Item 1. Legal Proceedings
ITEM 1. LEGAL PROCEEDINGS
With respect to legal proceedings that arise in
the ordinary course of business, when the Company becomes aware of a claim or potential claim, it assesses the likelihood of any loss
or exposure. In accordance with authoritative guidance, the Company records loss contingencies in its financial statements only for matters
in which losses are probable and can be reasonably estimated.
The Company is currently a defendant in a lawsuit
initiated by Joseph Gunnar, LLC (“Gunnar”) and Lucosky Brookman LLP (“LB”) in the Supreme Court of the State
of New York, New York County, under Index No.654633/2023. The lawsuit alleges multiple allegations such as breach of contract, fraudulent
activities, and tortious interference and seeks damages following the Company’s termination of an engagement letter for assistance
with a public stock offering. Gunnar is seeking over $500,000 in damages plus punitive damages, while LB is demanding reimbursement of
legal fees.
In response, the Company denies all allegations,
alleging that the engagement letter was unenforceable, and its termination was legally justified. The Company has also initiated counterclaims
against Joseph Gunnar & Co., accusing them of intentional interference and breach of fiduciary duty, and is seeking $1,000,000 for
each claim along with a declaratory judgment affirming the legality and justification of the termination. The plaintiffs have denied these
counterclaims.
Currently, there are no pending hearings or motions,
and the case is in the discovery stage. In early 2024, the plaintiffs proposed a settlement offer of $100,000. The Company has not responded
to that settlement offer.
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