Item 1. Legal Proceedings
ITEM
1. LEGAL PROCEEDINGS
On
June 22, 2021, Thomas Seifert’s employment as the Company’s Chief Financial Officer was terminated for cause. Mr. Seifert
asserts that the termination was not for cause and that he is owed compensation payable under his June 2, 2021 employment agreement.
The Company’s position is that Mr. Seifert is not owed any additional compensation relating to his prior service with the Company
or arising under any employment agreement. The Company and Mr. Seifert are currently engaged in litigation over the matter of his employment
and termination. The Company believes it has adequate defenses to Mr. Seifert’s claims and has asserted affirmative claims for
relief against Mr. Seifert including, but not limited to, breach of the employment agreement, breach of the fiduciary, fraud in the inducement
in connection with the employment agreement, fraudulent misrepresentation, and constructive fraud. The Company does not expect to seek
substantial monetary relief in the litigation. This dispute is pending before the District Court for the Southern District of Florida
under Case No. 1:21-cv-22436-DPG.
On
June 24, 2021, Seifert submitted an online whistleblower complaint to the Occupational Safety and Health Administration (OSHA) alleging
that NextPlat engaged in retaliatory employment practices in violation of the Sarbanes-Oxley Act. NextPlat responded by moving to dismiss
Seifert’s complaint, citing Seifert’s failure to make a prima facie showing that a protected activity contributed
to the adverse action alleged in the complaint. On July 21, 2022, following an investigation by the Regional Administrator for OSHA,
Region IV, the Secretary of Labor issued its findings, dismissing Seifert’s complaint on the grounds that the OSHA investigator
found that the evidence did not support Seifert’s claims.
From
time to time, the Company may become involved in litigation relating to claims arising out of our operations in the normal course of
business. The Company is not currently involved in any pending legal proceeding or litigation, and to the best of our knowledge, no governmental
authority is contemplating any proceeding to which the Company is a party or to which any of the Company’s properties is subject,
which would reasonably be likely to have a material adverse effect on the Company’s business, financial condition and operating
results.
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