Item 3. Legal Proceedings
Item 3. Legal Proceedings.
As discussed above, the Employment Agreement between
the Company and Dr. Adler was terminated and the Company has recently discovered that SAPL and ACL breached material representations and
warranties under the Share Exchange. Pursuant to a letter dated December 8, 2025, the Company intends to seek rescission of the Share
Exchange and rescind the shares of Company common stock issued to ACL pursuant to the Share Exchange. The Company has also sent notice
to Dr. Adler for the termination of the option to purchase common stock issued to Dr. Adler under the Employment Agreement and the termination
of such agreement for “cause” as defined under the agreement. Among other material breaches, without limitation, the Company
has discovered that the real property and material assets of SAPL were encumbered at the time of the closing of the Share Exchange and
remain encumbered and subject to liens.
On December 19, 2025, a lawsuit was filed in the
Clark County District Court of Nevada against the Company, Charles Faulkner and Simon Wajcenberg, the Company’s Chief Executive
Officer and Chief Financial Officer, respectively. The plaintiffs were Dr. Niclas Adler, who previously acted as Chief Technology Officer
of the Company and as a member of the Company’s board of directors, and Adler Capital Limited.
The complaint alleged breaches of fiduciary duty,
wrongful termination and breach of contract in connection with Dr. Adler’s employment agreement with the Company and the related
equity awards. The relief sought against the Company included enforcement of the Share Exchange, employment agreement and option agreement,
compensatory damages, punitive damages, accounting, prejudgment and post judgement interest, reasonable attorney fees, cost of suit, a
judicial declaration of the parties’ respective rights and obligations. On January 21, 2026, Dr. Adler and Adler Capital Limited
voluntarily dismissed the lawsuit without prejudice.
On January 15, 2026, the Company filed a lawsuit
against SAPL and ACL in the United States District Court for the Southern District of Florida. The Company is seeking rescission of the
Share Exchange and temporary injunctive relief to prevent SAPL and ACL from transferring the shares of common stock received pursuant
to the Share Exchange and damages related thereto. The Company expects SAPL and ACL to file a counterclaim.
At this time, the Company is unable to predict
the outcome of the litigation or estimate the ultimate financial exposure, if any, that may result from the proceedings. An adverse judgement
or settlement could have a material adverse effect on the financial condition and results of operations of the Company.
See “Note 12. Commitments and Contingencies ”
to the Financial Statements included in this report.
Item 4. Mine Safety
Disclosures.
Not applicable.
7
PART II
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