NOTE
7 - CONTINGENT LIABILITIES
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On
August 11, 2022, a lawsuit was filed in the Tel Aviv Magistrate’s Court against our director and majority shareholder, Boris Molchadsky, G.P.I.S Ltd., an entity controlled by Mr. Molchadsky, Nexsense, Inc. (the former shareholder of SleepX Ltd.) and SleepX,
Ltd., our subsidiary (collectively, the “Defendants”) [Civil lawsuit number 25441-08-22]. The suit was filed by a fund
operating out of Israel. A copy of the claim was served to the defendants only six months after it was submitted to court, on February
21, 2023. The lawsuit is based on the alleged breach of partnership and loan agreements as well as other related allegations, including
violation of agreements reached in a mediation proceeding that took place in 2015. On July 24, 2023, the Defendants (except for Nexsense,
Inc.) filed a statement of defense, denying the allegations and argued that the claim should be dismissed, due to the statute of
limitations, lack of cause of action, lack of jurisdiction, delay in filing the claim, and respecting SleepX, also due to the lack of standing between SleepX and the plaintiff. |
Recently,
the Magistrate’s Court in Tel Aviv accepted the request regarding lack of material jurisdiction, and the claim was then transferred
to the economic department of the District Court in Tel Aviv.
A
preliminary hearing was held on February 14, 2024. The presiding judge did not rule on the preliminary pleadings and urged the parties
to attempt mediation before the ruling. The parties are considering different mediators (which must be mutually agreed to) and following
the selection of a mediator, the parties will schedule a date for the mediation.
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