1 unchanged sentence
From time to time, we may become involved in legal proceedings.
−Removed: The Company, Wes Cummins, the Company's Chief Executive Officer, and David Rench, the Company's Chief Financial Officer, have been named as defendants in a putative securities class action lawsuit in the matter styled, McConnell v.
+Added: The Company, Wes Cummins, the Company's Chief Executive Officer, and David Rench, the Company's then Chief Financial Officer, have been named as defendants in a putative securities class action lawsuit in the matter styled, McConnell v.
Applied Digital Corporation, et al., Case No.
4 unchanged sentences
On September 20, 2024, the defendants filed a motion to dismiss the amended complaint.
+Added: On November 20, 2024, Lead Plaintiff filed his opposition to the Motion to Dismiss.
See discussion in “Note 10 - Commitments and Contingencies”.
−Removed: The Company is unable to estimate a range of loss, if any, that could result were there to be an adverse final decision in this action.
+Added: The Company is unable to estimate a range of loss, if any, that could result were there to be an adverse final decision in the Securities Lawsuit.
If an unfavorable action were to occur, it is possible that the impact could be material to the Company’s results of operations in the period(s) in which any such outcome becomes probable and estimable.
On November 15, 2023, a derivative action was filed in the matter styled, Weich v.
−Removed: Cummins, et al.
−Removed: A-23-881629-C in the District Court of Clark County, Nevada.
−Removed: The Weich complaint names as defendants certain members of the Company’s Board of Directors and its Chief Executive Officer Wesley Cummins and purports to name Chief Financial Officer David Rench as a defendant.
−Removed: The complaint asserts claims for breach of fiduciary duties, corporate waste and unjust enrichment based upon allegations that the defendants caused or allowed the Company to make materially false and misleading statements regarding the Company’s business, operations, and compliance policies.
+Added: Cummins, et al., Case No.
+Added: A-23-881629-C in the District Court of Clark County, Nevada (the “Derivative Lawsuit”).
+Added: The Weich complaint named as defendants certain members of the Company’s Board of Directors and its Chief Executive Officer Wesley Cummins and purports to name the Company’s then Chief Financial Officer David Rench as a defendant.
+Added: The complaint asserted claims for breach of fiduciary duties, corporate waste and unjust enrichment based upon allegations that the defendants caused or allowed the Company to make materially false and misleading statements regarding the Company’s business, operations, and compliance policies.
Specifically, the complaint alleged that the Company overstated the profitability of the Data Center Hosting Business and its ability to successfully transition into a low-cost cloud services provider and that the Board was not “independent” within the meaning of Nasdaq listing rules.
On February 27, 2024, the derivative plaintiff filed an amended complaint asserting the same claims as the original complaint.
−Removed: On June 5, 2024, the Court entered an order granting the defendants’ motion to dismiss without prejudice and dismissing all claims against all defendants, including the Company.
−Removed: On June 5, 2024, following briefing and argument on the defendants’ motion to dismiss, the Court entered an order granting the defendants’ motion without prejudice and dismissing all claims against all defendants, including the Company, on the grounds that the plaintiff failed to plead (1) demand futility as to each of plaintiff’s claims or (2) a claim for breach of fiduciary duty.
+Added: On June 5, 2024, following briefing and argument on the defendants’ motion to dismiss the Derivative Lawsuit, the Court entered an order granting the defendants’ motion without prejudice and dismissing all claims against all defendants, including the Company, on the grounds that the plaintiff failed to plead (1) demand futility as to each of plaintiff’s claims or (2) a claim for breach of fiduciary duty.
The order dismissed all claims against all defendants, including the Company.
3 unchanged sentences
There are no other pending lawsuits that could reasonably be expected to have a material adverse effect on the results of the Company’s consolidated operations.
−Removed: A description of the risk factors associated with our business is contained in the “Risk Factors” section of our Annual Report.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.