NOTE 4  LEGAL PROCEEDINGS

We commenced a declaratory judgment action in 2013 to establish the invalidity and non-infringement patent infringement claims by a competitor. The defendant answered the complaint and asserted various counterclaims that we believe are without merit. We subsequently added claims against the defendant to show that the defendant had engaged in various unfair business practices. On June 16, 2015 the Court issued what it termed a “narrow” preliminary injunction against the Company from making certain statements regarding certain competitor products.  The Company is complying with the preliminary injunction.  The parties will proceed with discovery in the case.  On June 25, 2015 the competitor filed a claim of patent infringement in the Eastern District of Texas with respect to the Company's needle sets.  This patent is similar to the patent that is the subject of the Company's declaratory judgment action and we believe this claim is likewise without merit.  The Company has not yet answered the complaint in the case in Texas.