Item 1. Legal Proceedings
ITEM 1.
LEGAL PROCEEDINGS
On July 27, 2018, we commenced an action
in the Circuit Court of the Ninth Judicial Circuit in and for Orange County, Florida, against Advanced Health Brands, Inc., Raymond
Kalmar, Paul Murphy, Michelle Polly-Murphy, Laura Fillman and John Baker, together with a Motion for Temporary Injunction Without
Notice and a Motion for Prejudgment Writ of Replevin arising from our decision to seek to rescind for misrepresentation the agreement
by which we acquired advanced Health Brands, Inc. for 1,250,000 shares of common stock valued at $2,500,000 and seek return of
the shares. On August 2, 2018, the court entered a Temporary Injunction Without Notice and an Order to Show Cause against the defendants.
Defendants Kalmar, Murphy, Polly-Murphy, and Baker filed a Motion to Dismiss our Verified Complaint, Motion to Dissolve Temporary
Injunction Without Notice and Response to Order to Show Cause, and Motion to Compel Arbitration. On January 4, 2019, the court
dismissed our complaint with prejudice, and directed the defendants to assign to us within 30 days, the six patents never duly
transferred to us. On February 1, 2019, we appealed the court’s order. Pursuant to a settlement agreement with one of the
defendants, that defendant returned the 50,000 shares which had been issued to her, and the shares were cancelled as of January
31, 2019. On June 7, 2019, the individual defendants (other than the defendant whom we have a settlement agreement), filed a motion
for sanctions and civil contempt against us, which generally claimed that we failed to comply with the Court’s January 4,
2019 order by refusing to issue the Ruling 144 letters that would allow the defendants to transfer their shares of common stock.
On October 29, 2019, the Court denied the defendants motion. On March 20, 2020, the Florida district court of appeal reversed the
lower court ruling in the Florida state court action that dismissed our complaint with prejudice, and gave us leave to file an
amended complaint. On July 7, 2020, Defendants filed Notice for Trial, requesting the court to set a trial date. The Company and
defendants have served their first set of interrogatories on each other and have filed answers and responses to each other’s
first set of interrogatories.
On August 22, 2018, four of the defendants
in the Florida action described in the previous paragraph filed a complaint against us in the Franklin County, Ohio Court of Common
Pleas seeking a declaratory judgment permitting them to sell the shares of common stock they received pursuant to the acquisition
agreement. The parties have agreed to a stay pending the outcome of the Florida litigation.
On April 29, 2019, the Company filed a securities fraud action
in the U.S. District Court for the Eastern District of New York against Raymond Kalmar, Paul Murphy, Michelle Polly-Murphy, Advanced
Health Brands and TD Therapeutic, Inc. In the complaint the Company alleges that in 2017, the defendants fraudulently and deceitfully
obtained 1,250,000 shares of common stock by orchestrating a months-long scheme to defraud the Company. The Company is seeking
the return of the shares of common stock and monetary damages resulting from the defendants’ fraudulent conduct. The defendants
filed a motion to dismiss the complaint on August 23, 2019, and on September 13, 2019 the Company filed its response. On July 20,
2020, the Court denied the defendant’s motion to dismiss the complaint, and the parties have recently commenced the discovery
phase of the litigation. No trial date has been scheduled by the Court.
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