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Item 3. Legal Proceedings

2024-09-20 compared with 2023-09-15 · 28 added, 26 removed, 4 unchanged (93% of the section changed)

1 unchanged sentence

Legal Proceedings

former placement agent, Boustead Securities LLC ("Boustead”), has brought a legal action against us following our communication

to Boustead to unilaterally terminate an engagement agreement under which we and Boustead had originally intended for Boustead to be engaged

to act as an exclusive underwriter in our initial public offering.

To date, we have been unable to reach a settlement with Boustead.

April 30, 2021, Boustead filed a statement of claim with FINRA demanding to arbitrate the dispute, and is seeking, among other things,

monetary damages against the Company and D.A.

Davidson & Co.

The matter is presently scheduled to have a pre-hearing conference before

a FINRA arbitration panel on September 26, 2023.

The actual FINRA arbitration, however, has been postponed and, as a result, a date for

the FINRA arbitration hearing has not yet been set.

The Company and its special litigation counsel are in the process of preparing for

We believe that we have meritorious defenses to any claims that Boustead may assert, and we do not believe that such claims

will have a material adverse effect on our business, financial condition, or operating results.

However, we have agreed to indemnify D.A.

Davidson & Co.

and the other underwriters who participated in our initial public offering against any liability or expense they may

incur or be subject to arising out of the Boustead dispute.

In addition, Chenlong Tan, our Chairman, President, and Chief Executive Officer

and a beneficial owner of more than 5% of our common stock, has agreed to reimburse us for any judgments, fines and amounts paid or actually

incurred by us or an indemnitee in connection with such legal action or in connection with any settlement agreement entered into by us

or an indemnitee up to a maximum of $3.5 million in the aggregate, with the sole source of funding for such reimbursement to come from

sales of shares then owned by Mr.

than the above, we are not presently party to any pending or other threatened legal proceedings or claims that we believe will have a

material adverse effect on our business, financial condition, or operating results, although from time to time, we may become involved

in legal proceedings in the ordinary course of business.

On April 3, 2024, the Company

and the underwriter of our initial public offering, D.A.

Davidson & Co (“D.A.

Davidson”), entered into a settlement agreement

and mutual release (the “Settlement Agreement”) with Boustead Securities, LLC (“Boustead”) and its current and

former employees, officers, directors, partners, agents and affiliates, pursuant to which all parties agreed to release all claims in

exchange for the Company’s payment of $1.3 million (the “Settlement Amount”) to Boustead.

The Settlement Agreement was

entered into for purposes of settling in full the FINRA Arbitration (FINRA Case No.

22-01133) which had been brought by Boustead against

the Company and D.A.

Davidson after the Company opted not to complete its initial public offering with Boustead but instead engaged and

completed its initial public offering with D.A.

In entering into the Settlement Agreement, the Company paid the Settlement Amount

in four equal installments of $325,000 on each of April 3, 2024, May 3, 2024, June 3, 2024 and July 3, 2024.

As of the date of this Annual

Report, the parties have formally withdrawn all of the complaints that were before FINRA, with prejudice, and the matter is settled in

In addition, effective June

18, 2024, and pursuant to the agreement between our co-founder and chairman, Chenlong Tan and D.A.

Davidson, Mr.

Tan and co-founder, Allan

Huang, returned a total of 541,667 shares (the “Cancelled Shares”) to the Company, all of which were cancelled following their

The Cancelled Shares, valued at $2.40 per share on the date of cancellation, served to cover the full value of the Settlement

Other than the above settlement,

we are not presently a party to any pending or other threatened legal proceedings or claims against us that we believe will have a material

adverse effect on our business, financial condition, or operating results.

Nonetheless, we may from time to time become involved in legal

proceedings in the ordinary course of business.

MINE SAFETY DISCLOSURES

1 unchanged sentence

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-K

Item 3. Legal Proceedings