On March 10, 2022, the Company filed a motion to challenge the jurisdiction of Shenzhen Intermediate
Court, as the dispute should be referred to arbitration in Hong Kong. The court rendered a ruling (which the Company received on September 14, 2022), dismissing the case against the Company, but not NTG, NTI, and Zastron. On October 14,
2022, the Company filed an appeal against this decision of the Shenzhen Intermediate Court, claiming that the case should be dismissed against all defendants.
West Ridge
As previously disclosed, in March 2021, the
BVI Court found that the 2020 PIPE conducted by the Company was void. Related to this litigation, the Company, under the prior management team and Board, entered into a settlement and indemnity agreement (the Indemnity Agreement) with
West Ridge Investment Company Limited (West Ridge), a subsidiary of Haitong International Securities Co Ltd, providing for, among other things, the return of funds of approximately USD $24 million representing the purchase price
paid by West Ridge in the 2020 PIPE if the 2020 PIPE was declared invalid.
On April 7, 2022, the BVI Court delivered a judgment in favor of West
Ridge in the amount of $23.8 million and concluded that the terms of the Indemnity Agreement stand to be enforced subject to any issues as to quantum (the West Ridge Litigation). However, the BVI Court granted the Company permission
to appeal the order to the Eastern Caribbean Court of Appeal (Court of Appeal) and granted the Company a stay on the order at a hearing held on June 8, 2022. This ruling prevents West Ridge from seeking to enforce its judgment
against the Company pending the appeal of this case except for certain real estate holdings in Hong Kong and monies held in an account with Credit Suisse (the CS Account), both held by Hong Kong subsidiaries of the Company. The
Companys appeal against the judgment is expected to be heard in February 2023.
Additionally, the Company has filed evidence in opposition to the
West Ridge claim for interest and legal costs arising from the June 8, 2022 judgment. A hearing has been scheduled for March 28, 2023. West Ridge has initiated proceedings in Hong Kong court to enforce the June 8, 2022 judgment, but
the judgment continues to be subject to restrictions on enforcement in accordance with its terms.
Other Proceedings
As previously disclosed, as part of his efforts to obstruct the change of control of the Company, Mr. Wang filed a claim in the PRC, in February 2022,
challenging the resolutions removing him from positions at the Company and its on-shore subsidiaries arising from the change in the Board of the Company (the Wang Litigation). The trial occurred on
August 3, 2022 and November 11, 2022 and the Company has not received any judgment from the court yet. The Company does not believe Mr. Wangs claims have legal merit.
Nam Tai has brought a counterclaim in the Wang Litigation, requesting the court in China confirm the validity of the resolutions which removed Mr. Wang
from his positions in the Companys onshore subsidiaries, and appointed Chunhua Yu. The trial on these issues is set for November 29, 2022.
The
Company and its subsidiaries are also engaged in other litigation and arbitration proceedings during the ordinary course of business.
Liquidity
Updates
As of November 7, 2022, the Company had (i) access to USD $5 million total of available borrowings remaining under the
unsecured delayed-draw term loans, evidenced by promissory notes dated January 11, 2022 (the Notes), with IAT Insurance Group, Inc. (IAT) and IsZo Capital LP (IsZo), (ii) potential access to up to an
additional USD $10 million of available borrowing under each of the Notes, with IAT and IsZos consent, respectively, to such increase and (iii) approximately USD $2.5 million of cash on hand. Further, there are certain
restrictions on the use of borrowings under the Notes, as disclosed in the Companys Form 6-K filed with the SEC on January 12, 2022. This amount is not sufficient to pay the full amount of the
liability under the West Ridge Litigation or any potential liability under the Hong Kong Arbitration, each as previously described, if either were to become due now. Further, although such liabilities may also be paid out of the CS Account under
certain limited circumstances, the amount in the CS Account is not sufficient to pay the full amount of the liability under the Hong Kong Arbitration, or under the Hong Kong Arbitration and the litigation on a combined basis.