What changed in this filing

/stocks — the workspaceLOADING

Item 1. Legal Proceedings

2023-05-22 compared with 2022-11-21 · 12 added, 101 removed, 23 unchanged (83% of the section changed)

LEGAL PROCEEDINGS

Blockchain Mining Supply and Services, Ltd.

On November 28, 2018, Blockchain

Mining Supply and Services, Ltd.

(“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 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

Mining filed an amended complaint (the “Amended Complaint”).

The Amended Complaint asserts the same causes of action and seeks

the same damages as the initial Complaint.

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

Company’s subsidiary admitted to the validity of the contract at issue and also asserted numerous affirmative defenses concerning

the proper calculation of damages.

On December 4, 2020, the Court

issued an Order directing the Parties to engage in limited discovery which was completed on March 4, 2021.

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.

On August 8, 2022, the Court

issued an Order denying the Motion to Dismiss, in its entirety.

On September 2, 2022, the

Company and its subsidiary filed an answer to the Amended Complaint and asserted numerous affirmative defenses.

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

On January 17, 2020, Ding

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 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.

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

The Complaint asserts causes

of action for declaratory judgment, specific performance, breach of contract, conversion, attorneys’ fees, permanent injunction,

enforcement of Guaranty, unjust enrichment, money had and received, and fraud arising from:

(i) a series of transactions entered into

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 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 (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.

On November 1, 2022, the parties

informed the Court that they reached a settlement in principle and requested an extension of time, until November 22, 2022, to file motions

for summary judgment to allow the parties time to draft formal settlement documents.

The Court granted the parties’ request and

the deadline for us and Mr.

Ault to file their summary judgment is November 22, 2022.

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

Litigation Matters

The Company is involved in

20 unchanged sentences

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

SEC Investigation

The Company and certain affiliates

and related parties received several subpoenas from the SEC for the production of documents and testimony in the non-public fact-finding

investigation referred to as In re DPW Holdings, Inc.

The Company and those parties have engaged in discussions with the SEC regarding

the matters at issue in the investigation, and those discussions have progressed.

No final resolution regarding the matters at issue in

the investigation has been reached however, and there can be no assurance as to the outcome of this matter.

The Company recorded a $1.0

million loss contingency related to this matter.

are no updates or changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2022.

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