Irvine, CA (Law Firm Newswire) February 27, 2019 - Enterprise Counsel Group, ALC (ECG), a leading business trial, appellate and corporate law firm, announces a major decision in the Delaware Court of Chancery in a case brought by Applied Energetics, Inc., an Arizona-based energy technology company, against its former Principal Executive Officer, George Farley.
In a 40-page decision, the Delaware Court of Chancery issued an order preliminarily enjoining the transfer, sale or otherwise disposal of 25 million shares of Applied Energetics stock, issued to that company’s former sole Director and Principal Executive Officer, George Farley. In so doing, the Court found Applied Energetics, Inc., a military contractor with market capitalization exceeding $1 billion during its peak in the mid-2000s, with 40 patents on Ultra-Short Pulse (“USP”) Lasers, Laser Guided Energy (“LGE”) and Direct Discharge Electrical Products both military and commercial applications, met “its considerable burden,” demonstrating it was likely to win its lawsuit against Farley and his family-owned company, AnneMarieCo.
Specifically, after reviewing evidence and expert testimony presented by Applied Energetics’ and Farley’s lawyers, the Court found it was “reasonably probable” Farley had arranged for the shares to be unlawfully issued, Farley had breached his duty of loyalty to Applied Energetics, Farley was unlikely to prove the stock issuance was procedurally or substantively “fair” to Applied Energetics, and Farley had fraudulently transferred 20 million of the shares to his wife and six children through AnneMarieCo.
Finally, the Court ruled because Farley and AnneMarieCo’s 25 million shares represented one-eighth of Applied Energetics’ outstanding ownership, the injunction was necessary to protect Applied Energetics’ capital structure, the company’s ability to attract new investors, ability to raise new capital, and ability to continue deployment of its plans, now underway, to revitalize its defense contracts, as well as the ability to expand its technology to meet the demands of other markets, including clean energy and law enforcement.
According to Applied Energetics’ lead attorney, Benjamin P. Pugh, “We are pleased the Delaware court recognized the strength of our case against Mr. Farley. We look forward to a successful conclusion to the litigation.”
Benjamin P. Pugh is a litigation partner at Enterprise Counsel Group, ALC (https://www.ecg.law/), an Irvine, California-based business trial, appellate and corporate law firm, with expertise in aggressive courtroom and boardroom representation for a broad spectrum of successful businesses in California, Colorado, Nevada, and across the US.