Item 3. Legal Proceedings
ITEM
3.
LEGAL
PROCEEDINGS
We are not currently involved
in any legal proceedings, except as described below. From time to time, we may become a party to various legal actions and complaints
arising in the ordinary course of business. In addition to commitments and obligations in the ordinary course of business, we may be subject
to various claims, pending and potential legal actions for damages, investigations relating to governmental laws and regulations and other
matters arising out of the normal conduct of our business. It is possible that our cash flows or results of operations could be materially
affected in any particular period by the unfavorable resolution of one or more of these contingencies.
Dispute with Former Management
On
October 10, 2025, the Company initiated litigation in the Circuit Court of the Thirteenth Judicial Circuit in and Hillsborough County,
Florida against certain former officers and/or directors of the Company (collectively, the “Former Management Parties”).
The complaint asserts claims including, among others, breach of the fiduciary duty of loyalty, breach of contract, tortious interference
with a contract, tortious interference with business relationships, and other applicable claims, arising out of the Former Management
Parties’ efforts to threaten harm the Company as leverage to force the retraction of a vote of the majority shareholders.
On
December 10, 2025, Defendants filed a motion to compel arbitration of all claims in the suit. The Company does not agree that all the
claims in the suit are subject to mandatory arbitration, and filed an opposition to that motion on December 22, 2025. A hearing is currently
scheduled on the motion to compel arbitration for April 27, 2026.
While
the Company believes it has meritorious claims, litigation is inherently uncertain, and there can be no assurance regarding the outcome
or timing of resolution.
In
January 2026, the Company has also served a notice of claims against the Former Management Parties for misrepresentations and omissions
of material fact in connection with an acquisition of certain limited liability company membership interests, which that resulted in,
among other things, supposed promises of equity and related arrangements to such individuals. The Company intends to seek, among other
relief, rescission and cancellation of any purported commitments related to or resulting from the misrepresentations and omissions, as
well as related equitable and monetary remedies.
As
of December 31, 2025, obligations associated with these arrangements are reflected as liabilities on the Company’s consolidated
balance sheet in the aggregate amount of approximately $17,500,000.
Because
the potential resolution of this matter may result in a gain contingency, no amounts have been recognized in the accompanying consolidated
financial statements for any potential recovery or reduction of the recorded liability. If the Company prevails in the litigation, all
or a portion of the recorded liability may be reversed in a future period. The Company will continue to evaluate this matter and will
adjust the related liability, if appropriate, based on developments in the litigation.
See Note 13 to the consolidated financial statements
for additional information regarding this matter.
ITEM
4.
MINE
SAFETY DISCLOSURES
Not
applicable.
50
PART
II
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