Item 3. Legal Proceedings
ITEM 3. LEGAL PROCEEDINGS
From time to time, we are
subject to ordinary routine litigation incidental to our normal business operations. We are not currently a party to, and our property
is not subject to, any material legal proceedings, except as set forth below.
On October 25, 2017,
our subsidiary, Genexosome, entered into and closed a Stock Purchase Agreement with Beijing Jieteng (Genexosome) Biotech Co., Ltd.,
a corporation incorporated in the People’s Republic of China on August 7, 2015 (“Beijing Genexosome”) which was
dissolved in June 2022, and Yu Zhou, MD, PhD, the sole shareholder of Beijing Genexosome, pursuant to which Genexosome acquired all
of the issued and outstanding securities of Beijing Genexosome in consideration of a cash payment in the amount of $450,000, of
which $100,000 is still owed. Further, on October 25, 2017, Genexosome entered into and closed an Asset Purchase Agreement with Dr.
Zhou, pursuant to which the Company acquired all assets, including all intellectual property and exosome separation systems, held by
Dr. Zhou pertaining to the business of researching, developing and commercializing exosome technologies. In consideration of the
assets, Genexosome paid Dr. Zhou $876,087 in cash, transferred 500,000 shares of our common stock to Dr. Zhou and
issued Dr. Zhou 400 shares of common stock of Genexosome. Further, the Company had not been able to realize the financial
projections provided by Dr. Zhou at the time of the acquisition and has decided to impair the intangible asset associated with this
acquisition to zero. Dr. Zhou was terminated as Co-CEO of Genexosome on August 14, 2019. Further, on October 28, 2019, Research
Institute at Nationwide Children’s Hospital (“Research Institute”) filed a Complaint in the United States District
Court for the Southern District of Ohio Eastern Division against Dr. Zhou, Li Chen, the Company and Genexosome with various claims
against the Company and Genexosome including misappropriation of trade secrets in violation of the Defend Trade Secrets Act of 2016
and violation of Ohio Uniform Trade Secrets Act. Research Institute is seeking monetary damages, injunctive relief, exemplary
damages, injunctive relief and other equitable relief. The Company intends to vigorously defend against this action and pursue all
available legal remedies. The criminal proceedings against Dr. Zhou and Li Chen have been concluded. The Company, Genexosome and the
Research Institute entered into a settlement agreement dated June 7, 2022 (the “Settlement Agreement”), whereby the
Company agreed to pay the Research Institute $450,000 on each of the sixty-day, one year and two-year anniversaries of the
Settlement Date. In addition, the Company agreed to pay the Research Institute 30% of the Company’s initial pre-tax profit of
$3,333,333, 20% of the Company’s second pre-tax profit of $3,333,333 and 10% of the Company’s third pre-tax profit of
$3,333,333. The parties provided a mutual release as well.
ITEM 4. MINE SAFETY DISCLOSURES
None.
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PART II