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Commitments and Contingencies
9 Months Ended
Dec. 31, 2021
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

11. Commitments and Contingencies

 

Legal Proceedings

 

On October 8, 2020, the Company filed a lawsuit in the U.S. District Court for the Central District of California against Joseph Page, our former director and chief technology officer. On January 13, 2021, the case was transferred to the U.S. District Court for the District of Nevada, Las Vegas Division. The causes of action include securities fraud under Federal and California law; fraud, breach of fiduciary duty, negligent misrepresentation and unjust enrichment under California law; and violation of California Business and Professions Code §17200 et seq. We are seeking injunctive and declaratory relief as well as damages of at least $5.1 million.

 

On May 29, 2019, Mr. Page resigned from the Company’s board. After his resignation, the Company retained independent patent counsel to review its patent applications. In connection with this review, the Company discovered certain deficiencies in some of the applications and in their assignments to the Company. determined that all of the applications had been abandoned. Based on this review, the Company decided to refile three of its applications with the U.S. Patent and Trademark Office, which the Company did in May 2020. It is the Company’s belief that the three newly filed patent applications cover and/or disclose the same subject matter as the Company disclosed in the five original patent applications. In this case, the Company’s rights may be subject to any intervening patent applications made after the dates of the original applications. In the lawsuit, the Company is alleging that Mr. Page was aware of the abandonments when he assigned the patents to RBC, a private corporation that he controlled, and that he failed to disclose to the Company the abandonments when the Company acquired RBC in exchange for shares of the Company’s Common Stock. Mr. Page has filed an answer denying the Company’s clams and has asserted cross- and counterclaims against the Company and several of the Company’s shareholders alleging breach of contract and fraud. In September 2021, Mr. Page voluntarily dismissed all of the counterclaims against the shareholders. The Company intends to vigorously contest these allegations.

 

On March 2, 2021, the Company filed a lawsuit in the U.S. District Court for the Southern District of New York against Ellenhoff Grossman & Schole LLP (“EGS”) for negligence and legal malpractice, breach of contract and breach of fiduciary duty. EGS had represented RBC prior to the Business Combination and represented us after the closing of the Business Combination through August 2019. In the litigation against Mr. Page, he has alleged that he provided information to an EGS partner that the patent applications had been abandoned and that EGS failed to inform RBC and us of that fact. We are seeking damages and the return of legal fees previously paid.

 

At the date of this report, the Company is unable to estimate the probability success or dollar amount of rulings in either of these cases, and as a result, has not accrued any potential benefit to the Company’s balance sheet. Attorney fees related to these proceedings are expensed as incurred.