ViaDerma Inc (VDRM)

[Mistral]

On or about April 12, 2017 the Company was made aware of a lawsuit filed against the Company and several other parties in U.S. District Court for the District of South Dakota by Steven Keough, an individual. As of the date of this filing, the lawsuit has not been properly served on the Company. The complaint alleges, among other things, that Mr. Keough had a licensing arrangement with Dr. Howard Phillips for some of the patents related to the first-generation transdermal delivery system that were developed by Dr. Phillips. The lawsuit also alleges that Dr. Phillips should not have been able to initially license the transdermal technology to the Company. The lawsuit further alleges that, through a separate consulting agreement Dr. Chris Otiko had with Thru Pharma, LLC, an entity related to Keough, that Dr. Chris Otiko should need to assign the rights of the transdermal patent to Mr. Keough. The lawsuit seeks monetary and injunctive relief.

Based on information and belief, both agreements were breached by Thru Pharma, LLC. The Company does not believe Mr. Keough has any right to the Company's patents or technology. Furthermore, the predecessor transdermal technology, which is the subject of dispute by Mr. Keough, is not even
currently used by the Company and any protections related to its provisional patents are believed to have expired. All new products being developed and sold by the Company are based on a newer transdermal technology created directly by the Company or its management team. The Company believes the lawsuit is without merit and has engaged legal counsel to vigorously defend it. The Company is also evaluating a counter-claim against Mr. Keogh.

Reference: 2016 Annual Report

http://www.otcmarkets.com/stock/VDRM/filings