Item 8.01 Other Events.
As previously disclosed, on June 7, 2019, iFresh Inc. (the "Company") entered
into a Share Exchange Agreement (the "Agreement") with Xiaotai International
Investment Inc. ("Xiaotai") and the equity holders of Xiaotai International (the
"Xiaotai Shareholders"), pursuant to which the Company would acquire all of the
outstanding issued shares and other equity interests in Xiaotai from the Xiaotai
Shareholders (the "Acquisition") in exchange for 254,813,383 shares of the
Company's common stock to be issued to the Xiaotai Shareholders. Xiaotai
operated through its variable interest entity, Zhejiang Xiaotai Technology Co.
Ltd. ("Zhejiang Xiaotai"), in China.
As disclosed in a current report on Form 8-K filed on November 5, 2019, the
Company received news regarding an ongoing investigation of Zhejiang Xiaotai by
the Hangzhou Police Department, Binjiang Branch ("Hangzhou Police") through a
public notice released by the Hangzhou Police on November 3, 2019 (the "Police
Report"). Zhejiang Xiaotai was alleged to have conducted illegal fundraising
from the public. The report also stated that several executives of Zhejiang
Xiaotai have been detained and are being held in custody. On November 5, 2019
(the "Termination Date"), the Company issued written notice to Xiaotai and
Xiaotai Shareholders to terminate the Agreement effective immediately pursuant
to the termination provisions of the Agreement.
On May 14, 2021, the Company initiated an arbitration proceeding with the
International Centre for Dispute Resolution (the "ICDR") of the American
Arbitration Association ("AAA") (ICDR Case No. 01-21-0003-8581) seeking to
recover from Xiaotai Parties a termination fee for an aggregate amount of
$3,739,285.54. Among other things, the Company claimed that Xiaotai and Xiaotai
Shareholders had breached the representations and warranties in the Agreement
entitling the Company to terminate the Agreement and recover a termination fee
as provided in the Agreement.
The ICDR held a hearing on June 28, 2021, in which neither Xiaotai nor Xiaotai
Shareholders participated. On July 27, 2021, the Company received notice that
the ICDR issued a default award in the Company's favor on July 21, 2021. The
Company was awarded the unpaid termination fee of $932,732.30, the difference
between the actual expenses of $3,707,732.30 incurred by the Company in
connection with the contemplated Acquisition and the payment previously made of
$2,707,732.30 by Xiaotai Parties prior to the date of the termination notice. In
addition, the Company was also awarded pre-judgement interest for breach of
contract of $2,069.90. The arbitration fees and expenses are to be borne equally
by the Company and Xiaotai Parties. The Company intends to pursue the ICDR's
decision in China after conclusion of the Chinese court's procedures; however,
recovery cannot be guaranteed.
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