Item 1.01 Entry into a Material Definitive Agreement.
SOS Information Technology New York, Inc. ("SOSNY"), a company incorporated
under the laws of state of New York and a wholly owned subsidiary of SOS Ltd.,
filed a December 9, 2022 lawsuit in the New York State Supreme Court against
Thor Miner, Inc., which is Singularity's joint venture ("Thor Miner"),
Singularity Future Technology Ltd. ("Singularity" or the "Company," and,
together with Thor Miner, referred to as the "Corporate Defendants"), Lei Cao,
Yang Jie, John F. Levy, Tieliang Liu, Tuo Pan, Shi Qiu, Jing Shan, and Heng Wang
(jointly referred to as the "Individual Defendants") (collectively, the
Individual Defendants and the Corporate Defendants are the "Defendants"). SOSNY
and Thor Miner entered into a January 10, 2022 Purchase and Sale Agreement (the
"PSA") for the purchase of $200,000,000 in crypto mining rigs, which SOSNY
claims was breached by the Defendants.
SOSNY and Defendants entered into a certain settlement agreement and general
mutual release with an Effective Date of December 28, 2022 ("Settlement
Agreement"). Pursuant to the Settlement Agreement, Thor Miner agreed to pay a
sum of thirteen million in U.S. dollars ($13,000,000) (the "Settlement Payment")
to SOSNY in exchange for SOSNY dismissing the lawsuit with prejudice as to the
settling Defendants and without prejudice as to all others. The full Settlement
Payment was received by SOSNY on December 28, 2022. SOSNY dismissed the lawsuit
with prejudice against Singularity (and other Defendants) on December 28, 2022.
Singularity and Thor Miner further covenanted and agreed that if they receive
additional funds from HighSharp (Shenzhen Gaorui) Electronic Technology Co.,
Ltd. ("HighSharp") related to the PSA, they will promptly transfer such funds to
SOSNY in an amount not to exceed forty million, five hundred sixty thousand,
five hundred sixty-nine dollars ($40,560,569.00) (which is the total amount paid
by SOSNY pursuant to the PSA less the price of the machines actually received by
SOSNY pursuant to the PSA). The Settlement Payment and any payments subsequently
received by SOSNY from HighSharp shall be deducted from the total amount of
forty million, five hundred sixty thousand, five hundred sixty-nine dollars
($40,560,569.00) previously paid by, and now due and owing to SOSNY. In further
consideration of the Settlement Agreement, Thor Miner agreed to execute and
provide to SOSNY, within seven (7) business days after SOSNY's receipt of the
Settlement Payment, an assignment of all claims it may have against HighSharp or
otherwise to the proceeds of the PSA.
The foregoing description of the Settlement Agreement is a summary of the
material terms of such agreement, does not purport to be complete and is
qualified in its entirety by reference to the Settlement Agreement, which is
attached hereto as Exhibit 10.1.
Item 8.01 Other Events.
Litigations
Lawsuits in connection with the Securities Purchase Agreement
On September 23, 2022, Hexin Global Limited and Viner Total Investments Fund
filed a lawsuit against the Company and other defendants in the United States
District Court for the Southern District of New York (the "Hexin lawsuit"). On
December 5, 2022, St. Hudson Group LLC, Imperii Strategies LLC, Isyled
Technology Limited, and Hsqynm Family Inc. filed a lawsuit against the Company
and other defendants in the United States District Court for the Southern
District of New York (the "St. Hudson lawsuit," and together with the Hexin
lawsuit, the "Investor Actions"). The plaintiffs in the Investor Actions are
investors that entered into a securities purchase agreement ("Securities
Purchase Agreement") with the Company in late 2021. Each of these plaintiffs
asserts causes of action for, among other things, violations of federal
securities laws, breach of fiduciary duty, fraudulent inducement, breach of
contract, conversion, and unjust enrichment, and seeks monetary damages and
specific performance to remove legends from certain securities sold pursuant to
the Securities Purchase Agreement. The Hexin lawsuit claims monetary damages of
"at least $6 million," plus interest, costs, fees, and attorneys' fees. The St.
Hudson lawsuit claims monetary damages of "at least $4.4 million," plus
interest, costs, fees, and attorneys' fees. As these Investor Actions are still
in the early stages, the Company cannot predict the outcome.
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Lawsuit in connection with the Financial Advisory Agreement
On October 6, 2022, Jinhe Capital Limited ("Jinhe") filed a lawsuit against the
Company in the United States District Court for the Southern District of New
York, asserting causes of actions for, among other things, breach of contract,
breach of the covenant of good faith and fair dealing, conversion, quantum
meruit, and unjust enrichment, in connection with a financial advisory agreement
entered into by and between Jinhe and the Company on November 10, 2021. Jinhe
claims monetary damages of "at least $575,000" and "potentially exceeding $1.8
million," plus interest, costs, and attorneys' fees. As this action is still in
the early stage, the Company cannot predict the outcome.
Putative Class Action
On December 9, 2022, Piero Crivellaro, purportedly on behalf of the persons or
entities who purchased or acquired publicly traded securities of the Company
between February 2021 and November 2022, filed a putative class action against
the Company and other defendants in the United States District Court for the
Eastern District of New York, alleging violations of federal securities laws
related to alleged false or misleading disclosures made by the Company in its
public filings. The plaintiff seeks unspecified damages, plus interest, costs,
fees, and attorneys' fees. As this action is still in the early stage, the
Company cannot predict the outcome.
In addition to the above litigations, the Company is also subject to additional
contractual litigations as to which it is unable to estimate the outcome.
Government Investigations
Following a publication issued by Hindenburg Research dated May 5, 2022, the
Company received subpoenas from the United States Attorney's Office for the
Southern District of New York and the United States Securities and Exchange
Commission. The Company is cooperating with the government regarding these
matters. At this early stage, the Company is not able to estimate the outcome or
duration of the government investigations.
Forward-Looking Statements
Certain statements in this report that are not based on historical fact are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and the provisions of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended (which Sections were adopted as part of the Private
Securities Litigation Reform Act of 1995). While management has based any
forward-looking statements contained herein on its current expectations, the
information on which such expectations were based may change. These
forward-looking statements rely on a number of assumptions concerning future
events and are subject to a number of risks, uncertainties, and other factors,
many of which are outside of the Company's control, that could cause actual
results to materially differ from such statements. Accordingly, investors should
not place any reliance on forward-looking statements as a prediction of actual
results. The Company disclaims any intention to, and undertake no obligation to,
update or revise any forward-looking statement.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
10.1 Form of the Settlement Agreement
104 Cover Page Interactive Data File (Embedded within the Inline XBRL document)
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