Legal Proceedings
−Removed: Please refer to "Item 3.
−Removed: Legal Proceedings" in our Annual Report on Form 10-K for the year ended September 30, 2022 for information regarding material pending legal proceedings.
+Added: Please refer to “Item 3.
+Added: Legal Proceedings”
+Added: in our 2021 Annual Report on Form 10-K for information regarding material pending legal proceedings.
Except as set forth therein and below, there have been no new material legal proceedings and no material developments in the legal proceedings previously disclosed.
+Added: SEC Investigation
On February 21, 2018, the Company received a subpoena from the Securities and Exchange Commission (“SEC”) and a letter from the SEC stating that it is conducting an investigation.
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and Section 17(a) of the Securities Act of 1933.
−Removed: The SEC seeks permanent injunctions against the Defendants, officer-and-director bars, disgorgement of profits, and civil penalties.
+Added: The SEC seeks permanent injunctions against the Company Defendants, officer-and-director bars, disgorgement of profits, and civil penalties.
The foregoing is only a general summary of the SEC Complaint, which may be accessed on the SEC’s website at https://www.sec.gov/litigation/litreleases/2021/lr25155.htm.
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On September 21, 2022, the SEC filed an amended complaint to which the Company Defendants filed an answer on October 11, 2022, denying liability.
−Removed: One third-party defendant moved to dismiss the amended complaint.
The court subsequently entered a discovery scheduling order and the parties exchanged initial disclosures.
−Removed: On February 1, 2023, the court denied the third-party defendant’s motion to dismiss the amended complaint.
−Removed: The parties have agreed to participate in a mediation and to continue the remainder of discovery until after the mediation, scheduled to take place in April 2023.
+Added: The parties have agreed to participate in a mediation and to continue the remainder of discovery until after the mediation, scheduled to take place in June 2023.
The Company Defendants strongly dispute and deny the allegations and intend to continue to defend themselves vigorously against the claims.
+Added: Sieggreen Class Action
On August 13, 2021, Daniel E.
−Removed: Sieggreen, individually and on behalf of all others similarly situated, filed a class action complaint for violation of federal securities laws in the United States District Court for the District of Nevada, naming as defendants the Company and the two executive officers named in the SEC Complaint.
+Added: Sieggreen, individually and on behalf of all others similarly situated, filed a class action complaint for violation of federal securities laws in the United States District Court for the District of Nevada, naming as defendants the Company and the two executive officers named in the SEC Complaint described above.
The allegations asserted are similar to those in the SEC Complaint.
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On February 1, 2023, the final motion to dismiss relating to the SEC Complaint was denied, which was subsequently noticed in the Sieggreen action on February 2, 2023.
−Removed: As a result, the plaintiff in this action has until on or about April 3, 2023 to file an amended complaint.
−Removed: The Company and its executives anticipate moving to dismiss the amended complaint as they strongly dispute and deny the allegations at issue in this case and intend to continue to defend themselves vigorously against these claims.
+Added: Plaintiff filed his Amended Complaint on March 6, 2023.
+Added: On May 5, 2023, the Company and its executives filed a Motion to Dismiss the Amended Complaint.
+Added: They strongly dispute and deny the allegations at issue in this case and intend to continue to defend themselves vigorously against these claims.
Holdback Matter
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The complaint alleges that the Company violated the terms of an agreement and plan of merger dated July 14, 2020, by failing to pay the shareholders a certain indemnity holdback of $2,500,000.
−Removed: Plaintiff alleges that it effectuated service of the complaint on Company, but the Company did not receive notification of the action until it received an Application for Default Judgment filed with the court on December 26, 2022.
+Added: Plaintiff alleged that he effectuated service of the complaint on the Company, but the Company did not receive notification of the action until it received an Application for Default Judgment filed with the court on December 26, 2022.
On December 28, 2022, the Court issued a letter order questioning its jurisdiction over the matter and directed plaintiff’s counsel to submit briefing as to why it believes jurisdiction is proper.
Plaintiff filed its brief on January 13, 2023.
−Removed: The court has not ruled as to whether it will exercise jurisdiction over the matter.
−Removed: The Company’s counsel has had contacted plaintiff’s counsel regarding the case and advised that the Company denies the allegations waged against it in the complaint and that it will abide by the court’s ruling on the threshold jurisdictional issue.
−Removed: The case will proceed once the court rules on the jurisdictional issue at which point the Company will vigorously defend against these claims.
+Added: On April 13, 2023, the Court dismissed the action in its entirety for lack of jurisdiction, rendering the Application for Default Judgment moot.
+Added: On January 12, 2023, and after jurisdiction over the case was questioned by the Court of Chancery, State of Delaware, plaintiff filed a substantially identical complaint in the Western District of Pennsylvania.
+Added: After the Delaware action was dismissed, plaintiff requested that counsel waive service of the Pennsylvania complaint.
+Added: On April 19, 2023, the Company agreed to waive service.
+Added: The Company’s response to the Complaint is now due on June 19, 2023.
+Added: The Company intends to defend against these claims vigorously.
Wage and Hour Matter
−Removed: On July 27, 2022, Irma Sanchez, a former employee Elite Builder Services, Inc.
−Removed: (“Elite Builders”) (see Note 17 above), filed a class action complaint against Elite Builders in the Superior Court of California, County of Alameda.
+Added: On July 27, 2022, Irma Sanchez, a former employee of Elite Builder Services, Inc.
+Added: (“Elite Builders”), filed a class action complaint against Elite Builders in the Superior Court of California, County of Alameda.
The complaint alleges that Elite Builders failed to pay all minimum and overtime wages, failed to provide lawful meal periods and rest breaks, failed to provide accurate itemized wage statements, and failed to pay all wages due upon separation as required by California law.
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The hearing on the motion was heard on February 8, 2023.
−Removed: The Company believes that Ms.
−Removed: Sanchez’s claims lack merit and intends to vigorously defend this action.
+Added: Elite Builders’
+Added: motion to change venue was granted.
+Added: Company believes that Mr.
+Added: Sanchez’s claims lack merit and intends to defend this action vigorously.
The Company is currently unable to estimate the range of possible losses associated with this proceeding since no discovery has commenced and the scope of class is not yet known.
+Added: Consumer Protection Act
+Added: On December 4, 2022, Sheila Thompson and Dennis Thompson filed a Complaint in the 21st Judicial Circuit Court of St.
+Added: Louis County, Missouri asserting putative class claims arising under the Telephone Consumer Protection Act, 47 U.S.C.
+Added: 227, and related Missouri state law claims pertaining to purportedly unsolicited text message advertisements.
+Added: Vintage Stock, Inc.
+Added: (“Vintage”) was served on December 13, 2022.
+Added: On January 11, 2023, Vintage timely removed the case from the state court into federal court.
+Added: On February 8, 2023, Vintage filed a Motion to Dismiss and Motion to Strike Class Allegations.
+Added: On March 1, 2023, plaintiffs filed their First Amended Complaint, that mooted the pending motion.
+Added: On March 15, 2023, Vintage moved to dismiss and/or strike the First Amended Complaint.
+Added: The motion is fully briefed and stands submitted to the Court for decision.
+Added: Vintage disputes the allegations and intends to defend itself vigorously against the claims in the First Amended Complaint.
+Added: As the case is still in the pleading stage, it is premature to estimate potential liability.
+Added: Salomon Whitney Settlement
+Added: Effective March 31, 2023, the Company entered into a settlement agreement with the Principal ownership of Salomon Whitney to pay the Company $1.0 million within 10 days of the effective date, and agreed to pay an additional $1.0 million within 45 days of the effective date if certain conditions of the settlement agreement are not met.
+Added: The Company recorded a receivable for the initial payment of $1.0 million on March 31, 2023, which it has recorded as other income in its condensed consolidated statements of income, and payment was received during the first week of April 2023..
Ri sk Factors
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.