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Contingent liabilities
6 Months Ended
Jan. 31, 2022
Sales concentration  
Contingent Liabilities

11.  Contingent liabilities

 

As of January 31, 2022, the Company incurred to two separate claims against the company.  The Company is early in the analysis of these claims.  The Company will defend its position regarding these claims; however, the company has reserved approximately $187,000 to date.

 

On February 15, 2022, former employee, commenced a lawsuit against the Company in Superior Court of California, County of San Diego. In this action, former employee brings claims for unpaid wages of $24,038, unused vacation pay $9,615, vested stock options of $378,000, penalties of $28,846 and fees and costs. 

 

The Company believes the allegations of the complaint are without merit and intends to defend the case vigorously. Former employee resigned from his position July 4, 2021, in an email to the Company and there weren't ever discussions around vested stock options.

 

On December 16, 2021, Boustead Securities, LLC filed a claim against the Company in the United States District Court, Central District of California. In this action, Boustead brings claims for breach of contract. Boustead is an investment banking firm that advises on mergers and acquisitions and capital raise and, charges fees for Placement and Advisor Services. 

 

In this action Boustead claims fees for; the Companies acquisition of; Coastal Labs and Bohemian Beverage Co., both of which did not occur, Admay LLC which is a conditional contract, Castillo Seed Company for a fee of $4,800, and Primordia LLC FOR $34,491. Boustead did not originate nor had involvement in any of these transactions. 

 

Further, Boustead claims fees for the PPP Loan the Company, a Shareholder Loan to the Company from a Company owned by the CEO, and a Bridge Loan. Boustead did not originate nor had involvement in any of these transactions. 

 

Further, Boustead claims 250,000 common shares in the Company, yet the shares were already issued over a year ago and were at that time included in the total of number of outstanding shares issued.

 

The Company believes the allegations of the complaint are without merit and intends to defend the case vigorously.