What changed in this filing

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Item 1. Legal Proceedings

2024-08-14 compared with 2024-05-15 · 41 added, 20 removed, 49 unchanged (55% of the section changed)

Legal Proceedings

As of March 31, 2024, there were no material pending legal proceedings to which the Company is a party or as to which any of its property is subject other than as described below.

As of June 30, 2024, there were no material pending legal proceedings to which the Company is a party or as to which any of its property is subject other than as described below.

Securities Litigation.

As previously reported, the U.S.

Court of Appeals for the Ninth Circuit issued an opinion earlier this year affirming in part and reversing in part the District Court’s prior dismissal of the Securities Litigation.

The case has now been remanded to the District Court for further proceedings.

In early June, the District Court directed Defendants to file a renewed motion to dismiss focused on the matters that remain in the case.

Consistent with that order, Defendants filed their renewed motion on July 29, 2024.

As previously disclosed, the Company, its Chief Executive Officer Andy Heyward, and its former Chief Financial Officer Robert Denton were named as defendants in a putative class action lawsuit filed in the U.S.

6 unchanged sentences

and in a decision issued on August 30, 2021, the Court dismissed the amended complaint but granted lead plaintiffs a further opportunity to plead a claim.

On September 27, 2021, lead plaintiffs filed a second amended complaint, naming the same defendants.

The new complaint alleged again that the Company made numerous false or misleading statements about the Company’s business and business prospects, this time over an expanded alleged class period that extended into March 2021;

In September 2021, lead plaintiffs filed a second amended complaint, naming the same defendants.

The new complaint alleged again that the Company made numerous – depending on how one counted, more than two dozen -- false or misleading statements about the Company’s business and business prospects, this time over an expanded alleged class period that extended into March 2021;

they again alleged that these misstatements violated Section 10(b) and 20(a) of the Exchange Act.

Lead plaintiffs again sought unspecified damages on behalf of an alleged class of persons who invested in the Company’s common stock during the expanded alleged class period.

In November 2021, defendants filed a motion to dismiss the second amended complaint.

In November 2021, the defendants filed a motion to dismiss the second amended complaint.

On July 15, 2022, the Court issued a decision dismissing the second amended complaint in its entirety and with prejudice.

On August 12, 2022, lead plaintiffs filed a notice of appeal to the United States Court of Appeals for the Ninth Circuit.

After full briefing of the appeal, a panel of the Court of Appeals held oral argument on the appeal on November 6, 2023, and took the matter under submission.

After a full briefing of the appeal, a panel of the Court of Appeals held oral argument on the appeal on November 6, 2023, and took the matter under submission.

On April 5, 2024, the Appellate Court issued its opinion, affirming in part and reversing in part the decision of the District Court.

The Appellate Court affirmed the dismissal of certain claims pertaining to Company statements where it found the Plaintiffs failed to adequately plead loss causation, but reversed the lower court’s dismissal of claims related to other Company statements, finding that, in those other instances, the Plaintiffs adequately pleaded loss causation.

The matter is now remanded to the U.S.

District Court for the Central District of California for further proceedings on the Plaintiffs remaining claims.

The Company cannot predict the outcome of the further proceedings upon remand to the District Court.

The Appellate Court affirmed the dismissal of certain claims pertaining to Company statements where it found that Plaintiffs failed to adequately plead a 10(b) cause of action but reversed the lower court’s dismissal of claims related to four of the Company’s alleged misstatements, finding that, in three of those instances, the Plaintiffs adequately pleaded loss causation, and in one instance adequately alleged a misleading statement.

The Court of Appeals did not address other elements of any claims based on these four complained-of statements, noting that the District Court should address those issues on remand.

The matter was remanded to the District Court in May 2024.

By order entered June 4, 2024, the Court directed the defendants to file a renewed motion to dismiss on a schedule to be proposed by the parties.

Defendants filed that motion on July 29, 2024.

Under an agreed, and court-ordered, briefing schedule, briefing of the motion is expected to extend into October 2024, with a hearing scheduled for early November.

The Company cannot predict the outcome of the renewed motion to dismiss Plaintiffs’ remaining claims based on the four remaining alleged misstatements, or the outcome of the case more generally.

Shareholder Derivative Actions.

Since my last report, there have been no developments in the shareholder derivative actions involving the Company.

Related to the securities class action, the Company’s directors (other than Dr.

Cynthia Turner-Graham, Stefan Piech and former director Michael Hirsh), together with Messrs.

Cynthia Turner-Graham, Michael Hirsh, and Stefan Piech), together with Messrs.

Heyward and Denton and former director Michael Klein, have been named as defendants in several putative stockholder derivative lawsuits.

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Pursuant to agreements among the parties, the courts in all of the derivative lawsuits have stayed proceedings pending the outcome of the securities class action.

The Company cannot predict the impact of the forthcoming decision on the appeal of the dismissal of the securities class action on the shareholder derivative lawsuits.

As the Company cannot predict the outcome of the securities class action, it is likewise unable to predict the outcome of the shareholder derivative lawsuits.

Section 16(b) Litigation.

As previously reported, the Company is also a nominal defendant in an action filed on January 11, 2022, in the U.S.

11 unchanged sentences

Defendants moved to dismiss again.

After full briefing and oral argument, the Court (with a new judge now sitting) denied the motion to dismiss by order entered January 24, 2024.

Discovery is now open, and Plaintiff has propounded initial document requests to the Defendants, the Company, and multiple third parties including Mr.

Following formal responses to the discovery requests, meet-and-confer discussions are currently underway concerning the scope of anticipated document productions.

After a full briefing and oral argument, the Court (with a new judge now sitting) denied the motion to dismiss by order entered on January 24, 2024.

Discovery is now open, and Plaintiff has propounded document requests to the Defendants, the Company, and multiple third parties including Mr.

Heyward and an entity that Mr.

Heyward controls.

Following formal responses to the discovery requests and meet-and-confer discussions concerning the scope of anticipated document productions, certain discovery matters have been resolved by the Court.

The parties anticipate that there will be additional discovery disputes presented to the Court.

On February 23, 2024, the Court entered a case scheduling order that contemplates completion of discovery by September 30, 2024, followed by dispositive motions before year-end.

1 unchanged sentence

As noted, Plaintiff seeks no relief from the Company;

indeed, the Plaintiff seeks monetary relief for the Company.

indeed, he seeks monetary relief for the Company.

In any event, the Company cannot predict the outcome of the case.

In connection with the Augenbaum lawsuit, two of the investor groups named as defendants (the “demanding defendants”) have made a demand on the Company for indemnification pursuant to terms of an indemnity provision of the securities purchase agreements under which they invested in the Company.

The Company believes the indemnity provision to be inapplicable and has rejected the demands.

The Company and the demanding defendants have entered into standstill agreements and the parties have agreed to defer resolution of the indemnification matter until after certain milestone events in the underlying litigation.

In addition, the Company’s placement agent for the offerings at issue, Special Equities Group (“SEG”), has been subpoenaed by Mr.

Pursuant to its placement-agent agreement with the Company, which covers a relationship broader than the offerings at issue, SEG has demanded indemnification

from the Company for its legal fees to comply with that subpoena.

While reserving its rights, the Company believes that SEG has an indemnity claim under the governing placement agent agreement that likely has more merit than the demanding defendants’ demands.

The Company cannot predict whether other parties may issue indemnification demands, or the outcome of any future proceedings that might arise concerning the such demands.

Demand Letter.

The Company received a demand letter from Dawson James Securities (“Dawson”) on or about April 22, 2024, alleging it was owed commissions and fees arising from the Company’s offering of securities announced on April 18, 2024.

The Company disputes Dawson’s asserted entitlement to commissions and fees.

In all of the above-mentioned active proceedings, the Company has denied and continues to deny any wrongdoing and intends to defend the claims vigorously.

The Company maintains a program of directors’ and officers’ liability insurance that, subject to the insurers’ reservations of rights, has offset a portion of the costs of defending the securities class action litigation, and that the Company expects will afford coverage for some costs of the other shareholder litigation should any of those cases proceed.

There have been no material changes to the Risk Factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2023.

Unregistered Sales of Equity Securities and Use of Proceeds

Defaults Upon Senior Securities

Mine Safety Disclosures

Not applicable.

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