{"url_path":"/sec/nrxs/10-q/2026/item-1","section_key":"item-1","section_title":"Item 1 LEGAL PROCEEDINGS**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-12","source_url":"https://www.sec.gov/Archives/edgar/data/1933567/0001493152-26-022384-index.html","accession_number":"0001493152-26-022384","cik":"0001933567","ticker":"NRXS","issuer_name":"Neuraxis, INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/1933567/0001493152-26-022384-index.html","primary_entity_key":"0001933567","primary_entity_name":"Neuraxis, INC"},"word_count":743,"has_tables":true,"body_markdown":"**ITEM\n1: LEGAL PROCEEDINGS**\n\n \n\nFrom\ntime to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business.\nAs of the date of issuance, other than those described below, there were no pending or threatened legal proceedings that could reasonably\nbe expected to have a material effect on the results of the Company’s operations. There are also no proceedings in which any of\nthe Company’s directors, officers or affiliates is an adverse party to the Company or has a material interest adverse to the Company’s\ninterest. Legal fees are expensed as incurred.\n\n \n\nOn\nFebruary 6, 2019, plaintiff Ritu Bhambhani, M.D., initiated a lawsuit against Innovative Health Solutions, Inc. and others in the United\nStates District Court for the District of Maryland. Plaintiffs Bhambhani and Sudhir Rao subsequently amended the complaint, with the\nThird Amended Complaint (“Complaint”) containing the most recent set of allegations. The Complaint asserted claims under\nthe RICO Act, as well as of fraudulent misrepresentation, intentional misrepresentation by concealment, and civil conspiracy and sought\ncompensatory damages in excess of $5 million, pre-judgment interest, punitive damages, attorney’s fees, court costs and designation\nof the case as a class action. The Complaint stated that the Company, distributors of the Company’s product, and medical billing\nand coding consultants allegedly made misrepresentations to the plaintiffs that the Company’s NeuroStim device and related procedures\ncould be billed to, and reimbursed by, Medicare and other insurance payors as a surgically implantable neurostimulator. Plaintiffs claim\nto have suffered damages when Medicare administrative contractors declined to pay plaintiffs for their use of the device.\n\n \n\nOn\nFebruary 11, 2022, the Company filed a motion for summary judgment based upon the plaintiffs not being proper parties to assert claims\nagainst the Company. On June 14, 2022, the Court granted the Company’s motion for summary judgment and dismissed the Complaint.\n\n \n\nOn\nJuly 14, 2022, plaintiffs Ritu Bhambhani and Sudhir Rao filed a notice of appeal with the Fourth Circuit Court of Appeals. On June 3,\n2024, the Fourth Circuit denied the plaintiff’s appeal and entered judgment against the plaintiffs. On June 25, 2024, the Fourth\nCircuit entered its mandate declaring that its judgment against the plaintiffs took effect that day. The plaintiffs did not seek any\nfurther review or appeal of that judgment.\n\n \n\nAlso\non July 14, 2022, plaintiffs Ritu Bhambhani, LLC; Box Hill Surgery Center, LLC; Pain and Spine Specialists of Maryland, LLC; and SimCare\nASC, LLC initiated a lawsuit against the Company and others in the United States District Court for the District of Maryland (the “2022\nLawsuit”). The plaintiffs in this lawsuit are business entities owned or partially owned by the plaintiffs that initiated the litigation\ndescribed above. The Complaint asserted claims under the RICO Act, as well as fraudulent misrepresentation, intentional misrepresentation\nby concealment, and civil conspiracy and seeks compensatory damages in excess of $75,000, pre-judgment interest, punitive damages, attorney’s\nfees, and court costs. The Complaint states that the Company, distributors of the Company’s product, and medical billing and coding\nconsultants allegedly made misrepresentations to the plaintiffs that the Company’s NeuroStim device and related procedures could\nbe billed to, and reimbursed by, Medicare and other insurance payors as a surgically implantable neurostimulator. Plaintiffs claim to\nhave suffered damages when Medicare administrative contractors declined to pay plaintiffs for their use of the device.\n\n \n\nOn\nSeptember 28, 2022, the Company filed a motion to dismiss all claims. On May 25, 2023, the Court issued an Order and a Memorandum Opinion\nwhich dismissed the plaintiffs’ claims related to the RICO Act. The remaining claims are still pending, and no trial date has been\nset for the case. The Court has vacated its Scheduling Order at the parties’ request so that the parties could try to resolve the\ndisputes in both cases through an independent third-party mediator.\n\n \n\nOn\nApril 25, 2025, the parties reached a $750,000 settlement payable in 12 equal monthly installments that began in January of 2026 with\nremaining payments of $562,500 as of March 31, 2026.\n\n \n\nIn\nJanuary 2024, Dr. Arturo Taca served notice to the Company that asserted an interest in its U.S. Patent No. 10,413,719 valued at $2,000,000\nbased on his own work in neurostimulation. The Company denied both the neurostimulation patent and compensation claims. The case remains\nunresolved. While it is too early to predict the ultimate outcome of this matter, we believe the Company has meritorious defenses and\nintends to defend this matter vigorously.\n\n \n\n28"}