Item 3. Legal Proceedings
ITEM 3. LEGAL PROCEEDINGS
The Company is subject from time to time to a number of lawsuits, including claims relating to competition, intellectual property rights, alleged libel or defamation, employment and labor matters, personal injury and property damage, free speech, customer privacy, regulatory requirements, and advertising, marketing and selling practices. Except as set forth below, the Company is currently not aware of any legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on the Company’s business, financial condition or operating results. For more information, see “Risk Factors – Risks Related to Legal and Regulatory Matters”.
On August 10, 2021, Dominion Voting Systems Corporation, Inc. or certain of its affiliates, an election technology company, filed a complaint against Newsmax Media in the Superior Court of the State of Delaware for defamation in connection with our coverage of the 2020 Presidential election, seeking up to $1.6 billion in compensatory damages as well as punitive damages. Discovery in the Dominion cases, including depositions and expert discovery, remains ongoing. At this time, a trial in the Dominion lawsuit is not expected to commence until April 28, 2025. Newsmax Media believes that it offered balanced and fair coverage in the dispute over the 2020 elections and the Dominion case is without merit and it has and will continue to vigorously defend against such suit. As of the date of this Annual Report, Newsmax is unable to predict the final outcome of the Dominion matter and cannot reasonably estimate the amount of its liability, if any. However, an unfavorable outcome in the Dominion matter could have a material adverse effect on Newsmax’s financial position, results of operations and cash flows.
In addition, on November 3, 2021, Smartmatic USA Corp. or certain of its affiliates, another election technology company, filed a complaint against Newsmax Media in the Superior Court of the State of Delaware for defamation, seeking compensatory, consequential and punitive damages to be determined at trial. Newsmax Media reached a settlement agreement with Smartmatic on September 26, 2024, pursuant to which all claims will be released by Smartmatic for consideration, including a cash amount of approximately $40 million payable over time and granted a five year warrant to purchase 2,000 of class B preferred stock at an exercise price of $5,000 per share. Management believes the settlement with Smartmatic will, subject to the payment of all consideration in a timely manner, reduce then eliminates future legal expenses the Company would have expected to bear related to this suit, which could have included costly appellate legal actions and other matters. The Smartmatic settlement agreement is subject to reaching a definitive settlement agreement that is approved by the court. Refer to Note 12. Legal for details of the settlement.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
41
PART II