What changed in this filing

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Item 1. Legal Proceedings

2025-05-12 compared with 2024-11-12 · 62 added, 12 removed, 1 unchanged (99% of the section changed)

LEGAL PROCEEDINGS

time to time in the normal course of our business operations, we may become subject to litigation that may result in liability material

to our financial condition as a whole or may negatively affect our operating results if changes to our business operations are required.

The cost to defend such litigation may be significant and may require a significant diversion of our resources, and there is no guarantee

that we will be able to successfully defend against any such litigation regardless of particular merits.

There also may be adverse publicity

associated with litigation that could negatively affect customer perception of our business, regardless of whether the allegations are

valid or whether we are ultimately found liable.

Insurance may not be available on favorable terms, at all, or in sufficient amounts

to cover any liabilities with respect to these or other matters.

A judgment or other liability in excess of our insurance coverage for

any claims could adversely affect our business, financial condition and the results of our operations.

reference the Litigation section of Note 11 to the unaudited financial statements for additional disclosure.

time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business.

As of the date of issuance, other than those described below, there were no pending or threatened legal proceedings that could reasonably

be expected to have a material effect on the results of the Company’s operations.

There are also no proceedings in which any of

the Company’s directors, officers or affiliates is an adverse party to the Company or has a material interest adverse to the Company’s

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;

Box Hill Surgery Center, LLC;

Pain and Spine Specialists of Maryland, LLC;

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”).

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.

On April 25, 2025, the parties reached a

tentative $750,000 settlement payable in 12 equal monthly installments beginning in January of 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 unresolved.

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.

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