TerraVolt Holdings, Inc. 10-K

Item 3. Legal Proceedings. We know of no material active or pending legal proceeding against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation, except as follows . On January 3, 2022, a complaint was filed against our company in the Superior Court of California, County of Los Angeles titled Michael Sekula v. CalEthos Inc, Michael Campbell and Does 1-25 (Case No. 22STCV00121) for, among other matters, failure to pay wages, fraud and other wage-related claims. In the complaint, the plaintiff claims he worked under a consulting agreement as Vice President of Brand Management of our company and was to be paid $4,000 per month and to receive an option to purchase 50,000 shares of our common stock that was to vest quarterly over the term of the agreement. In the complaint, the plaintiff alleges that, on or around March 27, 2020, we ceased paying the plaintiff despite the plaintiff’s continuing efforts on behalf of our company and that we agreed to continue to accrue his monthly retainer amount until such time that we received at least $100,000 in funding. Plaintiff further alleges that he continued to work for our company for 38 additional weeks in reliance on our promise of payment. The plaintiff claims that our refusal to make the promised payments amounts to violations of the California labor laws and seeks damages in excess of $450,000. We intend to dispute these claims and to defend this litigation vigorously. However, due to the inherent uncertainties of litigation, the ultimate outcome of this litigations is uncertain. An unfavorable outcome in this litigation could materially and adversely affect our business, financial condition and results of operations. Item 4. Mine Safety Disclosures. Not Applicable. 7 PART II