Item
4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
The
Registrant previously disclosed in a Form 8-K dated July 21, 2021, that it was working to restate its consolidated financial statements
for the three-, six-, and nine-month periods ended June 30, 2020, September 30, 2020, and December 31, 2020, respectively, as filed with
the U.S. Securities and Exchange Commission (the “SEC”) via Forms 10-Q on August 20, 2020, November 23, 2020, and February
22, 2021, respectively (the “Financials”).
The
errors previously determined to require restatement relate to the Registrant’s acquisition of controlling interests in two separate
companies: (1) the RET Wine Company (“RET”), and (2) Jiuxiang Blue Sky Technology (Beijing) Co. Ltd (“Jiuxiang,”
and together with RET, the “Subsidiaries”), which transactions closed in April 2020 and August 2020, respectively.
As
previously disclosed, on or about January 12, 2021, the iFresh shareholders who acquired shares through their sale of RET and Jiuxiang
to the Registrant (the “Subsidiary Shareholders”), acting in concert with another Registrant shareholder who obtained his
shares through an earlier equity investment (the “Investing Shareholder,” and collectively with the Subsidiary Shareholders,
the “Consent Shareholders”), made an attempt to unseat members of the Registrant’s current Board in order to effect
a takeover of the Registrant. This attempt is currently the subject of litigation in Delaware (the “Delaware Action”).
The
Registrant believes that the January 12, 2021, takeover attempt and litigation along with certain actions by the Consent Shareholders
may have interfered with the Company’s ability to exercise control over the Subsidiaries, leading the Audit Committee to previously
determine that a restatement would be required. Specifically, the Registrant’s current board rested its determination on the fact
that none of the Consent Shareholders disclosed their collective affiliations during the acquisitions of the Subsidiaries and, accordingly,
continues to believe the acquisitions of the Subsidiaries may have been fraudulently induced.
However,
since its July 21, 2021, 8-K filing, the Registrant has consulted with its Auditors and the SEC’s Office of the Chief Accountant
to determine the proper manner and scope of any required adjustments to the financial statements and to assess the necessity of restatement.
Following consultations, the Registrant has determined that restatement of the Financials is not appropriate because the Registrant had
indeed acquired “control” over the Subsidiaries as of the closing of the transactions under GAAP rules.
The
Company believes it has made significant progress in its preparation of the financial statements for the fiscal year ended March 31,
2021, and the quarter ended June 30, 2021, and it is working diligently on the financial statements for the quarter ended September 30,
2021 (collectively, the “Delayed Financial Statements”). The Company is working with all due haste to finalize the Delayed
Financial Statements to be filed with the SEC in consultation with its auditors.