What changed in this filing

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Item 1. Legal Proceedings

2021-12-14 compared with 2021-09-03 · 65 added, 56 removed, 2 unchanged (98% of the section changed)

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.

LEGAL PROCEEDINGS

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

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.

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

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.

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.

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’

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/

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.

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

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 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 nine patents never duly transferred to us.

On February 1, 2019, we appealed the court’s

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 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.

April 29, 2019, we 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 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.

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.

On April 29, 2019, we 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 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 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.

A trial date is expected to be set for some

time in early 2022.

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