v3.26.1
Note 16 - Commitments and Contingencies
9 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]

Note 16:  Commitments and Contingencies 

 

Litigation

 

SEC Investigation

 

The Company and certain of its executive officers are defendants in a civil enforcement action filed by the Securities and Exchange Commission (“SEC”) on August 2, 2021, in the United States District Court for the District of Nevada. The SEC’s Amended Complaint alleges various violations of the federal securities laws related to the Company’s financial reporting, disclosures, and executive compensation during the period from 2016 through 2018. The SEC seeks remedies including permanent injunctions, officer‑and‑director bars, disgorgement, and civil penalties. The Company and the executive officers deny the allegations.

 

On October 1, 2021, the Company Defendants and third-party defendants moved to dismiss the SEC complaint. On September 7, 2022, the court denied the Company Defendants’ Motion to Dismiss but granted one of the third-party defendant’s Motions to Dismiss, granting the SEC leave to file an Amended Complaint. On September 21, 2022, the SEC filed an Amended Complaint to which the Company Defendants filed an Answer on October 11, 2022, denying liability. The court subsequently entered a discovery scheduling order, and the parties exchanged initial disclosures. The parties participated in a mediation in June 2023. The mediation was not successful. Fact discovery was completed on May 20, 2024. The parties completed expert discovery in September 2024 and filed cross Motions for Summary Judgment in October 2024. On February 10, 2026, the Court entered an order denying the parties’ cross motions for summary judgment. The Court has not yet set a trial date for this matter.

 

Sieggreen Class Action

 

On August 13, 2021, Daniel E. Sieggreen, individually and on behalf of all others similarly situated claimants (the "Plaintiff"), filed a class action Complaint for violation of federal securities laws in the United States District Court for the District of Nevada, naming the Company, Jon Isaac, the Company's current President and Chief Executive Officer, and Virland Johnson, the Company's former Chief Financial Officer, as defendants (collectively, the "Company Defendants"). The allegations asserted are similar to those in the SEC Complaint. Among other sought relief, the complaint seeks damages in connection with the purchases and sales of the Company’s securities between December 28, 2016 and August 3, 2021. As of December 17, 2021, the judge granted a stipulation to stay proceedings pending the resolutions of the Motions to Dismiss in the SEC Complaint. 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. Plaintiff filed an Amended Complaint on March 6, 2023. On May 5, 2023, the Company Defendants filed a Motion to Dismiss the Amended Complaint. The Motion to Dismiss was heard and granted with Leave to Amend on September 30, 2024. The Second Amended Complaint was filed on October 31, 2024. We filed a Motion to Dismiss the Second Amended Complaint on December 16, 2024 and the briefing is complete. On September 30, 2025, the Court denied the motion to dismiss the Second Amended Complaint. The Company filed its response on December 1, 2025, and the parties are currently engaged in discovery. On July 27, 2026, the Court continued the class certification deadline to November 13, 2026, while discovery remains ongoing.

 

Wage and Hour Matter

 

On July 27, 2022, Irma Sanchez, a former employee of Elite Builder Services, Inc. (“Elite Builders”), filed a class action Complaint against Elite Builders in the Superior Court of California, County of Alameda, which case was transferred to Stanislaus Count. 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. The Complaint was later amended as a matter of right on October 4, 2022. Further, Ms. Sanchez has put the Labor & Workforce Development Agency on notice of her intention to exhaust administrative remedies and enable her to bring an additional claim under the California Labor Code Private Attorneys General Act, which permits an employee to assert a claim for violations of certain California Labor Code provisions on behalf of all aggrieved employees to recover statutory penalties. The parties agreed to participate in mediation and exchanged materials in preparation. Counsel for the plaintiff has requested multiple extensions of the mediation timeline and did not meet a previously scheduled discovery‑related deadline. The case management conference, which had been scheduled for August 3, 2026, was continued to December 7, 2026, with mediation anticipated to occur in October 2026.

 

General

 

The Company is involved in various claims and lawsuits arising in the normal course of business. The ultimate results of claims and litigation cannot be predicted with certainty. The Company currently believes that the ultimate outcome of such lawsuits and proceedings will not, individually, or in the aggregate, have a material adverse effect on our unaudited condensed consolidated financial position, results of operations or cash flows. As applicable, liabilities pertaining to these matters, that are probable and estimable, have been accrued.