Item 3. Legal Proceedings
Item
3. Legal Proceedings.
From
time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Below
is a description of our outstanding pending litigation matters. Litigation is subject to inherent uncertainties and an adverse result
in the below described or other matters may arise from time to time that may harm our business.
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On
June 5, 2020, we filed suit against Ortho-Tain, Inc. (“Ortho-Tain”) in the United States District Court for the District
of Colorado seeking relief from certain false, threatening, and defamatory statements to our business affiliate, Benco Dental (“Benco”).
We believe such statements have interfered with our business relationship and contract, causing harm to our reputation, loss of goodwill,
and unspecified monetary damages. On February 12, 2021, we amended our complaint to add claims for false advertising and unfair business
practices, as well as additional variants of the original claims to address Ortho-Tain’s alleged false advertising campaign against
us in the fall of 2020. Our amended complaint seeks permanent injunctive relief to prevent what we believe are defamatory statements
and interference with our business relationships by Ortho-Tain.
We
further seek declaratory relief to refute the defendant’s false allegations, as well as monetary damages. Prior to filing suit,
we worked collaboratively with legal counsel at Benco to address and resolve this matter. Such efforts were unsuccessful. On February
26, 2021, Ortho-Tain, Inc. filed a motion to dismiss the amended complaint. We opposed the motion. On June 21, 2022, the Tenth Circuit
entered an order and judgment. Pursuant to such order, the appeal was terminated and the case remanded to the U.S. District Court for
the District of Colorado for further proceedings. On July 13, 2022, the Clerk of Court for the Tenth Circuit transferred jurisdiction
back to the District Court. On February 1, 2023, Ortho-Tain filed a motion to re-open the district court case and set a status conference.
On February 22, 2023, Vivos filed a notice of non-opposition joining that request. On July 26, 2023, the District Court reopened the
case. On February 14, 2024, the District Court issued an order denying Ortho-Tain’s motion to dismiss after analyzing the issue
of litigation privilege under the standard ordered by the Tenth Circuit. In response, Ortho-Tain filed a notice of appeal of the District
Court’s order on February 14, 2024. The appeal has been docketed in the Tenth Circuit, and the record has been completed. On March 5, 2024, Vivos filed a motion to dismiss the appeal for lack of
jurisdiction. Ortho-Tain filed its response to the motion to dismiss on March 19, 2024. Vivos’ reply in support of the
motion to dismiss is to be filed by March 26, 2024. On March 20, 2024, the Court ordered that Vivos’ motion to dismiss for lack
of jurisdiction will be referred to the panel of judges to be assigned to the appeal, that no ruling on the motion to dismiss would issue
at this time, and that Ortho-Tain is to file its opening brief on or before April 29, 2024.
On
July 22, 2020 Ortho-Tain, Inc. filed a Complaint at Law in the United States District Court for the Northern District of Illinois naming
Vivos, along with the Company’s Chief Executive Officer, R. Kirk Huntsman, Benco Dental Supply Co., Dr. Brian Kraft, Dr. Ben Miraglia,
and Dr. Mark Musso. The Ortho-Tain complaint alleges violation of the Lanham Act and an alleged civil conspiracy among the defendants
to violate the Lanham Act by an alleged false designation of origin related to a presentation given by Dr. Brian Kraft at an event sponsored
by the Company and Benco Dental. Ortho-Tain also alleges that the actions of the defendants, including the Company, diverted sales from
Ortho-Tain, deprived Ortho-Tain of advertising value and resulted in a loss of goodwill to Ortho-Tain. Ortho-Tain also alleges two separate
breach of contract actions against Dr. Brian Kraft and the Company’s Chief Executive Officer, R. Kirk Huntsman. On September 9,
2020, the Company moved to dismiss the claims against it. On May 14, 2021, the United States District Judge entered an order granting
the Company’s motion to stay this case pending the outcome of a substantially similar, first-filed suit by the Company pending
in the United States District Court for the District of Colorado. In light of the stay, the Court denied, without prejudice, the Company’s
pending motion to dismiss. On September 3, 2021, on December 2, 2021, on April 4, 2022, on July 5, 2022, on September 19, 2022, and on
November 22, 2022 the Court extended the stay. On March 2, 2023, the Court lifted the stay.
On
April 13, 2023, the Court ordered the parties to exchange Rule 26(a) disclosures by May 1, 2023 and issue initial written discovery by
May 15, 2023. Further, the Court referred the matter to the Magistrate Judge to conduct a settlement conference. On April 28, 2023, the
Court clarified that Dr. Musso’s court ordered participation in settlement and discovery did not waive his objections to personal
jurisdiction and venue, and that Defendants did not need to file a response to the Complaint at this time. On June 2, 2023, the case
was reassigned to the Hon. LaShonda A. Hunt. On July 11, 2023, the Magistrate Judge scheduled a settlement conference for September 1,
2023. On August 1, 2023, Judge Hunt set a deadline to refile motions to dismiss as August 15, 2023, stayed discovery pending resolution
of the motions, and authorized the parties to cancel the settlement conference. The Company filed a motion to dismiss on August 15, 2023,
and a reply brief on October 3, 2023. The Parties are currently awaiting a decision on the motion to dismiss.
On
May 23, 2022, Dr. G. Dave Singh (“Dr. Singh”), the founder and former director and Chief Medical Officer of our company,
through his legal counsel, sent a demand letter (the “Demand Letter”) to us. The Demand Letter asserted certain allegations,
including an assertion that contested our decision to terminate Dr. Singh’s employment for cause in March 2022. As previously disclosed,
on March 1, 2022, with the unanimous approval of our Board of Directors, we provided notice of termination of Dr. Singh’s employment
with our company “for cause” pursuant to the terms Dr. Singh’s amended and restated employment agreement with us (the
“Employment Agreement”). In the Demand Letter, Dr. Singh also asserted certain potential claims against us and/or R. Kirk
Huntsman, our Chairman and Chief Executive Officer, including for breach of contract, breach of fiduciary duty, defamation and other
civil claims and remedies which could include severance payments to Dr. Singh and other money relief if Dr. Singh’s claims are
upheld in arbitration. We believe that Dr. Singh’s assertions completely lack merit in fact or law and further believes that Dr.
Singh will be unable to establish actionable damages. Further, we believe that several provisions of Dr. Singh’s Employment Agreement
limit or restrict claims Dr. Singh is alleging, including a mandatory arbitration clause and exclusive remedy provisions. However, no
assurances can be given that our positions regarding the Demand Letter or the Employment Agreement will be upheld by an arbitrator. The
parties engaged in voluntary mediation, with no resolution reached.
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On
November 3, 2022, the Company initiated arbitration with the American Arbitration Association against Dr. Gurdev Dave Singh. The Company’s
Demand for Arbitration alleged that Dr. Singh’s behaviors and actions constituted a breach of the Employment Agreement as well
as a breach of a fiduciary duty to which he owed the Company, and requests that the Arbitrator declare that Dr. Singh’s sole remedy
or relief against the Company is what was agreed upon in the Employment Agreement. On December 7, 2022, Dr. Singh filed a Cross-Complaint
in the Arbitration alleging claims against the Company for breach of contract, employment discrimination, and violation of the Colorado
Wage Act. On August 18, 2023, the Company filed an Amended Demand for Arbitration to add two claims for breach of contract of the restrictive
covenants for Dr. Singh’s work with Koala Plus and with Stimcore. On January 8, 2024, the Company and Dr. Singh reached a settlement
and the arbitration has been closed, with the arbitrator maintaining jurisdiction for any issues that may arise from the enforcement
of the settlement agreement.
Item
4. Mine Safety Disclosures.
Not
applicable.
PART
II