Item 1. Legal Proceedings
Item 1. Legal Proceedings
From time to time, we may be involved in legal proceedings arising in the ordinary course of our business.
We are currently a defendant in litigation with a former employee in the Court of Common Pleas of Philadelphia County (Commerce Division), or the Court, relating to a claim of breach of contract and violation of the Pennsylvania Wage Payment and Collection Law, or the Claim. The plaintiff claims that, pursuant to an alleged settlement agreement reached on February 3, 2020, we agreed to issue plaintiff 150,000 shares of its common stock and that such shares would not be subject to the reverse stock split implemented by us in connection with our initial public offering on February 14, 2020. The plaintiff’s claim is for an amount in the mid-single digit millions of dollars. We disagree with the allegations that there was ever a binding settlement agreement or that any shares would not be subject to the reverse stock split. In October 2023, the Court denied both our and the plaintiff’s motions for summary judgement and a trial date was set for October 2024. We have vigorously defended against these claims. On October 28, 2024, the Court entered a directed verdict in favor of the Company on the Pennsylvania Wage Payment and Collection Claim, and on October 29, the jury found for the plaintiff in the amount of $1.0 million on the breach of contract Claim, which we have accrued for and recognized in general and administrative expenses for the three and nine months ended September 30, 2024. The jury verdict is subject to post-trial motions and we will consider whether to appeal if our motions are denied and judgment is entered on the verdict.
Other than the above, we are not presently a party to any legal proceedings that, in the opinion of management, would, if decided against us, have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputational harm, and other factors.
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