i received a cease and desist letter from a company claiming rights to a character name. how do i respond?

the cease and desist letter states that i must stop using this name on a product that i sell. they state i have to comply with 3 other things which including send the parts to them to destroy any property with the logo or name, provide them with all of my financial information dealing with the product and last that i make a payment to them with an amount they set after reviewing my earnings. i have stopped selling the device, and destroyed any that were left with the logo. Do i still have to comply the my financial records? the most profit i made from the sale was around $1,000-$1,200 total. this company has tried taking other people to court before and they have not been successful because the name and logo in question are public domain. i am willing to cooperate %100 with them but is this legal for them to do? i don't want to fight them if its going to cost a large amount of money but i also don't know what my rights are here. thanks for the help!