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Item 3. Legal Proceedings

2018-06-29 compared with 2017-07-14 · 36 added, 98 removed, 5 unchanged (96% of the section changed)

LEGAL PROCEEDINGS

The Company is a defendant in a lawsuit filed on April 6, 2017

by Water Engineering Solutions, Inc.

(WES), in the Maricopa County, Arizona,

Superior Court, Water Engineering Solutions, Inc.

The Alkaline Water

Company, Inc., et al., cause number CV2017-005487.

WES seeks damages arising

out of the alleged breach of a written manufacturing agreement between the

Company and WES.

WES alleges that the Company has failed to purchase equipment

from WES as required under the manufacturing agreement.

The Company denies the

allegations of the claims, and has moved to dismiss pursuant to the terms of the

agreement which require that all disputes be resolved by arbitration.

response, WES filed an amended complaint apparently abandoning its breach of

contract claim, and instead seeking damages for alleged misappropriation of

claimed trade secrets relating to the equipment which the Company purchased

under the manufacturing agreement.

The Company intends to renew its motion to

dismiss based on the arbitration provisions of that agreement.

intends to defend the claim vigorously, whether in court or in arbitration

The Company is a defendant in a lawsuit filed on April 11, 2017

by Steven Nickolas, the former Chief Executive Officer of the Company, in the

Maricopa County, Arizona, Superior Court, Nickolas v.

The Alkaline Water

Company, Inc., et al., cause number CV2017-053064.

Nickolas seeks damages

arising out of the alleged breach of a written employment agreement between the

Company and Mr.

Nickolas alleges that the Company wrongfully

terminated the employment agreement and has failed to pay wages due under the

employment agreement.

The Company denies the allegations of the claims, and has

counterclaimed against Mr.

Nickolas for damages suffered by the Company as a

result of numerous breaches of fiduciary duty owed to the Company by Mr.

Nickolas in his capacity as officer and director of the company, including

diversion of corporate assets to personal matters, and actively interfering with

the Companys suppliers and customers.

The Company intends to defend against Mr.

Nickolass claims vigorously and to pursue its counterclaims.

The Company is nominal defendant in a lawsuit filed on April 6,

2017 by Steven Nickolas, a shareholder of the Company, derivatively on behalf of

the Company, against Richard Wright, David Guarino, and Aaron Keay (current

directors of the Company), and Daniel Lorey (current employee of the Company)

and the Companys former accounting firm, Seale & Beers, LLC.

The lawsuit is

pending in the Maricopa County, Arizona, Superior Court, Steven Nickolas,

derivatively on behalf of the Alkaline Water Company, v.

Richard Wright, et al.

cause number CV2017-005488 (the Derivative Action).

Nickolas alleges a

range of conduct breaching fiduciary and general duties owed to the Company.

Some of these allegations were first raised by Mr.

Nickolas in August, 2016 and,

at that time, the Company appointed an independent director, Mr.

conduct an investigation of the allegations.

Keay conducted the

investigation and concluded that the claims were without merit.

Company is a nominal defendant in this action, the Company believes the claims

in the action are baseless and has denied the claims.

The Company anticipates

that the other defendants will defend the action vigorously, and is paying the

cost of defending against the claims, subject to a reservation of rights in the

event of a finding the principal defendants breached duties owed to the Company

and are not eligible for indemnification.

Steven Nickolas also filed virtually an identical lawsuit to

the Derivative Action in his individual capacity against Richard Wright, David

Guarino, and Dan Lorey.

The lawsuit was filed on April 6, 2017 and is pending in

the Maricopa County, Arizona, Superior Court, Steven Nickolas vs.

Wright et al. cause number CV2017-005486 (the Individual Action).

allegations in the Individual Action are nearly identical to those in the

Derivative Action.

The Company anticipates that the defendants will defend the

action vigorously, and is paying the cost of defending against the claims,

subject to a reservation of rights in the event of a finding the principal

defendants breached duties owed to the Company and are not eligible for

indemnification.

The Company is a defendant in a lawsuit filed on June 1, 2017

by Black Mountain Equities, Inc.

(BM) in the San Diego County, California,

Superior Court, Black Mountain Equities, Inc.

The Alkaline Water Company,

Inc., et al., cause number 37-2017-00019820-CU-BT-CTL.

BM is seeking damages of

$151,000 for intentional interference with contractual relations arising from

the Company putting a stop on the transfer of certain stock in the Company from

a third party to the Plaintiff.

The Company intends to defend the claim

Our company was named as a defendant in a lawsuit filed on

April 6, 2017, by Douglas Horn in the Maricopa County, Arizona, Superior Court,

styled as Horn v.

The Alkaline Water Company, Inc., et al., cause number

CV2017-005485.

Horn sought damages arising out of the alleged breach of a

written employment agreement between our company and Mr.

that our company has failed to pay wages and to transfer stock allegedly owed to

him under the terms of his employment agreement.

Our company denied the

allegations of the claims, and moved to dismiss pursuant to the terms of the

employment agreement which require that all disputes be resolved by arbitration.

In response, Mr.

Horn filed a notice of dismissal of all claims in that court,

without prejudice.

On September 21, 2017, Mr.

Horn filed a Demand for

Arbitration with the American Arbitration Association, asserting the same

The claim has been assigned No.

01-17-0005-6474.

Our company has

responded, denying any liability to Mr.

Horn and the matter is currently in the

discovery phase.

The arbitration has been set for a three day hearing on October

8 to 10, 2018.

Our company intends to defend the claim vigorously.

Except as detailed above, we know of no material pending legal

proceedings to which our company or any of our subsidiaries is a party or of

which any of our properties, or the properties of any of our subsidiaries, is

In addition, we do not know of any such proceedings contemplated by

any governmental authorities.

proceedings to which our company or our subsidiary is a party or of which any of

our properties, or the properties of our subsidiary, is the subject.

addition, we do not know of any such proceedings contemplated by any

governmental authorities.

Except as detailed above, we know of no material proceedings in

which any of our directors, officers or affiliates, or any registered or

beneficial stockholder is a party adverse to our company or any of our

subsidiaries or has a material interest adverse to our company or any of our

subsidiaries.

which any of our directors, officers or affiliates, or any owner of record or

beneficially of more than five percent of our common stock, or any associate of

any such director, officer, affiliate or stockholder is a party adverse to our

company or our subsidiary or has a material interest adverse to our company or

our subsidiary.

MINE SAFETY DISCLOSURES

1 unchanged sentence

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