Item 1. Legal Proceedings
Item 1. Legal Proceedings
Legal case with FT Global Litigation
In January 2021, FT Global Capital, Inc. (“FT
Global”), a former placement agent of the Company filed a lawsuit against the Company in the Superior Court of Fulton County, Georgia.
FT Global served the complaint upon the Company in January 2021. In the complaint, FT Global alleges claims, most of which attempt to
hold the Company liable under legal theories that relate back to an alleged breach of an exclusive placement agent agreement between FT
Global and the Company in July 2020 which had a term of three months. FT Global claims that the Company failed to compensate FT Global
for securities purchase transactions between December 2020 and April 2021, pursuant to the terms of the expired exclusive placement agent
agreement. Allegedly, the exclusive placement agent agreement required the Company to pay FT Global for capital received during the term
of the agreement and for the 12-month period following the termination of the agreement involving any investors that FT Global introduced
and/or wall-crossed to the Company. However, the Company believes the securities purchase transactions at issue did not involve the one
investor which FT Global introduced or wall-crossed to the Company during the term of the agreement. FT Global claims approximately $7,000,000
in damages and attorneys’ fees.
The Company timely removed the case to the United
States District Court for the Northern District of Georgia (the (“Court) on February 9, 2021 based on diversity of jurisdiction.
On March 9, 2021, the Company filed a motion to dismiss based on FT Global’s failure to state a claim which is pending before the
Court. On March 23, 2021, FT Global filed its response to the Company’s motion to dismiss. FT Global argues that the Court should
deny the Company’s motion to dismiss. However, if the Court is inclined to grant the Company’s motion to dismiss, FT Global
requested that the Court permit it to file an amended complaint. On April 8, 2021, the parties filed a Joint Preliminary Report and Discovery
Plan. On April 12, 2021, the Court approved the Joint Preliminary Report and Discovery Plan and issued a Scheduling Order placing this
case on a six-month discovery tract. On April 30, 2021, the Company served FT Global with its Initial Disclosures. On May 6, 2021, FT
Global served the Company with its Initial Disclosures. On May 17, 2021, FT Global served the Company with its First Amended Initial Disclosures.
On November 10, 2021, the Court entered an Order granting the Company’s motion to dismiss FT Global’s fraud claim and breach
of contract claim as to the disclosure of its confidential and proprietary information. The Court denied the Company’s motion to
dismiss FT Global’s i) breach of contract claim for failure to pay FT Global pursuant to the terms of the exclusive placement agent
agreement; ii) claim for breach of the covenant of good faith and fair dealing; and iii) claim for attorney’s fees, and the court
concluded that additional information can be obtained through discovery. The Company timely filed an answer and defenses to FT Global’s
complaint on November 24, 2021. On January 3, 2022 the Company propounded discovery requests upon FT Global, including interrogatories
and requests for production of documents. On March 23, 2022, the Company propounded requests for admission upon FT Global. On March 24,
2022, FT Global propounded discovery requests upon the Company, including requests for production of documents and requests for admission.
On April 1, 2022, FT Global served its response to the Company’s requests for production of documents. On May 13, 2022, FT Global
served its responses to the Company’s interrogatories and requests for admissions. On May 13, 2022, FT Global produced documents
in response to the Company’s requests for production of documents. On June 3, 2022, the Company produced documents in response to
FT Global’s requests for production of documents. On August 3, 2022, the Company took the deposition of FT Global. On August 4,
2022, FT Global took the deposition of the Company. On August 3, 2022, the Court granted the parties’ Consent Motion to Extend Discovery
Period extending the discovery period from August 5, 2022 to September 14, 2022 and the deadline to file dispositive motions to October
12, 2022. On October 12, 2022, the Company filed a motion for summary judgment
on all claims asserted by FT Global in this lawsuit. On November 2, 2022, FT Global filed its opposition to the Company’s motion
for summary judgment. On November 16, 2022, the Company filed its reply in support of its motion for summary judgement on all claims asserted
by FT Global in this lawsuit. The Company will continue to vigorously defend the action against FT Global.
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Item 1A. Risk Factors
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosure
Not applicable.
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.