Item 1. Legal Proceedings
Item
1. LEGAL PROCEEDINGS.
The
Company filed a complaint against its Landlord in the Superior Court of New Jersey, Somerset County, Chancery Division on July 11, 2025
alleging principally that Landlord illegally locked the Company out of its leased premises in Bridgewater, New Jersey. As a result of
the illegal lockout, the Company sought (among other things) a declaration that the lease and all obligations thereunder, including rent,
terminated as of the date of the lockout. On September 5, 2025, Landlord filed an answer with counterclaims, which it amended on December
12, 2025. In the counterclaims, Landlord sought a declaration that there was no lockout, or that the lockout was justified, and therefore
the lease remains in effect. Landlord also sought damages for the Company’s alleged failure to pay approximately $205 in rent (as
of December 31, 2025) following the lockout, and alleged conversion of certain furniture, fixtures, and equipment (FF&E) items within
the premises belonging to Landlord. The matter was resolved by way of the Settlement Agreement effective April 7, 2026, pursuant to which
the Company (among other things) made a termination payment of $765 (which was satisfied with the $200 security deposit and a cash payment
of $565) in return for discontinuation of the action, termination of the lease, and an exchange of mutual general releases. The Company
exited the Bridgewater premises on April 29, 2026 pursuant to the terms of the Settlement Agreement.
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