Item 3. LEGAL PROCEEDINGS
In March 2003, Francis C. Pizzulli ("Pizzulli") filed a lawsuit styled
Geotermica, LTD., Francis C. Pizzulli, Inc., and Francis C. Pizzulli vs.
Endovasc, Inc., against Endovasc and others in the Los Angeles Superior Court
Case No. BC291463 seeking damages for alleged breach of contract, damages for
alleged misrepresentations, and to invalidate a merger/reverse stock split of
Endovasc Inc. We denied any and all liability in the lawsuit. Without the
admission of any liability by either Pizzulli or Endovasc, in February 2004, we
agreed to issue to Pizzulli 500,000 shares of common stock of the Company valued
at $125,000to settle the lawsuit.
On August 28, 2003, Cause No. 03-08-0681-CV, styled The Dow Chemical
Company vs. Endovasc Inc., was filed against us in the District Court of
Montgomery County, Texas, 359th Judicial District. Dow Chemical Company ("Dow")
filed a complaint against us for an alleged breach of contract and damages. The
amount of damages sought is approximately $230,000. This case is being
vigorously defended against the allegations made by Dow. We have also filed our
own counter-claim against Dow for breach of contract and damages. On June 30,
2004 a prediction cannot be made as to the final outcome of the complaint and
damages allegedly owed to Dow or to Endovasc. As a result, no amounts have been
accrued for this contingency.
On November 7, 2003, Cause No. 03-11-08112-CV, styled Greg Creekmore vs.
Endovasc, Inc. and Endovasc, LTD., Inc., was filed against the Company in the
District Court of Montgomery County, Texas, 284th Judicial District. Greg
Creekmore ("Creekmore") filed a complaint against Endovasc for alleged breach of
an employment contract between the parties. Creekmore seeks payment of $114,000
plus interest, 1 million shares of Endovasc's common stock and reimbursement of
court costs including reasonable attorney's fees allowed by law. This case is
being vigorously defended against the allegations made by Creekmore. On June
30, 2004, a prediction cannot be made as to the final outcome of the complaint
and damages allegedly owed to Creekmore. As a result, no amounts have been
accrued for this contingency.
On January 13, 2004, Case No. H-03-5226, styled Lorenz M. Hofmann, Ph.D.
and LMH Associates, Inc. vs. Endovasc, LTD., Inc., Endovasc, Inc., David P.
Summers, Ph.D. and M. Dwight Cantrell was filed against the Company in the
United States District Court for the Southern District of Texas Houston
Division. Lorenz M. Hofmann, Ph.D. and LMH Associates, Inc. ("LMH") filed a
complaint against us for alleged breach of contract and damages. LMH seeks
payment of $91,859. This case is being vigorously defended against the
allegations made by LMH. We have also filed our own counter-claim against LMH
for breach of contract and damages. On June 30, 2004, a prediction cannot be
made as to the final outcome of the complaint and damages allegedly owed to LMH.
As a result, no amounts have been accrued for this contingency.
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During the year ended June 30, 2004, a counterclaim under cause No
03-04-02939-CV (AAA Arbitration no. 79-181-0037-03TMS), styled Marco D.
Carnevale vs. Endovasc Corporation was filed against us in the 359th Judicial
District Court of Montgomery County, Texas. Carnevale filed a complaint against
us for alleged breach of contract and damages. Without the admission of any
liability, subsequent to June 30, 2004, we agreed to issue to Carnevale $33 of
cash or shares of common stock of the Company valued at $33 to settle the claim.
We are subject to certain other legal proceedings and claims which arose in
the ordinary course of its business. In the opinion of management, the amount
of ultimate liability with respect to these actions will not materially affect
the financial position, results of operations or cash flows of the Company.
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