What changed in this filing

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Item 3. Legal Proceedings

2022-03-17 compared with 2021-04-15 · 46 added, 52 removed, 2 unchanged (98% of the section changed)

PROCEEDINGS .

LEGAL PROCEEDINGS.

time to time, we are a defendant or plaintiff in various legal actions that arise in the normal course of business.

legal costs associated with loss contingencies as incurred and have accrued for all probable and estimable settlements.

are not currently involved in any material disputes and do not have any material litigation matters pending except:

March 27, 2018 a convertible note holder filed a complaint in the Iowa District Court for Polk County #CVCV056029 against the

Company for failure to pay the remaining balance due on a promissory note in the amount of $100,000, together with interest, attorney

fees and other costs of $171,035.

We record legal costs

associated with loss contingencies as incurred and have accrued for all probable and estimable settlements.

are currently involved in pending legal proceedings that have been previously disclosed in our filings with the Securities and Exchange

Commission under the Securities and Exchange Act of 1934, as amended.

Below is a summary of the legal proceedings that have become a

reportable event or which have had developments during the year ended December 31, 2021.

March 27, 2018, a convertible note holder filed a complaint in the Iowa District Court for Polk County #CVCV056029 against the Company

for failure to pay the remaining balance due on a promissory note in the amount of $100,000, together with interest, attorney fees and

other costs of $171,035.

On June 6, 2018 a default judgement was entered against the Company for the amount of $171,035.

The Company repaid an aggregate amount of $71,035, consisting of principal and interest, as of the date of the filing of this

As of December 31, 2020, the Company has accrued for the liability in convertible notes payable in the amount of $100,000

and accrued interest of $23,056 is included in accounts payable and accrued expenses.

May 2018, Resolute Contractors, Inc., Quality Tile, MTL Construction, Genesis Electric, JNB Interiors and Captive Aire filed a

Mechanics Lien for labor, service, equipment and materials in the total amount of $98,005.

The Company intends to set up various

payment plans with these vendors.

As of December 31, 2020, the Company has accrued for the liability in accounts payable and

accrued expenses.

December 12, 2018, the Company was listed as a defendant to a lawsuit filed by a landlord in the Superior Court of the State of

Fountain Valley is seeking approximately $121,000 in damages for rent, interest and other expenses.

On February 15,

2019, the Company entered into a settlement agreement and payment plan in the amount of $85,000.

The Company agreed to make the

following payments (i) $15,000 on or before March 15, 2019, and (ii) ten monthly installments of $7,000 commencing on April 15,

2019 and continuing monthly on the 15th day of each month though January 15, 2020.

The Company has accrued for the liability in

accounts payable and accrued expenses and has been making repayments pursuant to the settlement agreement.

As of January 15,

2020, the Company has met all their obligations and the full amount has been paid.

or about March 7, 2019, the Company was listed as a defendant to a lawsuit filed by a contractor in the State of Texas.

The contractor

is claiming a breach of contract and is seeking approximately $32,809 in damages for services claimed to be rendered by the contractor.

The Company is working with legal counsel in order to reach a settlement.

As of December 31, 2020, the Company accrued $30,000

for the liability in accounts payable and accrued expenses.

January 23, 2020, the Company was served a judgment in the amount of $130,185 for a breach of a lease agreement in Chicago, Illinois,

in connection with a Company owned store that was closed in 2018.

As of December 31, 2020, the Company has accrued for the liability

in accounts payable and accrued expenses.

March 2021, the Company participated in a mediation concerning an investor who invested with American Restaurant

Holdings, Inc and/or American Restaurants, LLC, our former parent company, from 2013 through 2015 in the total amount of $531,250.

The Company does not believe the dispute concerns Muscle Maker, Inc.

and intends to defend itself vigorously if the

matter is not settled.

As of the filing of this report, the company has not accrued for any potential liability pending the outcome

of continued mediation.

Maker or its subsidiaries failed in certain instances in paying past state and local sales taxes collected from customers in specific

states that impose a tax on sales of the Company’s products during 2017 and 2018.

The Company had accrued

a liability for approximately $231,177 as of December 31, 2020 related to this matter.

All current state and local sales taxes

from January 1, 2018 for open company owned locations have been fully paid and in a timely manner.

The Company has completed or

is in discussions on payment plans with the various state or local entities for these past owed amounts.

SAFETY DISCLOSURES.

repaid an aggregate amount of $71,035, consisting of principal and interest, as of the date of the filing of this report.

As of December

31, 2021, the Company has accrued for the liability in convertible notes payable in the amount of $100,000 and accrued interest of $27,210

is included in accounts payable and accrued expenses.

May 2018, Resolute Contractors, Inc., Quality Tile, MTL Construction, Genesis Electric, JNB Interiors and Captive Aire filed a Mechanics

Lien in Orange County, California for labor, service, equipment and materials in the total amount of $98,005.

As of December 31, 2021,

the Company has accrued for the liability in accounts payable and accrued expenses.

or about March 7, 2019, the Company was listed as a defendant to a lawsuit filed by a contractor in the State of Texas in El Paso County

#2019DCV0824.

The contractor is claiming a breach of contract and is seeking approximately $32,809 in damages for services claimed to

be rendered by the contractor.

As of December 31, 2021, the Company accrued $30,000 for the liability in accounts payable and accrued

On January 23, 2020, the Company was served a judgment

issued by the Judicial Council of California in the amount of $130,185 for a breach of a lease agreement in Chicago, Illinois, in connection

with a Company-owned store that was closed in 2018.

As of December 31, 2021, the Company has accrued for the liability in accounts payable

and accrued expenses.

In March 2021, the Company participated in a mediation

concerning an investor who invested with American Restaurant Holdings, Inc and/or American Restaurants, LLC, our former parent company,

from 2013 through 2015 in the total amount of $531,250.

As of the filing of this report, the Company entered into a settlement with American

Restaurant, LLC and the investor in the amount of $160,000.

The Company paid $100,000 as part of the settlement, including legal

fees, while the remaining balance was paid by the insurance carrier and American Restaurants, LLC.

MMI or its subsidiaries failed in certain instances

in paying past state and local sales taxes collected from customers in specific states that impose a tax on sales of the Company’s

products during 2017 and 2018.

The Company had accrued a liability for approximately $125,550 and $231,177 as of December 31, 2021 and

2020, respectively, related to this matter.

All current state and local sales taxes from January 1, 2018 for open Company-owned locations

have been fully paid and in a timely manner.

The Company has completed or is in discussions on payment plans with the various state or

local entities for these past owed amounts.

MINE SAFETY DISCLOSURES.

Not applicable.

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.

What changed 10-K

Item 3. Legal Proceedings