Item 1. Legal Proceedings
Item 1. Legal Proceedings
On August 6, 2020, the
Company, Messrs. John and Miller and certain affiliated entities filed a lawsuit in the United States District Court, Southern
District of New York against Robert Koch, Bedford Investment Partners, LLC, Kaizen Advisors, LLC and certain other unnamed defendants.
The lawsuit alleges that Mr. Koch and the other defendants are attempting to extort the Company and Messrs. John and Miller to
issue the defendants shares of the Company’s common stock which they claim are owed to them. The Company asserts that they
have no oral or written agreement with Mr. Koch or any of his affiliates that entitle him to shares of the Company’s common
stock. The Company’s complaint seeks actual damages in the amount of $5,000,000 and punitive damages in the amount of $5,000,000. In response, the defendants filed their answer and counterclaim, repeating
the same claims that caused the Company to file the lawsuit. On October 6, 2020, the Company moved for judgment on the pleadings
to dismiss the defendants' counterclaim in its entirety. That motion will be fully briefed on November 27, 2020.
On July 6 ,
2020, Brian Menke (the “Plaintiff”) in Nevada court seeking to enforce a judgement that he had obtained in 2012 against
Krista Whitley, the former owner and manager of Magical Beasts LLC., in the amount of $250,00. In July 2020, the Plaintiff brought
a claim in Nevada State Court to impute such judgement to the Company’s wholly owned subsidiary, Magical Beasts, LLC. On
August 6, 2020, the court imputed the judgement to Magical Beasts and advised the Company that before paying any funds to Ms. Whitley,
they must first satisfy the judgement to the Plaintiff. On October 12, 2020, the Company, Ms. Whitley and the Plaintiff reached
a settlement agreement whereby the Company agreed that of the $1,000,000 payable to Ms. Whitley, the first $334,000 be paid to
the Plaintiff. Ms. Whitley in turn agreed that such payments would be applied to the $1,000,000 owed to Ms. Whitley that was to
be paid from the proceeds of the offering and the Plaintiff agreed to withdraw the case against Magical Beasts without prejudice. There
will be no impact to the financial statements or financial position of the company related to this matter given the offset of the
note payable already recorded.
To the best
of the Company’s knowledge and belief, no additional legal proceedings are currently pending or threatened.
Item 1A. Risk Factors
As a “smaller
reporting company”, we are not required to provide the information required by this Item.
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