What changed in this filing

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Item 1. Legal Proceedings

2024-05-20 compared with 2023-11-20 · 80 added, 93 removed, 13 unchanged (93% of the section changed)

4 unchanged sentences

FT Global served the complaint upon the Company in January 2021.

In the complaint, FT Global alleges claims, most of which

attempt to hold the Company liable under legal theories that relate back to an alleged breach of an exclusive placement agent agreement

between FT Global and the Company in July 2020 which had a term of three months.

FT Global claims that the Company failed to compensate

FT Global for securities purchase transactions between December 2020 and April 2021, pursuant to the terms of the expired exclusive placement

agent agreement.

Allegedly, the exclusive placement agent agreement required the Company to pay FT Global for capital received during

the term of the agreement and for the 12-month period following the termination of the agreement involving any investors that FT Global

introduced and/or wall-crossed to the Company.

However, the Company believes the securities purchase transactions at issue did not

involve the one investor which FT Global introduced or wall-crossed to the Company during the term of the agreement.

FT Global claims

approximately $7,000,000 in damages and attorneys’ fees.

The Company timely removed the case to the United

States District Court for the Northern District of Georgia (the (“Court) on February 9, 2021 based on diversity of jurisdiction.

On March 9, 2021, the Company filed a motion to dismiss based on FT Global’s failure to state a claim which is pending before the

In the complaint, FT Global alleges claims, most of which attempt to

hold the Company liable under legal theories that relate back to an alleged breach of an exclusive placement agent agreement between

FT Global and the Company in July 2020 which had a term of three months.

FT Global claims that the Company failed to compensate FT Global

for securities purchase transactions between December 2020 and April 2021, pursuant to the terms of the expired exclusive placement agent

Allegedly, the exclusive placement agent agreement required the Company to pay FT Global for capital received during the term

of the agreement and for the 12-month period following the termination of the agreement involving any investors that FT Global introduced

and/or wall-crossed to the Company.

However, the Company believes the securities purchase transactions at issue did not involve the one

investor which FT Global introduced or wall-crossed to the Company during the term of the agreement.

FT Global claims approximately $7,000,000

in damages and attorneys’ fees.

The Company timely removed the case to the

United States District Court for the Northern District of Georgia (the (“Court”) on February 9, 2021 based on diversity

of jurisdiction.

On March 9, 2021, the Company filed a motion to dismiss based on FT Global’s failure to state a claim which

is pending before the Court.

On March 23, 2021, FT Global filed its response to the Company’s motion to dismiss.

FT Global argues that the Court should

deny the Company’s motion to dismiss.

However, if the Court is inclined to grant the Company’s motion to dismiss, FT Global

requested that the Court permit it to file an amended complaint.

On April 8, 2021, the parties filed a Joint Preliminary Report and Discovery

On April 12, 2021, the Court approved the Joint Preliminary Report and Discovery Plan and issued a Scheduling Order placing this

case on a six-month discovery tract.

On April 30, 2021, the Company served FT Global with its Initial Disclosures.

On May 6, 2021, FT

Global served the Company with its Initial Disclosures.

On May 17, 2021, FT Global served the Company with its First Amended Initial Disclosures.

On November 10, 2021, the Court entered an Order granting the Company’s motion to dismiss FT Global’s fraud claim and breach

of contract claim as to the disclosure of its confidential and proprietary information.

The Court denied the Company’s motion to

dismiss FT Global’s i) breach of contract claim for failure to pay FT Global pursuant to the terms of the exclusive placement agent

ii) claim for breach of the covenant of good faith and fair dealing;

and iii) claim for attorney’s fees, and the court

concluded that additional information can be obtained through discovery.

The Company timely filed an answer and defenses to FT Global’s

complaint on November 24, 2021.

On January 3, 2022 the Company propounded discovery requests upon FT Global, including interrogatories

and requests for production of documents.

argues that the Court should deny the Company’s motion to dismiss.

However, if the Court is inclined to grant the

Company’s motion to dismiss, FT Global requested that the Court permit it to file an amended complaint.

On April 8, 2021, the

parties filed a Joint Preliminary Report and Discovery Plan.

On April 12, 2021, the Court approved the Joint Preliminary Report and

Discovery Plan and issued a Scheduling Order placing this case on a six-month discovery tract.

On April 30, 2021, the Company served

FT Global with its Initial Disclosures.

On May 6, 2021, FT Global served the Company with its Initial Disclosures.

On May 17, 2021,

FT Global served the Company with its First Amended Initial Disclosures.

On November 10, 2021, the Court entered an Order granting

the Company’s motion to dismiss FT Global’s fraud claim and breach of contract claim as to the disclosure of its

confidential and proprietary information.

The Court denied the Company’s motion to dismiss FT Global’s i) breach of

contract claim for failure to pay FT Global pursuant to the terms of the exclusive placement agent agreement;

ii) claim for breach

of the covenant of good faith and fair dealing;

and iii) claim for attorney’s fees, and the court concluded that additional

information can be obtained through discovery.

The Company timely filed an answer and defenses to FT Global’s complaint on

November 24, 2021.

On January 3, 2022 the Company propounded discovery requests upon FT Global, including interrogatories and

requests for production of documents.

On March 23, 2022, the Company propounded requests for admission upon FT Global.

2022, FT Global propounded discovery requests upon the Company, including requests for production of documents and requests for admission.

2022, FT Global propounded discovery requests upon the Company, including requests for production of documents and requests for

On April 1, 2022, FT Global served its response to the Company’s requests for production of documents.

2022, FT Global served its responses to the Company’s interrogatories and requests for admissions.

On May 13, 2022, FT Global

served its responses to the Company’s interrogatories and requests for admissions.

On May 13, 2022, FT Global produced documents

in response to the Company’s requests for production of documents.

On June 3, 2022, the Company produced documents in response to

FT Global’s requests for production of documents.

On August 3, 2022, the Company took the deposition of FT Global.

2022, FT Global took the deposition of the Company.

On August 3, 2022, the Court granted the parties’ Consent Motion to Extend Discovery

Period extending the discovery period from August 5, 2022 to September 14, 2022 and the deadline to file dispositive motions to October

On October 12, 2022, the Company filed a motion for summary judgment on all claims asserted by FT Global in this lawsuit.

November 2, 2022, FT Global filed its opposition to the Company’s motion for summary judgment.

On November 16, 2022, the Company

filed its reply in support of its motion for summary judgment on all claims asserted by FT Global in this lawsuit.

On August 31, 2023,

the Court entered an Order denying the Company’s motion for summary judgment.

On September 20, 2023, the parties filed a joint motion

to extend the deadline to file the consolidated pretrial order pending mediation of the case by the parties.

On September 21, 2023, the

Court granted the parties’ joint motion to extend the deadline to file the consolidated pretrial order to October 27, 2023.

produced documents in response to the Company’s requests for production of documents.

On June 3, 2022, the Company produced

documents in response to FT Global’s requests for production of documents.

On August 3, 2022, the Company took the deposition

of FT Global.

On August 4, 2022, FT Global took the deposition of the Company.

On August 3, 2022, the Court granted the

parties’ Consent Motion to Extend Discovery Period extending the discovery period from August 5, 2022 to September 14, 2022

and the deadline to file dispositive motions to October 12, 2022.

On October 12, 2022, the Company filed a motion for summary

judgment on all claims asserted by FT Global in this lawsuit.

On November 2, 2022, FT Global filed its opposition to the

Company’s motion for summary judgment.

On November 16, 2022, the Company filed its reply in support of its motion for summary

judgment on all claims asserted by FT Global in this lawsuit.

On August 31, 2023, the Court entered an Order denying the

Company’s motion for summary judgment.

On September 20, 2023, the parties filed a joint motion to extend the deadline to file

the consolidated pretrial order pending mediation of the case by the parties.

On September 21, 2023, the Court granted the

parties’ joint motion to extend the deadline to file the consolidated pretrial order to October 27, 2023.

On October 16, 2023,

the parties mediated the case.

1 unchanged sentence

consolidated pretrial order.

On October 27, 2023, the Court granted the parties’ joint motion to extend the deadline to file the

consolidated pretrial order to November 17, 2023 and set the case for trial on January 8, 2024.

Subsequently, the Court approved an extension

of the deadline to file a pretrial order to December 1, 2023.

The Company will continue to vigorously defend the action against FT Global.

Settlement with SEC

On December 17, 2019, the Company announced that

it received a subpoena from the SEC’s Division of Enforcement requiring the Company to produce documents and other information and

the Company has cooperated with the SEC’s investigation and information request.

On July 3, 2023, the SEC announced a settlement

of the investigation with the Company.

Without admitting or denying the SEC’s findings, the Company has consented to:

and desist from committing or causing any violations and any future violations of Sections 17(a)(2) and (3) of the Securities Act, Sections

13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and Rules 12b-20, 13a-1, 13a-13 and 13a-15(a) thereunder;

civil money penalty in the amount of $1,650,000 to the Securities and Exchange Commission for transfer to the general fund of the United

States Treasury, subject to Exchange Act Section 21F(g)(3) and the payment shall be made in the following installments:

the first installment

of $150,000 shall be paid within ten (10) days of July 3, 2023 (the “Order Date”);

the second installment of $375,000 shall

be paid within 90 days of the Order Date;

the third installment of $375,000 shall be paid within 180 days of the Order Date;

installment of $375,000 shall be made within 270 days of the Order Date;

and the last installment of $375,000 shall be made within 360

days of the Order Date;

(iii) retain, within sixty (60) days of the Order Date, at Company’s own expense, a qualified independent

consultant (the “Consultant”) not unacceptable to the SEC staff, to test, assess, and review the Company’s internal

accounting controls and internal control over financial reporting (collectively, “review), and the Consultant, at the conclusion

of the review, which in no event shall be no more than 180 days after the Order Date, to submit a report of the Consultant to the Company

and the SEC staff and the report shall address the Consultant’s findings and shall include a description of the review performed,

the conclusions reached, and the Consultant’s recommendations for changes or improvements;

and (iv) adopt, implement, and maintain

all policies, procedures and practices recommended in the report of the Consultant within 120 days of receiving the report from the Consultant.

The first and second installments of $150,000 each have been paid by the Company on July 7, 2023 and September 25, 2023, respectively.

The Company also has engaged an independent consultant to test, assess, and review the Company’s

internal accounting controls and internal control over financial reporting on July 26, 2023 .

On October 27, 2023, the Court granted the parties’ joint motion to extend the deadline to file

the consolidated pretrial order to November 17, 2023 and set the case for trial on January 8, 2024.

Subsequently, the Court approved

an extension of the deadline to file a pretrial order to December 1, 2023.

The Court has also rescheduled the trial to commence on

April 8, 2024.

The trial began on April 8, 2024 and ended on April 11, 2024, on which date the jury returned a verdict in favor of

FT Global and the Court entered a judgment awarding FT Global $8,875,265.31.

On April 16, 2024, the Court issued an amended

judgment, awarding FT Global $10,598,379.93, which includes $7,895,265.31 in damages, $1,723,114.62 in prejudgment interest, and

$980,000.00 in attorney’s fees.

The Company filed a post-trial motion challenging the judgment on May 9, 2024 and will

continue to vigorously defend the action against FT Global, including by appealing the judgment to the United States Court of

Appeals for the Eleventh Circuit if necessary.

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Legal Proceedings