Item 3. Legal Proceedings
ITEM
3. 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.
41
North
Empire LLC
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. Discovery has been completed and both parties have filed motions for
summary judgment in connection with the claims and counterclaims. On December 30, 2021, the Court denied both My Size and North
Empire’s motions for summary judgment, arguing there were factual issues to be determined at trial. On January 26, 2022, the
Company filed a notice of appeal of the summary judgment decision. On February 3, 2022, the Company filed a motion to reargue the
Court’s decision denying the Company’s motion for summary judgment. On or about September 12, 2022, the Court issued its
Decision and Order denying the Company’s motion to reargue. North Empire filed its opposing brief on December 7, 2022. Both
sides were given an opportunity to file a reply brief. We filed our reply brief on January 4, 2023 and North Empire filed its reply
brief on January 13, 2023. Oral argument was held before the Appellate Court on February 7, 2023. On or about February 28, 2023, the
Appellate Court filed its Decision and Order, which affirmed the lower court’s decisions regarding both My Size and North
Empire’s motions for summary judgment and sent the case back to the Supreme Court. On or about March 13, 2023, the Supreme
Court referred the case to its Alternative Dispute Program and ordered the cases to mediate. A date for the mediation has not yet
been set. We intend to vigorously defend any claims made by North Empire. We believe it is more likely than not that the
counterclaims will be denied.
ITEM
4. MINE SAFETY DISCLOSURES
Not
applicable.
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PART
II