Legal Proceedings
−Removed: As previously disclosed, one of the Company’s largest customers, Celsius Mining LLC (“Celsius”), along with its parent company and certain affiliates, filed for voluntary relief under Chapter 11 of the United States Bankruptcy Code in July 2022 in the Bankruptcy Court for the Southern District of New York.
−Removed: On September 28, 2022, Celsius filed a motion in the chapter 11 case alleging that the Company is violating the automatic stay with respect to the Master Services Agreement between Celsius and the Company (the “Agreement”).
−Removed: Celsius is also using its chapter 11 proceeding to withhold payment of certain charges billed to Celsius pursuant to the Agreement.
−Removed: The Company strongly disagrees with the allegations made in the Celsius motion and the interpretation of the Agreement espoused therein and is vigorously defending its interests, including seeking resolution from the bankruptcy court and payment of any outstanding amounts owed under the Agreement (subject to applicable bankruptcy law in the Celsius chapter 11 case).
−Removed: The parties have agreed to stay the proceedings, including the evidentiary hearing scheduled for November 18, 2022.
−Removed: There can be no guarantee that the bankruptcy court will rule in the Company’s favor in a timely manner or that Celsius will honor the terms of the Agreement.
−Removed: An adverse ruling by the bankruptcy court that provides Celsius the benefits of the Company’s hosting services without Celsius fully paying the costs of such services would have a material effect on the Company’s business, financial condition, results of operations and cash flows.
−Removed: In November 2022, Sphere 3D Corp.
−Removed: filed a demand for arbitration with JAMS alleging the existence and breach of a contract for hosting services.
−Removed: The arbitration demand alleges that the Company has failed to provide contracted for services and to return approximately $35 million in prepayments made by Sphere 3D for such services.
−Removed: The Company denies the allegations contained in Sphere 3D’s arbitration demand and intends to vigorously defend its interests.
−Removed: In November 2022, McCarthy Building Companies, Inc.
−Removed: filed a complaint against the Company in the United States District Court for the Eastern District of Texas, alleging breach of contract for failing to pay when due certain payments allegedly owing under a contract for construction entered into between the parties.
−Removed: In November 2022, plaintiff Mei Peng filed a putative class action in the United States District Court, Western District of Texas, Austin Division, asserting that the Company violated the Securities Exchange Act by failing to disclose to investors, among other things, that the Company was vulnerable to litigation, that certain clients had breached their agreements, and that this impacted the Company's profitability and ability to continue as a going concern.
−Removed: The Company denies the allegations contained in the complaint and intends to vigorously defend its interests.
From time to time, we are involved in various legal proceedings arising from the normal course of business activities.
1 unchanged sentence
We may receive unfavorable preliminary or interim rulings in the course of litigation, and there can be no assurances that favorable final outcomes will be obtained.
+Added: Notwithstanding the foregoing, any litigation pending against us and any claims that could be asserted against us that arose prior to December 21, 2022, (subject to certain exceptions) are automatically stayed as a result of the commencement of the Chapter 11 Cases pursuant to Section 362(a) of the Bankruptcy Code, subject to certain statutory exceptions.
+Added: Please refer to the discussion contained in Note 3 — Chapter 11 Filing and Other Related Matters and Note 8 — Commitments and Contingencies.
+Added: There have been no material changes to the risk factors set forth in Part I, Item 1A., “Risk Factors,” in the Company’s Annual Report on Form 10-K for fiscal year December 31, 2022, which was filed with the United States Securities and Exchange Commission on April 4, 2023.
+Added: Unregistered Sales of Equity Securities and Use of Proceeds
+Added: Defaults Upon Senior Securities
+Added: Mine Safety Disclosures
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.