What changed in this filing

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Item 1. Legal Proceedings

2026-08-11 compared with 2026-05-12 · 20 added, 51 removed, 10 unchanged (88% of the section changed)

6 unchanged sentences

Legal fees are expensed as incurred.

February 6, 2019, plaintiff Ritu Bhambhani, M.D., initiated a lawsuit against Innovative Health Solutions, Inc.

and others in the United

States District Court for the District of Maryland.

Plaintiffs Bhambhani and Sudhir Rao subsequently amended the complaint, with the

Third Amended Complaint (“Complaint”) containing the most recent set of allegations.

The Complaint asserted claims under

the RICO Act, as well as of fraudulent misrepresentation, intentional misrepresentation by concealment, and civil conspiracy and sought

compensatory damages in excess of $5 million, pre-judgment interest, punitive damages, attorney’s fees, court costs and designation

of the case as a class action.

The Complaint stated that the Company, distributors of the Company’s product, and medical billing

and coding consultants allegedly made misrepresentations to the plaintiffs that the Company’s NeuroStim device and related procedures

could be billed to, and reimbursed by, Medicare and other insurance payors as a surgically implantable neurostimulator.

Plaintiffs claim

to have suffered damages when Medicare administrative contractors declined to pay plaintiffs for their use of the device.

February 11, 2022, the Company filed a motion for summary judgment based upon the plaintiffs not being proper parties to assert claims

against the Company.

On June 14, 2022, the Court granted the Company’s motion for summary judgment and dismissed the Complaint.

July 14, 2022, plaintiffs Ritu Bhambhani and Sudhir Rao filed a notice of appeal with the Fourth Circuit Court of Appeals.

2024, the Fourth Circuit denied the plaintiff’s appeal and entered judgment against the plaintiffs.

On June 25, 2024, the Fourth

Circuit entered its mandate declaring that its judgment against the plaintiffs took effect that day.

The plaintiffs did not seek any

further review or appeal of that judgment.

on July 14, 2022, plaintiffs Ritu Bhambhani, LLC;

On February 6, 2019, plaintiffs Ritu Bhambhani, M.D.

and Sudhir Rao initiated a lawsuit against Innovative Health Solutions, Inc.

others in the United States District Court for the District of Maryland, later as amended as the Third Amended Complaint (“Complaint”),

asserting claims under the RICO Act, as well as of fraudulent misrepresentation, intentional misrepresentation by concealment, and civil

conspiracy related to Medicare and insurance reimbursement of the Company’s NeuroStim device, seeking damages in excess of $5 million.

The Court granted the Company’s motion for summary judgment and dismissed the Complaint on June 14, 2022, and the Fourth Circuit Court

of Appeals affirmed the dismissal on June 3, 2024, with no further appeal sought by the plaintiffs.

On July 14, 2022, related entities owned or partially owned by the same plaintiffs Ritu Bhambhani, LLC;

Box Hill Surgery Center, LLC;

Pain and Spine Specialists of Maryland, LLC;

ASC, LLC initiated a lawsuit against the Company and others in the United States District Court for the District of Maryland (the “2022

The plaintiffs in this lawsuit are business entities owned or partially owned by the plaintiffs that initiated the litigation

described above.

The Complaint asserted claims under the RICO Act, as well as fraudulent misrepresentation, intentional misrepresentation

by concealment, and civil conspiracy and seeks compensatory damages in excess of $75,000, pre-judgment interest, punitive damages, attorney’s

fees, and court costs.

The Complaint states that the Company, distributors of the Company’s product, and medical billing and coding

consultants allegedly made misrepresentations to the plaintiffs that the Company’s NeuroStim device and related procedures could

be billed to, and reimbursed by, Medicare and other insurance payors as a surgically implantable neurostimulator.

Plaintiffs claim to

have suffered damages when Medicare administrative contractors declined to pay plaintiffs for their use of the device.

September 28, 2022, the Company filed a motion to dismiss all claims.

On May 25, 2023, the Court issued an Order and a Memorandum Opinion

which dismissed the plaintiffs’ claims related to the RICO Act.

The remaining claims are still pending, and no trial date has been

set for the case.

The Court has vacated its Scheduling Order at the parties’ request so that the parties could try to resolve the

disputes in both cases through an independent third-party mediator.

April 25, 2025, the parties reached a $750,000 settlement payable in 12 equal monthly installments that began in January of 2026 with

remaining payments of $562,500 as of March 31, 2026.

and SimCare ASC, LLC initiated a lawsuit against the Company and others in the United States

District Court for the District of Maryland (the “2022 Lawsuit”), asserting the same claims and seeking damages in excess

The Court dismissed the RICO claims on May 25, 2023, and the parties subsequently pursued mediation of the remaining claims.

On April 25, 2025, the parties reached a $750,000 settlement payable in 12 equal monthly installments beginning in January 2026, with

$375,000 remaining as of June 30, 2026.

January 2024, Dr.

Arturo Taca served notice to the Company that asserted an interest in its U.S.

10,413,719 valued at $2,000,000

based on his own work in neurostimulation.

The Company denied both the neurostimulation patent and compensation claims.

The case remains

While it is too early to predict the ultimate outcome of this matter, we believe the Company has meritorious defenses and

intends to defend this matter vigorously.

Arturo Taca asserted an interest in U.S.

10,413,719 and sought compensation of approximately $2,000,000

based on his alleged contributions to certain neurostimulation technology.

The Company disputes both the asserted ownership interest

and the related compensation claim and intends to defend the matter vigorously.

Although the Company does not believe that a material

loss is probable, the matter remains in its early stages and the ultimate outcome cannot be predicted.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Legal Proceedings