Another interesting find in the 10k dated 7/31/04
ScanLine Technologies, Inc. (“ScanLine”) sued the Company in July 2002 for breach of an alleged asset purchase agreement in which ScanLine sold the so-called "Delta Assets" to the Company in exchange for Company’s stock. ScanLine had included claims against the Company, as well as individual directors, for breach of contract, fraud, misrepresentation, violation of 10b-5 of the federal securities law and violation of Utah securities law. A Third Party Complaint was later filed individually by David Scull (“Scull”), a principal in ScanLine, against the Company alleging breach of contract, unjust enrichment and breach of the covenant of good faith and fair dealing for an alleged failure of the Company to compensate him for the time he acted as President and CEO of the Company. Scull had also filed a claim for defamation for allegedly defamatory statements made in the Company's public filings. Management had responded by denying the allegations, filing courterclaims against both ScanLine and Scull for damage to the Company, and defending the case.
Discovery had been ongoing in the matter, including the depositions of both ScanLine and Scull as well as the deposition of CompuSonics Video Corporation. Neither ScanLine, nor Scull could articulate a damage amount in the deposition. The potential loss was therefore difficult to ascertain. Scull had previously claimed a right to salary of approximately $225,000.00. Discovery cut-off was set for December 31, 2003 with a pre-trial conference set for January 9, 2004 at which time a trial date of August 7 was set.
Although the Company believes that Plaintiff’s claim was unfounded, the lawsuit was settled in early August 2004. CPVD paid $87,500 settlement fee to Plaintiff (Dave Scull). He received $90,000 as settlement, out of which amount, $2,500 was contributed by the Company’s attorney.
AI
