The lawsuit alleges that the company breached certain conversion provisions of secured convertible debentures purchased by investors during 2008. In addition to money damages, Plaintiffs seek the issuance of 2,424,240 shares of the company’s common stock to plaintiffs and assignment of the company’s patents to Plaintiffs.

On May 12, 2009, before the company had been able to retain New York counsel, Plaintiffs obtained a temporary restraining order, which barred the company from using or assigning any of its patents pending a hearing scheduled for May 19, 2009. Divine also filed a motion for preliminary injunctive relief seeking an order: (i) compelling the company to cease and desist any and all use of several patents; (ii) permitting plaintiffs to sell or otherwise dispose of the patents; (iii) compelling the company to immediately issue the 2,424,240 shares to the investors; and (iv) compelling the company to issue all shares covered by the convertible debenture agreement.

The company opposed Divine’s motion. On May 19, 2009 at the conclusion of oral argument on Plaintiffs’ motion, Justice Richard B. Lowe, III ruled in the company’s favor. Justice Lowe vacated the temporary restraining order and denied plaintiffs’ motion for a preliminary injunction in full. The company intends to vigorously defend this matter as the lawsuit proceeds.