I managed to read through all of the court documents yesterday (I had only read a couple previously)
A few points:
As far as payment, evidence has been presenting proving a transfer of $20K from Itec to Hyperion and $2,250 from Tachyon. Evidence has also been presented that McEwen attempted to wire another $2,500 to Hyperion, though so far no documents have been presented that prove that the wire actually went through. These payments total $24,750, though Hyperion claims to have mistakenly sent an invoice to Itec for $22,500 for the Itec and Tachyon payments (or for the $2,250 payment, I don't remember which). Amiga Delaware has also claimed that they made two additional payments for OS4 in the neighborhood of 7K and 8K respectively, but haven't provided any documentation to support that claim as of yet. I believe that Hyperion has claimed that payments from KMOS thus far have been for other contracts (like the development for the Arctic reference platform) and not for OS 4.
There's a dispute in the interpretation of the contract here as well. There is a statement that essentially says that payments need to first be applied to outstanding debts. Hyperion argues that even if Itec did successfully send them a total of $25K (including the Tachyon and McEwen payments) that it first needs to be applied to an oustanding Bill for other work Hyperion did for Amiga Washington and that they didn't pay enough as a result. Amiga Delaware claims that it doesn't matter what they were paying Hyperion for as long as they pay them $25K then the buy-in/buy-back clause is triggered.
The validity of the Itec to KMOS transfer is important to this case in that if Itec just sold KMOS the OS and not the rights to the contract KMOS/Amiga Delaware has no standing to sue Hyperion over the OS (though the trademark issue still stands). Itec could certainly sue Hyperion in this case of course. Amiga Delaware doesn't seem to be arguing that the purchase was made in this way though. As far as I can gather they are arguing that they bought the rights to the contract itself and thus the validity of the transfer is important (though again if the transfer to Itec was valid, Itec could still go after Hyperion).
On the insolvency question, it's important to look at the judgement denying the preliminary injunction. In his decision, the judge basically said that the contract didn't clearly define what was meant by insolvency and that Hyperion's view that Amiga Wa was insolvent back in 2002 could be correct. You can't just look at it from a Title 11 perspective until it goes to court and its decided that the insolvency clause actually means Title 11 bankruptcy and not some lower standard.
The completion question is an interesting one. The contract never actually says what it means for OS 4.0 to be complete. Hyperion claims that the December 04 release (and perhaps even the release prior) implements all the required and important features and most of the optional features listed in Annex I and therefore that release should mark the completion. Amiga Delaware says that was beta quality code and that Hyperion never notified them that they considered OS 4.0 done. Hyperion counters that a certain communication they sent (one of the many documents submitted to the court) was sufficient notice, though after reading it I can't say it really makes much of a clear statement that OS 4.0 is done. I found it rather amusing that Hyperion is using a review by Ars Technica as a piece of evidence.
In the end, a lot of this wouldn't be an issue if the contract wasn't so crappy. A lot of the terms used aren't properly defined leaving too much room for interpretation once disputes arise (insolvency and completion are just two of many examples). Neither party included enough language to protect their interests in case things didn't go according to plan. Hyperion clearly planned to finance most of their development work through sales of OS 4.0 with the $25K payment more of a token offering, but they seem to have failed to consider what would happen if the hardware situation fell through and they had no one to sell the OS to. Amiga didn't give itself much protection from Hyperion taking too long. The contract gives Hyperion a deadline, but only requires that they use "best efforts" to meet it.
Anyway, Amiga Delaware is far from having an open and shut case, but you don't have to trust my analysis of it. Just read the judge's decision in denying the injunction. One of the requirements for a preliminary injunction is a strong likelihood of success by the plaintiff and the judge himself said that wasn't the case. Of course, this isn't the same thing as saying Hyperion is in the clear either. Currently, Hyperion has done a much better job supplying documentation to support their claims than Amiga Delaware has, but that could change and if it does Hyperion's potential arguments get cut down quite a bit (though they could still try to win in it through one of the loosely worded areas of the contract).
What happens next will probably largely depend on how much money both parties have available for going to court. Amiga Inc. supposedly has a bunch of cash right now, but it's unclear how much of that is from actual profit and how much of it is investor money. If most of its the latter, they may be under a lot of pressure from their backers to settle. Investors tend to want to use their money to be making more money after all, not squander it on drawn out court cases. Likelihood of winning the battle will also come in to play certainly. Amiga Delaware may not have had the time to get all their documentation together or it's possible that they were too incompetent to keep proper documentation in the first place (which wouldn't be surprising given the people involved).
Of course, a settlement would be rather boring for us. A court case would almost certainly dig up some more juicy dirt on the companies involved. A court case might also have the nice side effect of putting these two companies out of business so that everybody who hasn't done so will just move on.
