What changed in this filing

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Item 1. Legal Proceedings

2022-05-23 compared with 2021-11-19 · 83 added, 82 removed, 32 unchanged (84% of the section changed)

3 unchanged sentences

Mining Supply and Services, Ltd.

(“Blockchain Mining”) a vendor who sold computers to the Company’s subsidiary, filed

a Complaint (the “Complaint”) in the United States District Court for the Southern District of New York against the Company

and the Company’s subsidiary, Digital Farms, Inc.

(f/k/a Super Crypto Mining, Inc.), in an action captioned Blockchain Mining

Supply and Services, Ltd.

Super Crypto Mining, Inc.

(“Blockchain Mining”) a vendor who sold computers to our subsidiary, filed a Complaint (the

“Complaint”) in the United States District Court for the Southern District of New York against us and our subsidiary, Digital

(f/k/a Super Crypto Mining, Inc.), in an action captioned Blockchain Mining Supply and Services, Ltd.

Super Crypto Mining,

and DPW Holdings, Inc.

The Complaint asserts claims

for breach of contract and promissory estoppel against the Company and its subsidiary arising from the subsidiary’s alleged failure

to honor its obligations under the purchase agreement.

The Complaint seeks monetary damages in excess of $1,388,495, plus attorneys’

fees and costs.

The Company intends to vigorously

defend against the claims asserted against it in this action.

On April 13, 2020, the Company

and its subsidiary, jointly filed a motion to dismiss the Complaint in its entirety as against us, and the promissory estoppel claim as

against its subsidiary.

On the same day, the Company’s subsidiary also filed a partial Answer to the Complaint in connection with

the breach of contract claim.

for breach of contract and promissory estoppel against us and our subsidiary arising from the subsidiary’s alleged failure to honor

its obligations under the purchase agreement.

The Complaint seeks monetary damages in excess of $1.4 million, plus attorneys’ fees

We believe that these claims

are without merit and intend to vigorously defend them.

On April 13, 2020, we and

our subsidiary, jointly filed a motion to dismiss the Complaint in its entirety as against us, and the promissory estoppel claim as against

our subsidiary.

On the same day, our subsidiary also filed a partial Answer to the Complaint in connection with the breach of contract

On April 29, 2020, Blockchain

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the same damages as the initial Complaint.

On May 13, 2020, the Company

and its subsidiary, jointly filed a motion to dismiss the Amended Complaint in its entirety as against the Company, and the promissory

estoppel claim as against of its subsidiary.

On the same day, the Company’s subsidiary also filed a partial Answer to the Amended

Complaint in connection with the breach of contract claim.

On May 13, 2020, we and our

subsidiary, jointly filed a motion to dismiss the Amended Complaint in its entirety as against us, and the promissory estoppel claim as

against of our subsidiary.

On the same day, our subsidiary also filed a partial Answer to the Amended Complaint in connection with the

breach of contract claim.

In its partial Answer, the

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On December 4, 2020, the Court

issued an Order directing the Parties to engage in limited discovery (the “Limited Discovery”) to be completed by March 4,

In connection therewith, the Court also denied the defendants’ motion to dismiss without prejudice.

On June 2, 2021, the Company

and its subsidiary filed a motion to dismiss the amended complaint in its entirety as against the Company, and the promissory estoppel

claim as against the subsidiary.

issued an Order directing the Parties to engage in limited discovery (the “Limited Discovery”) which was completed on March

In connection therewith, the Court also denied the previously filed motion to dismiss without prejudice.

On June 2, 2021, we and our

subsidiary filed a motion to dismiss (the “Motion to Dismiss”) the Amended Complaint in its entirety as against us, and the

promissory estoppel claim as against the subsidiary.

The Motion to Dismiss has

been fully briefed and is currently pending before the Court.

Based on the Company’s

assessment of the facts underlying the claims, the uncertainty of litigation, and the preliminary stage of the case, the Company cannot

reasonably estimate the potential loss or range of loss that may result from this action.

Notwithstanding, the Company has established

a reserve in the amount of the unpaid portion of the purchase agreement, which is included in accounts payable and accrued expenses.

unfavorable outcome may have a material adverse effect on the Company’s business, financial condition and results of operations.

Based on our assessment of

the facts underlying the claims, the uncertainty of litigation, and the preliminary stage of the case, we cannot reasonably estimate the

potential loss or range of loss that may result from this action.

Notwithstanding, we have established a reserve in the amount of the

unpaid portion of the purchase agreement.

An unfavorable outcome may have a material adverse effect on our business, financial condition

and results of operations.

Ding Gu (a/k/a Frank Gu) and Xiaodan Wang Litigation

1 unchanged sentence

Gu (a/k/a Frank Gu) (“Gu”) and Xiaodan Wang (“Wang” and with “Gu” collectively, “Plaintiffs”),

filed a Complaint (the “Complaint”) in the Supreme Court of the State of New York, County of New York against the Company

and the Company’s Chief Executive Officer, Milton C.

Ault, III, in an action captioned Ding Gu (a/k/a Frank Gu) and Xiaodan Wang

filed a Complaint (the “Complaint”) in the Supreme Court of the State of New York, County of New York against us and our Chief

Executive Officer, Milton C.

Ault, III, in an action captioned Ding Gu (a/k/a Frank Gu) and Xiaodan Wang v.

DPW Holdings, Inc.

and Milton C.

Ault III (a/k/a Milton Todd Ault III a/k/a Todd Ault) , Index No.

4 unchanged sentences

between Gu and us, as well as Gu and Ault, in or about May 2019;

and (ii) a term sheet entered into between Plaintiffs and the Company,

in or about July 2019.

The Complaint seeks, among other things, monetary damages in excess of $1.1 million, plus a decree of specific

performance directing the Company to deliver unrestricted shares of common stock to Gu, plus attorneys’ fees and costs.

The Company intends to vigorously

defend against the claims asserted against it in this action.

On May 4, 2020, the Company

and Ault jointly filed a motion to dismiss the Complaint in its entirety, with prejudice.

and (ii) a term sheet entered into between Plaintiffs and DPW, in or

about July 2019.

The Complaint seeks, among other things, monetary damages in excess of $1.1 million, plus a decree of specific performance

directing DPW to deliver unrestricted shares of DPW’s common stock to Gu, plus attorneys’ fees and costs.

We believe that these claims

are without merit and intend to vigorously defend them.

On May 4, 2020, we and Ault

jointly filed a motion to dismiss the Complaint in its entirety, with prejudice (the “Motion to Dismiss”).

On July 28, 2021, the Court

conducted oral argument in connection with the motion to dismiss.

During the oral argument, the Court informed the parties that the Court

was dismissing the fraud claim, in its entirety, and provided Plaintiffs an opportunity to amend their fraud claim within sixty days of

the date of the oral argument.

The Court reserved decision on the other causes of action.

Based on the Company’s

assessment of the facts underlying the above claims, the uncertainty of litigation, and the preliminary stage of the case, the Company

cannot reasonably estimate the potential loss or range of loss that may result from this action.

An unfavorable outcome may have a material

adverse effect on the Company’s business, financial condition and results of operations.

The Company received a subpoena

from the SEC for the voluntary production of documents.

The Company is fully cooperating with this non-public, fact-finding inquiry and

Management believes that the Company has operated its business in compliance with all applicable laws.

The subpoena expressly provides

that the inquiry is not to be construed as an indication by the SEC or its staff that any violations of the federal securities laws have

occurred, nor should it be considered a reflection upon any person, entity or security.

However, there can be no assurance as to the outcome

of this matter.

conducted oral argument (the “Oral Argument”), via Microsoft Teams, in connection with the Motion to Dismiss.

the Oral Argument, the Court informed the parties that the Court would be dismissing the fraud claim, in its entirety, and provided Plaintiffs

an opportunity to amend their fraud claim within sixty days of the date of the Oral Argument.

The Court reserved decision on the

other causes of action.

On December 14, 2021, the

Court entered a Decision and Order in connection with the Motion to Dismiss (the “Order”) whereby the Court dismissed Plaintiff’s

causes of action for specific performance, conversion, permanent injunction, and reiterated its prior determination that the fraud claim

was also dismissed.

The Court denied the Motion to Dismiss in connection with the other causes of action asserted in the Complaint.

On January 26, 2022, we and

Ault filed an Answer to the Complaint and asserted numerous affirmative defenses.

Based on our assessment of

the facts underlying the above claims, the uncertainty of litigation, and the preliminary stage of the case, we cannot reasonably estimate

the potential loss or range of loss that may result from this action.

An unfavorable outcome may have a material adverse effect on our

business, financial condition and results of operations.

The Company and certain affiliates

and related parties have received several subpoenas from the SEC for the production of documents and testimony.

The Company is fully cooperating

with this non-public, fact-finding inquiry and management believes that the Company has operated its business in compliance with all applicable

The subpoenas expressly provide that the inquiry is not to be construed as an indication by the Commission or its staff that any

violations of the federal securities laws have occurred, nor should they be considered a reflection upon any person, entity or security.

However, there can be no assurance as to the outcome of this matter.

Other Litigation Matters

1 unchanged sentence

litigation arising from other matters in the ordinary course of business.

The Company is regularly subject to claims, suits, regulatory

and government investigations, and other proceedings involving labor and employment, commercial disputes, and other matters.

suits, regulatory and government investigations, and other proceedings could result in fines, civil penalties, or other adverse consequences.

We are regularly subject to claims, suits, regulatory and government

investigations, and other proceedings involving labor and employment, commercial disputes, and other matters.

Such claims, suits, regulatory

and government investigations, and other proceedings could result in fines, civil penalties, or other adverse consequences.

Certain of these outstanding

matters include speculative, substantial or indeterminate monetary amounts.

The Company records a liability when it believes that it is

probable that a loss has been incurred and the amount can be reasonably estimated.

If the Company determines that a loss is reasonably

possible and the loss or range of loss can be estimated, the Company discloses the reasonably possible loss.

The Company evaluates developments

in its legal matters that could affect the amount of liability that has been previously accrued, and the matters and related reasonably

possible losses disclosed, and makes adjustments as appropriate.

Significant judgment is required to determine both likelihood of there

being and the estimated amount of a loss related to such matters.

With respect to the Company’s

other outstanding matters, based on the Company’s current knowledge, the Company believes that the amount or range of reasonably

possible loss will not, either individually or in aggregate, have a material adverse effect on the Company’s business, consolidated

financial position, results of operations, or cash flows.

However, the outcome of such matters is inherently unpredictable and subject

to significant uncertainties.

We record a liability when we believe that it is probable

that a loss has been incurred and the amount can be reasonably estimated.

If we determine that a loss is reasonably possible and the loss

or range of loss can be estimated, we disclose the reasonably possible loss.

We evaluate developments in our legal matters that could

affect the amount of liability that has been previously accrued, and the matters and related reasonably possible losses disclosed, and

make adjustments as appropriate.

Significant judgment is required to determine both likelihood of there being and the estimated amount

of a loss related to such matters.

With respect to our other

outstanding matters, based on our current knowledge, we believe that the amount or range of reasonably possible loss will not, either

individually or in aggregate, have a material adverse effect on our business, consolidated financial position, results of operations,

or cash flows.

However, the outcome of such matters is inherently unpredictable and subject to significant uncertainties.

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.

What changed 10-Q

Item 1. Legal Proceedings