This excerpt taken from the APY 8-K filed Feb 6, 2006.
Other Claims and Litigation In December 2003, a former employee (and co-founder) of the Company commenced an action in Federal District Court against the Company and subsequently amended the complaint in January 2005 to add the Companys President and CEO. The former employees claim arose from a September 29, 1995 Technology License Agreement under which the Company licensed certain software from the employees formerly owned company. Various allegations were filed including breach of contract, copyright infringement, unfair competition, breach of confidentiality, and misappropriations
of trade secrets. The former employee seeks damages in the amount of $229,300 for breach of contract and is seeking other damages of at least $1.95 million plus punitive damages. The Companys exposure to this action, if any, cannot be determined due to the early stage of the litigation. The Company believes that it has meritorious defenses to master all of the claims asserted in the action. No reserves were established on the Companys potential exposure as of December 31, 2004.
The Company was notified on March 2, 2004 of a pending issue arising from a License Agreement between the Company and certain patent holders for the use of certain technology in its product. The License Agreement was dated November 30, 1996 and was terminated by the Company on October 29, 1999. The patent holders are questioning minimum payment requirements of approximately $117,000 arising from this agreement. The Companys legal counsel believes the claim is without merit and that no future liabilities will arise as well. No reserves were established on the Companys potential exposure as of December 31, 2004.