Item 1. Legal Proceedings
ITEM 1. LEGAL PROCEEDINGS
GEM Lawsuit
On November 1, 2024, we filed a lawsuit against GYBL in the Court ,
pursuant to which we asserted two causes of action: (i) rescission of the GEM Warrants issued to GYBL pursuant to Section 29(b) of the
Exchange Act due to GYBL’s underlying violation of Section 15(a) of the Exchange Act for effecting the GEM Warrants as an unregistered
dealer, and (ii) in the alternative, a declaratory judgment that the exercise price adjustment calculation of the GEM Warrants is governed
by the terms provided in the GEM Warrants, rather than the terms of the GEM Agreement. Following a motion to dismiss filed by GYBL on
January 17, 2025, the Court granted such motion to dismiss on March 14, 2025. On April 15, 2025, we filed an appeal of the Court’s
decision dismissing our case to the Second Circuit. The briefing schedule at the Second Circuit is being held in abeyance
in order to allow two previously filed appeals, filed by two other public companies on identical issues against other similar investors,
to be resolved first. However, if and when the appellate briefing moves forward, there is no assurance that it will be successful.
Additionally, following
the Court’s grant of GYBL’s motion to dismiss our lawsuit, GYBL filed a separate lawsuit against us, in which GYBL is asserting
two causes of action against us: (1) breach of the terms of the GEM Warrants, and (2) declaratory relief concerning the validity and enforceability
of the GEM Warrants. In addition to the declaratory relief, GYBL is seeking monetary damages in an amount to be determined at trial, specific
performance of the GEM Warrants and attorneys’ fees and litigation costs. On June 9, 2025, we filed a motion to dismiss this lawsuit
from GYBL. GYBL responded to our motion to dismiss on June 23, 2025, asserting that our motion to dismiss should be denied, or, in the
alternative, GYBL should be given leave to further amend its complaint. On June 30, 2025, the Company filed a reply in support of its
motion to dismiss. On August 21, 2025, the Court granted, in part, our motion to dismiss the amended complaint with respect to GYBL’s
claim for declaratory relief concerning the validity and enforceability of the GEM Warrants. The Court denied our motion to dismiss
in all other respects. Following the Court’s partial grant and partial dismissal of our motion to dismiss, we filed an answer to
GYBL’s amended complaint on September 4, 2025.
45
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.