Item 3. Legal Proceedings
ITEM 3. LEGAL PROCEEDINGS.
Carebourn Capital, L.P. v. DarkPulse, Inc .
On or about January 29, 2021, Carebourn Capital,
L.P. (“ 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. Stat. § 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).
As of the date hereof, the final judgment remains
unsatisfied by Carebourn. 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. et
al
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. Stat. § 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).
As of the date hereof, the final judgment remains
unsatisfied by More. DarkPulse intends to continue to exercise all legal rights and remedies available to it to collect the amounts awarded
should More fail to voluntarily pay the same.
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Carebourn Capital et al v. Standard Registrar
and Transfer et al
On or about May 20, 2022, Carebourn and More (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 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 September 10, 2024, the Court entered an order
granting in part the Company’s motion for sanctions against the Noteholders and their counsel of record.
As of the date hereof, the Court has not yet rendered
its decision on the amount sanctions that will be imposed against the Noteholders and their counsel of record and awarded to the Company.
DarkPulse, Inc. v. 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
of New York.
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. On the same day, the Company appealed the Court’s
decision to the United States Court of Appeals for the Second Circuit (“ Second Circuit ”).
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.
On September 9, 2024, the FirstFire Defendants
filed their opening memorandum of law in support of their motion to dismiss. Shortly thereafter, the Company opposed the FirstFire Defendants’
motion and the FirstFire Defendants filed their reply in further support.
As of the date hereof, the Court has not scheduled
oral arguments on the FirstFire Defendants’ motion to dismiss or rendered its decision thereon. The Company remains committed to
actively litigating its claims for relief against the FirstFire Defendants.
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DarkPulse, Inc., et al v. Crown Bridge 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 United States Court of Appeals for the Second Circuit (“ Second Circuit ”).
On August 19, 2024, the Second Circuit issued
its decision and found that the District Court erred when granting the Crown Bridge Defendants’ motion to dismiss. As a result,
the Second Circuit vacated the District Court’s decision and remanded the case back to the District Court for further proceedings
consistent with its decision.
On September 30, 2024, the District Court entered
a scheduling order, setting forth deadlines for discovery and dispositive motion practice.
The Company is actively litigating its claims
for relief against the Crown Bridge Defendants.
GS Capital Partners, LLC v. DarkPulse, Inc.
On June 2, 2023, GS Capital Partners, LLC (“ GS
Capital ”) commenced an action in the Supreme Court for New York County against the Company through the filing of motion for
summary judgment in lieu of a complaint. The motion claims that the Company is in breach of a convertible promissory note, dated July
14, 2021, and accompanying securities purchase agreement, dated the same.
The motion claims that GS Capital is entitled
to an award of $2,407,671, plus prejudgment interest and attorney’s fees, costs and disbursements.
On July 27, 2023, the Company moved to set aside
the default judgment entered in favor of GS Capital and against the Company on July 25, 2023. GS Capital’s opposition thereto is
due on or before August 31, 2023. Thereafter, DarkPulse’s reply is due on or before September 6, 2023. Oral arguments are currently
not scheduled on the Company’s motion.
On or about September 27, 2023, the Company and
GS Capital confidentially settled the dispute. On or about October 3, 2023, the parties filed a stipulation with the court to vacate the
judgment entered against the Company and in favor of GS Capital, vacate the motion filed by the Company, and discontinue the action.
On or about October 9, 2023, the court vacated
the judgment and the action was dismissed.
The Company defaulted upon the settlement and,
on July 24, 2024, the Company and GS Capital entered into a Settlement Agreement pursuant to which the Company entered into a confession
of judgment in favor of GS Capital in the amount of $2,673,423.19 (the “ Balance ”). Upon approval of the court on August
19, 2024, the Company will issue to GS Capital free-trading and unrestricted shares of Common Stock pursuant to drawdown requests in the
amounts determined by GS Capital, subject to a 4.99% beneficial ownership limitation. The shares will be issued a price per share equal
to the average of the three lowest VWAPs for the five prior trading days. GS Capital will be allowed to sell, the greater of (1) in one
week, no more than 1% of the total outstanding shares of the Company on a non-cumulative basis at the “ask” price, and (2)
15% of the daily trading volume of the Common Stock on any single trading day. Each drawdown will reduce the Balance. The Company is required
to reserve 2,500,000,000 shares of Common Stock.
37
TJM West, Inc v Thomas J McCarthy Family
Limited Partnership
On or about July 25, 2023, TJM West filed an action
in Maricopa court against its landlord for illegal lockout from the company’s facilities.
On or about August 18, 2023, TJM West’s
motion for Temporary Restraining Order was granted.
September 27, 2023, TJM West counsel motion to
withdraw was accepted.
On or about October 6, 2923, TJM West hired new
counsel to assist with a short deadline to file answers to landlords motion.
On or about November 6, 2023, TJM West and its
counsel mutually agreed to a withdrawal.
On or about November 6, 2023, TJM West engaged
new counsel.
On or about May 8, 2024, TJM West dropped its
motion for Temporary Restraining Order.
On or about May 24, 2024, TJM West counsel filed
motion to continue discovery.
On or about May 24, 2024, TJM West’s counsel
left the firm handling the litigation it was determined in the best interest of the company to terminate its relationship with the law
firm. As of the date hereof, the Company is interviewing new counsel and evaluating its claims against landlord to determine if it’s
financially responsible to incur additional fees related to exercising TJM’s rights against the landlord for terminating the lease.
On or about June 28, 2024, the Company discussed
with possible new counsel the feasibility of recovering its damages utilizing the courts. At that time, it appeared the cost of recovery
would exceed the recoverable amount should the Company be successful in its litigation. TJM West is awaiting updates from the court in
Maricopa County as to the status of the case.
The facilities in question had served as TJM West’s
manufacturing facility and is located at 2640 W Medtronic Way Tempe, AZ 85281. Currently, we do
not have access to the facility nor have we signed a new lease signed with the landlord.
In addition to the foregoing Legal Proceedings,
we are also actively investigating potential legal claims, including but not limited to stock fraud, market manipulation, and/or defamation,
against certain Twitter accounts, websites, and social media channels. The investigation is ongoing and should potential claims be identified,
we will evaluate commencing formal litigation proceedings.
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.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
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PART II
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.