Item 8.01 Other Events.
On September 14, 2009, the Company announced that the United States District Court for the District of Utah (the “Court”) ruled in favor of the Company by dismissing all remaining claims with prejudice and ordering that digEcor recover no damages or injunctive relief. Specifically, the Court dismissed digEcor's claims for breach of a November 2005 Purchase Order between the parties, breach of a digital rights management (“DRM”) Agreement, and breach of an October 22, 2002 Product Agreement. All claims were dismissed "with prejudice and on the merits." The Court also declined to grant digEcor any injunctive relief in connection with the DRM-related claim. The Court’s ruling and prior rulings may be subject to future appeal by either party.
Additional information regarding the digEcor v. e.Digital litigation is described in Part II – Item 1 “Legal Proceedings” of the Company’s Form 10-Q for the quarter ended June 30, 2009 filed on August 13, 2009 and the information contained in such Item is incorporated herein by reference.
At June 30, 2009 the Company had an accrual of $80,000 related to a deposit for batteries made by digEcor and had an additional accrual of $100,000 based on a previous settlement offer. The Company is evaluating the impact this favorable ruling and any possible cost recoveries will have on the amounts accrued in its financial statements and expects to reduce the accrual at September 30, 2009.
