Item 3. Legal Proceedings
Item 3. Legal Proceedings
During the year ended December 31,
2019, a terminated employee of Canary has filed a lawsuit against the Company amounting to approximately $1,649,340 (CAD $2,100,000)
in Ontario, Canada. Currently, the Company is defending its position and believes that the ultimate decision will be in favor of
the Company. Due to the uncertainty of timing and the amount of estimated future cash flows, if any, relating to this claim, no
provision has been recognized.
During the year ended December 31,
2019, a terminated employee of Canary had delivered a demand letter claiming wrongful dismissal. A settlement was reached in the
amount of $5,792 (CAD $7,375) which were due within 30 days of the execution of the settlement agreement. During the quarter ended
June 30, 2020, the Company has paid the settlement amount in full.
During the year ended December 31,
2019, a terminated employee of Canary had delivered a demand letter claiming wrongful dismissal plus unpaid wages, expenses and
vacation pay for a minimum amount of $54,516 (CAD $69,412). During quarter ended June 30, 2020, the Company settled with the
employee in the amount of $7,495 (CAD $9,543).
On January 3, 2020, cGreen Inc. filed
a Complaint in Arbitration against the Company alleging a breach of the Exclusive License Agreement entered into with the Company
effective August 8,2019. (“Agreement”). The Complaint alleges the Company failed to make royalty payments of $300,000
and failed to issue cGreen 7,000,000 shares of the Company’s Common Stock as called for under the Agreement. During the quarter
ended June 30, 2020, the Company was in arbitration with cGreen for the breaches of the terms of the License Agreement, however,
through an early mediation, both companies reached to a settlement agreement to settle the breaches of the contract on July 27,
2020 (“Effective Date”). As per the settlement agreement, the License Agreement has been terminated and the Company
does not have to issue the 10 million shares nor pay the outstanding royalty payable in the amount of $1,191,860. As consideration,
the Company paid $130,000 within 30 days of the Effective Date and will pay $100,000 in monthly installments of $10,000 commencing
in April 2021 to cGreen resulting in a gain on settlement in the amount of $1,704,860.
In April 2020, an employee of Canary,
who had previously resigned from the company, filed a claim that their bonus, that had been promised in their employment agreement
was unpaid and had filled a claim with the Ministry of Labour in Ontario. While the Ministry of Labour deemed the bonus owed as
a valid payment, the matter has since progressed to the Ontario Labour Relations Board (OLRB) in which the company is disputing
this bonus due to several contractual factors that the company believes will allow this ruling to be overturned and revised in
the company’s favor. Due to the uncertainty of timing and the amount of estimated future cash flows, if any, relating to
this claim, no further amount has been recognized.
A claim for damages in the amount of $1,463,047
(CAD $1,862,805) was lodged against Company and its directors by the former Chief Financial Officer of the Company for wrongful
dismissal. The management are of the view that no material losses will arise in respect of the legal claim at the date of these
consolidated financial statements. As at December 31, 2020, $11,540 has been recorded in the Target’s payable based
on past accruals. Due to the uncertainty of timing and the amount of estimated future cash flows, if any, relating to this claim,
no further amount has been recognized.
During the year ended December 31,
2020, a claim for damages in the amount of $102,713 (CAD $130,778) was lodged against Canary by a vendor for breach of contract.
The management are of the view that no material losses will arise in respect of the legal claim at the date of these consolidated
financial statements. As at December 31, 2020, $108,503 (CAD $138,150) has been recorded in the Canary’s payable based
on past accruals. Due to the uncertainty of timing and the amount of estimated future cash flows, if any, relating to this claim,
no further amount has been recognized.
Item 4. Mine Safety Disclosures.
Not applicable.
12
PART II
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