DYIIE Dynacq International (MM)

Shareholder Class Action Filed Against Dynacq Healthcare, Inc. by the Law Firm of Schiffrin & Barroway, LLP BALA CYNWYD, Pa., Jan. 2 /PRNewswire/ -- The following statement was issued today by the law firm of Schiffrin & Barroway, LLP: Notice is hereby given that a class action lawsuit was filed in the United States District Court for the Southern District of Texas, Houston Division, on behalf of all purchasers of the common stock of Dynacq Healthcare, Inc. (NASDAQ:DYIIE) ("Dynacq" or the "Company") from January 14, 2003 through December 18, 2003, inclusive (the "Class Period"). If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Schiffrin & Barroway, LLP (Marc A. Topaz, Esq. or Stuart L. Berman, Esq.) toll free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at . The complaint charges that defendants Dynacq, Philip S. Chan, and Chiu M. Chan violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between January 14, 2003 and December 18, 2003. More specifically, the complaint alleges that the defendants' statements were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts: (1) that the Company had materially overstated its earnings, revenues, net income, and earnings per share; (2) that the Company was improperly accounting for its costs and revenue in violation of Generally Accepted Accounting Principals ("GAAP"); (3) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (4) that as a result, the value of the Company's net income and financial results were materially overstated at all relevant times. On December 1, 2003, the Company announced that it was requesting an automatic extension of up to 15 days for filing its 2003 Form 10-K. The Company stated that recently the Division of Corporation Finance of the United States Securities and Exchange Commission ("SEC") commented upon Dynacq's periodic filings. On December 16, 2003, the Company announced that it would further postpone the filing of its 2003 Form 10-K until the SEC completed its review of Dynacq's periodic filings and its independent auditors have completed their audit of the Company's Aug. 31, 2003 financial statements. On December 18, 2003, the Company announced that Ernst & Young, LLP ("E&Y") resigned late on December 17, 2003 as the Company's independent auditor effective immediately. E&Y verbally advised the Company that E&Y resigned due to the Company's lack of internal controls necessary to develop reliable financial statements. News of this shocked the market with shares of Dynacq falling 18.56 percent or $2.04 per share to close at $8.95 per share on December 18, 2003. The Company further shocked the market when it announced, after the markets had closed on December 18, 2003, that had received a NASDAQ Staff Determination stating that because Dynacq failed to comply with the requirement of NASD Marketplace Rule 4310 (c) (14), that it file a copy of its Form 10-K Annual Report to the Securities and Exchange Commission ("SEC") in a timely fashion, that its common stock would be delisted from the NASDAQ on December 30, 2003, unless Dynacq requested a hearing. Additionally, the Company disclosed that it had received a notice from the Ft. Worth, Texas office of the SEC that it was conducting an informal investigation pertaining to Dynacq's reporting of its financial statements, its recognition of costs and revenue, its allowances for doubtful accounts, and its internal controls. News of this shocked the market. Shares of Dynacq plummeted 54% or $4.86 per share to close at $4.09 per share on December 19, 2003. Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Schiffrin & Barroway, which prosecutes class actions in both state and federal courts throughout the country. Schiffrin & Barroway is a driving force behind corporate governance reform, and has recovered in excess of a billion dollars on behalf of institutional and high net worth individual investors. For more information about Schiffrin & Barroway, or to sign up to participate in this action online, please visit http://www.sbclasslaw.com/. If you are a member of the class described above, you may, not later than February 24, 2004, move the Court to serve as lead plaintiff of the class, if you so choose. In order to serve as lead plaintiff, however, you must meet certain legal requirements. You may retain Schiffrin & Barroway, or other counsel of your choice, to serve as your counsel in this action. CONTACT: Schiffrin & Barroway, LLP Marc A. Topaz, Esq. Stuart L. Berman, Esq. Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 1-888-299-7706 (toll free) or 1-610-667-7706 Or by e-mail at DATASOURCE: Schiffrin & Barroway, LLP CONTACT: Marc A. Topaz, Esq., or Stuart L. Berman, Esq. of Schiffrin & Barroway, LLP, 888-299-7706, or +1-610-667-7706, or Web site: http://www.sbclasslaw.com/

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