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Item 3. Legal Proceedings

2021-03-01 compared with 2020-03-25 · 6 added, 134 removed, 4 unchanged (97% of the section changed)

2 unchanged sentences

Future litigation

may be necessary to defend ourselves and our customers by determining the scope, enforceability, and validity of third party proprietary

rights or to establish our proprietary rights.

Akers Biosciences, Inc.

2:18-cv-10521 (D.N.J.) and Gleason v.

Akers Biosciences, Inc., No.

2:18-cv-10805 (D.N.J.)

June 13, 2018, Plaintiff Tim Faulkner filed a class action complaint alleging securities violations against our company, John

Gormally and Gary M.

Rauch (“Individual Defendants”

and together with our company, “Defendants”) on

behalf of all persons and entities who purchased publicly traded Akers securities from May 15, 2017 through June 5, 2018 (the

“Faulkner Action”).

The complaint alleged violations of Section 10(b) of the Exchange Act and Rule 10b-5 against all

Defendants, and violations of Section 20(a) of the Exchange Act against the Individual Defendants.

In particular, the complaint

alleged that Defendants made false and/or misleading statements and/or failed to disclose in our first, second, and third quarter

2017 10-Qs and our 2017 10-K that:

(1) Akers was improperly recognizing revenue for the fiscal year ended December 31, 2017;

(2) Akers had downplayed weaknesses in our internal controls over financial reporting and failed to disclose the true extent of

those weaknesses.

On June 20, 2018, Plaintiff David Gleason filed a class action complaint under the caption Gleason v.

Biosciences, Inc., No.

2:18-cv-10805 (D.N.J.) based on the same allegations and causes of action (the “Gleason Action”).

On November 21, 2018, the Faulkner and Gleason Actions were consolidated under the Faulkner Action docket.

The parties conducted

a mediation on January 10, 2019, and agreed to a settlement in principle disposing of the consolidated action as to all Defendants,

including the Individual Defendants.

On March 8, 2019, the parties signed a settlement agreement, subject to approval by the Court,

whereby we agreed to pay $2,250,000 in exchange for full releases and discharge of all claims against us.

On the same day, Plaintiffs

Tim Faulkner and David Gleason filed a motion for preliminary approval of the settlement and to establish notice procedures.

July 3, 2019, the Court granted the motion for preliminary approval and scheduled a final settlement hearing for November 8, 2019.

On or about July 24, 2019, our directors and officers’

insurer sent the settlement payment of $2,250,000 to the settlement

agent for the class.

On September 20, 2019, the Court granted the parties’

request to adjourn the final settlement hearing

and scheduled a final settlement hearing for December 20, 2019, at 11:00 a.m.

On October 11, 2019, Lead Plaintiffs filed motions

for final approval of the proposed settlement and award of attorneys’

fees, and reimbursement of expenses.

On December 20,

2019, the Court granted final approval of the settlement and award of attorneys’

fees, and reimbursement of expenses.

Gormally, et al., No.

2:18-15992 (D.N.J.) and Chan v.

Gormally, et al.

2:19-cv-4989 (D.N.J.)

November 9, 2018, Cale Watts (“Watts Plaintiff”) filed a verified shareholder derivative complaint alleging violations

of the Securities Exchange Act of 1934, breach of fiduciary duty, unjust enrichment, and waste of corporate assets based on alleged

material weaknesses in controls, management, and documentation (the “Watts Action”).

On January 14, 2019, the parties

reached an agreement in principle to settle the Watts Action that included corporate reforms and a payment of attorneys’

fees of $200,000.

The parties finalized a Stipulation of Settlement on March 4, 2019.

On February 7, 2019, Tiffany Chan, Jasmine

Henderson, and Don Danesh (“Chan Plaintiffs”) filed a verified shareholder derivative complaint alleging violations

of Section 14(a) of the Exchange Act and SEC Rule 14a-9, breach of fiduciary duty, unjust enrichment, and waste of corporate assets

based on the same circumstances as the Watts Action (the “Chan Action”).

The Chan Action further alleged that we should

not have settled the Watts Action because the Watts Action plaintiffs lacked standing and the settlement would cause irreparable

harm to us and our shareholders.

On March 22, 2019, the Watts Plaintiff filed a motion for preliminary approval of the proposed

settlement, approving the proposed form and method of providing notice of the settlement, scheduling a hearing for final approval

of the settlement (“Watts Motion for Preliminary Approval”).

On April 1, 2019, the Chan Plaintiffs filed an Opposition

to the Motion for Preliminary Approval and a Motion to Intervene and Stay Proceedings (“Motion to Intervene and Stay”).

Subsequently, the Watts Plaintiff, Chan Plaintiffs, and Defendants reached an agreement in principle to settle the Watts and Chan

Actions that included corporate reforms and a payment of attorneys’

fees of $325,000.

On October 2, 2019, the Watts Plaintiff

filed an Unopposed Motion for Preliminary Approval of the Settlement (the “Omnibus Motion for Preliminary Approval”).

The Omnibus Motion for Preliminary Approval was granted on January 8, 2020.

Plaintiffs must file a motion for final approval of

the proposed settlement by May 7, 2020.

The Final Settlement hearing is scheduled for May 28, 2020.

Therapeutics Inc.

and NovoTek Pharmaceuticals Limited v.

Akers Biosciences, Inc.

June 21, 2019, we received a complaint, filed by Novotek Therapeutics Inc., and Novotek Pharmaceuticals Limited (collectively,

“Novotek”), Beijing-based entities, in the United States District Court for the District of New Jersey, alleging,

among other things, breach of contract.

Novotek is seeking, among other things, damages in the amount of $1,551,562, plus interest,

disbursements and attorneys’

We vigorously dispute the allegations in the complaint and has retained counsel to defend

On September 16, 2019, we filed a partial motion to dismiss the complaint which was submitted on November 4, 2019.

not yet able to determine the amount of our exposure, if any.

Akers Biosciences, Inc.

David’s Healthcare Partnership, L.P., LLP CAUSE NO:

D-1-GN-19-004262

July 25, 2019, we were notified that on July 23, 2019, a complaint was filed by Neelima Varma, against our company and St.

David’s

Healthcare Partnership, L.P., LLP (“St.

David’s”), in the district court of Travis County, Texas, alleging,

among other things, negligence, gross negligence and strict product liability, breach of express warranty, breach of implied warranty

and fraudulent misrepresentation and omission in connection with allegedly erroneous results generated by the PIFA Heparin/PF4

The complaint argues that the allegedly erroneous results caused St.

David’s to continue with a course of treatment

that ultimately contributed to the loss of the plaintiff’s left leg.

Varma is seeking aggregate monetary relief from

David’s in excess of $1,000,000.

On September 20, 2019, we filed the original answer to plaintiff’s original

petition and on October 1, 2019, we received from plaintiff their first interrogatories and request for production of documents.

We carry product liability insurance.

The insurance carrier has provided notice that it has reserved certain rights.

insurance carrier will contest this complaint vigorously.

We believe that our product liability insurance coverage will be adequate

to cover the potential exposure from defending against this matter and any judgments, fines, or settlement costs directly resulting

from this matter.

Akers Biosciences, Inc., John Does 1-10, and XYZ Corp.

1-10, Docket No.

ESX-L-5272-19 (N.J.

Ct., Essex County):

Carrara, a former executive, has sued the Company over the termination of his employment.

The executive seeks contractual severance

pay in the amount of $200,000.

The executive asserts that the termination was without cause within the meaning of his employment

agreement, which provides for severance of one year’s salary in the event of termination without cause.

The executive also

seeks indemnification for approximately $10,000 in attorneys’

fees that he contends he incurred in regard to company business.

On August 29, 2019, the Company filed an answer to the second amended complaint and the parties have exchanged documents and interrogatories

as part of the discovery process.

No trial date or discovery cutoff has been set.

With regard to both claims, the executive seeks

to recover his attorneys’

fees under a fee-shifting provision in his employment agreement.

With respect to the matter, the

Company believes that the ultimate liability from the resolution of this matter will not be material to the Company’s consolidated

financial statements.

Discover in the case is continuing and is expected to conclude this summer.

No trial date has

Company intends to establish a rigorous defense of all claims.

All legal fees were expensed as and when incurred.

may be necessary to defend ourselves and our customers by determining the scope, enforceability, and validity of third-party

proprietary rights or to establish our proprietary rights.

For a discussion of material legal proceedings affecting us

as of December 31, 2020, please read Note 10 to the consolidated financial statements under “Litigation and Settlements,”

which information is incorporated herein by reference.

Mine Safety Disclosures

Akers to confirm whether this document was filed and resolution was reached.

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-K

Item 3. Legal Proceedings