NOTE 21 – COMMITMENTS AND CONTINGENCIES

Legal Matters

The Company may be involved, from time to time, in litigation or other legal claims and proceedings involving matters associated with or incidental to our business, including, among other things, matters involving breach of contract claims, and other related claims and vendor matters; however, none of the aforementioned matters are currently pending, except as discussed below. The Company believes that we are not exposed to matters that will individually, or in the aggregate, have a material adverse effect on our financial condition or results of operations.

Notwithstanding the above, the outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected.

The Company is involved in a dispute with one of its Cyprus subsidiaries’ minority owners. Meridian Malta owns 51% of the Cypriot company, Fair Champions Meridian Ltd. (“Fair Champions”). Meridian Malta and the minority shareholders of Fair Champions are engaged in two related court actions. They were also engaged in another two court actions (one from each side) in which they were seeking the liquidation of Fair Champions. These liquidations applications were closed without damages. The former proceedings are pending in the District Court of Limassol, Cyprus, being 1) Case No. 1080/2017, filed on 08/05/2017; and 2) Case No. 418/2017, filed on February 17, 2017. In the first action, the minority shareholders asserted derivative claims on behalf of Fair Champions. In the second action, Meridian Serbia sued certain minority shareholders for misrepresentations made at the time of the Company’s acquisition of its majority interest in Fair Champions. MeridianBet Group is seeking reimbursement of the sum it paid for that interest. The Company is vigorously defending this dispute and believes that dispute will be resolved in the Company's favor, and as such, a reserve has not been accrued.

Meridian Malta is carrying out a dispute with the Greek tax authorities (acting through the Audit Centre for Large Enterprises), before the competent Greek Courts. The MeridianBet Group has conducted business remotely (i.e., via internet) in Greece through Meridian Malta. Meridian Malta—like two dozen other remote betting entities—is locked in a tax dispute with the Greek tax authorities relating to tax years 2012 through 2014. The Greek authorities issued initial assessments, which Meridian Malta then appealed. The bases of the appeals included arguments that (i) Greece unlawfully assessed Meridian Malta’s tax liability; and (ii) Meridian Malta paid taxes on its Greek revenues in Malta, so it is exempt from further taxes under the two countries’ double taxation treaty. The appeals are at various stages of adjudication. These actions, instituted in December 2018 and April 2019, are pending in the Administrative Court of Appeal of Athens and the Supreme Court of Greece, respectively. The Company is vigorously defending this dispute and believes that the dispute will be resolved in the Company's favor, but out of prudence, the Company has accrued a tax expense of $1,468,472 for the said dispute.

The Company is in a dispute with Mr. Paul Hardman, one of the former owners of RKings, regarding certain consideration totaling approximately $626,450 (GBP 500,000) that Mr. Hardman has alleged remains payable to him pursuant to the RKings Purchase Agreement, and which the Company contends was forfeited. This amount is accrued and included in the Company’s liabilities. The Company’s dispute and related claims arise from alleged breaches of the terms of the RKings Purchase Agreement by Mr. Hardman. While no formal legal proceedings have been initiated by either party to date, the Company is actively pursuing resolution of the matter. Based on a settlement proposal received from legal counsel, the Company expects to resolve the dispute for at most approximately GBP 170,000 (approximately $230,000).

The Company is involved in various labor and tax-related disputes in the ordinary course of business. These matters include, but are not limited to, employee claims, wage and hour disputes, and tax assessments by regulatory authorities. The majority of disputes relate to labor disputes with former employees of the MeridianBet Group, which represents more than 90% of all disputes. While the outcomes of such matters are inherently uncertain, based on current information and management’s assessment, none of these disputes are expected to have a material impact on the Company’s financial position, results of operations, or cash flows. The Company continues to monitor these matters and will update its disclosures as necessary should any material developments arise.