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.
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.