Item 3. Legal Proceedings
ITEM 3
LEGAL PROCEEDINGS
On August 2, 2019, the Company filed suit
in Jefferson Circuit Court, Kentucky, against a supplier of Allure for breach of contract, breach of warranty, and negligence with
respect to equipment installations performed by such supplier for an Allure customer.
On October 10, 2019, the Allure customer
that is the basis of our claim above sent a demand to the Company for payment of $3,200 as settlement for an alleged breach of
contract related to hardware failures of equipment installations performed by Allure between November 2017 and August 2018, before
our acquisition of Allure. The suits filed by and against Allure were consolidated in the Jefferson Circuit Court, Kentucky in
January 2020. These consolidated cases remain in the early stages of litigation and, as a result, the outcome of each and the allocation
of liability, if any, remain unclear, so the Company is unable to reasonably estimate the possible liability, recovery, or range
of magnitude for either the liability or recovery, if any, at the time of this filing.
The Company has notified its insurance company
of potential claims and continues to evaluate both the claim made by the customer and potential avenues for recovery against third
parties should the customer prevail.
On February 20, 2020, the Company and Allure
filed a demand for arbitration against Seller (Christie Digital Systems, Inc.) for breach of contract, indemnification, and fraudulent
misrepresentation under the Purchase Agreement executed in connection with our acquisition of Allure. This demand includes a claim
for the right to offset the amounts owing under the Amended and Restated Seller Note due February 20, 2020. On February 27, 2020,
Seller sent the Company a notice of breach for failure to pay the Amended and Restated Seller Note on the maturity date of February
20, 2020 and demanding immediate payment. In December 2020, the parties entered a pre-arbitration mediation process in an effort
to settle the litigation, which remains ongoing as of the date of this report. We continue to assert the offset right under the
Purchase Agreement and Amended and Reseller Note.
Information regarding legal proceeding can
be found in Note 9 Commitments and Contingencies to the Company’s Consolidated Financial Statements.
ITEM 4
MINE SAFETY DISCLOSURES
Not applicable.
18
PART II
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