Item 3. Legal Proceedings
ITEM 3. LEGAL PROCEEDINGS
We are involved in, or have been involved in, arbitrations or various other legal proceedings that arise from the normal course of our business. We cannot predict the timing or outcome of these claims and other proceedings. The ultimate outcome of any litigation is uncertain, and either unfavorable or favorable outcomes could have a material negative impact on our results of operations, balance sheets and cash flows due to defense costs, and divert management resources. Currently, we are not involved in any arbitration and/or other legal proceeding that we expect to have a material effect on our business, financial condition, results of operations and cash flows.
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Merger Litigations
On March 6, 2026, in connection with the Mergers, a purported individual shareholder of the Company filed a complaint in New York state court, captioned Eric Brady v. SWK Holdings Corp., et al. , No. 651394/2026 (N.Y. Sup. Ct., N.Y. Cnty.), naming as defendants the Company and certain members of the Company’s board of directors as of the date of the Merger Agreement (“ Brady ”). On March 9, 2026, an additional case was filed by a purported individual shareholder of the Company in the same court against the same defendants, captioned Anthony Malone v. SWK Holdings Corp., et al. , No. 651422/2026 (N.Y. Sup. Ct., N.Y. Cnty.) (“ Malone ”). The Brady and Malone cases, and any similar subsequently filed cases involving the Company, RWAY, their respective boards of directors, or any committee thereof and/or any of their directors or officers relating directly or indirectly to the Merger Agreement, the Mergers, or any related transaction, are referred to as the “Merger Litigations.” The Merger Litigations filed to date generally allege that the proxy statement issued on Schedule 14A by the Company on March 3, 2026 is materially incomplete and misleading and assert claims for negligent misrepresentation and concealment and negligence under New York common law. The Merger Litigations seek, among other things, an injunction enjoining consummation of the Mergers, rescission of the Mergers, costs of the actions, including attorneys’ fees and experts’ fees and expenses, and any other relief the court may deem just and proper. In addition, the Company has received multiple demand letters from purported Company stockholders (the “Demand Letters”), alleging that the proxy statement omits material information in violation of federal securities laws and state law disclosure requirements and demanding that the Company provide additional disclosures in an amendment or supplement to the proxy statement. The Company denies all allegations in the Merger Litigations and the Demand Letters, believes that no additional disclosure is required in the proxy statement, and intends to vigorously defend against these and any similar Merger Litigations and Demand Letters.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II