
As your contract lapses, the hospital lawyers sue you for breach of contract because you were unable to produce a working copy of KAREL within the time limits of the contract. However, you come to an out of court settlement with the hospital, agreeing to finish KAREL as quickly as possible for less money.

Though on paper you have made money on the KAREL project, legal fees have drained your company and you are not as nearly succesful as you had wished. At this point in time, it's unfeasible for you to start work on a competitor for LOGO the Medic, as your company just doesn't have the resources to embark on another big project. For now, you live comfortably, but you're pretty much disqualified from the race with LOGO the Medic.
You have hope, though, as you spend your nights on your couch at home, watching movie marathons, hoping once more, for inspiration.