LEGAL PROCEEDINGS
−Removed: From time to time, we may be involved in various claims and legal actions in the ordinary course of business.
−Removed: Other than as set forth below, we are not currently involved in any material legal proceedings outside the ordinary course of our business.
+Added: From time to time, the Company is a party to various litigation matters incidental to the conduct of its business.
+Added: The Company is not presently a party to any legal proceedings that would have a material adverse effect on its business, operating results, financial condition, or cash flows, except as set forth below.
In July 2021, we were served with a Complaint in the District Court, County of Denver, Colorado, by plaintiff 2353 SB, LLC (“Plaintiff”).
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Monthly lease payments were to be $12,867.
−Removed: In 2020, we made initial payments (first month’s rent, last month’s rent, and security deposit) of $39,633.32;
+Added: In 2020, we made initial payments (first month’s rent and security deposit) of $39,633;
but subsequently did not take possession of the premises and have made no further payments in respect thereof, as a direct result of the COVID-19 pandemic.
−Removed: The lease contains a ‘force majeure’ clause which includes a provision that neither party is liable for failure to perform its obligations under the lease which have become practicably impossible because of circumstances beyond the reasonable control of the applicable party, including ‘pandemics or outbreak of communicable disease.’
−Removed: We have taken the position that our failure to take possession and make any further payments under the lease is directly related to the COVID-19 pandemic.
−Removed: We are vigorously defending this action and believe that the above-referenced force majeure clause presents a complete defense to Plaintiff’s claims.
−Removed: We filed a motion to dismiss;
−Removed: or a motion for summary judgment in the alternative.
−Removed: Plaintiff filed a response and cross-motion for summary judgement thereafter.
−Removed: In October 2022, the court denied the motion to dismiss on the basis that Plaintiff sufficiently pled facts that raise a plausible claim for relief, notwithstanding our possible defenses, but has not specifically made any rulings on either party’s motion for summary judgment.
−Removed: On November 14, 2022, we timely filed a formal answer to the complaint, denying each of Plaintiff’s substantive claims.
−Removed: We also asserted appropriate affirmative defenses, including the force majeure clause of the lease, which provides that we are not liable under the lease in the event of a variety of events outside our control, including “pandemics.” In addition, we have asserted a counterclaim against Plaintiff for breach of contract to recover the initial payments made under the lease as well as attorneys’ fees and costs.
−Removed: The trial is currently scheduled for September 2023.
+Added: The lease contains a ‘force majeure’ clause which includes a provision that neither party is liable for failure to perform its obligations under the lease which have become practicably impossible because of circumstances beyond the reasonable control of the applicable party, including ‘pandemics or outbreak of communicable disease.’ We took the position that our failure to take possession and make any further payments under the lease is directly related to the COVID-19 pandemic.
+Added: In June 2023, via mediation conducted through the Judicial Arbiter Group and a duly executed settlement agreement, we settled this litigation.
+Added: As part of the settlement, Plaintiff agreed to waive and release the Company et.
+Added: al from all claims relating to the litigation;
+Added: and in exchange, the Company has agreed to pay to Plaintiff an aggregate amount of $150,000, payable as follows:
+Added: (i) one initial installment payment of $30,000 payable on August 1, 2023;
+Added: and (ii) twenty (20) subsequent monthly payments of $6,000 each.
+Added: In the event of default under the settlement agreement, the non-defaulting party must provide written notice and the defaulting party has a 7-day right of cure.
+Added: The settlement agreement also provides for a ‘paper judgment’ in the event of an uncured default by the Company;
+Added: in which event the full amount of $345,000 becomes due and payable.
+Added: The parties will file a stipulated motion to administratively close the case and request that the court retain jurisdiction until completion of the settlement payments.
As of the date of this report, there have been no material changes to the Risk Factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.