Item 3. Legal Proceedings
ITEM 3 – LEGAL PROCEEDINGS
Legal case with FT Global Capital, Inc.
In January 2021, FT
Global Capital, Inc. (“FT Global”), a former placement agent of the Company filed a lawsuit against the Company in the Superior
Court of Fulton County, Georgia. FT Global served the complaint upon the Company in January 2021. In the complaint, FT Global alleges
claims, most of which attempt to hold the Company liable under legal theories that relate back to an alleged breach of an exclusive placement
agent agreement between FT Global and the Company in July 2020 which had a term of three months. FT Global claims that the Company failed
to compensate FT Global for securities purchase transactions between December 2020 and April 2021, pursuant to the terms of the expired
exclusive placement agent agreement. Allegedly, the exclusive placement agent agreement required the Company to pay FT Global for capital
received during the term of the agreement and for the 12-month period following the termination of the agreement involving any investors
that FT Global introduced and/or wall-crossed to the Company. However, the Company believes the securities purchase transactions at issue
did not involve the one investor which FT Global introduced or wall-crossed to the Company during the term of the agreement. FT Global
claims approximately $7,000,000 in damages and attorneys’ fees.
The Company timely removed
the case to the United States District Court for the Northern District of Georgia (the (“Court) on February 9, 2021 based on diversity
of jurisdiction. On March 9, 2021, the Company filed a motion to dismiss based on FT Global’s failure to state a claim which is
pending before the Court. On March 23, 2021, FT Global filed its response to the Company’s motion to dismiss. FT Global argues
that the Court should deny the Company’s motion to dismiss. However, if the Court is inclined to grant the Company’s motion
to dismiss, FT Global requested that the Court permit it to file an amended complaint. On April 8, 2021, the parties filed a Joint Preliminary
Report and Discovery Plan. On April 12, 2021, the Court approved the Joint Preliminary Report and Discovery Plan and issued a Scheduling
Order placing this case on a six-month discovery tract. On April 30, 2021, the Company served FT Global with its Initial Disclosures.
On May 6, 2021, FT Global served the Company with its Initial Disclosures. On May 17, 2021, FT Global served the Company with its First
Amended Initial Disclosures. On November 10, 2021, the Court entered an Order granting the Company’s motion to dismiss FT Global’s
fraud claim and breach of contract claim as to the disclosure of its confidential and proprietary information. The Court denied the Company’s
motion to dismiss FT Global’s i) breach of contract claim for failure to pay FT Global pursuant to the terms of the exclusive placement
agent agreement; ii) claim for breach of the covenant of good faith and fair dealing; and iii) claim for attorney’s fees, and the
court concluded that additional information can be obtained through discovery. The Company timely filed an answer and defenses to FT
Global’s complaint on November 24, 2021. On January 3, 2022 the Company propounded discovery requests upon FT Global, including
interrogatories and requests for production of documents. On March 23, 2022, the Company propounded requests for admission upon FT Global.
On March 24, 2022, FT Global propounded discovery requests upon the Company, including requests for production of documents and requests
for admission. On April 1, 2022, FT Global served its response to the Company’s requests for production of documents. On May 13,
2022, FT Global served its responses to the Company’s interrogatories and requests for admissions. On May 13, 2022, FT Global
produced documents in response to the Company’s requests for production of documents. On June 3, 2022, the Company produced documents
in response to FT Global’s requests for production of documents. On August 3, 2022, the Company took the deposition of FT Global.
On August 4, 2022, FT Global took the deposition of the Company. On August 3, 2022, the Court granted the parties’ Consent Motion
to Extend Discovery Period extending the discovery period from August 5, 2022 to September 14, 2022 and the deadline to file dispositive
motions to October 12, 2022. On October 12, 2022, the Company filed a motion for summary judgment on all claims asserted by FT Global
in this lawsuit. On November 2, 2022, FT Global filed its opposition to the Company’s motion for summary judgment. On November
16, 2022, the Company filed its reply in support of its motion for summary judgement on all claims asserted by FT Global in this lawsuit.
The Company will continue to vigorously defend the action against FT Global.
ITEM 4 – MINE SAFETY DISCLOSURES
Not applicable.
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PART II