Item 1. Legal Proceedings
Item 1. Legal Proceedings
Carebourn Capital, L.P.
On January 29, 2021, Carebourn
Capital, L.P. (“ Carebourn ”) commenced suit against the Company in the 4th Judicial District (Hennepin County District
Court, Minnesota), alleging the Company breached the terms and conditions of two convertible promissory notes and accompanying securities
purchase agreements Carebourn and the Company entered into on July 17, 2018 and July 24, 2018, respectively.
Also on January 29, 2021, Carebourn moved for
a temporary injunction to enjoin the Company from transferring any shares of its common stock to any third parties. Following submission
of briefing by both parties and oral arguments on Carebourn’s motion, on March 17, 2021, the Court denied Carebourn’s motion
for a temporary injunction.
On April 14, 2021, Carebourn filed an amended
complaint and asserted new claims. On May 13, 2021, the Company filed a motion to dismiss Carebourn’s amended complaint, arguing
that Carebourn is conducting itself as an unregistered dealer, in violation of Section 15(a) of the Securities and Exchange Act of 1934
(the “ Act ”), and, pursuant to Section 29(b) of the Act, the Company is entitled to have all contracts arising under
the unlawful securities transaction declared void ab initio and seek rescissionary damages for any unlawful securities transactions effected
by Carebourn.
As of the date hereof, a ruling has not been issued on the foregoing motions to dismiss filed by the Company and Standard
Registrar and Transfer Company, Inc., and the Company and Carebourn are conducting discovery. The Company intends to defend itself against
the allegations asserted in Carebourn’s amended complaint and interpose the defenses provided under the Act, including but not
limited to asserting that Carebourn is an unregistered dealer acting in violation of Section 15(a) and, pursuant to Section 29(b), the
Company interposing its right to rescind the unlawful securities contracts in their entirety and, furthermore, seek rescissionary damages
for any unlawful securities transactions effected by Carebourn.
Former DarkPulse Officers
On June 10, 2021, Stephen Goodman, Mark Banash,
and David Singer (the “ Former Officers ”), all former officers and employees of the Company, commenced suit against
the Company in Arizona Superior Court, Maricopa County. The complaint alleges the Company breached the rights of the Former Officers in
connection with Series D preferred stock issued to the Former Officers. The Company intends to defend itself against the allegations asserted
in the Former Officers’ complaint. If the case progresses, then the Company
will file countersuits against all plaintiffs.
More Capital, LLC
On June 29, 2021, More Capital,
LLC (“ More ”) commenced suit against the Company, et al., in the 4th Judicial District (Hennepin County District Court,
Minnesota), alleging the Company breached the terms and conditions of a convertible promissory note and accompanying securities purchase
agreement that More and the Company entered into on August 20, 2018.
On July 20, 2021, the Company filed a motion to
dismiss More’s complaint, arguing that the claims asserted against the Company fail to state a claim upon which relief can be granted.
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The Company intends to defend itself against the
allegations asserted in More’s complaint and interpose the defenses provided under the Act, including but not limited to asserting
that More is an unregistered dealer acting in violation of Section 15(a) of the Act and, pursuant to Section 29(b) of the Act, the Company
interposing its right to rescind the unlawful securities contracts in their entirety and, furthermore, seek rescissionary damages for
any unlawful securities transactions effected by More.