Item 1. Legal Proceedings
Item 1. Legal Proceedings.
From time to time,
we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation
is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm
our business.
On August 7, 2018,
we commenced an action against North Empire LLC, or North Empire, in the Supreme Court of the State of New York, County of New
York for breach of a Securities Purchase Agreement or Agreement in which we are seeking damages in an amount to be determined at
trial, but in no event less than $616,000. On August 2, 2018, North Empire filed a Summons with Notice against us, also in the
same Court, in which they allege damages in an amount of $11.4 million arising from an alleged breach of the Agreement. On September
6, 2018, North Empire filed a Notice of Discontinuance of the action it had filed on August 2, 2018. On September 27, 2018, North
Empire filed an answer and asserted counterclaims in the action commenced by us against them, alleging that we failed to deliver
stock certificates to North Empire causing damage to North Empire in the amount of $10,958,589. North Empire also filed a third-party
complaint against our CEO and now former Chairman of the Board asserting similar claims against them in their individual capacities.
On October 17, 2018, we filed a reply to North Empire’s counterclaims. On November 15, 2018, our CEO and now former Chairman
of the Board filed a motion to dismiss North Empire’s third-party complaint. On January 6, 2020, the Court granted the motion
and dismissed the third-party complaint. The parties are now engaging in discovery in connection with the claims and counterclaims.
We intend to vigorously defend any claims made by North Empire.
Item 1A. Risk Factors.
Not required for a
smaller reporting company.
Item 2. Unregistered Sales of Equity
Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
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