What changed in this filing

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Item 1. Legal Proceedings

2021-06-14 compared with 2020-12-15 · 65 added, 40 removed, 4 unchanged (96% of the section changed)

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

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 August 10, 2018, we, our chief executive officer and our chief financial

officer received a Wells notice from the enforcement division staff of the Miami Regional Office of the SEC in connection with an investigation

into the accuracy of certain statements in our Form 10 registration statement filed June 2, 2016, as amended, and our Form 10-K annual

report filed May 8, 2017.

The staff’s inquiry was focused on our disclosure language in those filings relating to the FDA requirements

for our consumer transdermal patch products in that our filings did not accurately reflect the FDA’s jurisdiction over our consumer

products and did not disclose that we could not legally market these products in the United States.

On September 7, 2018, we and the officers

filed a Wells submission in response.

After engaging in settlement discussions with the staff about the matters under investigation, we

and the officers submitted an offer of settlement to resolve the investigation without admitting or denying any violations of the federal

securities laws.

On December 26, 2018, the SEC announced that it has accepted the settlement

offer and instituted settled administrative cease-and-desist proceedings against us and the named officers.

The SEC’s administrative

order, dated December 26, 2018, finds that we and the officers consented –

without admitting or denying any findings by the SEC–

to cease-and-desist orders against them for violations by us of Sections 12(g) and 13(a) of the Exchange Act 1934 and Rules 12b-20 and

13a-1 thereunder, which require issuers to file accurate registration statements and annual reports with the SEC;

violations by the officers

for causing our violations of the above issuer reporting provisions;

and violations by the officers of Rule 13a-14 of the Exchange Act,

which requires each principal executive and principal financial officer of issuers to attest that annual reports filed with the SEC do

not contain any untrue statements of material fact.

In addition to consenting to the cease-and-desist orders, the officers have each agreed

to pay a $25,000 civil penalty to resolve the investigation.

The administrative order does not impose a civil penalty or any other monetary

relief against us.

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

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

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

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

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’

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’

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 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, we filed a securities fraud action in the U.S.

Court for the Eastern District of New York against Raymond Kalmar, Paul Murphy, Michelle Polly-Murphy, Advanced Health Brands and TD Therapeutic,

In the complaint we allege that in 2017, the defendants fraudulently and deceitfully obtained 1,250,000 shares of common stock by

orchestrating a months-long scheme to defraud us.

We are seeking the return of the 1,200,000 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.

2020, the Court denied the defendant’s motion to dismiss the complaint, and the parties have recently commenced the discovery

phase of the litigation.

The defendants filed a motion to dismiss on August 23, 2019, and we filed our

response on September 13, 2019.

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.

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