Item 3. Legal Proceedings
Item 3. Legal Proceedings
We may from time to time
become a party to various legal or administrative proceedings arising in the ordinary course of our business. We are currently not a party
to any legal or administrative proceedings and are not aware of any pending or threatened legal or administrative proceedings against
us in all material aspects other than the following:
In February 17, 2022, FT
Global Capital, Inc. (“FTG”), filed a lawsuit against the Company in the Commercial Division of New York Supreme Court. FTG
has brought a breach of contract action against the Company to recover fees in connection with an agreement that the parties entered into
in April 2019 (the “Agreement”). The Company has answered FTG’s complaint and has denied the allegations because it
is the Company’s position that FTG did not fulfill its obligations under the terms of the Agreement. Discovery is continuing. The
Court issued a Status Conference Order (the “Order”) dated April 15, 2024. According to the Order, the Court ordered that
the Company has failed to appear and is in default, and that pursuant to the warning given in the Court’s order dated March 22,
2024, the Company’s default renders its answer subject to being stricken, and accordingly the answer of the Company was stricken.
On April 18, 2024, FT Global filed a notice of motion for default judgment against the Company. By an order dated August 20, 2024, the
Court granted the plaintiff’s default motion on the issue of liability, with damages to be determined by a referee. The Company
then moved to vacate the order dated August 20, 2024, but the Court denied the Company’s motion on November 1, 2024, stating that
the excuse proffered by the Company as to the reason it did not retain counsel in a timely fashion was not sufficient.
In November 2023, an individual
plaintiff involved in a civil loan dispute filed a lawsuit against the defendants including Tengsheng Paper and Jie Ping, who served as
the executive director and the legal representative of Tengsheng Paper, at the Lianchi District People’s Court of Baoding City,
China (the “PRC Court”). On December 1, 2023, the plaintiff sought property preservation measures, requesting the PRC Court
to freeze RMB6.70 million worth of bank deposits held by Jie Ping and Tengsheng Paper. Following this request, on the same day, the PRC
Court issued a ruling to immediately freeze the RMB3.35 million worth of bank deposits of Jie Ping and Tengsheng Paper. On June 14, 2024,
the PRC Court ordered the defendants to repay the principal of the loan in the amount of RMB3,320,000 to the plaintiff, and Tengsheng
Paper was jointly liable for repayment.
The ultimate resolution
of the proceedings may have a material adverse impact on our business, financial condition, results of operations or cash flows. Failure
to settle the proceedings or other unfavorable outcomes in this proceedings could result in significant damages, additional penalties
or other remedies imposed against the Company. Litigation of this kind could result in substantial costs and a diversion of our management’s
attention and resources. It could also result in our reputation being harmed and our stock price could decline as a result of allegations
made in the course of the proceedings, regardless of the truthfulness of the allegations.
Item 4. Mine Safety Disclosures
Not Applicable.
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PART II