CITIZENS, INC. 10-Q

Item 1. LEGAL PROCEEDINGS Part I, Item 3, Legal Proceedings of our Form 10-K includes a discussion of our legal proceedings. There have been no material developments in the three and nine months ended September 30, 2021 from the legal proceedings described in our Form 10-K except as follows: On September 14, 2021, the Company won a victory in its trade secret theft suit against Randall Riley, Alexis Delgado and certain of his co-agents, and First Trinity Financial Corporation (“First Trinity”) when the Travis County District Court (the “Court”) denied Defendants’ traditional and no evidence Motion for Partial Summary Judgment (“Defendants’ Motion”) in its entirety. Defendants Motion claimed that the Company should not be able to proceed with our claims against Defendants for unfair competition, tortious interference with contract, conspiracy and unjust enrichment, because they “have no evidence to support these theories.” With respect to these claims, our lawsuit claims that: • Riley and First Trinity tortiously interfered with Citizens’ contracts with its agents and that they “willfully and intentionally” induced the agents to breach those contracts by disclosing Citizens’ confidential information; • Defendants wrongfully secured benefits from Citizens and thus Citizens is entitled to those benefits (unjust enrichment); • Defendants stole Citizens’ information in order to unfairly compete with us; and • Defendants conspired to achieve the theft of Citizens’ trade secrets. By denying Defendants’ Motion in its entirety, we can proceed to trial with all of the claims described above. Further, on September 28, 2021, the Court ruled in our favor on motions for summary judgment filed by five of the defendants. Specifically, the court: • Denied the requests of Alexis Enrique Delgado, Enrique Pinzon Ruiz, and Esperanza Peralta de Delgado to be dismissed from the lawsuit. These individuals were independent consultants who were terminated by the Company for cause due to the facts alleged in this lawsuit. • Denied Michael Buchweitz’s request that the claim against him for breach of his confidentiality agreement be dismissed. Mr. Buchweitz is a former underwriter for Citizens. • Denied Jonathan Pollio’s request that the claim against him for breach of his confidentiality agreement be dismissed. Mr. Pollio is a former actuary for Citizens. We have alleged that the above defendants conspired with Randall Riley and First Trinity to steal our trade secrets and unfairly compete with us, including by using a confusingly similar name and logo. The court denied the motions of Delgado, Ruiz, Delgado, Buchweitz and Pollio in their entireties, allowing us to proceed with all of the claims against each of them. While the court allowed the CEO and CFO of First Trinity to be dismissed individually from the lawsuit, the ruling does not affect Citizens’ claims against First Trinity described above. Trial in the lawsuit is set for February 2022. September 30, 2021 | 10-Q 54 Table of Contents CITIZENS, INC.