Matt,
RE: CTIG's Legal proceedings. The below info is taken from CTIG's 10ksb dtd 18 Dec 98. Note the company changed it'S name in 1992.
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Item 3. Legal Proceedings
In September 1990, the Company, through the loss adjusting service of
its former general liability insurance carrier, was advised of five Summons and
Complaints filed in the Superior Court of Bergen County, New Jersey. The suit
was filed on behalf of the Estates of five deceased plaintiffs who alleged that
the failure of communications equipment used by the Hackensack Fire Department,
and allegedly maintained by a subsidiary of the Company, impaired rescue
operations while fighting a fire in Hackensack, New Jersey. Currently,
plaintiffs' allegations have not supported the claim that the Company's
subsidiary, who is the named insured under an insurance policy, was involved in
the maintenance of the communication equipment in question. the above
During the fiscal year ended March 31, 1997, three of the cases were
settled. The Company's share of the settlements totaled $17,000. The Company's
former general liability insurance carrier will bear the cost of these
settlements. Discovery is proceeding on the remaining two cases; however,
further settlement discussions are to be held with the remaining claimants. As a
result of these settlements, and after consulting with the Company's counsel and
liability insurance carrier, it is the opinion of management that the final
outcome of the above matter will not have a material effect, if any, on the
financial statements of the Company.
On August 11, 1997, John Perri, the former President of the Company's
CTI Soft-Com Inc. subsidiary and Soft-Com Inc., filed suit in the United States
District Court for the Eastern District of Pennsylvania against the Company, CTI
Data Solutions (USA), Inc., Anthony P. Johns and Mark Daugherty, in connection
with the Company's termination of Mr. Perri's employment on July 28, 1997, and
the Company's acquisition of Soft-Com Inc. in January 1997. On November 11,
1997, the parties to this litigation entered into a settlement agreement
pursuant to which, among other things: (i) no party admitted liability to
another party; (ii) the Company agreed to pay an aggregate of $100,000 payable
in monthly installments of $5,000 and issue options to purchase 100,000 shares
of common stock of the Company to Mr. Perri to resolve the litigation and buy
out the remainder of Perri's employment contract. The options issued as part of
this settlement were in substitution for the options granted under his
employment agreement; (iii) Perri filed a stipulation terminating the litigation
with prejudice; and, (iv) the parties released each other from any further
liability
On March 11, 1998, Colmen Capital Advisors, Inc. ("Colmen"), the
Company's former financial advisors, filed suit in the Court of Common Pleas,
Montgomery County, Pennsylvania against the Company for breach of contract. This
is an action seeking damages of in excess of $80,000 and the grant of an option
for 100,000 shares of stock. Colmen's complaint seeks to recover a "success fee"
to which it claims entitlement as investment advisor to the Company pursuant to
a contract dated August 8, 1997. That contract entitled Colmen to a success fee
of 4% of new financing secured and an option for 100,000 shares of stock if
Colmen presented a financing proposal accepted by the Company and new financing
was obtained relating to the acquisition of Databit Ltd., a subsidiary of
Siemens plc. This acquisition eventually was closed by the Company itself on the
basis of seller financing which was subsequently renegotiated in which Colmen
played no role. The Company paid Colmen the advisory fee called for under the
contract and Colmen was reimbursed for all out-of-pocket expenses. Nevertheless,
Colmen has sued the Company for the success fee.
The Company has filed Preliminary Objections to Colmen's complaint
seeking that it be dismissed on the basis that the language of the contract,
drafted by Colmen, provides for payment of the success fee only if Colmen was
responsible for procuring financing for the acquisition. Colmen has responded to
the Preliminary Objections by arguing that the Company did not cancel the
contract prior to the acquisition and that the contract entitled Colmen to the
success fee as long as any financing is obtained from any source during the
pendency of the contract.
The Company intends to vigorously contest this action and believes it
has meritorious defense to Colmen's claims.
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Note: in all subsequent filings, (8/10K'S), under Legal Procedings they are stating - NONE.
It looks to me like there may be some open ended cases out there that the company is dealing with, but not anything that would appear to have a material effect on the company. I will specifically question this when I talk to the company.
Kevin
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