Settlement of Litigation --(finally-glad that's finalized)
On April 27, 2005, we entered into a Settlement Agreement and Mutual Release with eSoundIdeas, Inc., its two principals and a related partnership, which we refer to collectively as the ESI Parties. Pursuant to the Settlement Agreement, we and the ESI Parties settled litigation arising out of a dispute regarding a license and marketing agreement that we terminated in May 2003, and regarding stock options issued to each of the principals in April 2001 which expired unexercised following termination of consulting services provided to us by these principals.
As part of the settlement, we agreed to pay $150,000 and to issue 17,500 shares of our common stock to the ESI Parties.
In addition, the ESI Parties will be entitled to receive a commission equal to 1% of net sales from April 1, 2005 to September 28, 2007, of our HyperSonic Sound (HSS) products specifically targeted for use in North America in the point of sale/purchase, kiosk, display, event, trade show and exhibit markets, subject to a maximum aggregate commission of $500,000.
We and the ESI Parties have executed a mutual release of claims, and have agreed to dismiss with prejudice the pending litigation among us.
The issuance of the common stock was exempt from registration under the Securities Act by reason of Section 4(2) thereof and Rule 506 of Regulation D promulgated thereunder, and the certificates for such shares will contain an appropriate restrictive legend. We granted the recipients of these shares "piggyback" rights to have their shares included on future registration statements we might file.
Item 2.02 Results of Operations and Financial Condition.
On April 28, 2005, during our Annual Meeting of Stockholders, which was webcast, our management announced our expectations for revenues to be reported for our quarter and six months ended March 31, 2005. A transcript of the relevant portion of the Annual Meeting is attached hereto as Exhibit 99.2, and two presentation slides used during the announcement are attached hereto as Exhibit 99.3. |
