Item 1. Legal Proceedings
From time to time, we may become involved in various legal proceedings that arise in the ordinary course of business, including actions related to our intellectual property. Although the outcomes of these legal proceedings cannot be predicted with certainty, Management believes that the ultimate outcomes of the pending significant legal proceedings to which the Company is a party may have a material effect on our business, financial condition or results of operations.
On January 2, 2018, the Company, J. Edward Daniels, the Company’s transfer agent and certain other individuals were named as defendants in a lawsuit filed in the United States District Court - Central District of California captioned The Alliance for Education, Inc. v. Airborne Wireless Network, Inc. et al., Case No. 2:18-cv-20. The second amended complaint makes conversion claims against the Company and Mr. Daniels, and a breach of fiduciary duty claim against Mr. Daniels, alleging that the defendants wrongfully deprived the plaintiff of certain stock certificates representing shares of the Company’s common stock, and seeks monetary and punitive damages, a judicial declaration regarding the ownership of the share certificates at issue, an injunction that the certificates at issue be returned or reissued to the plaintiff and costs and attorneys’ fees. The outcome of this lawsuit is uncertain. The Company believes that the claims asserted are without merit. On April 11, 2019, the parties entered into a Confidential Settlement Agreement and Release. On June 24, 2019, the Court dismissed the action.
On October 17, 2018, GT Legal Corp., as assignee of Troy Gould PC, the Company’s corporate counsel prior to August 2017, filed a complaint against the Company in the Superior Court of California County of Los Angeles, Case No.: 18STCV01578, for breach of contract for unpaid legal fees. Troy Gould PC is seeking $71,960.50 in unpaid legal fees plus daily interest of $19.72 per day. On February 13, 2019, the Company and GT Legal Corp. entered into a Confidential Settlement Agreement and Release. The Company believes that the claims asserted were without merit. On May 28, 2019, GT Legal Corp. filed a Request for Dismissal with Prejudice.
On November 15, 2018, the Company was named as a defendant in Neutron Media, Inc. v. Airborne Wireless Network, in a complaint filed in the Superior Court of Ventura County, California, Case No.: 56-2018-00520023-CU-CL-VTA. Neutron Media, Inc., the plaintiff, seeks money damages in connection with the alleged breach by the Company of an advertising package contract. The contract at issue provides that in exchange for payment, the plaintiff would provide the Company a 30-second spot looping a minimum of three times per hour, for a total of 90 seconds per hour, airing 20 hours per day, from 6:00 am to 2:00 am, over an 89-day period, on The 1500 Broadway Spectacular, a 56 foot-by-29 foot viewing space. Neutron Media, Inc. alleges that it performed all conditions of the contract, but that the Company had breached the agreement by failing to provide payment. On March 8, 2019, a Request for Dismissal was filed by the plaintiff with the Ventura Superior Court and the complaint was dismissed without prejudice. The Company believes that the claims asserted were without merit.
On February 6, 2019, the Company was named as a defendant in YA II PN, LTD. v. Airborne Wireless Network, in a complaint filed in the Superior Court of New Jersey, Hudson County, Docket No.: HUD-L-00-557-19. YA II PN, LTD., the plaintiff, seeks monetary damages for the alleged breach of a debenture issued by the Company to YA II PN, LTD. in the amount of $1,264,964 plus interest, fees and costs including attorney’s fees. The debenture was issued by the Plaintiff in the amount of $1,250,000 on or about April 9, 2018. On March 21, 2019, the Plaintiff filed a request for Entry of Default Judgment in the amount of $1,284,542. On March 26, 2019, YA II PN obtained a Final Judgement against the Company in the amount of $1,284,542, which is included in the outstanding principal balance of the convertible note of $1,190,000 and accrued note interest of $111,364 as of May 31, 2019. The Company is currently evaluating its options and alternative ways to satisfy it.
