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
judgment on all claims asserted by FT Global in this lawsuit. On August 31, 2023, the Court entered an Order denying the
Company’s motion for summary judgment. On September 20, 2023, the parties filed a joint motion to extend the deadline to file
the consolidated pretrial order pending mediation of the case by the parties. On September 21, 2023, the Court granted the
parties’ joint motion to extend the deadline to file the consolidated pretrial order to October 27, 2023. On October 16, 2023,
the parties mediated the case. On October 24, 2023, the parties filed another joint motion to extend the deadline to file the
consolidated pretrial order. On October 27, 2023, the Court granted the parties’ joint motion to extend the deadline to file
the consolidated pretrial order to November 17, 2023 and set the case for trial on January 8, 2024. Subsequently, the Court approved
an extension of the deadline to file a pretrial order to December 1, 2023. The Court has also rescheduled the trial to commence on
April 8, 2024. The trial began on April 8, 2024 and ended on April 11, 2024, on which date the jury returned a verdict in favor of
FT Global and the Court entered a judgment awarding FT Global $8,875,265.31. On April 16, 2024, the Court issued an amended
judgment, awarding FT Global $10,598,379.93, which includes $7,895,265.31 in damages, $1,723,114.62 in prejudgment interest, and
$980,000.00 in attorney’s fees. The Company filed a post-trial motion challenging the judgment on May 9, 2024 and will
continue to vigorously defend the action against FT Global, including by appealing the judgment to the United States Court of
Appeals for the Eleventh Circuit if necessary.
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Item 1A. Risk Factors
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.