What changed in this filing

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Item 1. Legal Proceedings

2024-07-15 compared with 2023-11-15 · 149 added, 79 removed, 2 unchanged (99% of the section changed)

Legal Proceedings

See Note 14 to the unaudited consolidated condensed

financial statements.

Benner et al v.

Carebourn Capital, L.P.

DarkPulse, Inc.

On March 29, 2023, J.

Merlin Benner, Phillip J.

Benner, Benjamin P.

Benner, Jonas M.

Benner, and Angelica M.

Benner (collectively, the “ Benner Parties ”) commenced

an action in the United States District Court for the Southern District of Texas against the Company and its Chief Executive Officer,

Dennis O’Leary, individually, alleging (i) the Company is in breach of contracts between the Company and the Benner Parties as it

concerns Remote Intelligence, LLC and Wildlife Specialists, LLC, (ii) violation of Texas Uniform Fraudulent Transfer Act by the Company,

and (iii) defamation by Mr.

On June 30, 2023, the Company and Mr.

filed their Answer to the Benner Parties' Complaint.

The Company intends to vigorously defend itself against the Benner Parties’

Optilan (UK) Limited

– Compulsory Liquidation

On June 28, 2023, an

order was made by the English courts to place Optilan (UK) Limited (“ Optilan UK ”) into compulsory liquidation.

liquidation is a formal, legal insolvency procedure that results in a company being forcibly liquidated by the courts.

was initiated by the presentation of a winding petition served on Optilan UK by an unpaid creditor.

Optilan UK was unable to settle

the creditor payment ahead of the wining up hearing in court and consequently, the court made an order for the company to be wound up/liquidated.

At the point the order was made, Optilan UK ceased operating, and the directors’ powers ceased.

All employment contracts terminated

as did other contractual relationships with clients and customers whose contracts allowed for termination following the company’s

entry into liquidation.

We understand the other companies in the Optilan group remain solvent and continue to operate.

At the same time, the

court appointed the Official Receiver's Office (the “ OR ”) to take the appointment as liquidator of Optilan UK.

An official receiver is a licensed insolvency practitioner who has been appointed by the courts to ensure the company is wound down as

per the compulsory order.

The OR has taken control of the Optilan UK’s assets.

The primary objective

of the OR, who is also an officer of the court, is to repay as much as possible to the creditors.

The OR will undertake an initial

interview with the directors to identify urgent matters, and thereafter undertake a full interview with the directors to further their

investigation work.

The OR will also conduct a separate interview as regards the directors’ conduct and report this back to the

Insolvency Service.

Creditors can also nominate

their own choice of liquidator to replace the OR.

The OR will consider nominations from creditors and ordinarily the largest unsecured

creditor will be able to appoint their own choice of liquidator.

The liquidator acts in the interests of all creditors.

intention for DarkPulse (as largest unsecured creditor of Optilan UK) to try and replace the liquidator for one of its choice.

The liquidator's fees

are generally paid out of the company's assets.

The liquidator must make payment to creditors in a particular order as set out below:

Secured creditors with a fixed charge;

Liquidator fees;

Preferential creditors (employees);

Secondary preferential creditors (HMRC);

Secured creditors with a floating charge;

Unsecured creditors (which includes DarkPulse debts).

Unsecured creditors rank equally.

The main result of compulsory

liquidation is the complete dissolution of the business of Optilan UK.

However, assets of Optilan UK can be purchased at fair market value.

DarkPulse has expressed a desire to acquire certain assets of Optilan UK from the liquidator.

If DarkPulse does not

purchase the assets of Optilan UK, the liquidator will go out to competitors and may try to find a buyer.

If they cannot find one, any

contracts will be disclaimed (cannot be performed), and tangible assets will be disposed of at auction to get the best price.

Most liquidations take

around 6 to 12 months to conclude.

This period usually affords the liquidator sufficient time to dispose of the company’s assets,

agree creditor claims and make a distribution to creditors (if there are any funds available), conclude the company’s tax affairs

and fill the necessary closure paperwork.

During the process, the

subsidiaries can continue to operate, and DarkPulse can support those operations as well as attempt to sign new contracts with the current

customers of Optilan UK.

From time to time, we may become involved in litigation

relating to claims arising out of our operations in the normal course of business.

We are not currently involved in any pending legal

proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we are

a party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on our business,

financial condition and operating results.

On or about January 29, 2021, Carebourn Capital,

(“ Carebourn ”) commenced an action against the Company in Minnesota State Court.

Carebourn alleged that the Company

was in breach of certain securities purchase agreements and convertible promissory notes sold to Carebourn on or about July 17, 2018 and

July 24, 2018.

On or about August 31, 2021, the Company answered

Carebourn’s complaint and interposed affirmative defenses, including that Carebourn was an unregistered “dealer,” as

such term is defined in the Securities Exchange Act of 1934 (“ Exchange Act ”) and, therefore, all contracts between

the parties arising from or related to the securities purchase agreements and convertible promissory notes sold to Carebourn on or about

July 17, 2018 and July 24, 2018 were void pursuant to the Exchange Act.

The Company also asserted counterclaims against Carebourn under

the Minnesota Securities Act.

On or about April 21, 2023, the State Court ruled

in the Company’s favor on its motion for partial summary judgment on its Exchange Act defense, holding that (i) Carebourn is

a “dealer” under the Exchange Act in violation of the mandatory registration requirement imposed thereby, and (ii) all

contracts between the parties are void.

On or about November 17, 2023, the State Court

ruled in the Company’s favor on its motion for summary judgment on its Minnesota Securities Act counterclaims against Carebourn

and awarded damages for Carebourn’s violation of Minn.

§ 80A.76(d) in the amount of $124,012.91, attorney’s

fees in the amount of $239,923.33 and costs in the amount of $23,757.24 (or a total award in the amount of $387,693.48).

On or about March 23, 2024, Carebourn appealed

the final judgment entered by the State Court against Carebourn and in favor of the Company.

On or about March 25, 2024, the Minnesota Appellate

Court entered an Order, noting that Minn.

104.01 provides that appeals must be taken within 60 days of the date of the

final judgment and, therefore, it appears that Carebourn failed to timely take its appeal.

The Appellate Court requested the parties submit

informal briefing in response to two questions:

(a) Did the time to appeal the December 27, 2024 amended judgment expire on February

and (b) If the answer to (a) is yes, must this appeal be dismissed as untimely.

On or about April 4, 2024, DarkPulse filed

its informal briefing in response with the Appellate Court.

The Company is currently awaiting a decision from the Appellate Court.

As of the date hereof, Carebourn has

refused to voluntarily satisfy the final judgment.

Accordingly, the Company intends to exercise all legal rights and remedies

available to it to collect the amounts awarded.

DarkPulse intends to continue to exercise all

legal rights and remedies available to it to collect the amounts awarded should Carebourn fail to voluntarily pay the same.

More Capital, LLC v.

DarkPulse, Inc.

On or about June 29, 2021, More Capital, LLC (“ More ”)

commenced an action against the Company in Minnesota State Court.

More alleged that the Company was in breach of a certain securities

purchase agreement and convertible promissory note sold to More on or about August 20, 2018.

On or about September 3, 2021, the Company answered

More’s complaint and interposed affirmative defenses, including that More was an unregistered “dealer,” as such term

is defined in the Exchange Act and, therefore, all contracts between the parties arising from or related to the securities purchase agreement

and convertible promissory note sold to More on or about August 20, 2018 were void pursuant to the Exchange Act.

The Company also asserted

counterclaims against More under the Minnesota Securities Act.

On or about December 11, 2023, the Minnesota State

Court ruled in the Company’s favor on its motion for summary judgment on its (a) Exchange Act defense, holding that (1) More

is a “dealer” under the Exchange Act in violation of the mandatory registration requirement imposed thereby, and (ii) all

contracts between the parties are void, and (b) Minnesota Securities Act counterclaims against More and awarded damages for More’s

violation of Minn.

§ 80A.76(d) in the amount of $300,809.39, attorney’s fees in the amount of $110,029.00 and costs

in the amount of $210.25 (or a total award in the amount of $412,048.64).

On or about March 23, 2024, More appealed the

final judgment entered by the State Court against More and in favor of the Company.

On or about March 25, 2024, the Minnesota Appellate

Court entered an Order, noting that Minn.

104.01 provides that appeals must be taken within 60 days of the date of the

final judgment and, therefore, it appears that More failed to timely take its appeal.

The Appellate Court requested the parties submit

informal briefing in response to two questions:

(a) Did the time to appeal the December 27, 2024 amended judgment expire on February

and (b) If the answer to (a) is yes, must this appeal be dismissed as untimely.

On or about April 4, 2024, DarkPulse filed

its informal briefing in response with the Appellate Court.

The Company is currently awaiting a decision from the Appellate Court.

As of April 1, 2024, the final judgment had not

yet been satisfied by More, nor had a judgment been entered that stayed enforcement of that judgment.

Accordingly, the Company took actions

to enforce and collect the judgment including, inter alia , serving garnishment summons on More’s banks.

As of the date hereof, More has refused to voluntarily

satisfy the final judgement.

Accordingly, the Company intends to exercise all legal rights and remedies available to it to collect the

amounts awarded.

Carebourn Capital et al v.

Standard Registrar

and Transfer et al

On or about May 20, 2022, Carebourn and More (together

with Carebourn, the “ Noteholders ”) commenced an action against the Company, certain members of the Company’s

executive team and board of directors and Standard Registrar and Transfer Company, Inc., the Company’s transfer agent, in the United

States District Court for the District of Utah.

The Noteholders’ complaint alleged various causes of action arising from certain

securities purchase agreements and convertible promissory notes the Company sold to the Noteholders.

On or about November 23, 2022, the Company and

the members of the Company’s executive team and board of directors named in this action moved to dismiss the Noteholders’

On or about February 21, 2023, the Court granted

the Company’s motion to dismiss in part and stayed the action pending resolution of the motion for summary judgment brought by the

Securities and Exchange Commission against Carebourn in the United States District Court for the District of Minnesota.

On or about November 1, 2023, the Noteholders

moved to dismiss the action.

On or about November 2, 2023, the Company moved

for sanctions against the Noteholders and their counsel of record.

On or about December 4, 2023, the Court entered

an order granting dismissal of the Noteholders’ claims with prejudice.

The Court acknowledged that notwithstanding its dismissal

of the Noteholders’ claims, the Court continues to retain jurisdiction over the Noteholders because of DarkPulse’s pending

motion for sanctions against the Noteholders and their attorneys.

On May 22, 2024, the Court scheduled oral arguments

on the Company’s sanction motion on July 2, 2024.

DarkPulse, Inc.

FirstFire Global Opportunities

Fund, LLC, and Eli Fireman

On or about December 31, 2021, the Company commenced

an action against FirstFire Global Opportunities Fund, LLC (“ FirstFire ”) and its control person, Eli Fireman (“ Fireman ,”

and together with FirstFire, the “ FirstFire Defendants ”), in the United States District Court for the Southern District

On or about May 5, 2022, the Company amended its

complaint against the FirstFire Defendants.

The amended complaint alleges that the FirstFire Defendants were liable to the Company for

rescission of certain convertible promissory notes and transitions effected thereunder and damages pursuant to the Racketeer Influenced

and Corrupt Organizations Act (“ RICO ”).

On or about January 17, 2023, the Court granted

the FirstFire Defendants’ motion to dismiss the Company’s operative pleading.

Later on the same day, the Company appealed

the Court’s decision to the United States Court of Appeals for the Second Circuit (“ Second Circuit ”).

Oral arguments were held before the Second Circuit

on the Company’s appeal on December 11, 2023.

On March 28, 2024, the Second Circuit issued its

decision and found that the District Court (a) properly found that the Delaware forum-selection clause was enforceable but, thereafter,

(b) improperly made a ruling on the merits of the Company’s claims for relief.

As a result, the Second Circuit affirmed the

District Court’s decision in part, vacated in part and remanded the case back to the District Court for transferring to the United

States District Court for the District of Delaware.

As of the date hereof, this action has not yet

transferred to the Delaware Court.

The Company remains committed to actively litigating its claims for relief under RICO.

DarkPulse, Inc., et al v.

Partners, LLC, et al

On or about September 23, 2022, the Company, Social

Life Network, Inc.

and Redhawk Holdings Corp.

commenced an action against Crown Bridge Partners, LLC (“ Crown Bridge ”)

and its control persons, Soheil Ahdoot and Sepas Ahdoot (collectively, the “ Crown Bridge Defendants ”) in the United

States District Court for the Southern District of New York.

The complaint alleges that the Crown Bridge Defendants are liable to each

of the plaintiffs for damages pursuant to RICO.

On or about September 29, 2023, the Court granted

the Crown Bridge Defendants’ motion to dismiss the plaintiffs’ complaint.

On October 23, 2023, the plaintiffs appealed the

Court’s decision to the Second Circuit.

As of the date hereof, the appeal is fully briefed.

The Company remains committed to actively litigating

its claims for relief under RICO.

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-Q

Item 1. Legal Proceedings