Item 1. Legal Proceedings
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we become involved in legal proceedings
arising in the ordinary course of our business. We believe that we do not have any threatened litigation which, individually or in the
aggregate, would have a material adverse effect on our business, results of operations, financial condition and/or cash flows during the quarter ended March 31, 2025 except as described below.
In
December 2024, a former shareholder of the Company (the “Shareholder”) filed a complaint against the Company and other entities
and individuals affiliated with the Company in the Orange County Superior Court of California, alleging financial losses related to his
investment in entities affiliated with the Company. The Shareholder claims he invested approximately $500,000 and later sold his shares
for $7 million but alleges that, absent interference by an initial public offering organizer, the shares could have been sold for $9 million. Accordingly,
he claims to have lost a potential gain of $2 million. The case is currently in the pre-answer stage. The Company has filed a petition
to compel arbitration, seeking to move the dispute to arbitration in Texas. A demurrer has also been filed on behalf of one of the individual
defendants represented by the Company’s counsel, challenging the legal sufficiency of the complaint. The Company believes that
the complaint is without any merit and intends to defend the matter vigorously. The Company does not believe the potential legal costs to us or resolution of this matter will have a material adverse
effect on the results of operations, cash flows or financial position of the Company.
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ITEM 1A. RISK FACTORS.
As a “smaller reporting company,” as defined
by Rule 12b-2 of the Exchange Act, we are not required to provide the information in this Item. In any event, there have been no material
changes in our risk factors as previously disclosed in our 2024 Annual Report on Form 10-K filed with the SEC on December 9, 2024.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES
AND USE OF PROCEEDS.
(A) Unregistered Sales of Equity Securities
None.
(B) Use of Proceeds
Not applicable.
(C) Issuer Purchases of Equity Securities
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
None.
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