Bluejay Diagnostics, Inc. 10-K

ITEM 3. LEGAL PROCEEDINGS From time to time in the ordinary course of our business, we may be involved in legal proceedings, the outcomes of which may not be determinable. The results of litigation are inherently unpredictable. Any claims against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in diversion of significant resources. We have insurance policies covering any potential losses where such coverage is cost effective. The Company records accruals for outstanding legal proceedings, investigations, or claims when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company evaluates developments in legal proceedings, investigations, and claims that could affect the amount of any accrual, as well as any developments that would make a loss contingency both probable and reasonably estimable on a quarterly basis. When a loss contingency is not both probable and reasonably estimable, the Company does not accrue the loss. However, if the loss (or an additional loss in excess of the accrual) is at least a reasonable possibility and material, then the Company discloses a reasonable estimate of the possible loss or range of loss, if such reasonable estimate can be made. If the Company cannot make a reasonable estimate of the possible loss, or range of loss, then that is disclosed. In addition, legal fees and other directly related costs are expensed as incurred. Shareholder Complaint Filed in New Jersey Civil Court On December 8, 2025, the Company received by certified mail copy of a complaint filed in the New Jersey Special Civil Division (Sussex County) by a New Jersey resident. In the complaint, the plaintiff asserted claims for negligent misrepresentation, misrepresentation, and consumer deception against the Company and its former Chief Financial Officer, Kenneth Fisher, and sought total damages of $20,000. The plaintiff’s complaint stated that the plaintiff had traded in the Company’s common stock between 2022 and 2023 and relied on e-mail communications between the plaintiff and Mr. Fisher when deciding whether to continue holding and purchasing shares. The plaintiff asserted that such communications misrepresented matters related to regulatory progress, financial condition and capital actions. The complaint also attached a copy of a report that the plaintiff stated they had submitted to the Securities and Exchange Commission detailing what the plaintiff described as a multi-year pattern of material misstatements and omissions, market manipulation and governance failures by the Company. The Company believes that the complaint was without merit and included several allegations that were directly contradicted by the Company’s public filings and were not based in fact. The Company believes that the complaint took good faith e-mail communications between the plaintiff and Mr. Fisher and portrayed them in a manner that was highly misleading and out of context. On January 20, 2026, the Company filed an answer and counterclaim with the court in which the Company denied the allegations and asserted counterclaims against the plaintiff for defamation based on a series of message board posts that the plaintiff admitted making about the Company that the Company believes were verifiably untrue. On January 21, 2026, the court scheduled a trial for the matter on March 24, 2026. Though the Company was willing to contest these matters in a trial, to avoid further legal expenses, the Company accepted on February 17, 2026 an offer from the plaintiff to enter into a mutual release of claims pursuant to which the plaintiff withdrew the New Jersey civil court complaint and the matter was dismissed. Pursuant to the agreement between the parties, the Company agreed to reimburse the plaintiff for $1,050 in out-of-pocket expenses related to the matter. No other payments were made between the parties. ITEM 4. MINE SAFETY DISCLOSURES None.   30 PART II