Item 1. Legal Proceedings
Item 1. Legal Proceedings.
From time to time, we may be subject to legal
proceedings, investigations and claims incidental to the conduct of our business.
Other than disclosed above, we are not a party
to, nor are we aware of, any legal proceedings, investigations or claims which, in the opinion of our management, are likely to have a
material adverse effect on our business, financial condition or results of operations.
On March 17, 2021, the Food and Drug Administration
(“FDA”) sent a letter to Aspire North America requesting that Aspire North America submit documents relating to its marketing
practices for Aspire products. Specifically, the FDA requested documents related to youth exposure to Aspire North America’s social
media marketing of Aspire as well as Aspire North America’s use of influencers in social media marketing. This request applied to
all of Aspire electronic nicotine delivery system (ENDS) products and their components or parts. The FDA requested these documents based
on the epidemic of youth ENDS use and based on Aspire North America’s marketing of Aspire products on social media platforms (e.g.,
Facebook, YouTube, and Instagram). The FDA requested that Aspire North America respond within 60 days but granted a 30-day extension.
On June 15, 2021, Aspire North America provided the required information to the FDA.
To date, the FDA has not substantively responded
or taken any further action in the matter. The Company is uncertain as to whether this remains an active inquiry by FDA, though we believe
that the duration of time which has passed since the inquiry tends to suggest that the matter is no longer active within FDA.
However, if the matter remains active there is
a possibility that FDA may not consider the Company’s response adequate and/or may initiate regulatory or enforcement action based
on an alleged failure to comply with the request or FDA may initiate regulatory or enforcement action on other grounds based on the contents
of the documents produced in the response.
Given the lack of sales of the Company’s
e-cigarette products in the U.S. for the prior 3-year period, the Company believes it is unlikely that a material monetary penalty could,
or would, be levied against the Company in the event of a finding of fault in an aforementioned regulatory proceeding. A finding of fault
in a regulatory proceeding, may, however materially impact the Company’s reputation in the e-cigarette industry.
On April 12, 2024, we received a demand letter (the “Demand”)
from a current employee alleging a variety of workplace issues and other claims. We believe that these claims have no merit, and we plan
to vigorously defend against the Demand. We cannot predict the outcome of the Demand, and it is possible that additional demand letters
or lawsuits may be received.
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