Item 3. Legal Proceedings
ITEM
3. LEGAL PROCEEDINGS.
From
time to time, we are a defendant or plaintiff in various legal actions that arise in the normal course of business. We record legal costs
associated with loss contingencies as incurred and have accrued for all probable and estimable settlements.
We
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.
On
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 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.
In
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.
On
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
expenses.
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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.
ITEM 4.
MINE SAFETY DISCLOSURES.
Not applicable.
PART II