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Mr. Sulentic's representation of Lead Plaintiff John Mark Stauffer in this case is hereby terminated. Entered by Magistrate Judge Cyrus Y. Chung on 03/02/2026. Text Only Entry.(agryan) (Entered: 03/02/2026)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/481814735/","id":481814735,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/69445977/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/497572630/","id":497572630,"tags":[],"absolute_url":"/docket/69445977/65/garson-v-dmc-global-inc/","date_created":"2026-10-16T10:45:27.671932-07:00","date_modified":"2026-10-16T10:45:27.671954-07:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"65","attachment_number":null,"pacer_doc_id":"","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"","acms_document_guid":""}],"date_created":"2026-10-16T10:45:27.640911-07:00","date_modified":"2026-10-16T10:45:27.647400-07:00","date_filed":"2026-03-02","time_filed":null,"entry_number":65,"recap_sequence_number":"2026-03-02.001","pacer_sequence_number":null,"description":"MEMORANDUM regarding 64 MOTION to Withdraw as Attorney filed by John Mark Stauffer. Motion referred to Magistrate Judge Cyrus Y. Chung by District Judge Gordon P Gallagher on 03/02/2026. 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Gallagher\n\nCivil Action No. 24-cv-03387-GPG-CYC\n       Consolidated with Civil Action No. 25-cv-00277-GPG-CYC\n\nSAMUEL GARSON, Individually and On Behalf of All Others Similarly Situated,\n\n        Plaintiff,\n\nv.\n\nDMC GLOBAL INC.,\nMICHAEL KUTA,\nERIC V. WALTER, and\nBRETT SEGER,\n\n        Defendants.\n\n\n                                                 ORDER\n\n\n        Before the Court is Defendants\u2019 Motion to Dismiss Lead Plaintiff\u2019s Consolidated Amended\n\nComplaint (D. 57). The Court GRANTS the motion for the following reasons.\n\n                                          I. BACKGROUND\n\n        Plaintiff brings a private security class action.1 Defendant DMC Global Inc. (DMC) is a\n\npublicly traded company incorporated in Colorado. Defendants Michael Kuta, Eric V. Walter, and\n\nBrett Seger are executives or former executives of DMC.\n\n\n\n\n1\n The Court draws the operative facts from the Consolidated Amended Class Action Complaint for Violation of the\nFederal Securities Laws and Jury Demand (Complaint) (D. 47).\n\n                                                      1\n\fCase No. 1:24-cv-03387-GPG-CYC                      Document 67           filed 03/20/26          USDC Colorado\n                                                    pg 2 of 18\n\n\n\n\n           On December 23, 2021, DMC acquired a 60% controlling stake in Arcadia Products, LLC\n\n(Arcadia)2 for $282.5 million in cash and DMC stock. Arcadia \u201csupplies architectural building\n\nproducts, including exterior and interior framing systems, curtain walls, windows, doors, and\n\ninterior partitions to the commercial construction market; it also supplies customized windows and\n\ndoors to the high-end residential construction\u201d (D. 47 at 10). Arcadia\u2019s recent performance was\n\nvery strong prior to the acquisition. It did not fare so well after the acquisition, primarily due to\n\nmarket changes such as increased interest rates that slowed the construction market.\n\n           Although Plaintiff Samuel Garson does not allege misconduct in relation to the acquisition,\n\nsome aspects of the acquisition are relevant to the claims. \u201cAt the time of the Arcadia Acquisition,\n\nDMC\u2019s total market capitalization was approximately $688.5 million, based on a closing share\n\nprice of $36.74 on December 16, 2021\u201d (D. 47 at 13). \u201cTo fund a portion of the purchase price for\n\nthe acquisition, DMC entered into a new five-year syndicated credit facility, which included a\n\n$150 million term loan and a $50 million revolving line of credit . . . used to partially fund the\n\nacquisition\u201d (id. at 13\u201314). The seller \u201chad its own option, enabling [it] to sell its remaining 40%\n\ninterest to DMC through a corresponding three-year put option\u201d (id. at 14). With this put option,\n\nthe seller \u201ccould obligate DMC to buy the remaining 40% of Arcadia that it did not own on or after\n\nthe third anniversary of the Arcadia transaction (i.e., December 23, 2024)\u201d with \u201c20% in cash and\n\n80% in shares\u201d (id. at 15).\n\n           Because DMC paid a premium for Arcadia, there was some special accounting treatment.\n\n\u201cWhenever a public company acquires another entity for more than the target\u2019s book value, a new\n\nasset called \u2018goodwill\u2019 is created\u201d (D. 47 at 16). Goodwill corresponds to the \u201cportion of the\n\n\n2\n    The Court also uses the term Arcadia to refer to the acquired Arcadia operating within DMC.\n                                                           2\n\fCase No. 1:24-cv-03387-GPG-CYC                  Document 67          filed 03/20/26      USDC Colorado\n                                                pg 3 of 18\n\n\n\n\npurchase price above the net fair value of all of the assets purchased (i.e., the target company\u2019s\n\nbook value)\u201d (id.). \u201cBecause DMC paid $282.5 million for Arcadia, and recorded $141.2 million\n\nin corresponding goodwill, that means the book value of Arcadia at the time that DMC bought it\n\nwas $141.3 million (because goodwill is just the difference between the purchase price and the\n\nbook value, so rearranging those figures, purchase price minus goodwill equals book value)\u201d (id.).\n\nDMC\u2019s Form 10-K filed after the acquisition explained:\n\n                  Goodwill represents the amount by which the purchase price\n                  exceeds the fair value of identifiable tangible and intangible assets\n                  and liabilities acquired in a business combination. Goodwill\n                  acquired in a business combination and determined to have an\n                  indefinite useful life is not amortized, but instead is tested for\n                  impairment at least annually during the fourth quarter or whenever\n                  events or changes in circumstances indicate that the carrying value\n                  might not be fully recoverable. For goodwill, impairment is assessed\n                  at the reporting unit level. A reporting unit is defined as an operating\n                  segment or a component of an operating segment to the extent\n                  discrete financial information is available that is reviewed by\n                  segment management.\n\n                  As of and for the year ended December, 31, 2021, all goodwill\n                  recorded within the Consolidated Balance Sheet relates to the\n                  Arcadia acquisition. Given the proximity of the acquisition date to\n                  the balance sheet date, a quantitative impairment assessment was not\n                  deemed necessary of performance. No goodwill was outstanding as\n                  of and for the year ended December 31, 2020.\n\n(id. at 16\u201317).\n\n        Plaintiff\u2019s theory of liability is that Defendants \u201crepeatedly overstated DMC\u2019s income3 and\n\nassets by failing to impair goodwill attributed to DMC\u2019s acquisition of [Arcadia], despite mounting\n\nevidence and glaring red flags that such impairment was not only necessary, but obvious and\n\n\n\n3\n Although the Complaint references income here, there are no allegations that Defendants misrepresented DMC or\nArcadia\u2019s gross income.\n                                                      3\n\fCase No. 1:24-cv-03387-GPG-CYC                Document 67        filed 03/20/26      USDC Colorado\n                                              pg 4 of 18\n\n\n\n\ninevitable\u201d (D. 47 at 5). Plaintiff alleges four misleading statements made during the period\n\nbetween the acquisition and DMC taking a goodwill impairment based on Arcadia\u2019s poor\n\nperformance:\n\n       1. January 29, 2024 Press Release stating in relevant part:\n\n                 DMC Global [] today announced its board of directors (\u201cthe Board\u201d)\n                 has initiated a review of strategic alternatives for its DynaEnergetics\n                 and NobelClad businesses.\n\n                 The strategic review process formalizes DMC\u2019s ongoing efforts\n                 over the past several months to consider opportunities for unlocking\n                 shareholder value. The Board has retained a financial advisor and\n                 may retain other advisors to assist the Board in evaluating DMC\u2019s\n                 current strategy, operations, and capital structure. The Board will\n                 consider various strategic, business, and financial alternatives for\n                 DMC\u2019s DynaEnergetics and NobelClad businesses. These could\n                 include, among other things, a sale, a merger or other business\n                 combination of a portion of DMC\u2019s business-unit assets, and/or a\n                 strategic investment.\n\n                 David Aldous, DMC\u2019s chairman, said, \u201cOne year ago, we began\n                 evaluating and developing new operating strategies for our business\n                 units. Since Michael Kuta\u2019s appointment as CEO less than six\n                 months ago, we have been executing those strategies, and now are\n                 focused on opportunities to maximize the value of our portfolio with\n                 the help of our financial advisor.\u201d\n\n                 Aldous continued, \u201cArcadia Products is a core division of DMC, and\n                 we are taking a very focused approach toward maximizing its\n                 differentiated business model and capitalizing on growth\n                 opportunities within its large addressable markets. Both\n                 DynaEnergetics and NobelClad are valuable, industry-leading\n                 businesses with strong margin profiles. However, the Board and\n                 management team are aligned with the view expressed by many\n                 DMC shareholders that the Company should seek to simplify its\n                 portfolio to drive improved shareholder value. During the review\n                 process, the Board and management team will continue to execute\n                 DMC\u2019s strategy and will remain very focused on running our\n                 businesses.\u201d\n\n(D. 47 at 67).\n                                                   4\n\fCase No. 1:24-cv-03387-GPG-CYC           Document 67        filed 03/20/26      USDC Colorado\n                                         pg 5 of 18\n\n\n\n\n     2. February 23, 2024 Form 10-K stating in relevant part:\n\n            To test goodwill for impairment, we first perform a qualitative\n            assessment to determine whether it is more likely than not that the\n            fair value of a reporting unit is less than its carrying value. For the\n            qualitative assessment, we consider macroeconomic and market\n            conditions, cost factors, financial performance and other relevant\n            entity-specific events. If we conclude that it is more likely than not\n            that the fair value of a reporting unit is less than its carrying value\n            during the qualitative assessment, then we quantitatively estimate\n            the fair value of the reporting unit and compare the estimated fair\n            value to its carrying value. Based on the results of the quantitative\n            assessment, if the carrying value exceeds the fair value of the\n            reporting unit, an impairment loss is recognized for the difference.\n\n            The assumptions used in a quantitative assessment require\n            significant judgment, which include assumptions about future\n            economic conditions and company-specific conditions and plans. In\n            the Company\u2019s quantitative assessment, we estimate the fair value\n            of a reporting unit by using the income approach, specifically a\n            discounted cash flow analysis. A number of assumptions and\n            estimates are required in performing the discounted cash flow\n            analysis, including forecasts of revenues, gross profits, capital\n            expenditures, discount rates, working capital changes, and terminal\n            growth rates. Actual results may differ from those assumed in the\n            forecasts.\n\n            As of December 31, 2023, the carrying value of goodwill was\n            $141,725[,000] and relates entirely to the Arcadia Products\n            operating segment and reporting unit. As of the date of the 2023\n            annual impairment test, we performed a quantitative assessment and\n            concluded that the fair value of the Arcadia Products reporting unit\n            exceeded its carrying value by approximately 10%. Discount rates\n            are one of the more significant assumptions used in the income\n            approach. If the Company increased the discount rate used by\n            approximately 100 basis points, the fair value of Arcadia Products\n            would still exceed its carrying value. A sustained decline in general\n            economic conditions, activity levels in end markets or equity\n            valuations could impact the judgments and assumptions used to\n            estimate the fair value of Arcadia Products, and the Company could\n            be required to record an impairment charge in the future. If the\n            Company was required to recognize an impairment charge in the\n            future, the Consolidated Balance Sheets and Consolidated\n            Statements of Operations and Comprehensive Income (Loss) could\n                                              5\n\fCase No. 1:24-cv-03387-GPG-CYC             Document 67        filed 03/20/26    USDC Colorado\n                                           pg 6 of 18\n\n\n\n\n               be materially impacted; however, the non-cash charge would not\n               impact the Company\u2019s consolidated cash flows, current liquidity,\n               and capital resources.\n\n(D. 47 at 68\u201369).\n\n       3. May 2, 2024 Form 8-K reporting goodwill of $141,725,000 as of March 31, 2024\n\n       4. August 1, 2024 Form 8-K reporting goodwill of $141,725,000 as of June 30, 2024.\n\n       On October 21, 2024, DMC issued a press release indicating a change in business strategy\n\nand that it would take a goodwill impairment, stating in relevant part:\n\n               DMC Global [] today provided an update on its business conditions\n               and revised its third quarter financial guidance. The Company also\n               commented on its strategic review process and announced\n               governance changes. DMC said third quarter sales are expected to\n               be approximately $152 million versus prior guidance of $158\n               million to $168 million. The results reflect weaker-than-expected\n               sales at both Arcadia Products (\u201cArcadia\u201d), DMC\u2019s architectural\n               building products business, and DynaEnergetics, DMC\u2019s energy\n               products business.\n\n               Adjusted EBITDA* is now expected to be approximately $5 million\n               versus prior guidance of $15 million to $18 million. Third quarter\n               results will include inventory and bad debt charges at\n               DynaEnergetics totaling approximately $5 million, as well as lower\n               fixed overhead absorption on reduced sales at both Arcadia and\n               DynaEnergetics.\n\n               The Company said its third quarter financial results will include an\n               approximate $142 million non-cash goodwill impairment charge\n               associated with DMC\u2019s December 2021 acquisition of a controlling\n               interest in Arcadia. The charge reflects Arcadia\u2019s recent financial\n               performance and near-term outlook. These factors, combined with\n               the significant decline in DMC\u2019s market capitalization, led the\n               Company to conclude that the goodwill impairment charge was\n               appropriate at this time.\n\n               DMC president and CEO Michael Kuta, who is also leading Arcadia\n               on an interim basis, said, \u201cArcadia\u2019s third quarter performance was\n               affected by weak commercial and high-end residential construction\n\n                                                 6\n\fCase No. 1:24-cv-03387-GPG-CYC              Document 67        filed 03/20/26     USDC Colorado\n                                            pg 7 of 18\n\n\n\n\n               activity, lower fixed overhead absorption, and supply-chain\n               disruptions that impacted product availability.\u201d\n\n(D. 47 at 33\u201334). DMC\u2019s stock price went down.\n\n       DMC seeks dismissal of all claims (D. 57).\n\n                                   II. LEGAL STANDARDS\n\n       Under Rule 12(b)(6), a court may dismiss a complaint for \u201cfailure to state a claim upon\n\nwhich relief can be granted.\u201d Fed. R. Civ. P. 12(b)(6). To survive a motion to dismiss, a complaint\n\nmust contain sufficient factual matter, accepted as true and interpreted in the light most favorable\n\nto the non-moving party, to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal,\n\n556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Additionally,\n\nthe complaint must sufficiently allege facts supporting all the elements necessary to establish an\n\nentitlement to relief under the legal theory proposed; however, a complaint may be dismissed\n\nbecause it asserts a legal theory not cognizable as a matter of law. Forest Guardians v. Forsgren,\n\n478 F.3d 1149, 1160 (10th Cir. 2007); Golan v. Ashcroft, 310 F. Supp. 2d 1215, 1217 (D. Colo.\n\n2004). A claim is not plausible on its face \u201cif [the allegations] are so general that they encompass\n\na wide swath of conduct, much of it innocent,\u201d and the plaintiff has failed to \u201cnudge[ the] claims\n\nacross the line from conceivable to plausible.\u201d Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th\n\nCir. 2008) (quoting Twombly, 550 U.S. at 570).          In assessing a claim\u2019s plausibility, legal\n\nconclusions contained in the complaint are not entitled to the assumption of truth. See Kansas\n\nPenn Gaming, LLC v. Collins, 656 F.3d 1210, 1214 (10th Cir. 2011). The standard, however,\n\nremains a liberal pleading standard, and \u201ca well-pleaded complaint may proceed even if it strikes\n\na savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and\n\n\n                                                 7\n\fCase No. 1:24-cv-03387-GPG-CYC              Document 67         filed 03/20/26     USDC Colorado\n                                            pg 8 of 18\n\n\n\n\nunlikely.\u201d Dias v. City & Cty. of Denver, 567 F.3d 1169, 1178 (10th Cir. 2009) (internal quotations\n\nand citation omitted).\n\n       Though courts view allegations favorably to plaintiffs at the motion to dismiss stage,\n\nfederal law creates a heavy burden on claimants alleging securities fraud. See In re Level 3\n\nCommc\u2019ns, Inc. Sec. Litig., 667 F.3d 1331, 1333 (10th Cir. 2012) (\u201cA plaintiff suing under Section\n\n10(b) [of the Exchange Act] bears a heavy burden at the pleading stage.\u201d). The Private Securities\n\nLitigation Reform Act of 1995 (PSLRA) imposes \u201cspecific and more stringent pleading\n\nrequirements on complaints alleging securities fraud under Section 10(b).\u201d In re Crocs, Inc. Sec.\n\nLitig., 774 F. Supp. 2d 1122, 1139 (D. Colo. 2011). With respect to claims under the Exchange\n\nAct based on a material misleading statement or omission, the PSLRA requires that \u201cthe complaint\n\nshall specify each statement alleged to have been misleading, the reason or reasons why the\n\nstatement is misleading, and, if an allegation regarding the statement or omission is made on\n\ninformation and belief, the complaint shall state with particularity all facts on which that belief is\n\nformed.\u201d 15 U.S.C. \u00a7 78u\u20134(b)(1). To determine whether a misleading statement or omission is\n\nalleged, courts evaluate whether the facts alleged, \u201ctaken as a whole,\u201d . . . support a reasonable\n\nbelief that the defendant\u2019s statements identified by the plaintiff were false or misleading.\u201d Adams\n\nv. Kinder-Morgan, Inc., 340 F.3d 1083, 1099 (10th Cir. 2003), as amended on denial of reh\u2019g\n\n(Aug. 29, 2003). In applying this standard, the Tenth Circuit has directed courts to evaluate:\n\n               (1) the level of detail provided by the facts stated in a complaint; (2)\n               the number of facts provided; (3) the coherence and plausibility of\n               the facts when considered together; (4) whether the source of the\n               plaintiff\u2019s knowledge about a stated fact is disclosed; (5) the\n               reliability of the sources from which the facts were obtained; and (6)\n               any other indicia of how strongly the facts support the conclusion\n\n\n                                                  8\n\fCase No. 1:24-cv-03387-GPG-CYC              Document 67        filed 03/20/26     USDC Colorado\n                                            pg 9 of 18\n\n\n\n\n               that a reasonable person would believe that the defendant's\n               statements were misleading.\n\nId. (citation omitted). After considering these enumerated factors and \u201cmeasuring the nature of\n\nthe facts alleged against these indicia, [if] a reasonable person would believe that the defendant\u2019s\n\nstatements were false or misleading, the plaintiff has sufficiently pled with particularity facts\n\nsupporting his belief in the misleading nature of the defendant's statements.\u201d Id.\n\n       A plaintiff must also \u201cstate with particularity facts giving rise to a \u201cstrong\u201d inference that\n\nthe defendants acted with scienter. Meitav Dash Provident Funds & Pension Ltd. v. Spirit\n\nAeroSystems Holdings, Inc., 79 F.4th 1209, 1216 (10th Cir. 2023). \u201cAn inference of scienter is\n\nconsidered \u2018strong\u2019 only if proof of the allegations would lead a reasonable factfinder to determine\n\nthat an inference of fraudulent intent or recklessness is at least as compelling as an innocent\n\ninference.\u201d Id. \u201cConduct is considered reckless only if the defendants (1) acted in \u2018an extreme\n\ndeparture from the standards of ordinary care\u2019 and (2) presented \u2018a danger of misleading buyers or\n\nsellers\u2019 that was [ ] known to the defendants or [ ] so obvious that the defendants must have been\n\naware of the danger.\u201d Anderson v. Spirit Aerosystems Holdings, Inc., 827 F.3d 1229, 1237 (10th\n\nCir. 2016) (quoting In re Level 3, 667 F.3d at 1343 n.12).\n\n                                        III. ANALYSIS\n\n       Rule 10b\u20135(b) makes it unlawful \u201c[t]o make any untrue statement of a material fact or to\n\nomit to state a material fact necessary in order to make the statements made, in the light of the\n\ncircumstances under which they were made, not misleading.\u201d 17 C.F.R. \u00a7 240.10b\u20135(b). To plead\n\na claim for violations of Section 10(b), a plaintiff must establish \u201c(1) a material misrepresentation\n\nor omission by the defendant; (2) scienter; (3) a connection between the misrepresentation or\n\nomission and the purchase or sale of a security; (4) reliance upon the misrepresentation or\n                                            9\n\fCase No. 1:24-cv-03387-GPG-CYC              Document 67       filed 03/20/26     USDC Colorado\n                                            pg 10 of 18\n\n\n\n\nomission; (5) economic loss; and (6) loss causation.\u201d Ave. Capital Mgmt. II, L.P. v. Schaden, 131\n\nF.Supp.3d 1118 (D. Colo. 2015) (citing Amgen Inc. v. Conn. Ret. Plans & Trust Funds, 568 U.S.\n\n455, 460-61 (2013)).\n\n       Defendants argue that Plaintiff has failed to sufficiently allege a scienter and material\n\nmisrepresentation or omission under the PSLRA (D. 57 at 20). The Court agrees, although it\n\naddresses material falsehood first.\n\n       A. Plaintiff Has Not Shown that the Statements Were Materially Misleading.\n\n       For a statement to be actionable, it must be false when made. Grossman v. Novell, Inc.,\n\n120 F.3d 1112, 1124 (10th Cir. 1997). Thus, we examine a statement and its potential implications\n\nat that point and without the benefit of hindsight.\n\n       Plaintiff asserts that the January 29, 2024 \u201cPress Release gave the misleading impression\n\nthat Arcadia was performing well, because with the proposed sale of DynaEnergetics and\n\nNobelClad\u201d (D. 58 at 26). But it does not point to anywhere in the press release saying that Arcadia\n\nis doing well. Instead, the Press Release suggests that Arcadia has a \u201cdifferentiated business\n\nmodel\u201d and has \u201cgrowth opportunities within its large addressable markets.\u201d See Grossman, 120\n\nF.3d at 1118 (\u201cVague, optimistic statements are not actionable because reasonable investors do\n\nnot rely on them in making investment decisions.\u201d). Nothing suggests that Arcadia lacked a\n\ndifferentiated business model or that it did not operate in a large market. Without any actual\n\nfalsehood, Plaintiff must rely on creation of a false impression, asserting that the Press Release\n\nimplies Arcadia\u2019s present success because \u201cno reasonable investor would expect that a\n\nmanagement team would focus their business model on the worst performing business\u201d (D. 47 at\n\n67). Why not? Companies sell of lines of business all the time, even when they are performing\n\n                                                 10\n\fCase No. 1:24-cv-03387-GPG-CYC                    Document 67            filed 03/20/26        USDC Colorado\n                                                  pg 11 of 18\n\n\n\n\nwell, particularly when they believe they can either realize a high current value for that operation\n\n(as the Press Release indicates\u2014\u201cunlocking shareholder value\u201d) or for myriad other reasons such\n\nas to avoid distraction and allow focus on a particular line of business (as the Press Release also\n\nindicates\u2014\u201csimplify its portfolio\u201d). There is no false suggestion in the Press Release. See In re\n\nCutera Sec. Litig., 610 F.3d 1103, 1110 (9th Cir. 2010) (holding that \u201cwe believe our employee\n\nrelations are good\u201d was a nonactionable, \u201cmildly optimistic, subjective assessment\u201d).\n\n        Plaintiff asserts that the Q1 and Q2 financial statements were false because they did not\n\nreflect impaired goodwill. In Plaintiff\u2019s view, the failure to impair goodwill resulted in a false\n\noverstatement of the dollar value of goodwill and net earnings per share in its financial statements\n\n(D. 58 at 24). Accepting as true the allegations in the Complaint, it is unclear to the Court how\n\nDMC\u2019s statements about its goodwill could be false without a requirement that it test the goodwill\n\nbefore that point or an evaluation having been performed. According to the Complaint, the amount\n\nof goodwill is fixed by the transaction (D. 47 at 16). Thereafter, \u201c[b]ecause goodwill is an\n\nintangible asset, its value is reported at the acquisition price unless or until circumstances arise in\n\nwhich the intangible asset must be written off, or \u2018impaired\u2019\u201d (id. at 17) (emphasis added). The\n\nonly allegation plausibly establishing when DMC was required to test its goodwill is its own\n\nstatement indicating that it would test the goodwill at least annually and, when it did so, it would\n\nuse \u201cthe income approach, specifically a discounted cash flow analysis\u201d (D. 47 at 18; see also at\n\n31).4 This required annual test would happen in December, such that no such required test would\n\n\n4\n  Plaintiff\u2019s other allegations on this issue are entirely conclusory (e.g., D. 47 at 31\u201332) and at best suggest a\ndiscretionary determination could be made. Plaintiff does not offer any argument explaining why the alleged red flags\nrequired, as opposed to suggested, goodwill testing, and the Court declines to make the argument for Plaintiff (D. 58\nat 24). Notably, this statement what DMC would test annually appears to be entirely consistent with GAAP and IFRS\n\n                                                        11\n\fCase No. 1:24-cv-03387-GPG-CYC                       Document 67            filed 03/20/26         USDC Colorado\n                                                     pg 12 of 18\n\n\n\n\nhappen in a period relevant to these alleged misstatements (id. at 18). Thus, the only inference\n\nthat could be reasonably drawn from DMC\u2019s statement is that the goodwill valuation was\n\nconsidered using the income method at the last required check and it would happen again at least\n\nat the end of the year. There is no apparent inconsistency between this and restating that amount\n\nin Q1 and Q2 financial statements without further comment when no intermediate evaluation\n\noccurred. Dearborn Heights, 856 F.3d at 617\u201318 (\u201cPlaintiff\u2019s bare allegations of events and\n\ncircumstances during the Class Period that could have suggested the likelihood of goodwill\n\nimpairment under GAAP cannot establish that Defendants must have known there was a likelihood\n\nof goodwill impairment.\u201d).\n\n         Plaintiff\u2019s final argument for a materially false statement is hard to parse. After an\n\nextended discussion of the income method for testing goodwill, Plaintiff asserts that, \u201c[i]f investors\n\nhad been told that a mid-year change in methods was possible (but they were not), investors could\n\nhave determined, based on the observable input that occurred in Q2, that an impairment was\n\nrequired as of Q2\u201d (D. 58 at 26). But the Complaint states that DMC used both the income\n\napproach and the market approach, with both approaches agreeing that a goodwill impairment\n\nshould be taken. True, the disclosure describes using the market approach first and validating it\n\nwith the income approach, but this is meaningless as a practical matter if the same result obtained\n\nunder both. Further, it is not as though there are a multitude of approaches such that the use of\n\n\n\nstandards, which only require goodwill be tested annually. City of Dearborn Heights Act 345 Police & Fire Ret. Sys.\nv. Align Tech., Inc., 856 F.3d 605, 611 (9th Cir. 2017). Although Plaintiff cites various cases finding that the red flags\nwere sufficient, each of those determinations were heavily fact dependent or contain only cursory analysis. See id. at\n618. None appear to rest entirely on a delay in impairing goodwill, as Plaintiff\u2019s case does. It does not appear\nsufficient for a plaintiff to merely assert something that could potentially be a red flag requiring analysis of goodwill,\nsuch a missing a target, without evaluation of that specific indicator at least in comparison to something previously\nfound to be sufficient.\n                                                           12\n\fCase No. 1:24-cv-03387-GPG-CYC              Document 67         filed 03/20/26     USDC Colorado\n                                            pg 13 of 18\n\n\n\n\nanother would be surprising; the Complaint alleges only the two used exist and both can be used\n\nin parallel (D. 47 at 30). The disclosures that Plaintiff points to simply discuss the annual test and\n\ndo not disclaim the market approach. DMC\u2019s silence on the possibility that it might use the market\n\napproach in combination with the income approach would not be materially misleading to a\n\nreasonable investor.\n\n       Additionally, Plaintiff\u2019s argument that investors could have determined from public\n\ninformation that a goodwill impairment was likely or should occur points to a fundamental\n\nproblem with Plaintiff\u2019s entire case\u2014none of the information about the goodwill impairment\n\nappears to be material in this case. There is no allegation here that Defendants misstated any\n\ninformation on which goodwill testing is based. And much, if not all, of that information is public.\n\nPlaintiff alleges that \u201cdrivers of fair value for a reporting unit that is valued using the income\n\napproach may be cash flow projections, terminal growth rate or the weighted-average cost of\n\ncapital (WACC)\u201d (D. 47 at 30\u201331). DMC disclosed these or they could be reasonably determined\n\nby investors from other disclosures (see e.g., D. 57-9; D. 57-12 at 27). Plaintiff alleges that\n\n\u201cdrivers of fair value for a reporting unit that is valued using the market approach may be\n\napplicable industry multiples such as multiples of revenue or earnings before interest, taxes,\n\ndepreciation and amortization (EBITDA)\u201d (D. 47 at 30\u201331). DMC disclosed these and other\n\n\u201cobservable inputs of fair value\u201d (id. at 31). Thus, if it was important to them, investors could\n\nhave used information available to determine if its divisions\u2019 value and if the valuation provided\n\nwas proper. And it is unclear whether the decision to take, or not, the goodwill valuation had any\n\npractical effect on DMC\u2019s operations or prospects. DMC stated that, \u201c[i]f the Company was\n\nrequired to recognize an impairment charge in the future, the Consolidated Balance Sheets and\n\n                                                 13\n\fCase No. 1:24-cv-03387-GPG-CYC              Document 67         filed 03/20/26     USDC Colorado\n                                            pg 14 of 18\n\n\n\n\nConsolidated Statements of Operations and Comprehensive Income (Loss) could be materially\n\nimpacted; however, the non-cash charge would not impact the Company\u2019s consolidated cash\n\nflows, current liquidity, and capital resources\u201d (D. 47 at 68\u201369). This is not alleged to be false and\n\nis entirely consistent with the allegations in the Complaint\u2014the impairment is merely a paper loss.\n\nSo, investors had information from which, if they wished, they could make their own determination\n\nabout whether goodwill is, should be, or soon would be impaired and the ultimate result of that\n\nimpairment is simply a change in accounting treatment that does not affect DMC\u2019s existing assets\n\nor cash flow. There is nothing in the Complaint or Plaintiff\u2019s argument explaining why when in a\n\ngiven year the goodwill impairment was taken would affect a reasonable investor\u2019s decision. Cf.\n\nUnited States v. Woods, 571 U.S. 31, 33 (2013) (discussing advantages of paper losses in relation\n\nto tax treatment). Thus, even assuming Plaintiff had shown a misleading statement or omission,\n\nhis claims would fail because he has not shown materiality.\n\n       Accordingly, the Court will dismiss Plaintiff\u2019s claims. The Court will briefly address\n\nscienter because it provides another basis for dismissal.\n\n       B. Plaintiff\u2019s Allegations Do Not Support a Strong Inference of Scienter.\n\n       \u201cScienter consists of a mental state embracing intent to deceive, manipulate, or defraud, or\n\nrecklessness.\u201d Anderson, 827 F.3d at 1236\u201337 (10th Cir. 2016), as amended (July 6, 2016)\n\n(internal quotation marks omitted).\n\n       Plaintiff argues that a strong inference of scienter is possible because of the \u201cred flags\u201d\n\npresent, the alleged shifting explanations for the goodwill impairment, and the size of the\n\n\n\n\n                                                 14\n\fCase No. 1:24-cv-03387-GPG-CYC                      Document 67            filed 03/20/26         USDC Colorado\n                                                    pg 15 of 18\n\n\n\n\nimpairment, the obligation to cover the put option to purchase the remainder of Arcadia,5 and the\n\nimportance of Arcadia suggest scienter. Examination of each of these factors in relation to\n\nalternative inferences do not suggest scienter. See Anderson, 827 F.3d at 1237 (\u201cThus, the\n\ncomplaint suffices only if a reasonable person would deem the inference of scienter cogent and at\n\nleast as compelling as any opposing inference one could draw from the facts alleged.\u201d).\n\n         Although not put in quite these terms by Defendants, who include executives making the\n\nbusiness decisions, the most obvious alternative inference here is poor business judgment and a\n\nstubborn desire to make the Arcadia acquisition succeed in the face of bad decisions and bad luck.\n\nBasically, the poor outcome is better explained by incompetence (or bad luck) rather than malice\n\n(or recklessness sufficient to sustain a claim). See Anderson, 827 F.3d at 1238 (\u201cThe plaintiffs\n\nallege that the Spirit executives intentionally misrepresented or recklessly ignored economic\n\nrealities. That is possible, but it is more probable that the Spirit executives were overly optimistic\n\nand failed to give adequate weight to financial red flags, for the plaintiffs supply little reason to\n\nsuspect malevolence rather than benign optimism.\u201d).\n\n         In acquiring Arcadia, DMC paid more than the market thought that Arcadia was worth and\n\nmuch more than Arcadia\u2019s assets were worth. This is reflected in the premium paid at purchase\n\nand the generation of the goodwill paper asset reflecting the \u201cdifference between the purchase\n\nprice and the book value\u201d (D. 47 at 16). The goodwill may correspond in some sense to \u201cthe\n\n\n5\n  As Defendants argue, DMC secured the line of credit necessary to cover any cash portion of its purchase obligation\nwell before taking the goodwill impairment and before any purchase obligation would have become due. The Court\nhas not discussed all of Plaintiff\u2019s arguments because some are plainly irrelevant, such as a competitor taking an\nimpairment related to a different geographic market. In re Level 3, 667 F.3d at 1344 (\u201cWe too have assessed plaintiff's\ncomplaint holistically, though we limit our discussion here to the allegations most relevant to the issue of scienter.\u201d).\n\n\n\n                                                          15\n\fCase No. 1:24-cv-03387-GPG-CYC              Document 67       filed 03/20/26     USDC Colorado\n                                            pg 16 of 18\n\n\n\n\nacquired company\u2019s brand name, customer base, customer relations, employee relations, and/or\n\nproprietary technology,\u201d giving the acquired company an ability to earn beyond its valuation (id.).\n\nBut if there is not actually such surplus earning potential, then the goodwill essentially stands on\n\nnothing and will have to be written down.\n\n       The strongest inference from the factual circumstances here is a gradual turn from\n\noptimism in the face of bad luck to the realization that the situation was not going to turn around.\n\nAs Plaintiff acknowledges in the Complaint, the key driver of Arcadia\u2019s performance was external\n\nand essentially unpredictable to Defendants. \u201cGiven Arcadia\u2019s business model, with direct\n\nexposure to the construction market, Arcadia was highly susceptible to rising interest rates. And\n\nbecause DMC bought Arcadia in late 2021, the timing of that purchase could not have been worse\n\nbecause interest rates began to surge\u201d (D. 47 at 19). As interest rates rose, Arcadia repeatedly\n\nmissed its revenue targets. This poor performance and its knock-on effects, such as a decline in\n\nmarket capitalization, constituted the entirety of the purported \u201cred flags\u201d (D. 47 at 50\u201351). Yet\n\nDefendants remained confident and announced a plan in January 2024 to sell off DMC\u2019s other two\n\nbusiness units to focus on Arcadia\u2019s potential. Was this a bad decision? It turned out to be in\n\nretrospect, but Plaintiff points to nothing indicating that Defendants could not have reasonably\n\nbelieved at the time that Arcadia\u2019s fundamentals were strong notwithstanding what could\n\nreasonably be viewed as bad luck in the timing of the rise in interest rates that could turn around\n\nat any time. Smallen v. The W. Union Co., 950 F.3d 1297, 1312 (10th Cir. 2020) (finding no strong\n\ninference of scienter where the \u201callegations Plaintiff advances demonstrate the Individual\n\nDefendants were too optimistic about Western Union\u2019s compliance systems and failed to give\n\n\n\n                                                16\n\fCase No. 1:24-cv-03387-GPG-CYC              Document 67         filed 03/20/26     USDC Colorado\n                                            pg 17 of 18\n\n\n\n\nadequate weight to certain red flags, such as pending government investigations, at the time they\n\nmade their alleged misstatements\u201d).\n\n        The poor performance continued apace through the first two quarters of 2024. There is no\n\nsuggestion in the Complaint of a sudden crisis or other event indicating that a turnaround at\n\nArcadia, for example, due to a drop in interest rates, was not possible through the period that\n\nPlaintiff asserts DMC should have impaired the goodwill. But then, of course, at some point the\n\ngradual deterioration came to a point that full recovery became remote enough that a wholesale\n\nstrategic shift was called for, and Defendants made that shift\u2014announcing that they were no longer\n\nattempting to sell the divisions other than Arcadia and were taking the goodwill impairment for\n\nArcadia. Compare In re Level 3, 667 F.3d at 1345 (\u201cGiven the difficulty we have, even with the\n\nbenefit of hindsight, in determining whether a conflict actually existed between the reports and\n\ndefendants\u2019 statements, the strongest inference we can draw is that defendants were negligent in\n\nfailing to put together the pieces.\u201d).\n\n        Plaintiff argues that the various rationales provided where \u201cshifting,\u201d but none of them are\n\ncontradictory, implausible, or mutually exclusive. At best they refer to various effects of the main\n\nproblem\u2014namely, loss of revenue resulting in decline in market capitalization, etc.\u2014along with\n\nother potentially contributory issues, for example, difficulty integrating a family business and fully\n\nunderstanding an acquired company\u2019s operations. That many factors may have contributed to\n\nArcadia\u2019s poor performance after acquisition is hardly surprising, much less implausible or\n\ncontradictory. The size of the impairment and Arcadia\u2019s importance perhaps could motivate\n\ndeception, but they are equally likely to motivate a stubborn determination to turn things around\n\nthat does not rely on any deception. Notably, there is no indication that Defendants continued long\n\n                                                 17\n\fCase No. 1:24-cv-03387-GPG-CYC              Document 67         filed 03/20/26     USDC Colorado\n                                            pg 18 of 18\n\n\n\n\npast when, with better luck, a recovery would have been possible. Instead, they took their\n\nproverbial medicine. These facts do not suggest a strong inference of scienter. Thus, even if the\n\nCourt found material misrepresentations, it would still dismiss for failure to allege facts supporting\n\na strong inference of scienter.\n\n                                       IV. CONCLUSION\n\n       Accordingly, Defendants\u2019 Motion to Dismiss Lead Plaintiff\u2019s Consolidated Amended\n\nComplaint (D. 57) is GRANTED and Plaintiff\u2019s Consolidated Amended Complaint (D. 47) is\n\nDISMISSED. It is FURTHER ORDERED that the Clerk of Court shall close this case.\n\n\n\n       DATED March 20, 2026.\n\n                                                      BY THE COURT:\n\n\n\n\n                                               Gordon P. 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(Text Only Entry) (agarc, ) (Entered: 06/25/2025)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/447448370/","id":447448370,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/69445977/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/462200831/","id":462200831,"tags":[],"absolute_url":"/docket/69445977/47/garson-v-dmc-global-inc/","date_created":"2025-12-16T21:51:59.026494-08:00","date_modified":"2025-12-17T04:09:44.897866-08:00","sha1":"7973a4b3bd645e305582b6ec60c6b8247c9427fd","page_count":85,"file_size":1525765,"filepath_local":"recap/gov.uscourts.cod.239374/gov.uscourts.cod.239374.47.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.cod.239374/gov.uscourts.cod.239374.47.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case No. 1:24-cv-03387-GPG-CYC     Document 47    filed 06/23/25   USDC Colorado\n                                   pg 1 of 85\n\n\n\n\n                     IN THE UNITED STATES DISTRICT COURT\n                        FOR THE DISTRICT OF COLORADO\n\nConsolidated Civil Action No. 1:24-cv-03387-GPG-CYC\n\nSAMUEL GARSON, Individually and On Behalf\nof All Others Similarly Situated,\n\n            Plaintiff,\n\n      v.\n\nDMC GLOBAL INC.,\nMICHAEL KUTA,\nERIC V. WALTER, and\nBRETT SEGER,\n\n            Defendants.\n\n\n         CONSOLIDATED AMENDED CLASS ACTION COMPLAINT FOR\n     VIOLATION OF THE FEDERAL SECURITIES LAWS AND JURY DEMAND\n\fCase No. 1:24-cv-03387-GPG-CYC                              Document 47                 filed 06/23/25              USDC Colorado\n                                                            pg 2 of 85\n\n\n\n\n                                                TABLE OF CONTENTS\n                                                                                                                                     Page\n\nI.     NATURE OF THE ACTION .............................................................................................1\nII.    JURISDICTION AND VENUE .........................................................................................3\nIII.   PARTIES ............................................................................................................................4\nIV.    SUBSTANTIVE ALLEGATIONS .....................................................................................6\n       A.         Background Of The Company.............................................................................6\n       B.         DMC\u2019s Acquisition Of Arcadia At The \u201cTop Of The Market\u201d ...........................8\n       C.         DMC\u2019s Acquisition Of Arcadia Created A $141 Million Goodwill Asset\n                  On DMC\u2019s Balance Sheet ..................................................................................13\n       D.         Shortly After Acquiring Arcadia, Macroeconomic Headwinds Began\n                  To Pressure Arcadia\u2019s Business .......................................................................16\n       E.         Despite Worsening Results And Growing Economic Headwinds,\n                  Defendants Continued To Report Robust And Unchanged Levels Of\n                  Goodwill For Arcadia, And Overstated Net Income .......................................19\n       F.         Defendants Cannot Disclaim Knowledge Of DMC\u2019s Obligation To\n                  Impair Arcadia\u2019s Goodwill Given Defendants\u2019 Focus On Arcadia,\n                  Installation Of Experienced Management In Key Positions, And\n                  Design Of ERP Systems To Better Monitor Arcadia .....................................20\n       G.         Defendants Improperly Delayed Recognizing A Goodwill Impairment\n                  Charge For Arcadia.............................................................................................26\n       H.         Defendants Used DMC\u2019s Overstated Earnings And Balance Sheet\n                  To Secure Desperately Needed Capital For The Looming Put-Call\n                  Obligation .............................................................................................................29\n       I.         The Truth Emerges .............................................................................................30\n       J.         Post-Class Period Events ..................................................................................37\nV.     ADDITIONAL SCIENTER ALLEGATIONS .................................................................37\n       A.         Defendants\u2019 Desire To Increase DMC\u2019s Credit Agreement By $100\n                  Million To Gain Access To Desperately Needed Financing Provided\n                  Motive ....................................................................................................................37\n       B.         Red Flags Informed Defendants Of A Need To Impair Arcadia\u2019s\n                  Goodwill By The End Of Q1 2024 At The Latest ...........................................41\n                  1.         The Reasons That Defendants Gave For Arcadia\u2019s Q3 2024\n                             Goodwill Impairment Existed In Q1 2024 ............................................41\n\n\n\n\n                                                                    i\n\fCase No. 1:24-cv-03387-GPG-CYC                            Document 47                filed 06/23/25             USDC Colorado\n                                                          pg 3 of 85\n\n\n\n\n                  2.         Any Incremental Deterioration Of Arcadia\u2019s Performance After\n                             Q1 2024 Was Negligible As Compared To The Deterioration\n                             That Occurred Up To And Including Q1 2024 ....................................45\n                  3.         Additional Indicators Suggested Interim Testing For\n                             Impairment Was Necessary ..................................................................47\n        C.        DMC\u2019s Admission That It Acquired Arcadia At A Peak Valuation\n                  Supports Scienter Given The Rapid Rise In Interest Rates That\n                  Preceded The Class Period...............................................................................50\n        D.        Defendants\u2019 Abrupt And Undisclosed Change To The Goodwill\n                  Valuation Methodology Supports A Strong Inference Of Scienter ..............54\n        E.        Defendants\u2019 Shifting Explanations For Arcadia\u2019s Impairment Support\n                  A Strong Inference Of Scienter .........................................................................56\n        F.        The Magnitude Of The Goodwill Impairment Supports A Strong\n                  Inference Of Scienter ..........................................................................................58\n        G.        Arcadia Is Critical To DMC\u2019s Core Operations ...............................................59\n        H.        The Individual Defendants\u2019 Significant Experience With Public\n                  Accounting And The Company\u2019s Finances Supports A Strong\n                  Inference Of Scienter ..........................................................................................60\n        I.        Defendants Kuta And Walter Signed SOX Certifications .............................61\n        J.        The Timing And Numerous Resignations Support A Strong Inference\n                  Of Scienter............................................................................................................62\nVI.     DEFENDANTS\u2019 MATERIALLY FALSE AND MISLEADING STATEMENTS\n        AND OMISSIONS DURING THE CLASS PERIOD...................................................63\n        A.        January 29, 2024 Press Release .....................................................................63\n        B.        2023 Form 10-K Statements And Omissions .................................................65\n        C.        First Quarter 2024 Statements And Omissions ..............................................67\n        D.        Second Quarter 2024 Statements And Omissions ........................................68\nVII.    LOSS CAUSATION ........................................................................................................70\nVIII.   THE INAPPLICABILITY OF THE STATUTORY SAFE HARBOR ..........................72\nIX.     THE PRESUMPTION OF RELIANCE .........................................................................72\nX.      CLASS ACTION ALLEGATIONS .................................................................................74\nXI.     CLAIMS FOR RELIEF ....................................................................................................76\nXII.    PRAYER FOR RELIEF ..................................................................................................81\nXIII.   JURY TRIAL DEMANDED .............................................................................................82\n\n\n\n                                                                  ii\n\fCase No. 1:24-cv-03387-GPG-CYC            Document 47       filed 06/23/25    USDC Colorado\n                                          pg 4 of 85\n\n\n\n\n       Lead Plaintiff John Mark Stauffer (\u201cPlaintiff\u201d), individually and on behalf of all others\n\nsimilarly situated, by and through his attorneys, alleges the following upon information\n\nand belief, except as to those allegations concerning Plaintiff, which are alleged upon\n\npersonal knowledge. Plaintiff\u2019s information and belief is based upon, among other things,\n\nLead Counsel\u2019s investigation, which includes without limitation: (a) review and analysis of\n\nregulatory filings made by DMC Global Inc. (\u201cDMC Global,\u201d \u201cDMC,\u201d or the \u201cCompany\u201d)\n\nwith the United States Securities and Exchange Commission (\u201cSEC\u201d); (b) review and\n\nanalysis of press releases and media reports issued by and disseminated by DMC; and\n\n(c) review of other publicly available information concerning DMC. Plaintiff believes that\n\nsubstantial additional evidentiary support will exist for the allegations set forth herein after\n\na reasonable opportunity for discovery.\n\nI.     NATURE OF THE ACTION\n\n       1.     This is a securities class action on behalf of a class consisting of all persons\n\nand entities that purchased or otherwise acquired DMC securities between January 29,\n\n2024 and November 4, 2024, both dates inclusive (the \u201cClass Period\u201d), and who were\n\ndamaged thereby, seeking to pursue remedies under Sections 10(b) and 20(a) of the\n\nSecurities Exchange Act of 1934 (the \u201cExchange Act\u201d) and Rule 10b-5 promulgated\n\nthereunder, against Defendants DMC, Michael Kuta (\u201cKuta\u201d), Eric V. Walter (\u201cWalter\u201d),\n\nand Brett Seger (\u201cSeger\u201d) (collectively, \u201cDefendants\u201d).\n\n       2.     This case arises from Defendants\u2019 overstatement of DMC\u2019s net income and\n\nassets and equity on its balance sheet by material amounts and for improperly delaying\n\na massive goodwill impairment of $141.7 million during the Class Period. Defendant\n\n\n\n\n                                               1\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47      filed 06/23/25    USDC Colorado\n                                        pg 5 of 85\n\n\n\n\nDMC, which was led by Defendants Kuta, Walter, and Seger\u2014all of whom were licensed\n\nCertified Public Accountants (\u201cCPAs\u201d)\u2014repeatedly overstated DMC\u2019s income and assets\n\nby failing to impair goodwill attributed to DMC\u2019s acquisition of Arcadia Products, LLC\n\n(\u201cArcadia\u201d or \u201cArcadia Products\u201d), despite mounting evidence and glaring red flags that\n\nsuch impairment was not only necessary, but obvious and inevitable.\n\n       3.     As alleged below, from the outset of the Class Period, Defendants falsely\n\nassured investors that Arcadia\u2014which DMC acquired at \u201cthe top of the market\u201d in late\n\n2021 when interest rates were near zero\u2014was performing well and that its $141.7 million\n\ngoodwill valuation remained fully intact notwithstanding a surge in interest rates that both\n\nslowed demand for Arcadia\u2019s business and also reduced the value of DMC\u2019s goodwill\n\nvaluation due to the existence of materially higher discount rates. Defendants\u2019 assurances\n\ncame even as Arcadia\u2019s revenues and EBITDA declined sharply, missed projections, and\n\ndespite clear impairment indicators that required Defendants to admit the truth.\n\n       4.     Instead of applying Generally Accepted Accounting Principles (\u201cGAAP\u201d)\n\nrequired for public companies such as DMC, Defendants improperly delayed recognition\n\nof the impairment to maintain the appearance of financial stability at a time when\n\nDefendants were seeking to obtain credit to address a looming $187 million purchase\n\nobligation related to the Arcadia acquisition.\n\n       5.     When the truth finally emerged in late 2024\u2014through a series of corrective\n\ndisclosures including a $141.7 million impairment charge and admission that the\n\nCompany had changed its goodwill valuation methodology\u2014DMC\u2019s stock plummeted.\n\nWhen DMC belatedly disclosed DMC\u2019s then forthcoming goodwill impairment charge of\n\n\n\n                                             2\n\fCase No. 1:24-cv-03387-GPG-CYC             Document 47    filed 06/23/25    USDC Colorado\n                                           pg 6 of 85\n\n\n\n\nalmost $142 million on October 21, 2024, the price of DMC stock fell over 18% per share,\n\nthereby damaging investors.\n\n       6.      DMC shares fell another 6% per share on November 4, 2024, when\n\nadditional details were revealed, including that Defendants had brazenly changed the\n\nCompany\u2019s goodwill valuation method without ever informing investors that was a\n\npossibility.\n\n       7.      As a result of Defendants\u2019 wrongful acts and omissions, and the precipitous\n\ndecline in the market value of the Company\u2019s securities, Plaintiff and other Class\n\nmembers have suffered significant losses and damages.\n\nII.    JURISDICTION AND VENUE\n\n       8.      The claims asserted herein arise under and pursuant to Sections 10(b) and\n\n20(a) of the Exchange Act (15 U.S.C. \u00a7\u00a7 78j(b) and 78t(a)) and Rule 10b-5 promulgated\n\nthereunder by the SEC (17 C.F.R. \u00a7 240.10b-5).\n\n       9.      This Court has jurisdiction over the subject matter of this action pursuant to\n\n28 U.S.C. \u00a7 1331 and Section 27 of the Exchange Act (15 U.S.C. \u00a7 78aa).\n\n       10.     Venue is proper in this District pursuant to Section 27 of the Exchange Act\n\n(15 U.S.C. \u00a7 78aa) and 28 U.S.C. \u00a7 1391(b). DMC is headquartered in this District,\n\nDefendants conduct business in this District, and a significant portion of Defendants\u2019\n\nactions took place within this District.\n\n       11.     In connection with the acts alleged in this Complaint, Defendants, directly\n\nor indirectly, used the means and instrumentalities of interstate commerce, including but\n\n\n\n\n                                              3\n\fCase No. 1:24-cv-03387-GPG-CYC         Document 47       filed 06/23/25   USDC Colorado\n                                       pg 7 of 85\n\n\n\n\nnot limited to the mails, interstate telephone communications, and the facilities of a\n\nnational securities exchange.\n\nIII.   PARTIES\n\n       12.   Lead Plaintiff John Mark Stauffer (\u201cPlaintiff\u201d), as set forth in the previously\n\nfiled certification (ECF No. 28-3), incorporated by reference herein, purchased DMC\n\ncommon stock during the Class Period, and suffered damages as a result of the federal\n\nsecurities law violations and false and/or misleading statements and/or material\n\nomissions alleged herein.\n\n       13.   Defendant DMC Global Inc. (\u201cDMC Global,\u201d \u201cDMC,\u201d or the \u201cCompany\u201d) is a\n\nDelaware corporation with principal executive offices located at 11800 Ridge Parkway,\n\nSuite 300, Broomfield, Colorado 80021. The Company\u2019s common stock trades in an\n\nefficient market on the Nasdaq Global Select Market (\u201cNASDAQ\u201d) under the ticker symbol\n\n\u201cBOOM.\u201d\n\n       14.   Defendant Michael Kuta (\u201cKuta\u201d) served as DMC\u2019s President, Chief\n\nExecutive Officer (\u201cCEO\u201d) and a member of its Board of Directors (\u201cBoard\u201d) from August\n\n2023 through November 2024. On November 13, 2024, the Company announced that\n\nKuta would \u201cretire\u201d as the Company\u2019s President, CEO, and as a member of the Board\n\neffective November 29, 2024. Defendant Kuta was 49 years old in 2024. Defendant Kuta\n\npreviously served as DMC\u2019s interim co-CEO from January 2023 until August 2023, and\n\nfrom 2014 to January 2023, Defendant Kuta was DMC\u2019s Chief Financial Officer (\u201cCFO\u201d).\n\nDefendant Kuta earned a bachelor\u2019s degree in accounting from Kent State University and\n\n\n\n\n                                            4\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47       filed 06/23/25    USDC Colorado\n                                        pg 8 of 85\n\n\n\n\nan MBA in finance from Case Western Reserve University. Defendant Kuta also was a\n\nCertified Public Accountant (\u201cCPA\u201d).\n\n       15.    Defendant Eric V. Walter (\u201cWalter\u201d) has served as DMC\u2019s CFO since\n\nFebruary 28, 2023. Prior to this role, Walter served as the Company\u2019s Senior Vice\n\nPresident of Finance since joining the Company on January 23, 2023. Prior to joining\n\nDMC, Defendant Walter spent six years in executive positions in a large publicly traded\n\nengineering and professional services firm, including roles as CFO and leading the\n\ntreasury of its largest divisions. Prior to that, Defendant Walter spent over 13 years at two\n\nlarge corporations in financial leadership roles. Defendant Walter graduated with a BA in\n\nAccounting and Business Administration from Furman University and an MBA from Duke\n\nUniversity. Defendant Walter also holds the designations of CPA, Chartered Financial\n\nAnalyst, and Certified Treasury Professional.\n\n       16.    Defendant Brett Seger (\u201cSeger\u201d) has served as DMC\u2019s Chief Accounting\n\nOfficer (\u201cCAO\u201d) since March 1, 2023. He previously served as the Company\u2019s Vice\n\nPresident of Finance Integration since January 2022, with the primary responsibility of\n\nmanaging the coordination of significant financial activities relating to the Company\u2019s\n\nArcadia division. Prior to joining the Company, Seger spent over a decade as an\n\nemployee of Ernst & Young LLP (\u201cEY\u201d), most recently as an Audit Senior Manager.\n\nDefendant Seger graduated with a B.S. in Accounting and an MBA from the University of\n\nDenver and also holds the CPA professional designation.\n\n\n\n\n                                             5\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47      filed 06/23/25    USDC Colorado\n                                        pg 9 of 85\n\n\n\n\n       17.    Defendants Kuta, Walter, and Seger are collectively referred to herein as\n\nthe \u201cIndividual Defendants.\u201d DMC and the Individual Defendants are collectively referred\n\nto herein as \u201cDefendants.\u201d\n\n       18.    The Individual Defendants possessed the power and authority to control the\n\ncontents of DMC\u2019s SEC filings, press releases, and other market communications. The\n\nIndividual Defendants were provided with copies of DMC\u2019s SEC filings and press releases\n\nalleged herein to be misleading prior to or shortly after their issuance and had the ability\n\nand opportunity to prevent their issuance or to cause them to be corrected. Because of\n\ntheir positions with DMC, and their access to material information available to them but\n\nnot to the public, the Individual Defendants knew that the adverse facts specified herein\n\nhad not been disclosed to and were being concealed from the public, and that the positive\n\nrepresentations being made were then materially false and misleading. The Individual\n\nDefendants are liable for the false statements and omissions pleaded herein. The\n\nCompany is liable for the acts of the Individual Defendants and its other employees and\n\nagents under the doctrine of respondeat superior and common law principles of agency\n\nbecause all of the wrongful acts complained of herein were carried out within the scope\n\nof their employment and/or agency.\n\nIV.    SUBSTANTIVE ALLEGATIONS\n\n       A.     Background Of The Company\n\n       19.    The Company began as an unincorporated business called \u201cExplosive\n\nFabricators,\u201d which was formed in Colorado in 1965. The business was incorporated in\n\n1971 under the name \u201cE. F. Industries, Inc.,\u201d which was later changed to \u201cExplosive\n\n\n\n\n                                             6\n\fCase No. 1:24-cv-03387-GPG-CYC           Document 47       filed 06/23/25    USDC Colorado\n                                         pg 10 of 85\n\n\n\n\nFabricators, Inc.\u201d The Company became publicly traded in 1976. In 1994, it changed its\n\nname to \u201cDynamic Materials Corporation.\u201d\n\n       20.    In 2001, the Company acquired substantially all the stock of NobelClad\n\nEurope SA, a French company, which expanded the Company\u2019s explosive metalworking\n\noperations to Europe. In 2007, the Company acquired the German company\n\nDynaEnergetics GmbH and Co. KG and certain affiliates, which expanded the Company\u2019s\n\nexplosive metalworking operations in Europe and added a complementary energy\n\nproducts business.\n\n       21.    In 2013, the Company branded its explosive metalworking operations under\n\nthe single name NobelClad, and in 2014, the Company re-branded the energy products\n\nsegment as DynaEnergetics.\n\n       22.    In 2016, the Company re-branded to its current name, \u201cDMC Global Inc.\u201d\n\nFrom 2016 through 2021, DMC was comprised of NobelClad and DynaEnergetics. In an\n\neffort to diversify DMC\u2019s then existing business, on December 17, 2021, DMC announced\n\nits intention to acquire Arcadia.\n\n       23.    Following the acquisition of Arcadia (discussed below), DMC operates\n\nthrough three main business and reporting segments: (1) Arcadia, which supplies\n\narchitectural building products, including exterior and interior framing systems, curtain\n\nwalls, windows, doors, and interior partitions to the commercial construction market; it\n\nalso supplies customized windows and doors to the high-end residential construction\n\nmarket; (2) DynaEnergetics, which designs, manufactures and sells highly engineered\n\nproducts utilized by the global oil and gas industry principally for the perforation of oil and\n\n\n\n                                              7\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47        filed 06/23/25   USDC Colorado\n                                        pg 11 of 85\n\n\n\n\ngas wells; and (3) NobelClad, which produces explosion-welded clad metal plates for\n\nuse in the construction of corrosion resistant industrial processing equipment, as well as\n\nspecialized transition joints for use in construction of commuter rail cars, ships, and\n\nliquified natural gas processing equipment.\n\n       B.     DMC\u2019s Acquisition Of Arcadia At The \u201cTop Of The Market\u201d\n\n       24.    Leading up to the Arcadia acquisition, Arcadia\u2019s underlying business had\n\nstrong tailwinds behind it. For instance, following the global pandemic of 2020, the\n\nFederal Reserve slashed interest rates and injected trillions of dollars of liquidity into the\n\nbond market to stabilize the financial system. One effect of that additional liquidity was a\n\nhistorical drop in interest rates and a surge higher in prices for interest rate sensitive\n\nassets, such as real estate. The following charts illustrate the change in interest rates:\n\n\n\n\n                                              8\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47       filed 06/23/25    USDC Colorado\n                                        pg 12 of 85\n\n\n\n\n       25.    Leading up to the Arcadia acquisition, Arcadia\u2019s revenue grew at a\n\ncompound average growth rate (\u201cCAGR\u201d) of 13%, and its adjusted earnings before\n\ninterest taxes depreciation and amortization (\u201cEBITDA\u201d), which is a rough approximation\n\nof operating earnings, grew at a 23% CAGR.\n\n       26.    As a result, by late 2021, real estate prices were booming, and valuations\n\nfor real estate related businesses, such as construction, had similarly risen rapidly. It was\n\non the heels of that surge in asset prices (driven by a fall in interest rates), that on\n\nDecember 23, 2021, DMC acquired a 60% controlling stake in Arcadia, for $282.5 million\n\nin cash and DMC stock (hereinafter, the \u201cArcadia Acquisition\u201d). Put differently, given\n\nArcadia\u2019s strong growth, macro tailwinds (e.g., historical low interest rate environment),\n\nand high asset valuation, DMC paid a peak cycle price, which Defendants would later\n\ndescribe as buying at \u201cthe top of the market.\u201d (See below at \u00b6149). Buying at the top of\n\nthe market means that almost shortly thereafter, prices and valuations fall substantially;\n\ni.e., it would be akin to buying internet stocks in 2000, or buying a house in 2006, where\n\nprices of those assets fell sharply in the years immediately thereafter. Buying at the top\n\n\n\n                                             9\n\fCase No. 1:24-cv-03387-GPG-CYC            Document 47    filed 06/23/25    USDC Colorado\n                                          pg 13 of 85\n\n\n\n\nof the market increases risk of the transaction, so investors would pay special attention\n\nto the resulting goodwill on such a transaction because, among other reasons, as long as\n\ngoodwill remains fully intact, that representation signals to investors that the acquired\n\nbusiness still commands a valuation\u2014based on nonpublic projections of its cash flows\n\nthat the Company possesses\u2014that materially exceeds its book value (because otherwise\n\nit would be impaired, or written down).\n\n       27.    Following the closing of the Arcadia Acquisition, the remaining 40% minority\n\ninterest in Arcadia continued to be held by New Arcadia Holdings, Inc., which is wholly-\n\nowned by Synergex Group LLC, Trustee of the Munera Family ESBT (\u201cMunera\u201d). The\n\nimplied valuation for all of Arcadia at its closing was approximately $470 million.1\n\n       28.    At the time of the Arcadia Acquisition, DMC\u2019s total market capitalization was\n\napproximately $688.5 million, based on a closing share price of $36.74 on December 16,\n\n2021, and fully diluted shares outstanding as of September 30, 2021, of 18.739 million.\n\n       29.    To fund a portion of the purchase price for the acquisition, DMC entered\n\ninto a new five-year syndicated credit facility, which included a $150 million term loan and\n\na $50 million revolving line of credit. The proceeds of the $150 million term loan were\n\nused to partially fund the acquisition. The credit facility was secured by the assets of DMC\n\n\n\n\n1\n  Because the Arcadia Acquisition was for 60% (rather than 100%), the implied valuation\nfor the entire business would be the $282.5 million purchase price divided by .60 =\n$470.83 million. According to the Company\u2019s December 23, 2021 press release, the \u201ctotal\nimplied transaction value is $469.6 million.\u201d The difference between the two figures likely\nresults from a rounding difference.\n\n\n                                             10\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47       filed 06/23/25    USDC Colorado\n                                        pg 14 of 85\n\n\n\n\nincluding accounts receivable, inventory, and fixed assets, as well as guarantees and\n\nshare pledges by DMC and its subsidiaries, including the newly-acquired Arcadia.\n\n       30.    The Arcadia Acquisition also included a provision that DMC had the option\n\nto acquire the remaining 40% interest in Arcadia through a three-year call option that\n\ncould be exercised beginning in December 2024. Similarly, Munera, as the seller, had its\n\nown option, enabling Munera to sell its remaining 40% interest to DMC through a\n\ncorresponding three-year put option.\n\n       31.    A call option gives the holder of the call the right but not the obligation to\n\npurchase a given security at a predetermined exercise price, known as the strike price.\n\nFor example, if one held a call on DMC stock with a $15 exercise price, and the stock\n\nprice rose to $20, the holder of the call could buy DMC stock for $15, rather than the $20\n\nprevailing price in the market.\n\n       32.    A put option is the mirror image, giving the holder of the put the right, but\n\nnot the obligation, to sell a security at a given price. So, if DMC\u2019s stock instead fell from\n\n$15 per share to $10 per share, and the put had an exercise price of $15, then the put\n\nholder could sell DMC stock for $15, rather than the $10 prevailing price in the market.\n\n       33.    The mechanics of the DMC/Arcadia put/call provision were as follows. As\n\npart of the transaction, Munera received the put option on its 40% of Arcadia not sold to\n\nDMC, while DMC received a call option on the 40% of Arcadia that it did not buy. The\n\nDecember 21, 2021 Form 8-K stated that, \u201cMunera shall have the right (but not the\n\nobligation) to require the Company to purchase (the \u2018Put Right\u2019) its interests in Arcadia\n\nfor a price based on the higher of (a) a value based on the Acquisition purchase price and\n\n\n\n                                             11\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47       filed 06/23/25    USDC Colorado\n                                        pg 15 of 85\n\n\n\n\n(b) a multiple of Arcadia\u2019s average EBITDA for the preceding two fiscal years and its\n\nprojected EBITDA for the then-current fiscal year (the \u2018Option Purchase Price\u2019), and the\n\nCompany shall have the right (but not the obligation) to purchase all of Munera\u2019s interests\n\nfor the same price (the \u2018Call Right\u2019). If the Put Right is exercised, the Option Purchase\n\nPrice will be paid, at DMC\u2019s option, (i) in cash or (ii) 20% in cash and 80% in shares of\n\npreferred stock. If the Company, exercises the Call Right, the Option Purchase Price will\n\nbe paid in cash.\u201d\n\n       34.    Combining those two features, economically, it was almost as if the put/call\n\nprovision was essentially a deferred purchase obligation for DMC to buy the remaining\n\n40% of Arcadia that it didn\u2019t already own from Munera because, from DMC\u2019s perspective,\n\nwhile DMC\u2019s call option did not require it to buy the 40% of Arcadia from Munera (because\n\na call option gives the holder the right but not the obligation), Munera\u2019s put option (giving\n\nMunera the right but not the obligation to sell its 40% interest)\u2014to which DMC was a\n\npotential obligor\u2014could obligate DMC to buy the remaining 40% of Arcadia that it did not\n\nown on or after the third anniversary of the Arcadia transaction (i.e., December 23, 2024).\n\nIn other words, the fact that Munera could exercise its put option in December 2024,\n\ncreated a massive looming obligation for at least $187.1 million (which was the floor value\n\nof Munera\u2019s put option) that DMC would ultimately have to meet\u2014regardless of whether\n\nDMC desired to exercise its call option. DMC reported that the 40% minority interest of\n\nArcadia (i.e., the put/call option) was valued at $187.76 million, as of December 31, 2023.\n\n\n\n\n                                             12\n\fCase No. 1:24-cv-03387-GPG-CYC         Document 47       filed 06/23/25   USDC Colorado\n                                       pg 16 of 85\n\n\n\n\n       C.    DMC\u2019s Acquisition Of Arcadia Created A $141 Million Goodwill Asset\n             On DMC\u2019s Balance Sheet\n\n       35.   Whenever a public company acquires another entity for more than the\n\ntarget\u2019s book value, a new asset called \u201cgoodwill\u201d is created.2 Goodwill is an intangible\n\nasset that constitutes the portion of the purchase price above the net fair value of all of\n\nthe assets purchased (i.e., the target company\u2019s book value). Because DMC paid $282.5\n\nmillion for Arcadia, and recorded $141.2 million in corresponding goodwill, that means the\n\nbook value of Arcadia at the time that DMC bought it was $141.3 million (because goodwill\n\nis just the difference between the purchase price and the book value, so rearranging those\n\nfigures, purchase price minus goodwill equals book value).\n\n       36.   The underlying value of the goodwill asset often consists of, among other\n\nthings, the acquired company\u2019s brand name, customer base, customer relations,\n\nemployee relations, and/or proprietary technology.\n\n       37.   DMC first reported Arcadia\u2019s goodwill in the Company\u2019s 2021 Form 10-K,\n\nfiled on March 1, 2022, signed by Defendant Kuta (when he was the Company\u2019s CFO),\n\nstating:\n\n       Goodwill represents the amount by which the purchase price exceeds the\n       fair value of identifiable tangible and intangible assets and liabilities\n       acquired in a business combination. Goodwill acquired in a business\n       combination and determined to have an indefinite useful life is not\n       amortized, but instead is tested for impairment at least annually during the\n       fourth quarter or whenever events or changes in circumstances indicate that\n       the carrying value might not be fully recoverable. For goodwill, impairment\n       is assessed at the reporting unit level. A reporting unit is defined as an\n       operating segment or a component of an operating segment to the extent\n\n\n2\n Book value is a company\u2019s or an asset\u2019s worth, calculated by subtracting liabilities from\nassets.\n\n\n                                            13\n\fCase No. 1:24-cv-03387-GPG-CYC           Document 47       filed 06/23/25    USDC Colorado\n                                         pg 17 of 85\n\n\n\n\n       discrete financial information is available that is reviewed by segment\n       management.\n\n       As of and for the year ended December, 31, 2021, all goodwill recorded\n       within the Consolidated Balance Sheet relates to the Arcadia acquisition.\n       Given the proximity of the acquisition date to the balance sheet date, a\n       quantitative impairment assessment was not deemed necessary of\n       performance. No goodwill was outstanding as of and for the year ended\n       December 31, 2020.\n\n       38.      Because goodwill is an intangible asset, its value is reported at the\n\nacquisition price unless or until circumstances arise in which the intangible asset must be\n\nwritten off, or \u201cimpaired.\u201d Such accounting differs from a tangible asset, such as a building,\n\nwhich is depreciated over time (and thus a building\u2019s value typically changes on each\n\nquarterly balance sheet). Goodwill is a static figure and does not rise (unless another\n\nacquisition is made of course), but it can fall \u2013 if circumstances warrant writing the goodwill\n\ndown. The circumstances in which goodwill should be impaired are discussed below in\n\n\u00b6\u00b672-83. Importantly, because goodwill represents an amount above fair value of the\n\nasset acquired, if the fair value of the asset were to become materially impaired, goodwill\n\nwould fall as well.\n\n       39.      From the date of the acquisition of Arcadia in December 2021 until the truth\n\nwas revealed (at the end of the Class Period), DMC continuously reported $141 million in\n\ngoodwill for Arcadia on DMC\u2019s consolidated balance sheet. DMC had no other goodwill\n\non its balance sheet, other than that in connection with the Arcadia acquisition, during the\n\nClass Period.\n\n       40.      DMC described the conditions that it would test its goodwill (to determine if\n\nan impairment may be warranted) as:\n\n\n\n                                              14\n\fCase No. 1:24-cv-03387-GPG-CYC        Document 47        filed 06/23/25    USDC Colorado\n                                      pg 18 of 85\n\n\n\n\n     Goodwill acquired in a business combination and determined to have an\n     indefinite useful life is not amortized, but instead is tested for impairment at\n     least annually during the fourth quarter or whenever events or changes in\n     circumstances indicate that the carrying value might not be fully\n     recoverable. For goodwill, impairment is assessed at the reporting unit level.\n     A reporting unit is defined as an operating segment or a component of an\n     operating segment to the extent discrete financial information is available\n     that is reviewed by segment management. The Company\u2019s reporting units\n     are each of the three operating segments disclosed in Note 10 within Item\n     8 \u2014 Financial Statements and Supplementary Data.\n\n     To test goodwill for impairment, we first perform a qualitative assessment\n     to determine whether it is more likely than not that the fair value of a\n     reporting unit is less than its carrying value. For the qualitative assessment,\n     we consider macroeconomic and market conditions, cost factors, financial\n     performance and other relevant entity-specific events. If we conclude that it\n     is more likely than not that the fair value of a reporting unit is less than its\n     carrying value during the qualitative assessment, then we quantitatively\n     estimate the fair value of the reporting unit and compare the estimated fair\n     value to its carrying value. Based on the results of the quantitative\n     assessment, if the carrying value exceeds the fair value of the reporting unit,\n     an impairment loss is recognized for the difference.\n\n     The assumptions used in a quantitative assessment require significant\n     judgment, which include assumptions about future economic conditions and\n     company-specific conditions and plans. In the Company's quantitative\n     assessment, we estimate the fair value of a reporting unit by using the\n     income approach, specifically a discounted cash flow analysis. A\n     number of assumptions and estimates are required in performing the\n     discounted cash flow analysis, including forecasts of revenues, gross\n     profits, capital expenditures, discount rates, working capital changes, and\n     terminal growth rates. Actual results may differ from those assumed in the\n     forecasts.\n\n     As of December 31, 2023, the carrying value of goodwill was\n     $141,725[,000] and relates entirely to the Arcadia Products operating\n     segment and reporting unit. As of the date of the 2023 annual impairment\n     test, we performed a quantitative assessment and concluded that the fair\n     value of the Arcadia Products reporting unit exceeded its carrying value by\n     approximately 10%. Discount rates are one of the more significant\n     assumptions used in the income approach. If the Company increased the\n     discount rate used by approximately 100 basis points, the fair value of\n     Arcadia Products would still exceed its carrying value. A sustained decline\n     in general economic conditions, activity levels in end markets or equity\n\n\n                                           15\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47      filed 06/23/25   USDC Colorado\n                                        pg 19 of 85\n\n\n\n\n         valuations could impact the judgments and assumptions used to estimate\n         the fair value of Arcadia Products, and the Company could be required to\n         record an impairment charge in the future. If the Company was required to\n         recognize an impairment charge in the future, the Consolidated Balance\n         Sheets and Consolidated Statements of Operations and Comprehensive\n         Income (Loss) could be materially impacted; however, the non-cash charge\n         would not impact the Company\u2019s consolidated cash flows, current liquidity,\n         and capital resources.3\n\n         41.   As shown above, when DMC\u2019s goodwill becomes impaired, the amount of\n\nthe resulting impairment reduces the goodwill asset on DMC\u2019s balance sheet, which has\n\na direct and corresponding effect on earnings. Put differently, if goodwill is artificially\n\noverstated (i.e., it should be impaired, but it is not), that overstatement will also,\n\nnecessarily, overstate earnings for all periods during which goodwill is overstated but not\n\nimpaired.\n\n         D.    Shortly After Acquiring Arcadia, Macroeconomic Headwinds Began\n               To Pressure Arcadia\u2019s Business\n\n         42.   Given Arcadia\u2019s business model, with direct exposure to the construction\n\nmarket, Arcadia was highly susceptible to rising interest rates. And because DMC bought\n\nArcadia in late 2021, the timing of that purchase could not have been worse because\n\ninterest rates began to surge alongside the inflationary pressures that followed the global\n\npandemic.\n\n\n\n\n3\n    Throughout the Complaint, all emphasis is added unless otherwise noted.\n\n\n                                            16\n\fCase No. 1:24-cv-03387-GPG-CYC           Document 47       filed 06/23/25   USDC Colorado\n                                         pg 20 of 85\n\n\n\n\n       43.    As shown above, mortgage rates hit generational lows during 2021, but\n\nbegan a sharp and sudden increase just as the Arcadia Acquisition was closing. That\n\nspike in interest rates, beginning in 2021 and 2022 served as a headwind for the\n\nconstruction industry, including for Arcadia. Indeed, one of Arcadia\u2019s publicly-traded\n\ncompetitors, Jeld-Wen, recorded a $54.9 million interim goodwill impairment during the\n\nthird quarter of 2022 to its European segment, reflecting, among other factors, \u201cincreasing\n\ninterest rates, persistent inflation, and operational inefficiencies attributable to ongoing\n\nglobal supply chain disruptions.\u201d Jeld-Wen would record two more goodwill impairments\n\nduring 2024 (one for its European segment, and one for its North American segment),\n\nwhich were also attributed in part to rising interest rates.\n\n       44.    These inflationary headwinds, supply chain disruptions, and higher interest\n\nrates began to impact Arcadia. For instance, while Arcadia\u2019s Q2 2023 reported revenue\n\nexceeded guidance by 2.1%, by Q3 2023, Arcadia missed its revenue guidance by 5.4%,\n\nand by Q4 2023, it missed its guidance by 5.6%. Worse, it was missing such guidance on\n\nlower and lower targets: Arcadia\u2019s Q3 2023 revenue was $71.5 million, or 11% lower than\n\nthe prior year; and Q4 2023 revenue was $67.9 million, 9% lower than the prior year.\n\n\n                                             17\n\fCase No. 1:24-cv-03387-GPG-CYC        Document 47      filed 06/23/25   USDC Colorado\n                                      pg 21 of 85\n\n\n\n\nArcadia\u2019s full year 2023 revenue was just below its full year 2022 revenue, dipping 0.2%,\n\nas compared to the 13% average compound growth that Arcadia experienced before\n\nDMC bought it. Yet, unlike Arcadia\u2019s competitor, Jeld-Wen, Arcadia recorded no goodwill\n\nimpairment during 2022 or 2023. By keeping Arcadia\u2019s goodwill valued at the same level\n\nas it was before the macroeconomic headwinds emerged, Defendants implicitly signaled\n\nto investors that the future stream of cash flows that Defendants projected to value\n\nArcadia\u2019s goodwill under the income approach, was robust enough to offset both declining\n\nrevenue and rising discount rates (otherwise the goodwill would have been impaired).\n\n      45.    By Q1 2024, Arcadia\u2019s reported revenue fell to $61.9 million, a 23% decline\n\nfrom the prior year, and an 8.9% quarter-over-quarter decline, and a continuation of the\n\ndowntrend that began in Q2 2023. Arcadia\u2019s Q1 2024 revenue missed its guidance by\n\n10.3%, and Arcadia\u2019s Q1 2024 EBITDA fell 44% from the prior year. And once again, as\n\nof Q1 2024, DMC reported the same $141 million of goodwill (all of which was associated\n\nwith Arcadia) on its balance sheet for Q1 2024.\n\n      46.    As DMC\u2019s primary and largest division, Arcadia contributed significantly to\n\nDMC\u2019s net sales and gross profits leading up to the Class Period. During the years ended\n\nDecember 31, 2023 and 2022, Arcadia represented approximately 42% and 46% of\n\nDMC\u2019s consolidated net sales, respectively; DynaEnergetics represented approximately\n\n44% and 40%, respectively; and NobelClad represented approximately 15% and 14%,\n\nrespectively. For 2023, the Company reported gross profits of $92.2 million for Arcadia;\n\n$86.7 million for DynaEnergetics; and $33.5 million for NobelClad. And for 2023,\n\n\n\n\n                                           18\n\fCase No. 1:24-cv-03387-GPG-CYC        Document 47      filed 06/23/25   USDC Colorado\n                                      pg 22 of 85\n\n\n\n\nArcadia\u2019s Adjusted EBITDA of $29.7 million comprised around 30% of DMC\u2019s total\n\nAdjusted EBITDA of $96.0 million.\n\n      47.    Further, Arcadia accounted for all of the goodwill on DMC\u2019s balance sheet,\n\nwhich the Company reported as $141.7 million as of December 31, 2023.\n\n      E.     Despite Worsening Results And Growing Economic Headwinds,\n             Defendants Continued To Report Robust And Unchanged Levels Of\n             Goodwill For Arcadia, And Overstated Net Income\n\n      48.    Notwithstanding the above worsening in Arcadia\u2019s performance relative to\n\nguidance, and the macroeconomic headwinds that prompted Arcadia\u2019s competitor, Jeld-\n\nWen, to recognize a goodwill impairment, Defendants still reported Arcadia\u2019s balance\n\nsheet as having unchanged goodwill of $141 million. For instance, in Q1 2024, even after\n\nArcadia\u2019s third quarter in a row of missing revenue guidance, Defendants again reported\n\na $141.7 million goodwill asset on Arcadia\u2019s balance sheet\u2014giving investors the\n\nmisleading impression that Arcadia was seemingly weathering the worsening conditions.\n\nThat endorsement of goodwill was an implicit message to investors that Arcadia still had\n\nsubstantially similar long-term business prospects as it did when DMC first bought it\n\n(when interest rates were much lower), otherwise it would have been impaired.\n\n      49.    In other words, because Defendants had told investors that DMC valued\n\nArcadia using the income approach, and because the income approach reflects the\n\nsummation of projected future cash flows, by maintaining Arcadia\u2019s goodwill at the same\n\n$141.7 million level, Defendants implicitly told investors that Arcadia\u2019s worsening\n\nbusiness (e.g., missing revenue guidance for three quarters in a row as of Q1 2024) was\n\nonly temporary\u2014because when Arcadia was acquired, revenue was growing an average\n\n\n\n\n                                          19\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47     filed 06/23/25   USDC Colorado\n                                        pg 23 of 85\n\n\n\n\n13% per year, yet by Q1 2024, revenue had fallen 23% from the prior year. By not\n\nimpairing goodwill in Q1 2024, Defendants implicit message to investors was things are\n\ngoing to get better\u2014because if that were not the case, Arcadia\u2019s goodwill would have\n\nbeen impaired by the end of Q1 2024.\n\n       50.    But that goodwill representation was false because, as Defendants would\n\nlater admit, the reasons that they gave when they belatedly impaired Arcadia\u2019s goodwill\n\n(in Q3 2024) existed by the end of Q1 2024 (discussed further below in \u00b6\u00b6108-130).\n\n       51.    As Defendants acknowledged in DMC\u2019s Form 10-K for the fiscal year ended\n\nDecember 31, 2023, filed with the SEC on February 23, 2024 (the \u201c2023 10-K\u201d), \u201c[i]f the\n\nCompany was required to recognize an impairment charge in the future, the Consolidated\n\nBalance Sheets and Consolidated Statements of Operations and Comprehensive Income\n\n(Loss) could be materially impacted.\u201d\n\n       52.    In other words, overstating goodwill necessarily overstates earnings during\n\nevery period that goodwill is overstated because goodwill impairments reduce pre-tax\n\nincome, dollar-for-dollar.\n\n       53.    DMC\u2019s goodwill was impaired by Q1 2024, yet Defendants reported both\n\nQ1 2024 and Q2 2024 goodwill as $141.7 million, thus materially overstating assets,\n\nequity, and net income.\n\n       F.     Defendants Cannot Disclaim Knowledge Of DMC\u2019s Obligation To\n              Impair Arcadia\u2019s Goodwill Given Defendants\u2019 Focus On Arcadia,\n              Installation Of Experienced Management In Key Positions, And Design\n              Of ERP Systems To Better Monitor Arcadia\n\n       54.    Defendants were keenly focused on Arcadia during the Class Period and\n\nhad the people and systems in place to monitor it\u2014in real time. Indeed, Defendants both\n\n\n                                           20\n\fCase No. 1:24-cv-03387-GPG-CYC         Document 47      filed 06/23/25    USDC Colorado\n                                       pg 24 of 85\n\n\n\n\nimplemented an Enterprise Resource Planning (\u201cERP\u201d) system and installed executives\n\nwith knowledge of finance and accounting at key positions that oversaw Arcadia\u2019s\n\nworsening performance.\n\n      55.    Following the acquisition of Arcadia, but before the Class Period began,\n\nDMC announced in a press release on February 24, 2022, that DMC would be\n\nimplementing several initiatives that included the \u201cimplementation of a new enterprise\n\nresource planning (ERP) system.\u201d\n\n      56.    Among other things, an ERP system creates a centralized database for all\n\nbusiness information and facilitates the data flow between various departments.\n\n      57.    In January 2023, DMC sought to \u201caccelerat[e] the integration and capacity\n\nexpansion of Arcadia,\u201d and evaluate and develop new operating strategies for its three\n\nbusiness units, which included the appointment of new executive management at the\n\nCompany. Accordingly, on January 5, 2023, DMC announced that James Chilcoff\n\n(\u201cChilcoff\u201d) had been hired as President to lead Arcadia. Prior to joining DMC, Chilcoff\n\nhad been with Mohawk Industries as president of its wood and laminate flooring division\n\noverseeing five manufacturing plants. The DMC press release stated:\n\n      \u201c[Chilcoff] is an accomplished leader in the building products industry,\u201d said\n      Kevin Longe, president and CEO of DMC. \u201cHis extensive background in\n      operations, manufacturing, sales, supply chain, finance and product-line\n      management will be invaluable as Arcadia continues to streamline\n      operations, increase production capacity and expand the markets for its\n      commercial exterior, commercial interior and high-end residential product\n      lines.\u201d\n\n      58.    Less than two weeks later, on January 17, 2023, DMC announced another\n\nmanagement change when it announced that Kevin Longe, then president and CEO of\n\n\n\n                                           21\n\fCase No. 1:24-cv-03387-GPG-CYC           Document 47     filed 06/23/25   USDC Colorado\n                                         pg 25 of 85\n\n\n\n\nDMC, would be stepping down \u201ceffective immediately.\u201d Longe had served as DMC\u2019s\n\npresident and CEO since March 2013, so most of his experience leading up to the Arcadia\n\nacquisition was in DMC\u2019s other two businesses, i.e., not Arcadia (because Arcadia was\n\nnot acquired by DMC until late 2021). The Company further announced the appointment\n\nof Defendant Kuta (who had been serving as DMC\u2019s CFO since 2014) and David Aldous\n\n(\u201cAldous,\u201d DMC\u2019s Chairman of the Board) as interim co-CEOs of DMC. The press release\n\nfurther quoted Defendant Kuta stating:\n\n       \u201cWe are laser focused on enabling each of our businesses to achieve their\n       growth objectives, deliver industry leading margins and improved free cash\n       flow. Our highest priorities include accelerating the integration of Arcadia,\n       strengthening the profitability of DynaEnergetics, achieving commercial\n       success with NobelClad\u2019s new products, and improving DMC\u2019s cash flow\n       through more effective working capital management and targeted cost\n       reductions.\u201d\n\n       59.   On February 23, 2023, the Company updated progress on its ERP system,\n\nand confirmed that \u201cArcadia has made significant progress implementing its new ERP\n\nplatform, and the first phase of the project should go live during the second quarter [of\n\n2023].\u201d\n\n       60.   Five days later, on February 28, 2023, Defendant Walter, who was hired the\n\nmonth before as the Senior Vice President of Finance for DMC, was appointed as the\n\nCompany\u2019s CFO.\n\n       61.    The day after Walter was installed as CFO, on March 1, 2023, Defendant\n\nSeger was appointed as the Company\u2019s Chief Accounting Officer. Defendant Seger\n\npreviously served as the Company\u2019s Vice President of Finance Integration since January\n\n2022, with the primary responsibility of managing the coordination of significant financial\n\n\n\n                                            22\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47      filed 06/23/25    USDC Colorado\n                                        pg 26 of 85\n\n\n\n\nactivities relating to Arcadia. Before that, Seger spent 10 years at EY, which was Arcadia\u2019s\n\nauditor.\n\n       62.    On August 7, 2023, the Company announced that Defendant Kuta had been\n\nappointed as DMC\u2019s President, CEO and director, \u201ceffective immediately.\u201d The press\n\nrelease quoted Aldous as stating: \u201cMike [Kuta\u2019s] leadership skills, strategic thinking, and\n\ndeep knowledge of DMC\u2019s businesses and culture made it clear he was the ideal person\n\nto lead the Company. The [B]oard and I look forward to supporting Mike [Kuta] and his\n\nleadership team as they aggressively work to execute on DMC\u2019s strategy and move the\n\nCompany forward.\u201d\n\n       63.    In parallel with DMC\u2019s management changes, many of whom had\n\naccounting backgrounds, Defendants continued touting their progress on the Company\u2019s\n\nERP system. For instance, on November 2, 2023, in the Form 10-Q for the third quarter\n\nof 2023, the Company confirmed that \u201cPhase one of a new enterprise resource planning\n\n(ERP) system went live in July 2023, and is expected to enhance operating efficiencies\n\nand the internal control environment throughout Arcadia.\u201d\n\n       64.    Also on November 2, 2023, during a call with investors and analysts\n\nDefendant Walter explained that Arcadia\u2019s ERP system was improving internal controls\n\nby allowing Defendants to have \u201cbetter controls and better visibility into data\u201d at\n\nArcadia, including as to inventory, material costs, customers, and sales. Defendant Walter\n\nfurther stated that \u201cwe think that [the ERP] is going to provide or prevent any type of\n\nmargin leakage between changes in aluminum costs and our ability to pass that through\n\nto customers. But another benefit that we\u2019re really excited about is it should also allow us\n\n\n\n                                            23\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47       filed 06/23/25    USDC Colorado\n                                        pg 27 of 85\n\n\n\n\nto be more efficient from an inventory turn standpoint. So if you think about our business\n\nmodel, we\u2019ve got a hub and satellite type of structure with this new ERP system, we\u2019re\n\ngoing to have a better understanding of where that inventory is, how it\u2019s turning at the\n\ndifferent satellites, and how we can transfer it from maybe 1 satellite where it\u2019s moving\n\nslower into another one where it\u2019s moving, faster.\u201d\n\n       65.    On November 13, 2023, the Company announced that James O\u2019Leary\n\n(\u201cO\u2019Leary\u201d) had been appointed to be a director. The press release quoted Aldous, the\n\nCompany\u2019s Chairman, as stating: \u201cJim [O\u2019Leary] brings a wealth of relevant experience\n\nand expertise to the DMC board, and we are thrilled to welcome him as a new director.\n\nHis insights and guidance will be invaluable as DMC continues to execute its strategy.\u201d\n\n       66.    Following months of communicating to investors that Defendants had better\n\nvisibility into Arcadia, and following executive changes that installed three executives with\n\ndeep experience in accounting,4 on January 29, 2024 (the start of the Class Period), DMC\n\nannounced that Arcadia would be the future of the DMC. More specifically, the January\n\n29, 2024 press release announced that the Company had initiated \u201ca review of strategic\n\nalternatives for it DynaEnergetics and NobelClad businesses\u201d that could include a sale,\n\nmerger, or other business combinations of the two other divisions. The message was\n\nclear: Defendants had invested into gaining real time insight into Arcadia, and they liked\n\nwhat they saw. Defendants described Arcadia as the Company\u2019s \u201ccore division\u201d and was\n\n\u201ctaking a very focused approach toward maximizing [Arcadia\u2019s] differentiated business\n\n\n\n4\n Defendants Kuta, Walter, and Seger all have accounting degrees, MBAs, and have\nearned the CPA designation. See below at \u00b6\u00b6157-158.\n\n\n                                             24\n\fCase No. 1:24-cv-03387-GPG-CYC         Document 47       filed 06/23/25    USDC Colorado\n                                       pg 28 of 85\n\n\n\n\nmodel and capitalizing on growth opportunities within it large addressable markets.\u201d\n\nDefendants\u2019 statements affirmed to investors that DMC\u2019s focus was on Arcadia as its core\n\ndivision. And because DMC had spent the past twelve months improving visibility into\n\nArcadia and was now being led by CPAs, the fact that Defendants would sell DMC\u2019s other\n\ntwo business segments to focus on Arcadia was an implicit message to investors that\n\nArcadia\u2019s business was strong: because no reasonable investor would expect a company\n\nto sell two-of-three business to focus on the worst performing business.\n\n       67.    Following the Company\u2019s announcement about focusing on Arcadia,\n\nDefendants continued to reiterate the benefits of its ERP system. For instance, in the\n\n2023 10-K, the Company stated:\n\n       We expect Arcadia Products to be the primary driver of DMC\u2019s future\n       financial and operational growth, reflecting its large addressable market and\n       differentiated business model. Arcadia Products is investing in new digital\n       technologies and manufacturing capacity to facilitate its expansion. Phase\n       one of a new enterprise resource planning (ERP) system went live in the\n       third quarter of 2023 and is enhancing operating efficiencies and the\n       internal control environment. Additional aluminum painting capacity was\n       added in the second half of 2023, and the business expects further\n       expansions in painting and anodizing capacity in 2024.\n\n       68.    On May 2, 2024, the Company filed its Form 10-Q for First Quarter of 2024\n\n(\u201cQ1 2024 10-Q\u201d), reiterating that Arcadia\u2019 ERP System was \u201cenhancing operating\n\nefficiencies and the internal control environment.\u201d\n\n       69.    During a call with investors and analysts on May 2, 2024, Defendant Kuta\n\nstated that \u201cWe\u2019re actually getting a lot of good visibility now out of our ERP system.\u201d\n\n\n\n\n                                            25\n\fCase No. 1:24-cv-03387-GPG-CYC        Document 47       filed 06/23/25     USDC Colorado\n                                      pg 29 of 85\n\n\n\n\n      70.    Then, on August 1, 2024, the Company filed its Form 10-Q for Second\n\nQuarter of 2024 (\u201cQ2 2024 10-Q\u201d), again reiterated that Arcadia\u2019s ERP system was\n\n\u201cenhancing operating efficiencies and the internal control environment.\u201d\n\n      G.     Defendants Improperly Delayed Recognizing A Goodwill Impairment\n             Charge For Arcadia\n\n      71.    Led by CPAs and armed with near real-time visibility into Arcadia\u2019s\n\nbusiness, during the Class Period, Defendants represented that DMC\u2019s financial\n\nstatements were prepared in conformity with GAAP. These representations were\n\nmaterially false and/or misleading when made because Defendants, in violation of GAAP,\n\nknowingly or recklessly delayed the recognition of a goodwill impairment charge of more\n\nthan $141 million for the Arcadia business, thereby falsely inflating the Company\u2019s\n\nincome, assets, and equity during the Class Period, until DMC belatedly recognized the\n\ncharge on November 4, 2024.\n\n      72.    GAAP is a series of authoritative standards (set out by policy boards,\n\nincluding the Financial Accounting Standards Board, or \u201cFASB\u201d) that standardizes and\n\nregulates the definitions, assumptions, and methods used in accounting across\n\nindustries, and seeks to ensure that a company\u2019s financial statements are complete,\n\naccurate, consistent, and comparable. FASB\u2019s Accounting Standards Codification\n\n(\u201cASC\u201d) is the current source of U.S. GAAP.\n\n      73.    Compliance with GAAP is a basic fundamental obligation of publicly traded\n\ncompanies, like DMC. Indeed, as set forth in SEC Rule 4-01(a) of SEC Regulation S-X,\n\n\u201c[f]inancial statements filed with the [SEC] which are not prepared in accordance with\n\n[GAAP] will be presumed to be misleading or inaccurate.\u201d 17 C.F.R. \u00a7210.4-01(a)(1).\n\n\n                                           26\n\fCase No. 1:24-cv-03387-GPG-CYC            Document 47        filed 06/23/25     USDC Colorado\n                                          pg 30 of 85\n\n\n\n\n       74.     Goodwill is an intangible asset subject to GAAP. ASC 805-10-05-4 \u201crequires\n\nthat a business combination be accounted for by applying what is referred to as the\n\nacquisition method.\u201d ASC 805-20-30-1 describes the acquisition method, which requires\n\nthe acquiring company to record the assets acquired and liabilities assumed at their\n\nrespective fair market values as of the date of the acquisition. ASC 805-10-20 describes\n\nfair value as \u201c[t]he price that would be received to sell an asset or paid to transfer a liability\n\nin an orderly transaction between market participants at the measurement date.\u201d Goodwill\n\nis calculated by subtracting the fair value of the identifiable net assets acquired from the\n\npurchase price. ASC 805-30-30-1. This is also known as the purchase price actually paid\n\n(i.e., the market value) minus the book value of the entity.\n\n       75.     Once goodwill is added to an acquiring company\u2019s balance sheet, it just sits\n\nthere as a static figure (an asset), unless it is later written off. And because goodwill is a\n\nstatic figure, issuers are obligated to value it to determine whether the reported value on\n\nthe balance sheet still reflects reality. To value goodwill, an \u201cincome approach\u201d or a\n\n\u201cmarket approach\u201d can be used.\n\n       76.     EY, DMC\u2019s auditor, explains that \u201cdrivers of fair value for a reporting unit\n\nthat is valued using the income approach may be cash flow projections, terminal growth\n\nrate or the weighted-average cost of capital (WACC), whereas the drivers of fair value for\n\na reporting unit that is valued using the market approach may be applicable industry\n\n\n\n\n                                               27\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47        filed 06/23/25   USDC Colorado\n                                        pg 31 of 85\n\n\n\n\nmultiples such as multiples of revenue or earnings before interest, taxes, depreciation\n\nand amortization (EBITDA).\u201d 5\n\n       77.    In other words, unlike the income approach, the market approach includes\n\nobservable inputs of fair value, including but not limited to non-binding offers received\n\nfrom third-parties and comparative market multiples.\n\n       78.    If, after using either the income or market approach, an issuer determines\n\nthat its goodwill exceeds its carrying value (i.e., if its net present value is less than that\n\nwhich is being publicly reported), the issuer must write-off that goodwill down to the level\n\nof market value and record an impairment charge.\n\n       79.    A goodwill impairment charge is an acknowledgement that an acquired\n\nbusiness is no longer worth as much as it was at the time of the acquisition. Goodwill\n\nimpairments directly reduce net income on the income statement; and also reduce assets\n\nand shareholders equity on an issuer\u2019s balance sheet.\n\n       80.    GAAP requires that companies test their goodwill at least once per year.\n\nBut, if certain indicators, or \u201ctriggering events,\u201d arise that suggests goodwill should be\n\ntested more than once per year, companies must make such an interim test.\n\n       81.    According to the EY Advisory, under ASC 350-20-35-30, a number of non-\n\nexhaustive factors exist that establish whether circumstances have changed such that an\n\nadditional goodwill test should be conducted.\n\n\n\n\n5\n  See EY\u2019s June 2024 Financial Reporting Developments: \u201cIntangibles \u2013 goodwill and\nother\u201d (hereinafter, the \u201cEY Advisory\u201d).\n\n\n                                             28\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47      filed 06/23/25    USDC Colorado\n                                        pg 32 of 85\n\n\n\n\n       82.    Some events that may indicate that an interim impairment test is necessary\n\ninclude:\n\n               i.    Negative current events or long-term outlooks for\n                     specific industries impacting the company as a whole or\n                     specific reporting units\n\n               ii.   Not meeting analyst expectations or internal forecasts\n                     in consecutive periods, or downward adjustments to\n                     future forecasts\n\n              iii.   Planned or announced plant closures, layoffs, or asset\n                     dispositions\n\n              iv.    Market capitalization of the company below its book\n                     value.\n\n       83.    Additionally, the EY Advisory cautions that the SEC also considers certain\n\nfactors that may lead to a conclusion that an interim goodwill testing should take place.\n\nThese factors include, inter alia, (1) downward revisions to forecasts; (2) a decline in\n\nmarket capitalization below book value; (3) industry trends; and (4) restructuring actions\n\nor plans. The EY Advisory adds that \u201cSituations may arise where companies may need\n\nto consider performing an interim goodwill impairment test even though they may have\n\nrecently performed their annual assessment.\u201d\n\n       H.     Defendants Used DMC\u2019s Overstated Earnings And Balance Sheet To\n              Secure Desperately Needed Capital For The Looming Put-Call\n              Obligation\n\n       84.    Amidst Arcadia\u2019s declining financial performance, on February 6, 2024,\n\nDMC increased its borrowing capacity from a $50 million revolving facility to a $200 million\n\nfacility. Along with a $100 million term loan, the Company\u2019s total borrowing capacity\n\nincreased from $200 million to $300 million. The Company\u2019s first amended credit facility\n\n\n\n\n                                            29\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47        filed 06/23/25    USDC Colorado\n                                        pg 33 of 85\n\n\n\n\nspecifically provided for DMC\u2019s acquisition of its remaining 40% of Arcadia under the\n\nput/call provision.\n\n       85.    DMC\u2019s credit facility was backed by all of the Company\u2019s assets. As\n\ndiscussed above, before it was entirely written off, DMC\u2019s goodwill was a $141 million\n\nasset. In other words, Defendants gained financing that was secured, at least in part, by\n\nassets that were, as of the end of Q1 2024, overstated.\n\n       I.     The Truth Emerges\n\n       86.    On October 21, 2024, after market close, the Company issued a press\n\nrelease entitled, \u201cDMC Global Provides Business and Strategic Review Update,\n\nAnnounces Governance Changes,\u201d which it also filed on Form 8-K with the SEC, and\n\nwhich stated in pertinent part:\n\n       DMC Global [] today provided an update on its business conditions and\n       revised its third quarter financial guidance. The Company also commented\n       on its strategic review process and announced governance changes. DMC\n       said third quarter sales are expected to be approximately $152 million\n       versus prior guidance of $158 million to $168 million. The results reflect\n       weaker-than-expected sales at both Arcadia Products (\u201cArcadia\u201d), DMC\u2019s\n       architectural building products business, and DynaEnergetics, DMC\u2019s\n       energy products business.\n\n       Adjusted EBITDA* is now expected to be approximately $5 million versus\n       prior guidance of $15 million to $18 million. Third quarter results will include\n       inventory and bad debt charges at DynaEnergetics totaling approximately\n       $5 million, as well as lower fixed overhead absorption on reduced sales at\n       both Arcadia and DynaEnergetics.\n\n       The Company said its third quarter financial results will include an\n       approximate $142 million non-cash goodwill impairment charge\n       associated with DMC\u2019s December 2021 acquisition of a controlling\n       interest in Arcadia. The charge reflects Arcadia\u2019s recent financial\n       performance and near-term outlook. These factors, combined with the\n       significant decline in DMC\u2019s market capitalization, led the Company to\n\n\n\n\n                                             30\n\fCase No. 1:24-cv-03387-GPG-CYC        Document 47      filed 06/23/25   USDC Colorado\n                                      pg 34 of 85\n\n\n\n\n       conclude that the goodwill impairment charge was appropriate at this\n       time.\n\n       DMC president and CEO Michael Kuta, who is also leading Arcadia on an\n       interim basis, said, \u201cArcadia\u2019s third quarter performance was affected by\n       weak commercial and high-end residential construction activity, lower fixed\n       overhead absorption, and supply-chain disruptions that impacted product\n       availability.\u201d\n\n       87.     The Company also announced that \u201cit is no longer actively marketing\n\nDynaEnergetics and NobelClad,\u201d ending the strategic review process which the\n\nCompany announced at start of the Class Period on January 29, 2024.\n\n       88.     On this news, DMC common stock dropped more than 18%, from a $12.93\n\nper share closing price on October 21, 2024, to a close of $10.57 per share the next day,\n\non unusually high trading volume.\n\n       89.     Then, on November 4, 2024, after market close, the Company issued a\n\npress release entitled, \u201cDMC Global Reports Third Quarter Financial Results,\u201d which it\n\nalso filed on Form 8-K with the SEC, and in which it reported Q3 2024 sales of $152.4\n\nmillion, a $159.4 million net loss (inclusive of a $141.7 million goodwill impairment\n\ncharge at Arcadia), and adjusted EBITDA of $5.7 million. The press release further\n\nstated, in part:\n\n       At Arcadia, DMC\u2019s architectural building products business, persistent high\n       interest rates have impacted sales to the high-end luxury home market and\n       have resulted in continued soft commercial construction activity. Under the\n       direction of a new interim business president, Arcadia is executing a\n       series of internal initiatives designed to strengthen sourcing and\n       supply chain functions; improve sales, inventory and operations\n       planning processes; and more effectively leverage Arcadia\u2019s\n       enterprise resource planning system. The business is also reviewing\n       certain product lines that have not consistently met profitability targets.\n\n\n\n\n                                           31\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47      filed 06/23/25    USDC Colorado\n                                        pg 35 of 85\n\n\n\n\n       Arcadia\u2019s improvement initiatives are being led by interim president Chris\n       Scocos, who joined the business in September 2024 with a 25-year track\n       record of implementing lean manufacturing, process improvement and\n       operational excellence programs for industrial manufacturing businesses\n       across a broad range of industries, including building materials and\n       industrial manufactured products.\n\n       90.    On November 4, 2024, the Company also filed its Form 10-Q for Third\n\nQuarter of 2024 (\u201cQ3 2024 10-Q\u201d). Therein, Defendants revealed for the first time that\n\nthey had changed DMC\u2019s valuation method of goodwill from the \u201cincome approach\u201d to the\n\n\u201cmarket approach.\u201d\n\n       91.    More specifically, Defendants admitted that for the \u201cquantitative goodwill\n\nimpairment test,\u201d the Company \u201cutilized the market approach to estimate the fair value\n\nof the Arcadia Products reporting unit, but also considered the income approach to\n\nvalidate the results.\u201d6 Never before had Defendants indicated that goodwill could be\n\nvalued under a market approach, or that its valuation methodology was subject to change.\n\n       92.    The change in valuation methods for goodwill was material because, among\n\nother reasons, under a market approach, which is based on \u201cobservable inputs of fair\n\nvalue, including but not limited to non-binding offers received from third-parties and\n\ncomparative market multiples\u201d, investors could have better tracked DMC\u2019s goodwill had\n\nthey been informed that these \u201cobservable inputs\u201d could affect DMC\u2019s goodwill.\n\nSignificantly, the only third-party non-binding offer that was made publicly occurred during\n\n\n\n\n6\n  The income approach estimates the fair value by discounting the reporting unit\u2019s\nestimated future cash flows using an estimated discount rate, or expected return, that a\nmarketplace participant would have required as of the valuation date.\n\n\n                                            32\n\fCase No. 1:24-cv-03387-GPG-CYC        Document 47      filed 06/23/25   USDC Colorado\n                                      pg 36 of 85\n\n\n\n\nQ2 2024, not Q3 2024 when the impairment was taken.7 And if investors knew at the time\n\nthat the third-party offer made in Q2 2024 could have prompted an impairment of DMC\u2019s\n\ngoodwill, they could have responded accordingly. But Defendants kept investors in the\n\ndark. Had Defendants disclosed that goodwill could be valued under a market approach,\n\ninvestors would not have faced the same level of information asymmetry that is inherent\n\nin the income approach.\n\n      93.    Defendants continued, \u201c[b]ased on the results of our quantitative goodwill\n\nimpairment test, we recorded a $141,725[,000] impairment charge to goodwill during the\n\nthree and nine months ended September 30, 2024, which is included in \u2018Goodwill\n\nimpairment\u2019 in our Condensed Consolidated Statements of Operations.\u201d\n\n      94.    Later, on November 4, 2024, the Company held a conference call with\n\nanalysts and investors to discuss its Q3 2024 results. Defendants Kuta and Walter, as\n\nwell as O\u2019Leary, DMC\u2019s Executive Chairman, and Geoff High, DMC\u2019s Vice President,\n\nInvestor Relations & Corporate Communications, participated on the call, during which\n\nDefendant Kuta stated in part:\n\n\n\n\n7\n  On May 31, 2024, Steel Connect, Inc. (together with its affiliates, \u201cSteel\u201d) sent DMC a\nnon-binding offer to purchase DMC by acquiring all outstanding shares of DMC not\nalready owned by Steel for $16.50 per share in cash (Steel disclosed that it owned\n1,973,039 shares at the time). The offer letter was filed with the SEC on June 13, 2024.\nBy comparison, when DMC\u2019s acquisition of Arcadia closed, on December 23, 2021,\nDMC\u2019s share price closed at $40.82 per share. In other words, on May 31, 2024, third-\nparty, Steel, believed that DMC\u2019s total value was worth 59.5% less than it was when DMC\nacquired Arcadia. Yet, with that information, Defendants represented that Arcadia\u2019s\ngoodwill (in Q2 2024) was worth the same as it was in 2021\u2014as if a 59.5% decline in its\nentire business had not happened.\n\n\n                                           33\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47        filed 06/23/25    USDC Colorado\n                                        pg 37 of 85\n\n\n\n\n      Arcadia, our architectural building products business, reported third quarter\n      sales of $57.8 million, down 17% sequentially and down 19% versus the\n      third quarter last year. Arcadia\u2019s third quarter adjusted EBITDA margin was\n      5.8%, down from 17.8% in the second quarter and 18.8% year-over-year.\n      The decline principally reflects lower fixed cost absorption on reduced sales.\n\n      Persistently high interest rates have negatively affected sales to Arcadia\u2019s\n      high-end luxury home market, and also slowed commercial construction\n      activity in several Arcadia\u2019s regional markets. Arcadia\u2019s third quarter is also\n      impacted by supply chain disruptions that limited product availability.\n\n      We recently named Chris Scocos as our new Interim President at Arcadia.\n      He brings an extensive background in lean manufacturing, operational\n      excellence, and improving plant productivity. His immediate focus is on\n      strengthening sourcing and supply chain functions, improving sales,\n      inventory, and operations planning processes, and more effectively\n      leveraging Arcadia\u2019s ERP system. We also are reviewing certain product\n      lines that have not consistently met our profitability targets.\n\n      95.    On the call, O\u2019Leary (who would soon become DMC\u2019s interim president and\n\nCEO) and Defendant Kuta had the following colloquy with analyst Gerry Sweeney at Roth\n\nCapital Partners:\n\n      Analyst Gerry Sweeney, Roth Capital Partners:\n\n      I was hoping maybe we could discuss a little bit more about the work they\n      want to do at Arcadia to improve operations. And then as maybe a subset\n      to that question, are the systems in place to manage that? You talked about\n      the ERP explicitly leveraging that, but just curious if all the systems are in\n      place and then to go into a little bit more detail on maybe where some of the\n      low-hanging fruit is or what have you, and what's the path forward on that\n      front?\n\n      James O\u2019Leary:\n\n      I\u2019m going to turn it over to Mike [Kuta] on some of the specific initiatives that\n      he and Chris [Scocos] have been initiating, accelerating, and I think pushing\n      forward with the right skill sets for really the first time since the acquisition.\n\n      A macro comment, which I think, again, we might have underestimated\n      and certainly contributed to the goodwill write-off, we bought a family\n\n\n\n                                             34\n\fCase No. 1:24-cv-03387-GPG-CYC        Document 47        filed 06/23/25    USDC Colorado\n                                      pg 38 of 85\n\n\n\n\n     business. We bought a family business that had excellent commercial\n     people. They understood pricing. They understood their markets.\n\n     They had the right titles, the right org charts, the right people that at first\n     blush looked like they\u2019d be able to handle the amount of change that comes\n     with being a public company. And the digestion issues around ERP, putting\n     in compliance around being a public company, making sure you\u2019ve got, not\n     just people who have the titles of VP of supply chain, but actually know what\n     that means, particularly in a post-COVID environment.\n\n     We underestimated the challenges there. A couple of -- we took a few\n     calls after our last press release, and to me, these are things that are simple\n     to diagnose, easy to spot, not really wildly difficult to fix if you have people\n     with the right skill set, but take time.\n\n     And putting the ERP system on with the aggressiveness of the\n     implementation, dealing with upgrading people happens with every\n     family company acquisition I\u2019ve ever seen, and really dealing with just\n     the robustness of the systems and the people, exactly what you think\n     in a family company.\n\n     The answer was no, and that led to the write-off. We\u2019ve spotted,\n     diagnosed, have fixes in for all of them. Takes a little bit of time. You\u2019d feel\n     a lot better if it was at a time when elections behind us, whatever --\n     whichever party puts in place, is going to help put a little bit more wind in\n     the sales of the housing market more broadly and construction.\n\n     And interest rates being a little bit lower would help the high-end\n     residential market. But that said, while it would be nice to have the wind in\n     our sales, we recognize we don\u2019t. So we\u2019ve got initiatives underway that are\n     very specifically targeted to some of the things we probably could have been\n     a little bit more respectful from the get-go on.\n\n     Mike [Kuta], do you want to talk about some of the specific initiatives?\n\n     Defendant Kuta:\n\n     Yes, [analyst] Gerry [Sweeney]. So a couple of things that we\u2019re working on\n     with the team relate to supply chain and sourcing, so we can do a better job\n     on both supply chain sourcing and planning, as well as S&OP processes.\n\n     So one of the gaps we have there is demand planning and knowing what\n     we need when we need it. So that was some of my comments around the\n\n\n\n                                           35\n\fCase No. 1:24-cv-03387-GPG-CYC         Document 47       filed 06/23/25    USDC Colorado\n                                       pg 39 of 85\n\n\n\n\n      supply chain disruption. So we\u2019ve got programs we\u2019re putting in place there,\n      working on.\n\n      The other thing is there\u2019s the other item in the back-end of our businesses,\n      there\u2019s some improvements we can certainly make in our finishing\n      operations. So and a lot of that gets to -- you get your supply chain de-bottle\n      neck and you\u2019ve got to get scheduling right and finishing up.\n\n      So a lot of work we\u2019re doing on that to improve lead times, on-time and in\n      full, deliveries to customers, making sure we\u2019ve got shelf stocked with\n      product, making progress, but a ways to go.\n\n      So there\u2019s good things happening, but it\u2019s going to take some time, as Jim\n      [O\u2019Leary] mentioned, to sort that out.\n\n      96.    Then, later in the November 4 call, O\u2019Leary had the following colloquy with\n\nanalyst Ken Newman at KeyBanc Capital Partners:\n\n      Analyst Ken Newman, KeyBanc Capital Partners:\n\n      Okay. Maybe switching over to the restructuring actions you\u2019re taking, I --\n      one, I thought there was already an ERP implementation already kind\n      of in place at Arcadia. So, when you talk about the sourcing initiatives, just\n      what\u2019s kind of involved with that? And just what\u2019s -- is there any way to kind\n      of size the cash cost that\u2019s going to be associated with some of these\n      restructuring actions you\u2019re taking, and how long you expect that payback\n      to be?\n\n      James O\u2019Leary:\n\n      So, these are additions. We haven\u2019t talked specifically about any\n      restructuring, but, certainly everything\u2019s on the table when you have\n      results like we\u2019ve had, but there\u2019s nothing that we\u2019re specifically\n      announcing.\n\n      All the additions are top grading, upgrading people. You\u2019re 100% correct.\n      We\u2019ve talked about ERP in the past, but it certainly could have gone\n      smoother, and really holding people accountable and getting some\n      additional resources in. The cash cost, it\u2019s kind of part of doing business\n      when you\u2019re top grading and adding people, like in the case of Chris\n      [Scocos]. Chris [Scocos] is replacing a guy that we let go who had a\n      comparable salary, so it\u2019s not a huge incremental cost that we\u2019d put a\n      payback on.\n\n\n                                            36\n\fCase No. 1:24-cv-03387-GPG-CYC            Document 47        filed 06/23/25     USDC Colorado\n                                          pg 40 of 85\n\n\n\n\n       97.     Following the November 4, 2024 disclosures, the price of DMC common\n\nstock dropped another 6%, from a $9.84 per share closing price on November 4, 2024,\n\nto a close of $9.25 per share the next day, on high trading volume.\n\n       J.      Post-Class Period Events\n\n       98.     On November 13, 2024, the Company announced that Defendant Kuta\n\nwould \u201cretire\u201d as the Company\u2019s President, CEO, and as a member of the Board, effective\n\nNovember 29, 2024, and that O\u2019Leary would assume the role of interim president and\n\nCEO. On June 23, 2025, the Company announced O\u2019Leary\u2019s appointment as president\n\nand CEO on a permanent, non-interim basis, effective July 1, 2025.\n\nV.     ADDITIONAL SCIENTER ALLEGATIONS\n\n       99.     Numerous facts including those detailed above, considered collectively,\n\ndemonstrate that Defendants knew or recklessly disregarded that they were\n\nmisrepresenting DMC\u2019s financials, including its reported goodwill, total assets and equity,\n\nand net income. The allegations below further support such an inference of scienter.\n\n       A.      Defendants\u2019 Desire To Increase DMC\u2019s Credit Agreement By $100\n               Million To Gain Access To Desperately Needed Financing Provided\n               Motive\n\n       100.    As discussed above, at the time of the Arcadia Acquisition, the put/call\n\nfeature created a looming cash need for DMC because the put/call feature allowed\n\nMunera to \u201cput\u201d its 40% interest in Arcadia to DMC, no matter how bad Arcadia or DMC\u2019s\n\nbusiness was performing.\n\n       101.    By Defendants\u2019 later admissions, that looming cash need created the\n\npossibility of \u201can impending liquidity issue\u201d if financed in cash or \u201csignificant equity dilution\u201d\n\n\n\n\n                                               37\n\fCase No. 1:24-cv-03387-GPG-CYC             Document 47      filed 06/23/25    USDC Colorado\n                                           pg 41 of 85\n\n\n\n\nif financed in stock, as observed by O\u2019Leary during the Company\u2019s Q4 2024 earnings call\n\non February 24, 2025. As O\u2019Leary put it, that put/call liquidity risk was \u201cthe number one\n\nconcern many of [DMC\u2019s] shareholders correctly raised\u201d when he took over as DMC\u2019s\n\nCEO in November 2024.\n\n       102.   The put/call exercise was initially intended to occur by the third anniversary\n\nof the Arcadia Acquisition, i.e., December 23, 2024. And at least 20% of the put exercise\n\nwould need to be paid in cash (by DMC to Munera, the Arcadia minority interest holders).\n\nAt year-end 2023, DMC reported the floor value of the put option as $187.8 million,\n\nmeaning, if Munera exercised its put option at the end of 2024, DMC would have to pay\n\n$187.8 million to Munera, of which 20% (or $37.5 million) would need to be paid in cash.\n\n       103.   DMC did not have available funds on hand to pay the $187.8 million\n\nexercise price in cash coming into 2024. As of year-end 2023, DMC had roughly $31\n\nmillion of cash on its balance sheet, and another $12.6 million of marketable securities. It\n\nalso had $50 million of borrowing capacity available under its then-existing revolving\n\ncredit facility, thus bringing total theoretical sources of funds to a total of $93.6 million as\n\nof year-end 2023.\n\n                      DMC Sources of funds ($ 000) as of 12/31/2023\n                      Cash                                     31,040\n                      Marketable securities                    12,619\n                      Revolving Credit Facility                50,000\n                      Total:                                   93,659\n\n                      Floor value of put option:               $187,760\n\n                      Shortfall:                                (94,101)\n\n\n\n\n                                                   38\n\fCase No. 1:24-cv-03387-GPG-CYC           Document 47       filed 06/23/25    USDC Colorado\n                                         pg 42 of 85\n\n\n\n\n       104.   Accordingly, Defendants faced an approximate $94 million cash shortfall if\n\nMunera exercised its put option and DMC elected to pay in cash. That $94 million shortfall\n\nwould thus need to be covered by DMC shares, which would have massively diluted\n\nDMC\u2019s stock. For instance, based on DMC\u2019s share price on December 29, 2023 of $18.82\n\nper share, to raise $94.1 million, DMC would need to issue roughly 5 million shares, as\n\ncompared to the 19.5 million shares that it had outstanding as of December 31, 2023 (or\n\na 26% increase). And, because DMC could not have realistically put every single dollar\n\nthat it had into the Arcadia exercise \u2013 because it had other cash obligations (e.g., payroll,\n\naccounts payable, etc.), the true cash shortfall coming into 2024 was significantly greater\n\nthan the $94.1 million cited immediately above.\n\n       105.   As a result, DMC announced on February 6, 2024, that it increased its\n\nborrowing capacity from a $50 million revolving facility to a $200 million facility. Along with\n\na $100 million term loan, the Company\u2019s total borrowing capacity increased from $200\n\nmillion to $300 million. The Company\u2019s first amended credit facility specifically provided\n\nfor DMC\u2019s acquisition of its remaining 40% of Arcadia under the put/call provision. In\n\nexchange for the increased borrowing, DMC\u2019s lenders demanded a higher rate of interest.\n\nDMC\u2019s interest rates on its credit facility increased based on DMC\u2019s leverage ratio, as\n\nshown by the redline to the credit agreement that was filed with the SEC on February 7,\n\n2024 (redlines in original):\n\n\n\n\n                                              39\n\fCase No. 1:24-cv-03387-GPG-CYC       Document 47      filed 06/23/25   USDC Colorado\n                                     pg 43 of 85\n\n\n\n\nSource: DMC\u2019s February 7, 2024 Form 8-K (ex. 10.10).\n\n      106.   Thus, given the timing of the February 6, 2024 amended borrowing facility,\n\nthe negotiation of which was presumably ongoing during Q1 2024, Defendants had a\n\nstrong motive to avoid impairing its goodwill because a massive impairment might have\n\njeopardized those desperately needed financing discussions because, among other\n\nreasons, the amended credit agreement was secured by the assets of the Company.\n\nAnd, at year-end 2023, DMC\u2019s goodwill was a $141 million asset (out of total DMC assets\n\nof $884.5 million) that they would not have otherwise been able to borrow against.\n\nMoreover, impairing 100% of DMC\u2019s goodwill just weeks after securing such a facility\n\nmight have jeopardized relationships with DMC\u2019s lenders \u2013 who may have felt blindsided\n\nby such a scenario. Thus, Defendants had a strong motive to avoid taking the impairment\n\nduring Q1 2024.\n\n\n                                          40\n\fCase No. 1:24-cv-03387-GPG-CYC         Document 47      filed 06/23/25   USDC Colorado\n                                       pg 44 of 85\n\n\n\n\n      107.   Separately, the February 6, 2024 amendment to DMC\u2019s credit agreement\n\nalso created a direct and measurable change to one of the inputs that drives the value of\n\nArcadia\u2019s goodwill: an increase to DMC\u2019s weighted-average cost of capital (\u201cWACC\u201d),\n\nwhich is used to discount the projected cash flows under the income approach. Increases\n\nto DMC\u2019s cost of debt directly increases its WACC. And the higher the WACC, the lower\n\nthe present value of Arcadia\u2019s future cash flows under the income approach for valuing\n\nArcadia\u2019s goodwill. That increased cost of borrowing was tied to a base rate, which itself\n\nhad been increasing in the years since DMC acquired Arcadia. Thus, DMC\u2019s WACC had\n\nincreased materially since its acquisition of Arcadia, and the increased borrowing costs\n\nin Q1 2024 would have even further lowered the carrying value of Arcadia under the\n\nincome approach to valuing its goodwill (as DMC was purportedly using to value DMC\u2019s\n\ngoodwill as of Q1 2024).\n\n      B.     Red Flags Informed Defendants Of A Need To Impair Arcadia\u2019s\n             Goodwill By The End Of Q1 2024 At The Latest\n\n             1.     The Reasons That Defendants Gave For Arcadia\u2019s Q3 2024\n                    Goodwill Impairment Existed In Q1 2024\n\n      108.   Defendants claim the impairment was taken because of Arcadia\u2019s (i) recent\n\nfinancial performance and (ii) near-term outlook. According to Defendants, those factors,\n\ncombined with the significant market capitalization decline in DMC, led the Company to\n\nconclude that Arcadia\u2019s goodwill should be written off\u2014in its entirety\u2014as of Q3 2024.\n\n      109.   However, Defendants\u2019 stated reasons for impairing DMC\u2019s goodwill in Q3\n\n2024 also existed as of Q1 2024 (at the latest), thus establishing that the impairment\n\nshould have been taken no later than Q1 2024.\n\n\n\n\n                                           41\n\fCase No. 1:24-cv-03387-GPG-CYC         Document 47        filed 06/23/25   USDC Colorado\n                                       pg 45 of 85\n\n\n\n\n        110.   For instance, by Q1 2024, Arcadia had missed its projected revenue\n\nguidance for three straight quarters: in Q3 2023; Q4 2023; and Q1 2024.\n\n        111.   And as shown immediately below, by Q1 2024, Arcadia was missing such\n\nguidance on both (i) lower-and-lower guidance targets\u2014which should have been easier\n\nto hit; and (ii) missing those lowered targets by higher-and-higher percentages.\n\n    Reporting period           Q2 2023       Q3 2023           Q4 2023        Q1 2024\n    Arcadia Revenue            $75,000 -     $73,000 -         $70,000 -      $67,000 -\n    guidance                    $80,000       $78,000           $74,000        $71,000\n    ($ 000)\n    Reported revenue            $79,158         $71,450        $67,958         $61,925\n    Revenue shortfall8             --            -5.4%          -5.6%          -10.3%\n\n        112.   Arcadia\u2019s Q1 2024 reported revenue of $61.9 million missed the midpoint\n\nof the Company\u2019s guidance range of $67-$71 million by 10.3%. And by Q1 2024,\n\nArcadia\u2019s reported revenue had fallen for five consecutive quarters:\n\n    Reporting period     Q1 2023     Q2 2023        Q3 2023        Q4 2023         Q1 2024\n    Revenue              $80,338     $79,158        $71,450        $67,958         $61,925\n\n        113.   Arcadia\u2019s declining revenue, which began in Q1 2023, was precipitous and\n\nmaterial. Arcadia\u2019s Q1 2024 revenue of $61.9 million represented a 22.9% decrease from\n\nQ1 2023. Arcadia\u2019s Q1 2024 revenue also represented a sequential (or quarter-over-\n\nquarter) decline of 8.9%. When Acadia\u2019s goodwill was initially calculated, revenue was\n\ngrowing 13% per year.\n\n\n\n\n8\n  Because DMC provided a range of revenue guidance (e.g., from $75 to $80 million for\nQ3 2023), the percentages used in this calculation compare the actual reported revenue\nto the mid-point of revenue guidance range.\n\n\n                                           42\n\fCase No. 1:24-cv-03387-GPG-CYC        Document 47      filed 06/23/25   USDC Colorado\n                                      pg 46 of 85\n\n\n\n\n      114.   Arcadia\u2019s profitability, as measured by Adjusted EBITDA, showed a similar\n\npattern of consistent decline in reporting periods preceding Q1 2024.\n\n  Reporting period         Q2 2023         Q3 2023          Q4 2023         Q1 2024\n  Reported Adj.            $9,982           $8,060           $5,530          $3,540\n  EBITDA\n  Quarterly decline            --           -18.5%           -31.4%          -36.0%\n\n\n\n\n                                           43\n\fCase No. 1:24-cv-03387-GPG-CYC         Document 47      filed 06/23/25   USDC Colorado\n                                       pg 47 of 85\n\n\n\n\n      115.   Arcadia\u2019s Q1 2024 Adjusted EBITDA fell 44% year-over-year, to just $3.54\n\nmillion. Since Q2 2023, Arcadia\u2019s Adjusted EBITDA fell a cumulative 64.2%. Yet as of Q1\n\n2024, Defendants recorded DMC\u2019s goodwill at $141 million \u2013 the same levels as when\n\nArcadia was growing revenue at 13% compounded annually.\n\n      116.   With revenue and Adjusted EBITDA being Arcadia\u2019s key metrics, as of Q1\n\n2024, Arcadia\u2019s financial performance had worsened materially, and was (and had been)\n\non a clear downward trend leading up to Q1 2024. The purported \u201crecent financial\n\nperformance\u201d Defendants cited in Q3 2024 as prompting the impairment was not recent\n\n\u2013 it was a continuation of a well-defined trend that accelerated dramatically into Q1 2024\n\nwhen the impairment should have been recorded.\n\n      117.   Given such performance, DMC\u2019s market capitalization correspondingly fell.\n\nAt the time of the Arcadia Acquisition, DMC\u2019s market capitalization was approximately\n\n$688.5 million. By contrast, DMC\u2019s market capitalization stood at $382.2 million as of\n\nMarch 31, 2024. Thus, the cumulative decline in DMC\u2019s market capitalization since the\n\ntime of the Arcadia Acquisition through the end of Q1 2024 was $306.3 million, or 44.4%.\n\nAnd because DMC paid $282.5 million for 60% of Arcadia, and because Arcadia was\n\nDMC\u2019s largest business, a $306.3 million decline in DMC\u2019s market capitalization, almost\n\ncertainly meant that Arcadia\u2019s value had fallen as well. For instance, at the time of the\n\nacquisition, when DMC paid $282.5 million for Arcadia, that $282.5 million consideration\n\ncomprised 41% of DMC\u2019s then market capitalization of $688.5 million ($282.5/688.5 =\n\n41.0%). If that same proportion of Arcadia-relative-to-DMC was applied to DMC\u2019s $382.2\n\nmillion market capitalization as of March 31, 2024, Arcadia\u2019s implied value would be\n\n\n\n                                           44\n\fCase No. 1:24-cv-03387-GPG-CYC        Document 47      filed 06/23/25   USDC Colorado\n                                      pg 48 of 85\n\n\n\n\n$156.7 million. By comparison, Defendants marked Arcadia\u2019s goodwill alone at $141\n\nmillion as of March 31, 2024, which is nonsensical in comparison to Arcadia\u2019s market-\n\nimplied valuation because it would essentially mean that the vast majority of Arcadia\u2019s\n\nmarket-implied valuation was made up of goodwill.\n\n      118.   In sum, the factors that Defendants cited to purportedly justify DMC\u2019s 100%\n\ngoodwill impairment as of Q3 2024 \u2014 weakening financial performance and a significant\n\nmarket capitalization decline \u2014 had already happened by the end of Q1 2024. Thus, by\n\nDefendants own metrics, DMC should have impaired Arcadia\u2019s goodwill by Q1 2024.\n\n             2.     Any Incremental Deterioration Of Arcadia\u2019s Performance After\n                    Q1 2024 Was Negligible As Compared To The Deterioration That\n                    Occurred Up To And Including Q1 2024\n\n      119.   As shown above, Defendants\u2019 explanation about Arcadia\u2019s so-called \u201crecent\n\nfinancial performance\u201d to purportedly warrant the impairment in Q3 2024 does not track\n\nthe true timeline of the Company\u2019s actual financial performance. And while Arcadia\u2019s\n\nperformance did worsen modestly after Q1 2024, any incremental worsening in financial\n\nperformance was, in comparison, far smaller than the financial performance declines that\n\nexisted as of Q1 2024.\n\n      120.   Indeed, the decline in Arcadia\u2019s quarterly revenue from Q1 2023 to Q1 2024\n\nwas $18.4 million, or 22.9%. Yet, the incremental decline in Arcadia\u2019s revenue from Q1\n\n2024 to Q3 2024, was just $4.1 million, or 6.6%.\n\n\n\n\n                                          45\n\fCase No. 1:24-cv-03387-GPG-CYC        Document 47      filed 06/23/25   USDC Colorado\n                                      pg 49 of 85\n\n\n\n\n      121.   So too with DMC\u2019s market capitalization decline (depicted immediately\n\nabove), which Defendants also pointed to as prompting the impairment. Since DMC\n\nacquired Arcadia in December 2021, DMC\u2019s market capitalization fell a total of $434\n\nmillion\u2014from $688.5 to $254.5 million, as of September 30, 2024 (when the impairment\n\nwas taken). But $306.3 million\u2014or 70.6%\u2014of that cumulative $434 million market\n\ncapitalization decline had already occurred by March 31, 2024. And by May 6, 2024 (just\n\nafter DMC reported Q1 2024 earnings), DMC\u2019s market capitalization fell to $267.5 million.\n\nSo after DMC\u2019s Q1 2024 dismal earnings had been digested by the market and priced\n\ninto DMC\u2019s shares, there was only a $13 million additional decline to reach DMC\u2019s $254.5\n\nmarket capitalization as of September 30, 2024. Defendants\u2019 purported justification of a\n\n\u201crecent\u201d market capitalization decline cannot explain an impairment in Q3 2024 (and only\n\nQ3 2024) but not in Q1 2024.\n\n\n\n                                           46\n\fCase No. 1:24-cv-03387-GPG-CYC               Document 47      filed 06/23/25   USDC Colorado\n                                             pg 50 of 85\n\n\n\n\n       122.        In sum, by many measures, there was a far greater decline in Arcadia\u2019s\n\nfinancial performance that occurred leading up to and including Q1 2024, than there ever\n\nwas in between Q1 2024 (when the impairment should have been taken) and Q3 2024\n\nwhen the impairment was belatedly recognized. Thus, the very reasons that Defendants\n\ncited for the impairment were present at the end of Q1 2024. And any modest and\n\nincremental weakening in Arcadia\u2019s financial performance metrics\u2014particularly those that\n\nDefendants attributed to causing the impairment\u2014between Q1 2024 and Q3 2024 would\n\nnot justify a complete write-off of 100% of Arcadia\u2019s goodwill. At a minimum, Defendants\u2019\n\nreasons for the impairment establish that at least a partial impairment should have\n\noccurred before Q3 2024. It is not as if Arcadia was a pharmaceutical business that\n\nsuddenly lost FDA approval of its only drug during Q3 2024 (which theoretically could\n\njustify a sudden impairment of 100% of a business).\n\n                   3.      Additional Indicators Suggested Interim Testing For Impairment\n                           Was Necessary\n\n       123.     As noted above, GAAP requires interim goodwill testing when certain\n\nindicators are present. Here, several red flags existed during the Class Period that should\n\nhave prompted Defendants to impair Arcadia\u2019s goodwill as of Q1 2024.\n\n       124.     According to the EY Advisory, under ASC 350-20-35-30, examples of\n\nevents that may indicate that an interim impairment test is necessary include:\n\n              i.        Negative current events or long-term outlooks for specific\n                        industries impacting the company as a whole or specific\n                        reporting units\n\n              ii.       Not meeting analyst expectations or internal forecasts in\n                        consecutive periods, or downward adjustments to future\n                        forecasts\n\n\n                                                  47\n\fCase No. 1:24-cv-03387-GPG-CYC               Document 47      filed 06/23/25   USDC Colorado\n                                             pg 51 of 85\n\n\n\n\n              iii.      Planned or announced plant closures, layoffs, or asset\n                        dispositions\n\n              iv.       Market capitalization of the company below its book value.\n\n       125.          Additionally, DMC\u2019s auditor, EY, cautions that the SEC also considers\n\ncertain factors that may lead to a conclusion that an interim goodwill testing should take\n\nplace. These factors include, inter alia, (1) downward revisions to forecasts; (2) a decline\n\nin market capitalization below book value; (3) industry trends; and (4) restructuring actions\n\nor plans. EY adds that \u201cSituations may arise where companies may need to consider\n\nperforming an interim goodwill impairment test even though they may have recently\n\nperformed their annual assessment.\u201d\n\n       126.          Most of the above indicators were present here during the Class Period,\n\nthus necessitating an interim test of goodwill for impairment. For instance, industry factors\n\nsuggesting interim testing was necessary include the rapid rise in interest rates that\n\npressured the entire construction industry beginning in 2022 and 2023; and that Arcadia\u2019s\n\ncompetitor, Jeld-Wen, recognized an impairment in 2022, among others.\n\n       127.          Additionally, Arcadia failed to meet guidance expectations for revenue in\n\nconsecutive periods: Q3 2023; Q4 2023; and Q1 2024. Q1 2024 was the third consecutive\n\nquarter that Arcadia missed revenue guidance. Arcadia also missed its Adjusted EBITDA\n\nguidance during Q1 2024. And the consecutive revenue shortfalls relative to guidance\n\noccurred in response to downward adjustments to forecasts.\n\n       128.          On January 29, 2024, the Company announced strategic alternatives and\n\nthe hiring of financial advisors to potentially sell two business segments, which reflects\n\n\n\n\n                                                  48\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47      filed 06/23/25   USDC Colorado\n                                        pg 52 of 85\n\n\n\n\nthe type of contemplated \u201casset dispositions\u201d that EY instructs is another indicator.\n\nMoreover, financial advisors engaged for a strategic review process typically prepare a\n\nsum-of-the-parts valuation analysis of each business segment on a standalone basis.\n\nHere, that standard process would have included a valuation of Arcadia. At a minimum,\n\nthe financial advisors would have access to the specific observable market inputs that\n\nDefendants would use under the market approach.\n\n         129.   Moreover, roughly half-way through Q4 2023, DMC\u2019s market value fell\n\nbelow its book value, and remained there for the balance of 2023. And at no point during\n\nQ1 2024 did DMC\u2019s market value ever rise above its book value, as shown in the following\n\nchart:\n\n\n\n\n         130.   As a result, given all the above glaring red flags, the three CPAs who led\n\nDMC knew or were reckless in disregarding an urgent need to test Arcadia\u2019s goodwill as\n\n\n\n                                             49\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47       filed 06/23/25    USDC Colorado\n                                        pg 53 of 85\n\n\n\n\nof Q1 2024. So Defendants either did test for impairment in Q1 2024, and decided to\n\nknowingly overstate Arcadia\u2019s goodwill as of Q1 2024; or, alternatively, if they failed to\n\ntest Arcadia\u2019s goodwill in Q1 2024, in spite of the above red flags, they were reckless for\n\nfailing to do so. Either way supports a strong inference of scienter.\n\n       C.     DMC\u2019s Admission That It Acquired Arcadia At A Peak Valuation\n              Supports Scienter Given The Rapid Rise In Interest Rates That\n              Preceded The Class Period\n\n       131.   Under the income approach, Defendants are required to project cash flows\n\nof future years and discount those projected cash flows to present value, taking into\n\naccount, among other things, the appropriate discount rate. The EY Advisory explains\n\nthat \u201cdrivers of fair value for a reporting unit that is valued using the income approach may\n\nbe cash flow projections, terminal growth rate or the weighted-average cost of capital\n\n(WACC).\u201d Put differently, all of the aforementioned factors can impact goodwill valuation\n\nunder the income approach. Accordingly, the sharp rise in interest rates that preceded\n\nthe belated impairment (discussed above at \u00b6\u00b642-44) served as an additional red flag for\n\na need to impair Arcadia\u2019s goodwill. Rising interest rates materially lowers the value of\n\nArcadia\u2019s goodwill under the income approach, which is what Defendants claim to have\n\nused during Q1 2024, for at least two reasons: (1) higher interest rates decreased demand\n\nfor construction products, which in turn reduced the projected cash flows of the\n\nconstruction industry, including for Arcadia (i.e., the numerator of the income approach);\n\nand (2) simultaneously increased DMC and/or Arcadia\u2019s WACC (i.e., the denominator).\n\n       132.   The numerator. Given Arcadia\u2019s exposure to the construction industry, its\n\nunderlying business is sensitive to changes in interest rates. Higher interest rates\n\n\n\n\n                                             50\n\fCase No. 1:24-cv-03387-GPG-CYC         Document 47      filed 06/23/25     USDC Colorado\n                                       pg 54 of 85\n\n\n\n\ndiscourage capital investment and raise the cost of construction for Arcadia\u2019s customers\n\nwho borrow to finance such projects. Higher interest rates thus operate as a demand\n\nheadwind to Arcadia\u2019s business: the higher the rate, the stronger the headwind. So, under\n\nthe income approach for valuing goodwill, the higher interest rates that preceded the\n\nClass Period should have prompted Defendants to consider whether the numerator in\n\nArcadia\u2019s cash flow projections (which must be projected to value goodwill under the\n\nincome approach) were overstating the value of goodwill recorded on DMC\u2019s books in\n\nconnection with the Arcadia acquisition.\n\n      133.    The denominator. Yet even if higher rates had no impact to Arcadia\u2019s\n\nunderlying business fundamentals, meaning even if they did not reduce future cash flows,\n\nrising interest rates still decrease the value of Arcadia\u2019s goodwill by the way the math\n\nworks in discounting cash flows: the higher the interest rate, the lower the net present\n\nvalue of the cash flows received in the future. The table immediately below shows how\n\nchanges in interest rates impact the valuation of a hypothetical stream of cash flows.\n\n                                      2025     2026    2027    2028       2029   Total NPV\nProjected cash flow (undiscounted)   29.95    29.95   29.95   29.95      29.95    149.75\n Discounted at 2.25%                 29.29    28.65   28.02   27.40      26.80    140.15\n Discounted at 5.25%                 28.46    27.04   25.69   24.41      23.19    128.78\n Discounted at 8.00%                 27.73    25.68   23.78   22.01      20.38    119.58\n\n      134.    For comparison with the above hypothetical stream of cash flows, as of year\n\nend 2021, Arcadia reported Adjusted EBITDA of $29.951 million, and reported goodwill\n\nof $141.7 million. Also at the time of the Arcadia acquisition, the Secured Overnight\n\nFinancing Rate (\u201cSOFR\u201d), which replaced LIBOR as of June 30, 2023, was less than\n\n0.25%. Arcadia\u2019s actual cost to borrow in 2021 was roughly 1.75% plus the prevailing\n\n\n\n                                             51\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47       filed 06/23/25    USDC Colorado\n                                        pg 55 of 85\n\n\n\n\nSOFR rate (as of year-end 2021). As shown above, even using the same 5-year annual\n\ncash flow forecast of $29.95, the net present value (\u201cNPV\u201d) of that stream of cash flows\n\nwould fall from roughly $140.1 to $119.6 just from an increase in discount rates from\n\n2.25% to 8.0%.9 The NPV calculations above would fall further if the projections of the\n\ncash flows also decreased, and the same is true of Arcadia\u2019s goodwill when valued under\n\nthe income approach, if the projections of future cash flows also decreased.10\n\n       135.   The glaring need for Defendants to apply a higher discount rate when\n\nvaluing Arcadia\u2019s goodwill under the income approach became even more pronounced\n\nat the beginning of Q1 2024 because that was when DMC increased its debt capacity to\n\nfinance the then looming put/call option. In connection with that refinancing, DMC\u2019s\n\nlenders increased the rate that it charged DMC to borrow. So while general increases\n\nbetween 2021 and 2024 caused market-based interest rates to increase (i.e., so-called\n\n\u201cbase rates\u201d), and those base rate increases in turn caused DMC\u2019s borrowing cost to rise\n\n\n\n\n9\n  Before refinancing its credit agreement on February 6, 2024, DMC was charged\nborrowing costs of SOFR plus 1.25% - 2.25% under its pre-amended credit agreement.\nSee image under \u00b6105. After amending that agreement, DMC\u2019s rate increased to SOFR\n+ 2.25 \u2013 3.25%. At the time of the Arcadia acquisition, average SOFR rates were between\nzero and 0.5%. So DMC would pay roughly 0.5% (base rate) + 1.25 - 2.25% (spread over\nbase rate) or around 2.25% (using the midpoint of the spread). By the end of 2022, SOFR\nrose to around 3.5%, which would increase DMC\u2019s borrowing cost to (3.5% + 1.75%) or\naround 5.25% (using the midpoint of the spread). By January 2024, SOFR reached\naround 5.25%, so DMC would pay 5.25% plus the (increased) spread of 2.75% (using the\nmidpoint of the spread) or a total rate of 8.00%.\n10\n    NPV calculations are substantially the same as a discounted cash flow (\u201cDCF\u201d)\nanalysis, and many finance professionals use the terms interchangeably. The point for\npurposes of valuing goodwill is simply what is the net value, in today\u2019s dollars, of a stream\nof future cash flows.\n\n\n                                             52\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47      filed 06/23/25    USDC Colorado\n                                        pg 56 of 85\n\n\n\n\nbetween 2021 through Q4 2023, DMC\u2019s February 2024 refinancing increased the spread\n\nthat DMC pays on top of the rising base rates (staring in February 2024 after the\n\nrefinancing). In other words, as of Q1 2024, there were both market forces (rising interest\n\nrates) and company-specific factors (increased debt load) that increased DMC\u2019s cost to\n\nborrow. Further, increased financing costs in turn increased DMC\u2019s WACC. Notably, EY\n\ninstructs that issuers consider their WACC when using discount rates to value goodwill\n\nunder the income approach. Indeed, DMC admits that \u201cDiscount rates are one of the more\n\nsignificant assumptions used in the income approach.\u201d\n\n       136.   In sum, DMC\u2019s February 2024 refinancing\u2014which increased borrowing\n\ncosts, and thus DMC\u2019s discount rate in the income approach\u2014was both a glaring red flag\n\nand an interim event that should have caused Defendants to conduct an interim test\n\nduring Q1 2024.\n\n       137.   Also, because higher rates both slow Arcadia\u2019s growth (i.e., reduce its future\n\ncash flows) and directly reduce the net present value of future cash flows\u2014even if\n\nprojected cash flows remain unchanged\u2014the rising interest rate environment that\n\npreceded the Class Period and continued into Q1 2024 compounded the need for\n\nDefendants to impair Arcadia\u2019s goodwill before Q3 2024. The February 2024 refinancing\n\nthat further increased DMC\u2019s WACC was yet another indicator that DMC\u2019s goodwill should\n\nhave been impaired no later than Q1 2024.\n\n       138.   Given the Individual Defendants\u2019 finance and accounting experience, they\n\ncould not have been unaware of these dynamics at the time of their statements during\n\nthe Class Period. Indeed, as O\u2019 Leary would later admit during DMC\u2019s Q3 2024 earnings\n\n\n\n                                            53\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47       filed 06/23/25    USDC Colorado\n                                        pg 57 of 85\n\n\n\n\ncall on November 4, 2024, the fact that DMC \u201cpaid a very robust price at probably the top\n\nof the market for Arcadia\u201d contributed to the goodwill impairment. O\u2019Leary\u2019s recognition\n\nthat DMC paid \u201ca very robust price\u201d reflects the fact that at lower interest rates (as at the\n\ntime of the Arcadia acquisition), valuations increase\u2014because the value of future cash\n\nflows are discounted at a lower interest rate. And by conceding that the transaction was\n\nmade \u201cat probably the top of the market,\u201d further confirms that once the market turned\n\n(i.e., once interest rates began to rise), the value of the asset acquired at the top, almost\n\nimmediately begins to decrease.\n\n       139.   As shown by O\u2019Leary\u2019s acknowledgement, the peak valuation that DMC\n\npaid for Arcadia contributed to the impairment: yet valuations began contracting due to\n\nthe rising interest rates well before the impairment. Defendants thus had yet another\n\nstrong indication that Arcadia\u2019s book value was impaired well before Q3 2024 given the\n\nrising interest rate environment that almost immediately followed the Arcadia acquisition.\n\n       D.     Defendants\u2019 Abrupt And Undisclosed Change To The Goodwill\n              Valuation Methodology Supports A Strong Inference Of Scienter\n\n       140.   Throughout the Class Period, Defendants reiterated to investors that DMC\n\n\u201cestimate[s] the fair value of a reporting unit by using the income approach, specifically a\n\ndiscounted cash flow analysis\u201d to value DMC\u2019s goodwill. Such representations were made\n\nin DMC\u2019s 10-Ks for the years ended 2022 and 2023, which were incorporated by\n\nreference into DMC\u2019s 10-Qs for the quarterly periods between Q1 2022 through Q2 2024.\n\n       141.   At no point between the filing of the Company\u2019s 2023 10-K and when the\n\ntruth was ultimately revealed, did Defendants ever warn that they may change the\n\nvaluation method for how Arcadia\u2019s goodwill was calculated.\n\n\n                                             54\n\fCase No. 1:24-cv-03387-GPG-CYC         Document 47       filed 06/23/25    USDC Colorado\n                                       pg 58 of 85\n\n\n\n\n       142.   Yet, for Q3 2024 (when the impairment was belatedly recorded),\n\nDefendants did exactly that by switching the valuation method for Arcadia\u2019s goodwill.\n\nSpecifically, Defendants admitted in the Q3 2024 10-Q that \u201cThe Company utilized the\n\nmarket approach to estimate the fair value of the Arcadia Products reporting unit\u201d while\n\nnoting that it \u201cconsidered the income approach to validate the results.\u201d\n\n       143.   Further, as discussed above, the EY Advisory explains that \u201cdrivers of fair\n\nvalue for a reporting unit that is valued using the income approach may be cash flow\n\nprojections, terminal growth rate or the weighted-average cost of capital (WACC),\n\nwhereas the drivers of fair value for a reporting unit that is valued using the market\n\napproach may be applicable industry multiples such as multiples of revenue or earnings\n\nbefore interest, taxes, depreciation and amortization (EBITDA).\u201d\n\n       144.   In other words, unlike the income approach, the market approach includes\n\nobservable inputs of fair value, including but not limited to non-binding offers received\n\nfrom third-parties and comparative market multiples. Of course here, the non-binding offer\n\nreceived during the Class Period occurred during Q2 2024 (see n.7 above on page 33).\n\nThus, whether using the income approach or the market approach, DMC\u2019s goodwill was\n\noverstated as of Q1 2024 using the income approach; or, alternatively, overstated as of\n\nQ2 2024 using the market approach.\n\n       145.   Given all the red flags that Arcadia\u2019s goodwill was overstated as of Q1 2024\n\nunder the income approach, that Defendants switched to the market approach supports\n\nan inference of scienter because the switch suggests that it was either: (1) done knowingly\n\nto avoid incurring the impairment under the income approach as of Q1 2024; or (2) that\n\n\n\n                                            55\n\fCase No. 1:24-cv-03387-GPG-CYC           Document 47        filed 06/23/25    USDC Colorado\n                                         pg 59 of 85\n\n\n\n\ndefendants recklessly delayed from Q2 2024 to Q3 2024 under the market approach\n\nbecause the third-party offer was made during Q2 2024. Either way, it supports an\n\ninference of intentional or reckless conduct.\n\n       E.     Defendants\u2019 Shifting Explanations For Arcadia\u2019s Impairment Support\n              A Strong Inference Of Scienter\n\n       146.   Defendants gave contradictory reasons for what caused Arcadia\u2019s\n\nimpairment. For example, when announcing the impairment on October 21, 2024,\n\nDefendants said that the \u201ccharge reflects Arcadia\u2019s recent financial performance and\n\nnear-term outlook\u201d and \u201c[t]hese factors, combined with the significant decline in DMC\u2019s\n\nmarket capitalization, led the Company to conclude that the goodwill impairment charge\n\nwas appropriate at this time.\u201d\n\n       147.   Yet, Defendants\u2019 October 21, 2024 explanation differed from what they said\n\non the Q3 2024 earnings call. On November 4, 2024, when discussing Q3 2024, results,\n\nO\u2019Leary stated:\n\n       A macro comment, which I think, again, we might have underestimated and\n       certainly contributed to the goodwill write-off, we bought a family\n       business. We bought a family business that had excellent commercial\n       people. They understood pricing. They understood their markets.\n\n       They had the right titles, the right org charts, the right people that at first\n       blush looked like they\u2019d be able to handle the amount of change that comes\n       with being a public company. And the digestion issues around ERP, putting\n       in compliance around being a public company, making sure you\u2019ve got, not\n       just people who have the titles of VP of supply chain, but actually know what\n       that means, particularly in a post-COVID environment.\n\n       We underestimated the challenges there. A couple of -- we took a few calls\n       after our last press release, and to me, these are things that are simple to\n       diagnose, easy to spot, not really wildly difficult to fix if you have people with\n       the right skill set, but take time.\n\n\n\n\n                                              56\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47        filed 06/23/25    USDC Colorado\n                                        pg 60 of 85\n\n\n\n\n       And putting the ERP system on with the aggressiveness of the\n       implementation, dealing with upgrading people happens with every family\n       company acquisition I\u2019ve ever seen, and really dealing with just the\n       robustness of the systems and the people, exactly what you think in a family\n       company.\n\n       The answer was no, and that led to the write-off.\n\n       148.   Unlike both DMC\u2019s October 21, 2024 announcement and its Q3 2024 10-Q,\n\nduring the November 4, 2024 earnings call, O\u2019Leary also seemed to attribute Arcadia\n\nbeing a family business as having contributed to the impairment (i.e., \u201cwrite-off\u201d).\n\n       149.   Moreover, during the same November 4, 2024 earnings call, O\u2019Leary\n\ncontinued to blame other things, such as the valuation that DMC paid for Arcadia as\n\ncontributing to the impairment:\n\n       In terms of manufacturing prowess and all the things that, to be candid, a\n       family company like Arcadia really didn't have a robust skill set at, that's the\n       right guy to fill in a lot of those gaps right now.\n\n       So as I said, answer is yes, market had a lot to do with it. You combine\n       the market with the fact we paid a very robust price at probably the top\n       of the market for Arcadia.\n\n       We\u2019re not hiding from that. I mean, that\u2019s why we wrote off $142 million of\n       goodwill.\n\n       150.   As shown above, O\u2019Leary blamed, at various times, everything from market\n\nweakness, to paying too much for Arcadia at the \u201ctop of the market\u201d, to integration\n\nchallenges of a family business for DMC\u2019s impairment. Those reasons \u2013 many of which\n\nhave existed for years (e.g., that Arcadia was a family business, and that Arcadia paid\n\ntoo much for it) do not align with the purported \u201crecent\u201d financial performance and market\n\ncapitalization declines that were initially attributed as the causes for the impairment.\n\n\n\n\n                                             57\n\fCase No. 1:24-cv-03387-GPG-CYC         Document 47      filed 06/23/25   USDC Colorado\n                                       pg 61 of 85\n\n\n\n\n       151.   In DMC\u2019s 2024 Form 10-K filed on February 24, 2025 (\u201c2024 10-K\u201d), the\n\nreasons differed yet again. The 2024 10-K stated that \u201cGoodwill impairment of $141,725\n\nin 2024 relates to the full impairment of goodwill due in part to recent financial\n\nperformance not in accordance with expectations and downward revisions to the near-\n\nterm forecast.\u201d Notably, the 2024 10-K made no mention of DMC\u2019s purported decline in\n\nmarket capitalization as having contributed to the impairment (as was discussed in the\n\nOctober 21, 2024 release on the impairment, see \u00b6146). Nor was there mention of any\n\nintegration challenges or of DMC paying too rich of a price at the time of the Arcadia\n\nacquisition (cf. \u00b6149).\n\n       152.   That Defendants offer differing reasons at differing times for the cause of\n\nDMC\u2019s impairment supports scienter.\n\n       F.     The Magnitude Of The Goodwill Impairment Supports A Strong\n              Inference Of Scienter\n\n       153.   That Defendants impaired 100% of Arcadia\u2019s goodwill supports scienter\n\nbecause there was no single discrete event that occurred during the third quarter of 2024\n\nthat warranted a 100% goodwill impairment. The fact that no earlier, partial impairments,\n\nwere ever taken in response to Arcadia\u2019s successive quarters of worsening financial\n\nperformance, supports an inference that the impairment was knowingly or recklessly\n\ndelayed.\n\n       154.   Indeed, the $141.7 million represents 15.4x DMC\u2019s Net Income of $9.861\n\nmillion for the same quarter in the prior year; and roughly 20% of DMC\u2019s Q3 2024 assets\n\nafter the impairment was taken.\n\n\n\n\n                                           58\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47      filed 06/23/25    USDC Colorado\n                                        pg 62 of 85\n\n\n\n\n       G.     Arcadia Is Critical To DMC\u2019s Core Operations\n\n       155.   The critical importance of Arcadia to the Company\u2019s overall operations and\n\nfinancial results, as acknowledged by Defendants, bolsters the strong inference of\n\nDefendants\u2019 scienter. The Company described Arcadia as the Company\u2019s \u201ccore division,\u201d\n\nand Arcadia\u2019s performance significantly contributed to DMC\u2019s financial results. Since the\n\nArcadia Acquisition, Defendants repeatedly emphasized that they were \u201cenhancing\n\noperating efficiencies and the internal control environment\u201d at Arcadia, which included\n\nimplementing Arcadia\u2019s ERP system. Indeed, reflecting on the success of the ERP\n\nsystem implementation, during a call with investors and analysts on May 2, 2024,\n\nDefendant Kuta stated that \u201cWe\u2019re actually getting a lot of good visibility now out of our\n\nERP system.\u201d At the start of the Class Period, in announcing that DMC\u2019s strategic initiative\n\nto sell off the DynaEnergetics and NobelClad divisions, Defendants emphasized their\n\nfocus on Arcadia and that DMC was \u201ctaking a very focused approach toward maximizing\n\n[Arcadia\u2019s] differentiated business model and capitalizing on growth opportunities within\n\nit large addressable markets.\u201d\n\n       156.   The importance of Arcadia to DMC\u2019s core operations, and the visibility from\n\nArcadia\u2019s ERP systems and controls, support the inference that the Individual Defendants\n\nknew, or at the very least were reckless in not knowing or disregarding, the facts which\n\nrendered Defendants\u2019 public statements materially false or misleading as alleged in this\n\nComplaint.\n\n\n\n\n                                            59\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47      filed 06/23/25    USDC Colorado\n                                        pg 63 of 85\n\n\n\n\n         H.     The Individual Defendants\u2019 Significant Experience With Public\n                Accounting And The Company\u2019s Finances Supports A Strong\n                Inference Of Scienter\n\n         157.   Defendants Kuta, Walter, and Seger all have accounting degrees, MBAs,\n\nand have earned the CPA designation. Between them, they have decades of corporate\n\naccounting and finance experience (see the Individual Defendants\u2019 biographies at \u00b6\u00b614-\n\n16). Prior to assuming his role as DMC\u2019s CEO in 2023, Defendant Kuta served as DMC\u2019s\n\nCFO for 9 years. Defendant Walter has been DMC\u2019s CFO since February 2023, nearly a\n\nyear before the start of the Class Period. Defendant Seger has served as DMC\u2019s Chief\n\nAccounting Officer since March 2023, and previously served as the Company\u2019s Vice\n\nPresident of Finance Integration since January 2022, with \u201cthe primary responsibility of\n\nmanaging the coordination of significant financial activities relating to the Company\u2019s\n\nsubsidiary Arcadia.\u201d11 Defendant Seger also worked as an auditor for 10 years at EY,\n\nwhich is DMC\u2019s auditor.\n\n         158.   The Individual Defendants\u2019 significant accounting and finance training and\n\nexperience, along with their key accounting and financial reporting oversight roles at the\n\nCompany, supports a strong inference that Defendants knew, or were reckless in not\n\nknowing or disregarding, the facts alleged herein concerning the GAAP goodwill\n\nimpairment requirements and the improper delay of the impairment of Arcadia\u2019s goodwill.\n\n\n\n\n11\n     DMC\u2019s Proxy Statement, filed with SEC on April 2, 2024, at page 13.\n\n\n                                             60\n\fCase No. 1:24-cv-03387-GPG-CYC           Document 47       filed 06/23/25    USDC Colorado\n                                         pg 64 of 85\n\n\n\n\n       I.     Defendants Kuta And Walter Signed SOX Certifications\n\n       159.   In connection with the Company\u2019s 2023 10-K, Q1 2024 10-Q, and Q2 2024\n\n10-Q filed during the Class Period (the \u201cReports\u201d), Defendants Kuta and Walter signed\n\ncertifications pursuant to the Sarbanes-Oxley Act (\u201cSOX\u201d).\n\n       160.   Pursuant to Section 302 of SOX, Defendants Kuta and Walter each certified\n\nthat they reviewed the Reports and \u201cbased on [their] knowledge\u201d the Reports \u201cdid not\n\ncontain any untrue statement of a material fact or omit to state a material fact necessary\n\nto make the statements made, in light of the circumstances under which such statements\n\nwere made, not misleading with respect to the period covered by this report\u201d and \u201cthe\n\nfinancial statements, and other financial information included in this report, fairly present\n\nin all material respects the financial condition, results of operations and cash flows of the\n\nregistrant as of, and for, the periods presented in this report.\u201d\n\n       161.   Defendants Kuta and Walter each also certified, pursuant to SOX Section\n\n302, that:\n\n       The registrant\u2019s other certifying officer and I are responsible for establishing\n       and maintaining disclosure controls and procedures (as defined in\n       Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over\n       financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-\n       15(f)) for the registrant and have:\n\n       a) Designed such disclosure controls and procedures, or caused such\n       disclosure controls and procedures to be designed under our supervision,\n       to ensure that material information relating to the registrant, including its\n       consolidated subsidiaries, is made known to us by others within those\n       entities, particularly during the period in which this report is being prepared;\n\n       b) Designed such internal control over financial reporting, or caused such\n       internal control over financial reporting to be designed under our\n       supervision, to provide reasonable assurance regarding the reliability of\n       financial reporting and the preparation of financial statements for external\n\n\n                                             61\n\fCase No. 1:24-cv-03387-GPG-CYC         Document 47      filed 06/23/25   USDC Colorado\n                                       pg 65 of 85\n\n\n\n\n      purposes in accordance with generally accepted accounting principles;\n      [and]\n\n      c) Evaluated the effectiveness of the registrant\u2019s disclosure controls and\n      procedures and presented in this report our conclusions about the\n      effectiveness of the disclosure controls and procedures, as of the end of the\n      period covered by this report based on such evaluation[.]\n\n      162.   Pursuant to Section 906 of SOX, Defendants Kuta and Walter also attested\n\nto the Company\u2019s internal controls over financial reporting. Specifically, Defendants Kuta\n\nand Walter each certified, inter alia, that \u201c(i) [t]he Report fully complies with the\n\nrequirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (ii)\n\n[t]he information contained in the Report fairly presents, in all material respects, the\n\nfinancial condition and results of operations of the Company.\u201d\n\n      163.   By signing these certifications, Defendants Kuta and Walter certified that\n\nthe Company\u2019s internal controls over financial reporting and disclosure controls and\n\nprocedures were effective pursuant to SOX, evidencing their access to (and purported\n\nreview of) DMC\u2019s and Arcadia\u2019s financial data, as well as the materially false and/or\n\nmisleading statements set forth below in Section VI. Accordingly, Defendants Kuta and\n\nWalter knew, or at the very least were reckless in not knowing or disregarding, the facts\n\nwhich rendered Defendants\u2019 public statements materially false or misleading.\n\n      J.     The Timing And Numerous Resignations Support A Strong Inference\n             Of Scienter\n\n      164.   The timing and circumstances of the resignations or removal of key\n\nexecutives and Board members, including Defendant Kuta, supports an inference of\n\nscienter. That these resignations or removals are temporally connected to the alleged\n\ncorrective disclosures of the Company\u2019s accounting fraud supports that inference.\n\n\n                                           62\n\fCase No. 1:24-cv-03387-GPG-CYC         Document 47       filed 06/23/25   USDC Colorado\n                                       pg 66 of 85\n\n\n\n\n       165.   On October 9, 2024, Chilcoff \u201cstepped down\u201d as President of Arcadia, a\n\nposition he held when he was hired in January 2023 a part of the Company\u2019s plan to\n\nstrengthen and improve Arcadia. Chilcoff\u2019s removal was just two weeks before the\n\nCompany\u2019s announcement of the Company\u2019s Q3 2024 financial results revealing\n\nArcadia\u2019s poor performance and the write-down of the $141.7 million in goodwill.\n\n       166.   Then, on October 16, 2024, Aldous resigned as a member of the Board and\n\nChairman, \u201ceffective immediately.\u201d Aldous was the Company\u2019s long-serving Chairman\n\nand had served as interim co-CEO with Defendant Kuta from January 2023 to August\n\n2023, having played a large part of the acquisition of Arcadia and the Company\u2019s strategic\n\ninitiative. Also, on October 16, 2024, director Peter Rose notified the Company of his\n\ndecision to retire from the Board.\n\n       167.   Finally, shortly after the disclosure of the Company\u2019s Q3 2024 results at the\n\nend of the Class Period, on November 13, 2024, the Company unexpectedly announced\n\nthat Defendant Kuta would \u201cretire\u201d as the Company\u2019s President, CEO and as a member\n\nof the Board. Defendant Kuta was only 49 years old at his \u201cretirement.\u201d\n\nVI.    DEFENDANTS\u2019 MATERIALLY FALSE AND MISLEADING STATEMENTS AND\n       OMISSIONS DURING THE CLASS PERIOD\n\n       A.     January 29, 2024 Press Release\n\n       168.   The Class Period begins on January 29, 2024, when before the market\n\nopened DMC issued a press release entitled, \u201cDMC Global Announces Strategic\n\nAlternatives Process for DynaEnergetics and NobelClad Businesses.\u201d The press release\n\ndescribed Arcadia as the Company\u2019s \u201ccore division\u201d and stated in relevant part:\n\n\n\n\n                                            63\n\fCase No. 1:24-cv-03387-GPG-CYC        Document 47      filed 06/23/25   USDC Colorado\n                                      pg 67 of 85\n\n\n\n\n      DMC Global [] today announced its board of directors (\u201cthe Board\u201d) has\n      initiated a review of strategic alternatives for its DynaEnergetics and\n      NobelClad businesses.\n\n      The strategic review process formalizes DMC\u2019s ongoing efforts over the\n      past several months to consider opportunities for unlocking shareholder\n      value. The Board has retained a financial advisor and may retain other\n      advisors to assist the Board in evaluating DMC\u2019s current strategy,\n      operations, and capital structure. The Board will consider various\n      strategic, business, and financial alternatives for DMC\u2019s\n      DynaEnergetics and NobelClad businesses. These could include,\n      among other things, a sale, a merger or other business combination of a\n      portion of DMC\u2019s business-unit assets, and/or a strategic investment.\n\n      David Aldous, DMC\u2019s chairman, said, \u201cOne year ago, we began evaluating\n      and developing new operating strategies for our business units. Since\n      Michael Kuta\u2019s appointment as CEO less than six months ago, we have\n      been executing those strategies, and now are focused on opportunities to\n      maximize the value of our portfolio with the help of our financial advisor.\u201d\n\n      Aldous continued, \u201cArcadia Products is a core division of DMC, and we\n      are taking a very focused approach toward maximizing its differentiated\n      business model and capitalizing on growth opportunities within its large\n      addressable markets. Both DynaEnergetics and NobelClad are\n      valuable, industry-leading businesses with strong margin profiles.\n      However, the Board and management team are aligned with the view\n      expressed by many DMC shareholders that the Company should seek to\n      simplify its portfolio to drive improved shareholder value. During the\n      review process, the Board and management team will continue to execute\n      DMC\u2019s strategy and will remain very focused on running our businesses.\u201d\n\n      169.   The market reacted favorably to the Company\u2019s press release, with the\n\nshare price gaining over 8% from the prior trading day on unusually high trading volume.\n\nFollowing the press release, Bloomberg News reported the Company\u2019s announcement\n\nand market reaction that day, including that \u201cKeyBanc analyst Ken Newman [] says the\n\nannouncement should be viewed favorably by investors\u201d and quoting the analyst\u2019s note\n\nto clients stating, \u201cWhile we are somewhat surprised by the timing of the announcement,\n\n\n\n\n                                          64\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47        filed 06/23/25    USDC Colorado\n                                        pg 68 of 85\n\n\n\n\nwe think the prospect for a potentially simplified portfolio offering is in line with\n\nmanagement\u2019s [long-term] objectives since acquiring Arcadia in December 2021.\u201d\n\n       170.   Defendants\u2019 statements in \u00b6168 were materially false and/or misleading\n\nwhen made because Defendants misleadingly suggested that: (i) Arcadia\u2019s business was\n\ngrowing, when, at the time, revenue had been contracting as discussed above at \u00b6\u00b6108-\n\n122, including during the first four weeks of January 2024; and (ii) the underlying business\n\nat Arcadia, as of January 29, 2024, was performing better than the other two operating\n\nsegments that were potentially going to be sold\u2014because no reasonable investor would\n\nexpect that a management team would focus their business model on the worst\n\nperforming business.\n\n       B.     2023 Form 10-K Statements And Omissions\n\n       171.   On February 23, 2024, Defendants filed the Company\u2019s 2023 10-K, which\n\nwas signed by Defendants Kuta, Walter, and Seger. Defendants stated that to test\n\ngoodwill impairment for the \u201cquantitative assessment,\u201d the Company only cited the\n\n\u201cincome approach\u201d to estimate the fair value of Arcadia, stating:\n\n       To test goodwill for impairment, we first perform a qualitative assessment\n       to determine whether it is more likely than not that the fair value of a\n       reporting unit is less than its carrying value. For the qualitative assessment,\n       we consider macroeconomic and market conditions, cost factors, financial\n       performance and other relevant entity-specific events. If we conclude that it\n       is more likely than not that the fair value of a reporting unit is less than its\n       carrying value during the qualitative assessment, then we quantitatively\n       estimate the fair value of the reporting unit and compare the estimated fair\n       value to its carrying value. Based on the results of the quantitative\n       assessment, if the carrying value exceeds the fair value of the reporting unit,\n       an impairment loss is recognized for the difference.\n\n       The assumptions used in a quantitative assessment require significant\n       judgment, which include assumptions about future economic conditions and\n\n\n                                             65\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47       filed 06/23/25    USDC Colorado\n                                        pg 69 of 85\n\n\n\n\n       company-specific conditions and plans. In the Company's quantitative\n       assessment, we estimate the fair value of a reporting unit by using the\n       income approach, specifically a discounted cash flow analysis. A\n       number of assumptions and estimates are required in performing the\n       discounted cash flow analysis, including forecasts of revenues, gross\n       profits, capital expenditures, discount rates, working capital changes, and\n       terminal growth rates. Actual results may differ from those assumed in the\n       forecasts.\n\n       As of December 31, 2023, the carrying value of goodwill was\n       $141,725[,000] and relates entirely to the Arcadia Products operating\n       segment and reporting unit. As of the date of the 2023 annual impairment\n       test, we performed a quantitative assessment and concluded that the fair\n       value of the Arcadia Products reporting unit exceeded its carrying value by\n       approximately 10%. Discount rates are one of the more significant\n       assumptions used in the income approach. If the Company increased the\n       discount rate used by approximately 100 basis points, the fair value of\n       Arcadia Products would still exceed its carrying value. A sustained decline\n       in general economic conditions, activity levels in end markets or equity\n       valuations could impact the judgments and assumptions used to estimate\n       the fair value of Arcadia Products, and the Company could be required to\n       record an impairment charge in the future. If the Company was required to\n       recognize an impairment charge in the future, the Consolidated Balance\n       Sheets and Consolidated Statements of Operations and Comprehensive\n       Income (Loss) could be materially impacted; however, the non-cash charge\n       would not impact the Company's consolidated cash flows, current liquidity,\n       and capital resources.\n\n       172.   Defendants\u2019 statements in \u00b6171 that the Company used the \u201cincome\n\napproach\u201d for the quantitative assessment of goodwill impairment was materially false\n\nand/or misleading when made because Defendants omitted material facts, including, inter\n\nalia, that (i) the goodwill valuation method was subject to change without further notice to\n\ninvestors; (ii) the Company could also use the \u201cmarket approach\u201d to valuing goodwill; and\n\n(iii) as a result, the factors that influence the \u201cincome approach\u201d, e.g., discount rates, do\n\nnot bear on the goodwill valuation under the \u201cmarket approach.\u201d Defendants never\n\nwarned that they may change the valuation method for how Arcadia\u2019s goodwill was\n\n\n\n                                             66\n\fCase No. 1:24-cv-03387-GPG-CYC         Document 47       filed 06/23/25   USDC Colorado\n                                       pg 70 of 85\n\n\n\n\ncalculated, which Defendants did just two quarters later when the Company belatedly\n\nwrote off the entire $141.7 million of goodwill. By speaking on the methods of how\n\nDefendants would value DMC\u2019s goodwill, Defendants assumed a duty to speak\n\ncompletely, including a duty to disclose to investors that the valuation method for valuing\n\nDMC\u2019s goodwill is subject to change.\n\n       C.     First Quarter 2024 Statements And Omissions\n\n       173.   On May 2, 2024, after the markets closed, DMC issued a press release\n\nentitled, \u201cDMC Global Reports First Quarter Financial Results,\u201d which was also filed on\n\nForm 8-K with the SEC and signed by Defendant Walter. The press release announced\n\nQ1 2024 results including: $2.3 million in net income; $4.2 million in adjusted net income;\n\nand $0.21 adjusted diluted EPS.\n\n       174.   On May 2, 2024, after the markets closed, DMC also filed its unaudited Q1\n\n2024 10-Q with the SEC which was signed by Defendants Walter and Seger. The Q1\n\n2024 10-Q repeated the Q1 2024 results from the press release including: $2,319,000 in\n\nnet income; and $4,167,000 in adjusted net income; and $0.21 adjusted diluted EPS.\n\n       175.   The Q1 2024 10-Q also reported goodwill of $141,725,000 as of March 31,\n\n2024. The Q1 2024 10-Q incorporated by reference the 2023 10-K, including the\n\nCompany\u2019s goodwill statements and discussions of the \u201cincome approach,\u201d as set forth\n\nabove in \u00b6171, and stated that \u201cOur critical accounting estimates have not changed from\n\nthose reported in Item 7 - Management\u2019s Discussion and Analysis of Financial Condition\n\nand Results of Operations in the Company\u2019s [2023 10-K].\u201d\n\n\n\n\n                                            67\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47       filed 06/23/25    USDC Colorado\n                                        pg 71 of 85\n\n\n\n\n       176.   Attached to the Q1 2024 Form 10-Q were certifications pursuant to Sections\n\n302 and 906 of SOX signed by Defendants Kuta and Walter attesting to the accuracy of\n\nthe statements and financial reporting, the disclosure of any material changes to the\n\nCompany\u2019s internal controls over financial reporting and the disclosure of all fraud. The\n\nQ1 2024 Form 10-Q also stated the following with respect to the Company\u2019s evaluation\n\nof its disclosure controls and procedures:\n\n       Our management, under the supervision and with the participation of the\n       Chief Executive Officer and Chief Financial Officer have evaluated the\n       Company\u2019s disclosure controls and procedures, as defined in Rules 13a-\n       15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended,\n       as of the end of the period covered by this report, and they have concluded\n       that these controls and procedures are effective.\n\n       177.   Defendants\u2019 statements in \u00b6\u00b6173-175 were materially false and/or\n\nmisleading when made because, based on Defendants\u2019 reasons for the Q3 2024\n\nimpairment, which also existed in Q1 2024, DMC\u2019s goodwill should have been impaired\n\nin Q1 2024, and as a result of the foregoing, by failing to impair $141.7 million in goodwill\n\nduring Q1 2024, DMC\u2019s reported income was overstated by $141.7 million; DMC\u2019s total\n\nassets were materially overstated by $141.7 million; and the Company\u2019s financial results\n\nwere not prepared in conformity with GAAP. By not recording the goodwill impairment on\n\na timely basis, DMC\u2019s shareholders\u2019 equity was also overstated by $141.7 million as of\n\nMarch 31, 2024.\n\n       D.     Second Quarter 2024 Statements And Omissions\n\n       178.   On August 1, 2024, after the market closed, DMC issued a press release\n\nentitled, \u201cDMC Global Reports Second Quarter Financial Results,\u201d which was also filed\n\non Form 8-K with the SEC and signed by Defendant Walter. The press release announced\n\n\n                                             68\n\fCase No. 1:24-cv-03387-GPG-CYC         Document 47       filed 06/23/25   USDC Colorado\n                                       pg 72 of 85\n\n\n\n\nQ2 2024 results including: $6.3 million in net income; $5.7 million in adjusted net income;\n\nand $0.29 adjusted diluted EPS.\n\n       179.   On August 1, 2024, after the market closed, DMC also filed its unaudited\n\nQ2 2024 10-Q with the SEC which was signed by Defendants Walter and Seger. The Q2\n\n2024 10-Q repeated the Q2 2024 results from the press release including: $6,293,000 in\n\nnet income; $5,675,000 in adjusted net income; and $0.29 adjusted diluted EPS.\n\n       180.   The Q2 2024 10-Q also reported goodwill of $141,725,000 as of June 30,\n\n2024. The Q2 2024 10-Q incorporated by reference the 2023 10-K, including the\n\nCompany\u2019s goodwill statements and discussions of the \u201cincome approach,\u201d as set forth\n\nabove in \u00b6171, and stated that \u201cOur critical accounting estimates have not changed from\n\nthose reported in Item 7 - Management\u2019s Discussion and Analysis of Financial Condition\n\nand Results of Operations in the Company\u2019s [2023 10-K].\u201d\n\n       181.   Attached to the Q2 2024 10-Q were SOX certifications signed by\n\nDefendants Kuta and Walter attesting to the accuracy of the statements and financial\n\nreporting, the disclosure of any material changes to the Company\u2019s internal controls over\n\nfinancial reporting and the disclosure of all fraud. The Q2 2024 10-Q also stated the\n\nfollowing with respect to the Company\u2019s evaluation of its disclosure controls and\n\nprocedures:\n\n       Our management, under the supervision and with the participation of the\n       Chief Executive Officer and Chief Financial Officer have evaluated the\n       Company\u2019s disclosure controls and procedures, as defined in Rules 13a-\n       15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended,\n       as of the end of the period covered by this report, and they have concluded\n       that these controls and procedures are effective.\n\n\n\n\n                                            69\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47       filed 06/23/25    USDC Colorado\n                                        pg 73 of 85\n\n\n\n\n       182.   Defendants\u2019 statements in \u00b6\u00b6178-180 were materially false and/or\n\nmisleading when made because: (i) based on Defendants\u2019 reasons for the Q3 2024\n\nimpairment, which also existed in Q1 2024, DMC\u2019s goodwill should have been impaired\n\nin Q1 2024, and as a result of the foregoing, by failing to impair $141.7 million in goodwill\n\nduring Q1 2024, DMC\u2019s total assets were materially overstated by $141.7 million during\n\nQ2 2024 (because the goodwill asset carried over from Q1 2024 to Q2 2024); (ii) the\n\nCompany\u2019s financial results were not prepared in conformity with GAAP; (iii) by not\n\nrecording the goodwill impairment on a timely basis during Q1 2024, DMC\u2019s shareholders\u2019\n\nequity was also overstated by $141.7 million as of June 30, 2024; and (iv) by not\n\ndisclosing that DMC\u2019s goodwill valuation methodology was subject to change from the\n\nincome approach to the market approach, DMC\u2019s financials were materially misleading\n\nbecause during Q2 2024, DMC received the very third-party offer that Defendants claim\n\nthey used to value and impair DMC\u2019s goodwill during Q3 2024.\n\nVII.   LOSS CAUSATION\n\n       183.   During the Class Period, Defendants made materially false and/or\n\nmisleading statements as detailed in this Complaint. This artificially inflated or maintained\n\nthe price of DMC common stock and operated as a fraud or deceit on the Class. Later,\n\nwhen Defendants\u2019 prior misrepresentations and omissions concealed by the fraudulent\n\nconduct alleged in this Complaint materialized and were disclosed publicly to the market\n\non October 21, 2024, and November 4, 2024, the price of DMC\u2019s common stock fell\n\nprecipitously and in a significant manner, as set forth above in \u00b6\u00b686-97. Indeed, following\n\nthe corrective disclosures on October 21, 2024, the closing price of DMC\u2019s common stock\n\n\n\n\n                                             70\n\fCase No. 1:24-cv-03387-GPG-CYC            Document 47       filed 06/23/25   USDC Colorado\n                                          pg 74 of 85\n\n\n\n\nfell more than 18% from $12.93 per share on October 21, 2024, to $10.57 per share the\n\nnext day, on high trading volume. Then, following the corrective disclosures on November\n\n4, 2024, the closing price of DMC\u2019s common stock fell more than 6% from $9.84 per share\n\non November 4, 2024, to $9.25 per share the following day, on high trading volume.\n\n       184.   As a result of their acquisition of DMC common stock during the Class\n\nPeriod and Defendants\u2019 material misstatements and omissions, Plaintiff and other\n\nmembers of the Class suffered economic loss, i.e., damages, under the federal securities\n\nlaws. Defendants\u2019 materially false and misleading statements caused DMC common\n\nstock to trade at artificially inflated levels throughout the Class Period, reaching as high\n\nas $19.49 per share on March 28, 2024.\n\n       185.   The declines in the price of DMC common stock after the corrective\n\ndisclosures   came    to   light   were    a   direct   result   of   Defendants\u2019   fraudulent\n\nmisrepresentations being revealed to investors and the market. The timing and magnitude\n\nof the price declines negate any inference that the loss suffered by Plaintiff and the other\n\nClass members was caused by changed market conditions, macroeconomic or industry\n\nfactors, or Company-specific facts unrelated to Defendants\u2019 fraudulent conduct.\n\n       186.   The economic loss, i.e., damages suffered by Plaintiff and the other Class\n\nmembers was a direct result of Defendants\u2019 fraudulent scheme to artificially inflate the\n\nprice of DMC common stock and the subsequent significant decline in the value of DMC\n\ncommon stock when Defendants\u2019 prior misrepresentations and other fraudulent conduct\n\nwere revealed.\n\n\n\n\n                                               71\n\fCase No. 1:24-cv-03387-GPG-CYC           Document 47      filed 06/23/25    USDC Colorado\n                                         pg 75 of 85\n\n\n\n\nVIII.   THE INAPPLICABILITY OF THE STATUTORY SAFE HARBOR\n\n        187.   The statutory safe harbor provided for forward-looking statements under\n\ncertain circumstances does not apply to any of the allegedly false statements pleaded in\n\nthis Complaint.\n\n        188.   The statements and omissions alleged to be false and misleading herein\n\nrelate to then-existing facts and conditions. In addition, to the extent certain of the\n\nstatements alleged to be false may be characterized as forward looking, they were not\n\nidentified as \u201cforward-looking statements\u201d when made and/or there were no meaningful\n\ncautionary statements identifying important factors that could cause actual results to differ\n\nmaterially from those in the purportedly forward-looking statements.\n\n        189.   In the alternative, to the extent that the statutory safe harbor is determined\n\nto apply to any forward-looking statements pleaded herein, Defendants are liable for\n\nthose false forward-looking statements because at the time each of those forward-looking\n\nstatements was made, the speaker had actual knowledge that the forward-looking\n\nstatement was materially false or misleading, and/or the forward-looking statement was\n\nauthorized or approved by an executive officer of DMC who knew that the statement was\n\nfalse when made, and/or the statement lacked a reasonable basis.\n\nIX.     THE PRESUMPTION OF RELIANCE\n\n        190.   Plaintiff and other members of the Class relied, and are entitled to have\n\nrelied, upon the integrity of the market prices for DMC securities and are entitled to a\n\npresumption of reliance on Defendants\u2019 materially false and misleading statements and\n\nomissions pursuant to the fraud-on-the-market doctrine. At all relevant times, the market\n\n\n\n\n                                             72\n\fCase No. 1:24-cv-03387-GPG-CYC         Document 47     filed 06/23/25    USDC Colorado\n                                       pg 76 of 85\n\n\n\n\nfor DMC\u2019s securities was open, well-developed and efficient for the following reasons,\n\namong others:\n\n             (a)   DMC common stock met the requirements for listing, and was listed\n\n             and actively traded on the NASDAQ, a highly efficient and automated\n\n             market;\n\n             (b)   As a regulated issuer, DMC filed periodic public reports with the SEC;\n\n             (c)   DMC regularly communicated with public investors via established\n\n             market    communication     mechanisms,      including     through   regular\n\n             dissemination of press releases on the national circuits of major newswire\n\n             services and through other wide-ranging public disclosures, such as\n\n             communications with the financial press and other similar reporting\n\n             services; and\n\n             (d)   DMC was followed by securities analysts employed by brokerage\n\n             firms who wrote reports about the Company, and these reports were\n\n             distributed to the sales force and certain customers of their respective\n\n             brokerage firms. Each of these reports was publicly available and entered\n\n             the public marketplace.\n\n      191.   As a result of the foregoing, the market for DMC\u2019s securities promptly\n\ndigested current information regarding DMC from all publicly available sources and\n\nreflected such information in DMC\u2019s share price. Under these circumstances, all\n\npurchasers of DMC\u2019s securities during the Class Period suffered similar injury through\n\n\n\n\n                                          73\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47       filed 06/23/25    USDC Colorado\n                                        pg 77 of 85\n\n\n\n\ntheir purchase of DMC\u2019s securities at artificially inflated prices and a presumption of\n\nreliance applies.\n\n       192.   A Class-wide presumption of reliance is also appropriate in this action under\n\nthe Supreme Court\u2019s holding in Affiliated Ute Citizens of Utah v. United States, 406 U.S.\n\n128 (1972), because the Class\u2019s claims are, in large part, grounded on Defendants\u2019\n\nmaterial misstatements and/or omissions. Because this action involves Defendants\u2019\n\nfailure to disclose material adverse information regarding the Company\u2019s business\n\noperations and financial prospects\u2014information that Defendants were obligated to\n\ndisclose\u2014positive proof of reliance is not a prerequisite to recovery. All that is necessary\n\nis that the facts withheld be material in the sense that a reasonable investor might have\n\nconsidered them important in making investment decisions. Given the importance of the\n\nClass Period material misstatements and omissions set forth above, that requirement is\n\nsatisfied here.\n\nX.     CLASS ACTION ALLEGATIONS\n\n       193.   Plaintiff brings this action as a class action pursuant to Federal Rule of Civil\n\nProcedure 23(a) and (b)(3) on behalf of a class of all persons and entities that purchased\n\nor otherwise acquired DMC securities between January 29, 2024 and November 4, 2024,\n\ninclusive, and who were damaged thereby (the \u201cClass\u201d). Excluded from the Class are\n\nDefendants, the officers and directors of the Company, at all relevant times, members of\n\ntheir immediate families and their legal representatives, heirs, successors, or assigns,\n\nand any entity in which Defendants have or had a controlling interest.\n\n\n\n\n                                             74\n\fCase No. 1:24-cv-03387-GPG-CYC           Document 47       filed 06/23/25    USDC Colorado\n                                         pg 78 of 85\n\n\n\n\n        194.   The members of the Class are so numerous that joinder of all members is\n\nimpracticable. Throughout the Class Period, DMC\u2019s shares actively traded on the\n\nNASDAQ. While the exact number of Class members is unknown to Plaintiff at this time\n\nand can only be ascertained through appropriate discovery, Plaintiff believes that there\n\nare at least hundreds or thousands of members in the proposed Class. Millions of DMC\n\nshares were traded publicly during the Class Period on the NASDAQ.\n\n        195.   Record owners and other members of the Class may be identified from\n\nrecords maintained by DMC or its transfer agent and may be notified of the pendency of\n\nthis action by mail, using the form of notice similar to that customarily used in securities\n\nclass actions.\n\n        196.   Plaintiff\u2019s claims are typical of the claims of the members of the Class as all\n\nmembers of the Class are similarly affected by Defendants\u2019 wrongful conduct in violation\n\nof federal law that is complained of herein.\n\n        197.   Plaintiff will fairly and adequately protect the interests of the members of the\n\nClass and has retained counsel competent and experienced in class and securities\n\nlitigation.\n\n        198.   Common questions of law and fact exist as to all members of the Class and\n\npredominate over any questions solely affecting individual members of the Class. Among\n\nthe questions of law and fact common to the Class are:\n\n               (a)    whether the federal securities laws were violated by Defendants\u2019 acts\n\n               as alleged herein;\n\n\n\n\n                                               75\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47       filed 06/23/25    USDC Colorado\n                                        pg 79 of 85\n\n\n\n\n               (b)     whether statements made by Defendants to the investing public\n\n               during the Class Period omitted and/or misrepresented material facts about\n\n               the business, operations, and prospects of DMC; and\n\n               (c)     to what extent the members of the Class have sustained damages\n\n               and the proper measure of damages.\n\n       199.    A class action is superior to all other available methods for the fair and\n\nefficient adjudication of this controversy since joinder of all members is impracticable.\n\nFurthermore, as the damages suffered by individual Class members may be relatively\n\nsmall, the expense and burden of individual litigation makes it impossible for members of\n\nthe Class to individually redress the wrongs done to them. There will be no difficulty in the\n\nmanagement of this action as a class action.\n\nXI.    CLAIMS FOR RELIEF\n\n                                       COUNT I\n                 Violations Of Section 10(b) Of The Exchange Act And\n              Rule 10b-5 Promulgated Thereunder Against All Defendants\n\n       200.    Plaintiff repeats and re-alleges each and every allegation contained above\n\nas if fully set forth herein.\n\n       201.    During the Class Period, Defendants carried out a plan, scheme and course\n\nof conduct which was intended to and, throughout the Class Period, did: (i) deceive the\n\ninvesting public, including Plaintiff and other Class members, as alleged herein; and (ii)\n\ncause Plaintiff and other members of the Class to purchase DMC\u2019s securities at artificially\n\ninflated prices. In furtherance of this unlawful scheme, plan and course of conduct,\n\nDefendants, and each defendant, took the actions set forth herein.\n\n\n\n\n                                             76\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47      filed 06/23/25    USDC Colorado\n                                        pg 80 of 85\n\n\n\n\n       202.   Defendants (i) employed devices, schemes, and artifices to defraud; (ii)\n\nmade untrue statements of material fact and/or omitted to state material facts necessary\n\nto make the statements not misleading; and (iii) engaged in acts, practices, and a course\n\nof business which operated as a fraud and deceit upon the purchasers of the Company\u2019s\n\nsecurities in an effort to maintain artificially high market prices for DMC\u2019s securities in\n\nviolation of Section 10(b) of the Exchange Act and Rule 10b-5. All Defendants are sued\n\neither as primary participants in the wrongful and illegal conduct charged herein or as\n\ncontrolling persons as alleged below.\n\n       203.   Defendants, individually and in concert, directly and indirectly, by the use,\n\nmeans or instrumentalities of interstate commerce and/or of the mails, engaged and\n\nparticipated in a continuous course of conduct to conceal adverse material information\n\nabout DMC\u2019s financial well-being and prospects, as specified herein.\n\n       204.   Defendants employed devices, schemes and artifices to defraud, while in\n\npossession of material adverse non-public information and engaged in acts, practices,\n\nand a course of conduct as alleged herein in an effort to assure investors of DMC\u2019s value\n\nand performance and continued substantial growth, which included the making of, or the\n\nparticipation in the making of, untrue statements of material facts and/or omitting to state\n\nmaterial facts necessary in order to make the statements made about DMC and its\n\nbusiness operations and future prospects in light of the circumstances under which they\n\nwere made, not misleading, as set forth more particularly herein, and engaged in\n\ntransactions, practices and a course of business which operated as a fraud and deceit\n\nupon the purchasers of the Company\u2019s securities during the Class Period.\n\n\n\n                                            77\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47      filed 06/23/25    USDC Colorado\n                                        pg 81 of 85\n\n\n\n\n       205.   Each of the Individual Defendants\u2019 primary liability and controlling person\n\nliability arises from the following facts: (i) the Individual Defendants were high-level\n\nexecutives and/or directors at the Company during the Class Period and members of the\n\nCompany\u2019s management team or had control thereof; (ii) each of these defendants, by\n\nvirtue of their responsibilities and activities as a senior officer and/or director of the\n\nCompany, was privy to and participated in the creation, development and reporting of the\n\nCompany\u2019s internal budgets, plans, projections and/or reports; (iii) each of these\n\ndefendants enjoyed significant personal contact and familiarity with the other defendants\n\nand was advised of, and had access to, other members of the Company\u2019s management\n\nteam, internal reports and other data and information about the Company\u2019s finances,\n\noperations, and sales at all relevant times; and (iv) each of these defendants was aware\n\nof the Company\u2019s dissemination of information to the investing public which they knew\n\nand/or recklessly disregarded was materially false and misleading.\n\n       206.   Defendants had actual knowledge of the misrepresentations and/or\n\nomissions of material facts set forth herein, or acted with reckless disregard for the truth\n\nin that they failed to ascertain and to disclose such facts, even though such facts were\n\navailable to them. Such defendants\u2019 material misrepresentations and/or omissions were\n\ndone knowingly or recklessly and for the purpose and effect of concealing DMC\u2019s financial\n\nwell-being and prospects from the investing public and supporting the artificially inflated\n\nprice of its securities. As demonstrated by Defendants\u2019 overstatements and/or\n\nmisstatements of the Company\u2019s business, operations, financial well-being, and\n\nprospects throughout the Class Period, Defendants, if they did not have actual knowledge\n\n\n\n                                            78\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47      filed 06/23/25    USDC Colorado\n                                        pg 82 of 85\n\n\n\n\nof the misrepresentations and/or omissions alleged, were reckless in failing to obtain such\n\nknowledge by deliberately refraining from taking those steps necessary to discover\n\nwhether those statements were false or misleading.\n\n        207.   As a result of the dissemination of the materially false and/or misleading\n\ninformation and/or failure to disclose material facts, as set forth above, the market price\n\nof DMC\u2019s securities was artificially inflated during the Class Period. In ignorance of the\n\nfact that market prices of the Company\u2019s securities were artificially inflated, and relying\n\ndirectly or indirectly on the false and/or misleading statements made by Defendants, or\n\nupon the integrity of the market in which the securities trades, and/or in the absence of\n\nmaterial adverse information that was known to or recklessly disregarded by Defendants,\n\nbut not disclosed in public statements by Defendants during the Class Period, Plaintiff\n\nand the other members of the Class acquired DMC\u2019s securities during the Class Period\n\nat artificially high prices and were damaged thereby.\n\n        208.   At the time of said misrepresentations and/or omissions, Plaintiff and other\n\nmembers of the Class were ignorant of their falsity, and believed them to be true. Had\n\nPlaintiff and the other members of the Class and the marketplace known the truth\n\nregarding the problems that DMC was experiencing, which were not disclosed by\n\nDefendants, Plaintiff and other members of the Class would not have purchased or\n\notherwise acquired their DMC securities, or, if they had acquired such securities during\n\nthe Class Period, they would not have done so at the artificially inflated prices which they\n\npaid.\n\n\n\n\n                                            79\n\fCase No. 1:24-cv-03387-GPG-CYC          Document 47      filed 06/23/25   USDC Colorado\n                                        pg 83 of 85\n\n\n\n\n       209.    By virtue of the foregoing, Defendants violated Section 10(b) of the\n\nExchange Act and Rule 10b-5 promulgated thereunder.\n\n       210.    As a direct and proximate result of Defendants\u2019 wrongful conduct, Plaintiff\n\nand the other members of the Class suffered damages in connection with their respective\n\npurchases and sales of the Company\u2019s securities during the Class Period.\n\n                                        COUNT II\n                    Violations Of Section 20(a) Of The Exchange Act\n                            Against The Individual Defendants\n\n       211.    Plaintiff repeats and re-alleges each and every allegation contained above\n\nas if fully set forth herein.\n\n       212.    The Individual Defendants acted as controlling persons of DMC within the\n\nmeaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-\n\nlevel positions and their ownership and contractual rights, participation in, and/or\n\nawareness of the Company\u2019s operations and intimate knowledge of the false financial\n\nstatements filed by the Company with the SEC and disseminated to the investing public,\n\nthe Individual Defendants had the power to influence and control and did influence and\n\ncontrol, directly or indirectly, the decision-making of the Company, including the content\n\nand dissemination of the various statements which Plaintiff contends are false and\n\nmisleading. The Individual Defendants were provided with or had unlimited access to\n\ncopies of the Company\u2019s reports, press releases, public filings, and other statements\n\nalleged by Plaintiff to be misleading prior to and/or shortly after these statements were\n\nissued and had the ability to prevent the issuance of the statements or cause the\n\nstatements to be corrected.\n\n\n\n                                            80\n\fCase No. 1:24-cv-03387-GPG-CYC           Document 47       filed 06/23/25    USDC Colorado\n                                         pg 84 of 85\n\n\n\n\n       213.   In particular, the Individual Defendants had direct and supervisory\n\ninvolvement in the day-to-day operations of the Company and, therefore, had the power\n\nto control or influence the particular transactions giving rise to the securities violations as\n\nalleged herein, and exercised the same.\n\n       214.   As set forth above, DMC and the Individual Defendants each violated\n\nSection 10(b) and Rule 10b-5 by their acts and omissions as alleged in this Complaint.\n\nBy virtue of their position as controlling persons, the Individual Defendants are liable\n\npursuant to Section 20(a).\n\nXII.   PRAYER FOR RELIEF\n\n       WHEREFORE, Plaintiff prays for relief and judgment, as follows:\n\n              (a)    Determining that this action is a proper class action under Rule 23 of\n\n              the Federal Rules of Civil Procedure;\n\n              (b)    Awarding compensatory damages in favor of Plaintiff and the other\n\n              Class members against all Defendants, jointly and severally, for all\n\n              damages sustained as a result of Defendants\u2019 wrongdoing, in an amount to\n\n              be proven at trial, including interest thereon;\n\n              (c)    Awarding Plaintiff and the Class their reasonable costs and\n\n              expenses incurred in this action, including counsel fees and expert fees;\n\n              and\n\n              (d)    Such other and further relief as the Court may deem just and proper.\n\n\n\n\n                                              81\n\fCase No. 1:24-cv-03387-GPG-CYC           Document 47       filed 06/23/25   USDC Colorado\n                                         pg 85 of 85\n\n\n\n\nXIII.   JURY TRIAL DEMANDED\n\n        Plaintiff hereby demands a trial by jury.\n\nDATED: June 23, 2025                                GLANCY PRONGAY & MURRAY LLP\n\n                                                    s/    Takeo A. Kellar\n                                                    Raymond D. Sulentic\n                                                    Takeo A. Kellar\n                                                    Glancy Prongay & Murray LLP\n                                                    12526 High Bluff Drive, Suite 300\n                                                    San Diego, CA 92130\n                                                    Telephone: (310) 201-9150\n                                                    Email: rsulentic@glancylaw.com\n                                                           tkellar@glancylaw.com\n\n                                                    Robert V. Prongay\n                                                    Glancy Prongay & Murray LLP\n                                                    1925 Century Park East, Suite 2100\n                                                    Los Angeles, CA 90067\n                                                    Telephone: (310) 201-9150\n                                                    Email: rprongay@glancylaw.com\n\n                                                    Lead Counsel for Lead Plaintiff\n                                                    John Mark Stauffer\n\n                                                    LAW OFFICES OF HOWARD G. SMITH\n                                                    Howard G. Smith\n                                                    3070 Bristol Pike, Suite 112\n                                                    Bensalem, PA 19020\n                                                    Telephone: (215) 638-4847\n\n                                                    Additional Counsel\n\n\n\n\n                                             82\n\f","ocr_status":1,"date_upload":"2025-12-16T21:57:26.679317-08:00","document_number":"47","attachment_number":null,"pacer_doc_id":"039012033078","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/462200962/","id":462200962,"tags":[],"absolute_url":"/docket/69445977/47/1/garson-v-dmc-global-inc/","date_created":"2025-12-16T21:56:53.139658-08:00","date_modified":"2025-12-16T21:56:53.139668-08:00","sha1":"","page_count":2,"file_size":798448,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"47","attachment_number":1,"pacer_doc_id":"039012033079","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Summons - Brett Seger","acms_document_guid":""}],"date_created":"2025-12-16T21:51:58.996774-08:00","date_modified":"2025-12-16T21:51:59.006034-08:00","date_filed":"2025-06-23","time_filed":null,"entry_number":47,"recap_sequence_number":"2025-06-23.001","pacer_sequence_number":169,"description":"AMENDED COMPLAINT Consolidated Amended Class Action Complaint For Violation Of The Federal Securities Laws And Jury Demand against DMC Global Inc., Michael Kuta, Eric V. Walter, Brett Seger, filed by John Mark Stauffer. 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Motion referred to Magistrate Judge Cyrus Y. Chung by District Judge Gordon P Gallagher on 05/06/2025. 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Sulentic on behalf of John Mark StaufferAttorney Raymond D. Sulentic added to party John Mark Stauffer(pty:mov) (Sulentic, Raymond) (Entered: 05/05/2025)","tags":[]}],"entries_total":"https://www.courtlistener.com/api/rest/v4/docket-entries/?count=on&docket=69445977&page_size=40"}