245 F.3d 1313 (11th Cir. 2001)
GEORGE EHLERT, as joint tenants on behalf of themselves and all others similarly situated, GEORGEANNE EHLERT, as joint tenants on behalf of themselves and all others similarly situated, et al., Plaintiffs-Appellants- Cross-Appellees,v.MICHAEL SINGER, JOHN H. KANG, et al., Defendants-Appellees- Cross-Appellants.
No. 00-10163D. C. Docket No. 98-2168-CIV-T-17E
UNITED STATES COURT OF APPEALSELEVENTH CIRCUIT
March 30, 2001

Appeals from the United States District Court for the Middle District of Florida
Before ANDERSON, Chief Judge, and MARCUS and KRAVITCH, Circuit Judges.
ANDERSON, Chief Judge:


1
This is an appeal from a district court order dismissing Plaintiffs' claims  under  11, 12(a)(2), and 15 of the Securities Act of 1933. For the reasons  stated below, we affirm the district court's dismissal of the complaint under  Fed. R. Civ. P. 12(b)(6) but remand so that the district court can make the Rule  11 findings required under the Private Securities Litigation Reform Act  ("PSLRA").

I. BACKGROUND

2
According to the complaint, Medical Manager Corporation ("MMC") is a leading  provider of computer management systems to the health-care industry. It derives  most of its revenue from sales of its "core product," known as the Medical  Manager, a practice management system. In 1994 MMC began selling its software  system known as "Version 8" of the Medical Manager. MMC became a publicly traded  company through an initial public offering in February 1997. In 1997 it released  "Version 9" of the Medical Manager, which was the first version to be Year 2000  compliant.


3
On April 23, 1998, MMC conducted a secondary public offering of MMC securities,  in which 2.5 million shares of its common stock were offered for sale at a price  of $30 per share. MMC sold 1.5 million shares, and Michael Singer, Chairman of  the Board of Directors, President, and CEO of MMC, and Richard Mehrlich, a  director of MMC, each sold 500,000 shares. Donaldson, Lufkin & Jenrette  Securities Corporation, Morgan Stanley & Co, Inc., Smith Barney, Inc., and  Raymond James & Associates, Inc., (collectively, the "Underwriter Defendants"),  purchased all 2.5 million shares and resold them to the public.


4
On August 5, 1998, it became public knowledge that a MMC customer had filed a  class action against MMC (the "Courtney lawsuit") based upon MMC's refusal to  provide free upgrade services to its Version 8 product in order to make it Year  2000 compliant. Following this disclosure, the price of MMC's common stock  dropped from $26.75 per share to $20.375 per share by the close of trading on  August 5, 1998. On August 31, 1998, MMC issued a statement that is was "no  longer enhancing, updating or maintaining versions prior to Version 9" and that  it would "make no representations with respect thereto, including those  concerning the current or future ability of Version 8 or prior versions to  handle industry and regulatory requirements."


5
Plaintiffs, George and Georgeanne Ehlert, who purchased shares of MMC common  stock on or about April 24, 1998, at $30 per share, brought this securities  class action against MMC, MMC officers and directors (the "Individual  Defendants"), and the Underwriter Defendants on behalf of themselves and all  similarly situated purchasers of MMC common stock during the class period.1 In  their amended complaint, Plaintiffs alleged that Defendants' issuance of  materially false and misleading statements and omissions in the prospectus and  registration statement, issued as part of the secondary public offering, caused  the class to purchase the stock at artificially inflated prices.


6
The district court dismissed the complaint under Rule 12(b)(6) because the court  concluded that the alleged misstatements were forward-looking statements that  were protected under the PSLRA safe-harbor provision due to the existence of  adequate cautionary language. Plaintiffs appeal the dismissal of their  11,  12(a)(2), and 15 claims. On cross-appeal, MMC and the Individual Defendants  argue that the district court erred in failing to make the Rule 11 findings  required under the PSLRA.


7
We review the dismissal of a complaint under Fed. R. Civ. P. 12(b)(6) de novo.  See Harris v. Ivax Corp., 182 F.3d 799, 802 (11th Cir. 1999). All well-pleaded  facts are accepted as true, and all reasonable inferences drawn therefrom are  construed in the light most favorable to the plaintiff. See Bryant v. Avado  Brands, Inc., 187 F.3d 1271, 1273 n.1 (11th Cir. 1999).

II. DISCUSSION
A. Alleged Securities Violations

8
The crux of Plaintiffs' complaint is that the prospectus, which was filed as  part of MMC's registration statement, was materially false and misleading  because it failed to warn investors that, at the time the prospectus was issued,  Version 8 was no longer being enhanced or upgraded and would be rendered  obsolete by Version 9.


9
Section 11 of the Securities Act creates a private cause of action where a  registration statement either "contained an untrue statement of a material fact  or omitted to state a material fact required to be stated therein or necessary  to make the statements therein not misleading." 15 U.S.C.  77k. A  11 claim  can be brought against the issuer of the securities, the issuer's directors or  partners, the underwriters of the offering, and accountants who are named as  having prepared or certified the registration statement. See 15 U.S.C.  77k(a).


10
Section 12(a)(2) of the Securities Act creates a private cause of action against  persons who offer or sell a security "which includes an untrue statement of a  material fact or omits to state a material fact necessary in order to make the  statements, in the light of the circumstances under which they were made, not  misleading." 15 U.S.C.  77l(a)(2). Section 12 liability extends to those who  transfer title to the security and to those who successfully solicit the  purchase. See Pinter v. Dahl, 486 U.S. 622, 642-46, 108 S. Ct. 2063, 2075-78  (1988).


11
Thus, in order to state a claim under  11 and 12, Plaintiffs must allege that  there was a material misrepresentation or omission. In their amended complaint,  Plaintiffs point to two statements in a section of the prospectus entitled  "Risks Related to Technological Change and New Product Development," which they  allege were materially misleading.2 The first allegedly misleading statement was  that "[t]he Company's future success will depend, in part, upon its ability to  enhance its current products, to respond effectively to technological changes,  to sell additional products to its existing client base and to introduce new  products and technologies that address the increasingly sophisticated needs of  its clients." The second allegedly misleading statement was that "[t]he Company  is devoting significant resources to the development of enhancements to its  existing products and the migration of existing products to new software  platforms." Plaintiffs allege that these two statements were materially  misleading "absent any statement by the defendants that the Company would not  provide Year 2000 compliant software upgrades to the Company's mainstay product,  the Version 8 system, and that MMC was curtailing its services to this product  line." Plaintiffs further allege that "[n]o disclosure was made in the  Prospectus that defendants were rendering its core product obsolete by the  introduction of the Company's Version 9 system," and there was no disclosure of  "the adverse consequences which would result from such action."


12
The PSLRA provides a safe-harbor from liability for certain "forward-looking"  statements. See 15 U.S.C.  77z-2.3 The threshold question is whether the  section of the prospectus at issue in this case constitutes a forward-looking  statement subject to the PSLRA safe-harbor. For the reasons stated below, we  conclude that it does.


13
In order to determine whether the statements in the prospectus fall within the  safe-harbor, we must first examine the text of the prospectus.4 The paragraph of  the prospectus which Plaintiffs quote in their amended complaint states in full:


14
Risks Related to Technological Change and New Product Development: The market  for the Company's products is characterized by rapid change and technological  advances requiring ongoing expenditures for research and development and the  timely introduction of new products and enhancements of existing products. The  Company's future success will depend, in part, upon its ability to enhance its  current products, to respond effectively to technological changes, to sell  additional products to its existing client base and to introduce new products  and technologies that address the increasingly sophisticated needs of its  clients. The Company is devoting significant resources to the development of  enhancements to its existing products and the migration of existing products  to new software platforms. There can be no assurance that the Company will  successfully complete the development of new products or that the Company's  current or future products will satisfy the needs of the market for practice  management systems. Further, there can be no assurance that products or  technologies developed by others will not adversely affect the Company's  competitive position or render its products or technologies noncompetitive or  obsolete.


15
Plaintiffs argue that the PSLRA safe-harbor does not apply because the  statements at issue "relate to current information" and thus they are not  "forward-looking." Specifically, Plaintiffs allege that MMC discontinued all  services and upgrades to its Version 8 product in November 1997 with the  introduction of its Version 9 product and that this was "hard information" when  the prospectus was issued in April 1998.


16
In Harris, this Court held that an entire section of a prospectus may qualify as  a forward-looking statement even though it contains a statement of current  conditions. See 182 F.3d at 806-07. Furthermore, "a material and misleading  omission can fall within the forward-looking safe-harbor." Id. at 806. In  Harris, at issue was a press release that contained a list of factors relating  to Ivax's generic drug business that would influence its third quarter results.  See id. at 805. The list contained some statements that were forward-looking and  some statements of present fact. Thus, one of the questions faced by this Court  was whether the safe-harbor benefitted the entire statement or only parts of it.  See id. at 806. This Court stated:


17
Of course, if any of the individual sentences describing known facts . . .  were allegedly false, we could easily conclude that that smaller,  non-forward-looking statement falls outside the safe-harbor. But the  allegation here is that the list as a whole misleads anyone reading it for an  explanation of Ivax's projections, because the list omits the expectation of a  goodwill writedown. If the allegation is that the whole list is misleading,  then it makes no sense to slice the list into separate sentences. Rather, the  list becomes a "statement," in the statutory sense, and a basis of liability,  as a unit. It must therefore be either forward-looking or not forward-looking  in its entirety.


18
Id. at 806. The Court held that "when the factors underlying a projection or  economic forecast include both assumptions and statements of known fact, and a  plaintiff alleges that a material factor is missing, the entire list of factors  is treated as a forward-looking statement." Id. at 807.


19
Similar to the plaintiffs in Harris, Plaintiffs in this case allege that the  section of the prospectus at issue here is materially misleading absent a  statement that MMC would not provide free Year 2000 compliant upgrades to  Version 8 customers and absent a statement that it was curtailing its services  to Version 8. Plaintiffs do not allege that the statement in the prospectus that  MMC's "future success will depend, in part, upon its ability to enhance its  products" is false. Nor do they argue that MMC was no longer "devoting  significant resources to the development of enhancements" to its Version 9  product, which was "an existing product" at the time the prospectus was issued.  Because the allegation is that this section of the prospectus is misleading, due  to material omissions, we view the section as a whole and determine whether it  is forward-looking. See Harris, 182 F.3d at 806.


20
The section of the prospectus at issue is entitled "Risks Related to  Technological Change and New Product Development." It discusses MMC's "future  success" and risk-factors that might affect that success. It is "a statement of  future economic performance," as well as "a statement of the plans and  objectives of management for future operations, including plans or objectives  relating to the products or services of the issuer." 15 U.S.C.  77z-2(i)(1).  Viewing the section of the prospectus as a whole, we conclude that it is a  forward-looking statement. See Harris, 182 F.3d at 807.5


21
After having determined that the statement is forward-looking, and thus that the  safe-harbor provision applies, the next step in the analysis is to determine  whether the statement is protected by the safe-harbor. See 15 U.S.C.  77z-2.  One way in which a forward-looking statement can be protected is for it to be  "accompanied by meaningful cautionary statements identifying important factors  that could cause actual results to differ materially from those in the  forward-looking statement." 15 U.S.C.  77z-2(c)(1)(A)(i).


22
In the section of the prospectus quoted above, MMC informed investors that  "[t]he market for the Company's products is characterized by rapid change and  technological advances requiring ongoing expenditures for research and  development and the timely introduction of new products and enhancements of  existing products." MMC also warned investors that "[t]here can be no assurance  that the Company will successfully complete the development of new products or  that the Company's current or future products will satisfy the needs of the  market for practice management systems."


23
Plaintiffs' primary claim is that the challenged statements were misleading  because MMC failed to warn investors that MMC had decided not to provide free  upgrades to Version 8 to make it Year 2000 compliant. We conclude that  Plaintiffs' claim is without merit, because the challenged statements were  forward- looking and were accompanied by meaningful cautionary statements. The  following excerpts from the prospectus demonstrate that the forward-looking  statement was accompanied by meaningful cautionary language:


24
Risk of Product-Related Claims Certain of the company's products provide  applications that relate to financial records, patient medical records and  treatment plans. Any failure of the Company's products to provide accurate,  confidential and timely information, including failures which may be traceable  to the Year 2000 issue, could result in product liability or breach of  contract claims against the Company by its clients, their patients or others .  . . There can be no assurance that the Company will not be subject to product  liability or breach of contract claims . . . .


25
Year 2000 Compliance The Year 2000 issue relates to whether computer systems  will properly recognize and process information relating to dates in and after  the year 2000. These systems could fail or produce erroneous results if they  cannot adequately process dates beyond the year 1999 and are not corrected.  Significant uncertainty exists in the software industry concerning the  potential consequences that may result from failure of software to adequately  address the Year 2000 issue.


26
Proprietary (External) Software The Year 2000 issue also creates risk for the  Company from problems that may be experienced by customers of its software.  While the Company believes that Version 9 of The Medical Manager practice  management system, which was commercially released in November 1997, is Year  2000 compliant, prior versions of the system are not. The Company has  encouraged users of pre-Version 9 versions of the Medical Manager software to  upgrade to Version 9 in order to become Year 2000 compliant. If these or other  customers experience significant difficulties as a result of the Year 2000  issue, or if the Company encounters difficulties in responding in a timely  manner to customer requests to upgrade to Version 9, there could be a material  adverse impact on the Company's results of operations, financial condition or  business.


27
We conclude that there was meaningful cautionary language in the prospectus to  put investors on notice that Version 8 was not Year 2000 compliant and that  Version 8 users needed to purchase Version 9 in order to have a Year 2000  compliant Medical Manager program. Investors were also warned that: non-Year  2000 compliant software, such as Version 8, could "fail or produce erroneous  results;" that "difficulties . . . [with respect to] customer requests to  upgrade to Version 9 . . . could [have] a material adverse impact on the  Company's . . . operations, financial condition or business;" and that "failures  . . . traceable to the Year 2000 issue could result in product liability or  breach of contract claims against the Company." Given the statement in the  prospectus that MMC "encouraged users of pre-Version 9 versions of the Medical  Manager software to upgrade to Version 9 in order to become Year 2000  compliant," and absent any allegation that it was the industry-wide norm for  companies to provide free support and upgrade services to non- Year 2000  compliant software, we conclude that there was meaningful cautionary language to  warn investors that there were risks to MMC's existing products created by the  Year 2000 problem and that MMC would not provide free Year 2000 compliant  upgrades to Version 8 users.


28
Plaintiffs also argue that the cautionary language in the prospectus is  insufficient because it fails to address the consequences of MMC's  discontinuance of its services to Version 8 customers, i.e., that Version 8  users would need to purchase Version 9. We disagree.6 The PSLRA safe-harbor  requires only that the cautionary language mention "important factors that could  cause actual results to differ materially from those in the forward-looking  statement." 15 U.S.C.  77z- 2(c). It does not require that the prospectus list  all factors that might influence the company's financial future. See Harris, 182  F.3d at 807. As this Court held in Harris, "[M]ust the cautionary language  explicitly mention the factor that ultimately belies a forward-looking  statement? We think not. . . . [W]hen an investor has been warned of risks of a  significance similar to that actually realized, she is sufficiently on notice of  the danger of the investment to make an intelligent decision about it according  to her own preferences for risk and reward." Id. In this case, the warnings  actually given were not only of a similar significance to the risks actually  realized, but were also closely related to the specific warning which Plaintiffs  assert should have been given. Because we conclude that adequate cautionary  language accompanies the forward-looking statement, we hold that Defendants are  protected from liability under the safe-harbor.


29
Thus, the district court properly dismissed Plaintiffs'  11 and 12 claims  against Defendants. See 15 U.S.C.  77z-2(c)(1). Because Plaintiffs have failed  to establish a primary violation under  11 or 12, their  15 claim also fails.  Section 15 of the Securities Act of 1933 imposes joint and several liability  upon controlling persons for acts committed by those under their control that  violate  11 and 12. See 15 U.S.C.  77o. To make out a prima facie case of a   15 violation, Plaintiffs must prove that Defendants "(1) each had power or  influence over the controlled person and (2) each induced or participated in the  alleged violation." Dennis v. General Imaging, Inc., 918 F.2d 496, 509 (5th Cir.  1990). Because we hold that Plaintiffs have failed to state a claim of a  securities violation under  11 and 12, they have also failed to state a claim  under  15. See id. (holding that none of the defendants could be liable under   15 "since there [were] no actual violators of the securities laws to be held  liable with").

B. Cross-Appeal

30
On cross-appeal, Defendants argue that the district court erred in failing to  make Rule 11 findings expressly required by the PSLRA. We agree. The applicable  PSLRA provision states:


31
In any private action arising under this subchapter, upon final adjudication  of the action, the court shall include in the record specific findings  regarding compliance by each party and each attorney representing any party  with each requirement of Rule 11(b) of the Federal Rules of Civil Procedure as  to any complaint, responsive pleading, or dispositive motion.


32
15 U.S.C.  77z-1(c)(1). Because the district court did not make the necessary  Rule 11 findings, we remand for this purpose.

III. CONCLUSION

33
For the reasons stated above, we affirm the district court's dismissal of the  complaint and remand for purposes of making the Rule 11 findings.


34
AFFIRMED and REMANDED.



NOTES:


1
  The class period commenced on April 23, 1998, and extended through August 5,  1998.


2
  Other allegations in the amended complaint were abandoned either explicitly by  Plaintiffs in their reply brief to this Court or implicitly by Plaintiffs'  failure to present the allegations to the district court as a basis for  liability or their failure to raise the allegations in their initial brief to  this Court.


3
  The term "forward-looking statement" means-
(A) a statement containing a projection of revenues, income (including income  loss), earnings (including earnings loss) per share, capital expenditures,  dividends, capital structure, or other financial items;
(B) a statement of the plans and objectives of management for future operations,  including plans or objectives relating to the products or services of the  issuer;
(C) a statement of future economic performance, including any such statement  contained in a discussion and analysis of financial condition by the management  or in the results of operations included pursuant to the rules and regulations  of the Commission;
(D) any statement of the assumptions underlying or relating to any statement  described in subparagraph (A), (B), or (C);
(E) any report issued by an outside reviewer retained by an issuer, to the  extent that the report assesses a forward-looking statement made by the issuer;  or
(F) a statement containing a projection or estimate of such other items as may  be specified by rule or regulation of the Commission.
15 U.S.C. 77z-2(i).


4
  As the document is central to the complaint, and its contents are not in  dispute, the text of the prospectus is properly considered by this Court. See  Harris, 182 F.3d at 802 n.2. See also Bryant, 187 F.3d at 1276 (approving the  practice of "judicially noticing relevant documents legally required by and  publicly filed with the SEC at the motion to dismiss stage").


5
  We also note that the individual statement that "[t]he Company is devoting  significant resources to the development of enhancements to its existing  products" is itself a statement that has "forward-looking" connotations. The  fact that it is a present tense statement does not render it  non-forward-looking. See Harris, 182 F.3d at 805.


6
  Although we conclude in the text, infra, that the cautionary language is not  insufficient for failure specifically to mention the alleged discontinuance of  service for Version 8, we also note that it is clear from the complaint, and the  briefs in both the district court and on appeal, that this case is primarily  about MMC's decision not to provide free upgrades to Version 8 to make the  Version 8 software Year 2000 compliant. Moreover, we note that the alleged  discontinuance of service for Version 8 would in any event probably be a moot  point, because Plaintiffs conceded in paragraph 37 of the complaint that MMC's  decision to provide upgrades to Version 8 only by means of the acquisition of  Version 9 rendered Version 8 obsolete. Finally, we note that the only damages  alleged in this case are those stemming directly and solely from MMC's decision  "to simply disregard the year 2000 defect in its Version 8 product," Complaint   6, and the revelation thereof as a result of the Courtney lawsuit.


