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COMMITMENTS & CONTINGENCIES
6 Months Ended
Jun. 30, 2022
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS & CONTINGENCIES

NOTE 12 - COMMITMENTS & CONTINGENCIES

 

Potential Royalty Payments

 

The Company, in consideration of the terms of the debenture to the University of New Brunswick, shall pay to the University a two percent royalty on sales of any and all products or services which incorporate the Company's patents for a period of five years from April 24, 2018.

 

Legal Matters

 

Carebourn Capital, L.P. v. DarkPulse, Inc.

 

As disclosed in greater detail in the Company’s Form 10-Q, filed May 16, 2022, the Company remains in active litigation with Carebourn Capital, L.P. (“Carebourn”). Thus, the remainder of this communication will address all material updates since the aforementioned Form 10-Q.

 

On July 11, 2022, the Court denied Carebourn’s motion to compel DPLS to produce a privilege log.

 

On July 15, 2022, the Court denied Carebourn’s motion to disqualify or, in the alternative, seek limited discovery of DPLS’ legal counsel, consisting of the Taft Stettinius & Hollister LLP and The Basile Law Firm P.C.

 

On July 27, 2022, Carebourn paid $18,858.18 for attorneys’ fees awarded pursuant to the Court’s April 14, 2022 decision on the Company’s motion to compel Carebourn.

 

The Company remains committed to actively litigating its claims for relief under the Securities Exchange Act of 1934.

 

More Capital, LLC v. DarkPulse, Inc. et al

 

As disclosed in greater detail in the Company’s Form 10-Q, filed May 16, 2022, the Company remains in active litigation with More Capital, LLC (“More”). Thus, the remainder of this communication will address all material updates since the aforementioned Form 10-Q.

 

On July 11, 2022, the Court denied More’s motion for summary judgment against the Company and granted DarkPulse’s motion to compel More. The Court directed More to produce all responsive documents to certain requests for production served by DarkPulse within seven days thereof.

 

The Company remains committed to actively litigating its claims for relief under the Securities Exchange Act of 1934.

 

Goodman et al. v. DarkPulse, Inc.

 

As disclosed in greater detail in the Company’s Form 10-Q, filed May 16, 2022, the Company remains in active litigation with Stephen Goodman (“Goodman”), Mark Banash (“Banash”), and David Singer (“Singer”) (Goodman, Banash, and Singer, together, the “Series D Plaintiffs”). Thus, the remainder of this communication will address all material updates since the aforementioned Form 10-Q.

 

As of the date hereof, there are no material updates to this litigation.

 

The Company remains committed to actively litigating its claims and defenses against the Series D Plaintiffs.

 

DarkPulse, Inc. v. FirstFire Global Opportunities Fund, LLC, and Eli Fireman (SDNY)

 

As disclosed in greater detail in the Company’s Form 10-Q, filed May 16, 2022, the Company remains in active litigation with FirstFire Global Opportunities Fund, LLC (“FirstFire”), and Eli Fireman (“Fireman”) (FirstFire and Fireman together, the “FirstFire Parties”). Thus, the remainder of this communication will address all material updates since the aforementioned Form 10-Q.

 

On May 26, 2022, the FirstFire Parties filed their motion to dismiss the Company’s first amended complaint, filed on May 5, 2022, and opening memorandum of law in support thereof.

 

On June 16, 2022, the Company filed its memorandum of law in opposition to the FirstFire Parties’ motion to dismiss, and on June 30, 2022, the FirstFire Parties filed their memorandum of law in reply and further support of their motion to dismiss.

 

As of the date hereof, the FirstFire Parties’ motion to dismiss is fully submitted to the Court. On May 26, 2022, the FirstFire Parties requested oral arguments on their motion to dismiss. As of the date hereof, oral arguments have not been scheduled and, further, no decision has been rendered on the FirstFire Parties’ motion to dismiss. 

 

The Company remains committed to actively litigating its claims for relief under the Securities Exchange Act of 1934.

 

DarkPulse, Inc. v. EMA Financial, LLC et al

 

As disclosed in greater detail in the Company’s Form 10-Q, filed May 16, 2022, the Company remains in active litigation with EMA Financial, LLC (“EMA”), EMA Group, Inc. (“EMA Group”), and Felicia Preston (“Preston”) (EMA, EMA Group, and Preston together, the “EMA Parties”). Thus, the remainder of this communication will address all material updates since the aforementioned Form 10-Q.

 

On June 22, 2022, the EMA Parties filed their motion to dismiss the Company’s first amended complaint, filed on March 28, 2022, and opening memorandum of law in support thereof.

 

On July 13, 2022, the Company filed its memorandum of law in opposition to the EMA Parties’ motion to dismiss, and on July 22, 2022, the EMA Parties filed their memorandum of law in reply and further support of their motion to dismiss.

 

As of the date hereof, no decision has been on the EMA Parties’ motion to dismiss.

 

The Company remains committed to actively litigating its claims for relief under the Securities Exchange Act of 1934 and the Racketeer Influenced and Corrupt Organizations Act.

 

Carebourn Capital et al v. Standard Registrar and Transfer et al

 

On May 20, 2022, Carebourn Capital, L.P. (“Carebourn”) and More Capital, LLC (“More”) (Carebourn and More, together, the “MN Noteholders”) commenced an action in the United States District Court for the District of Utah against (i) Standard Registrar and Transfer Co., Inc. (“Standard”), (ii) Amy Merrill (“Merrill”) (Standard and Merrill, together, the “TA Defendants”), (iii) DarkPulse, Inc., (iv) Dennis O’Leary (“O’Leary”), (v) Thomas Seifert (“Seifert”), (vi) Carl Eckel (“Eckel”), (vii) Anthony Brown (“Brown”), and (viii) Faisal Farooqui (“Farooqui”) (DarkPulse, O’Leary, Seifert, Eckel, Brown, and Farooqui, collectively, the “DPLS Defendants”).

 

The MN Noteholders’ complaint alleges, among other things, that the TA Defendants and DPLS Defendants conspired together and acted in unison to preclude the MN Noteholders’ from receiving the benefits of the convertible note transactions between Carebourn, More, and DarkPulse.

 

On July 5, 2022, the TA Defendants filed their motion to dismiss the MN Noteholders’ complaint. Pursuant to the local rules of the U.S. Dist. Court for the District of Utah, the MN Noteholders must reply to the TA Defendants’ motion to dismiss on or before August 2, 2022.

 

As of the date hereof, the DPLS Defendants have not been served and, thus, no deadline exists by which the DPLS Defendants must answer or otherwise respond to the MN Noteholders’ complaint.

 

The Company intends to vigorously defend itself against the MN Noteholders’ lawsuit.

 

DarkPulse, Inc. v. Brunson Chandler Jones et al

 

On July 8, 2022, the Company commenced an action against the law firm of Brunson Chandler & Jones, PLLC and Lance B. Brunson (“Chandler Defendants”) in the United States District Court for the District of Utah.

 

The Company’s claims, consisting of professional negligence/malpractice and breach of contract, arise from the legal services and relationship between DarkPulse and the Chandler Defendants and in connection with the merger between DarkPulse, DarkPulse Technologies Inc., and Klever Marketing, Inc.

 

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.

 

Bayliss Settlement Agreement

 

The CEO, William Bayliss, of the Company’s subsidiary, Optilan, was terminated effective April 30, 2022. Optilan entered into a settlement agreement with Mr. Bayliss in which he received £125,000 in lieu of the six months’ salary provided for in Mr. Bayliss’s employment agreement.

 

O’Leary Employment Agreement

 

On June 22, 2022, the Board of Directors of the “Company, with Dennis O’Leary abstaining, approved the Employment Agreement dated effective April 1, 2022 (the “Effective Date”) with Mr. O’Leary, the Company’s Chief Executive Officer (the “Agreement”). The term of the Agreement is three years from the Effective Date, subject to termination. The Agreement may be terminated upon the death or disability of Mr. O’Leary or for “Cause,” as defined in the Agreement. Pursuant to the Agreement, Mr. O’Leary is entitled to an annual salary of $300,000, which may accrue and be paid once the Company has available funds. Any accrued and unpaid base salary may also be converted subject to mutual agreement of the Company and Mr. O’Leary. Also, pursuant to the Agreement, upon the filing of the Certificate of Designation with the Delaware Secretary of State, Mr. O’Leary is to be issued 100 shares of Series A Super Voting Preferred Stock of the Company.