-Reiterate Strong Bu y Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister , Michael Husman Date of March 29, 2000 Statement Page Number 60 Fraudulent Exhibit 51 Statement Quarterly Income statement, 2000-02E $ in millions. except per share data : Janua ry fiscal yea r 1000A 2000A 3000A 4000A 2000A 1001E 2Q01E 3001E 4001E 2001E 1Q02E 2002E 3002E 4002E 2002E Revenue : Licensing rreportei ? 0 .49 1 .72 2 .21 45 .60 22 .86 13 .08 12 .22 9376 7.86 16 .90 18 .04 16 .0 3 58 .85 Lice nsing (pro forma' 358 8 .77 7 G 4 9 59 29 5 8 5 .7 9 14 .59 13 08 12 .2 2 45 68 7 .86 16 .96 18 0 4 16 .0 0 58 .8 5 Services 1 .22 1 .57 1 .93 1 .83 6 .55 1 .36 1 42 1 .54 1 .60 593 1 71 1 79 1 94 2 .01 7 .4 5 Hard,3are 1 .00 2 .17 1 66 1 .54 6 .37 1 .01 2 .28 1 .79 1 . 94 7 02 1 53 4 16 3 2 .3 3 30 12 2 4 Subscnptan 0 41 0 43 i 40 0 .54 1 79 0 .49 0 .70 0 .86 1 .20 3 25 1 .42 1 .49 1 S :3 1 .81 i 2 5 Advertising 0 .00 0 00 0 .01) 3 03 0 03 0 .16 0 .16 0 .20 0 .22 0 73 0 .72 j 88 1 .27 1 .71 4 .59 E-Comrnerce 0 . 00 0 00 0 .00 0.00 0 .00 0 .01 0 04 0 .09 0 .11 0 25 0.27 0 19 0.35 00 .33 1 .1 5 Total Revenue 6 .21 12.94 11 .63 13 . 53 44.32 8 .84 19 .18 17 .55 17.29 62 .86 13 .52 25.47 26.39 25 .16 90 .5 3 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 178 of 262) Reason Why +Estimate s Fraudulent Report Title Bringing Together Parents, Students, and Teachers through the Power of the Internet-Reiterate Strong Bu y Author(s) Greg Cappelli, Scott Wilson, Eric Sledgister, Michael Husma n Date of March 29, 2000 Statement Page Number 6 1 Fraudulent The Lightspan Partnership, Inc . Statement Exhibit 5 2 Annual Income Statement , 2000-02 E $ In millbns . except per snare data ; January fiscal year 2000A I 2001E 2002 E Revenue : Licensing (reported ) 2.21 93. 76 58.85 Licensing (p ro forma ') 29 .58 45.68 58.85 Services 6 .55 5.43 7.45 Hardware 6.37 7.( 12 .24 Subscription 1 .79 3.25 6.25 Adve rtising 0 .03 0.73 4.59 E-Commerce 0.00 0 .25 1 .1 5 Total Revenue 44 .32 62.86 90 .53 Reason Why +Estimates Fraudulent Report Title School's In Session : April Qua rter Results Above Expectations ;Reiterate Strong Buy . Author(s) Greg Cappelli, Scott Wilson, Michael Husman Date of May 18, 2000 Statement Page Number I Fraudulent LSPN reported first (April) quarter results that were significantly better than our estimates . Pro forma revenues of $10 .3 million were 16.7% highe r Statement than our estimate , Reason Why +Surprises Fraudulent Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 179 of 262) Report Title School's In Session : April Quarter Results Above Expectations ;Reiterate Strong Buy . Author(s) Greg Cappelli, Scott Wilson, Michael Husma n Date of May 18, 2000 Statement Page Number 2 Fraudulent LSPN began its first fiscal year as a public company with April (first) quarter results significantly ahead of our expectations . First quarter pro Statement forma revenues of $10 .3 million were 16.7% better than our estimate of $8 .8 million, . . . Reason Why +Surprises Fraudulent Report Title School's In Session : April Qua rter Results Above Expectations ; Reiterate Strong Buy. Author (s) Greg Cappelli, Scott Wilson, Michael Husman Date of May 18, 2000 Statement Page Number 2 Fraudulent LSPN reported pro forma (see deferred revenue section) first quarter revenue of $10 .3 million, which was 16 .7% above our estimate of $8 .8 Statement million and 65 .9% higher than the year ago period . Reason Why +Surprises Fraudulent Report Title School's In Session : April Quarter Results Above Expectations ; Reiterate Strong Buy. Author (s) Greg Cappelli, Scott Wilson, Michael Husma n Date of May 18, 2000 Statement Page Number 3 Fraudulent Table 1 Statement Summa ry of April (First ) Quarter Results $ in millions. expect per share data 1001 1Q01 1Q00 % Change Actual Estimated Difference Actual YTY Revenue: Total Revenue (pro forma)' 10 .31 8.84 16.7% 6.21 65.9°%d Reason Why +Surprises Fraudulent Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 180 of 262) Report Title School's In Session : April Quarter Results Above Expectations ; Reiterate Strong Buy. Author(s) Greg Cappelli, Scott Wilson, Michael Husma n Date of May 18, 2000 Statement Page Number 5 Fraudulent LSPN reported first (April) quarter results that were significantly better than our estimates . Revenues, gross margins, and EPS were all better tha n Statement expected. Reason Why +Surprises Fraudulent Report Title School's In Session : April Quarter Results Above Expectations ; Reiterate Strong Buy. Author(s) Greg Cappelli, Scott Wilson, Michael Husma n Date of May 18, 2000 Statement Page Number 7 Fraudulent Table 2 Statement Quarterly Income Statement, 2000A - 2001 E S in millions . except per share data, January fiscal yea r I 1000A 2000A 3000A 4000A 2000A 1 0 01A 2001E 3Q01E 4001E 2001E 1002E 2002E 3002E 4002E 2002 E Revenue : Licensing irepcrtzd~ 0 0 0 .40 1 .72 2 .21 52 .92 22 .91 13 12 12 .2 6, 1)1 .22 7 .93 17 .2' 18 .27 16 .20 59 .6 1 Licensim1 tpro f-.rma' i 3 .58 8 .7 7 7 .64 9 .54 29 .58 6 .1 0 14 63 13 .12 1226 46 .12 7 .93 17 .20 18 .27 16 .20 59 .6 1 Ser:ic-s 1 .22 1 .57 1 .93 1 83 55 2.17 1 .4 2 1 .54 1 .60 6 .74 1 73 1 .81 1 .96 2 .03 7 .54 Hardware 1 .1-10 2 .17 1 .66 1 54 6. .37 1 .15 228 1 .75 1 94 7 .16 1 .54 4 .22 3 .30 3 34 12 .3 9 Subscription 0 .41 0.43 0 .4 _i 6 .54 1 .79 0.72 0 76 1 .03 1 31 3 .82 1 .55 1 .62 1 .83 1 .96 6 .995 Advertising 0 .0(' C' ui i .00 0 .03 p 03 0 .16 0 16 0 .26' G 22 6 .74 1 .10 1 .88 1 .27 1 .74 4 .99 E--Commerce ' n .iri .00 O .ir 0 .i,. 0 .".0 7 .00 0 .0 ? .27 0 .19 0 .35 .95 1 .1 6 Total Revenue 6.21 12 .94 11 .63 13 . 53 44 . 32 10 .31 19 .25 17 .68 17 .34 64 . 57 14 .12 25 .91 26 .99 25 .63 92.6 5 Reason Why +Surprises Fraudulent Report Title School's In Session : April Quarter Results Above Expectations ; Reiterate Strong Buy. Author(s) Greg Cappelli, Scott Wilson, Michael Husma n Date of May 18, 2000 Statement Page Number 8 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 181 of 262) Fraudulent Lightspan Inc . Statement Table 3 Annual Income Statement. 2000A-2002 E $ I n millions, exoapt per snare data: Janua ry fiscal year 1999A 2000A 2001E 2002 E Revenue : Licensing ireported) 0 .00 2 .21 101 .22 59 .6 1 Licensing (pro forma' 20 .72 29 .58 46 .12 59 .6 1 Services 3 .74 6 .55 6 .74 7 .5 4 Hardware 6 .10 6 .37 7 .16 12 .3 9 Subscription 1 .02 1 .79 3 .82 6 .9 5 Advertising 0 .00 0 .03 0 .74 4 .9 9 E-Commerce 0 .00 0 .00 0 .00 1 .1 6 Total Revenue 31 .59 44 .32 64 .57 92 .6 5 Reason Why +Estimates Fraudulent Report Title School's in Session : April Quarter Results Above Expectations ; Reiterate Strong Bu y Author (s) Greg Cappelli, Scott Wilson, Michael Husma n Date of May 22, 2000 Statement Page Number 1 Fraudulent LSPN reported first (April) quarter results that were significantly better than our estimates. Pro forma revenues of $10 .3 million were 16.7% higher Statement than our estimate , Reason Why +Surprise s Fraudulent Report Title School's in Session : April Quarter Results Above Expectations ; Reiterate Strong Buy Author(s) Greg Cappelli, Scott Wilson, Michael Husma n Date of May 22, 2000 Statement Page Number 2 Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 182 of 262) Fraudulent LSPN began its first fiscal year as a public company with April (first) quarter results significantly ahead of our expectations . First quarter pro Statement forma revenues of $10.3 million were 16.7% better than our estimate of $8 .8 million , Reason Why +Surprise s Fraudulent Report Title School's in Session : April Quarter Results Above Expectations ; Reiterate Strong Bu y Author(s) Greg Cappelli, Scott Wilson, Michael Husma n Date of May 22, 2000 Statement Page Number 2 Fraudulent LSPN reported pro forma (see deferred revenue section) first quarter revenue of $10 .3 million, which was 16 .7% above our estimate of $8 .8 Statement million and 65 .9% higher than the year-ago period . Reason Why +Surprises Fraudulent Report Title School's in Session : April Quarter Results Above Expectations ; Reiterate Strong Buy Author (s) Greg Cappelli, Scott Wilson, Michael Husma n Date of May 22, 2000 Statement Page Number 3 Fraudulent Table 1 Statement Summa ry of April (First) Quarter Results $ in millions . except per share data 1Q01 1001 % 1 Q00 % Chang e Actual Estimated Difference Actual YTY Revenue : Total Revenue(pro forma)' 10.31 8.84 16.7°!0 6.21 65.9% Reason Why +Surprises Fraudulent Report Title School's in Session : April Quarter Results Above Expectations ; Reiterate Strong Bu y Author (s) Greg Cappelli, Scott Wilson, Michael Husma n Date of May 22, 2000 Statement Page Number 6 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 183 of 262) Fraudulent Table 2 Statement Quarterly Income Statement, 2000A-2002 E $ in millions, except per share data ; January fiscal year en d 1000A 2000A 3000A 4000A 2000A 1 0 01A 2001E 3001E 4Q01E 2001E 1002E 2002E 3002E 4002E 2002 E Revenue : Licensing (reported) 0 0 0 .49 1 .72 2 .21 52 .92 22 .91 13 .12 12 .26 101 .22 7 .93 17 .20 18 .27 16 .20 59.6 1 Licensing (pro forma' 3 .58 8 .77 7 .64 9 .59 29 .58 6 .10 14 .63 13 .12 12 .26 46 .12 7 .93 17 .20 18 .27 16 .20 59 .6 1 Services 1 .22 1 .57 1 .93 1 .83 6 .55 2 .17 1 .42 1 .54 1 .60 6 .74 1 .73 1 .81 1 .96 2 .03 7 .5 4 Hardware 1 .00 2 .17 1 .66 1 .54 6 .37 1 .15 2 .28 1 .79 1 .94 7 .16 1 .54 4 .22 3 .30 3 .34 12 .3 9 Subscription 0 .41 0 .43 0 .40 0 .54 1 .79 0 .72 0 .76 1 .03 1 .31 3 .82 1 .55 1 .62 1 .83 1 .96 6 .9 5 Advertising 0 .00 0 .00 0 .00 0 .03 0 .03 0 .16 0 .16 0 .20 0 .22 0 .74 1 .10 0 .88 1 .27 1 .74 4 .9 9 E-Commerce 0 .00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .27 0 .1 (4 0 .35 0 .35 1 .1 6 Total Revenue 6 .21 12 .94 11 .63 13 . 53 44 . 32 10 . 31 19 .25 17 .68 17 .34 64 . 57 14 .12 25 .91 26 .99 25 . 63 92 .6 5 Reason Why +Estimates Fraudulent Report Title School's in Session : April Quarter Results Above Expectations ; Reiterate Strong Bu y Author(s) Greg Cappelli, Scott Wilson, Michael Husman Date of May 22, 2000 Statement Page Number 7 Fraudulent Lightspan . Inc . Statement Table 3 Annual Income Statement. 1999A-2002E $ In millions. except per sna re data ; Januaryflscal yearen a 1999A 2000A 2001E 2002 E Revenue: Licensing {reported) 0 .00 2.21 101 .22 59 .6 1 Licensing (pro formal) 20 .72 29.58 46.12 59 .6 1 Services 3 .74 6.55 6.74 7 .5 4 Hardvrare 6 .10 6.37 7.16 12 .3 9 Subscription 1 .02 1 .79 3.82 6 .9 5 Advertising 0 .00 0.03 0.74 4 .99 E-Cornmerce 0 .00 0.00 0.00 1 .1 6 Total Revenue 31 .59 44.32 64.57 92 .6 5 Reason Why +Estimates Fraudulent Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 184 of 262) Report Title LSPN Expands Product Offering by Acquiring Edutest, Inc .; Reiterate Strong Buy . Author(s) Greg Cappelli, Scott Wilson, Michael Husman Date of May 25, 2000 Statement Page Number 3 Fraudulent LSPN recently announced first quarter 2001 results significantly ahead of our expectations . Statement First quarter pro forma revenues of $10 .3 million were 16.7% better than our estimate of $8 .8 million, . . . Reason Wh y +Surprises Fraudulent Report Title LSPN Expands Product Offering by Acquiring Edutest, Inc .; Reiterate Strong Buy. Author(s) Greg Cappelli, Scott Wilson, Michael Husma n Date of May 25, 2000 Statement Page Number 3 Fraudulent We maintain our fiscal 2001 and 2002 pro forma revenue estimates of $64 .6 million and $92.7 million, respectively . Statement Reason Why +Estimates Fraudulent Report Title LSPN Expands Product Offering by Acquiring Edutest, Inc .; Reiterate Strong Buy. Author(s) Greg Cappelli, Scott Wilson, Michael Husma n Date of May 25, 2000 Statement Page Number T4 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 185 of 262) Fraudulent Table I Statement Quarterly Income Statement , 2000A-2002E $ in millions, except per share data ; January fiscal year end 1000A 2000A 3000A 4000A 2000A 1Q01A 2Q01E 30 01E 4Q01E 2001E 1 0 02E 2Q02E 3Q02E 4Q02E 2002 E Revenue : Licensing (reported) 0 0 0.49 1 .72 2 .21 52.92 22 .91 13 .12 12 .26 101 .22 7 .93 17 .20 18 .27 16 .20 59.6 1 Licensing (pro forma1 ) 3.58 8 .77 7.64 9 .59 29 .58 6 .10 14 .63 13 .12 12 .26 46 .12 7 .93 17 .20 18 .27 16 .20 59 .6 1 Services 1 .22 1 .57 1 .93 1 .83 6 .55 2 .17 1 .42 1 .54 1 .60 6 .74 1 .73 1 .81 1 .96 2 .03 7 .54 Hardware 1 .00 2 .17 1 .66 1 .54 6 .37 1 .15 2 .28 1 .79 1 .94 7 .16 1 .54 4 .22 3 .30 3 .34 12 .39 Subscription 0 .41 0 .43 0.40 0 .54 1 .79 0 .72 0 .76 1 .03 1 .31 3 .82 1 .55 1 .62 1 .83 1 .96 6 .95 Advertising 0 .00 0 .00 0.00 0 .03 0 .03 0 .16 0 .16 0 .20 0 .22 0 .74 1 .10 0.88 1 .27 1 .74 4 .99 E-Commerce 0 .00 0 .00 0 .00 0.00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .27 0 .19 0.35 0 .35 1 .1 6 Total Revenue 6 .21 12. 94 11 . 63 13. 53 44 .32 10 .31 19 . 25 17 . 68 17.34 64 . 57 14. 12 25.91 26 .99 25. 63 92.65 Reason Why +Estimate s Fraudulent Report Title LSPN Expands Product Offering by Acquiring Edutest, Inc . ; Reiterate Strong Buy. Author(s) Greg Cappelli, Scott Wilson, Michael Husma n Date of May 25, 2000 Statement Page Number 5 Fraudulent Lightspan.Inc . Statement Table 2 Annual Income Statement . 1999A-2002 E $ In millions, except per sha re data, January fiscal yearend 1999A 2000A 2001E 20112 E Revenue : Licensing (reported ) 0.00 2.21 1 01 .22 59.6 1 Licensing (p ro forma ') 20.72 29.58 46.12 59.6 1 Services 3.74 6.55 6.74 7.54 Hardware 6.10 6.37 7.16 12.39 Subscription 1.02 1 .79 3.82 6.9 5 Advertising 0.00 0.03 0.74 4.99 E-Commence 0.00 0.00 0.00 1 .1 6 Total Revenue 31 .59 44 .32 64.57 92.65 Reason Why +Estimates Fraudulent Exhibit D: Misstatements and Omissions in CSFBC' s Research Reports (Page 186 of 262) Report Title LSPN acquires LearningPlanet.com; Reiterate Strong Buy. Author(s) Greg Cappelli, Scott Wilson, Michael Husma n Date of June 1, 2000 Statement Page Number 1 Fraudulent We expect the financial impact of this transaction to be minimal . Therefore, we maintain our fiscal 2001 and 2002 pro forma revenues and EPS of Statement $64.6 million and $92.7 million, respectively, . . . Reason Why +Estimates Fraudulent Report Title LSPN acquires LearningPlanet.com; Reiterate Strong Buy. Author (s) Greg Cappelli, Scott Wilson, Michael Husma n Date of June 1, 2000 Statement Page Number 3 Fraudulent Table 1 Statement Quarterly Income Statement , 2000A-2002E S in millions . except per share data : January fiscal year en d 1000A 2000A 3000A 4000A 2000A 1001A 2001E 3001E 4001E 2001E 1002E 2002E 3002E 4002E 2002 E Revenue : Licwsing (reportedi 0 0 0 .49 1 .72 2 .21 52 .92 22 91 13 .12 12 .26 101 .22 7 .93 17 .20 1827 16 .20 59 .6 1 Licensing (pro fomial 3 58 V7 7 .64 9 .59 29 .58 6.10 14 63 13 .12 12 .26 46 .12 7 .93 17 .20 1827 16 .20 59 .6 1 Services 1 .22 1 .57 1 .9+3 1 .83 6 .55 2.17 1 .42 1 .54 1 .60 674 1 .73 1 .81 1 .96 2 .03 7 .54 Hardware 1 .00 2 .17 1 .66 1 .54 6 .37 1 .15 2 .28 1 .79 1 .94 7 .16 1 .54 4 .22 3 .30 3 .34 12 .3 9 Subscriptoo 0 .41 0 .43 0 .40 0 .54 179 0.72 0 .76 1 .03 1 .31 3 .82 1 .55 1 .62 1 .83 1 .96 6 .9 5 Advertising 0 .00 0 .00 0 .00 0 .03 0 03 0.16 0 .16 0 .20 0 .22 0.74 1 .10 0 .88 1 .27 1 .74 4 .9 9 E-Commerce 0 .00 0 .00 0 . CND 0 .00 0 .00 0.00 0 .00 0 .00 0 .00 0 .00 0.27 0 .19 0 35 0 .35 1 .1 6 Total Revenue 6 .21 12 .94 11 .63 13 . 53 44 . 32 10. 31 19 .25 17 .68 17 .34 64 .57 14 .12 25 . 91 26 .99 25 .63 92 .6 5 Reason Why +Estimate s Fraudulent Report Title LSPN acquires LearningPlanet .com; Reiterate Strong Buy. Author(s) Greg Cappelli, Scott Wilson, Michael Husma n Date of June 1, 200 0 Statement Page Number 4 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 187 of 262) Fraudulent Lightspan. Inc . Statement Table 2 Annual Income Statement . 1999A-2002 E $ In millions . except per share data: January tlscai year en d 1999A 2000A 2001E 2002 E Revenue : Licensing ( reported) 0.00 2 .21 101 .22 59.6 1 Licensing ( pro forma ' ) 20 .72 29 .58 46.12 59.6 1 Services 3 .74 6.55 6.74 7.54 Hardware 6 .10 6.37 7.16 12 .3 9 Subscription 1.02 1 .79 3.82 6.95 Advertising 0.00 0.03 0.74 4.99 E-Commerce 0.00 0.00 0.00 1 .1 6 Total Revenue 31 .59 44 .32 64.57 92.65 Reason Why +Estimate s Fraudulent Report Title First Edition Summary: Key Action Call s Author(s) Greg Cappell i Date of June 12, 2000 Statement Page Number 2 Fraudulent Our FY'01/'02 rev ests are $65m & 93m . Statement Reason Why +Estimate s Fraudulent Report Title LSPN Announces De parture of Kathleen McElwee, VP of Finance and CFO. Author(s) Greg Cappelli, Eric Sledgister, Michael Husma n Date of June 20, 2000 Statement Page Number 3 Exhibit D: Misstatements and Omissions in CSFBC' s Research Reports (Page 188 of 262) Fraudulent Table 1 Statement Quarterly Income Statement , 2000A-2002 E $ in millions, except per share data, January fiscal year en d 1000A 2QOOA 3 0 00A 4000A 2000A 1 00 1A 2Q01E 3Q01E 4Q01E 2001E 1Q02E 2 0 02E 3 0 02E 4Q02E 2002 E Revenue : Licensing (reported) 0 0 0 .49 1 .72 2 .21 52 .92 22 .91 13 .12 12 .26 101 .22 7 .93 17 .20 18 .27 16 .20 59 .6 1 Licensing (pro forma' 1 3 .58 8 .77 7 .64 9 .59 29 .58 6 .10 14 .63 13 .12 12 .26 46 .12 7 .93 17 .20 18 .27 16 .20 59 .6 1 Services 1 .22 1 .57 1 .93 1 .83 6 .55 2 .17 1 .42 1 .54 1 .60 6 .74 1 .73 1 .81 1 .96 2 .03 7 .5 4 Hardware 1 .00 2.17 1 .66 1 .54 6 .37 1 .15 2 .28 1 .7 11 .94 7 .10 1 .54 4 .22 3 .30 3 .34 12 .39 Subscription 0 .41 0.43 0 .40 0 .54 1 .79 0 .72 0 .76 1 .03 1 .31 3 .82 1 .55 1 .62 1 .83 1 .96 6 .9 5 Advertising 0 .00 0.00 0 .00 0 .03 0 .03 0 .16 0 .16 0 .20 0 .22 (1 .74 1 .10 0 .88 1 .27 1 .74 4 .9 9 E-Commerce 0 .00 0.00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .27 0 .19 0 .35 0 .35 1 .1 6 Total Revenue 6 .21 12. 94 11 . 63 13 . 53 44 .32 10 . 31 19 . 25 17 .68 17 .34 64 . 57 14 . 12 25 . 91 26 .99 25 . 63 92 .6 5 Reason Why +Estimates Fraudulent Report Title LSPN Announces Departure of Kathleen McElwee, VP of Finance and CFO . Author(s) Greg Cappelli, Eric Sledgister, Michael Husma n Date of June 20, 2000 Statement Page Number 4 Fraudulent Lightspan . Inc. Statement Table 2 Annual Income Statement . 1999A-2002E $ I n millions, except per share data; January fiscal year en d 1999A 2000A 2001E 2002E Revenue : Licensing f.reported' 0 .00 2.21 101 .22 59 .6 1 Licensing (pro formal 1 20 .72 29 .58 46.12 59 .6 1 Services 3 .74 6 .55 6.74 7 .5 4 Hard%%2re 6 .10 6 .37 7 .16 12 .3 9 Subscription 1 .02 1 .79 3 .82 6 .9 5 Advertising 0 .00 0 .03 0 .74 4 .99 E-Commerce 0 .C10 0 .00 0 .00 1 .1 6 Total Revenue 31 .59 44 .32 64 .57 92 .6 5 Reason Why +Estimates Fraudulent Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 189 of 262) Report Title LSPN Signs $2,479,000 Contract With New York City Author(s) Greg Cappelli, Eric Sledgister, Michael Husman Date of June 22, 2000 Statement Page Number 3 Fraudulent Table 1 Statement Quarterly Income Statement, 2000A-2002 E $ in millions, except per share data: January fiscal year en d 1000A 2000A 3000A 4000A 2000A 1001A 2Q01E 3Q01E 4 0 01E 2001E 1Q02E 2 0 02E 3 0 02E 4Q02E 2002 E Revenue : Licensing (reported) 0 0 0 .49 1 .72 2 .21 52 .92 22 .91 13 .12 12 .26 101 .22 7 .93 17 .20 18 .27 16 .20 59 .6 1 Licensing (pro forma' 1 3 .58 8 .77 7 .64 9 .59 29 .58 6 .10 14 .63 13 .12 12 .26 46 .12 7 .93 17 .20 18 .27 16 .20 59 .6 1 Services 1 .22 1 .57 1 .93 1 .83 6 .55 2 .17 1 .42 1 .54 1 .60 6 .74 1 .73 1 .81 1 .96 2 .03 7 .5 4 Hardware 1 .00 2 .17 1 .66 1 .54 6 .37 1 .15 2 .28 1 .79 1 .94 7 .16 1 .54 4 .22 3 .30 3 .34 12 .3 9 Subscription 0 .41 0 .43 0 .40 0 .54 1 .79 0 .72 0 .76 1 .03 1 .31 3 .82 1 .55 1 .62 1 .83 1 .96 6 .9 5 Advertising 0 .00 0 .00 0 .00 0 .03 0 .03 0 .16 0 .16 0 .20 0 .22 0 .74 1 .10 0 .88 1 .27 1 .74 4 .9 9 E-Commerce 0 .00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .27 0 .19 0 .35 0 .35 1 .1 6 Total Revenue 6 .21 12 . 94 11 . 63 13 .53 44 .32 10 .31 19 . 25 17 .68 17 .34 64 .57 14 . 12 25 .91 26 .99 25 .63 92 .6 5 Reason Why +Estimates Fraudulent Report Title LSPN Signs $2,479,000 Contract With New York Cit y Author(s) Greg Cappelli, Eric Sledgister, Michael Husman Date of June 22, 2000 Statement Page Number 5 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 190 of 262) Fraudulent Lightspan.Inc . Statement Table 2 Annual Income Statement , 1999A-2002 E $ In millions . except per snare data : January fi scal year en d 1999A 2000A 2001E 2002 E Revenue : Licensing rreportedl 0 .00 2 .21 101 .22 59 .6 1 Licensing (pro formal 20 .72 29 .58 46 .12 59 .6 1 Services 3 .74 6 .55 6 .74 7 .5 4 Hardware 6 .10 6 .37 7 .16 12 .3 9 Subscription 1 .02 1 .79 3 .82 6 .9 5 Advertising 0 .00 0 .03 0 .74 4 .99 E-Cornmerce 0 .00 0 .00 0 .00 1 .1 6 Total Revenue 31 .59 44 .32 64 .57 92 .6 5 Reason Why +Estimate s Fraudulent Report Title Shifting K-12 Internet Strategy from B2C to B2B ; Goal is to Accelerate Path to Profitability . Author (s) Greg Cappelli, Michael Husman Date of August 2, 2000 Statement Page Number 2 Fraudulent Our current revenue and EPS estimates for fiscal 2001 and 2002 are $64 .6 million and $92.7 million, respectivel y Statement Reason Why +Estimates Fraudulent Report Title Shifting K-12 Internet Strategy from B2C to B2B ; Goal is to Accelerate Path to Profitability . Author (s) Greg Cappelli, Michael Husman Date of August 2, 2000 Statement Page Number 4 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 191 of 262) Fraudulent Exhibit I Statement Quarterly Income Statement , 2000A-2002 E $ in millions, except per share data; Janua fiscal year end 1000A 2QOOA 3000A 4000A 2000A 1 001A 2001E 3001E 4001E 2001E 1002E 2002E 3002E 4002E 2002 E Revenue: Licensing (reported) 0 0 0 .49 1 .72 2 .21 52 .92 22 .91 13 .12 12 .26 10122 7 .93 17 .20 18 .27 16 .20 59 .6 1 Licensing (pro forma1 ) 3 .58 8 .77 7 .64 9 .59 29 .58 6 .10 14 .63 13 .12 12 .26 46 .12 7 .93 17 .20 18 .27 16 .20 59.6 1 Services 1 .22 1 .57 1 .93 1 .83 6 .55 2 .17 1 .42 1 .54 1 .60 6.74 1 .73 1 .81 1 .96 2 .03 7.5 4 Hardware 1 .00 2 .17 1 .66 1 .54 6 .37 1 .15 2 .28 1 .79 1 .94 7 .16 1 .54 4 .22 3 .30 3 .34 12 .3 9 Subscription 0 .41 0 .43 0 .40 0 .54 1 .79 0 .72 0 .76 1 .03 1 .31 3 .82 1 .55 1 .62 1 .83 1 .96 6 .9 5 Advertising 0 .00 0 .00 0 .00 0 .03 0 .03 0 .16 0 .16 0 .20 0 .22 0 .74 1 .10 0 .88 1 .27 1 .74 4 .9 9 E-Commerce 0 .00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .00 0 .27 0 .19 0 .35 0 .35 1 .1 6 Total Revenue 6 .21 12 . 94 11 . 63 13 .53 44 .32 10 .31 19 .25 17 .68 17 .34 64 . 57 14 .12 25 .91 26 .99 25 .63 92 .6 5 Reason Why +Estimate s Fraudulent Report Title Shifting K-12 Internet Strategy from B2C to B2B ; Goal is to Accelerate Path to Profitability . Author(s) Greg Cappelli, Michael Husman Date of August 2, 2000 Statement Page Number 5 Fraudulent Lightspan. Inc. Statement Exhibit 2 Annual Income Statement, 1999A-2002E $ In millions . except per sna re data : Janua ry ti al year en d 1999A 2000A 2001E 2002 E Revenue : Licensing ( reported ; 0.00 2.21 101 .22 59.61 Licensing (pro forma ') 20.72 29 .58 46.12 59.61 Services 3.74 6.55 6.74 7.54 Hardware 6.10 6.37 7.16 12.39 Subscription 1.02 1 .79 3.82 6.95 Advertising 0 .00 0.03 0.74 4.919 E-Commerce 0 .00 0.00 0.00 1 .1 6 Total Revenue 31 .59 44 .32 64.57 92.65 Reason Why +Estimates Fraudulent END ofd Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 192 of 262) a -McD!ata Co ratn CDT Report Title Initiating Coverage with a Buy Rating : Because No SAN is an Islan d Author(s) Amit Chopra, Andrew McCulloug h Date of September 6, 2000 Statement Page Number 19 Fraudulent Exhibit 1 5 Statement McDATA Income Statemen t ($'s in thousands) 0199A 02 99A Q3 99A 04 99A 1999A QI OOA C2 OOA 03 00E 04 DOE 2000E Q 10 IE 02 01E 03 01E 04 DIE 2111 1 Pkl SaW_s 1 $ 13 .163 3 21 .027 S 22 .661 38 412 5 95 .203 5 47 .134 S 564i;1 S 60.978 5 68 .295 5 232 A68 5 72051 79 257 5 h3219 91,375 5 325 .95 2 Reason Wh y +Estimates Fraudulent Report Title Storage and Data Networking - A preview of the September Quarte r Author(s) Amit Chopr a Date of October 12, 200 0 Statement Page Number 1 Fraudulent Our checks suggest that with strong demand from OEMs, especially EMC, MCDT should beat our quarterly sales forecast of $60 .9 million . Statement Reason Why +Cautionar y Fraudulent Report Title Storage and Data Networking - A preview of the September Quarte r Author(s) Amit Chopr a Date of October 12, 2000 Statement Page Number 4 Fraudulent McDATA Income Statemen t Statement 01 ODA 02 ODA 03 OW Q4 DOE 2000E Qi 01E 02 01E 03 01E 04 DIE 2001E Net Sales $ 47,134 $ 56 .461 $ 60,978 $ 68,295 $ 232,868 $ 72,051 79 .257 $ 83.219 91 .375 $ 325 .90 2 Exhibit D: Misstatements and Omissions in CSFBC ' s Research Reports (Page 193 of 262) Reason Why +Estimates Fraudulent Report Title McDATA Puts Up McNICE Numbers Author(s) Amit Chopra, Andrew McCulloug h Date of October 19, 2000 Statement Page Number I Fraudulent McDATA posted revenue of $66 .8 million, topping our forecast by 10%. Statement Reason Why +Surpises Fraudulent Report Title McDATA Puts Up McNICE Numbers Author(s) Amit Chopra, Andrew McCulloug h Date of October 19, 2000 Statement Page Number 1 Fraudulent We have raised our Q4 revenue and EPS estimates to $76 .8 million and $0.11 . We have also raised 2001 top and bottom lines estimates Statement to $358.7 million and $0.46, respectively. Reason Why +Revisions Fraudulent Report Title McDATA Puts Up McNICE Numbers Author(s) Amit Chopra, Andrew McCulloug h Date of October 19, 2000 Statement Page Number 2 Fraudulent The company made the announcement count, handily beating our revenue forecast by 10 % Statement Reason Wh y +Surprises Fraudulent Report Title McDATA Puts Up McNICE Numbers Author(s) Amit Chopra, Andrew McCulloug h Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 194 of 262) Date of October 19, 200 0 Statement Page Number 2 Fraudulent . . .we have raised our fourth quarter revenue estimate to $76 .8 million . . .In addition, we have increased our full year 2001 top an d Statement bottom lines estimates to $358 .7 million Reason Why +Revisions Fraudulent Report Title McDATA Puts Up McNICE Number s Author(s) Amit Chopra, Andrew McCulloug h Date of October 19, 200 0 Statement Page Number 2 Fraudulent Exhibit I Statement Out with the Old and In with the New: Raising our Numbers Revenue $'s in millions 042000 FuII Year 200 1 Previous Current '%% Increase Precious Current lracreas e Re .enue $6e .3 $76 .8 12.5% $325.9 $358.7 1 f. 1 5A% y-o y growth .7.8%u 100% 40%, 45.1% E PS $$0. 109 $0.11 22.2 % $0.4) $0 .46 115. 0 Source: CSFB Technology Grou p Reason Why +Revisions Fraudulent Report Title McDATA Puts Up McNICE Number s Author(s) Amit Chopra, Andrew McCulloug h Date of October 19, 2000 Statement Page Number 2 Fraudulent Third quarter revenue of $66.8 million breezed past our estimate of $61 .0 million . . . Statement Reason Why +Surprises Fraudulent Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 195 of 262) Report Title McDATA Puts Up McNICE Numbers Author(s) Amit Chopra, Andrew McCulloug h Date of October 19, 200 0 Statement Page Number 4 Fraudulent McDATA Corporation Statement Exhibit 3 Quarterly Income Statemen t $'s in thousands Q1 99A Q2 99A Q3 99A Q4 99A 1999 Q1 OOA Q2 OOA Q3 OOA 04 00 E 2000E 0 1 01 E Q2 01E Q3 01 E Q4 01 E Net Sales $ 13 ,163 $ 21,027 $ 22,661 $ 38,412 $ 95,263 $ 47,134 $ 56,461 $ 66,760 $ 76,824 $ 247,179 $ 80,281 86 .302 $ 91,480 100,628 Reason Why +Estimate s Fraudulent Report Title Apocalypse Not No w Author(s) Amit Chopra, Andrew McCullough, Daniel Lynch Date of January 4, 200 1 Statement Page Number 5 Fraudulent Exhibit 4 Statement McDATA Quarterly Income Statemen t $'s in thousands Q1 99A Q2 99A Q3 99A Q4 99A 1999 Q1 OOA Q2 00A Q3 00A Q4 00E 0-0-ET Q1 01 E Q2 01E Q3 01E 0401E 200 1 Net Sales $ 13 ,163 $ 21,027 $ 22 .661 $ 38 .412 $ 95 .263 $ 47,134 $ 56 .461 $ 66,760 $ 76 .824 $247,179 $ 80 .665 87925 $ 92 .761 102,037 $ 363,38 8 Reason Why +Estimates Fraudulent Report Title Storage and Data Networkin g Author(s) Amit Chopra Date of January 10, 2001 Statement Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 196 of 262) Page Number 1 Fraudulent Our checks suggest that with strong demand from OEMs, especially EMC, MCDT should beat our quarterly sales forecast of $76 .8 million. Statement Reason Why +Cautionary Fraudulent Report Title Storage and Data Networking Author(s) Amit Chopra Date of January 10, 200 1 Statement Page Number 4 Fraudulent McDATA Income Statement Statement $ in 000s 01 OOA 02 OOA 03 OOA 04 DOE 2000E 01 01E 02 01E 03 01E 04 OlE 2001 E I Net Sales 5 47.134 $ 56,461 $ 66.760 S 76 .824 S 247 .17 9 $ 80.281 86 .302 $ 91 .480 100,628 $ 358 .692 Reason Why +Estimates Fraudulent Report Title McDiesel : MCDT Beats Estimates, Raises Guidanc e Author(s) Amit Chopra, Andrew McCullough, Daniel Lynch Date of January 24, 200 1 Statement Page Number 1 Fraudulent Riding the storage networking wave, McDATA posted fourth quarter revenue of $78.3 million, versus our estimate of $76 .8 million . Consequently, Statement EPS of $0.12 beat our estimate by a penny. Reason Why +Surprise s Fraudulent Report Title McDiesel: MCDT Beats Estimates, Raises Guidanc e Author(s) Amit Chopra, Andrew McCullough, Daniel Lynch Date of January 24, 200 1 Statement Page Number 1 Fraudulent As a result, we have raised our 2001 revenue and EPS estimates from $358 million to $447 million, and $0 .46 to $0 .50. Statement Exhibit D: Misstatements and Omissions in CSFBC' s Research Reports (Page 197 of 262) Reason Why +Revisions Fraudulent Report Title McDiesel : MCDT Beats Estimates, Raises Guidance Author(s) Amit Chopra, Andrew McCullough, Daniel Lynch Date of January 24, 200 1 Statement Page Number 2 Fraudulent On January 24th, McDATA reported fourth quarter results that exceeded both top and bottom-line expectations . Revenue of $78 .3 million gre w Statement 17.3% sequentially, versus our estimate of 15% . Reason Why +Surprises Fraudulent Report Title McDiesel : MCDT Beats Estimates, Raises Guidance Author(s) Amit Chopra, Andrew McCullough, Daniel Lynch Date of January 24, 200 1 Statement Page Number 2 Fraudulent McDATA reported solid fourth quarter results, exceeding both our top- and bottom- line estimates . The company nudged past our revenue forecas t Statement by $1 .5 million, while EPS of $0 .12 came in a penny ahead of our estimate. Reason Why +Surprises Fraudulent Report Title McDiesel : MCDT Beats Estimates, Raises Guidance Author(s) Amit Chopra, Andrew McCullough, Daniel Lynch Date of January 24, 200 1 Statement Page Number 2 Fraudulent With a commanding market share and loaded product pipeline, we believe McDATA could prove even its improved guidance to be conservative . Statement With this in mind, we have raised our 2001 revenue estimate to $447 million from $359 million and our EPS target from $0 .46 to $0 .50. Reason Why +Revisions Fraudulent Report Title McDiesel : MCDT Beats Estimates, Raises Guidance Author(s) Amit Chopra, Andrew McCullough, Daniel Lynch Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 198 of 262) Date of January 24, 200 1 Statement Page Number 2 Fraudulent Exhibit 1 Statement Raising Numbers Revenue $ s in millions Q1 2001 Full Year 200 1 previous current % increase previous current $ increase Revenue $ 80.3 $ 83.8 4%, $ 358 .7 $ 447 .2 25`'-x. Reason Why +Revisions Fraudulent Report Title McDiesel: MCDT Beats Estimates, Raises Guidanc e Author(s) Amit Chopra, Andrew McCullough, Daniel Lynch Date of January 24, 200 1 Statement Page Number 4 Fraudulent Exhibit 2 Quarterly Income Statemen t Statement $ 's in thousands 01 OOA 0 2 00A Q3 00A 04 00A 2000A 01 01E 02 01E 03 01E 04 01 E 2001 E Net Sales S 47.134 S 56 .461 S 66 .760 S 78.331 S 248 .686 S 83 .814 S 100.250 S 117 .250 S 145 .875 S 447 .189 Reason Why +Estimate s Fraudulent Report Title McDiesel: MCDT Beats Estimates, Raises Guidanc e Author(s) Amit Chopra, Andrew McCullough, Daniel Lynch Date of January 29, 200 1 Statement Page Number 1 Fraudulent Riding the storage-networking wave, McDATA posted fourth quarter revenue of $78 .3 million, versus our estimate of $76 .8 million . Consequently . Statement EPS of $0.12 beat our estimate by a penny. Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 199 of 262) Reason Why +Surprise s Fraudulent Report Title McDiesel: MCDT Beats Estimates, Raises Guidanc e Author(s) Amit Chopra, Andrew McCullough, Daniel Lynch Date of January 29, 200 1 Statement Page Number I Fraudulent As a result, we have raised our 2001 revenue and EPS estimates from $358 million to $447 million, and $0 .46 to $0 .50. We reiterate our Buy ratin g Statement and $140 12-month price target. Reason Why +Revision s Fraudulent Report Title McDiesel: MCDT Beats Estimates, Raises Guidance Author (s) Amit Chopra, Andrew McCullough, Daniel Lynch Date of January 29, 200 1 Statement Page Number 2 Fraudulent On January 24, McDATA reported fourth quarter results that exceeded both top and bottom-line expectations . Revenue of $78 .3 million grew Statement 17.7% sequentially, versus our estimate of 15% . Reason Wh y +Surprises Fraudulent Report Title McDiesel: MCDT Beats Estimates, Raises Guidance Author(s) Amit Chopra, Andrew McCullough, Daniel Lynch Date of January 29, 200 1 Statement Page Number 2 Fraudulent McDATA reported solid fourth quarter results, exceeding both our top- and bottom- line estimates . The company nudged past our revenue forecast Statement by $1 .5 million, while EPS of $0 .12 came in a penny ahead of our estimate. Reason Why +Surprise s Fraudulent Report Title McDiesel: MCDT Beats Estimates, Raises Guidanc e Author(s) Amit Chopra, Andrew McCullough, Daniel Lynch Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 200 of 262) Date of January 29, 200 1 Statement Page Number 2 Fraudulent With a commanding market share and loaded product pipeline, we believe McDATA could prove even its improved guidance to be conservative . Statement With this in mind, we have raised our 2001 revenue estimate to $447 million from $359 million and our EPS target from $0 .46 to $0.50. Reason Why +Revisions Fraudulent Report Title McDiesel: MCDT Beats Estimates, Raises Guidanc e Author(s) Amit Chopra, Andrew McCullough, Daniel Lynch Date of January 29, 200 1 Statement Page Number 2 Fraudulent Exhibit I Statement Raising Numbers $ in millions Q 1 2001 Full Year 200 1 previous current increase previous current increase Revenue S 80.3 $ 83.8 4`%,.`, $ 358.7 $ 447.2 25%, Reason Why +Revisions Fraudulent Report Title McDiesel: MCDT Beats Estimates, Raises Guidance Author(s) Amit Chopra, Andrew McCullough, Daniel Lynch Date of January 29, 200 1 Statement Page Number 4 Fraudulent Exhibit 2 Statement Quarterly Income Statement , FYOOA-01 E $ in thousands, except per-share data Q1 00A Q2 00A Q3 00A Q4 00A 2000A Q1 01E 0 2 01E Q3 01E Q4 01E 2001 E Net Sales $ 47 ,134 $ 56,461 $ 66 .760 $ 78 .331 $ 248 . 686 $ 83 .814 $ 100 .250 $ 117 .250 $ 145 .875 $ 447 .18 9 Reason Why +Estimates Fraudulent Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 201 of 262) Report Title Completed Distribution Provides Buying Opportunity Author(s) Amit Chopra, Andrew McCullough, Daniel Lynch Date of February 7, 200 1 Statement Page Number 3 Fraudulent Exhibit 2 Statement Quarterly Income Statemen t $'s in thousands 01 OOA Q2 OOA 03 OOA 04 OOA 2000A 01 01E Q2 01E Q3 01 E 04 01E 2001 E Net Sales $ 47 .134 $ 56,461 $ 66 .760 S 78 .331 $ 248,686 $ 83 .814 $ 100 .250 $ 117,250 $ 145 .875 $ 447 .189 Reason Wh y +Estimates Fraudulent Report Title A Chink in the Armo r Author(s) Amit Chopra, Andrew McCullough, Daniel Lynch Date of February 12, 200 1 Statement Page Number 4 Fraudulent Exhibit 4 McDATA Qua rterly Income Statemen t Statement $'s in thousands 1999A Q1 OOA Q2 OOA Q3 OOA Q4 OOA 2000A 01 01E 02 01E Q3 01 E Q4 01E 2001 E Net Sales $ 95,263 $ 47 .134 $ 56,461 $ 66,760 $ 78 .331 $ 248 .686 $ 83 .814 $ 100,250 $ 117,250 $ 145,875 $ 447,18 9 Reason Why +Estimate s Fraudulent T : < End of -McDT Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 202 of 262) Issuer. _ e - Ne vcus ..Inc.-- NUFO Report Title Initiating Coverage with a BUY Investment Rating ; NUFO Well Positioned To Emerge As Key Component Playe r Author(s) James P. Parmelee, Leslie D. Mallon, Monica Matyjaskiewic z Date of June 12, 2000 Statement Page 2 Number Fraudulent We are establishing earnings per share estimates of ($0 .60) for 2000 and ($0 .38) for 2001 based upon our top-line projections of $49 .7 millio n Statement for 2000 and $100 million for 2001 . Reason Why +Estimate s Fraudulent Report Title Initiating Coverage with a BUY Investment Rating ; NUFO Well Positioned To Emerge As Key Component Player Author(s) James P . Parmelee, Leslie D . Mallon, Monica Matyjaskiewic z Date of June 12, 2000 Statement Page 3-4 Number Fraudulent Based upon the company's strong bookings trends, recent design wins and success in scaling manufacturing, we would assign a high probabilit y Statement to New Focus exceeding our top-line estimates by a significant margin during the foreseeable future . The magnitude of the out performanc e could actually increase in the December quarter of 2000 and into 2001 as the company achieves scale manufacturing in China and successfull y introduces new products . Significant top-line surprises will also spark lower losses through an enhanced gross profit margin performance an d significant operating leverage. Reason Why +Cautionar y Fraudulent Report Title Initiating Coverage with a BUY Investment Rating ; NUFO Well Positioned To Emerge As Key Component Playe r Author(s) James P . Parmelee, Leslie D . Mallon, Monica Matyjaskiewic z Date of June 12, 2000 Statement Page 8 Number Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 203 of 262) Fraudulent Table 1 : VALUATION ANALYSIS : OPTICAL COMPONENT S Statement Rating! Price SHS Mcap Revenue In Mil li ons EPS PIE Firm Value ! Sales 3 Yr EP S Ticker Target 6,0910 1999 YTD (MIL) ( MIL) C99(A ) 000(E) COI(E) C991A ) 000(EI CO1 (E) C991A) CODIE ) C01(E) C99 (A) 000( E) C01(E) Growt h OPTICAL COMPONENT S NEW FOCUS NUFO NR 7511) NA 2750°" 58 4.375 23 5c 100 (0,19) (0 ,601 0,08) NM NH NM 191 .0x 87.8x 43.6x 40% Reason Why +Estimate s Fraudulent Report Title Initiating Coverage with a BUY Investment Rating ; NUFO Well Positioned To Emerge As Key Component Player Author(s) James P. Parmelee, Leslie D . Mallon, Monica Matyjaskiewic z Date of June 12, 2000 Statement Page 9 Number Fraudulent New Focus . Inc. (NtUFO ) Historical and Projeclid Income Statement Statement (ti in th ,n,.srfmle : cvrrpt 1k•r lhdre• Jul,,: fO I rear eneh fl,rrruirr 31,11 1009!e ~ ( IIt II'. ~ I :1 1 I I'. C ,k'od,r N ea r I1,1 .\ 'I) \ ;OA 4Q.\ 113 .1 =n1 ?((I'. 4)31! 1 f p . 2 1fl1: 1)31 4 ( )1 . 1 1 ) 91 .4. I F_ (I' I I'. Telecom Group 45 4511 2.023 _,5?9 4 , 89(5 651111 % 5114) 11,5444 ) 143000 17,5)111 22 .000 275011 5,1 147 31 . 381 91.1)011 (,,jscrrnrrlgr-th rare' 15411.fr,, 49.0", 932" ,. :3 1•"', 111. .9" o 4 .). 21 .",. :5.1)"%, .c 7• .., ? i.q•'r, /n or~nrr-inn p,mth rmrl I 0) 7t9"„ l .)JJ.i°„ 724 .2',, 754. ', /9n .4"', 1M1 c. 2' .. (341"„ 5'1 0% 15X .Y" „ C'K, 4 .696 4.131 4.652 4 .16 4 .997 4,-00 11 4511)) 4 .51111 4 .7511 4,7511 -1,7511 4 .7511 17 .79, 19,297 19A1111 13 .5" . -111.1'=, 23",' fl,r1"„ 5 .0",. 0.1/1, O.r/',' It))" ,, /iavr .'.', -mar grnnth rare? 4 .7°0 6.5 "i, -3 . 3",, 4J,", , (v' . .v'' 5.6"" 2 .X' 6 101 Al . RF.vF. '4. LF: 4.741 4.5)11 6.67, 6. 11-05 9782 10,91111 13, 111111 16 .0 4 441 1 8 .750 22 .2541 2 (054) 32 r fl 22 .1441 49,682 1110,111111 Reason Why +Estimates Fraudulent Report Title First Edition Summar y Author(s) Jim Parmelee Date of Wednesday, July 26, 2000 Statement Page 1 Number Fraudulent Rptd g2'00 revs of $14 .5m vs our est of $10 .9m on eps (loss) of $(0 .13) vs our est of $(0.16) . Statement Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 204 of 262) Reason Why +Surprises Fraudulent Report Title Increasing Estimates ; Boosting Price Target ; Reiterat e Author(s) James P . Parmelee, Leslie D . Mallon, Monica Matyjaskiewicz, Steve M . Edney Date of August 16, 200 0 Statement Page 1 Number Fraudulent Due to strong performance in Q2 :00 and an accretive stock offering, we are boosting 2000 EPS to ($0 .44) from ($0.60) and revenue to $59 .7M Statement from $49 .7M and raising 2001 EPS to ($0.13) from ($0 .38) and sales to $120M from $ l00M ; Reason Why +Revisions Fraudulent Report Title Increasing Estimates; Boosting Price Target; Reiterate Author (s) James P. Parmelee, Leslie D . Mallon, Monica Matyjaskiewicz, Steve M . Edney Date of August 16, 200 0 Statement Page 2 Number Fraudulent Due to strong performance in Q2 :00 and an accretive stock offering, we are boosting 2000 EPS to ($0 .44) from ($0.60) and revenue by 20% to Statement $59.7 million from $49 .7 million and raising 2001 EPS to ($0 .13) from ($0.38) and sales by 20% to $120 million from $100 million . Reason Why +Revisions Fraudulent Report Title Increasing Estimates; Boosting Price Target; Reiterate Author(s) James P . Parmelee, Leslie D . Mallon, Monica Matyjaskiewicz, Steve M . Edney Date of August 16, 2000 Statement Page 5 Number Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 205 of 262) Fraudulent Nev, Focus. Inc. (NUFO) II°lorirnl ti ed Prujccled Income Slalrnrn l Statement (S in tnuu.3(I rdc rtr(prpe, "hurr hlla : li.nrl crur e1k!, De, ember 31,f ) I 2 101111 . -- 11, Ildar i n r I QA 2[) .\ 4Ql, It,l .\ 2Il :\ 1 11 1 . 4c l 1 II)l. '_f 1 11 3111'. 4()I . ll'/'1'IA F21 111 !'. I N .M1. RI•:vE\UE RY SEGMENT Telecom Group 45 4511 2. 02 3 2 .529 4 A 8 5 8 .54141 10500 1 3A110 16. 01141 20 .00(1 26. 0(10 34 .1 14 10 5.1147 3 6,8 14 5 96,0110 G'cyuerlluf>TO,rrA rate) V00 0 ° .. 39.V ;, 25.)? 93. .",• 4.0 ,. :s. n°„ gull"„ 30 .,5" . /It'or-cw- c,•ur ;;rrm'1h rate) 101S0" r. 179. 9"., 119.()•'„ 41431', 22 7. 135.3",. 14?.1)° ., 1n1 .5" ., :30 .1'„ lou._"„ C11( : 4,696 4.1 .11 4 .652 4 .316 .11197 5 .951 6.111111 6.111111 6, 114 111 6 .111111 (1.1111(1 6,111111 17.795 22 .848 24.111111 (1'ylll'rlicll grcncih 'ate) -1' .11 '•„ n "• -'.?'. ., 1 3 5. 2 1 . 5 " .• // .N" n Il . ll",• Il.Ir', . 111r'„ Il lf'„ 1111"r. A eartmr-Rargnngh ralel 4. 441's, 0" ', O.N .•e 1)11',, O a'„ 29 .4'4. 5.0"n to I Al . RE NT N t I F: .1 .741 4. 581 6 .675 6.845 9,782 14 .451 16, 50 11 19.111111 22.14(10 26 .1111 0 32,111111 .111.48.111 22 .842 59,733 1211.11111 1 Reason Why +Estimates Fraudulent Report Title Breaking the Bottleneck: A Wireline Weekl y Author(s) James P. Parmelee, Leslie D . Mallon, Monica Matyjaskiewicz, Steve M . Edney Date of September 08, 2000 Statement Page 4 Number Fraudulent We believe NUFO's Q3 :00 is tracking favorably to our $16.5M top line and ($0 .11) EPS estimates ; Statement Reason Why +Estimate s Fraudulent Report Title CSFB Tech Intra-Dail y Author(s) James P. Parmelee, Leslie D . Mallon Date of Tuesday, October 24, 2000 Statement Page 2 Number Fraudulent Anticipate NUFO topped our sales projection of $16.5M and our EPS expectation of ($0 .11); Statement Reason Why +Estimates Fraudulent Exhibit D: Misstatements and Omissions in CSFBC' s Research Reports (Page 206 of 262) Report Title CSFB Tech Intra-Dail y Author (s) James P . Parmelee, Leslie D . Mallon Date of Tuesday, October 24, 2000 Statement Page 2 Number Fraudulent We would assign a high probability to sales in the range of $18-19M and EPS in the range of ($0 .09) to ($0.10). Statement Reason Why +Cautionary Fraudulent Report Title Reinstating Coverage of New Focus ; Reiterate BUY Investment Rating . Author (s) James P . Parmelee, Leslie D . Mallon, Sarah K . Alfor d Date of January 17, 200 1 Statement Page I Number Fraudulent To reflect previous mgmt guidance, raising Q4 :00 sales to $26 .5M from $19M and EPS to ($0 .03) from ($0 .06); In 2001, increasing top-line to Statement $150M from $120M and EPS to $0 .10 from ($0 .14). Reason Why +Revisions Fraudulent Report Title Reinstating Coverage of New Focus ; Reiterate BUY Investment Rating . Author(s) James P . Parmelee, Leslie D . Mallon, Sarah K . Alfor d Date of January 17, 200 1 Statement Page I Number Fraudulent Believe NUFO tracking favorably relative to our Q4 :00 estimates ; Would assign high probability to rev in the $28-29M range and a lower los s Statement per shr by $0 .01-0.02 ; Reason Why +Cautionary Fraudulent Report Title Reinstating Coverage of New Focus; Reiterate BUY Investment Rating . Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 207 of 262) Author(s) James P . Parmelee, Leslie D . Mallon, Sarah K . Alford Date of January 17, 200 1 Statement Page 2 Number Fraudulent To reflect management guidance following the company's strong Q3 :00 results (we were unable to adjust our model due to our restriction), w e Statement are raising our Q4 :00 and 2001 estimates . Reason Why +Revisions Fraudulent TMMM~ Report Title Reinstating Coverage of New Focus ; Reiterate BUY Investment Rating . Author(s) James P . Parmelee, Leslie D . Mallon, Sarah K . Alford Date of January 17, 200 1 Statement Page 3 Number Fraudulent We anticipate that the company is tracking favorably to our top-line projection of $26 .5 million . . . Statement Reason Why +Estimate s Fraudulent Report Title Reinstating Coverage of New Focus ; Reiterate BUY Investment Rating . Author(s) James P . Parmelee, Leslie D . Mallon, Sarah K . Alford Date of January 17, 200 1 Statement Page 3 Number Fraudulent We anticipate that the company is tracking favorably to our top-line projection of $26 .5 million . . . We would assign a high probability t o Statement revenue in the range of $28 to 29 million and a lower loss per share by $0 .01-0.02. Reason Why +Cautionar y Fraudulent Report Title Reinstating Coverage of New Focus ; Reiterate BUY Investment Rating . Author(s) James P. Parmelee, Leslie D. Mallon, Sarah K . Alford Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 208 of 262) Date of January 17, 200 1 Statement Page 4 Number Fraudulent To reflect management guidance following its Q3 :00 results, we are raising our Q4 :00 top-line estimate to $26 .5 million from $19 millio n Statement Reason Why +Revisions Fraudulent Report Title Reinstating Coverage of New Focus ; Reiterate BUY Investment Rating . Author(s) James P . Parmelee, Leslie D . Mallon, Sarah K . Alfor d Date of January 17, 200 1 Statement Page 4 Number Fraudulent In 2001, we are raising our revenue projection 25% to $150 million from our original $120 million . . . Statement Reason Why +Revisions Fraudulent Report Title Reinstating Coverage of New Focus ; Reiterate BUY Investment Rating . Author(s) James P . Parmelee, Leslie D . Mallon, Sarah K . Alfor d Date of January 17, 200 1 Statement Page 6 Number Fraudulent New Focus , Inc. (N LIFO ) Historical and Projcrted Income Statemen t Statement i\ in ,hwnuw:,l . : rr, .j,r prv-,hurt Jaw . fi,rrl .rw rnd, /1cc - ,hrr 11,i , 1919.A 200(11`. ?ooI1 : (' :dendar Year I(3\ '_(IA 3Q .\ 4(l :\ 1(1.\ 1_() .\ }Q,\ 4Q1' 1131: _(1]1 3(W 4Qh. I'1999 :\ 1,2 001l1 120 111 1 REVENUE BY SEGMEN T I clecum Group 45 450 2 .1123 2,529 4 ,81)5 8, 464 14 ,919 19 .511 0 23 .175 27 . 5110 32 .625 38.700 5 .047 47 .768 122 .11110 . nrqunui„!t^, n, IL ral,1 YN rr- .. ;J~in•. . `~o^•. 9J ,. . . . _ ;'. .. ru 7 .. ., 1~\.., . IN r• .. 1 .9 rVJ,' .. near-rn rr-rinrl,•n,,r,r, -.%n 4 ' . , 9 3 " -. 1 I' .. '4 4', „J .', .. CP( . 4 .696 4 ,131 4.652 4 .316 4 .1197 5.987 7,331 7 .11(11) 7 .111111 7.400 7 .11181 7,111111 17 .795 25 .215 28.181 0 ., . nr,l ~ri,rn ad kr,r.- rit rat" -!' .u .. 1 . n' . -- _ . 1 ; i'•• 22 . .. -,_ ; . 4 1" ., /9' .. nm• . . rul' ., U q` , /,'Ca ;'-,,c ir-iar C''rnfil, rd!rl Jj", JJ 4'• . ;'n ' .• n:,' .. J : .V ., in. P ., i"11 Hu" . J . " .. . I I TOTAL REVENUE 4,741 4, 581 6,675 6.845 9,782 14,-151 22,250 26 .500 311,175 3 4,5011 39,625 45,70 0 22 .842 72,983 154J. 00 0 Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 209 of 262) Reason Why +Estimate s Fraudulent Report Title CSFB Tech Intra-Dail y Author(s) James P . Parmelee, Leslie D . Mallon Date of Monday, January 29, 200 1 Statement Page 2 Number Fraudulent We believe that NUFO's will deliver strong Q4 :00 topping our $26.5M top-line and loss per share of ($0.03); Statement Reason Wh y +Estimates Fraudulent Report Title CSFB Tech Intra-Dail y Author(s) James P . Parmelee, Leslie D . Mallon Date of Monday, January 29, 200 1 Statement Page 2 Number Fraudulent We believe that NUFO's will deliver strong Q4 :00 topping our $26.5M top-line and loss per share of ($0.03); We would assign a high Statement probability to rev in the range of $28-29 M Reason Why +Cautionary Fraudulent Report Title NUFO Delivers Blowout Q4 :00 Results ; Raising Estimate s Author(s) James P . Parmelee, Leslie D. Mallon, Sarah K . Alford Date of January 31, 200 1 Statement Page Number Fraudulent Excl non-recurring chrgs, NUFO reported Q4 :00 EPS of $0.04, significantly beating our $(0.03) estimate, and revenues of $33 .9M were 27.8% Statement above our $26 .5M projection; Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 210 of 262) Reason Why +Surprises Fraudulent Report Title NUFO Delivers Blowout Q4 :00 Results ; Raising Estimate s Author(s) James P . Parmelee. Leslie D. Mallon, Sarah K . Alford Date of January 31, 200 1 Statement Page 1 Number Fraudulent Substantially raising 2001 revenue to $240M from $150M and EPS to $0 .20 from $0 .10; Establishing 2002 sales of $345 .7M and EPS of $0 .45 . Statement Reason Why +Revisions Fraudulent Re Tort Title NUFO Delivers Blowout Q4 :00 Results ; Raising Estimate s Author(s) James P . Parmelee, Leslie D . Mallon, Sarah K . Alford Date of January 31, 200 1 Statement Page 2 Number Fraudulent New Focus delivered an impressive December quarter performance, with earnings per share and revenues easily topping our estimates . Statement Reason Why +Surprise s Fraudulent Report Title NUFO Delivers Blowout Q4 :00 Results ; Raising Estimate s Author(s) James P . Parmelee, Leslie D . Mallon, Sarah K . Alford Date of January 31, 200 1 Statement Page 2 Number Fraudulent We are substantially raising 2001 revenue to $240 million from $150 million and earnings per share to $0 .20 from $0 .10. Statement Reason Why +Revisions Fraudulent Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 211 of 262) Report Title NUFO Delivers Blowout Q4 :00 Results ; Raising Estimate s Author(s) James P . Parmelee, Leslie D. Mallon, Sarah K . Alford Date of January 31, 200 1 Statement Page 2 Number Fraudulent We are also establishing 2002 sales of $345 .7 million and EPS of $0.45 . Statement Reason Why +Estimate s Fraudulent Report Title NUFO Delivers Blowout Q4 :00 Results ; Raising Estimate s Author(s) James P . Parmelee, Leslie D . Mallon, Sarah K . Alford Date of January 31, 200 1 Statement Page 3 Number Fraudulent Revenue of $33 .9 million, was 27 .8% higher than our $26 .5 million projection (our previewed range was $28-29 million ) Statement Reason Why +Surprise s Fraudulent Report Title NUFO Delivers Blowout Q4 :00 Results ; Raising Estimate s Author(s) James P . Parmelee, Leslie D . Mallon, Sarah K . Alford Date of January 31, 200 1 Statement Page 6 Number Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 212 of 262) Fraudulent NSW Foc ut. Inc. ( N7 U FO ) llKtorlcal and Projected Inc a n Statrnrn t Statement (S in /I!!!NJ!!l1c/1 ; except (/l'I' \Ilare (Iala : fiscal ccy; f'!f Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 213 of 262) i -- - Simplex Solutions Inc. -SPLX Re ort Title Initiating Coverage with Buy and $30 Targe t Author(s) Erach D . Desai, Andrew J . Singer, CF A Date of May 29, 2001 Statement Page Number I Fraudulent Establishing Revenue and EPS Estimates : Revenues for FY01, FY02 . and FY03 are $47 .8mm, $67 .Omm, and $88 .Omm, respectively . Statement Reason Why +Estimates Fraudulent Report Title Initiating Coverage with Buy and $30 Targe t Author(s) Erach D . Desai, Andrew J . Singer, CF A Date of May 29, 2001 Statement Page Number 6-7 Fraudulent We are establishing the following estimates (FY-End = September) : Statement • FYOIE: Revenues of $47 .8mm (+54%), cash net income of $1 .6mm and EPS of $0 .09 • FY02E : Revenues of $67 .Omm (+40%), cash net income of $7 .6mm and EPS of $0 .36 • FY03E: Revenues of $88 .0mm (+31%), cash net income of $13 .7mm, EPS of $0 .5 7 On a calendar year basis : • CY01E : Revenues of $53 .2mm with EPS of $0 .1 3 • CY02E : Revenues of $72 .Omm with EPS of $0 .44 • CY03E : Revenues of $93 .0mm with EPS of $0 .5 7 Reason Why +Estimate s Fraudulent Report Title Initiating Coverage with Buy and $30 Targe t Author(s) Erach D. Desai, Andrew J . Singer, CF A Date of May 29, 200 1 Statement Page Number 7 Fraudulent Our revenue assumptions are relatively conservative . Statement Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 214 of 262) Reason Why +Cautionar y Fraudulent Report Title Anticipate Solid F3Q Earnings Repor t Author(s) Erach D . Desai, Andrew J . Singer, CFA Date of July 11, 200 1 Statement Page Number 1 Fraudulent We expect revenues in the $13 .0-$13 .5mm range, with EPS of $0 .02-$0.03, vs. our point estimates of $12 .5mm and $0.02. Statement Reason Why +Cautionar y Fraudulent Report Title Anticipate Solid F3Q Earnings Repor t Author(s) Erach D . Desai, Andrew J . Singer, CF A Date of July 11, 200 1 Statement Page Number 1 Fraudulent . . . vs. our point estimates of $12 .5mm and $0 .02. Statement Reason Why +Estimate s Fraudulent Report Title Strong Sequential Momentum Continues ; Reiterate Buy Rating Author(s) Erach D . Desai, Andrew J . Singer, CF A Date of July 25, 200 1 Statement Page Number 1 Fraudulent Upside F3Q Results : For F3Q (Jun '01), Simplex reported revenues of $13 .Imm (+48% y/y on an apple-to-apples basis, +12% q/q) and cash EP S Statement of $0.04. The overall report was modestly better than our preview and solidly ahead of our $12 .5mm revenue and $0 .02 cash EPS estimates. Reason Why +Surprises Fraudulent Exhibit D : Misstatements and Omissions in CSFBC' s Research Reports (Page 215 of 262) Report Title F4QO1 Tracking; Guidance Intact ; Reiterate Bu y Author(s) Erach D. Desai, Andrew J . Singer, CF A Date of September 28, 200 1 Statement Page Number 1 Fraudulent F4QOI Tracking to Expectations : We expect the company to report revenues in the $14.3-$14.8mm range, with cash EPS of $0.05, or better (vs . Statement our point estimates of $14.5mm and $0.05, respectively) . Reason Why +Cautionar y Fraudulent Report Title F4QO1 Tracking ; Guidance Intact ; Reiterate Bu y Author(s) Erach D. Desai, Andrew J . Singer, CF A Date of September 28, 200 1 Statement Page Number I Fraudulent . . .(vs. our point estimates of $14 .5mm and $0.05, respectively) . Statement Reason Why +Estimates Fraudulent End 4f SPIX Exhibit D: Misstatements and Omissions in CSFBC' s Research Reports (Page 216 of 262) fir rt.co Iuc. -SPRT Re ort Title eSupport Leader, Initiating Coverage with BUY Rating and $36 Price Targe t Author(s) Wendell H . Laidley, Marie A. Kluth Date of August 15, 2000 Statement Page Number 1 Fraudulent On 8/3/00, SPRT posted strong Q2 :00 results, reporting $3 .6 million and EPS of ($0 .29), surpassing our estimates of $3.2 million and ($0.30), Statement respectively . Reason Why +Surprise s Fraudulent Report Title eSupport Leader, Initiating Coverage with BUY Rating and $36 Price Targe t Author(s) Wendell H . Laidley, Marie A. Kluth Date of August 15, 2000 Statement Page Number 1 0 Fraudulent We are introducing 2000 estimates of $16 .4 million and ($1 .11), 2001 estimates of $37 .5 million and ($0.92), and 2002 estimates of $66 millio n Statement and ($0 .22). Reason Why +Estimates Fraudulent Report Title eSupport Leader, Initiating Coverage with BUY Rating and $36 Price Targe t Author(s) Wendell H . Laidley, Marie A . Kluth Date of August 15, 2000 Statement Page Number 1 1 Fraudulent Assuming SPRT continues to execute and deliver meaningful revenue upside relative to our published estimates and achieve strategic objectives , Statement we believe SPRT shares are capable of maintaining a premium valuation consistent with other leading eBusiness infrastructure providers that hav e established meaningful differentiation and are expected to deliver explosive growth over the next several years. Reason Why +Cautionar y Fraudulent Report Title eSupport Leader, Initiating Coverage with BUY Rating and $36 Price Targe t Author(s) Wendell H . Laidley, Marie A . Kluth Date of August 15, 2000 Statement Page Number 13 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 217 of 262) Fraudulent Supporl .corn, Inc. Income Statement Statement (data in thousands . except per share) 1999 by Qatar 7800 by Quarter 7001 by Quarter Fucaf year Earls December Mar•9 Jun-99 Seo-99 Dec-99 Mar-00 Jun-0D Seo00E Dec DO Mar 1E Jun01E 5eo01E Dec 1E 1999 000E 2001E 2007E Total Revenues $334 $493 $782 $ 1,602 $1 .872 $3,574 $4 ,718 $6.251 $7 .314 $8.593 $10 .054 $11 .512 $3 .211 $16.415 $37.474 $66 .002 Reason Why +Estimate s Fraudulent Report Title eSupport Leader ; Initiating Coverage with a Buy Rating and $36 Price Targe t Author (s) Wendell H . Laidley, Marie A . Kluth Date of August 16, 2000 Statement Page Number 1 Fraudulent On 8/3/00, SPRT posted strong Q2 :00 results, reporting revenue of $3 .6 million and EPS of $(0 .29), surpassing our estimates of $3 .2 million and Statement $(0.30), respectively . Reason Why +Surprise s Fraudulent Report Title eSupport Leader ; Initiating Coverage with a Buy Rating and $36 Price Targe t Author(s) Wendell H . Laidle , Marie A . Klut h Date of August 16, 2000 Statemen t Page Number 9 Fraudulent On 8/3/00, SPRT posted strong Q2 :00 results, reporting revenue of $3 .6 million and EPS of $(0 .29), surpassing our estimates of $3 .2 million and Statement $(0.30), respectively . Reason Why +Surprise s Fraudulent Report Title eSupport Leader; Initiating Coverage with a Buy Rating and $36 Price Targe t Author(s) Wendell H . Laidley, Marie A . Kluth Date of August 16, 2000 Statement Page Number 10 Fraudulent We are introducing 2000 revenue and EPS estimates of $16 .4 million and $(1 .11), respectively, 2001 estimates of $37 .5 million and $(0.92), an d Statement 2002 estimates of $66 million and $(0 .22). Reason Why +Revisions Fraudulent Report Title eSupport Leader ; Initiating Coverage with a Buy Rating and $36 Price Targe t Author(s) Wendell H . Laidley, Marie A . Kluth Date of August 16, 2000 Statement Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 218 of 262) Page Number 10 Fraudulent Assuming SPRT continues to execute and deliver meaningful revenue upside relative to our published estimates and achieve strategic objectives , Statement we believe SPRT shares are capable of maintaining a premium valuation consistent with other leading eBusiness infrastructure providers that hav e established meaningful differentiation and are expected to deliver explosive growth over the next several years . Reason Why +Cautionary Fraudulent Report Title eSupport Leader ; Initiatin Coverage with a Buy Rating and $36 Price Target Author (s) Wendell H . Laidley, Marie A. Klut h Date of August 16, 2000 Statement Page Number 1 1 Fraudulent Exhibit 5 Statement Income Statement , FY 99A-02 E $ in thousands, except per share data 1999 by Quarter 2000 by Quarter 2001 by Q uerler Fiscal Year Ends Decenrbsr ar-99 un- Seo-9 Dec Mr - eo0 DecOOE ar01 Jun01E el 1 _ecOlE Iggy 001 001j 20 0002 1 Total Revenues 5334 5493 5782 S1 .602 51,072 53 .574 54 .718 1 6251 57 .314 58 .593 110054 $ 11 .512 53211 516 .415 5 77 .474 566 .00 2 Reason Why +Estimates Fraudulent Report Title CSFB Tech Intra-Daily Author(s) Wendell H . Laidley, Marie A . Klut h Date of September 12, 2000 Statement Page Number 1 Fraudulent Company is tracking well against September quarter strategic objectives and our Q3 estimates of $4.7 MM and ($0.29) . Statement Reason Why +Estimates Fraudulent Report Title SPRT Hosts Successful First User Forum Author(s) Wendell H . Laidley, Marie A. Klut h Date of September 25, 2000 Statement Page Number 1 Fraudulent We believe SPRT will meet or beat our Q3:00 estimates of $4.7 million and ($0 .29),. . . Statement Reason Why +Estimates Fraudulent Report Title SPRT Hosts Successful First User Forum Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 219 of 262) Author(s) Wendell H . Laidley, Marie A . Klut h Date of September 25, 200 0 Statement Page Number 3 Fraudulent We believe SPRT will meet or beat our Q3 :00 estimates of $4 .7 million and ($0.29), . . . Statement Reason Why +Estimates Fraudulent Report Title SPRT Hosts Successful First User Foru m Author(s) Wendell H . Laidley, Marie A . Klut h Date of September 25, 200 0 Statement Page Number 5 Fraudulent Suppo rt. com, Inc. Income Statemen t Statement (data in thousands, except per share) 1999 by Quarter 2000 b Quarter 200! b Quarter Fiscal Year Ends December Mar- 9 Jun-99 Dec-99 Ma 00 ,tun- Sen 0 Dec OE Mar 1E Jun01 59001F QecU1E 1999 200 2 1E 002 s $334 $493 $782 $1 .602 $1,872 $3,574 $4 .718 $6 .251 $7,314 $8,593 $10,054 $11,512 $3,211 $16,415 $37,474 $66 .00 2 Reason Why +Estimates (left side of table for revenues cut off in report ) Fraudulent Report Title SPRT Hosts Successful First User Foru m Author(s) Wendell H . Laidley, Marie A . Klut h Date of September 26, 200 0 Statement Page Number 1 Fraudulent We believe SPRT will meet or beat our Q3 :00 estimates of $4 .7 million in revenues and EPS of $(0 .29), . . . Statement Reason Why +Estimate s Fraudulent Report Title SPRT Hosts Successful First User Forum Author(s) Wendell H . Laidley, Marie A . Klut h Date of September 26, 2000 Statemen t Page Number 3 Fraudulent We believe SPRT will meet or beat our Q3 :00 estimates of $4 .7 million in revenues and $(0 .29), . . . Statement Reason Why +Estimate s Fraudulent Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 220 of 262) Report Title SPRT Hosts Successful First User Foru m Author(s) Wendell H . Laidley, Marie A . Klut h Date o f September 26, 2000 Statement Page Number 4 Fraudulent Table 1 Statement Income Statemen t $ in thousands, except per share data 1999 by quarter 2000 by Quarter 2001 by Quarter Fiscal Year Ends December Mar39 Jun- eo- 9 ec-99 ~r-00 Jun- 5eo ec 0 ar0 =11un1 1 eo 1E ec01 01E 02 E Total Revenues $334 $493 $782 $1,602 $1,872 $3,574 $4,718 $6 .251 $7.314 $8,593 $10,054 $11,512 $3 .211 $16,415 $37,474 $66 .002 Reason Why +Estimates Fraudulent Report Title Higher ASPs Drive Q3 :00 Upside, Strong Results and Recent Price Weakness Represent Compelling Entry Point Author(s) Wendell H . Laidley, Marie A . Klut h Date o f October 19, 200 0 Statement Page Number 1 Fraudulent SPRT reported stronger-than-expected September quarter results of $5 .4 million and EPS (excluding extraordinary items) of $(0 .24), Statement surpassing our Q3 :00 estimates of $4.7 million and $(0.29) . Reason Why +Surprise s Fraudulent Report Title Higher ASPs Drive Q3 :00 Upside, Strong Results and Recent Price Weakness Represent Compelling Entry Point Author(s) Wendell H . Laidley, Marie A . Klut h Date o f October 19, 200 0 Statement Page Number 1 Fraudulent Our 2001 revenue and EPS estimates are raised to $40 million and $(0.84), from $37 million and $(0.92), and our new 2002 estimates are Statement $69 million and $(0 .22), from $66 million and $(0.22). Reason Why +Revisions Fraudulent Report Title Higher ASPs Drive Q3 :00 Upside, Strong Results and Recent Price Weakness Represent Compelling Entry Point Author(s) Wendell H . Laidley, Marie A . Klut h Date of October 19, 2000 Statement Page Number 2 Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 221 of 262) Fraudulent SPRT reported stronger-than-expected September quarter results of $5 .4 million and EPS (excluding extraordinary items) of $(0 .24), surpassing Statement our Q3 :00 estimates of $4 .7 million and ($0.29) . Reason Why +Surprises Fraudulent Report Title Higher ASPs Drive Q3 :00 Upside, Strong Results and Recent Price Weakness Represent Compelling Entry Point Author (s) Wendell H . Laidley, Marie A . Kluth Date of October 19, 200 0 Statemen t Page Number 4 Fraudulent Taking into consideration SPRT's subscription revenue model which significantly understates actual bookings, our 2001 revenue and EP S Statement estimates are being raised to $40 million and $(0 .84) from $37 million and $(0 .92) . Our 2002 estimates are raised to $69 million and $(0 .22) fro m $66 million and $(0 .22) . Reason Why +Revision s Fraudulent Report Title Higher ASPs Drive Q3 :00 Upside, Strong Results and Recent Price Weakness Represent Compelling Entry Point Author(s) Wendell H . Laidley, Marie A . Kluth Date of October 19, 200 0 Statemen t Page Number 5 Fraudulent Table 1 Statement Income Statement $ in thousands, except per share data 1999 by Quarter 2000 by Quarter 2001 by Qua rter Fiscal Year Ends Decembe r Mar-99 ,1un.9.2 Sep-99 Dec-99 Mar-00 Jun -00 Sep-00 24s-Q.4E MarOlE ,lmm41E 11211L DeCOJE i11 394.4E 10.91E 20OZE Total Revenues $334 $493 $782 $1,602 $1 .872 $3, 574 $5, 353 $6,959 $ 7,829 $9,003 $10,579 $12, 694 $3.211 $17,758 $40,105 $69,46 9 Reason Why +Estimate s Fraudulent Re ort Title Highlights from CSFB Tech Conferenc e Author(s) Wendell H . Laidley, Marie A . Kluth Date of November 29, 2000 Statemen t Page Number 1 Fraudulent We believe SPRT is tracking in-line to ahead of our Q4 :00 estimates of $6.9 million and ($0.23),. . . Statemen t Reason Why +Estimate s Fraudulent Report Title Highlights from CSFB Tech Conferenc e Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 222 of 262) Author(s) Wendell H . Laidley, Marie A . Klut h Date of November 29, 200 0 Statemen t Page Number 2 Fraudulent We believe SPRT is tracking in-line to ahead of our Q4 :00 estimates of $6.9 million and ($0.23),. . . Statemen t Reason Why +Estimate s Fraudulent Repo t Title Hi blights from CSFB Tech Conference Author(s) Wendell H . Laidley, Marie A . Klut h Date of November 29, 2000 Statement Page Number 3 Fraudulent Suppo rt. com, Inc . Income Statemen t Statement (data in thousands , except per share ) 109 by Qua rter 2000 by Quarter 2001 by Quarter Fiscal Year Ends December Jun-99 en -99 Mar-U!2 0 Le__- 21c00E a Jun ao01E Dee01 1999 NQUIE 200 1 Total Revenues $334 $493 $782 $1,602 $1,872 $3,574 $5,353 $6 .959 $7,829 $9,003 $10,579 $12,694 $3,211 $17,758 $40,105 $69,46 9 Reason Why +Estimates Fraudulent Report Title Another Upside Quarter, Raising Estimates and Upgrading to STRONG BUY Author(s) Wendell H . Laidley, Marie A. Kluth Date of January 17, 200 1 Statemen t Page Number 1 Fraudulent SPRT reported stronger than expected Q4 :00 results of $7 .9 M and EPS (excluding extraordinary items) of ($0 .20), surpassing our Q4:00 Statement estimates of $7 .0 M and ($0 .23). Reason Why +Surprise s Fraudulent Report Title Another Upside Quarter, Raising Estimates and Upgrading to STRONG BUY Author (s) Wendell H. Laidley, Marie A. Kluth Date of January 17, 200 1 Statement Page Number 1 Fraudulent We are raising our 2001 estimates to $44 M and ($0 .63) [from $40 M and ($0.84)], and 2002 estimates to $77 M and ($0 .10) [versus $69 M an d Statement ($0.22) previously] . Reason Why +Revisions Fraudulent Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 223 of 262) Report Title Another Upside Quarter, Raising Estimates and Upgrading to STRONG BUY Author(s) Wendell H . Laidley, Marie A . Klut h Date of January 17, 200 1 Statemen t Page Number 2 Fraudulent Statement Investment Summary Exhibit 1 : Support.com Variance Analysi s Support . cotn Variance A nal sic ( .~l R (, ,r,n, iwn }„S (nn;pcruur Vo O (wnparrIu n r ur , ,, 7 r r . r tr ;u ,'rr : : Q- 0 0 A I Q-00 F : S UifL I)iff. Q-99 :% S Change Chan . Q-(10 :% S ('hangs Change Total Re%enues 7 .867 6,959 9 118 13 .0",6 1,6112 6.265 ±91 .1".1, ; .353 2 .514 47 .0% Reason Why +Surprise s Fraudulent Report Title Another Upside Quarter, Raising Estimates and Upgrading to STRONG BUY Author(s) Wendell H . Laidley, Marie A . Klut h Date of January 17, 200 1 Statemen t Page Number 2 Fraudulent SPRT reported stronger than expected December quarter results of $7 .9 million and EPS (excluding extraordinary items) of ($0 .20), surpassing our Statement Q4:00 estimates of $7 .0 million and ($0.23) and representing 13% upside to our revenue number . Reason Why +Surprise s Fraudulent Report Title Another Upside Quarter, Raising Estimates and Upgrading to STRONG BUY Author(s) Wendell H . Laidley, Marie A . Kluth Date of January 17, 200 1 Statement Page Number 5-6 Fraudulent We are raising our estimates to reflect the Company's stronger Q4 :00 results and management's publicly stated revised guidance . For 2001, our Statement new estimates are $44 million and ($0 .63) [versus $40 million and ($0 .84) previously] based on blended operating margin assumptions of (50%) compared with (68%) previously and these revenue estimates suggest YoY growth of 138% vs . 126% previously . For 2002, new are no w estimating revenue of $77 million and ($0 .10) [versus $69 million and ($0 .22) previously] based on revised operating margin expectations of (7% ) compared with (14%) previously, with YoY revenue growth assumptions of 73% unchanged . Reason Why +Revisions Fraudulent Report Title Another Upside Quarter, Raising Estimates and Upgrading to STRONG BUY Exhibit D : Misstatements and Omissions in CSFBC 's Research Reports (Page 224 of 262) Author(s) Wendell H . Laidle , Marie A. Klut h Date o f January 17, 200 1 Statement Page Number 7 Fraudulent Support. com, Inc . Income Statement Statement (data in thousands . except per share) 999 by Quarter 7000 by Awrter 7001 by Quarter Fieul Yoer Ends December M Jun-9 Uec-99 Mar- Jun-00 a Dec MarUIE Jun01 5=01 Dec01E 1999 2000 2002E Fotal Revenues $334 $493 $782 $1 .602 $ 1 .872 $3574 95353 87,867 38.654 49 .952 $11,693 $ 14032 93211 418,666 $44 .331 $76,790 Reason Why +Estimates Fraudulent Report Title Another Upside Quarter, Raising Estimates and Upgrading to Strong Bu y Author(s) Wendell H . Laidley, Marie A. Kluth Date of January 18, 200 1 Statement Page Number 1 Fraudulent SPRT reported stronger-than-expected Q4 :00 results of $7 .9 M in revenue and EPS (excluding extraordinary items) of $(0 .20), surpassing ou r Statement Q4 :00 estimates of $7 .0 M and $(0 .23). Reason Why +Surprise s Fraudulent Report Title Another Upside Quarter, Raising Estimates and Upgrading to Strong Bu y Author(s) Wendell H . Laidley, Marie A. Kluth Date of January 18, 200 1 Statement Page Number 1 Fraudulent We are raising our 2001 estimates to $44 M in revenue and EPS of $(0 .63) [from $40 M and $(0.84)], and 2002 estimates to $77 M and $(0 .10) Statement [versus $69 M and $(0.22) previously] . Reason Why +Revisions Fraudulent Report Title Another Upside Quarter, Raising Estimates and Upgrading to Strong Bu y Author(s) Wendell H . Laidley, Marie A . Kluth Date of January 18, 200 1 Statement Page Number 2 Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 225 of 262) Fraudulent Statement Investment Summary Exhibit I Support.com Variance Analysi s Supportcom Variance Analysi s CSFB C'ompari%on 1'oFC'owparismi QoQ Consparicon (Sin 6001s, exceprper share data 4Q-00 A 4Q-00 E $ Duff. % Difl 4Q -99 A S Change % Change 3Q-00 A S Change % Change Total Revenues 7,867 6,959 908 13 .0% 1,602 6 .265 391 .1% 5 153 2 .514 47 .0 % Reason Why +Surprise s Fraudulent Report Title Another U side Qua rter, Raising Estimates and Upgrading to Strong Buy Author(s) Wendell H . Laidley, Marie A . Kluth Date of January 18, 200 1 Statement Page Number 2 Fraudulent SPRT reported stronger-than-expected December quarter results of $7 .9 million in revenue and EPS (excluding extraordinary items) of $(0 .20), Statement surpassing our Q4 :00 estimates of $7.0 million and $(0.23) and representing 13% upside to our revenue number . Reason Why +Surprise s Fraudulent Report Title Another Upside Quarter, Raising Estimates and Upgrading to Strong Buy Author(s) Wendell H . Laidley, Marie A . Kluth Date of January 18, 200 1 Statement -Page Number 5 Fraudulent We are raising our estimates to reflect the Company's stronger Q4 :00 results and management's publicly stated revised guidance . For 2001, our Statement new estimates are $44 million in revenue and EPS of $(0 .63) [versus $40 million and $(0 .84) previously] based on blended operating margi n assumptions of (50%) compared with (68%) previously, and these revenue estimates suggest YoY growth of 138% versus 126% previously . For 2002, new are now estimating revenue of $77 million and $(0 . 10) [versus $69 million and $(0.22) previously] based on revised operating margin expectations of (7%) compared with (14%) previously, with YoY revenue growth assumptions of 73% unchanged . Reason Why +Revisions Fraudulent Report Title Another Upside Quarter, Raising Estimates and Upgrading to Strong Buy Author(s) Wendell H . Laidley, Marie A . Kluth Date of January 18, 200 1 Statement Page Number 7 Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 226 of 262) Fraudulent Exhibit 3 Statement Support .com, Inc . Income Statemen t $ in thousands, except per-share data 1999 by Quart., 7000 by Quarfer 2001 by Quarter Fiscal Yaar End, Dacamba r _ un- ac• ar- un• •o- ac • ar un so • c T olel Revenues $334 $493 $782 $1 .602 $1 .672 53,574 $5,353 57.867 48,654 59 .952 811 .693 $14 .032 $3211 518,666 344 .331 $7679 0 Reason Why +Estimates Fraudulent End Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 227 of 262) Issuer N> me -.. , Tannin echnolo Corporation -TANK Report Title Investing in the Back-End Services Wav e Author(s) Mark Wolfenberger and Wayne Sega l Date of August 17, 1999 Statement Page 1 Number Fraudulent Q2 results well ahead of expectations . Statement Reason Why +Surprise s Fraudulent Report Title Investing in the Back-End Services Wav e Author(s) Mark Wolfenberger and Wayne Sega l Date of August 17, 1999 Statement Page 1 Number Fraudulent Raising FY99 & FY00 rev & EPS ests . Statement Reason Why +Revisions Fraudulent Report Title Investing in the Back-End Services Wav e Author(s) Mark Wolfenberger and Wayne Sega l Date of August 17, 1999 Statement Page I Number Fraudulent Three upside levers (headcount, bill rates, & util) could prove estimates conservative . Statement Reason Why +Cautionary Fraudulent Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 228 of 262) Report Title Investing in the Back-End Services Wav e Author(s) Mark Wolfenberger and Wayne Sega l Date of August 17, 199 9 Statement Page 3 Number Fraudulent Q2 results well ahead of expectations . TANN reported F2Q99 revenues & EPS of $13 .2M and $0 .02, versus our estimates of $11 .9M and $0.01, Statement respectively. Reason Why +Surprise s Fraudulent Report Title Investing in the Back-End Services Wav e Author(s) Mark Wolfenberger and Wayne Sega l Date of August 17, 1999 Statement Page 3 Number Fraudulent We are raising our FY99 & FY00 revenue estimates from $48.7M & $65.7M to $52M & $70M, respectively . Statement Reason Why +Revisions Fraudulent 71, Report Title Investing in the Back-End Services Wav e Author (s) Mark Wolfenberger and Wayne Sega l Date of August 17, 1999 Statement Page 5 Number Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 229 of 262) Fraudulent Table 2 : TANN Earnings Model FY97A-FYOO E Statement $ in millions, except per share data rTanning Technology Corp. (TANN) FY Ends Dec BUY ! $25 !16!99 FY97 Ql-Ma Q2 -Jun Q3- Sep Q4 -Dec FY96 Ql-Mat Q2 -Jun Q3S ep Q 4- Dec FY99 QI-Mar Q2-Jun Q3 - Sep Q4-Dec FY00 Actual Actual .actual A ctual Actual Actual Total Reveict 25 .2 4 .6 5 .6 9.2 10.9 303 113 13 .2 13 .5 140 52 .0 147 162 18 .2 209 70 0 %ctt6QtuQIr - 18".: 21% 65% 19% 3% 17'Y 2% 4% 5% 10% 12% 15 % Re tt 25 .2 46 5 .6 9.2 10. 9 30.3 113 13.2 13 .5 14.0 52 .0 14.7 16.2 18 .2 20 .9 70 0 Reason Why +Estimates Fraudulent Report TitleY Mark Your Calendar, Learn Technology Customer Inten t Author(s) Mark Wolfenberger and Wayne Sega l Date of September 28. 1999 Statement Page 1 Number Fraudulent TANN to report Q3 results on 10/26 . Expect upside to both our $13 .5M & $0 .02 revenue & EPS estimates . Statement Reason Why +Estimates Fraudulent Report Title CSFB Tech Dail y Author(s) Mark Wolfenberger and Wayne Sega l Date of October 26, 1999 Statement Page 2 Number Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 230 of 262) Fraudulent TANN reported robust revs of $16M, up 74% Y-o-Y and 21 % sequen . vs $13.5M est. Statement Reason Why +Surprises Fraudulent Report Title CSFB Tech Daily Author(s) Mark Wolfenberger and Wayne Sega l Date of October 26, 1999 Statement Page 2 Number Fraudulent Raising Q499 to $16M from $14M, no change to bottom . Significantly raising F00 revs to $80M from $70M, up 15% and EPS to $0 .12 from Statement $0.10. Reason Why +Revisions Fraudulent Report Title CFSB Estimate Change s Author(s) Mark Wolfenberger Date of October 26, 1999 Statement Page Not listed but approx 7 of 14 Number Fraudulent TANN reported robust revs of $16M, up 74% Y-o-Y and 21 % sequen . vs $13.5M est. Statement Reason Why +Surprise s Fraudulent Report Title CFSB Estimate Change s Author (s) Mark Wolfenberger Date of October 26, 1999 Statement Page Not listed but approx 7 of 14 Number Fraudulent Raising Q499 to $16M from $14M, no change to bottom . Significantly raising F00 revs to $80M from $70M, up 15% and EPS to $0 .12 from Statement $0.10. Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 231 of 262) Reason Wh y +Revisions Fraudulent Report Title Off To A Great Public Star t Author(s) Mark Wolfenberger and Wayne Sega l Date of October 26, 1999 Statement Page Number Fraudulent TANN reported robust revs of $16M, up 74% Y-o-Y and 21 % sequen . vs $13 .5M est. Statement Reason Wh y +Surprises Fraudulent Report Title Off To A Great Public Star t Author(s) Mark Wolfenberger and Wayne Sega l Date of October 26, 1999 ? Statement Page Number Fraudulent Raising Q499 to $16M from $14M, no change to bottom . Significantly raising F00 revs to $80M from $70M, up 15% and EPS to $0 .12 from Statement $0.10. Reason Why +Revisions Fraudulent Report Title Off To A Great Public Star t Author(s) Mark Wolfenberger and Wayne Sega l Date of October 26, 199 9 Statement Page 3 Number Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 232 of 262) Fraudulent TANN Earnings Model FY97A-FYOO E Statement $ in millions , except per share dat a 'Tanning Technology Corp. ( TANN) FY Ends Dec BUY 1$55 10/25!99 FY97 Ql-M r Q2 .Jun Q3-Sep Q4-Dec FY98 QI-Mar Q2-Jun Q3 -Sep Q4- Dcc PY99 QI-Mar Q24m Q3-SeP Q4-Dcc FY00 Actual A ctual Actual Actual Ac tual Actual Actual Taal Rcvcnucs 25 .2 4 .6 5 .6 9. 2 10.9 30.3 11 .3 132 16 .0 16 .0 56. 5 16.5 18.5 22.0 23 .0 80 .0 %chg Q tr/Qtr .18% 21 % 65% 19% 3% 17% 21% 0% 3% 12% 19% 5 % Revs ua 25 .2 4 .6 5 .6 9.2 10.9 30.3 11 .3 13 .2 16 .0 16 .0 56.5 16.5 18 .5 22 .0 ----2-3-0-----8-0 .-0 1 Reason Why +Estimates Fraudulent Report Title CSFB Tech Daily Author (s) Mark Wolfenberger and Wayne Sega l Date of October 27, 199 9 Statement Page 2 Number Fraudulent FY00 revs & EPS ests now $80M & $0 .12 from $0 .70 & $0 .10. Statement Reason Why +Revisions Fraudulent Report Title Capitalizing On Reality Of Internet Succes s Author(s) Mark Wolfenberger and Wayne Sega l Date of December 1, 1999 Statement Page I Number Fraudulent Model remains conservative and likely revision to estimates and price target post Q4 results . Statement Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 233 of 262) Reason Why +Cautionar y Fraudulent Report Title Capitalizing On Reality Of Internet Succes s Author(s) Mark Wolfenberger and Wayne Sega l Date of December 1, 1999 Statement Page 3 Number Fraudulent TANN Earnings Model FY97-FYO O Statement $ in millions, except per share dat a Tanning Technology Corp. (TAN FY Ends De c BUY 1$5 5 0125/99 F Y07 QI-Mar Q'-Jun Q3- Sep Q4- Dec FY99 QI-Mar Q2-Jun Q3- Sep Q4- Dm FY99 OI-Mar Q2-Jun 03-Scp Q4- Dec FY0 0 Actual Actual Actual Actual Actual Actual Actua l Total Rcccaucs 25 .' 4.6 5.6 9 .2 h, .9 30 .3 11 .3 3 .2 16 .0 16 .0 56 .5 16 .5 19 .5 220 23 .0 00.0 %chg Qrr;Qtr -1601 ; 21% 65% 19% 3% 7% 21% 0% 3% I2% 19% 501 ; Revenues 25.2 4 .6 5.6 9 .2 10 .9 30 .3 11.3 3 .2 16.0 16 .0 56 .5 16 .5 19.5 2 2 .0 23 .0 80. 0 Reason Why +Estimate s Fraudulent Report Title Global Center Invests $10 M Author(s) Mark Wolfenberger and Wayne Sega l Date of February 2, 200 0 Statement Page 1 Number Fraudulent Company reports Q4 on 2/9, expect #'s to be ahead of our $16M rev & $0 .02 EPS est s Statement Reason Why +Estimates Fraudulent Exhibit D : Misstatements and Omissions in CSFBC' s Research Reports (Page 234 of 262) Report Title Global Center Invests $ IO M Author(s) Mark Wolfenberger and Wayne Segal Date of February 2, 200 0 Statement Page 3 Number Fraudulent TANN Earnings Model FY97-FYOO Statement $ in millions , except per share data "Tanning Technology Corp . (TAN FY Ends Dec BUY1$55 0/25199 FY97 QI-Mar 02-]un Q3-Sep 04-Dec FY 98 QI-Mar Q2-Jun Q3-Sep Q4-Dec FY99 QI -Mar Q2-Jun 03-Sep Q4-Dec FY0 0 Actual Actual Actual Actual Actual Actual Actua l Total Revenues 25 .2 4 .6 5 .6 9 .2 10 .9 303, 11.3 11.2 16 .0 16.0 56 .5 16 .5 18.5 220 23 .0 30 .0 %c]tgQtr/Qte -I8'ti 21% 65% 194x. 3% 174E 21% 0% 3% 12% 19% 5% Revenues 25 .2 46 56 92 109 303 113 13 .2 160 160 56 .5 165 18.5 22 .0 23 .0 80 0 Reason Why +Estimates Fraudulent Report Title CSFB Tech Daily Author(s) Mark Wolfenberger and Wayne Sega l Date of February 10, 2000 Statement Page 2 Number Fraudulent TANN reported $17 .9M (12% Q/Q growth) revs & $0.04 EPS vs $16.OM & $0.02 ests . Statement Reason Why +Surprise s Fraudulent Report Title Reports Strong Results, Pipeline Never Better Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 235 of 262) Author(s) Mark Wolfenberger, David Sturtz and Barry Chubri k Date of April 26, 2000 Statement Page 1 Number Fraudulent TANN reported $19 .6M (9% Q/Q growth) revs & $0 .04 EPS vs $18.OM & $0.03 ests . Statement Reason Wh y +Surprises Fraudulent Report Title Reports Strong Results, Pipeline Never Better Author(s) Mark Wolfenberger, David Sturtz and Barry Chubri k Date of April 26, 200 0 Statement Page Number Fraudulent Increasing FY00 rev & EPS ests to $92 .6M & $0 .16 from $85 .OM & $0.15 . Additionally, increasing FY01 ests to $130.OM rev & $0 .30 EPS from Statement prior $120M & $0 .25. Reason Why +Revisions Fraudulent Report Title Reports Strong Results, Pipeline Never Better Author(s) Mark Wolfenberger, David Sturtz and Barry Chubri k Date of April 26, 200 0 Statement Page 1 Number Fraudulent Accordingly, believe ests remain conservative given reasonable model assumptions (H .C ., util, & rates) . Statement Reason Why +Cautionary Fraudulent Report Title Reports Strong Results, Pipeline Never Better Author(s) Mark Wolfenberger, David Sturtz and Barry Chubri k Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 236 of 262) Date of April 26, 2000 Statement Page 3 Number Fraudulent Statement "Tanning Technology Corp. (TANN) FY Ends De c BUY ! $4 0 4125100 FY98 QI-Mar Q2-Jun Q3-Scp Q4-Dcc FY99 QI-Mar Q2-Jun Q3-Sep Q4-Dec FY00 FY0 1 Actual Actual Actual Actua l Total Rctcnucs 30 .3 11 .3 13 .2 1h .0 17 .9 58 .5 19 .6 22 .5 24 .5 26 .0 02 .6 130.0 % chgQtr'Q1r 3% 17% 21% 12% 9% I5% 9".% 6" 6 Revenues 30 .3 11 .3 112 1h .0 17 .9 58 .5 19 .6 22 .5 24 .5 26 .0 92 .o 13 ( .1 ) Reason Why +Estimate s Fraudulent Report Title Update on Quarterly Progres s Author (s) Mark Wolfenberger, David Sturtz and Ba rry Chubrik Date of June 7, 2000 Statement Page 1 Number Fraudulent Revs & EPS tracking ahead of $22 .5M & $0 .04 ests. Statement Reason Why +Estimates Fraudulent Report Title Update on Quarterly Progres s Author(s) Mark Wolfenberger, David Sturtz and Ba rry Chubrik Date of June 7, 2000 Statement Page 1 Number Exhibit D: Misstatements and Omissions in CSFBC' s Research Reports (Page 237 of 262) Fraudulent TANN Earnings Model FY98A-FY01 E Statement $ in millions , except per share data Tanning Technology Corp. (TANN) FY Ends De c BUY / $40 4!25/00 FY98 QI-Mar Q2-Jun Q3-Sep Q4-Dec F1-99 QI-M ar Q2-Jun Q3-Sep Q4-Dec FY00 FY0 1 Actual Actual Actual Actual Actua l Total Revenues 30 .3 11 .3 13 .2 16 .0 17.9 58 .5 19 .6 22 .5 24 .5 26 .0 92.6 130 .0 chg Qtr, Qtr - ,,, 17^%'„ 21 % 12%4% 9% 15°,n 9% 6% Revenues 10 .3 11 .3 13 .2 16 .0 17 .9 58 .5 19 .6 22 .5 24 .5 26 .0 92.6 130 .0 Reason Why +Estimate s Fraudulent -Ead -of TANN Exhibit D: Misstatements and Omissions in CSFBC 's Research Reports (Page 238 of 262) ~ssue.> ~l ame _ . Tumbleweed Communications ;Cor - Ron - TMWD Re ort Title Initiating Coverage with a Buy : Enabling Secure Online Communicatio n Author(s) Todd Raker, Brad Stephens Date of August 31, 1999 Statement Page 4 Number Fraudulent We expect Tumbleweed to show strong revenue growth in the future . We are projecting sales to increase 166% in 1999, to $4 .8 million, and 215 % Statement in 2000 to $15.1 millio n Reason Why +Estimate s Fraudulent Report Title Initiating Coverage with a Buy : Enabling Secure Online Communicatio n Author(s) Todd Raker, Brad Stephen s Date of August 31, 1999 Statement Page 20 Number Fraudulent Table 1 0 Statement Annual Income Statement , 1997-2005E ($ in millions except per-share data ) (Fiscal Year Ends Dec .) 1997 1998 1999 . 2000E 2 00IF. 2002 F. 2003E 2004E 2005 E Re venue s Licenses S 0.359 S 0 .885 S 2 .907 S 7 .600 S 12 .500 S 17 .9(X) S 25 .800 S 38 .600 5 57 .20 0 %ofSales 58.'1 49. 3 % 60.8% 50.5° 43 .1% 32.6% 2 0.I%. 2 2 . 9 % 21 . 2 % Service, ,& Transactions 0 .250 0 .910 1 .874 7 .450 16500 37 .000 73 .200 130 .000 713 .000 %ofSoles 41.1% 50.7% 3(1.2% 49.5% 56.9% 67 .4% 73 .9%j. 77.1078 .8 % Total Sales 0 .609 1 .795 4 .781 15 .050 29 . 000 54 .900 99 .000 168 .600 270 .20 0 Reason Why +Estimate s Fraudulent Report Title Initiating Coverage with a Buy : Enabling Secure Online Communicatio n Author(s) Todd Raker, Brad Stephen s Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 239 of 262) Date of August 31, 1999 Statement Page 22 Number Fraudulent Table 1 2 Statement Projected Quarterly Income Statement , 1999-200 0 ($ in millions, except per-share data) 1999E Full Year 2000E Full Yea r (Fiscal Year Ends Dec .) 3131 A 61i0 .A 9/30 12131 1999E 3/31 6/30 9/30 12/31 2000F. Revenue s Licenses S 0.515 S 0 .564 S 0 .775 S 1 .050 S 2 .907 S 1 .250 S 1 .650 S 2 .050 S 2 .650 S 7 .60 0 %o/Srtle.s 74796 517 .0% 60.59 58 .34 60 .8% 52 .14 51 .6% 50.0% 49.1% 50.50 % Services 8 Transactions 0.175 0 .444 0 .505 0 .750 1 .874 1 .150 1 .550 2.000 2 .750 7 .45 0 % 01.Salcs 25.39 44 .0 .° 39.5% 41 .7 ?% 39 .2° 479%6 48.4% 49.4% 50.19% 49.5° 6 Total Sales 0 . 693 1 .008 1 . 280 1 .800 4 .781 2 .400 3 . 200 4 . 050 5 .400 15 .05 0 Reason Why +Estimates Fraudulent Report Title Initiating Coverage with a Buy : Enabling Secure On-line Communications Author(s) Todd Raker, Brad Stephens Date of September 1, 1999 Statement Page 4 Number Fraudulent We expect Tumbleweed to show strong revenue growth in the future . We are projecting sales to increase 166% in 1999, to $4 .8 million, and 215% in 2000 to $15 .1 million. Statement Reason Why +Estimate s Fraudulent Report Title Initiating Coverage with a Buy : Enabling Secure On-line Communications Author(s) Todd Raker, Brad Stephens Date of September 1, 1999 Statement Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 240 of 262) Page 20 Number Fraudulent Table 1 0 Statement Annual Income Statement , 1997-2005 E ($ in millions except per-share data) (Fiscal Year Ends Dec .) 1997 1998 1999E 2000E 2001E 2002F 2003E 2004E 2005 E Revenues Licenses S 0 .359 S 0 .885 S 2 .907 S 7 .600 S 12 .500 S 17 .900 S 25 .800 S 38 .600 S 57 .20 0 o(Sales 58.9% 49. 3 % 60 .84 ; 50.5% 43 .1% 32 .69 . 2o .I% 22 .9% 21.2 % Services & Transactions 0 .250 0 .910 1 .874 7 .450 16 .500 37 .000 73 .200 130 .000 213 .000 %of sales 41 .1 .% 50.7% 39 .2% 49.5% 56.9% O7.4°/ 73 .9% 77 .1% 78.8 % Total Sales 0. 609 1 .795 4 .781 15 .050 29 .000 54 .900 99 .000 168.600 270.200 Reason Why +Estimates Fraudulent Report Title Initiating Coverage with a Buy : Enabling Secure On-line Communication s Author(s) Todd Raker, Brad Stephens Date of September 1, 199 9 Statement Page 22 Number Fraudulent Table 1 2 Statement Projected Quarterly Income Statement , 1999-2000 ($ in millions, except per-share data) I099E Full Year 20 00F. Full Yea r (Fiscal Year Ends Dec .) 3131A 6130_A 9130 12131 1 999E 3131 6130 9130 12131 2000F. Revenues Licenses S 0 .518 S (1.563 S 0 .775 S 1 .050 S 2 .907 S 1 .250 S 1 .650 S 2 .050 S 2 .650 S 7 .6(8) %o1Saie. 74 .7% 56 .0"% li(1.5% 58.3% 60 .8% 52. P6 51 .6% 50.6% 49.1% 50.5 4 Services & Transactions 0 .175 0 .444 0 .505 0.750 1 .874 L 150 1 .5 50 2.000 2 .75(1 7 .45 0 %o/Sales 25 .3% 44 .0% 39 .5% 41.7N, 39 .2% 47 .9 .°% 48.4% 49 .4% 50.9% 49.5 % Total Sales 0.693 1 .008 1 .280 1 .800 4 .781 2 .400 3 .200 4.050 5 .400 15.05 0 Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 241 of 262) Reason Why +Estimates Fraudulent Report Title Reports Excellent Quarter ; Outlook Remains Brigh t Author(s) Todd Raker, Brad Stephen s Date of October 20, 199 9 Statement Page Number Fraudulent The company reported revenue of $1 .685 million, exceeding our estimate of $1 .280 million by 32% . Statement Reason Why +Surprises Fraudulent Report Title Reports Excellent Quarter ; Outlook Remains Brigh t Author(s) Todd Raker, Brad Stephen s Date of October 20, 199 9 Statement Page 8 Number Fraudulent Table 6 Statement Annual Income Statement , 1997-2005E $ in millions, except per share data I F'. ., i Yem F.nd .l)cC .) 1997 1998 19991: 20011E 21101E 211112E 2003F: 211114F. 211115 E Rrrrnt( r .iCiIAC> S 11 5k) \ 0 .X5$ ) 2 . ')j'! S 7 ('U(I S 1 2 .5IIII ti 171)(10 ti _j ..xUll ti i .\(,l) U S ._'!1! 1 2 Senlcc. \' 1 !(!maul u . ! 1 .2 (1 11 .')111 _ .__ .-1511 I L .?U(I 37 1011 -_ 7011 13!i .1111)) .I ~ .UIIl ) Total Sales 0 .609 1 .79 5 .1 8 6 15 .0511 29 .0011 54.900 99 .900 168 . 61111 270 .200 Reason Why +Estimates Fraudulent Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 242 of 262) -Report Title Reports Excellent Quarter ; Outlook Remains Brigh t Author(s) Todd Raker, Brad Stephen s Date of October 20, 199 9 Statement Page 10 Number Fraudulent Table 8 Statement Projected Quarterly Income Statement , 1999-200 0 $ in millions, except per share data 1999E Full Year 2000E Full Yea r (Fiscal Year Ends Dcc .) 3131 A 6/30A 9130 12/31 1999E 3/31 6/30 9/30 12/31 2000 E Ren venu es Licenses S 0 .518 S 0 .564 S 0 .827 5 1 .050 S 2 .959 S 1 .250 S 1 .650 S 2 .050 S 2 .650 S 7 .60 0 % of Salcs 74.7?,, 56 .0% 49.1 ?6 58.P, 57.1 ?% 52.19,, 51 .06 59 .6% 49 .1% 50 .5 % Services & Transactions 0 .175 0.444 0 .858 0.750 2 .227 1 .150 1 .550 2 .000 2 .750 7 .45 0 % of 'sates 25.3% 44.0% 50.9991 41 .791 42 .9991 47 .99 48.491 49 .4% 50 .9% 49 . 5 % Total Sales 0 .693 1 .008 1 .685 1 .800 5 .186 2 .400 3 . 200 4 .050 5 .400 15 .05 0 Reason Why +Estimate s Fraudulent Report Title CSFB Tech Daily Author(s) Todd Raker Date of January 20, 2000 Statement Page 2 Number Fraudulent Tumbleweed announced fourth quarter results well ahead of consensus expectations . Revenues were $2 .39 million versus our estimate of $1 .80 Statement million- an upside surprise of 33% . Reason Why +Surprises Fraudulent Report Title The Leader in Enabling Secure On-line Communications Reinstating Coverage with a Bu y Exhibit D : Misstatements and Omissions in CSFBC 's Research Reports (Page 243 of 262) Author (s) Analyst Name, Analyst Name Date of February 1, 200 0 Statement Page 3 Number Fraudulent We expect Tumbleweed to show strong revenue growth in the future . We are projecting sales to increase 79% in 2000, to $29 .5 million, and 76 % Statement in 2001 to $51 .9 million. Reason Wh y +Estimate s Fraudulent Report Title The Leader in Enabling Secure On-line Communications Reinstating Coverage with a Bu y Author(s) Analyst Name, Analyst Name Date of February 1, 2000 Statement Page 3 Number Fraudulent We believe that this estimate is conservative and there is a reasonable chance that the company will break even sooner . Statement Reason Why +Cautionary Fraudulent Report Title The Leader in Enabling Secure On-Line Communications ; Reinstating Coverage with a Buy Author(s) Todd Raker, Brad Stephen s Date of February 2, 2000 Statement Page 4 Number Fraudulent We expect Tumbleweed to show strong revenue growth in the future . We are projecting sales to increase 79% in 2000 to $29 .5 million and 76°k% i n Statement 2001 to $51 .9 million . Reason Why +Estimate s Fraudulent Report Title The Leader in Enabling Secure On-Line Communications ; Reinstating Coverage with a Bu y Author(s) Todd Raker, Brad Stephen s Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 244 of 262) Date of February 2, 200 0 Statement Page 22 Number Fraudulent Table 1 0 Statement Annual Income Statement (Pro Forma for WorldTalk acquisition 1/31/00), 1998-2005 E $ in millions , except per-share data (I i'ral Year [Aids Dec .) 1998 1999A 2000E 211111E 2002E 2003E 2004E 2005E Revenue% I..ic,m R 10 .51(l S 1 1 .181 5 I X . I S(1 S 20 .050 b 34.7(() S 45 .100 S 58 .13)) S 74 .(x)0 ul S~/Ci 69,0",, 7,1"'„ 61 .0"„ ?ll . 2N . V0, I rallsaCtiotls 0 .0111) 0 .t)%1 4 .(,0u 15 . 111(1 3 3 .7u0 o7 .1;()II 110 300 1 9 7 .11 00 Services 4 .727 4 .324 1, 725 10 .85)) 14 .500 1,1 .05() 2 3 . 7 ( )) 30.000 „ I,I .S 11, t l .ll", 'n. 1 7 5", , Total Sales 15 .243 16.486 29.475 51 .9110 82.900 131 .4 50 201 .130 301 .000 Reason Why +Estimates Fraudulent Report Title The Leader in Enabling Secure On-Line Communications ; Reinstating Coverage with a Bu y Author (s) Todd Raker , Brad Stephens Date of February 2, 2000 Statement Page 24 Number Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 245 of 262) Fraudulent Table 1 2 Statement Projected Quarterly Income Statement (Pro Forma for WorldTalk acquisition 1/31/00 ), 1999-2000 $ in millions, except per-share data 1499A Full l ear 20011E Full 1 ca r (Pisc :d Year Fred, Dec .) 3 3 1 6/30 9/30 12/31 1 999 :1 313 1 6 /30 93 0 12 131 2000 E Reve,,,w s I .i ',O' S _' . hI)? S _' "7, \ 3 .1hti_' ti : .I 2I) .45n ' 4 .01 () I I s I s ti 4 .}5l) \ 1 11 \ I `, I?I I ,v',, r,'..'',,,. l,'. . /rrl ..\' .,. .; 7 b/.b" .. lran.acUom, 0 .ull? 1) If)" u . ;l`1 1)457 IL11XI 0 .550 11.5)1(1 I .~'> I .'1' ; 4 .011( 1 6, ..\°„ !? . scr%lie+ I .I II($ I .I L'~= I .~ 11 1(,01,4 4 .j24 1 . 1 1 .4`11 1 .5511 2 100 1 . .72 5 2 Total Sales 3 .617 3.657 4 .671 4.541 16 .496 5.125 6 .250 7.975 10.12 ; 29 .47 ; Reason Why +Estimates Fraudulent Re ort Title CSFB Tech Daily Author(s) Todd Raker Date of April 17, 2000 Statement Page 2 Number Fraudulent We believe the Company will beat our estimates of $5 .13 million and operating EPS of ($0.27) . The street consensus EPS is ($0 .27). Statement Reason Why +Cautionary Fraudulent Report Title CSFB Tech Daily Author(s) Todd Raker Date of April 17, 2000 Statement Page 2 Number Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 246 of 262) Fraudulent . . . our estimates of $5 .13 million and operating EPS of ($0 .27) . . . Statement Reason Why +Estimates Fraudulent Report Title Reports Stellar Quarter . Outlook Is Bright . Raising Estimates Author(s) Todd Raker, Brad Stephen s Date of April 19, 2000 Statement Page I Number Fraudulent Tumbleweed reported operating EPS of $(0 .26), a penny ahead of our estimate . Revenues came in at $6 .6 million, well ahead of our $5 .1 millio n Statement estimate. Reason Wh y +Surprises Fraudulent Report Title Reports Stellar Quarter. Outlook Is Bright . Raising Estimates Author(s) Todd Raker, Brad Stephen s Date of April 19, 2000 Statement Page 1 Number Fraudulent We are raising our revenue and EPS estimates to reflect strong growth . Our 2000 estimates are increasing to $37.8 million in revenue, up from Statement $29 .5 million, and operating EPS increases a penny to $(0 .99). In 2001 our revenue estimate increases to $72 .4 million from $51 .9 million . Reason Why +Revisions Fraudulent Report Title Reports Stellar Quarter . Outlook Is Bright . Raising Estimates Author(s) Todd Raker, Brad Stephens Date of April 19, 2000 Statement Page 2 Number Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 247 of 262) Fraudulent We are raising our estimates as follows . For 2000, we forecast revenue of $37 .8, up from $29 .5 million, and operating earnings of $(0 .99) per Statement share, up from $(1 .00) per share . For 2001, we forecast revenue of $72 .4 million, up from $51 .9 million and operating earnings of $(0 .66) per share, up from $(0 .75) per share. Reason Why +Revisions Fraudulent Report Title Reports Stellar Quarter . Outlook Is Bright . Raising Estimates Author(s) Todd Raker, Brad Stephen s Date of April 19, 2000 Statement Page 2 Number Fraudulent Statement Table 1 Strong Revenue Growth Actual Expected Deviation Deviation Results Results ($)) (%) Actual Actual Q1' 00 Q1, 00 minus minus 31311! 10 31'311'00 expected expecte d License Revenue S 4 .356 S 3.450 S 0 .906 20% Serprice Re^renue 1 .524 1 .125 0.399 35% Transaction Revenue 0 .730 0 .550 0.180 33% Total Revenue 6.610 5 .125 1 .485 29% Reason Why +Surprise s Fraudulent Report Title Reports Stellar Quarter . Outlook Is Bright . Raising Estimates Author(s) Todd Raker, Brad Stephen s Date of April 19, 2000 Statement Page 7 Number Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 248 of 262) Fraudulent Table 6 Statement Annual Income Statement , 1997-2005 E $ in millions, except per share dat a (Fiscal Year End Dec . ) 1998 1999A 2000E 2001E 2002E 2003E 2004E 2005E Karr,! u c . License, S 10 .516 ti t 12X5 S 24 .206 1 43 .3(10 S 63 .5(10 S 56 .(X)(1 S I I N .000 S 140.00 0 .71 u/• /' . 69.fl,,,, h'. "„ 64 .(1",, 59. . ", S'.u"„ 41 1, 44 .4",, Transactions 0 .000 0 .951 5 .750 17 .000 42 .500 92 .000 12± .5151 194 .00 0 . 5'1, ul .5ulrs fl. (1", 15 .3'o 23 4.X,.,, 46 .,'°,, 40.0", , Service,, 4 .727 4 .490 7.524 12 .100 16.000 18 .650 23 .700 30 .00 0 o f .Saletc 31 .0° , 26 . .4",, ?(1 .7 i.1 9.5 0 S.9"1 1 Total Sales 15 .243 16 .756 37.810 72.400 122 .00(1 196 .650 265.500 364 .00 0 Reason Why +Estimates Fraudulent Report Title Reports Stellar Quarter . Outlook Is Bright. Raising Estimate s Author(s) Todd Raker, Brad Stephens Date of April 19, 2000 Statement Page 8 Number Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 249 of 262) Fraudulent Table 7 Statement Projected Quarterly Income Statement, 1999-200 0 $ in millions, except per share data I999A 1:1111 1 ear 2 (1 00 E 11>cal 1"oar End . Dec . 1 3/31 6/30 0/30 12,131 1 999:A 3131 6/30 9.r3 11 12/3 1 Rcivomc% S ~ .11K1 \ 3 .1~() I 1 .1-9i s 4 .1~6 S 5 .450 (,. i r .Sul,` rv ._ , ('i .5"" 660" ., nx . , . o-3", r, ; 911 ,, r,1 n ' I' :I I1~ ;IChon, 11 .1111 ; 02u3 0 . I 11 .45 ( .'1/I 11 .7"1) 1 .1511 I .1+S11 _ .'51 1 ,1 S,rlc I J O",, j ? . Sit% Ice, 1 .2112 I .II5_ 1 .222 (1,`)( .-j 4 .4')11 I .524 I .R1111 2 .1111) 2 .400 \crlc' ;rr .,~", IN Y' '7, 2 " '! ._ 2 _'N. . . , Total Sales 3 .9117 3 .637 4 .671 4 .541 16 .756 6 .610 8.400 111.3511 12 .450 Reason Why +Estimate s Fraudulent -Report Title Reports Stellar Quarter . Outlook Is Bright. Raising Estimates Author(s) Todd Raker, Brad Stephen s Date of April 26, 200 0 Statement Page I Number Fraudulent Tumbleweed reported operating EPS of $(0 .26), a penny ahead of our estimate . Revenues came in at $6 .6 million, well ahead of our $5 .1 million Statement estimate. Reason Why +Surprises Fraudulent Report Title Reports Stellar Quarter . Outlook Is Bright . Raising Estimates Author(s) Todd Raker, Brad Stephens Date of April 26, 2000 Statement Page 1 Number Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 250 of 262) Fraudulent We are raising our revenue and EPS estimates to reflect strong growth . Our 2000 estimates are increasing to $37.8 million in revenue, up fro m Statement $29.5 million, and operating EPS increases a penny to $(0 .99). In 2001 our revenue estimate increases to $72 .4 million from $51 .9 million. O eratin EPS in 2001 increases to $(0 .66) from $(0.75 ) Reason Why +Revisions Fraudulent Report Title Reports Stellar Quarter . Outlook Is Bright . Raising Estimates Author(s) Todd Raker, Brad Stephen s Date of April 26, 2000 Statement Page 2 Number Fraudulent We are raising our estimates as follows . For 2000, we forecast revenue of $37 .8, up from $29 .5 million, and operating earnings of $(0 .99) per Statement share, up from $(1 .00) per share . For 2001, we forecast revenue of $72 .4 million, up from $51 .9 million and operating earnings of $(0 .66) per share, u from $(0.75) per share. Reason Why +Revisions Fraudulent Report Title Reports Stellar Qua rter. Outlook Is Bright . Raising Estimates Author(s) Todd Raker, Brad Stephens Date of April 26, 2000 Statement Page 2 Number Fraudulent Table I Statement Strong Revenue Growth Actual Expected Deviation DeA ;lation Results Results ($) 4" i Actual Actua l 01, 0A Q1 00 minus minus 3/31/00 3/31/00 expected expected License Revenue S 4 .356 S 3.450 S 0 .906 26% Service Revenue 1 .524 1 .125 0 .399 35°x%• Transaction Revenue 0 .730 Lo .651 0.180 33 % Total Revenue 6.61 0 5.125 1 .485 29°0 Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 251 of 262) Reason Why +Surprises Fraudulent Report Title Reports Stellar Quarter. Outlook Is Bright . Raising Estimate s Author(s) Todd Raker, Brad Stephens Date of April 26, 2000 Statement Page 7 Number Fraudulent Table 6 Statement Annual Income Statement, 1997-2005E $ in millions, except per share dat a (Fiocal Year Endo Dec .) 1 99H 1999A 2000E 2001E 2002E 2003E 2004E 2005 E Revenue s Licenses S 10 .516 5 11 .285 5 24 .206 S 4± .300 S 63 .500 86 .000 S I I8 .00(1 S 140 .000 i, ,l Sale, 69 .0% 07. % 64.0% 9.X ,, 5 O° 43.7"a 44 .4 % Transaction,; 0.000 0 .981 5 .780 17 .0(8) 42 .5(N) 92 .(8)0 123 .1400 I04 (8) 0 23. 5" ;, 34.X"„ 46 .141111 ; 3 .3° „ Sei iccs 4 .727 4 .49)) 7 .X24 12 .100 16 .000 I 8 .l>>0 23.700 310 .00) ) o/ SaA . 26 . .12°.,, 2(l. Total Sales 15 .243 16 .756 37.810 72.4 00 122 .000 196 . 650 265 .500 364 .000 Reason Why +Estimates Fraudulent Report Title Reports Stellar Quarter. Outlook Is Bright. Raising Estimates Author(s) Todd Raker , Brad Stephens Date of April 26, 200 0 Statement Page 8 Number Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 252 of 262) Fraudulent Table 7 Statement Projected Quarterly Income Statement, 1999-2000 $ in millions, except per share data 1999A Full Year 2000 E (Fiscal Year End' Dec .) 3/3l 6/30 9/3 0 12/31 1999A 3131 6/30 9/30 12/3 1 Revenue. Licenses S 1 .702 S tX' S ? .UPI i 3 .170 S I I_116 5 4 .35( 5 . 4 50 5 6 .600 ti 7) 0 O (1/ Sult' . 6 0 . 0 "'„ 6S . ,• 6'._ ,, hj .tP'• 64.r1"•, (, ,S• 6 2 . . Transactions (I .M03 0 . 2 0 3 (i .318 ( .4~7 0 .9s] (1 .730 1 . 1I .(50 225() of Sales 0 .1" . ? .h" ., h .w"„ In.]"•• i .9"„ ll .u"„ 1? .' , . /5 .r9",, l,~'-1" „ Sel%icc~ I .202 I .Oj' 1_17? 0 .964 4 .49)) 1 .524 1 .80)) 2 .1(1O _ .40) ) ul Sale' 30 .1y"', 2 ;1' .911 „ ' 1 . " . b . N"„ i . /"• 1 .4", . 1 . , ,, 19 . ;'. ., Total Sales 3.907 3 .637 4 .671 4 .541 16 .756 6 .610 8 .400 10.350 12 .45 0 Reason Why +Estimate s Fraudulent Report Title Acquires Controlling Interest in Japanese Subsidiary . Adjusting Numbers Accordingly. Reiterate Buy . Author(s) Todd Raker, Suji DeSilva, Brad Stephen s Date of June 13, 2000 Statement Page Number Fraudulent Our estimates change as follows : In 2000, revenue increases from $37 .8 million to $41 .0 million ; in 2001 it increases from $72 .4 million to $84. 1 Statement million. Reason Why +Revisions Fraudulent Report Title Acquires Controlling Interest in Japanese Subsidiary . Adjusting Numbers Accordingly. Reiterate Buy . Author(s) Todd Raker, Suji DeSilva, Brad Stephens Date of June 13, 2000 Statement Page 2 Number Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 253 of 262) Fraudulent Table 1 Statement Changes to the Model Old Estimates New Estimates Revenue: 02 '00 $ 8 .4 $ 9.2 2000 $ 37 .8 $ 41 .0 2001 $ 72 .4 $ 84 . 1 Reason Why +Revision s Fraudulent Report Title Acquires Controlling Interest in Japanese Subsidiary . Adjusting Numbers Accordingly . Reiterate Buy. Author(s) Todd Raker, Suji DeSilva , Brad Stephens Date of June 13, 2000 Statement Page 4 Number Fraudulent Statement Table 6 Annual Income Statement, 1997-2001 E $ in millions , except per share data ( Fiscal Year Ends Dec.) 1998 1999A 2000E 2001 E Revenues Licenses S 10.51 6 S 1 1 .28 `S 25 .856 S 53 .400 °ao/5[I/es O9. fl". r, 67 ;'r. 6 .(J 63.5'& Transactions 0.000 O.1)81 6.530 17.40L.1 °o o f Sales 0.0"t, 5. 9". 15. 9"0 20.7"b Scr\ices 1 .72 4.400 S . 62 133, 0 0 0 of Saks 1.0"„ 26.,x"'+, 2!.0"o 15. ° 6 Total Sales 15.243 16.756 41 .010 84.100 Exhibit D: Misstatements and Omissions in CSFBC' s Research Reports (Page 254 of 262) Reason Why +Estimates Fraudulent Report Title Acquires Controlling Interest in Japanese Subsidiary . Adjusting Numbers Accordingly. Reiterate Buy . Author(s) Todd Raker, Suji DeSilva, Brad Stephen s Date of June 13, 2000 Statement Page 5 Number Fraudulent Table 7 Statement Projected Quarterly Income Statement , 1999-2000 $ in millions, except per share data 1999A Full Year 2111111E Full Yea r i Fiscal Year Ends Dec .) 3131 6/30 9/30 12/31 1999A 3/31 6/30 9/30 12/3 1 2000 E Rere,z :,es Licenses S 2 .7112 S -s ti 3 .0) I S 3 .1 120 S 112N5 S 4 .356 S SAN) j 7 .1100 > KIM) S 2 ~' .S5 6 ol .l'uh (19. ° .; 65 .5 1 .. 6 0.(!^,, rix . ,, b .)' ., 65 .9'. . 6 ; .9° .. 61 .91111 O2 .6"•, ni.11'' .; Transactions 0 .00)3 0 .203 o .31' 0 .457 11 .981 0 .730 1 .400 1 .9()(l 2 .500 6 .531 1 u1 .1'ulr~ O / 0 " S6" ; O x',,. R1.111 „ 5 .9"„ I LIi", . l ;, _ l h .,1"'„ l ,~' .IP'. .• 1 ? .'f', • ser% ices 1 .202 1.1157 1272 11 .964 4 .490 1 .524 1 .000 2 .4(10 2 .7011 5 .62 4 .,, . . .,s'° it ;, n/ .1ult'~ i0. h .. .9"„ / . 2 ./"o / . _'1 ...... /9 .4'•r _'1 .0" ., Total Sales 3 .9117 3 .637 4.671 4 .541 16 .756 6 .6111 9.21111 11 .31111 13 .911(1 41 .111 0 Reason Why +Estimates Fraudulent -Report Title CSFB Tech Dail y Author(s) Todd Raker Date of July 17, 2000 Statement Page 2 Number Fraudulent Tumbleweed reports its second quarter on Thursday, July 20th after the market closes . Conference call at 5 :00 EST. Dial-in # 719-457-2665 . Our Statement estimates for the quarter are as follows - revenue of $9 .2 million and operating EPS of $(0 .3 1) . Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 255 of 262) Reason Why +Estimates Fraudulent Report Title The Leader in Enabling Secure On-Line Communications ; Reinstating Coverage. Upgrading to a Strong Buy . Author(s) Todd Raker Date of August 1, 2000 Statement Page 1 Number Fraudulent On July 27, Tumbleweed reported an excellent second quarter . We are raising our estimates as follows : Revenue - 2000 goin g Statement from $41 .0 million to $44 .0 million, 2001 going from $84 .1 million to $90.9 million . Reason Why +Revisions Fraudulent Report Title The Leader in Enabling Secure On-Line Communications ; Reinstating Coverage . Upgrading to a Strong Buy . Author(s) Todd Rake r Date of August 1, 2000 Statement Page 4 Number Fraudulent We expect Tumbleweed to show strong revenue growth in the future . We are projecting sales to increase 163% in 2000 to $44 .0 million and 107% Statement in 2001 to $90.9 million. Reason Wh y +Estimates Fraudulent Report Title The Leader in Enabling Secure On-Line Communications ; Reinstating Coverage . Upgrading to a Strong Buy . Author(s) Todd Raker Date of August 1, 2000 Statement Page 14 Number Fraudulent Revenues for the second quarter of 2000 grew 228%, to $10 .1 million from $2.4 million in the second quarter of 1999, increasing 53% from th e Statement previous quarter's revenues of $6 .6 million . Revenue was an astounding 10% ahead of consensus expectations . Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 256 of 262) Reason Why +Surprises Fraudulent Report Title The Leader in Enabling Secure On-Line Communications ; Reinstating Coverage . Upgrading to a S trong Buy. Author(s) Todd Raker Date of August 1, 2000 Statement Page 1 5 Number Fraudulent Statement Table 4 Second Qua rter Results Actual Expected Deviation Deviation Results Results `$' `D/o Actual Actual Q2'00 02'00 minus minus 6/30/00 6P30/00 expected expected License Revenue $ 6.824 S 5.800 $ 1 .024 18 % Service Revenue 1 .748 2.000 (0.252) -13 % Transaction Revenue 1 .518 1 .400 0.118 8 % Total Revenue 10 .090 9.200 0.890 10 % Reason Why +Surprises Fraudulent Report Title The Leader in Enabling Secure On-Line Communications ; Reinstating Coverage . Upgrading to a S trong Buy. Author (s) Todd Raker Date of August 1, 2000 Statement Page 25 Number Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 257 of 262) Fraudulent Table 1 0 Statement Annual Income Statement (Pro Forma for WorldTalk acquisition 1/31/00), 1998-2005E $ in millions, except per-share data IFi,c :rl1' .' :IrEnd .Dcc . 1 1998 1999 : 2000 1. 2001 E 2002 1 200 3 E. 2004E 2005 E Rt't'enu, , t. Kill ~i> 5 1(1 .51). I I 255 j _''1\II S is ,II114 ti `)\,1)111) S .44(4)5 S 144 .01)0 C 1\j . 111 0 „IS4, . , 6 1 1)'',. h'_ ,, n ' .h°„ 03 .-1 ., 4(1 - . . ., J 4 1 °„ 43 . 0 I r,ln .a . uun . II nnl) (1 .') 5l - .114S I N,KIm -Ir. -4nn v" .nou I I . I .40(1 ' I ; 10 0 of S .'f' , Scr\ /iii 4 .74 .491) 5 .972 1 4 .1100 17 60 0 0l 20 . 11111 25 5)))) .. '_ .111 0 ,,l .,wk, ;l .1)° ., 'n . .1• .,,, 214 .4^„ 1? .Y „ / 1) .4`• 1 - 4 ., l, - . 7. 5 Total sales 15 .243 16 . 756 44 . 000 90 . 900 162 . 000 253 .0011 3411 .900 430 .40 0 Reason Why +Estimates Fraudulent Report Title The Leader in Enabling Secure On-Line Communications ; Reinstating Coverage. Upgrading to a Strong Buy . Author(s) Todd Rake r Date of August 1, 2000 Statement Page 27 Number Fraudulent Table 1 2 Statement Projected Quarterly Income Statement (Pro Forma for WorldTalk acquisition 1/31/00 ), 1999-2000 $ in millions , except per-share data 201NI1 Full Year 211111 I': Pull l ea r IFlacul Year End' Dcc .) 113 1 613 0 91311 12 111 1 2N111: 3 131E 6130 . 9,30E 12131 F. 20011 : /111 ('flu,' ' I .ICCIUC~ ti .), if, ti I . 524 - . 1111 ti '1 .,11O S " .`)\II ) 11 .411)) S 1 "(ill 1 I ' .`UI) \ 1' .`11111 s is, 1111 1 - . h ? .1 ,• I.4 1'',. ri ; . 1 l,I1'Uifl, ..11" 11 .' .1) I .'IX 11111 2 .7)1)1 71145 3 .4411 4 .10N0 1,111)11 6' 100 01081 1 1 ;rlr, f 1 fr' :, r' rr'., 1" .. 1,1 fr• ., :6 t," . . 'u rrv, . / 1 .~' .',, 'u rr' . . `I" . (1" .: SCrcicc. I `'_4 1 .'41 _ -U1) : .IxHI .5 (73 7 .4(5' . .3111) ,5)5 )) 7 .411)1 141))0 1 ."l N 11r, ) i l ' „ _ 1 1 . 1. . _2,1' ., 0 _111 .4' . . iI. . 1, :.• .`1 . . :4)"• i?y . , 14J 1al Sales 6 .61)) 111 .11911 12 .11)) 15.19)1) 44 ,111111 1N . 110u1 211 .7111) 24 .31111 27 .911 0 411,4111 1 Reason Why +Estimates Fraudulent Exhibit D : Misstatements and Omissions in CSFBC' s Research Reports (Page 258 of 262) -Report Title Closes Interface Acquisition. Revises Guidance for Acquisition . Author(s) Todd Raker Date of September 7, 2000 Statement Page 1 Number Fraudulent Our numbers change as follows : In 2000 we are raising our revenue expectation from $44 .0 to $45 .2 and in 2001 we go from $90 .9 to Statement $104.4. Reason Why +Revisions Fraudulent Report Title Closes Interface Acquisition. Revises Guidance for Acquisition . Author(s) Todd Raker Date of September 7, 2000 Statement Page 3 Number Fraudulent We believe that Tumbleweed business momentum remains excellent and we would expect the company to handily beat our revenue expectation s Statement over the next few quarters . Reason Why +Cautionary Fraudulent Report Title Closes Interface Acquisition . Revises Guidance for Acquisition . Author(s) Todd Raker Date of September 7, 2000 Statement Page 7 Number Exhibit D : Misstatements and Omissions in CSFBC's Research Reports (Page 259 of 262) Fraudulent Table 3 Statement Annual Income Statement , 1998-2005E $ in millions, except per share data (Fiscal Year Ends Dcc .1 1998 1999A 2000E 2001E 2002E 2003E 2004E 2005 E Reos', rc e License, 5 10 .516 S 11 . 2_X5 s 28 .690 S 65 .2100 S 111 .501 S 165 .010 S 218 .000 S 26K .00 0 . ., „l .Subs 69 .1) ", . ? , ' 2 1" ., 6' . ? 5s . 1 " . , 5 5 . 3 ',, 3 ._ „ 5 1 .1' ,, Transactions 0 .1100 1) .981 7 .048 20 .500 .5 5J)00 104 .000 161 .000 224 .00 0 , , of Sales 1) .11"1 . .9°„ 19 .G", ; 1 . '9 . . 4 7 Sersices 4 .727 4 .490 9 .4 12 15 .700 25 .400 29 .,01) ±0 .4111) 32 .50( 1 of Solo's 3/ 07,, 1' .9^„ 13 ._%, 9. .5"., 7 .4° „ Total Sales 15 .243 16 .756 45 .150 104 . 4110 191 .900 298 .300 409 .400 524 .50 0 Reason Why +Estimate s Fraudulent -Report Title Closes Interface Acquisition . Revises Guidance for Acquisition . Author(s) Todd Raker Date of September 7, 2000 Statement Page 8 Number Fraudulent Table 4 Statement Projected Quarterly Income Statement , 1999-2000 $ in millions, except per share data 1999A Full Year 2000E Full Yea r (Fiscal Year Ends Dec .) 3131 6/30 9/30 12 / 31 1999A 3 /31A 6/30A 9 /30E 12131E 2000 E Revenue. Licenses 5 2 .702 S 2 .382 5 3 .081 5 3 .120 S 11 .285 S 4 .356 5 6 .824 $ 7 .700 $ 9 .810 3 28 .690 %ojSulec 69 .291 . 65.5', 66 .ost; 68 .70L 67 .3% 65 .9%1'1 67.6 .% 61 .1% 61 .9"l 63 .5 % Transactions 0 .003 0 .2 0 .318 0 .457 0 .981 0 .730 1 .518 2 .100 2 .700 7 .04 8 %ofSules 0 .1% 1.6'.'% 6 .Y% 10.1% "1 5 .94 /1 .011-. 15. 16 .7"/, 17.0?% 15 .6 " Services 1 .202 1 .052 1 .272 0 .964 4 .490 1 .524 1 .748 2 .800 3 .340 9 .41 2 4 of Sales ?0 .5% 28.9% ?7.2% 21 . % 2 6 . 8 u,. 73 .ln. 17,39/ 2 2 .2 'G 21 .11 20 .8 % Total Sales 3 .907 3 .637 4 . 671 4 .541 16 . 756 6 .610 10 .090 12 .600 1 5 . 8 50 45 .150 Reason Why +Estimates Fraudulent Exhibit D: Misstatements and Omissions in CSFBC' s Research Reports (Page 260 of 262) Closes Interface Acquisition . Revises Guidance for Acquisition . - Report Title Author(s) Todd Raker Date of September 8, 2000 Statement Page I Number Fraudulent Our numbers change as follows : In 2000 we are raising our revenue expectation from $44 .0 million to $45 .2 million, and in 2001 we go fro m Statement $90.9 million to $104.4 million. Reason Why +Revisions Fraudulent Report Title Closes Interface Acquisition . Revises Guidance for Acquisition . Author(s) Todd Raker Date of September 8, 2000 Statement Page 2 Number Fraudulent We believe that Tumbleweed business momentum remains excellent, and we would expect the company to handily beat our revenue expectation s Statement over the next few quarters . Reason Why +Cautionar y Fraudulent Report Title Closes Interface Acquisition . Revises Guidance for Acquisition . Author(s) Todd Raker Date of September 8, 2000 Statement Page 4 Number Exhibit D: Misstatements and Omissions in CSFBC' s Research Reports (Page 261 of 262) Fraudulent Table 3 Statement Annual Income Statement , 1998A-2005E $ in millions , except per share dat a (Fiscal Year Inds Dec .) 1998A 1 999A 2000E 2001E 2002E 2003E 2004E 2005 E Rtwcww .N I_iccus's S IO .tilG S 11 2s . ti 25 .W)0 C 6 .20)) S I I I .iOO S I6i .))OO 5 2I~ .i100 S 261 .00 0 lramaclions 0 .000 0.961 7 .04 20 .500 55 .000) 104 .0101 161 .000 224 .000 i . /5 .6"„ 19 .6"" , 3 .1 9",, ."Y_""' -4 2 .' „ services 4.400 9.412 18.700 25.400 20. ,00 30.400 32.500 7 .4" „ Total Sales 15.243 16 .756 45 . 150 104 .400 191 .900 298 .300 409 .400 524 .500 Reason Why +Estimates Fraudulent Report Title Closes Interface Acquisition. Revises Guidance for Acquisition. Author(s) Todd Raker Date of September 8, 2000 Statement Page Number 5 Fraudulent Table 4 Statement Projected Quarterly Income Statement, 1999A-2000 E $ in millions , except per share data 1 a9' A Full Year 2 1)ftlF: Full \'cu r ; I I>cal ) Cal Flid, Del: 3/31 6/3 0 9/311 12131 1999A 3/11 A 6 1 11 9!111} 12!31 F 21111 0 1 : rr 1 I ~• ;, r, I' , I Iccu .c . : ONI S 1'u C 1 I ' .N ; C 4 ;>r, S r• x'4 ', ' 7 4n S ') SIu 1 ,5 w) ( I to ;'• ., f, (, . II .I111 I''01 II I1\ II ._)i - II .'1\I 11 . iI) I ./11 lilt) -1111 ' . I)4 \. h . 11 1 11 .. //I 1 11 _ 5'•, 1! I)" .. / i .. . .il .. . (111 .: I -II)' 1 II ' I '7 _1 11 .51 .4 4 )111) 1 524 174c 2 . .NI111 $4 5 3" 2 1 10 .11 sales 3 ,99 3 .617 4 .671 4 . 541 16 .756 6 .611) 1 0 .0411 1 2 .1,10) 150511 35 .151 1 Reason Why +Estimates Fraudulent AgEntof TMWD Exhibit D: Misstatements and Omissions in CSFBC's Research Reports (Page 262 of 262) EXHIBIT E: Misstatements and Omissions in CSFB's Sales Memos Issu r +Tam = a : _: µ AiN an Iet _vrks1nc. ALR Re ort Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author (s) Credit Suisse First Boston ; Investment Banking (John Hodge, John Metz, Michael Ounjian, Jeff Loff) ; Equity Research (Marc Cabi, Randy Abrams) Date of June 2000 Statement Page 1 Number Fraudulent ($CCOs) Year Ended QuarLar Ended C alondar Yea Statement Deoerrber 31 . 1999 Ended April 2 2000 2000E 2001 E-/~ Revenue $12480 $5.661 $30.161 $58.000 Cost of Pavenue 8L086 3. 530 19.121 35,026 Gross Profit $47394 $2.131 $11,040 22,974 Gross margrt 352'% 37.6% 36. 6'%0 39.6% Inc. (loss) Operations ($29,496) ($7,686) ($29,983) ($23,325) Net I noorne (loss) ($29,449) ($7,064) ($29.114) ($22,943) Prebairmy Credit Susie Fist Boston Egiity Research . Marc Cat i . Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, John Metz, Michael Ounjian, Jeff Loff) ; Equity Research (Marc Cabi, Randy Abrams) Date of June 2000 Statement Page 1 Number Fraudulent Key Sales Points . . . Strong Revenue Growth and Backlo g Statement Reason Why +Growth Fraudulent Re ort Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Exhibit E : Misstatements and Omissions in CSFB's Sales Memos (Page 1 of 96) Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, John Metz, Michael Ounjian, Jeff Loff) ; Equity Research (Marc Cabi, Randy Abrams ) Date of June 2000 Statement Page 5 Number Fraudulent Key Points to Marketing Airspan . . .Strong Revenue Growth and Backlo g Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, John Metz, Michael Ounjian, Jeff Loff) ; Equity Research (Marc Cabi, Randy Abrams) Date of June 2000 Statement Page 1 7 Number Fraudulent Strong Revenue Growth and Backlog Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, John Metz, Michael Ounjian, Jeff Loff) ; Equity Research (Marc Cabi, Randy Abrams ) Date of June 2000 Statement Page 20 Number Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 2 of 96) Fraudulent ➢ As a supplier of fixed wireless access systems, Airspan compares most closely with fixed wireless systems Statement providers ➢ At 4.4x CY01 revenues 1 , Airspan is attractively valued and represents a significant discount to the trading multiple s of is comparable companies : ➢ 74.6% discount to mean Fixed Wireless Systems Providers CY01 revenue multiples. 2 Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, John Metz, Michael Ounjian, Jeff Loff) ; Equity Research (Marc Cabi, Randy Abrams) Date of June 2000 Statement Page 20 Number Fraudulent VALUATION DATA Aggregate Aggr. Va r lue 1 in MM) Market Value 2000 Rev . Statement ($ Alrspan (at $10.00) $ 251 8.3x Netro (at $49.13) $ 2,086 30 .8 15.8 Vyyo (at $30.63) $ 1,005 75 .0 18.8 Fixed Wireless Systems Providers (Mean) 52.9 17.3 Other Fixed Wireless Equipment Providers (Median ) 11 .9 6.0 Other Broadband Access Suppliers (Median) 12.9 8.5 Recent Communications IPOs (Median) 99.1 52.9 Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, John Metz, Michael Ounjian, Jeff Loff) ; Equity Research (Marc Cabi, Randy Abrams) Date of June 2000 Statement Page 2 1 Number Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 3 of 96) FStatteemea nnt Stme t C able ompan Analysis V Trading Performance Capitalization Revenue Multiples 0 I Stock Disc . I Prem . Equity Aggr. Aggr. Value I Price to LTM Market Market CYOO CY01 C Y (FYE) 6/28100 High Low Value Value Revs Rev s An P $10100 NA ` NA $3 33 $251 6 3x 43x NETRO (4Z 0 $49-13 -51 . 5% 156 . 9% $2,465 $2,086 30 -8x 15 .8x VYYOINC (Zy 30 .63 -8 .4% 126 .9% 1,091 1,005 75-0 18-8 Mean -29 .9% 141 .9% 52 .9x 17 .3x Reason Why IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offe ring" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, John Metz, Michael Ounjian, Jeff Loff) ; Equity Research (Marc Cabi, Randy Abrams) Date of June 2000 Statement Page 24 Number Fraudul Statementt AiResearch Mode l „. Ccnsoli tedhicome St~t*,snt 9,99a2001E _ Fiscal Year E tuber 2000E 2001E Calendar Year Totals (Amounts in $000 rE JunE SepE DecE MarE JunE SepE DecE 1999E 2000E 2001 E NetSales 6,500 8 ,000 10,000 11,000 13 ,000 15,000 19 ,000 12,480 30,161 58,00 0 Reason Why +Estimates Fraudulent End of AIRN Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 4 of 96) Issuer-Name Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Cameron Lester, Scott Kupor, Matthew Alfano) ; Equity Research (Michael Kwatinetz, Hans Roderich) Date of September 1999 Statement Page 1 Number Fraudulent Fiscal Year Ended December 31, Six Months Ended 3 , Statement 1997 1998 1999E 2000E 2001E 1998 1999 Total revenue $14,405 $24,612 $38,796 $50, 629 $66,723 $10 ,802 $18,543 Total cost of revenue 5,644 11,301 19,025 24,265 30,830 5,028 8,899 Gross profit 8,761 13,311 19,771 26,364 35,893 5,774 9,644 Gross margin 60 .8% 54.1% 51.0% 52.1% 53.8% 53.5% 52.0% Inc. from operations 4,564 3,170 1,109 1,407 5,835 1,704 1,448 Net income $ 3,806 $ 2,300 $ 968 $ 1 ,820 $ 4, 459 $ 1 ,217 $ 866 Pro forma EPS $0.17 $0.08 $0.03 $0 .05 $0.12 $0.04 $0.03 Preliminary Credit Suisse First Boston Equity research . Mike Kwatinetz Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Cameron Lester, Scott Kupor, Matthew Alfano) ; Equity Research (Michael Kwatinetz, Hans Roderich) Date of September 1999 Statement Page 1 Number Exhibit E: Misstatements and Omissions in CSFB ' s Sales Memos (Page 5 of 96) Fraudulent VALUATION DATA BSQR Valuation Multiples Statement (S in MM, except per share data) Market Aggregate Value I Aggregate Value / Capitalization 1999 Rev. 2000 Rev. BSQR (at $12.00) $ 418.7 9.0x 6 .9x BSQR (at $14.00) 488.8 10.6 8 . 1 Web Platforms Mean 61 .9 36 . 1 Median 38.1 23 .8 r : Credit Suisse First Boston Equity Research . As of 9/29/99 Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Cameron Lester, Scott Kupor, Matthew Alfano) ; Equity Research (Michael Kwatinetz, Hans Roderich ) Date of September 1999 Statement Page 1 Number Fraudulent Key Sales Points . . . Significant Revenue Growth and Operating Leverag e Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Cameron Lester, Scott Kupor, Matthew Alfano) ; Equity Research (Michael Kwatinetz, Hans Roderich ) Date of September 1999 Statement Page 5 Number Exhibit E : Misstatements and Omissions in CSFB 's Sales Memos (Page 6 of 96) Fraudulent Key Points to Marketing BSQUARE . . .Significant Revenue Growth and Operating Leverag e Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book " Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Cameron Lester, Scott Kupor, Matthew Alfano) ; Equity Research (Michael Kwatinetz, Hans Roderich) Date of September 1999 Statement Page 1 5 Number Fraudulent Significant Revenue Growth and Operating Leverage Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Cameron Lester, Scott Kupor, Matthew Alfano) ; Equity Research (Michael Kwatinetz, Hans Roderich) Date of September 1999 Statement Page 1 6 Number Fraudulent Significant Revenue Growth and Operating Leverage Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Cameron Lester, Scott Kupor, Matthew Alfano) ; Equity Research (Michael Kwatinetz, Hans Rode ri ch) Date of September 1999 Statement Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 7 of 96) Page 1 8 Number Fraudulent • BSQUARE's filing range is very conservative relative to the Web Platform companie s Statement • Compared to Liberate and Phone .com, BSQUARE's valuation is even more conservative Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Cameron Lester, Scott Kupor, Matthew Alfano) ; Equity Research (Michael Kwatinetz, Hans Roderich ) Date of September 1999 Statement Page 1 8 Number Fraudulent Tra din Multiples Statement Agar. Value CY99E CYOOE COMPANY (FYE) Revs Revs " ' Web Platform s Median 38 .1 x 23 .8 x Mean 61 .9 36. 1 at $13.00 per share Premium 1 Discount to Web Platform s Median -74.4% -68.6% Mean -84.2% -79.3% Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Cameron Lester, Scott Kupor, Matthew Alfano) ; Equity Research (Michael Kwatinetz, Hans Rode rich) Date of September 1999 9 Statement Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 8 of 96) Page 1 9 Number Fraudulent Com Company Analysis Statement ($MM) f^~ Performance Capitalization Trading Multiple s O Stock Disc . / Prem . Equity Aggr. Aggr. Value I ~~`\\\ vvV// Price to LTM Market Market CY99E CYOO E COMPANY (FYE) LAW909 High Low Value Value Revs "' Revs BSQUARE $418 .7 $347. 4 9 .0 x 6 .9 x 453 .8 378.8 9 .8 7 . 5 14 . 488 . 8 410.1 10 .6 8. 1 Web Platforms MICROSOFT CORP '3 20 5s?.9 .50 -11 .2%; 0 d°•S.'' ` .2 $440.599.2 20-7 x 1 6 K AF:IERIC .a ONLINE INC 6 30 1092E 3T .' .5 429 01 577 11' .330 .7 21!0 16 . 1 EXCITEi• iHOME (12:'3 1 i 4 3.4-4 -56 .1'x, 151 .6" . 14 .352 . 4 GEMSTAR INTERNATIONAL i -31 t 7731 -4 .71 7 .475.8 ?. . : -17 . P PHONE CON INC i6 :3?i 152 .17 17 .9 371 .7':$ 641 .8 182 .8 Sc „ LIBERATE TECHNOLOGIES f5 :31 i 41 .8?. 1 .720, 707 48 . 7 Median -14 .5° 246 .51, 3:51 x 23 .8 x Mean -22 .4% 258 .430 61 .9 36 . 1 I $13. 00 per share L~ Premium / Discount to Web Platform s Median -74 .4°% -68 .6 % Mean -84 .2% .79.3°1, Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Cameron Lester, Scott Kupor, Matthew Alfano) ; Equity Research (Michael Kwatinetz, Hans Rode rich) Date of September 1999 Statement Page 22 Number Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 9 of 96) Fraudulent CSFB rch Mode l Statement BSQUAR E Pro Forma Income Statement ($ in thousands , except per share data ) FY1999A FY1999E FY2000E FY Endi Dec. 31 , Mar 31 Jun 30 S 30 Dec 31 Mar 31 Jun 30 Sa 30E Dec 31E Mar 31E Jun 30E Se 30E Dec 31E 1998A 1999E 2000E 2001 E Total Revenues 5 4 6 579 7,231 8,809 9,734 9,832 10,421 11,151 12,043 13,127 14,308 24 ,612 38,796 50,629 66,723 Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book " Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Cameron Lester, Scott Kupor, Matthew Alfano) ; Equity Research (Michael Kwatinetz, Hans Rode rich ) Date of September 1999 Statement Page 29 Number Fraudulent Strong Revenue Growth Statement Reason Why +Growth Fraudulent End of -R Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 10 of 96) Issuer Name" Cache Inc. -.CF Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book " Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Paul Ferris, Adam Beard, Ajay Shah, Edward Loh) ; Equity Research (Paul Weinstein, Ch ri stian Jende) Date of November 1999 Statement Page 1 Number Fraudulent FY F' 2000 I FY Er,ded April Statement 1 JuI-W Oct18 .M49 Apr40 Ju1 4P9 Oc14I8E J4n00€ Apr-00E 1986 2008E 2001E Tahl Rev rus SM9 51,082 52,201 52,944 $3612 $4586 $6195 0 8,054 $7036 522.450 367.875 Cod of rr,er,ur 590 852 670 1 .157 1 380 17% 2418 3 .141 3297 8 .696 25,152 CY03S PmAt 211 430 1,311 1,767 2 .232 2 .750 37,19 4 .183 3739 13 .754 42,726 C erisnp o6t Loss) 112 ,373} ($3, 519} [52, 70.''} ($4, 411) M W91 4 $ 7 .8121 (5704191 (08.477) 1$13,005) 133373?) 1520875 ) Pretax Prof ,(lass) (2 ,302) (3.486) (2 .817} $4,597) 180651 17. 8881 (9786) 155161 (13,202) (32. 236) (17. -VA Net ftcorne ;(Lo i ('52 ,3 ) 03, 1$2,817) 4 1,557) 418p 6 i 4$7,8891 ( 06. 7861 (58 ,516) 1313202 ) ( 532.236) (517,3% Emrxgs Per Brvrc (3013) (30. 19) 153.13) IS0 .16t 150.181 (00 -16$ $00 29 1 I SO24 ) ($0.611 i df0 . I' I ExA~orc ' fe' d 025:d, arKxmmm crrgcc Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Eq uity Sales Book " Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Paul Ferris, Adam Beard, Ajay Shah, Edward Loh) ; Equity Research (Paul Weinstein, Christian Jende) Date of November 1999 Statement Page 1 Number Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 11 of 96) Fraudulent VALUATION DATA CFLO Valuation Multipl e Statement ($ in MM , except per share data ) Equity Aggregate Value 1 Capitaliza tion Aggregate Value 2000 Rev. CFLO (at $12 .00) $ 355.8 $279.4 5.9x High Growth C Os Median 19 .3 Ca g ices i 10 .8 ing - Proxy Servers Median 17 .7 rce: Credit Suisse First Boston E q u i t y Research, as of 10127!99_ Price as of November 2 . 1999 _ Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Paul Ferns, Adam Beard, Ajay Shah, Edward Loh) ; Equity Research (Paul Weinstein, Chri stian Jende) Date of November 1999 Statement Page 1 Number Fraudulent Key Sales Points . . . Robust Revenue Growth, Balanced Mix & Leveraged Financial Mode l Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Paul Ferris, Adam Beard, Ajay Shah, Edward Loh) ; Equity Research (Paul Weinstein, Chri stian Jende) Date of November 1999 Statement Page 5 Number Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 12 of 96) Fraudulent Key Points to Marketing CacheFlow . . . Robust Revenue Growth, Balanced Mix & Leveraged Financial Mode l Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Paul Ferris, Adam Beard, Ajay Shah, Edward Loh) ; Equity Research (Paul Weinstein, Chri stian Jende) Date of November 1999 Statement Page 1 3 Number Fraudulent Robust Revenue Growth, Balanced Mix & Leveraged Financial Model Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Paul Ferris, Adam Beard, Ajay Shah, Edward Loh) ; Equity Research (Paul Weinstein, Chri stian Jende) Date of November 1999 Statement Page 1 5 Number Fraudulent • Like many high growth communications equipment and technology IPOs, CacheFlow's value is based on forwar d Statement revenue multiples • With a filing range of $11 .00-13.00 per share, CacheFlow's CYOOE aggregate market value/revenue multiple ranges from 5 .4x to 6.5 x Reason Why +Basis Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Paul Ferris, Adam Beard, Ajay Shah, Edward Loh) ; Equity Research (Paul Weinstein, Ch ristian Jende) Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 13 of 96) Date of November 1999 Statement Page 1 5 Number Fraudulent • CacheFlow is very attractively priced Statement • High-growth communications companies currently trade at an average of 19.3x CYOOE revenue s Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offerin " (and/or) "Equity Sales Book " Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Paul Ferns, Adam Beard, Ajay Shah, Edward Loh) ; Equity Research (Paul Weinstein, Chri stian Jende) Date of November 1999 Statement Page 1 7 Number Exhibit E: Misstatements and Omissions in CSFB' s Sales Memos (Page 14 of 96) Fraudulent Statement Valuation - Comparable Com pany Analysis ($MM . except per share data ) Performance c 1zaston Stock Disc . $ Prom. Equity Aggr. Aggregalue Valu Price to LTM Market Market CY99E Z00V FYE 11J02129 High Low Value Value Revs s o CACHEFLOW $11 .00 $329. 1 $266.1 6 A 12.00 366.6 279 . 6 .9 113.00 366.4 19 .0 6 .6 Caching - Ano$l nces CISCO SYSTEMS (7131) 573.50 -1 .3% 1354% 5242 ,363 .1 16 .9 x 12 .6 IBM (12131) 94.81 -31 .9% 30 .1% 193 .648 .3 2 .2 2 .0 NETWORK APPLIANCE (4130) 79.75 -1 .5% 195 .4 .3 5 .617 .0 13 .7 8 .9 INK'OMI(9'30) 96.94 -39.1% J~ft 5,002.4 4,710.7 53 .3 29 .5 Median - 16 .7 9 15 .3 x 10 .8 Mean I W3% 21 .5 13 .2 Cachtno - Pro xy Ser vers MICROSOFT (8,30) S ..W -8-1% 767% $475, 910 .5 $457 ,968.5 21 .2 x 17. 7 AMERICA ONLINE (630) (2) 132 . -24 .3% 3142% 147, 236.1 145 ,816 .1 26 .1 20 .0 NOVELL INC (10131) 19.06 -36 .9% 36 .8% 6 ,349 .1 5 .367 .0 4 .1 3 4 Median -243% 76 .7% 21 .2 x 17 .7 Mean -23 .8% 142 .6% 17 .1 13. 7 (1) All estimates I nslyst consensus . (2) Amer" o, business as result of Netscape acquis4ion. $t "SIM re P 'IcountCaching -Appliances an 141% -44.7% n -18.9% 46 .1 % ~ Pnmittn per sha m \v mlurn 1 Discou" nt to Caching - Proxy Servers rl Median - 17 .6% -6 6.6% 0 Mean 1 .9% -66 .8 % Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Paul Ferris, Adam B eard, Ajay Shah, Edward Loh); Equity Research (Paul Weinstein, Chri stian Jende) Date of November 1999 Statement Page 20 Number Exhibit E : Misstatements and Omissions in CSFB 's Sales Memos (Page 15 of 96) Fraudulent Statement CacheFlow Research Model - Annual ($ in thousands) FY Ended Aprit 30, CY Ended December 31 , 1999 2000E 2001E 1999E 2000 E Total Revenues $7.036 $22,450 $67,878 $16 ,009 $48,969 Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offeri n " (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Paul Ferris, Adam Beard, Ajay Shah, Edward Loh) ; Equity Research (Paul Weinstein, Ch ristian Jende) Date of November 1999 Statement Page 2 1 Number Fraudulent CacheFlow Research Model - Statement Quarterly ($ in thousands) FY 11M FY 2OOD Fraoo , Jul-96 Oct-" Jan-90 Apr-99 Ju149 Oct -OBE Jan-ODE r-0OE Jul -OE Oat -0OE J \%k-M E Total Revenues $809 $1 ;062 $2 .201 $2 .944 $3,612 $4,589 $8,195 $8 ,054 $10,389 $14,026 51 $24,81 0 Reason Why +Estimates Fraudulent Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 16 of 96) ssu JVan> t = Commerce a Vic. MRC Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Ted Smith, John Hinrichs, James Randall) ; Equity Researc h (Bill Burnham, Jamie Earl ) Date of June 1999 Statement Page 1 Number Fraudulent Year Ended December 31 . Statement - 1998 1999E 2000E Total net revenue 2.563 12,782 35.522 Total cost of net revs 4 .369 11,069 15.700 Gross profit (1,806) 1 .713 19 .822 Gross margin (70.3% 13.4% 55.8% Loss from operations (23,306) (43.157) (37,628) Net loss (23,096) (41 .765) (36,743) Net loss per share 5(2.55) 5(2.17) 5(1 .35) Fwa"nwy r t ana Fir-A Eqwty esamch m Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Ted Smith, John Hinrichs, James Randall) ; Equity Research (Bill Burnham, Jamie Earl) Date of June 1999 Statement Page 1 Number Fraudulent Key Sales Points. . . Multiple, recurring revenue streams. Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Ted Smith, John Hinrichs, James Randall) ; Equity Research (Bill Burnham, Jamie Earl) Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 17 of 96) Date of June 1999 Statement Page 1 Number Fraudulent VALUATION DATA CMRC Valuation Multiples Statement (S in MM , except per share data) Market Aggregate Value ? Aggregate Value Capitalization 1999 Rev. 2000 Rev. CMRC ( at $14.00) $ 355. 1 22.3x 8.0x E-Commerce Enablers: Inktomi ($94.00) 4.592 .1 59.3 32. 2 DoubleClick ($95.31) 3.772 .5 26.2 13. 2 VeriSign ($58 .50) 2.932 .1 37.1 24. 2 Vignette ($56.38) 1 .544 .2 34.0 17. 5 Broadvision ($55.13) 1,394 .1 16.3 10.9 VerticalNet ($78 .25) 1,315 .7 89.9 35. 7 Source. Credit Suisse First Boston Equity Research . As of 614199 Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Ted Smith, John Hinrichs, James Randall) ; Equity Research (Bill Burnham, Jamie Earl ) Date of June 1999 Statement Page 5 Number Fraudulent Key Points to Marketing Commerce One . . . Multiple Recurring Revenue Stream s Statement Reason Why +Growth Fraudulent Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 18 of 96) Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author (s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Ted Smith, John Hinrichs, James Randall) ; Equity Research (Bill Burnham, Jamie Earl ) Date of June 1999 Statement Page 1 3 Number Fraudulent Commerce One has Multiple, Recurring Revenue Stream s Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Ted Smith, John Hinrichs, James Randall) ; Equity Research (Bill Burn ham, Jamie Earl ) Date of June 1999 Statement Page 1 3 Number Fraudulent Commerce One enjoys multiple revenue streams from all of the entities that use the CMRC solutions : Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Ted Smith, John Hinrichs, James Randall) ; Equity Research (Bill Burnham, Jamie Earl ) Date of June 1999 Statement Page 1 5 Number Fraudulent CMRC is attractively valued at a substantial discount to its comparables on a revenue multiple basis : Statement CMRC : 22.2x CY99E Agg. value/revenues and 8 .Ox CYOOE Agg. value/revenues Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 19 of 96) Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Ted Smith, John Hinrichs, James Randall) ; Equity Research (Bill Burnham, Jamie Earl ) Date of June 1999 Statement Page 16 Number Fraudulent Statement CMRC Valuation - Comparable Company Analysis ($MM, except per share data) Performance zaEon Stock Disc . I Pram . Equfy Aggr . 5-Yr. EPS FO Aggr . Value I Price to LTM Market Market Gr . Rata LTM CY99E CYOOE COMPANY (FYE) 6104(99 High Low Value Vakx LTOR Ravi Revs (1) Ray, nr COMMERCE $13,00 $329 .3 $262 .2 40 .0% 56.2 x 20 .5 x 7 .4 x COMMERCEMONE ONE 12188 $11 ,00 $355 .1 $294 .6 40 .0% 01 .0 22.3 8 .0 COMMERCE ONE 12198 )" $15 .00 $381 .0 $306 .8 40 .0% 65.8 240 8 .6 E-Cammarca EnabNra INKTOMI CORP (9130) $94 .00 -40 .9% 511 . 4% 54 .592 . 1 $4,486 .5 75 .0% x 112. 5 x 59 .3 x 32 .2 x DOUBLECLICK INC (1231) 95 .31 -45 .6% 1312 .0% 3 .772 .5 3,651 .3 60 .0% 40.9 262 132 VERISIGN INC (12!31) 58 .50 -37 .8% 503 . 9% 2.932 .1 2,775 .6 147 .3% 58.0 37.1 24 .2 VIGNETTE CORP (12131 ) 56 .38 -49 .6% 51 .3% 1 .544 .2 1,464 .7 76.3% 63.4 34.0 17 .5 BROADVISION (12131 ) 55 .13 -23 .8% 495 .9% 1 .394 .1 1,307 .6 57 .3% 22. 1 16.3 10. 9 VERTICALNET INC (12!31 ) 78 .25 -47 .5% 125 .2% 1 .315 .7 1,260 .2 NA 268 .6 89 .9 35 .7 Median -43 .4% 361 .2% 89.0% 49.5 x 30.1 x 15.4 x Mean -434% 408 . 3% 75 .0% 74 5 354 18 5 (1) All estimates from I 11131E'S analyst consensus . (2) Members based on 3.3 MM prima ry share offering. Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Ted Smith, John Hinrichs, James Randall); Equity Research (Bill Burnham, Jamie Earl ) Date of June 1999 Statement Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 20 of 96) Page 24 Number Fraudulent Statement CMRC Research Model 1996 by Quarte r 1999 6 Owrter 2000 by Owner Calendar Year M .r.68 Jun - 98 Sea-98 PsS:R$ Mar. 98 Jun-99E SAL.:@YF Dec-M0 Mar-DOE jun-00- Sffi40E BeS~4F IMA 19986 200OE Revenue License Fees $0 $305 $500 $676 $1 506 $1,800 $2 .400 $3 150 $4 .275 $5,225 $6 .650 $8 .550 $1 481 $8 858 524 .700 Transaction Fees 7 1 3 3 3 6 35 62 100 173 306 436 14 106 1,01 5 Profnss,cnal Services 1C7 391 270 339 642 840 900 1 .050 1 .350 1 650 2 .100 2,700 1 107 3 .432 7 .800 Mamleaance Revenue 6 6 3 1 11 61 116 198 291 410 558 748 16 386 2 .007 Total Revenue 120 703 776 1,019 2,164 2 ,707 3 ,451 4, 460 8 ,016 7 ,468 9,614 12,434 2,e19 12 ,762 36,522 Reason Why +Estimates Fraudulent Erid ofCMRC Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 21 of 96) Natrle - 5 corilli i Co , i'>ation -LORI Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Cameron Lester, Richard Hart, Paul Lu, Travis Parsons) ; Equity Research (Jim Marks, Mark St . Marie) Date of March 22, 200 0 Statement Page 1 Number Fraudulent At filing range of $10 to $12, Corillian would trade at a steep discount to Si, Digital Insight, and Online Resources on a Statement market value/active user and market value/end user basis . Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast-- Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Cameron Lester, Richard Hart, Paul Lu, Travis Parsons) ; Equity Research (Jim Marks, Mark St . Marie) Date of March 22, 200 0 Statement Page 1 Number Fraudulent FINANCIAL OVERVIEW (000s) Statement CY 1994 Ended December 31 . Mar-99 Jun-99 SOP-99 c 9A 2000E 2001 E Net Revenues $1,405 $1 .337 $2,287 7 $ 7,736 5 18 ,350 $37 .91 8 Gro ss P rofit 643 105 2 1,085 5 .019 22,399 Operating Profit~(Loss) ($352) ($1,414) 41) (59 .426) (526 .282) (314,950 1 Net Incoma;(Loss) ($327) ($1 .33 , ( 557) ($4,809) ($9,027 (525,110) ( $13 .174 ) Eamings Per Share ($1 .03) (50.54 ) F D WAS O 24 .438 24 .43 8 Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offe rin " (and/or) "Equity Sales Book " Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 22 of 96) Author (s) Credit Suisse First Boston ; Investment Banking (Cameron Lester, Richard Hart, Paul Lu, Travis Parsons) ; Equity Researc h (Jim Marks, Mark St . Marie) Date of March 22, 2000 Statement Page 1 Number Fraudulent VALUATION DATA Statement Performance Capitalization Stock Disc . I Prem . Equity Aggr. Aggr. Value i Price to LTM Market Market CYOOE CY01 E 1 COMPANY (FY 0 3 121100 High Low Value Value Revs " Revs " ' $10 .00 $336 .32 $254 .86 13.9 x 6 .7 x -~" • r 11 .00 368 .2 282.4 15.4 7 .4 12 .00 400.0 310.0 16.9 8 .2 rood eFinance Software lean -28 .3% 264.9% 23.4 x 14 .3 x cations Mean -36 .3% 934.7% 98.7 x 60 .7 x Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Cameron Lester, Richard Hart, Paul Lu, Travi s Parsons); Equity Research (Jim Marks, Mark St . Marie) Date of March 22, 2000 Statement Page 1 7 Number Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 23 of 96) Fraudulent Competitive Environment : Comparable Companie s Statement Performance Ca tafzatlon ($MM . except Per share data; Stock Disc . I Prem . Equity Aggr . Ag . e / Price to LTM Market Market OE CY01 E COMPANY (FYE) 3121(00 High Low Value Valu Rev s $1!0 .'' $338 .32 13 .0x 1 .7 x C 0 A I t t k 11 i 3.;g.2 2 _ .4 1 11.4 7 .4 1 2 . 00 400.x 310 .0 16 2 P . 2 Best of Breed eFinance Software p0 SECURITY FIRST (12131 8100 .83 2'_ .3" t•00 .`0 Q 7 $4 .7702 1A .0 x 11 . 5 DIGITAL INSIGHT CORP 12 .31 .~ 62 .56 -27 .3" . 228 3 .432.2 1 .425.8 29.7 17 . 1 Mean 2830, ~" 23.4 x 14 .3 x Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Cameron Lester, Richard Hart, Paul Lu, Travis Parsons) ; Equity Research (Jim Marks, Mark St . Marie) Date of March 22, 2000 Statement Page 1 8 Number Fraudulent Historical and Projected Income Statement O Statement ($ in OOOs ) O 1000E 2000E 3000E 4Q00E IQ01E 2001E 3Q01E 400"99 2000E 2001E Revenues 2,925 4,255 5 ,280 5,890 7 ,030 8,740 10 ,48 12 7,736 18,350 37,91 8 Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Cameron Lester, Richard Hart, Paul Lu, Travis Parsons) ; Equity Research (Jim Marks, Mark St . Marie) Date of March 22, 200 0 Statement Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 24 of 96) Page 20 Number Fraudulent Corillian is attractively valued to its competitors at the proposed filing range based on 2001 revenue multiples . . . Statement Reason Why +Basis Fraudulent Re ort Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Cameron Lester, Richard Hart, Paul Lu, Travis Parsons) ; Equity Research (Jim Marks, Mark St . Marie) Date of March 22, 2000 Statement Page 20 Number Fraudulent . . . and based on Corillian's impressive expected revenue growth . . . Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Cameron Lester, Richard Hart, Paul Lu, Travis Parsons) ; Equity Research (Jim Marks, Mark St . Marie) Date of March 22, 2000 Statement Page 20 Number Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 25 of 96) Fraudulent Performance Lzation Statement Stock Disc. 1 Prem . ity Aggr. Aggr . Value I Price to LTM ark et Market CYOOE CY01 E COMPANY IFY E) 3121/00 High kl* Value Value Revs ( 1) Revs (' ) $10 .00 $336.32 $254.86 13 .9 x 6 .7 x CGP IL L • A 11 .00 368 .2 282 .4 15 .4 7 . 4 12 .00 400 .0 310 .0 16 .9 8 . 2 Best of Breed eFinance Software Mean -28 3". 264 .9%•x• 23 4 x 14 3 x Mean -36.3"x;, 934 .7% 98 7 x 60 .7 x Estimates from I B!E ;. S ana , _nsus and rese arch reports Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast---Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Cameron Lester, Richard Hart, Paul Lu, Travis Parsons) ; Equity Research (Jim Marks, Mark St . Marie) Date of March 22, 2000 Statement Page 2 1 Number Fraudulent Comparable Company Analysi s Statement !S1,11d. except per share data; Q Performance Capitalization Stock Disc . I Prem . Equity Aggr . Value 1 Price to LTM Market CYOOE CY01 E COMPANY ( FYE) 3/21/00 High Low Value ~~(e Revs Rev s Best of Breed eFinance Software SECURITY FIRST (12/31) $100 .63 300 5% $4 .779 .2 18 .0 x 11 .5 x DIGITAL INSIGHT CORP 112 .31) 62.56 -27 .3x• 229 .3% .2 1 .426 .8 28 .7 17 1 Mean -28 .3% 264 .9 `7 O 23 .4 x 14 .3 x Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offe ring" (and/or) "Equity Sales Book" Exhibit E : Misstatements and Omissions in CSFB's Sales Memos (Page 26 of 96) Author(s) Credit Suisse First Boston ; Investment Banking (Cameron Lester, Richard Hart, Paul Lu, Travis Parsons) ; Equity Research (Jim Marks, Mark St . Marie) Date of March 22, 200 0 Statement Page 24 Number Fraudulent CSFB Research Mode l Statement ($MM, except per share data) 0 CY 1999A CY 2000 CY 2001 C nded December 31 , Mar-99 Jun - 99 Sep-99 Dec-99 Mar-O OE Jun-00E Se 00E Dec-O OE Mar-01E Jun-01E Sep-ME Dec. 1999A 2000E 2001 E Net Revenues $ 1,405 $1 .337 $2, 287 $2,707 $2, 925 $4,255 $5,280 $5 ,890 $7 ,030 $8,740 $10 ,486 $7,736 $15,350 $37,91 8 Reason Why +Estimates Fraudulent 'End of CORI Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 27 of 96) Fier N ice - -1~entilliun Communlcatio Inc. CTLM- Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, Darrel Slack, Yukie Tokuda) ; Equity Research (Charlie Glavin, Jim Parmelee, Regina Crilly ) Date of April 2000 Statement Page 1 Number Fraudulent ($MU, except per share data) Fiscal Year Ended Decern ber 31, " Statement 1999A 2000E 2001 E Total reven ue $3 .7 $23 .7 $62 .6 Total cost of revs 3 .0 14 .2 31 .3 Gross profit 0 .7 9.52 31 . 3 Gross margin 20 .1 % 40 .1 % 50 .0 % Inc . (loss ) operations $(16 .7) $(31 .2) 5(26 .6 ) Net income (loss) (15 .65) (28 .3) (22 .5 ) Net income per share 5 (0 .72) $(0 .91) $(0 .64 ) Preliminary Credit Suisse Fi rs t Boston Equity Research . Charlie Glavin and Regina Crill y "Does not include deferred stock corn pensalio n Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, Darrel Slack, Yukie Tokuda) ; Equity Research (Charlie Glavin, Jim Parmelee, Regina Crilly) Date of April 2000 Statement Page 1 Number Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 28 of 96) Fraudulent VALUATION DATA Capitalization Valuation Multiple s Statement ($ in MM, except per sha re data) Equity Aggregate Aggr . Value / Aggr . Value ! Market Value Market Value 2000 Rev . 2001 Rev . Cent ilIiurn (at 519.001 $666 $551 23 .2x 8.Bx Globespan 6.5118 6.542 55 .0 39.4 High Growth Comm ICs 53 .3 35. 5 Recent Semi and Comm IC IPOs 44 .6 30. 2 Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) it uit Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, Darrel Slack, Yukie Tokuda) ; Equity Research (Charli e Glavin, Jim Parmelee, Regina Crilly) Date of Apri 1 2000 Statement Page 1 7 Number Fraudulent Our valuation analysis of Centillium is based primarily on CY2001 comparable company revenue multiples . Statement Reason Why +Basis Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, Darrel Slack, Yukie Tokuda) ; Equity Research (Charlie Glavin, Jim Parmelee, Regina Crill ) Date of April 2000 Statement Page 1 7 Number Fraudulent At the midpoint of the filing range, Centillium's aggregate value is $551 million which represents a CY2000 revenu e Statement multiple of 23 .2x and a 2001 revenue multiple of 8 .8x . This filing valuation is conservative when compared to the sam e multiple of comparable publicly traded companies. Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 29 of 96) Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, Darrel Slack, Yukie Tokuda) ; Equity Research (Charlie Glavin, Jim Parmelee, Regina Crilly) Date of Apri 12000 Statement Page 1 7 Number Fraudulent VALUATION DATA Capitalization ? ,,,'Valua ti on multiple s Statement (5 in MM, except per share data) Equity Aggregate Aggt. yakle Aggr . Value Market Value Market Value 2bQ4 Rev : 2001 Rev. Centilllum (at $19 .00) $666 $551 23 .2x 8.8x Globespan 6.578 6.542 55.0 39.4 High Growth Comm ICs 53 .3 35:5 Recent Semi and Comm IC IPOs 44 .6 30.2 Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offe ring" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, Darrel Slack, Yukie Tokuda) ; Equity Research (Charlie Glavin, Jim Parmelee, Regina Crilly) Date of April 2000 Statement Page 1 8 Number Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 30 of 96) Fraudulent Centil1 um Valuation - Comparable Company Ana lysi s Statement - tWf. exce;x pershd& amamts) Parformr,c' Ca lralzaoon Traai n ,puff s Stock Disc . , Prom . Equ it y Aggr. P1E CYO1E Aggr . Valu o Price to LTM Market Mxkot PE 1 CYO0E CY01 E COMPANY FYE 42 900 High Low Value Value CYOOE CY01E LTGR Revs "I Revs" ' Pranarv Camoar.+,le Canoan v GLOBESPAN ( 12/31) 195.00 -43.1% 980 .6`. $6.578 .0 $6.541 .8 NM x NM x NM x 55 .0 x 39.4 x Fhoh Growth Communications ICs BROADCOM (12131) 9172. B, -34.9 385 .6"' . $36. 828 .1 $36.502 .8 NM x 164 .2 x 3.4 x 44 .6 x 30 .5 x PMC-SIERRAINC(1226.i 141 .08 .349% 806.3% 30.725 .4 30.518 .8 NM 167 .0 4.2 70 .6 46 .8 OLOGIC CORP (128) 100:31 . .. .00.6% 494 .41 . 15,310 .3 15,184 .5 1142 872 2.7 57 .0 42 5 APPLIED MICRO CIRCUITS (3:31) 128 .88 951 .4";, 16.003 .9 15.066.8 109 .2 130.8 3.0 53 .3 35 . 5 VIRATA 3131 12525 43.696 X44 :8's 3.360 .9 3,284 .6 NM 167 .4 2. 8 31 .9 14 .6 Reason Why +IPO Discoun t Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, Darrel Slack, Yukie Tokuda) ; Equity Research (Charlie Glavin, Jim Parmelee, Regina Crill ) Date of April 2000 Statement Page 2 1 Number Fraudulent Cenfill ium - CSFB Research Mode l Statement 1999 2000 200 1 Q1 Q2 03 Q4 FYE QIA Q2E WE 04E FYE WE Q2E WE 04E EY E (S Millions) Mar-9 9 Jun-99 Sep -99 Dx•99 Q409 Mar-00 Jun-00 SOD-OD DOC-00 oe4 00 Mar-01 n 1 S2p 4 1 Dec-01 Dec-0 1 Net re venues $0.05 $0 .66 $0 .85 $2.19 $3 .74 $4 .72 $5.59 $631 $7 . 10 $23 .72 $8 .86 $1195 $17.81 $23 .97 $62 .60 Reason Why +Estj mates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, Darrel Slack, Yukie Tokuda) ; Equity Research (Charlie Glavin, Jim Parmelee, Regina Crilly) Date of Apri 1 2000 Statement Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 31 of 96) Page 32 Number Fraudulent Accelerating revenue growth and design win s Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, Darrel Slack, Yukie Tokuda) ; Equity Research (Charlie Glavin, Jim Parmelee, Regina C ri lly) Date of April 2000 Statement Page 55 Number Fraudulent Strong Revenue Growth Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, Darrel Slack, Yukie Tokuda) ; Equity Research (Charlie Glavin, Jim Parmelee, Regina Crilly) Date of Apri 1 2000 Statement Page 6 1 Number Fraudulent Accelerating revenue growth and design win s Statement Reason Why +Growth Fraudulent End of C' LM - Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 32 of 96) Is er e _ - EMachi n es Inc. - EEEE Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, John Metz, James Randall) ; Equity Research (Michael Kwatinetz, Hans Roderich) Date of March 2000 Statement Page 1 Number Fraudulent Fiscal Year Ended December 31 . Three Months En Statement 1998 1999 2000E 2001E 1998 %XY,) Total revenue $68,283 $ 814,317 $ 1,028,826 $1,379,736 $58,283 $ 3 Total cost of revenue 58,088 780,945 952,591 1,252,077 58.088 292,036 Gross profit 195 33,372 76.235 127.659 195 15,075 Gross margin 0.3% 4.1% 7.4% 9.3% 0.3% 4.9 % Inc. from operations" (1,913) (1,842) (84,231) 27,932 (1,913) (1,017) Net income ' $ (2,802 ) $(5,728 ) $(7,996 ) $36,932 $ (2,802) $ (2,204 ) Pro forma EPS" $(0.04) $(0.0T) $0.00 $0 .24 0.04) 0.03) Prelimina ry Crept Suisse First Boston Equity Research . We Kv obnetz ` Excludes Amortization of Defefred Co nsation Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, John Metz, James Randall); Equity Research (Michae l Kwatinetz, Hans Roderich ) Date of March 2000 Statement Page 1 Number Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 33 of 96) Fraudulent VALUATION DATA EEEE Valuation Multiples Statement ($ in MM, except per share data) Market Agg Value / Agg Value I Agg Value / Agg Value Capitalization 2000 Rev . 2001 Rev . 2000 Gr_Prot_ 2001 Gr . Prof. EEEE (at $8.00) $ 907 0 .8x 0.6x 10.2x 6.1x EEEE (at $10 .00) 1 .181 1 .0 0.8 13.8 8.3 Hardware Vendors (Median) 1 .9 1 .6 8.8 7.5 Internet Mktg. Vendors (Median ) 28.3 16.3 55.2 29.3 Credit Suisse First Boston Equity Research . Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, John Metz, James Randall); Equity Research (Michae l Kwatinetz, Hans Roderich ) Date of March 2000 Statement Page 1 Number Fraudulent Key Sales Points . . . Significant Revenue Growth and Operating Leverag e Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, John Metz, James Randall); Equity Research (Michae l Kwatinetz, Hans Roderich ) Date of March 2000 Statement Page 1 5 Number Fraudulent Significant Revenue Growth and Operation Leverage Statement Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 34 of 96) Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, John Metz, James Randall) ; Equity Research (Michael Kwatinetz, Hans Roderich) Date of March 2000 Statement Page 1 5 Number Fraudulent Explosive revenue growth in Internet side of busines s Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, John Metz, James Randall) ; Equity Research (Michae l Kwatinetz, Hans Roderich ) Date of March 2000 Statement Page 2 1 Number Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 35 of 96) Fraudulent BTB I Valuation Methodology Statement Valuation Range 20 .Ox - 35 .Ox eMachines 2001E BT B Internet Revenue 50.8 $50 . 8 Implied eMachines Valuation $1 ,0$1,777b5 . 0 . 3 Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, John Metz, James Randall) ; Equity Research (Michae l Kwatinetz, Hans Roderich ) Date of March 2000 Statement Page 23 Number Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 36 of 96) Fraudulent Hard Iuation Methodology Statement Imp ' le 1 .9x 4 eMachines Di u 60 % Implied eMachines Mu .75 x lapzo e Machines 2001 E Hardw a re Revenue (MM ) Implied eMachine s Valuation (MM) $997.0 Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, John Metz, James Randall); Equity Research (Michae l Kwatinetz, Hans Roderi ch ) Date of March 2000 Statement Page 24 Number Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 37 of 96) Fraudulent Comp4fhgo~ Company Analysis Statement AeAMmano . Whiben 7 AfWh ,1 9 ($MM)($/y(/y(} 5106k Dist. ! Pmn. Equ ity Air. AaiW. Value Rw Pike to LTM Market Market LTM LOA CYOSE CY01E LOA CYOOE CY01E CAGR LOA ANY 2729110 High LOW Value Value Rays Rays Revs M Revs 11 1 GP GP GP 90-01 GM EMACHINES 12131 56 .00 $907 .2 $776 .0 1 .0 x 0.6 x 0.8 x 0.6 x 12 .9 a 10.2 v 6.1 x 30.2% 49% EMACHINES 12131 ,10 $1 . 2 f81 4.0 1 .1 0.7 4 .9 &7 14 .2 12.0 7.2 30.2% 4.9% EMACHINES 12!31 10 . $1,181 .3 $1053 .3 1 .3 0.9 1 .0 0.8 17 .6 13 .8 83 30.2% 49% 00, 40 ""MudledStail" Busing- PC DELL COMPUTER CORP (1/28) 81 - 4 30.1% $ 104 .690 .8 598,3456 3.9 x 3.8 x 3 .1 x 2 .3 x 449 x 42.5 v 780 x 32.9% 81 % COMPAQ COMPUTER CORP (12/31) % 42,712.5 39,663 5 10 1 .0 0.9 1.0 47 3.9 NA 3.9% 20.4 % GATEWAY INC (12!31) 6 . -1 2 . % 21,761 .8 20,540.2 2 .4 2 .1 1 .9 1 .8 9 .4 8.8 75 22.4% 22 .3 % APPLE COMPUTER INC (9125) 114 .63 5 18,530 .1 15,674 .4 2.5 2.5 1 .8 1.5 6 .5 87 6.7 16.3% 39.0% Median .21 3% 900% 24 x 2.3 x 1 .9 x 1 .6 x 8 .0 x 8.8 x 7.5 x 19.3% 21 .4% Mew .20.5% 117 .1% 2 .5 23 1 .9 1 .6 16 .4 16 .0 18.7 18.9% 22 .5% Ineuxives MMnMn NETZERO INC (4/30) $23 .50 -41 .3% 36.7% 2, .8 185.0 x 74 .0 x 106.9 x 35 .4 x NM NM 56 .6 x 158.6% NM NETCEMIIVES INC (12/31) 45 .50 -526% 3439% 71 . 177 .0 123.2 74.8 28 .4 NM NM NM 81 .4% NM MYPOINTS .COM INC 12131 46 .88 -52.9% 246.4% 1 323 .0 .0 24 .6 24 .3 114 67 .9 x 54.1 x 38.0 78.6% 36 .2% Median .52.0% 343.9% 177.0 x 74 .0 x 74 .8 x 284 x 87 .9 x 54.1 x 47.8 x 81 .4% 38 .2% Mean 48.6% 242.4% 136.7 73 .9 89 .3 25.1 67 .9 54 .1 47.8 108.2% 36 .2 % Advsrb,u a &,a@ M,rksarm 61h,struehr n O CMGI (7131) $129 .56 -20.6% 350.2% $33,726.7 $31,005 .4 1 x .3 x 16.3 x 5127 x NA NA 58.5% 10 .6 % DOUBLECLICK INC (12/31) 68 .81 -34.3% 306.0% 10,496 .5 10,301 .7 7 . /179 . 13 .0 49 .4 35.3 x 14 .6 x S44% 55 .6 % KANA COMMUNICATIONS (12131) 142 . S0 .136% 5255% 8 .228 .8 8.176 .6 $81 .4 3 193 92 .6 1.093 .7 395.8 NA 68.8% 289% DIGITAL IMPACT INC 3/31 2850 -58.2% 1 .8% 695.7 690 .0 155.3 165.5 56 .3 19 .6 97.5% 49 .7 % Medi an -27.5% 328.1% 1335 x 73 .2 x 26 .6s 14.7 x 3491 x 563 x 172), 738% 39 .3% Mew -312% 295 9% 2221 122 .8 86 7 331 480 .3 182 .5 172 74.8% 36 .2 % In ,m,tloe Hab& AMERICA ONLINE (6130) 859.00 -38.4% 53 .4% $134.824 .3 $133,152 .3 23.3 x 205 x 17 .5 x x 4 3 9 x 284 x 39.0% 48.8 % YAHOO INC (12131) 159.69 -36 .1% 190.3% 84,072 .3 52,6540 140.8 103.0 08 .7 64.4 .1 44.9% 86.5% EBAY INC (12131) 143 .38 -387% 104 .0% 16,543 .8 18,1734 809 815 47 .6 343 8 8 4 50.9% 70 .8% EXC)TEOHO0 E(12131) 3431 .653% 4.0% 13 .047 .5 13,3498 317 25.9 17 .5 104 42 1 840% 61 .1 % LYCOS INC (7/31) 5963 -38 3% 1088 % 8,501 .0 6,3380 380 283 20.3 14 .1 357 2 79.2% CNET INC(12131( 6688 .18.3% 1432% 4913 .7 4,094 .3 384 287 222 160 882 1 . % 303% G02NET INC (9/35) 67 .00 -22.1% 2222% 3 .437 .2 3,8509 107.9 65 .2 44 .8 27 .1 113 .9 P78 .5 2. .2 % Medan -36.3% 108 .8% 38 .0 x 28.3 x 222 x 160 x w9 X 42.4 x 30.9 x 44. 9% 61 .1 % Mean -36.2% 1180% 65.6 47.3 36 .6 25 .6 75 .5 53.8 380 49.7% 62 .0% O.eral Median 374% 166 .8% 944 x 57 .8 x 26 .8 x 1e1 x 87 .6 x 54.1 x 30.9 x 60.8% 52.6% , Overall Meer .-374% 195.5% 126.0 74 .5 52 .2 27 .6 203 .1 83 .5 38.0 690% 512% (1) AN ee11m,1es from /915/S analys! eoroen9us. Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, John Metz , James Randall); Equity Research (Michael Kwatinetz, Hans Roderich) Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 38 of 96) Date of March 2000 Statement Page 27 Number Fraudulent CSFB rch Model Statement ($MM except per Mu-99 Jun-99 Se~99 Dae-99 Mr-0OE Jun-0OE Sep-OOE Dae-0OE Mu-0tE Jun-0tE Sip-07E Dee-0t E He v 5137. 434 $213 .930 5155 282 $345.600 5223 .116 5187 .400 5243.642 5353. 281 $289.691 $289. 691 $333. 144 5116,431 Irnemel Re D 0 611 1 .500 2 .659 3.800 5. 714 9 .214 9.480 10.907 13. 560 16.832 Net Revenues 7.434 213.900 155 .893 307 100 225 .775 191 200 249,356 362 .495 299,171 300. 598 346.709 433.26 3 Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offerin g" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, John Metz, James Randall); Equity Research (Michae l Kwatinetz, Hans Roderich ) Date of March 2000 Statement Page 2 8 Number Fraudulent Statement C S P B rch Model ($MM except per re CY Ended December 31 , s61 1999E 2004E 2001 E Hardware Revenue S812,216 $1 .007,439 $1 .328,95 7 Internet Revenue 2,111 21,387 50,77 9 et Revenues 814,327 1 .028,826 1 -379,736 Reason Why +Estimates Fraudulent EndofEEEE Exhibit E : Misstatements and Omissions in CSFB's Sales Memos (Page 39 of 96) ems:: = EtTic ent Netverks~Inc. - EFNT Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Paul Ferris, Ray Carey, Sean Turner) ; Equity Research (Pau l Weinstein, Ch ristian Jende) Date of June 22, 1999 Statement Page 1 Number Fraudulent CSFB RESEARCH MODEL 1999(E) oo( Statement 1st a 2nd 0 3rd 0 4th 0 1st 0 72nd Q SEP DEC MAR JUN SEP XN T* JUN Revenue 1 .174 1.850 4 .115 7.582 18.63 2 Gross profit 0.311 0.203 (0.074) (0 .287) 0. 7.266 Operating Income (3 .022) (3 .301) (3 .873) 2 4) (0 .034 ) Pretax income (3 .375) (3 .746) (6 .955) 8 5 21 (0 .615 ) Net Income before extraordinary items (3 .375) (3 .746) (6 .955) (1 5.50 (0 .615) EPS (excluding comp . charges) 0.11) (0.12) (0. 1 ( . . 0.0 1 Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Paul Ferris, Ray Carey, Sean Turner) ; Equity Research (Paul Weinstein, Chri stian Jende) Date of June 22, 1999 Statement Page 1 Number Fraudulent Explosive DSL Revenue Growt h Statement Reason Why +Growth Fraudulent Re ort Title "Sales Point Broadcast - Initial Public Offerin g" (and/or) "Equity Sales Book" Exhibit E : Misstatements and Omissions in CSFB's Sales Memos (Page 40 of 96) Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Paul Ferris, Ray Carey, Sean Turner) ; Equity Research (Paul Weinstein, Ch ristian Jende) Date of June 22, 1999 Statement Page 1 Number Fraudulent VALUATION Value/C 99 Revs Aga . Value/CYOO Revs Statement Efficient (@ $ 11 .00 ) 12.9x 5.2x Copper Mountain O 19 .0 13. 1 Recent Communicati s s 20.8 11 . 7 Broad Dataata//, ce C i . 3 .9 3 .4 Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "E uit Sales Book " Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Paul Ferris, Ray Carey, Sean Turner) ; Equity Research (Paul Weinstein, Ch ri stian Jende) Date of June 22, 1999 Statement Page 14 Number Fraudulent Explosive DSL Revenue Growth Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Paul Ferris, Ray Carey, Sean Turner) ; Equity Research (Paul Weinstein, Ch ri stian Jende) Date of June 22, 1999 Statement Page 5 Number Exhibit E: Misstatements and Omissions in CSFB ' s Sales Memos (Page 41 of 96) Fraudulent Explosive DSL Revenue Growt h Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Paul Ferris, Ray Carey, Sean Turner) ; Equity Research (Paul Weinstein, Christian Jende) Date of June 22, 1999 Statement Page 1 8 Number Fraudulent Statement Summary Valuation Points for Efficient N etworks Trading Statistics of Comparable Companies ($MM, except per share amounts) ~~> Performance Capitalization Trading M ", O Stock Disc . I Prem. Equity Aggr . PIE 5-Yr . EPS D Aggr. Value Pri ce to LTM Market Market Gr. R t CY99E CYOOE LT M COMPANY (FYE) 6118199 High Low Value Value CY99E CYOOE CY01E T evs Revs Revs Op . Inc. EFFICIENT NETWORKS (Midpoint of Filing) 511 .00 NA NA $472 .2 $419.3 NM X NM x I`jM1CxNZ --\ N x NA x 12 .9 x 5.2 x NM x Recent Comm. Equip. IPOs BROADCOM CORP (12/31) $111 .94 -45% 376 .34% $11 .2123 511 .091 .5 149 .6 x 1 O(~}~ 47 .5% 2 .3 x 420 x 33 .6 x 21 7 x 161 .4 x EXTREME NETWORKS INC (6130) 43 .44 -333% 23.9% 2.123 .0 2 .016 .8 N 1 NS 35.0% 5 .5 288 13 .8 87 NM REDBACK NETWORKS INC (12+131) 102 .38 -9 .3% 57 .5% 2.153 .4 2 .100 .2 NM 45 .0% NM 1378 52 .5 27 .9 NM BROCADE COMMUNICATIONS SYS 1 (10,131 84 75 0 .0' % 156 8% 2.176 8 2 .11 . NA NA NA 74 3 38 .6 289 NM COPPER MTN NETWORKS INC (12 .31) 64 .00 -18 .3% 26 .7% 1 .432 .8 33 .3 NA NA NA 38 .6 19 .0 13 1 NM JUNIPER NETWORKS (Midpoint of Filing) 23 .00 00% 0.0% 1,297 M NM NNI NA NA 874 226 10 3 NM CARRIER ACCESS CORP (12131) 33 .50 -583% 150 .5% 799 . 0 . 53 .2 393 26 .8 46 .700 0.8 11 .8 7 .1 48 47 . 8 TUT SYSTEMS INC (12131) 41 .00 -525% 11 .9% 469 .9 2 NM NM NA NA NA 334 183 79 NM Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Paul Ferris, Ray Carey, Sean Turner) ; Equity Research (Paul Weinstein, Chri stian Jende) Exhibit E : Misstatements and Omissions in CSFB 's Sales Memos (Page 42 of 96) Date of June 22, 1999 Statement Page 1 8 Number Fraudulent At 5 .2x CYOO Rev's EFNT is Attractively Priced Compared to the Trading Performance of Recent Communication Equipmen t Statement IPOs Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Paul Ferris, Ray Carey, Sean Turner) ; Equity Research (Paul Weinstein, Chri stian Jende) Date of June 22, 1999 Statement Page 21 Number Fraudulent Statement CSFB Equity Research Model : EFNT 1999 ( E) 2000(E) 2001 ) 1st Q 2nd Q 3rd Q 4th Q 1st Q 2nd 0 3rd Q 4th 0 1st Q 2 3N *-J ) 4Yfi Q Revenue 1 .174 1 .850 4 . 115 7 .582 9 .525 11 .227 13.642 U3 2r4 j 22.105 .360 40 .353 Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Paul Ferris, Ray Carey, Sean Turner) ; Equity Research (Paul Weinstein, Ch ri stian Jende) Date of June 22, 1999 Statement Page 22 Number Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 43 of 96) Fraudulent Statement CSFB Equity Research Model : EFNT Calendarized Data 1998(A) 1999(E) 2000(E) 2001 ( E) 1999 ( E) 2000(E ) Revenue 3 .370 14 .721 53 .026 118 .424 32 .449 79 5 Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Paul Ferris, Ray Carey, Sean Turner) ; Equity Research (Paul Weinstein, Chri stian Jende) Date of June 22, 1999 Statement Page 49 Number Fraudulent Strong Quarterly Revenue Growth Statement Reason Why +Growth Fraudulent Endf EFNT Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 44 of 96) is [~Ime = E,Pi has InG EPNY Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book " Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Cameron Lester, Scott Kupor, Margaret Coyle, Kenneth Mah) ; uit Research (George Gilbert, Brent Thill ) Date of August 27, 199 9 Statement Page 1 Number Fraudulent CSFB RESEARCH MODEL Statement ($ in thousands) mar-98 Jun-98 Sep-98 ec- mar-99 Jun-99 ep- e c Revenue $227 $636 $1 , 112 $1 ,402 $1 .894 $3 ,230 $3 , 892 6971- $3 7 513 , 713 $30,07 6 Gross Profit 100 393 632 852 1 .062 1 . 549 1 .7 1, 0 977 6,305 18 .39 2 Operating Income ( 1 .658 ) ( 2,362 ) (2 .537) (3,257) ( 3 .451) (4,438) 1 (9 .814 ) (22 .729 ) (34,881 ) Pretax Income ( 1 .595 ) ( 2 .296 ) (2,513) (3,127) ( 3 .356 ) ( 4 .418) , 13) ) (9 .531) (22 .284) (33,391 ) Net Income ( 1,595 ) ( 2,296 ) ( 2 .513 ) (3,127) ( 3 .356 ) (4 .4 ,0 ) ,477 ) (9,531) (22 .264) (33,391 ) EPS "' ($0 .13) ($0 .19 ) ($ 0 .13) ($0 . 16) ($0 .17 ) ( $0 .2 ($0 .27) ($0 .54) ($ 0 .95) ($1 .11 ) Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Cameron Lester, Scott Kupor, Margaret Coyle, Kenneth Mah) ; E uit Research (George Gilbert, Brent Thill ) Date of August 27, 1999 Statement Page 1 Number Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 45 of 96) Fraudulent Valuation lu Revs Agg . Value/CY00 Rev s Statement Epiphany (@ $10 .00) x 7.&x nktomi KI 72.8x6/C( 38.5x Ariba 108 .3x 71 .9x Verisign 69.5x 44 .5x Portal Softw 59.6x 35 .1 x Critical P 100.1X 24.5x Vig 35.7x 20.1 x 29.Ox 19.4x o ce One 58.6x 25.7x imba 21 .2x 13 .3x Silknet 26.2x 13.5x Webtrends 24 .3x 14 .2x Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Cameron Lester, Scott Kupor, Margaret Coyle, Kenneth Mah) ; uit Research (George Gilbert, Brent Thill ) Date of August 27, 1999 Statement Page 1 5 Number Fraudulent Strong Financial Momentu m Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Cameron Lester, Scott Kupor, Margaret Coyle, Kenneth Mah) ; E uit Research (George Gilbert, Brent Thill ) Exhibit E : Misstatements and Omissions in CSFB 's Sales Memos (Page 46 of 96) Date of August 27, 1999 Statement Page 1 5 Number Fraudulent Rapid top line growth : driven by infrastructure investments (45 sales professionals) with major leverage and upside from Statement resellers Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Cameron Lester, Scott Kupor, Margaret Coyle, Kenneth Mah) ; E uit Research (George Gilbert , Brent Thill) Date of August 27, 1999 Statement Page 1 8 Number Fraudulent • Like many high growth Internet software and technology IPOs, E .piphany's value is based on forward revenu e Statement multiples • With a filing range of $9.00-11 .00 per share, E.piphany's CYOOE aggregate market value/revenue multiple range s from 6.7x to 8 .4x Reason Why +Basis Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book " Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Cameron Lester, Scott Kupor, Margaret Coyle, Kenneth Mah) ; E uit Research (George Gilbert, Brent Thill ) Date of August 27, 1999 Statement Page 1 8 Number Fraudulent • E.piphany is very attractively priced Statement • Internet and eBusiness Infrastructure companies currently trade at an average of 29.2x CYOOE revenue s Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 47 of 96) Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offerin " (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Cameron Lester, Scott Kupor, Margaret Coyle, Kenneth Mah) ; E uit Research (George Gilbert, Brent Thill) Date of August 27, 199 9 Statement Page 1 9 Number Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 48 of 96) Fraudulent Statement Valuation - Comparable Company Analysis ($MM , except per share data ) Capitalization Stock Disc . / Prem . Equity Aggr . Aggr. Va e 1 Price to LTM Market Market CY99E 0 E COMPANY (FYE) 8/26/99 High Low Value Value Revs )' E .piphany $9.00 $251 .6 $202.5 x 6.7 x 10.00 280 .6 22 6.6 7.6 11 .00 309 . 5 8 18 .4 8 .4 Internet & eBusiness Infrastructure 0 INKTOMI CORP (9/30) S115.06 -27.7% 490 .1% $5,93 5.840 .5 72.8 x 38.5 x ARIBA (9/30) 134.50 -10.2% 120 .5% 5,961 .0 108 .3 71 .9 VERISIGN INC (12/31) 110.50 -3 .1% 1040 .6% .5 5.441 .4 69.5 44 .5 PORTAL SOFTWARE INC (1/31) 50.75 -15 .3% 82 . ° 3,8238 3.714 .9 59.6 35.1 CRITICAL PATH INC (12131) 36.75 -75.5% 1,399.9 1 .163 .6 100 .1 24 .5 VIGNETTE CORP (12/31) 68.69 -38 . ° 8 0 1 .909 .0 1 .836 .4 35 .7 20 .1 BROADVISION (12/31) 102.88 -1~69*11 1 12 % 2,629.6 2,560.7 29.0 19 4 COMMERCE ONE (12/31) 51 .00~ 31 .~~// 92 .5% 1 ,225 .7 1 .113 .6 58.6 25. 7 MARIMBA INC (12/31) 7~ \/J68 .7% 43 .4% 708.5 634 .5 21 .2 13.3 SILKNET SOFTWARE INC (6130) Q? ~/ -28 .6% 139 .2% 560 .6 503.4 26 .2 13 .5 WEBTRENDS CORP (12/31) .25 -56 .8% 64 .8% 459 .5 382 .5 24 .3 14 .2 Median -28 .6% 92 .5% 586 x 24 5 x Mean -32 .5% 289 .9% 55 .0 29 . 2 @ $10.00 per share Premium / Discount to Internet & eBusiness In frastructur e Median -71 .7% 69.2 % Mean -69.9% -74.1 % 1 E i s from I/B/E/S analyst consensu s Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Cameron Lester, Scott Kupor, Margaret Coyle, Kenneth Mah) ; E uity Research (George Gilbert, Brent Thill ) Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 49 of 96) Date of August 27, 1999 Statement Page 2 1 Number Fraudulent EPNY - CSFB l Statement Equity Research Mode ($ in thousands) -- FY1998 by Quarter -- - FY1999E by Quarter -- -- FY2000E Qua rter - Y nded December -- M iL98 JunBQ Seu..9$ Dec 9 $ Mar fl JL11..@9 ➢.. MF. F. Mar DOE Jun DOE §S& ~4.QF. S~~ 2000E ~.QSF License revenue 137 396 737 946 1,136 1,793 2,141 2,583 3,154 3,924 4,632 5,49 2,216 7653 17,205 32,66 1 Service revenue 22 Z4Q g ;¢ j~,Q. 1 .437 1 .751 2 .114 z= 3.021 3.424 1 6 .060 12 .872 21 .21 0 Total revenue $227 $636 $1112 $1,402 $1,694 $3,230 $3,892 $4,697 5,682 6,945 8,056 53,377 513713 $30,076 553,87 1 Reason Why +Estj mates Fraudulent E nd±of EPNY Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 50 of 96) 1ssuer me -_ Hands riu .Inc. -HAND Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book " Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, John Metz, David Meckfes sel, Michael Ounjian, Mar c Laberge) ; Equity Research (Marc Cabi, B ri an Blair) Date of June 2000 Statement Page 1 Number Fraudulent (SW iJuly 29. 1998 to Nne P Calendar Statement June 30. 1999 Ended April 1 . 2000 2000E 01 Faevenue - $50.1 $218.9 8513.8 Cast of Revenue - 34.2 152.4 352 5 Gross Profit - $15.9 $66.5 161 .3 Gross m pn w 31.8% 30.4% 31.4% Inc. (loss) Operations ($5.2) ($14.7) ($48.6) (487) Net 1r n (loss) (4.7) ($14 .3) ($43 .3) (41.2) Crecit & sse First Boon Egity Reseerth Marc Cab. Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, John Metz, David Meckfessel, Michael Ounjian, Marc Laberge) ; Equity Research (Marc Cabi, B ri an Blair) Date of June 2000 Statement Page 1 Number Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 51 of 96) Fraudulent CY2001E 1 Rev Muit I Statement VALUATION DATA (8 i n MVO e ce pier share data) Equity Revenue CY00-CY01 CYDO-CY01 Market Value Multiple Grorovth Rate Growth Rate Handspring (at $18.00) $ 2,633 4.8x 134.8% 3.6 Palm (521 .38) 12.066 6.7 41 5 16. 1 Leading I-kandheldWirdess Companies (Med .) 7.0 74.8 16. 1 Wreless Equiprnent Companies (Med .) 10.3 48.3 25.9 ce Hardware/Software Related Con anies (Med.) 12.2 57.1 21 .0 . and Intent Companies (Med .) 23.1 79.2 24.3 AsbFIALM109., Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, John Metz, David Meckfessel, Mi chael Ounjian, Marc Laberge); E uit Research (Marc Cabi, B rian Blair) Date of June 2000 Statement Page 1 Number Fraudulent Key Sales Points . . . Rapid Revenue Growth With Significant Operating Leverage Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, John Metz, David Meckfessel, Mi chael Ounjian, Marc Laberge); Equity Research (Marc Cab], B rian Blair) Date of June 2000 Statement Page 5 Number Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 52 of 96) Fraudulent Key Points to Marketing Handspring . . . Rapid Revenue Growth With Significant Operating Leverag e Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, John Metz, David Meckfessel, Michael Ounjian, Mar c Laberge) ; E uit Research (Marc Cabi, B rian Blair) Date of June 2000 Statement Page 1 1 Number Fraudulent Impressive Revenue Growt h Statement Q4 1999:$15 .8MM Q 1 2000 :$34.3MM Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, John Metz, David Meckfessel, Michael Ounjian, Mar c Laberge); Equity Research (Marc Cabi, B rian Blair) Date of June 2000 Statement Page 1 5 Number Fraudulent Rapid Revenue Growth with Significant Operating Leverage Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, John Metz, David Meckfessel, Michael Ounjian, Mar c Laberge); uity Research (Marc Cabi, B rian Blair) Exhibit E : Misstatements and Omissions in CSFB 's Sales Memos (Page 53 of 96) Date of June 2000 Statement Page 2 1 Number Fraudulent We are proposing a filing valuation midpoint of $2,633 million (4 .8x CY2001 revenues). Statement We believe that HAND's IPO valuation is conservative with respect to the following valuation methodologies : Comparable Company Valuation Analysis and Recent Communications IPOs . Reason Why +Basis Fraudulent Report Title "Sales Point Broadcast - Initial Public Offeri ng" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, John Metz, David Meckfessel, Michael Ounjian, Mar c Laberge) ; Equity Research (Marc Cab], Brian Blair) Date of June 2000 Statement Page 2 1 Number Fraudulent VALUATION DATA Aggregate Aggr . Value I CY00-CY01 ! Cal _ Q1-Q 2 (in MM) Market Value 2001 Rev. Grow th Rate Growth Rate Statement FFandsprnr9 (at $18 .00) $ 2,441 4.8x 134 .8% 3. % P alm (at $21 .38) $ 11 .067 6 . 7 41 .5 16 . 1 Leafing Handhek!M eless Device Companies (Med .) 7 . 0 74 .8 16. 1 Wireless Equipment companies (Med .) 10.3 48 .3 25. 9 Device Hardware/Software Related Companies (Med .) 12. 2 57 .1 21 .0 23. 6 Lead New Comm. And Internet Companies 23 .1 79 .2 24 .3 16 . 7 Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, John Metz, David Meckfessel, Michael Ounjian, Mar c Laberge) ; Equity Research (Marc Cabi, B ri an Blair) Date of June 2000 Statement Page 22 Number Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 54 of 96) Fraudulent C rable Company Analysis (Continued) Statement ,,, , T'"we r.rr.vea ' .rlw-. &-bw F...ra rrl. Vw ."t. ____ ern I... NUR. i Oi6. P . EIIYV A W . 111%11hpa" lyr. MlYiiI f 014Q CM-CM CYM{r0 1 PH . . M LTY M .1.t IN~ ME C1 CY 07 o.aw. !i. CCNl/NF FME Y2NO !sw V~ . V . C771 IYN Il .ra IMN00' ~ Nwl. { f NIMN MtD M NA SU O.44/ N/ 1128 4J! NAI% *10% 4. Q PA0A13 yM4, l " 5% 11% 9 '2 Cfr_ 51 .5 •S8. 9Ar 87 2 5% 415% 1E pa'Yllf .4%' 208 .1% 3cm 5521 5'd. 8 7 NR :5 • % i.l 8 RE :FAA-1-! 8384:1 :8:1.5 I 1% 1% 1 92.3 • 53 5 t t 9 5 3 . 5 78. Ills", vrtba ^ y •164, +~3. t9% 4t'% lE l v.,.. 4% la 4 X14 ' C It ft 74j % oliLUi'RRI wr ISC, I ei c'_ 5? t! S 4 .32 TS 5 5% - h &a4ECLY.16* .5P*D1513 - S. -16 3 :!87 NA + 74 •-5.0 3 w 5Be % M]t•. .5+3% 41.2 a: T. ' 51, X5 1 ' 0 1% 483 % 4ra• .513% ca It A:' •54 :34 1.'i 189 E Oai~N&A . .9eb -MWN c,,* a .IDJ=5Y6T£IfS I{4lJ~ ; 3537 . s • 3% 1 F :h S'95 : eL ?93% F`C'.M==H N=1 .4nl 653£ - 5E £ 303 • EJ: - :9 C 413 945115 a' r~~E115 .%54% ?SC] -~Ya- 145 ;MtE" 5 333 :A' • 1' S Si `k _"b t_ LGERATE rWI2-.20E3ALr ; ii 8b -hl ]% f545% 1 5 ' 1 •S {C 3 . : • ! .- - YI. ,.N SYb- E VS IIi ; JU ; ? 38 1 - Y17A i1 1Y E 7: • a59 Q ' tl `4 < A '74 S~L:rICYJE 111=lpai i - 66 2% CT4 1•3i •. Di6 1 3 .%81 ta5 d 4 TI':L I 1,8_ 0.. - 73 A4 137% !9' NY iCi ". 38% t r 73 N. x .S'A 117 .5% 66 .7 35) .5 z` 1 ld?51% 18 :B % A .1iPER YTNCRK$!G .,7~:: :' 4133 L'J -SGA 9449% K 1 - 1, 3'L 4169.1 734 495 .i• 1 5!'J.WCgE fk i '~tfdt5-til-uli 15 E:' 59 ,% SIC N. '€713 1 ;41 2337 833 39 . r 43 F3 %CHY 1.ET11,F,3 .745 ~5 ' C" 73 5% C 9% 53"1: E146 O-s 4 15 : 12 1 1 14% 735.. 4NA). -Ec-fF-DJIES N-, IV-, =594 .8' r C 0% 5 •:E 3453 NV 713 !ti 3 fK 1IT3 / / .3 ? NEXT LEVE. C:Ln4f' ~Zrc •.3 .3 .-4}. 44% 5553 3E'S I N 55 7 118% : 1 0.'ibNEA 7349= 4in l .575 -^S i 1 ?6% 1595 5'153 145 8 US YJ • 7 5% 116 8 8,519 £TIrf,S!A_,'LY E5 C^_ 735% 1• 3% :lee • 914 lei 445 i3 C `K i4 'A WaAr ? .1 'Ji. 1•'Y9. :J' 53 :3• - 6 `k :5 :14 Y+ M F:A 34111 341 7 517 27 3 X1715 855% l.4M AW~ln -35% 515% 51 . Si . 1138 151% ES 9% 5 J.iM AWn .579% 13.: fr% 1354 1+ 185 •t 1% 1387% :H 3 -01 r IBE: r ('nylc ir.Vr.E vtl iG !'/thMLQ n_I,a Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, John Metz, David Meckfessel, Michael Ounjian, Mar c Laberge) ; Equity Research (Marc Cabi, Brian Blair) Date of June 2000 Statement Page 23 Number Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 55 of 96) Fraudulent R Communications IPOs Statement a HAND should also be compared to recent communications IPOs . G th rate, HAND should trade at a similar multiple. 1 5x - 20x CY 2001 E revenues . SMM except r share amounts 7E NUN= 2001E 2DCOE ?DfJf 2000E 2UEiE Gm-t 6 In Reg . Handspring ('J 4 .8 NA x NA x NA $218 .9 $513.8 134.7% In Reg . Accelerated Networks 14 .1 6 NA NA NA 38 . 7 81 .3 110.1 % In Reg - ONI Systems NA NA NA 30 .0 125 .0 316.7% 0524100 Sonus 49 .7 17 .7 39 .8 $48 .50 25 .0 70 .0 180.0% 05!23100 Cemdlwm 21 .3 8 .1 O .3 27 .25 23 . 7 62 .6 164 .1 % 05117/00 New Focus 22 .9 11 .6 52 . 47.25 50 .5 99 .7 97 .4% 0426100 Metawave Communications 5 .6 2.7 16.4 4.00 50 .0 105 .0 110 .0% 04119(00 360 Networks 28 .1 11 .6 22.7 jP 407 . 0 984.0 141 .8% 04112/00 Nuance Communicat,ons 11 .5 6.0 27.9 14 .8 33 . 0 63.0 90 .9% 04 111/00 Boolcham Technology 44 .3 172 96.7 37 .6 99 .3 157 .3% 04/05100 Ulticom 10 78 18. 8 14 .5 24 . 59.9 29 .9% 04105,'00 Vyyo 31 .8 81 28.2 7 .2 13.50 51.0 292.3% 03/01 100 Palen 17 .4 12 .3 9.4 6 .7 21 .38 11 1 41 .5% Average 23 .3 x 10.0 a 41 .6 17 .6 x $160 .8 14~.39 L Median 21 .3 x 8.1 x 26 .1 x 13.4 x $38 .7 2"% (1) Assumes pacing at midpoint of filing range Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Sui sse First Boston ; Investment Banking (John Hodge, John Metz, David Meckfessel, Michael Ounjian, Mar c Laberge) ; uit Research (Marc Cabi, Bri an Blair) Date of June 2000 Statement Page 26 Number Exhibit E: Misstatements and Omissions in CSFB' s Sales Memos (Page 56 of 96) Fraudulent Statement H in Research Mode l Break-even : Q4'01 __ MV, z _ Fiscal Year Ends December 31 FY2 FY2001 E FY2002E FY Ending Jun 30 CY Ending Dec 3 1 ($ & Shares in Millions) Se to DecA Ma SeptE DecE MarchE JunE SeptE DecE 2000A 2001E 2000A 2001 E Net Sales 15 .8 34 .3 58 81 .8 90 .0 110 .6 137 .3 175 .9 94 .4 340.8 218. 9 313 . 8 Reason Why +Estimates Fraudulent End of f[,tM Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 57 of 96) IuterNAP Nett v ervic es Corporation AN" Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book " Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Greg Roth, John Hinrichs, Matt Warner) ; Equity Research (Todd Raker, Brad Stephens) Date of September 9, 199 9 Statement Page 1 Number Fraudulent FINANCIAL OVERVIE W ($MM ) Statement (Fists! Year Ends Dec .} 1999E 2000E 2001 E Total Sales S 11 .510 S 44 .300 $ 111 .700 Gross Profit (14 .456) (14.300) 20.200 Operating Profit (Loss) (52.351 ) (77 .475) (71 .888) I Reason Why -I-+Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Greg Roth, John Hinrichs, Matt Warner) ; Equity Research (Todd Raker, Brad Stephens) Date of September 9, 199 9 Statement Page 1 Number Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 58 of 96) Fraudulent VALUATION DATA Statement Stock Equity Aggr. Aggr. Valu• I Price Market Market CY99 E CYOOE COMPANY (FYE) 9107199 Value Value F Revs "' ft." " ' INTERNAP NETWORK SERVICES CORP. $14 .00 $917 .0 $784.0 68.1 x 17.7 x Median 90.7 x 18.6 x Mean 119.5 272 Intsmat lnfrasbvctura ian 36.1 x 13.8 x n 4&0 14.5 Reason Why +IPO Discoun t Fraudulent Report Title "Sales Point Broadcast-- Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Greg Roth, John Hinrichs, Matt Warner) ; Equity Research (Todd Raker, Brad Stephens) Date of September 9, 199 9 Statement Page 1 6 Number Fraudulent As with most recent Internet deals, we have based the initial valuation of InterNAP on 2000 revenue multiples . Statement Reason Why +Basi s Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Greg Roth, John Hinrichs, Matt Warner) ; Equity Research (Todd Raker, Brad Stephens ) Date of September 9, 199 9 Statement Page 1 6 Number Exhibit E : Misstatements and Omissions in CSFB's Sales Memos (Page 59 of 96) Fraudulent CSFB believes that InterNAP is attractively valued at the proposed filing range based on revenue multiples particularly fo r Statement the Broadband Enabler comparable companies . Valuation Compariso n The midpoint of the InterNAP filing range implies multiples of 17 .7x CY 2000 revenue. This multiple represents a significant discount to Broadband Enabler comparable companies, which trade at a mean of 27 .2x CY 2000 revenue . Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Greg Roth, John Hinrichs, Matt Warner) ; Equity Research (Todd Raker, Brad Stephens) Date of September 9, 199 9 Statement Page 1 7 Number Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 60 of 96) Fraudulent Statement Co ble Company Analysis (SMM, excep WQ d Performance Capitalization Stock Disc. I Prem . Equity Aggr. 5-Yr. EPS Aggr . Value I Price to LTM Market Market Gr . Rate LTM CY99E CYOOE COMPANY FYE 9 Hi h Low Value Value (LTGR) Revs Revs (1) Revs (1 1 Broadband Enablers EXCITE@HOME (12 ;31) 75.9% 513 .110 .5 $12 .986 7 83 .8% 45 .7 x 51 .0 x 17 .9 x COVAD COMMUNICAT IONS GROUP (12131) 47 . 31 .0% 3 .425 .6 3 .522 .0 94 .0% 169 .7 62 .5 16 . 8 NORTHPOINT COMMUNICATIONS GP (12131) 27 . 53 ° 3 .288 .3 2 944 .0 100 .0`/° 646 .3 118 .9 19 . 4 RHYTHMS NETCONNECTIONS INC (12131) 36. k5 9i. 28 ° 2,682 .1 2 .678 .4 75 .0%u 975 .4 245 7 54 9 Median 52 .4% 88 .9% 408 .0 x 90 .7 x 18 .6 x Mean -53 .2% 882% 459 .3 119 .5 27 . 2 Internet Infrastructure EXODUS COMMUNICATIONS INC (12/31) S75 .13 -16 .3% 1838 7% S6 1 59.9 72 .5% 59 .7 x 34 1 x 16 6 x ABOVENET COMMUNICATIONS INC (6130) 35 .13 -53 .5% 510.9% 1 .214 . 75 .0% 71 .6 301 10 4 CRITICAL PATH INC (12/31, 31 .13 -79 .3% 7 3% 1 .187 .6 9^303 50 .0% 249 .3 81 .8 20 0 INTERVU (12131 ) 31 .56 -61 .5% 448.9!° 440 .5 526 0% 76 .3 38 1 11 0 Median -57 .5% 4799% 3 74 .0 x 36 .1 x 13 .8 x Mean -52 .6°! 7015% 9 114 .2 46 .0 14 . 5 Overall Median -56 .9" 153 5°/o 7 " 56 .7 x 17 .3 x Overall Mean -52 .9% 399 3% 75 "/ 828 20 9 (1) All estimates from V13/EIS analyst consensus . Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book " Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Greg Roth, John Hinrichs, Matt Warner) ; Equity Research (Todd Raker, Brad Stephens) Date of September 9, 1999 Statement Page 20 Number Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 61 of 96) Fraudulent CSKO search Model - Annua l ($MM, excep d i a Year Ends Dec.) 1996 1997 1998 1999E 2000E 2001E $ 0044 S 1 .045 S 1 957 S 11 510 S 44 .300 $111 .700 Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Greg Roth, John Hinrichs, Matt Warner) ; Equity Research (Todd Raker, Brad Stephens) Date of September 9, 199 9 Statement Page 2 1 Number Fraudulent Statement CS search Model - Quarterly ($MM, excep dqM) 1999E Full Year 2000E Full Yea r (Fiscal r Er s c.) 3131A 6130A 9130 12131 1999E 3131E 6130E 9/30E 12131E 2000 E Total Sales 1-421,4 YA~- 1 .244 S 2 166 S 3 .400 S 4 700 S 11 .510 S 6 .600 S 9 .100 S 12 400 S 16 200 S 44 30 0 Reason Why +Estimates Fraudulent -= . a- jEndvf INAP_ Exhibit E: Misstatements and Omissions in CSFB ' s Sales Memos (Page 62 of 96) Lan Cor l*tion _ Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Michael Tunstall, Tony Trousset, Steve Robb, K .S . Jangbahadur, Richard Park) ; ity Research (Mark Wolfenberger, Wayne Segal, Barry Chubrick) Date of January 20, 200 0 Statement Page 1 Number Fraudulent Key Sales Points. . . Strong business momentu m Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Michael Tunstall, Tony Trousset, Steve Robb, K .S. Jangbahadur, Richard Park); E ity Research (Mark Wolfenberger, Wayne Segal, Barry Chubrick) Date of January 20, 200 0 Statement Page 4 Number Fraudulent Summary Sales Points . . . Strong sequential quarterly growth in revenue s Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Michael Tunstall, Tony Trousset, Steve Robb, K .S. Jangbahadur, Richard Park); Equit Research (Mark Wolfenberger, Wayne Segal, Barry Chubrick) Date of January 20, 200 0 Statement Page 20 Number Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 63 of 96) Fraudulent Strong Business Momentum : Annual Revenue Growth Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book " Author(s) Credit Suisse First Boston ; Investment Banking (Michael Tunstall, Tony Trousset, Steve Robb, K .S. Jangbahadur, Richard Park); Equit Research (Mark Wolfenberger, Wayne Segal, Barry Chubrick) Date of January 20, 200 0 Statement Page 24 Number Fraudulent Lante is attractively valued relative to its comparables at the proposed filing range based on Statement 2000 and 2001 revenue multiples Reason Why +Basis Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author (s) Credit Suisse First Boston ; Investment Banking (Michael Tunstall, Tony Trousset, Steve Robb, K .S. Jangbahadur, Richard Park); Eq ity Research (Mark Wolfenberger, Wayne Seal, Barry Chubrick) Date of January 20, 200 0 Statement Page 24 Number Fraudulent N,,.12W atwvs AMVI CY 00 CY 01 Statement Revs me (at $11.0()) x Selectee Crabs Cc np nias Sapient 6 .134 10.3 x Scion( 5.808 5.8 RaZOI h 3.808 16.9 .0 ), Proxicorn 2.475 20 .5 Vrant 2.088 17 .2 / ( / Yrt : 17.2 x - Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 64 of 96) Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Michael Tunstall, Tony Trousset, Steve Robb, K .S. Jangbahadur, Richard Park); Eq ity Research (Mark Wolfenberger, Wayne Segal, Barry Chubrick) Date of January 20, 2000 Statement Page 26 Number Fraudulent (E) Revenue multiples based on preliminary CSFB equity research revenue forecasts ; Est. 2000 Rev of $54.5 MM and Est. Statement 2001 Rev of $79 MM Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book " Author(s) Credit Suisse First Boston; Investment Banking (Michael Tunstall, Tony Trousset, Steve Robb, K .S . Jangbahadur, Richard Park); Eq ity Research (Mark Wolfenberger, Wayne Segal, Barry Chubrick) Date of January 20, 2000 Statement Page 28 Number Fraudulent `+ S Statement F B h Model QI-Mar Ju -Dx FYQ8 QI-Mar Q2-Jun Q)-Sep Q4-Dec FY 99 (;I-Mar Q2-Jun Q?-Sep Q4-Dec I'Y0 0 FY - I ctu al Actual Actual lclua l Total Revenues 3 .1 15 .4 4 .0 7 .1 931 11 .5 12 .2 11 .0 10 .2 1i .1 54 .5 711 , %fr Qrr'Qrr 30% 2$°,-n IJ% 46?d. 10% 2411 Ou 7°if, G Revenues I 3 .8 4 .7 2 4 .11 7 .1 9 3, 11 .D 12 .2 I3 .0 14 .2 15 .1 54 .E 79 . Reason Why +Estimates Fraudulent End of LNTE Exhibit E : Misstatements and Omissions in CSFB's Sales Memos (Page 65 of 96) ssu Name - The Lx is "srfner . ' Inc. - LSPN Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author (s) Credit Suisse First Boston ; Investment Banking (Chas Edelstein , Dris Upitis) ; Equity Research (Greg Cappelli, Mike Husman ) Date of January 19, 2000 Statement Page 1 Number Fraudulent NANC/.4L OVERVIEW Statement Dollars In Thousands) Fiscal Year Ended Jan . 31 , 2000 c Year Ende d Q1A Q2A Q3A Q4E 2 01 2002 E Total Revenues S6,562 512,938 S11 .551 S1 . 5 . 1, 5 S1, 88 S88.652 Gross Profit 4.094 8.284 7.823 6 . 2 39 .239 54.31 7 EEITA A837) (3,177-1 (6,869) ( :~ ( .1 (52,663) (29,022 ) Operating IncorneAossi 0,837) (3 .177) (8.4 r (1 0 33 5) (66,077"1 02,422) Net Incnm e'(Lossi (5,230 : 13 .739) 9, 1 (18,2 37.052) (65.353: (41 .002) Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Chas Edelstein, Dris Upitis); Equity Research (Greg Cappelli, Mike Husman) Date of January 19, 200 0 Statement Page 16 Number Fraudulent Multiple Revenue Stream s Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book " Exhibit E: Misstatements and Omissions in CSFB ' s Sales Memos (Page 66 of 96) Author(s) Credit Suisse First Boston; Investment Banking (Chas Edelstein, Dris Upitis) ; Equity Research (Greg Cappelli, Mike Husman ) Date of January 19, 2000 Statement Page 2 1 Number Fraudulent This estimate for FY 2001 schools and revenue for Lightspan Achieve Now is considered conservative based on curren t Statement growth rates. Reason Why +Cautionary Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Chas Edelstein, Dris Upitis) ; Equity Research (Greg Cappelli, Mike Husman) Date of January 19, 2000 Statement Page 25 Number Fraudulent We have based our valuation of the Company on a public market trading analysis. This analysis applies a range of revenu e Statement multiples based on comparable companies in the Education Technology and Internet sectors . We believe that the comparable company analysis is the most appropriate for valuing Li hts an and have primarily relied on this methodology, Reason Why +Basi s Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Chas Edelstein, Dris Upitis) ; Equity Research (Greg Cappelli, Mike Husman ) Date of January 19, 2000 Statement Page 25 Number Exhibit E : Misstatements and Omissions in CSFB's Sales Memos (Page 67 of 96) Fraudulent Lightspan Valuation Summary Statement FILING RANG E SHARE PRICE $10.00 $12 .00 $16 .00 $18 .00 Shares (millions} 47 .0 46 .6 4 45 .1 45 .0 Post-I0oney Equity Value $470 $55 Y $721 $81 0 Enterprise Value $346 $41 78 $548 $62 1 Implied Multiple of FY 2001 6 .1x 4x 9.7x 10- .9x Revenues 10 Implied Multiple of FY 2uu2 4 .4x 6.1x 7.0x B.Ox Revenue s de: u x-fi caerc6e reen oe o 5 , . We have also performed a sum-of-the-pa s k al~ysis which applies relevant multiples of each of th e Company's business segments, to theseents c ~Year 2001 and 2002 estimated revenues . This valuatio n analysis yields a post-money equity val i itspan of $465 million to $590 million and is detailed below . (Dollars in Millions) IMPLIED FULLY DISTRIBUTE D FISCAL YEAR E ULTPLE RANGE ENTERPRISE VALU E BUSINESS 2001E FY 2001E OF FY 2002E VALUATION SEGMENT REVENUE!!; REVENUE REVENUE FY2001E FY2002E RANG E Achieve Now $4 . t) 7.Ox - 9.5x NA $290 - $394 NA $290 - $395 Academic Sys . .6 7 .0-9.5 NA 78 - 105 NA 80 - 105 Internet K-12 12 .1 10 .0-15 .0 7 .Ox-10.Ox 43-64 $85-$121 65-90 Total 6 . $78 .1 $435-$590 Fully Di u to rise Value Range $435 -$590 Fully Di ity Value Range $457 -$61 2 IPO Ou e 15%-25 % Pr ost IPO Discount ) Equity Value Range('2) $365 - $48 9 P refiminary Equity Value Range 13" $465 - $58 9 Nary revenues adjusted to Include not hardware revenues of $1 .0MM and $1 .6MM In 2001E and 2002E respectIvey . 2 As s IPO discount at midpoint of 15% - 25% IPO discount range. sumes $62 . 5MM IPO w ith $75. 2MM In not proceeds and concurrent p rivate placements of $25 .5MM with net proceeds of $24 .6MM. Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book " Exhibit E : Misstatements and Omissions in CSFB 's Sales Memos (Page 68 of 96) Author(s) Credit Suisse First Boston ; Investment Banking (Chas Edelstein, Dris Upitis) ; Equity Research (Greg Cappelli, Mik e Husman ) Date of January 19, 2000 Statement Page 28 Number Fraudulent Lightspan Partnership Inc. Quarterly Income Statement Grey CBOpaa) (312-75O-29O7) Scot? Wilson (312 .750.9073) Statement J$ n urxo c. Frfnd rail 1000A 2000A 3000A 4000E 2000E 1001E 2001E 3001E 400TE 2001E 1002E 2002E 3002E 4002E 2002 E Revenue: Licensing $3 .93 $ 8 .77 $7 .56 $6 .99 $27.25 $5 .78 $13 .38 $14.23 $12 .25 $ 45.64 $7 .45 $16 . 48 $17 .56 $15.53 $57 .0 2 Services 1 .22 1 .57 1 .93 1 .20 5. 92 1 .37 1 .43 1 .55 1 .61 5 .95 1 .70 1 .78 193 2.00 7 .40 Hardware 1 .00 2.17 1 .66 1 .53 6 .35 1 .01 2 .17 1 .89 194 7 .02 1 .53 4 .12 3.23 3.27 12 .1 5 Subscription 0 .41 0. 43 0.40 0.52 1 .76 0 .50 0 .71 0 .87 1 .22 3 .30 1 .45 1 .51 1 .55 1 .83 6.34 Advertising 0 .00 0. 00 0.00 0. 03 0.03 0 .16 0 .16 020 0 .22 0.73 0 .72 0 . 88 1 .27 1 .71 4 .59 E-C mmerce 0 .00 0 .00 0 .00 0 .00 0 .00 0.01 0 .04 0 .09 0.11 0.25 0 .27 0 . 19 0 .35 0.33 1 .1 5 Total Revenue 6 .56 12. 94 11 .55 10.26 41 .32 8.89 17.88 18 .83 17.36 62 .69 13. 12 24 .96 25.89 24 .58 88.65 Reason Why +Estimates Fraudulent End of lPN Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 69 of 96) McDa#a Co ratio n - M EDT Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Jake Peters, John Metz, Tim Smith, Rhett Hunter, Jake Block) ; Equity Research (Amit Chopra) Date of July 19, 2000 Statement Page 1 Number Fraudulent INCOME STATEMENT Six Months Six Months Calendar Year, ' Statement fwws) Ended June 30, Ended June 30 1999A 2000A 1999A 2000E 2001 ; Net revenue S34,190 S103 ,595 595,263 5232,865 5325,897 Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Jake Peters, John Metz, Tim Smith, Rhett Hunter, Jake Block) ; Equity Research (Amit Chopra) Date of July 19, 2000 Statement Page 1 Number Fraudulent Strong revenue growth with continued operating profitabilit y Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Jake Peters, John Metz, Tim Smith, Rhett Hunter, Jake Block) ; Equity Research (Amit Chopra) Date of July 19, 2000 Statement Page 1 Number Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 70 of 96) Fraudulent VALUATION DATA Capitalization MCDT Valua tion Multiples Statement (SMM, except per share data ) Equity Aggregate Aggr. Value / Market Value / Market Value Market Value 2001 Rev. Earnings 200 1 McDATA Corpora tion (at $20 .00) $2,382 $2,108 6.5x 65 .7x Best-in-Class Storage Infrastructure (Median) 18.8x 142.Ox Recent Communica tions IPOs (Median) 31 .4x NM A 7/18/00. Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Jake Peters, John Metz, Tim Smith, Rhett Hunter, Jake Block) ; Equity Research (Amit Chopra) Date of July 19, 2000 Statement Page 5 Number Fraudulent Strong Revenue Growth with Continued Operating Profitabilit y Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book " Author(s) Credit Suisse First Boston; Investment Banking (Jake Peters, John Metz, Tim Smith, Rhett Hunter, Jake Block) ; Equity Research (Amit Chopra) Date of July 19, 2000 Statement Page 20 Number Fraudulent Strong Revenue Growth with Continued Operating Profitabilit y Statement Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 71 of 96) Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book " Author (s) Credit Suisse First Boston ; Investment Banking (Jake Peters, John Metz, Tim Smith, Rhett Hunter, Jake Block); Equity Research (Amit Chopra) Date of July 19, 2000 Statement Page 20 Number Fraudulent Strong annual and quarterly revenue growt h Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast-- Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Jake Peters, John Metz, Tim Smith, Rhett Hunter, Jake Block) ; Equity Research (Amit Chopra) Date of July 19, 2000 Statement Page 22 Number Fraudulent • Attractively priced Statement • Primary comparable in the Storage Area Network (SAN) industry is Brocade Communications System s (BRCD), which is currently trading at 41 .7x CYOIE revenues and at 243 .1x CYOIE Price-to-Earning s • Other comparables include recent communications equipment IPOs, which currently trade at a median of 31 .4x CYOIE revenues • Assuming CYOIE revenue of $325.9MM (CSFB Research), McDATA's AMV/Revenue multiple at filing i s only 6.lx - 6.8x CYOIE with a P/E multiple of 62 .3x - 69.Ox • Based on the midpoint of the IPO filing range of $20/share, this represents an 79.8% discount to the recen t communications a ui ment IPOs median of CYOIE revenue multiple Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offerin = (and/or) "Equity Sales Book " Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 72 of 96) Author(s) Credit Suisse First Boston ; Investment Banking (Jake Peters, John Metz, Tim Smith, Rhett Hunter, Jake Block) ; Equity Research (Amit Chopra) Date of July 19, 2000 Statement Page 27 Number Fraudulent Statement M Corporation Research Model - Amit Chopra ($MM, except r e nou)ts 1f99A 2000E 2001 E 2 1 ISA 03 "A Qt "A 19!99 Q1 00A Q2 00A 03 ODE 0400E 2000E 0101E 0201 8 0701E Q401E 2001 E Dollars In Thousand s Nei Sales S VZ4, 1, S 2,681 S 38,412 S 95,2631S 47,134 S 56 .480 S 60,977 S 68,294 $ 232 ,885 S 72,050 79,255 S 83 ,2 18 91 ,373 S 325,88T Reason Why +Estimates Fraudulent Ud ofViCDT Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 73 of 96) j~Nkne New Focus Inc. - Nt31 0 Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, Ray Carey, Ajay Shah, Zsofia Madi-Szabo) ; Equity Research (Jim Parmelee, Leslie Mallon ) Date of April 2000 Statement Page 1 Number Fraudulent '$MM) Fiscal Year Nine Months Calpnda r Ended March 31 Ended December 3 1 Statement 1999A 1999A 1999A 2000E 0 Total net revenue $17 .29 18 .10 22.84 49 .1.4 Total cast of net revs 9.23 12 .53 15.19 44.79 64 . Gross profit 8.06 5 .58 7.65 4 .89 35 .24 Gross rnag 46.6% 30.8% 33.5% 9.8?, 35.2% Inc. (loss) operations (4 .67) (7 .54) (8.90) (34 .67) (23.50) Net income (loss) (4 .97) (7 .68) (9.15) (29 .80, (19.00) Prelimina ry Cre dit Suisse First Boston Equity Research. Jim Parmelee Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, Ray Carey, Ajay Shah, Zsofia Mad]-Szabo) ; Equity Research (Jim Parmelee, Leslie Mallon) Date of April 2000 Statement Page 1 Number Exhibit E : Misstatements and Omissions in CSFB 's Sales Memos (Page 74 of 96) Fraudulent VALUATION DATA Capitalization NUFO Valuation Multiples Statement (S in MM, except per share data) Equity Aggregate Aggr. Value Aggr . Value ..' Market Value Market Value 2000 Rev . 2001 Rev. us (at $15.00) $ 953.0 $ 862 .0 17.1 x 8 .6x A n Co $76 .38) 4,775 .7 4,581 .5 79.4 30 .5 00 T v ($38.25) 4 .501 .0 4 .195. 2 107.6 42 .4 0' IC n a cturers ( Median) 26.5 17 . 1 Recent ar Os (Median) 31 .4 17 .6 As of 4.24M. Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, Ray Carey, Ajay Shah, Zsofia Madi-Szabo) ; Equity Research (Jim Parmelee, Leslie Mallon) Date of April 2000 Statement Page 1 Number Fraudulent Key Sales Points . . .Rapid Revenue Growth With Significant Operating Leverag e Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, Ray Carey, Ajay Shah, Zsofia Madi-Szabo) ; Equity Research (Jim Parmelee, Leslie Mallon) Date of April 2000 Statement Page 5 Number Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 75 of 96) Fraudulent Key Points to Marketing New Focus . . .Rapid Revenue Growth With Significant Operating Leverag e Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offe ri n " (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, Ray Carey, Ajay Shah, Zsofia Madi-Szabo) ; Equity Research (Jim Parmelee, Leslie Mallon) Date of April 2000 Statement Page 1 7 Number Fraudulent Rapid Revenue Growth With Significant Operating Leverag e Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, Ray Carey, Ajay Shah, Zsofia Madi-Szabo) ; Equity Research (Jim Parmelee, Leslie Mallon) Date of Apri 1 2000 Statement Page 2 1 Number Fraudulent We have mainly based our initial valuation analysis of New Focus on CY2001 revenue multiples . We are proposing a filing Statement valuation midpoint of $862 million. Reason Why +Basis Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, Ray Carey, Ajay Shah, Zsofia Madi-Szabo) ; Equity Research (Jim Parmelee, Leslie Mallon) Date of April 2000 Statement Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 76 of 96) Page 2 1 Number Fraudulent At 17.1x CY 2000 and 8 .6x CY2001 revenues (at the midpoint of our proposed filing valuation), we believe that New Focus ' Statement IPO valuation is conservative when compared to the same multiple of comparable publicly traded companies. Reason Why +IPO Discoun t Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, Ray Carey, Ajay Shah, Zsofia Madi-Szabo) ; Equity Researc h (Jim Parmelee, Leslie Mallon) Date of April 2000 Statement Page 2 1 Number Fraudulent New Focus is comparable to the following groups of publicly traded companies : Statement • Optical Components Manufacturers such as Avanex Corporation, Bookham Technology, Corning, Ditec h Communications, E-TEK Dynamics, Harmonic, JDS Uniphase and SDL . • Recent High Growth Communications Equipment IPOs such as Alteon Websystems, Brocade Communications, CacheFlow, Clarent, Efficient Networks, Foundry Networks, Juniper Networks, Next Level Communications, Redbac k Networks and Sycamore Networks . VAL UA TION DATA Capitalization laluation Multiple s ($ in MM . except per share data) Equity Aggregate Val gr . value Market Value Market Value 0 1 Rear . New Focus (at $15 .00) $ 953.0 $ 862.0 17 . 1 Avanex Corp . ($76.38,1 4 .775.7 4.581 .5 79 .4 Bookhom Technology ($33 .25 ;, 4 .501 .0 4,195.2 107 .6 Optical Components Manufacturers Median) 26 .5 1 Recent High Gro with Equipment IPOs (t.iedian ) 31 .4 17.6 Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 77 of 96) Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, Ray Carey, Ajay Shah, Zsofia Madi-Szabo) ; Equity Research (Jim Parmelee, Leslie Mallon) Date of April 2000 Statement Page J2-2 - Number Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 78 of 96) Fraudulent Statement Npk~_ApM s valuation - Com parable Com pany Analysis e pt per share amounts) Performance Ca italization Trading Muffiples Stock Disc . I Prem . Equity Aggr . Aggr . Value 7~ Price to L TM Market Market LTM CYOOE CYO1 E CO 4124100 High Low Value Value Revs Revs "" Revs' " 14 NEW FOCU C 151 "N $953.0 S862.0 37 .7 x 17 . 1 x 8 .6 x V 'Sr JDS UNIPHASE (6,'30) " 80 .31 -47.7% 481 .4 >o $57 .201 .9 $56 .316.6 57 .6 x 32 .4 x 18.8 x CORNING INC (12 ..31 ~o 14 -34 .4% 211.4% 40 .958 .5 42 .710 .6 9 .9 6 .8 5 .5 SDL (12(31) -34 .341, 646 .9% 11 .698 .9 11,384 .8 60 .9 31 2 20 .8 E-TEK DYNAMICS (6/30) 4 -57 .31•x. 355 .9% 9 .134 .6 9 .000,4 32 .7 21 .8 15 .4 AVANEX CORP (600) 8 3 4,775.7 4,581 .5 208 .9 79 .4 30 .5 BOOKHAM TECHNOLOGY PLC (12131) 3 &. 3 % 4 .501 .0 4,195 .2 NA 107 .6 42 .4 DITECH COMMUNICATIONS (4130) 78 .00 2 .197 .6 2 .138 .5 27 .6 12 .8 10 . 0 HARMONIC INC (12/31) 68 .30 2,098 .6 2,0/8 .9 10 .9 7 .6 6 .0 Recent High Growth Eauio . !POs JUNIPER NETWORKS (12+31) $174.56 -44 .2% 481 .1% $ 7 402 7.6 176 .7 x 86 .2 x 57 .9 x SYCAMORE NETWORKS INC (7'31) 62 .81 -68 .51.'1• 32 .9`/ 15,35 O 7 . 251 .6 78 .0 43 .9 BROCADE COMMUNICATIONS (10031) 91 .06 -50 .8% 1 003 .8% 9.8659 6 . 4 .5 37 .7 23 .2 FOUNDRY NETWORKS (12'31) 75 .06 -64.6c,,, 39.0% 8.6221 8. 6 4 25 .1 16 .5 REDBACK NETWORKS (12'31 ) 54 .000 -72 .8 % 232 .3 % 8,151 . 6 8 . 02 . 6 8 . 43 .2 18 . 6 NEXT LEVEL COMM INC (12-'31'; 82 .94 -58 .9% 80 .1% 6,615 .7 6,471 . 4 ." 25 . 9 ALTEON WEBSYSTEMS (6'30) 61 .69 -55 .3% 50.5% 2 .497 .5 2,409.8 4 . O .2 8 .2 EFFICIENT NETWORKS (6 .'30 48 .63 -74 .0% 66 .29'0 2345.0 2 .596 .1 51 . 8 4 .4 CACHEFLOW INC (41130) 48 .75 -73 .25 80 .6% 1 .742 .6 1 .614 .9 83 .1 . 2 CLARENT (12/31) 46 .25 -74.1% 132.7% 1 .499 .7 1,218.4 25 .5 1 . 5 (1) All estimates from I/B E'S analyst conse nsus , Reason Why +IPO Discount Fraudulent Re ort Title "Sales Point Broadcast - Initial Public Offering" (and/or) " Equity Sales Book" Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 79 of 96) Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, Ray Carey, Ajay Shah, Zsofia Madi-Szabo) ; Equity Research (Jim Parmelee, Leslie Mallon) Date of Apri 1 2000 Statement Page 25 Number Fraudulent N s Research Model Hi P oje ed income Statement ($ in t ; exc fpfgK share data, fiscal year ends December 31st) 1999A 2000E Calendar Yea r A 2QA 3QA 4QA 1QA 2QE 30E 4QE F1999A F2000E F2001 E REVENUE BY SE T Telecom Group 450 2,023 2 ,529 4,885 6,500 8, 500 11 ,500 5,047 31, 385 81,00 0 (sequential growth rate) .0%%% 349 .6`%_ 25 .0 % 93.2% 33.1 % 30.8% 35.3% (year-over-Year growth rate) 10756% 1344 .4% 320.2% 354 .7% 521 .9% 158 .1 % CPG ,13 4,652 4 ,316 4,897 4,400 4, 500 4,500 17,795 18,297 19,00 0 (sequential growth rate) .6% -7.21 13.5% -10.1% 2.3% 0 .0% (year-over-year growth rate) 4.34 6. 2.8%-% 3 .8 % TOTAL REVENUE 4,741 4 , 0 6,845 9,782 10,900 13,000 16,000 22,842 49,682 100,00 0 Reason Why +Estimates Fraudulent EndibfNUFO Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 80 of 96) ) r ~in~e7; == S~rn le tions Inc. 'LX Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book " Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, Richard Hart, David Meckfessel, Jerry Wu, Matthew Katz) ; Equity Research (Erach Desai, Andrew Singer) Date of April 200 1 Statement Page 1 Number Fraudulent 8. Valuation range of 19 .5x to 23 .4x '02 earnings . Most recent deal in space was Verisity (priced on 3/20/01) which priced at Statement 20.Ox '02 earnings, and currently trades at 25.0x, up 25%. The other deal in this space, Synplicity (priced 10/12/00), was price d at 21 .6x '02 revenue multiple of Verisity and Synplicity . '02 earnings and trades at 30 .6x, up 42% . At the midpoint of 1 .7x CY '02 revs, Simplex is valued at a 42% discount to the average Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, Richard Hart, David Meckfessel, Jerry Wu, Matthew Katz) ; Equity Research (Erach Desai, Andrew Singer) Date of Apri1200 1 Statement Page 1 Number Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 81 of 96) Fraudulent + i Statement (excludes non-cash charges) CYE Dec 31 2000 2001E 2002 E Q1 A Q2 Q3 Q4 Tota l Revenues $ 27,750 $ 11 .655 $ 12,500 $ 14,500 $ 14,500 $ 53,155 $ 72,000 y/y growth 126.3% 103.2% 99.4% 58.1% 91.5% 35.5% Gross profit 22,432 9,310 9,842 11,516 11 .440 42,108 58,580 gross margin 80.8% 79.9% 78.7% 79.4% 78.9% 79.2% 81.4 % Operating Profit 1,342 409 432 506 740 2,087 9,98 0 operating margin 4 .8% 3.5% 3.5% 3.5% 5.1% 3.9% 13.9 % EPS $ 0.11 $ 0.02 $ 0.02 $ 0 .05 $ 0.06 $ 0.14 $ 0.5 1 Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, Richard Hart, David Meckfessel, Jerry Wu, Matthew Katz) ; Equity Research (Erach Desai, Andrew Singer) Date of April 200 1 Statement Page 5 Number Fraudulent Valuation range of 19 .5x - 23 .4x `02 earnings. Most recent deal in space was Verisity (priced on 3/20/01), which priced at Statement 20.Ox `02 earnings, and currently trades at 25 .0x, up 25%. The other deal in this space, Synplicity (priced 10/12/00), was priced at 21 .6x `02 earnings and currently trades at 30 .6x, up 42% . At the midpoint of 1 .7x CY'02 revs, Simplex is valued at a 42 % discount to the average `02 revenue multiple of Verisity and S n licit . Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (John Hodge, Richard Hart, David Meckfessel, Jerry Wu, Matthew Katz) ; Equity Research (Erach Desai, Andrew Singer) Date of Apri 1 200 1 Statement Exhibit E : Misstatements and Omissions in CSFB 's Sales Memos (Page 82 of 96) Page 14 Number Fraudulent Exceptional Revenue Growth and Significant Visibilit y Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book " Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, Richard Hart, David Meckfessel, Jerry Wu, Matthew Katz) ; Equity Research (Erach Desai, Andrew Singer) Date of April 200 1 Statement Page 20 Number Fraudulent • Like EDA vendors, Simplex's value will be based on forward PIE multiple s Statement • With a filing range of $10 .00 to $12.00 per share, Simplex's CY02E P/E multiple ranges from 19 .5x to 23.4x • At this range, Simplex's equity market value is approximately $154 - $189M M • Simplex is very attractively priced : • Priced at EDA levels with long-term IP potentia l • Simplex is being offered at a 23% discount to the average of the recently public Synplicity and Verisity on a multiple of '02 earnings and a 42% discount to '02 revs Reason Why +IPO Discoun t Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (John Hodge, Richard Hart, David Meckfessel, Jerry Wu, Matthew Katz) ; Equity Research (Erach Desai, Andrew Singer) Date of Apri 1 200 1 Statement Page 38 Number Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 83 of 96) Fraudulent CSFB arch Mode l Statement FY 2001 FY 2002 LY 2000 GY 2001 CY 2002 CY Ended Dezember 31 , •00A Jun-004 Sep-00A Deo-00A Yer-01 A Ju n.01F Sep -01E Dec-0 1E Mar-02E Jun-0 2E Sep 02E Dec-02E 2000 2001E 2002 E Net Revenues 5 56.152 $7,273 $9,174 $11 .655 $12,500 $14,500 014.500 516,000 517,500 479,000 579,500 $27 .750 $53 .155 $72 .000 Reason Why +Estimates Fraudulent £nd of SPLX Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 84 of 96) Iss hi u rt.cot_n Inc: - SPRT. Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Richard Hart, Margaret Coyle, Sandy Scott) ; Equity Research (Wendell Laidley, Marie Kluth) Date of June 2000 Statement Page 1 Number Fraudulent OVERVIE W Statement (data m thousands, except pershare 2000 by Q uarhsr 2001 by Q U2rh9r Annua l 2r-VU uu VapuUT: sc a ru 3.E aunullu ; ep e c Tom1R evenues $],3]4 $3,077 $4 , 307 $5,707 $6 , 848 $8,184 $9,657 $11,347 $ 3,183 $15,405 $ 36,036 $55,05 5 Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offe ri ng" (and/or) "E uity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Richard Hart, Margaret Coyle, Sandy Scott) ; Equity Research (Wendell Laidley, Marie Kluth) Date of June 2000 Statement Page 1 Number Fraudulent Key Sales Points . . . Financial model underestimates bookings growth rate and justifies premium valuation relative t o Statement comparables . Reason Why +Cautionary Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Richard Hart, Margaret Coyle, Sandy Scott) ; Equity Research (Wendell Laidley, Marie Kluth) Date of June 2000 Statement Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 85 of 96) Page 1 Number Fraudulent ;VALUATION DAT A Statement (USD m limns, exceptpershaLe am aunts) C apiti fixation Revenue X ult~p ]e o Stoc Hqu iby Aggr . Pcce I adk et I azk .t CYO 0 CY01 CY0 2 CC!PANT WYE) 6/16 /00 value Rabe Eeve Aeve Aev e cuemm ex Bervie a I omt 50 67$ 71 4 Bourne : 39 5 0 coneeaeue eta atee unlans ether ine note d Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Richard Hart, Margaret Coyle, Sandy Scott) ; Equity Research (Wendell Laidley, Marie Kluth) Date of June 2000 Statement Page 5 Number Fraudulent Key Points to Marketing Support .com . . .Financial model underestimates bookings growth rate and justifies premium Statement valuation relative to corn arables . Reason Why +Cautionary Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Richard Hart, Margaret Coyle, Sandy Scott) ; Equity Researc h (Wendell Laidley, Marie Kluth) Date of June 2000 Statement Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 86 of 96) Page 1 4 Number Fraudulent Revenue Growth is Only the Beginning. . . Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Richard Hart, Margaret Coyle, Sandy Scott) ; Equity Research (Wendell Laidley, Marie Kluth) Date of June 2000 Statement Page 1 8 Number Fraudulent • Like many e-Business software vendors, Support .com's value is based on forward revenue multiple s Statement • With a filing range of $8-$10 share, Support .com's CY01E revenue multiple ranges from 6.6x to 8 .4x • At this range, Support.com's aggregate market value is approximately $238 -$302MM . . . Reason Why +Basis Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Richard Hart, Margaret Coyle, Sandy Scott) ; Equity Research (Wendell Laidley, Marie Kluth) Date of June 2000 Statement Page 1 8 Number Fraudulent • Support.com is very attractively price d Statement • Support .com's comparables trade at an average of 22 .8x CY01E revenue s • Support.com is being filed at an 67% discount to an average of its comparable companie s Reason Why +IPO Discount Fraudulent Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 87 of 96) Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Richard Hart, Margaret Coyle, Sandy Scott) ; Equity Researc h (Wendell Laidley, Marie Kluth) Date of June 2000 Statement Page 1 8 Number Fraudulent Statement Supp4&42 Valuatio n (USD millions, except per share amounts) ( Y c2pit!lizaW ReVd?hq Multi ples Stock Equity Ad bQ. Price Market Market Y 0 CY0 2 COMPANY (FYE) 6126100 Value Value V s Stan $291 $238 18J 6.6 3.7 x Support $9A 0 $318 $270 17.5 7.5 4.1 x $10 .00 $302 19.6 4.8 x Median 41 .1 23 .2 14 .9x Mean 38.5 22 .8 14 .5 Discount to Compa rables @ Midpoint 54% 67% 71 ;4. Source: IBES consensus estimates unless otherwise noted . Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast --Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Richard Hart, Margaret Coyle, Sandy Scott) ; Equity Research (Wendell Laidley, Marie Kluth ) Date of June 2000 Statement Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 88 of 96) Page 28 Number Fraudulent CSFB rch Model - P& L Statement (data in thousands , except per share) 1999 by Qua rter 2000 by Quarter--1 1 2001 by Quarter Annual Sep-99 Q9S Mar -00 JunOO Se E QScOO E M 1 Jung Sep01E eL 2000E 2001E 20OZE Total Revenues $3 $782 $1 .674 $2 .314 $3,077 $4,307 $5,707 $6,848 $8,184 $9,657 $11,347 $3,283 $15,405 $36,036 $65,05 5 Reason Why +Estimates Fraudulent IKJW of SPRT Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 89 of 96) ssue 'N Tinning Technol Co radon - 'ANN Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Michael Tunstall, Tony Trousset, K .S. Jangbahadur, Affan Butt) ; Equity Research (Mark Wolfenberger, Wayne Segal ) Date of July 8, 1999 Statement Page 1 Number Fraudulent SUMMARY FINANCIAL RESULTS ($MM) Statement Quarter Ended Year Ended Fiscal Year end 12131 Mar-98 Jun-98 Sap-9E Dec-98 Mar-99 1998 1999 2000 Services Revenue $4.6 $5 .6 $9.2 $10.9 $11.3 $30.3 $48.7 $65 .7 Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offe rin " (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Michael Tunstall, Tony Trousset, K .S . Jangbahadur, Affan Butt); Equity Research (Mark Wolfenberger, Wayne Seal) Date of July 8, 1999 Statement Page 1 Number Fraudulent VALUATION DATA as of 7/6 199) Aggregate Value ! Statement ($ in MM) Market Capitalization CY 1999 Rev. CY 2000 Rev . Tanning (at S10 .00 ). $202 3.2x 2 .3 x Scient 1,809 33.7x 15 .5 x Razorfish 842 16.7x 11 .2 x Viant 756 17 .9x 10.9 x Sapient 1,623 5 .9x 4 .O x Reason Why +IPO Discount Fraudulent Exhibit E : Misstatements and Omissions in CSFB's Sales Memos (Page 90 of 96) Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Michael Tunstall, Tony Trousset, K .S . Jangbahadur, Affan Butt); Equity Research (Mark Wolfenberger, Wayne Segal ) Date of July 8, 1999 Statement Page 4 Number Fraudulent Strong sequential quarterly growth in revenue s Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Michael Tunstall, Tony Trousset, K .S . Jangbahadur, Affan Butt); Equity Research (Mark Wolfenberger, Wayne Segal ) Date of July 8, 1999 Statement Page 23 Number Fraudulent Rapid Revenue Growth Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Michael Tunstall, Tony Trousset, K .S . Jangbahadur, Affan Butt) ; Equity Research (Mark Wolfenberger, Wayne Segal ) Date of July 8, 1999 Statement Page 24 Number Fraudulent Strong Sequential Revenue Growt h Statement Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 91 of 96) Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Michael Tunstall, Tony Trousset, K .S . Jangbahadur, Affan Butt); Equity Research (Mark Wolfenberger, Wayne Segal ) Date of July 8, 1999 Statement Page 29 Number Fraudulent Tanning is attractively valued relative to its comparables at the proposed filing range based on 1999 and 2000 revenu e Statement multiples Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Michael Tunstall, Tony Trousset, K .S . Jangbahadur, Affan Butt) ; Equity Research (Mark Wolfenberger, Wayne Segal ) Date of July 8, 1999 Statement Page 29 Number Exhibit E: Misstatements and Omissions in CSFB's Sales Memos (Page 92 of 96) Fraudulent VALUATION DATA TANN Valuation as of 7/6199 Statement ($ in MM) Aggregate Value CY 99 CY 00 Mkt. Cap. Re vs Revs TANN (at $10.00) $202 3.2 x 2 .3 x Selected Comparable Companies Scient $1,809 33.7 x 15.5 x Razorfish 842 16-7 11 .2 Viant 756 17 .9 10.9 1XL 1,851 10.9 7. 3 Proxicom 777 11-6 8.0 AppNet 515 5-6 4. 1 Sapient 1 .623 5.9 4.0 Alden - InternedWeb-Enabled Services Companies 11 .6 _x 8.0 x Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston ; Investment Banking (Michael Tunstall, Tony Trousset, K .S . Jangbahadur, Affan Butt) ; Equity Research (Mark Wolfenberger, Wayne Seal ) Date of July 8, 1999 Statement Page Number 3 3 Fraudulent Statement CSFB Research Model FY97 Q1-Mar Q2-Jun Q3-Sep 04-Dec FY98 Q1-Mar 02-Jun Q3-Sep 04-Dec FY99 01-Mar Q2-Jun 03-Sep Q4-Dec FY0 0 Actual Actual Actual Actual Actua l Total Revenues 25 .2 46 5 .6 9 .2 10 .9 30.3 11 .3 11 .9 12 .5 13.0 48 .7 13 .7 150 17.0 20 .0 65 .7 Revenues 25 .2 4.6 5 .6 9 .2 10 .9 30.3 11 .3 11 .9 125 13 .0 48 .7 13 _7 15 0 17.0 20 .0 65 .7 Reason Why +Estimates Fraudulent - End of TANN Exhibit E: Misstatements and Omissions in CSFB ' s Sales Memos (Page 93 of 96) iTAitttG --Tumbleweed om unt Lions Co ration -1'1Vi VD Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author (s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Ted Smith, Doug Chu, Sandeep Murthy) ; Equity Research (Kri sten Koh) Date of July 14, 1999 Statement Page 1 Number Fraudulent Statement of Operations Data Year En 3 1 Statement 1997 1998 2000E 2001 E Revenue 729 210 \ .592 15,200 29,500 Reason Why +Estimates Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Ted Smith, Doug Chu, Sandeep Murthy) ; Equity Research (Kri sten Koh) Date of July 14, 1999 Statement Page 1 Number Fraudulent Key Sales Points . . .A Transaction- Based Recurring Revenue Model Creates an Attractive Business Mode l Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Ted Smith, Doug Chu, Sandeep Murthy) ; Equity Research (Kri sten Koh ) Date of July 14, 1999 Statement Page 5 Number Exhibit E: Misstatements and Omissions in CSFB ' s Sales Memos (Page 94 of 96) Fraudulent Key Points to Marketing Tumbleweed Communications . . .A Transaction- Based Recurring Revenue Model Creates an Statement Attractive Business Mode l Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book " Author(s) Credit Suisse First Boston ; Investment Banking (Bill Brady, Ted Smith, Doug Chu, Sandeep Murthy) ; Equity Research (Kri sten Koh) Date of July 14, 1999 Statement Page 1 3 Number Fraudulent Key Sales Points . . .A Transaction- Based Recurring Revenue Model Creates an Attractive Business Mode l Statement Reason Why +Growth Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Ted Smith, Doug Chu, Sandeep Murthy) ; Equity Research (Kri sten Koh ) Date of July 14, 1999 Statement Page 26 Number Fraudulent • We have based our initial valuation of Tumbleweed on 1999 and 2000 revenue multiples for a series of comparabl e Statement Internet companies . • At a range of $12.00 to $14.00 per share, Tumbleweed's implied post-money equity valuation is $290MM to $338M M Reason Why +Basi s Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Ted Smith, Doug Chu, Sandeep Murthy) ; Equity Research (Kristen Koh) Date of July 14, 1999 Statement Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 95 of 96) Page 26 Number Fraudulent • Tumbleweed is attractively valued at a substantial discount to its comparables on a Statement revenue multiple basis : • TMWD : 53 .Ox CY99E Agg. value/revenues and 16 .2x CYOOE Agg. value/revenue s Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Greg Roth, Joe Orlando, Margaret Coyle, Russell Roenick) ; E uit Research (Todd Raker, Brad Stephens) Date of October, 1999 Statement Page 26 Number Fraudulent CSFB believes that Tumbleweed is undervalued at the $12 .00 -$14.00 range based on multiples of comparable publicl y Statement traded companies and by Tumbleweed's breadth of service offerings, key partnerships and strong management team. Reason Why +IPO Discount Fraudulent Report Title "Sales Point Broadcast - Initial Public Offering" (and/or) "Equity Sales Book" Author(s) Credit Suisse First Boston; Investment Banking (Bill Brady, Ted Smith, Doug Chu, Sandeep Murthy) ; Equity Researc h (Kri sten Koh) Date of July 14, 1999 Statement Page Number 29 Fraudulent Statement Research Model 1990 1)1)99 V2N74' 03199E Q 4199E 1999F. Q 1/00F. Q290)E 4)316401 4)4/UOE 21 2001 E Oprr . l .Q pn mu , : SA- l.IL'.•nc.c I57U4 !I?U b3UU Pcp 1 .UIc0 j,u}7 .11 aNIU l .7UVU 2 .430 II WI .) 00613 14:155 0 lien la• :07 7 175 .0 77V U 475 0 73` 0 IGii U I 106 0 I .>UV U 22 .)00 "X7 7,1itl 7 Is GJS U U01 Rsr~ e 04 0.5 40t0 900 1 1,2!0.0 1,750.1 1192.0 .0 200.0 .0 1 410 M .0 Reason Why +Estimates Fraudulent End of TMWD Exhibit E: Misstatements and Omissions in CSFB 's Sales Memos (Page 96 of 96) EXHIBIT F: Declaration of Antoine Kasprzak UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORID A CASE NO.03-CV-20459-MARTINEZIDUB E AMY LIU on behalf of herself and all others similarly situated, Plaintiff, Case No . 03-CV-20459 vs. CREDIT SUISSE FIRST BOSTON CORPORATION, et al ., Defendants. DECLARATION OF ANTOINE KASPRZA K 1, ANTOINE KASPRZAK, hereby certify that : (a) I did not purchase the shares of Airspan Networks, Inc. common stock at the direction of plaintiffs counsel or in order to participate in any private action arising under the federal securities laws. (b) I am willing to serve as a representative party on behalf of a class, including providin g testimony if necessary . (c) During the proposed class period, I executed the following Transactions related to Airspan Networks, Inc. common stock: DAte" A_ Aznoulot Prir4e;: .' .Kj leE, Z ._~_~ 13,x ; Cr I >n 2 4- 7-5© //Z/. 41~ (d) .1 have not acted as a class representative in :any cases brought under the federal securities laws during the past three years . (e) I will not accept any payment for serving as a representative party on behalf of a clas s beyond the plaintiffs' pro-rata share of any recovery, except as ordered or approved by the court.. SWORN AND CERTIFIED TI3IS DA Y OF cc4 2003 . ANTOINE KASPRZA K Address : 2 3 r e-Je s ~c 4# 6 1 2 2 lre.) -7 11TZ1 /' `Y K ICY-- Day Phone .fl -t- J73 f ~ G 3 19-5 Home Phone y ,L _3-5' ) 41e.' J`3' 3' 4-3 T EXHIBIT G: Declaration of Amy Liu UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA Case No . AMY LIU on behalf of herself and all others similarly situated, Plaintiff, vs. CREDIT SUISSE FIRST BOSTON CORPORATION, CREDIT SUISSE FIRST BOSTON, INCORPORATED, CREDIT SUISSE FIRST BOSTON-USA, CREDIT SUISSE FIRST BOSTON, CREDIT SUISSE GROUP, FRANK QUATTRONE, GEORGE BOUTROS, WILLIAM BRADY, JOHN M. HENNESSY, ALLEN D. WHEAT, RICHARD THORNBURGH, CHARLES WARD, DAVID A . DENUNZIO, EDWARD CERTIFICATION OF CLASS NADEL, JOHN HODGE, JACK TEJAVANIJA, REPRESENTATIVE AIRSPAN NETWORKS, INC., ERIC D. REGARDING THE FILING OF A STONESTROM, JOSEPH J. CAFFARELLI, AT CLASS ACTION COMPLAINT ROAD, INC., KRISH PANU, THOMAS C . HOSTER, OCCAM NETWORKS INC . (formerly "ACCELERATED NETWORKS, INC ."), SURESH NIHALANI, FREDERIC T. BOYER, AVANTGO, INC., RICHARD OWEN, DAV ID B. COOPER, JR., AUTOWEB.COM, INC. (AUTOBYTEL, real party in interest), DEAN A . DEBIASE, SAMUEL M . HEDGPETH III, BSQUARE CORP ., WILLIAM T. BAXTER, BRIAN V . TURNER, BLUE COAT SYSTEMS, INC. (formerly "CACHEFLOW, INC."), BRIAN M . NESMITH, MICHAEL J . JOHNSON, CLARENT CORP . (VERSO TECHNOLOGIES, INC., real party in interest), JERRY SHAW-YAU CHANG, RICHARD J . HEAPS, COMMERCE ONE, INC., MARK B. HOFFMAN, PETER F . PERVERE, CORILLIAN CORP., TED F. SPOONER, STEVEN SIPOWICZ, CENTILLIUM COMMUNICATIONS, INC., FARAD AALAEI, JOHN W. LUHTALA, DIGITAL IMPACT, INC., WILLIAM C. PARK, DAVID OPPENHEIMER, E MACHINES, INC., STEPHEN A . DUKKER, STEVEN H . MILLER, EFFICIENT NETWORKS, INC ., MARK A . FLOYD, JILL S. MANNING, E.PIPHANY, INC ., ROGER S . SIBONI, KEVIN J . YEAMAN, EVOLVE SOFTWARE, INC ., JOHN P. BANTLEMAN, DOUGLAS S. SINCLAIR, HANDSPRING, INC ., DONNA L. DUBINSKY, BERNARD J . WHITNEY, IMPROVENET, INC., RONALD B . COOPER, RICHARD G. REECE, INTERNAP NETWORK SERVICES CORP., ANTHONY C. NAUGHTIN, PAUL E. MCBRIDE, INFORMATICA CORP., GAURAV S . DHILLON, CRAIG L. KLOSTERMAN, IPRINT TECHNOLOGIES, INC . (formerly "IPRINT.COM"; MADETOORDER .COM, INC., real party in interest), ROYAL P. FARROS, JAMES P. MCCORMICK, INTRAWARE, INC., PETER H . JACKSON, DONALD M. FREED, INTERTRUST TECHNOLOGIES CORP ., VICTOR SHEAR, ERWIN N . LENOWITZ, INTERWOVEN, INC., MARTIN BRAUNS, DAVID M. ALLEN, LUMINENT, INC ., WILLIAM R. SPIVEY, ERIC BLACHNO, LANTE CORP. (SBI AND COMPANY, real party in interest), C. RUDY PURYEAR, BRIAN HENRY, VA SOFTWARE CORPORATION (formerly "VA LINUX SYSTEMS"), LARRY M . AUGUSTIN, TODD B. SCHULL, LIGHTSPAN PARTNERSHIP, INC ., JOHN T. KERNAN, KATHLEEN R . MCELWEE, MCDATA CORPORATION, JOHN F . MCDONNELL, DEE J . PERRY, MULTILINK TECHNOLOGY CORP., RICHARD N. NOTTENBURG, ERIC M. PILLMORE, MP3.COM (VIVENDI UNIVERSAL NET USA GROUP, INC ., real party in interest), MICHAEL L. ROBERTSON, PAUL L. H. OUYANG, NUMERICAL TECHNOLOGIES, INC ., Y. C. (BUNO) PATI, RICHARD MORA, NEW FOCUS, INC ., KENNETH E. WESTRICK, WILLIAM L. POTTS, JR ., NOVATEL WIRELESS, INC ., JOHN MAJOR, MELVIN FLOWERS, ONVIA.COM, INC., GLENN S. BALLMAN, MARK T. CALVERT, ONYX SOFTWARE CORP ., BRENT R. FREI, SARWAT H. RAMADAN, RAZORFISH, INC . (SBI AND COMPANY, real party in interest), JEFFREY A. DACHIS, SUSAN BLACK, RETEK, INC ., JOHN BUCHANAN, GREGORY A . EFFERTZ, PINNACOR, INC . (formerly "SCREAMINGMEDIA, INC.")., KEVIN C. CLARK, DAVID M . OBSTLER, SILICON IMAGE, INC., DAVID D. LEE, DANIEL K. ATLER, SELECTICA, INC., RAJEN JASWA, STEPHEN BENNION, SIMPLEX SOLUTIONS, INC. (CADENCE DESIGN SYSTEMS, INC ., real party in interest), PENELOPE A. HERSCHER, LUIS P. BUHLER, SUPPORTSOFT, INC . (formerly "SUPPORT.COM"), RADHA R. BASU, BRIAN M. BEAT-FIE, TANNING TECHNOLOGY CORP ., LARRY G. TANNING, HENRY F. SKELSEY, TICKETS .COM, INC., W. THOMAS GIMPLE, JOHN M . MARKOVICH, TUMBLEWEED COMMUNICATIONS CORP., JEFFREY C. SMITH, JOSEPH C. CONSUL, TRITON NETWORK SYSTEMS, INC., HOWARD SPEAKS, KENNETH R. VINES, VIANT CORP. (DIVINE, INC., real party in interest), ROBERT L . GETT, M . DWAYNE NESMITH, VITRIA TECHNOLOGY, INC ., JOMEI CHANG, PAUL AUVIL, GLOBESPANVIRATA, INC. (formerly "VIRATA CORP."), CHARLES COTTON, ANDRE VOUGHT, Defendants. I, Amy Liu, hereby certify that : (a) I have reviewed the complaint prepared by counsel in the above referenced case, an d have authorized its filing ; (b) I did not purchase the shares of Commerce One common stock at the direction o f plaintiff's counsel or in order to participate in any private action arising under the federal securities laws . (c) I am willing to serve as a representative party on behalf of a class, including providin g testimony at deposition and trial if necessar y (d) During the proposed class period, my deceased husband, Peter Lin, using community property, executed the following transactions related to Commerce One common stock : July 18, 2000 Bought 200 66.1875 January 19, 2001 Bought 300 28.0000 January 24, 2001 Sold 300 34.8125 January 26, 2001 Bought 200 32.3125 February 5, 2001 Sold 200 28.7500 March 1, 2001 Sold 60 17.1250 April 19, 2001 Bought 100 13 .0700 Apri l 27, 2001 Sold 130 9.5600 May 22, 2001 Bought 90 9.2600 May 30, 2001 Short Sale 400 6.7500 June 8, 2001 Cover Short 400 6.2300 June 28, 2001 Bought-ou ht 500 4.0900 June 28, 2001 Bought 300 4.0900 July 2, 2001 Sold 500 5 .2500 July 2, 2001 Sold 500 5 .2500 July 12, 2001 Bought 500 5 .2500 July 12, 2001 Bought 500 5 .2500 July 20, 2001 Sold 200 3.8500 July 20, 2001 Sold 800 3.8500 (e) I have not acted as a class representative in any cases brought under the federal securitie s laws during the past three years . (f) I will not accept any payment for serving as a representative party on behalf of a class beyond the plaintiffs' pro-rata share of any recovery, except as ordered or approved b y the court . SWORN AND CERTIFIED THIS DAY OF -FEL, 2003. Amy Liu