iFresh (IFMK) Risk Analysis

iFresh is an "emerging growth company," as defined in the JOBS Act. It may remain an "emerging growth company" until the fiscal year ended March31, 2021. However, if its non-convertible debt issued within a three-year period or revenues exceeds $1 billion, or the market value of its common stock that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, iFresh would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company, iFresh is not required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, has reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and is exempt from the requirements of holding a non binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Additionally, as an emerging growth company, iFresh has elected to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As such, iFresh's financial statements may not be comparable to companies that comply with public company effective dates. As a result, potential investors may be less likely to invest in our securities.

On December 23, 2016, NYM, as borrower, entered into a $25 million senior secured Credit Agreement (the "Credit Agreement") with Key Bank National Association ("Key Bank" or "Lender"). The Credit Agreement provides for (1) a revolving credit of $5,000,000 for making advance and issuance of letter of credit, (2) $15,000,000 of effective date term loan and (3) $5,000,000 of delayed draw term loan. The interest rate is equal to (1) the Lender's "prime rate" plus 0.95%, or (b) the Adjusted LIBOR rate plus 1.95%. As reflected in the Company's consolidated financial statements, the Company had operating losses in fiscal year 2020 and had negative working capital of $28.6 and 21.7 million as of March 31, 2020 and 2019, respectively. The Company had negative equity of $2.6 million as of March 31, 2020. The Company did not meet the financial covenant required in the credit agreement with Keybank. As of March 31, 2020, the Company has outstanding loan facilities of approximately $20.1 million due to Keybank. Failure to maintain these loan facilities will have a significant impact on the Company's operations. On May 20, 2019, iFresh, NYM (or the "Borrower"), certain subsidiaries of NYM, Mr. Long Deng and KeyBank National Association ("Keybank" or the "Lender") entered into the first forbearance agreement (the "First Forbearance Agreement") with respect to that certain Credit Agreement, dated as of December 23, 2016, as amended, pursuant to which KeyBank made available to NYM a revolving credit facility, a term loan facility, and other credit accommodations (the "Loan Agreements"). The Lender has agreed to delay the exercise of its rights and remedies under the Loan Agreements based on the existence of certain events of default until the earlier to occur of: (a) 5:00 p.m. Eastern Time on the 90th day from the date of the First Forbearance Agreement (the "First Forbearance Period"); and (b) a Forbearance Event of Default. Reference is made to the current report on Form 8-K filed with the SEC on May 21, 2019. The Borrower did not meet its obligations under the Loan Agreements by the end of the First Forbearance Period. On October 17, 2019 (the "Effective Date"), the Company, NYM, certain subsidiaries of NYM, Go Fresh 365, Inc. ("Go Fresh"), Mr. Long Deng and Keybank entered into the second forbearance agreement (the "Second Forbearance Agreement"). Pursuant to certain Guaranty Agreement dated as of December 26, 2016, as amended by several joinder agreements and the Second Forbearance Agreement, the Company, certain subsidiaries of NYM, Go Fresh and Mr. Long Deng (collectively, the "Guarantors", and together with the Borrower, the "Loan Parties") have agreed to guarantee the payment and performance of the obligations of the Borrower under the Credit Agreement ("Obligations"). Terms used but not otherwise defined herein have the meanings ascribed to them in the Second Forbearance Agreement. The Lender agreed to delay the exercise of its rights and remedies under the Loan Agreement based on the existence of certain events of default (the "Specified Events of Default") until the earlier to occur of: (a) 5:00 p.m. Eastern Time on the November 29, 2019; and (b) a Forbearance Event of Default. No subsequent agreements or amendments have been entered into. The Borrower is not current in its payments to Keybank. As of June 30, 2020 we owe $21,266,148 to Keybank. We have retained as bankruptcy counsel to prepare bankruptcy filings for certain of our subsidiaries. Our principal liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. Our ability to fund these needs will depend on its future performance, which will be subject in part to general economic, competitive and other factors beyond its control. In addition, if Keybank accelerates the loan, we may be forced to declare bankruptcy. These conditions raise substantial doubt as to our ability to remain a going concern.

As discussed in this Annual Report on Form 10-K, we incurred operating losses, did not meet the financial covenant required in the Credit Agreement and are currently in default of the Credit Agreement due to our failure to pay certain tax obligations. These conditions raise substantial doubt about our ability to continue as a going concern.

Food retail is a large and highly competitive industry. However, iFresh believes that the market participants in the Chinese supermarket industry are highly fragmented and immature. Currently, iFresh faces competition from smaller or dispersed competitors focusing on the niche market of Chinese consumers. However, with the rapid growth of the Chinese and other Asian population and their consumption power, other competitors may also begin operating in this niche market in the future. Those competitors include: (i) national conventional supermarkets, (ii) regional supermarkets, (iii) national superstores, (iv) alternative food retailers, (v) local foods stores, (vi) small specialty stores, and (vii) farmers' markets. The national and regional supermarket chains are experienced in operating multiple stores locations, expanding management and they have greater marketing or financial resources than iFresh does. Even though they currently offer only a limited selection of Chinese and Asian specialty foods, they may be able to devote greater resources to sourcing, promoting and selling their products if they choose to do so. On the contrary, the local food stores and markets are small in size with a deep understanding of local preferences, but their lack of scale results in high risk and limited growth potential. If more and more competitors devote into this market segment aiming to serve Chinese and other Asian customers in the future, the competition will increase. Our operating results may be negatively impacted through a loss of sales, reduction in margin from competitive price changes and/or greater operating costs such as marketing, due to the increase of competition.

iFresh currently leases all of its store locations. Many of iFresh's current leases provide unilateral option to renew for several additional rental periods at specific rental rates. iFresh's ability to re-negotiate favorable terms on an expiring lease or to negotiate favorable terms for a suitable alternate location, and iFresh's ability to negotiate favorable lease terms for additional store locations, could depend on conditions in the real estate market, competition for desirable properties, its relationships with current and prospective landlords, or other factors that are not within iFresh's control. Any or all of these factors and conditions could negatively impact iFresh's growth and profitability.

The trade tension between the United States and China may impact imports and exports. For example, the Trump administration is suspending passenger flights to the U.S. by Chinese airlines, saying it was retaliating after Beijing barred American carriers from re-entering China amid escalating tensions between the two nations. The order took effect June 16, 2020. The move ratchets up tensions between the U.S. and China over trade, which may prevent us from importing face masks from our manufacturing facility in China.

Severe weather conditions and other natural disasters in areas where iFresh has stores or from which iFresh obtains the products it sells may materially adversely affect its retail operations or its product offerings and, therefore, its results of operations. Such conditions may result in physical damage to, or temporary or permanent closure of, one or more of iFresh's stores, an insufficient workforce in iFresh's markets and/or temporary disruption in the supply of products, including delays in the delivery of goods to iFresh's stores or a reduction in the availability of products in its stores. In addition, adverse climate conditions and adverse weather patterns, such as drought or flood, that impact growing conditions and the quantity and quality of crops may materially adversely affect the availability or cost of certain products within its supply chain. Any of these factors may disrupt iFresh's businesses and materially adversely affect its financial condition, results of operations and cash flows.

Local policies and national policies regarding the liquor industry are inconsistent to some degree. At the national level, the liquor products business is in a restricted industry. According to the "Industrial Structure Adjustment Guidance Catalogue" promulgated by the National Development and Reform Commission in 2011 and revised in 2013, the liquor products business is in the restricted industry category. However, Hubei Province, where our liquor business is located, issued a notice on "Strengthening the Hubei Liquor Industry Action Plan" in 2016, encouraging further expansion into the liquor industry and comprehensively improving the strength and competitiveness of the liquor industry. We cannot predict the impact of the inconsistency between national and local politics and any future change in policy on the industry. If the national or the local government further adjusts the current liquor industry policy, such as placing restrictions on liquor production and consumption through regulations on taxation, bank loans, land supply, advertising, pricing or other aspects, it might have an adverse impact on our production and operation.