If only securities being registered
on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ☐
If any of the securities being
registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. ☒
If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. ☐
If this Form is a registration
statement pursuant to General Instruction I.C. or a post-effective amendment thereto that shall become effective upon filing with the
Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ☐
If this Form is a post-effective
amendment to a registration statement filed pursuant to General Instruction I.C. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ☐
Indicate by check mark whether
the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
If an emerging growth company
that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the
extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B)
of the Securities Act. ☐
† The term “new
or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting
Standards Codification after April 5, 2012.
CAUTIONARY NOTE
REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains or incorporates forward-looking
statements within the meaning of section 27A of the Securities Act and section 21E of the Exchange Act. Forward-looking statements may
involve risks and uncertainties. All statements other than statements of historical facts are forward-looking statements. These statements
involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be
materially different from those expressed or implied by the forward-looking statements.
You can identify these forward-looking statements
by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,”
“estimate,” “intend,” “plan,” “believe,” “likely to” or other similar expressions.
We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends
that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking
statements include, but are not limited to, statements about:
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EZGO’s goals and growth strategies; |
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EZGO’s expectations regarding demand for and market acceptance of its brand and platforms; |
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EZGO’s future business development, results of operations and financial condition; |
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EZGO’s ability to maintain and improve infrastructure necessary to operate its platforms through the WFOE, the VIE and its subsidiaries; |
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competition in the car accessory and online retail industry in China; |
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the expected growth of, and trends in, the markets for EZGO’s products and services provided through the WFOE, the VIE and its subsidiaries in China; |
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government policies and regulations relating to EZGO’s corporate structure, business and industry; |
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our expectation regarding the use of proceeds from an offering pursuant to this prospectus; |
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our ability to comply with the continued listing standards on the exchange or trading market on which EZGO’s Ordinary Shares is listed for trading; |
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the development of COVID-19 in the PRC and globally; |
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general economic and business condition in China and elsewhere; and |
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assumptions underlying or related to any of the foregoing. |
You should read thoroughly this prospectus and
the documents incorporated by reference or otherwise referred to in this prospectus with the understanding that our actual future results
may be materially different from and worse than what we expect. Other sections of this prospectus and the documents incorporated by reference
in this prospectus include additional factors which could adversely impact EZGO’s business through the WFOE, the VIE and its subsidiaries
in China and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time
to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors
on EZGO’s business through the WFOE, the VIE and its subsidiaries in China or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in any forward-looking statements. Although we believe that
EZGO’s plans, objectives, expectations and intentions reflected in or suggested by the forward-looking statements we make in this
prospectus are reasonable, we can give no assurance that these plans, objectives, expectations or intentions will be achieved. Important
factors that could cause our actual results to differ materially from our expectations are disclosed and described under “Risk Factors”
elsewhere in this prospectus, “Risk Factors” in Item 3.D. to our 2022 Annual Report and incorporated by reference in
this prospectus, any prospectus supplement, any free writing prospectus and in filings incorporated by reference, and the same may be
amended, supplemented or superseded by the risks and uncertainties described under similar headings in the other documents that filed
after the date hereof and incorporated by reference into this prospectus. We qualify all of our forward-looking statements by these cautionary
statements.
You should not rely upon forward-looking statements
as predictions of future events. We undertake no obligation to update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated
events. You should read this prospectus and the documents incorporated by reference or otherwise referred to in this prospectus, which
we have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that
our actual future results may be materially different from what we expect.
PROSPECTUS SUMMARY
Investors in EZGO’s securities are not
purchasing an equity interest in our operating entities in China but instead are purchasing an equity interest in a BVI holding company.
This prospectus summary highlights selected
information that is presented in greater detail elsewhere, or incorporated by reference, in this prospectus and any applicable prospectus.
It does not contain all of the information that may be important to you and your investment decision. Before investing in the securities
that we are offering, you should carefully read this entire prospectus and any applicable prospectus, including the matters set forth
under the section of this prospectus and any applicable prospectus captioned “Risk Factors” and the financial statements and
related notes and other information that we incorporate by reference herein, including, but not limited to, our 2022 Annual Report and
our other SEC reports.
Overview
EZGO is a holding company
incorporated in the BVI with operating subsidiaries, the VIE, in which EZGO does not hold any equity interest, and VIE’s subsidiaries,
and with substantially all of its operations and assets in China. As a holding company with no material operations of its own, EZGO conducts
its business in China through the WFOE, the VIE and its subsidiaries. Through the WFOE, the VIE and its subsidiaries in China, EZGO’s
vision is to be a leading short-distance transportation solutions provider in China. Leveraging its Internet of Things (“IoT”)
product and service platform, EZGO has preliminarily established a business model centered on the sale of e-bicycles and battery and cells,
complemented by sale of battery packs and its charging pile business through the WFOE, the VIE and its subsidiaries in China. Currently,
EZGO (i) designs, manufactures, rents and sells e-bicycles and e-tricycles; (ii) rents and sells lithium batteries; and (iii) sells,
franchises, and operates smart charging piles for e-bicycles and other electronic devices primarily through the VIE and its subsidiaries
in China, and sells battery packs partially through the WFOE.
The e-bicycles are models under the PRC Safety Technical Specification
for Electric Bicycles (GB 17761-2018) (also referred to generally as the “New National Standards for Electric Bicycles” and
referred to herein as the “New National Standards”) (“new standards e-bicycles”) and there are no domestic laws
or regulations related to urban e-tricycles. In addition, the two-wheel electric vehicle models that do not comply with the new standards
e-bicycles that are manufactured under the New National Standards (“non-new standards e-bicycles”) are manufactured under
the PRC National Standard General Specification for Electric Motorcycle and Electric Mopeds (GB/T24158-2018) (“General Specification
Standard”), which came into effect on April 1, 2019. None of EZGO, the WFOE, the VIE and its subsidiaries in China produces any
non-new standards e-bicycles. As of September 30, 2022, we did not have any non-new standards e-bicycles as our property, plants and equipment
and no impairment was recognized for the fiscal years ended September 30, 2020, 2021 and 2022.
To date, EZGO, through the WFOE, the VIE and its
subsidiaries in China, has engaged in the business of battery packs sales, which accounted for approximately 21%, 18% and 40% of its total
revenues for the fiscal years ended September 30, 2020, 2021 and 2022, respectively. The revenue from e-bicycles sales accounted for approximately
73%, 78% and 54% of its total revenues for the fiscal years ended September 30, 2020, 2021 and 2022, respectively. For the fiscal years
ended September 30, 2020, 2021 and 2022, as the self-developed smart charging piles for e-bicycles and other electronic devices have not
yet entered into large-scale production and sales, the revenue from this business accounted for a small proportion of EZGO’s total
revenues. For the fiscal year ended September 30, 2022, the revenue from our smart charging piles business accounted for 3% of EZGO’s
total revenues.
EZGO, through the WFOE, the VIE and its subsidiaries
in China, is committed to providing cost-effective and convenient solutions for short distance travelers through the design, manufacture,
rental and sale of high-quality e-bicycles, with lightweight and high endurance lithium batteries, to meet different levels of consumer
demand, and through the operation of smart charging piles in communities. EZGO, through the WFOE, the VIE and its subsidiaries in China,
also plans to launch its online 4S (which stands for Sale, Spare-part supply, after-sale Service and Survey) services to enhance its sales
capacity by combining its online sales portals and offline service and support channels.
Contractual Arrangements and Corporate Structure
EZGO was incorporated
in the BVI on January 24, 2019. EZGO’s wholly owned subsidiary, EZGO HK, formerly known as Hong Kong JKC Group Co., Limited, was
incorporated in Hong Kong on February 13, 2019. EZGO HK, in turn, holds all of the capital stock of Changzhou EZGO, formerly known as
Changzhou Jiekai New Energy Technology Company, which was incorporated in China on June 12, 2019 and Changzhou Langyi Electronic Technologies
Co., Ltd. (“Changzhou Langyi”), which was incorporated in China on August 6, 2021. Changzhou EZGO has obtained the contractual
rights to determine the most significant economic activities of the VIE and also receives the majority of the economic benefits of the
VIE, through a series of contractual arrangements (the “VIE Agreements”). EZGO conducts its business in the PRC primarily
through the VIE and its subsidiaries, Changzhou Hengmao Power Battery Technology Co., Ltd. (“Hengmao Power Battery”), Jiangsu
Cenbird E-Motorcycle Technologies Co., Ltd. (“Jiangsu Cenbird”) and Changzhou Yizhiying IoT Technologies Co., Ltd., (“Yizhiying
IoT”) since EZGO, through contractual arrangements with the VIE, obtained the rights to determine the most significant economic
activities and also receives the majority of the economic benefits of the VIE beginning in November 2019.
On January 25, 2023, EZGO and Jiangsu EZGO New Energy Technologies
Co., Ltd. entered into an equity transfer agreement, pursuant to which Changzhou Sixun was acquired and became a wholly-owned subsidiary
of Jiangsu EZGO New Energy Technologies Co., Ltd., an indirect wholly owned subsidiary of EZGO. EZGO issued an aggregate of 7,667,943
Ordinary Shares to the sellers of Changzhou Sixun (the “Sellers”), which had an aggregate value of RMB54,400,000
(approximately US$8,080,448 on January 25, 2023) and on February 22, 2023, EZGO paid the sellers of Changzhou Sixun RMB5,000,000 (approximately
US$726,238 on February 22, 2023) in cash in consideration for such purchase. For more information on the acquisition of Changzhou Sixun,
see our Reports of Foreign Private Issuer on Form 6-K furnished with the SEC on January 26, 2023 and February 22, 2023, respectively,
both of which are incorporated herein by reference. In order to address an issue relating to corporate authorization of the issuance of
the 7,667,943 Ordinary Shares to the Sellers under BVI law, the holders of such
Ordinary Shares surrendered their shares for no consideration on May 13, 2023 and resubscribed
for 7,667,943 Ordinary Shares on May 15, 2023. Changzhou Higgs Intelligent Technology Co., Ltd., the 60% subsidiary of Changzhou
Sixun, is a national high-tech enterprise focusing on the research and development, production and sales of programmable core components
of controller, providing stable and reliable electronic control system for automation equipment. On April 10, 2023, VIE sold 100% of equity
interest in Tianjin Jiahao Bicycle Co., Ltd., a former wholly-owned subsidiary of the VIE, for an aggregate cash consideration of RMB
44 million (approximately US$6,454,831), which payments are made in installments until May 10, 2025. On April 11, 2023, Yizhiying IoT
sold 80% of equity interest of Tianjin Dilang Technologies Co., Ltd., a PRC company of which Yizhiying IoT previously owned 80% of the
equity interest, for an aggregate of cash consideration of RMB 2,240,000 (approximately US$325,667).
As a result of such series
of contractual arrangements, EZGO and its subsidiaries become the primary beneficiary of the VIE for accounting purposes and the VIE as
a PRC consolidated entity under U.S. GAAP. We consolidate the financial results of the VIE and its subsidiaries in our consolidated financial
statements in accordance with U.S. GAAP. Neither we nor EZGO’s investors own any equity ownership in, direct foreign investment
in, or control through such ownership/investment of the VIE. These contractual arrangements have not been tested in a court of law in
the PRC. As a result, investors in EZGO’s Ordinary Shares are not purchasing an equity interest in the VIE or its subsidiaries but
instead are purchasing an equity interest in EZGO, the BVI holding company.
The diagram below shows
our corporate structure as of the date of this prospectus, including the VIE and its subsidiaries. However, investors are cautioned that
the enforceability of such VIE Agreements has not been tested in a court of law. EZGO conducts operations in China primarily through
the VIE and its subsidiaries in China, and EZGO does not conduct any business on its own. The VIE structure is used to provide investors
with contractual exposure to foreign investment in China-based companies where Chinese law prohibits or restricts direct foreign investment
in the operating companies. Due to PRC legal restrictions on foreign ownership in internet-based businesses, we do not have any equity
ownership of the VIE, instead we receive the economic benefits of the VIE’s business operations through certain contractual arrangements.
As a result of such series of contractual arrangements, EZGO and its subsidiaries become the primary beneficiary of the VIE for accounting
purposes and the VIE as a PRC consolidated entity under U.S. GAAP. We consolidate the financial results of the VIE and its subsidiaries
in our consolidated financial statements in accordance with U.S. GAAP. Neither we nor EZGO’s investors own any equity ownership
in, direct foreign investment in, or control through such ownership/investment of the VIE. Investors are purchasing an interest in EZGO,
the BVI holding company.
Contractual Arrangements with the VIE and
Its Shareholders
Due to PRC legal restrictions
on foreign ownership in internet-based businesses, neither we nor our subsidiaries own any equity interest in the VIE. Instead, we receive
the economic benefits of the VIE’s business operations through the VIE Agreements. Changzhou EZGO, the VIE and its equity holders
entered into the VIE Agreements on November 8, 2019. The VIE Agreements are designed to provide Changzhou EZGO with contractual rights,
and obligations, including certain control rights and the rights in the assets, property and revenue of the VIE, to (i) determine the
most significant economic activities of the VIE, (ii) receive the majority of the economic benefits of the VIE, most importantly the ability
to consolidate the financial statements of the VIE with the financial statements of our holding company, EZGO under U.S. GAAP, for which
we are the primary beneficiary of the VIE for accounting purposes, and (iii) have an exclusive option to purchase or designate any third
party to purchase all or part of the equity interests in and assets of the VIE when and to the extent permitted by PRC law. However, The
VIE Agreements may not be as effective as direct ownership in providing us with control over the VIE and its subsidiaries, and the enforceability
of the VIE Agreements has not been tested in a court of law, and the PRC government may take actions to exert more oversight and control
over offerings by China based issuers conducted overseas and/or foreign investment in such companies, or could disallow the VIE Agreements,
which would likely result in a material change in EZGO’s operations primarily through the VIE and its subsidiaries in China and/or
a material change in the value of the securities we have registered for sale, including that it could cause the value of EZGO’s
securities could to significantly decline or become worthless. Specifically, the legal environment in the PRC is not as developed as in
other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability, as a BVI holding
company, to enforce these contractual arrangements and doing so may be quite costly. There are also substantial uncertainties regarding
the interpretation and application of current and future PRC laws, regulations and rules regarding the status of the rights of Changzhou
EZGO with respect to its contractual arrangements with the VIE and its shareholders. It is uncertain whether any new PRC laws or regulations
relating to variable interest entity structure will be adopted or if adopted, what they would provide. If we or the VIE are found to be
in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals,
the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. In addition,
the enforceability of the various contracts described above by our company against the VIE is dependent upon the shareholders of the VIE.
If the shareholders of the VIE fail to perform their obligations under the contractual arrangements, we could be unable to enforce the
contractual arrangements that enable us to consolidate the VIE’s operations and financial results in our financial statements in
accordance with U.S. GAAP as the primary beneficiary. If this happens, we would need to deconsolidate the VIE. The majority of our assets,
including the necessary licenses to conduct business in China are held by the VIE and its subsidiaries and a significant part of our revenues
are generated by the VIE and its subsidiaries. An event that results in the deconsolidation of the VIE would have a material effect on
EZGO’s operations primarily through the VIE and its subsidiaries in China and result in the value of its securities diminishing
substantially or even become worthless. For a detailed description of the risks associated with our corporate structure, please refer
to risks disclosed under “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure”
on page 19 of the 2022 Annual Report.
As a result of our direct
ownership in Changzhou EZGO and the contractual arrangements with the VIE, we are regarded as the primary beneficiary of Jiangsu EZGO,
and we treat the VIE as our consolidated variable interest entity under U.S. GAAP, which generally refers to an entity in which we do
not have any equity interests but whose financial results are consolidated into our consolidated financial statements in accordance with
U.S. GAAP because we have a controlling financial interest in, and thus are the primary beneficiary of, that entity. We have consolidated
the financial results of the VIE and its subsidiaries in our consolidated financial statements in accordance with U.S. GAAP.
Each of the VIE Agreements
is described in detail below and each of which is currently in full force and effect:
Exclusive Management
Consulting and Technical Service Agreement
Pursuant to the Exclusive
Management Consulting and Technical Service Agreement, dated November 8, 2019, between Changzhou EZGO and the VIE (the “VIE Exclusive
Management Agreement”), the VIE agrees to engage Changzhou EZGO as its exclusive provider of management consulting, technical support,
intellectual property license and relevant services, including all services within the VIE’s business scope and decided by Changzhou
EZGO from time to time as necessary. The VIE pays to Changzhou EZGO service fees within three months after each fiscal year end. The service
fees are set at 95% (or a percentage adjusted by Changzhou EZGO in its sole discretion) of the after-tax profit after the deficit of the
prior fiscal year is covered and the statutory common reserve is extracted. Changzhou EZGO exclusively owns any intellectual property
arising from the performance of the VIE Exclusive Management Agreement. The VIE Exclusive Management Agreement is effective for twenty
years unless earlier terminated as set forth in the agreement or other written agreements entered into by the parties thereto. The VIE
Exclusive Management Agreement shall be extended automatically at the end of its term, until Changzhou EZGO’s business term or the
VIE’s business term expires, unless otherwise notified by Changzhou EZGO in writing. During the term of the VIE Exclusive Management
Agreement, the VIE may not terminate the VIE Exclusive Management Agreement except in the case of Changzhou EZGO’s gross negligence
or fraud, or VIE Exclusive Management Agreement or applicable PRC laws provide otherwise. Changzhou EZGO may terminate the VIE Exclusive
Management Agreement by 30-day written notice to the VIE at any time.
Equity Pledge Agreement
Pursuant to the Equity
Pledge Agreement, dated November 8, 2019, among Changzhou EZGO, the VIE and the equity holders of the VIE (the “VIE Equity Pledge
Agreement”), the equity holders of the VIE have pledged 100% of their equity interests in the VIE to Changzhou EZGO to guarantee
performance of all obligations under the VIE Exclusive Management Agreement, the VIE Loan Agreement (defined hereafter), the VIE Exclusive
Call Option Agreement (defined hereafter) and the VIE Proxy Agreement (defined hereafter). If any event of default as provided for therein
occurs, Changzhou EZGO, as the pledgee, will be entitled to dispose of the pledged equity interests according to applicable PRC laws.
On November 28, 2019, Changzhou EZGO, the VIE and all its equity holders completed the registration of the equity pledge with the relevant
office of State Administration of Market Regulation (“SAMR”, formerly known as State Administration for Industry and Commerce,
or the SAIC) in accordance with the PRC Property Rights Law.
Exclusive Call
Option Agreement
Pursuant to the Exclusive
Call Option Agreement, dated November 8, 2019, among Changzhou EZGO, the VIE and the equity holders of the VIE (the “VIE Exclusive
Call Option Agreement”), each of the equity holders of the VIE has irrevocably granted Changzhou EZGO an exclusive option to purchase,
or to designate other persons to purchase, to the extent permitted by applicable PRC laws, rules and regulations, all of the equity interests
and assets in the VIE from its equity holders. The equity holders of the VIE agree that, without the prior written consent of Changzhou
EZGO, they will not dispose of their equity interests in the VIE or create or allow any encumbrance on their equity interests. The purchase
price for the equity interest is to be the minimum price permitted by applicable PRC laws, rules and regulations, or the amount that the
equity holders actually pay to the VIE regarding the equity, whichever is lower. The purchase price for the assets is to be the minimum
price permitted by applicable PRC laws, rules and regulations, or the net book value of the assets, whichever is lower. The VIE Exclusive
Call Option Agreement expires when all the equity interests or all the assets are transferred pursuant to the agreement.
Proxy Agreement
Pursuant to the Proxy
Agreement, dated November 8, 2019, among Changzhou EZGO, the VIE and each of equity holders of the VIE (the “VIE Proxy Agreement”),
each of the equity holders irrevocably authorizes Changzhou EZGO to exercise his or her rights as an equity holder of the VIE, including
the right to attend equity holders meetings, to exercise voting rights and to transfer all or a part of his or her equity interests therein
pursuant to the VIE Exclusive Call Option Agreement. During the term of the VIE Proxy Agreement, the VIE and all its equity holders may
not terminate the VIE Proxy Agreement except when the VIE Proxy Agreement or applicable PRC laws provide otherwise.
Loan Agreement
Pursuant to the Loan
Agreement, dated November 8, 2019 (the “VIE Loan Agreement”), Changzhou EZGO agrees to provide the VIE with loans of different
amounts at an annual interest rate of 24% according to the VIE’s needs from time to time. The term of each loan is 20 years, which
can be extended with the written consent of both parties. During the term of the loan or the extended term of the loan, the VIE may not
prepay any loan without the written consent of Changzhou EZGO while in case of certain circumstances, the VIE must repay the loan in advance
upon Changzhou EZGO’s written request.
Spousal Consent
Letter
The spouses of individual
equity holders of the VIE have each signed a spousal consent letter. Under the spousal consent letter, the signing spouse unconditionally
and irrevocably has agreed to the execution by his or her spouse of the VIE Equity Pledge Agreement, the VIE Exclusive Call Option Agreement
and the VIE Proxy Agreement, and that his or her spouse may perform, amend or terminate such agreements without his or her consent. In
addition, in the event that the spouse obtains any equity interest in the VIE held by his or her spouse for any reason, he or she agrees
to be bound by and sign any legal documents substantially similar to the contractual arrangements entered into by his or her spouse, as
may be amended from time to time.
Through the current contractual
arrangements, we have established a contractual relationship with all equity holders of the VIE. Pursuant to these agreements, all equity
holders of the VIE have irrevocably authorized Changzhou EZGO to exercise voting rights and all other rights as the equity holder and
pledged all of his or her equity interests in the VIE to Changzhou EZGO as collateral to secure performance of all of his or her obligations
under these agreements. However, the equity holders of the VIE may have potential conflicts of interest with us and may breach, or cause
the VIE to breach, or refuse to renew, the existing contractual arrangements we have with them and the VIE. Any failure by the VIE or
equity holders of the VIE to perform his or her obligations under our contractual arrangements with them would have a material adverse
effect on EZGO’s business primarily through the VIE and its subsidiaries in China and financial condition. See “Item 3.
Key Information — D. Risk Factors — Risks Related to Our Corporate Structure” on page 19 of the 2022 Annual Report.
Based on the advice of
our PRC counsel, DeHeng Law Offices, that:
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the ownership structure of the VIE and Changzhou EZGO in China does not violate any applicable PRC laws or regulations currently in effect; and |
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the contractual arrangements among Changzhou EZGO, the VIE and the VIE’s shareholders governed by PRC law are valid, binding and enforceable in accordance with their terms and applicable PRC laws or regulations currently in effect and do not and will not violate any applicable PRC laws or regulations currently in effect. |
However, there are substantial
uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules, and the VIE Agreements
have not been tested in a court of law. Accordingly, we may incur substantial costs to enforce the terms of the VIE Agreements, and the
PRC regulatory authorities may in the future take a view that is contrary to or otherwise different from the above opinion of our PRC
legal counsel.
VIE Financial Information
Set forth below is selected
Consolidated Statements of Operations and cash flows for the fiscal years ended September 30, 2020, 2021 and 2022, and selected balance
sheet information as of September 30, 2020, 2021 and 2022 showing financial information for the parent, non-VIE subsidiaries, the WFOE,
the VIE and VIE’s subsidiaries, eliminating entries and consolidated information (dollars in thousands). In the tables below, the
column headings correspond to the following entities in the organizational diagram on page 3. See also VIE and consolidated financial
information in Note 1 of our financial statements.
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“parent” refers to EZGO Technologies Ltd., a BVI business company; |
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“non-VIE subsidiaries” refer to the sum of (i) China EZGO Group Ltd., our wholly owned Hong Kong subsidiary, (ii) Changzhou Langyi Electronic Technology Co., Ltd., a wholly owned PRC subsidiary, (iii) Jiangsu Langyi Import and Export Trading Co., Ltd., (iv) Jiangsu EZGO Energy Supply Chain Technology Co., Ltd., (v) Jiangsu EZGO New Energy Technologies Co., Ltd., (vi) Sichuan EZGO Energy Technologies Co., Ltd., (vii) Tianjin EZGO Electric Technologies Co., Ltd., (viii) Changzhou Youdi Electric Bicycle Co., Ltd., (ix) Changzhou Sixun Technology Co., Ltd., and (x) Changzhou Higgs Intelligent Technology Co., Ltd.; |
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“WFOE” refers to Changzhou EZGO Enterprise Management Co., Ltd., our wholly owned PRC subsidiary; |
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“VIE and its subsidiaries” refer to the sum of (i) Jiangsu EZGO Electronic Technologies, Co., Ltd., (ii) Changzhou Hengmao Power Battery Technology Co., Ltd., (iii) Changzhou Yizhiying IoT Technologies Co., Ltd., and (iv) Jiangsu Cenbird E-Motorcycle Technologies Co., Ltd.; and |
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“VIE” refers to Jiangsu EZGO Electronic Technologies, Co., Ltd. |
Consolidated Statements
of Operations Information
| |
Fiscal Year Ended September 30, 2022 | |
| |
Parent | | |
Non-VIE
Subsidiaries | | |
WFOE | | |
VIE and its
subsidiaries | | |
Eliminations | | |
Consolidated | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Revenue | |
$ | | | |
$ | 176,027 | | |
| 4,407,284 | | |
$ | 12,805,906 | | |
$ | | | |
$ | 17,389,217 | |
Cost of revenue | |
| | | |
| (170,454 | ) | |
| (4,042,002 | ) | |
| (12,957,722 | ) | |
| - | | |
| (17,170,178 | ) |
Gross profit | |
| | | |
| 5,573 | | |
| 365,282 | | |
| (151,816 | ) | |
| - | | |
| 219,039 | |
Operating expenses | |
| (1,449,339 | ) | |
| (14,993 | ) | |
| (1,095,508 | ) | |
| (4,121,806 | ) | |
| - | | |
| (6,681,646 | ) |
Loss from operations | |
| (1,449,339 | ) | |
| (9,420 | ) | |
| (730,226 | ) | |
| (4,273,622 | ) | |
| - | | |
| (6,462,607 | ) |
Share of loss from subsidiaries | |
| (157,105 | ) | |
| (149,440 | ) | |
| - | | |
| - | | |
| 306,545 | | |
| - | |
Other income (expense), net | |
| 327 | | |
| (265 | ) | |
| 533,977 | | |
| (931,538 | ) | |
| - | | |
| (397,499 | ) |
Loss before income tax expenses (benefit) | |
| (1,606,117 | ) | |
| (159,124 | ) | |
| (196,249 | ) | |
| (5,205,160 | ) | |
| 306,545 | | |
| (6,860,106 | ) |
Net loss | |
| (1,606,117 | ) | |
| (157,105 | ) | |
| (149,440 | ) | |
| (5,862,713 | ) | |
| 306,545 | | |
| (7,468,830 | ) |
Less: net loss attributable to non-controlling interests | |
| - | | |
| - | | |
| - | | |
| (1,005,032 | ) | |
| - | | |
| (1,005,032 | ) |
Net loss attributable to EZGO’s shareholders | |
| (1,606,117 | ) | |
| (157,105 | ) | |
| (149,440 | ) | |
| (4,857,681 | ) | |
| 306,545 | | |
| (6,463,798 | ) |
| |
Fiscal Year Ended September 30, 2021 | |
| |
Parent | | |
Non-VIE Subsidiaries | | |
WFOE | | |
VIE and its subsidiaries | | |
Eliminations | | |
Consolidated | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Revenue | |
$ | - | | |
$ | - | | |
| 3,793,146 | | |
$ | 19,628,860 | | |
$ | - | | |
$ | 23,422,006 | |
Cost of revenue | |
| - | | |
| - | | |
| (3,604,878 | ) | |
| (19,434,650 | ) | |
| - | | |
| (23,039,528 | ) |
Gross profit | |
| - | | |
| - | | |
| 188,268 | | |
| 194,210 | | |
| - | | |
| 382,478 | |
Operating expenses | |
| (495,835 | ) | |
| (1,964 | ) | |
| (70,278 | ) | |
| (3,691,820 | ) | |
| - | | |
| (4,259,897 | ) |
(Loss) income from operations | |
| (495,835 | ) | |
| (1,964 | ) | |
| 117,990 | | |
| (3,497,610 | ) | |
| - | | |
| (3,877,419 | ) |
Share of loss from subsidiaries | |
| (203,744 | ) | |
| (205,707 | ) | |
| - | | |
| - | | |
| 409,451 | | |
| - | |
Other income (expense), net | |
| 279 | | |
| - | | |
| 156,368 | | |
| (75,873 | ) | |
| - | | |
| 80,774 | |
Loss before income tax expenses (benefit) | |
| (699,300 | ) | |
| (207,671 | ) | |
| 274,358 | | |
| (3,573,483 | ) | |
| 409,451 | | |
| (3,796,645 | ) |
Net loss | |
| (699,300 | ) | |
| (203,744 | ) | |
| (205,707 | ) | |
| (2,714,344 | | |
| 409,451 | | |
| (3,413,644 | ) |
Less: net loss attributable to non-controlling interests | |
| - | | |
| - | | |
| - | | |
| (434,971 | ) | |
| - | | |
| (434,971 | ) |
Net loss attributable to EZGO’s shareholders | |
| (699,300 | ) | |
| (203,744 | ) | |
| (205,707 | ) | |
| (2,279,373 | ) | |
| 409,451 | | |
| (2,978,673 | ) |
| |
Fiscal Year Ended September 30, 2020 | |
| |
Parent | | |
Non-VIE Subsidiaries | | |
WFOE | | |
VIE and its subsidiaries | | |
Eliminations | | |
Consolidated | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Third-party revenues | |
$ | - | | |
$ | - | | |
| - | | |
$ | 15,243,282 | | |
$ | - | | |
$ | 15,243,282 | |
Inter-company consulting and services revenues | |
| - | | |
| - | | |
| 116,190 | | |
| - | | |
| (116,190 | ) | |
| - | |
Third-party costs of Revenue | |
| - | | |
| - | | |
| - | | |
| (13,704,248 | ) | |
| - | | |
| (13,704,248 | ) |
Inter-company consulting and services costs | |
| - | | |
| - | | |
| - | | |
| (116,190 | ) | |
| 116,190 | | |
| - | |
Gross profit | |
| - | | |
| - | | |
| 116,190 | | |
| 1,422,844 | | |
| - | | |
| 1,539,034 | |
Operating expenses | |
| - | | |
| - | | |
| - | | |
| (1,467,068 | ) | |
| - | | |
| (1,467,068 | ) |
Income from operations | |
| - | | |
| - | | |
| 116,190 | | |
| (44,224 | ) | |
| - | | |
| 71,966 | |
Share of income from subsidiaries | |
| 116,190 | | |
| 116,190 | | |
| - | | |
| - | | |
| (232,380 | ) | |
| - | |
Other income, net | |
| - | | |
| - | | |
| - | | |
| 378,395 | | |
| - | | |
| 378,395 | |
Income before income tax expenses | |
| 116,190 | | |
| 116,190 | | |
| 116,190 | | |
| 334,171 | | |
| (232,380 | ) | |
| 450,361 | |
Net income | |
| 116,190 | | |
| 116,190 | | |
| 116,190 | | |
| 160,732 | | |
| (232,380 | ) | |
| 276,922 | |
Less: net income attributable to non-controlling interests | |
| - | | |
| - | | |
| - | | |
| 129,748 | | |
| - | | |
| 129,748 | |
Net income attributable to EZGO’s shareholders | |
| 116,190 | | |
| 116,190 | | |
| 116,190 | | |
| 30,984 | | |
| (232,380 | ) | |
| 147,174 | |
Consolidated Balance
Sheets Information
| |
As of September 30, 2022 | |
| |
Parent | | |
Non-VIE Subsidiaries | | |
WFOE | | |
VIE and its subsidiaries | | |
Eliminations | | |
Consolidated | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Amounts due from subsidiary of EZGO | |
$ | 16,161,400 | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | (16,161,400 | ) | |
$ | - | |
Prepaid on behalf of VIE | |
| 3,014,680 | | |
| - | | |
| - | | |
| - | | |
| (3,014,680 | ) | |
| - | |
Amount due from VIE and its subsidiaries | |
| - | | |
| - | | |
| 12,370,844 | | |
| - | | |
| (12,370,844 | ) | |
| - | |
Service fee receivable from VIE | |
| - | | |
| - | | |
| 116,190 | | |
| - | | |
| (116,190 | ) | |
| - | |
Amount due from non-VIE subsidiaries | |
| - | | |
| - | | |
| 5,971,687 | | |
| 704 | | |
| (5,972,391 | ) | |
| - | |
Loan from WFOE | |
| 8,000,000 | | |
| - | | |
| | | |
| 7,589,951 | | |
| (15,589,951 | ) | |
| - | |
Amount due from EZGO | |
| - | | |
| - | | |
| - | | |
| 417,138 | | |
| (417,138 | ) | |
| - | |
Current assets | |
| 27,278,299 | | |
| 5,789,274 | | |
| 30,210,861 | | |
| 17,434,133 | | |
| (47,558,531 | ) | |
| 33,154,036 | |
Amount due to VIE and its subsidiaries | |
| (417,138 | ) | |
| (704 | ) | |
| (7,589,951 | ) | |
| - | | |
| 8,007,794 | | |
| - | |
Amount due to WFOE | |
| - | | |
| (5,971,687 | ) | |
| - | | |
| (12,370,844 | ) | |
| 18,342,531 | | |
| - | |
Service fee payable to WFOE | |
| - | | |
| - | | |
| - | | |
| (116,190 | ) | |
| 116,190 | | |
| - | |
Amount due to EZGO | |
| - | | |
| (16,161,400 | ) | |
| (8,000,000 | ) | |
| (3,014,680 | ) | |
| 27,176,080 | | |
| - | |
Working capital | |
| 26,773,478 | | |
| (16,904,159 | ) | |
| 14,651,312 | | |
| (5,334,798 | ) | |
| - | | |
| 19,185,833 | |
Investment in non-VIE subsidiaries | |
| - | | |
| 15,604,043 | | |
| - | | |
| - | | |
| (15,604,043 | ) | |
| - | |
Assets | |
| 27,278,299 | | |
| 21,803,156 | | |
| 27,446,730 | | |
| 31,327,603 | | |
| (93,502,243 | ) | |
| 14,353,546 | |
| |
As of September 30, 2021 | |
| |
Parent | | |
Non-VIE Subsidiaries | | |
WFOE | | |
VIE and its subsidiaries | | |
Eliminations | | |
Consolidated | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Amounts due from subsidiary of EZGO | |
$ | 15,853,200 | | |
$ | - | | |
| - | | |
$ | - | | |
$ | (15,853,200 | ) | |
$ | - | |
Prepaid on behalf of VIE | |
| 3,017,337 | | |
| - | | |
| - | | |
| - | | |
| (3,017,337 | ) | |
| - | |
Amount due from VIE | |
| - | | |
| - | | |
| 13,323,711 | | |
| | | |
| (13,323,711 | ) | |
| - | |
Service fee receivable from VIE | |
| - | | |
| - | | |
| 116,190 | | |
| - | | |
| (116,190 | ) | |
| - | |
Amount due from Non-VIE | |
| - | | |
| - | | |
| | | |
| 1,914,828 | | |
| (1,914,828 | ) | |
| - | |
Amount due from EZGO | |
| - | | |
| - | | |
| | | |
| 316,524 | | |
| (316,524 | ) | |
| - | |
Current assets | |
| 20,145,974 | | |
| 7,831 | | |
| 18,187,550 | | |
| 23,880,044 | | |
| (34,541,789 | ) | |
| 27,679,610 | |
Amount due to VIE | |
| (316,524 | ) | |
| - | | |
| (1,914,828 | ) | |
| - | | |
| 2,231,352 | | |
| - | |
Amount due to non-VIE | |
| - | | |
| - | | |
| | | |
| (13,323,711 | ) | |
| 13,323,711 | | |
| - | |
Service fee payable to WFOE | |
| - | | |
| - | | |
| - | | |
| (116,190 | ) | |
| 116,190 | | |
| - | |
Amount due to EZGO | |
| - | | |
| (15,853,200 | ) | |
| | | |
| (3,017,337 | ) | |
| 18,870,537 | | |
| - | |
Working capital | |
| 19,781,865 | | |
| (15,844,963 | ) | |
| 16,188,763 | | |
| (1,921,225 | ) | |
| - | | |
| 18,204,440 | |
Investment in non-VIE subsidiaries | |
| - | | |
| 15,753,483 | | |
| | | |
| - | | |
| (15,753,483 | ) | |
| - | |
Assets | |
| 20,145,974 | | |
| 15,761,314 | | |
| 18,187,547 | | |
| 38,212,105 | | |
| (50,295,270 | ) | |
| 42,011,670 | |
| |
As of September 30, 2020 | |
| |
Parent | | |
Non-VIE Subsidiaries | | |
WFOE | | |
VIE and its subsidiaries | | |
Eliminations | | |
Consolidated | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Service fee receivable from VIE | |
| - | | |
| - | | |
| 116,190 | | |
| - | | |
| (116,190 | ) | |
| - | |
Current assets | |
| - | | |
| - | | |
| | | |
| 16,316,861 | | |
| - | | |
| 16,316,861 | |
Service fee payable to WFOE | |
| - | | |
| - | | |
| - | | |
| (116,190 | ) | |
| 116,190 | | |
| - | |
Working capital | |
| - | | |
| - | | |
| 116,190 | | |
| 9,528,018 | | |
| - | | |
| 9,644,208 | |
Investment in non-VIE subsidiaries | |
| 116,190 | | |
| 116,190 | | |
| | | |
| - | | |
| (232,380 | ) | |
| - | |
Assets | |
| 116,190 | | |
| 116,190 | | |
| 116,190 | | |
| 19,817,798 | | |
| (348,570 | ) | |
| 19,817,798 | |
Consolidated Cash
Flows Information
| |
Fiscal Year Ended September 30, 2022 | |
| |
Parent | | |
Non-VIE Subsidiaries | | |
WFOE | | |
VIE and its subsidiaries | | |
Eliminations | | |
Consolidated | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Total cash used in operating activities | |
$ | 132,326 | | |
$ | (3,456 | ) | |
| (11,973,551 | ) | |
$ | 1,489,651 | | |
$ | - | | |
$ | (10,355,030 | ) |
Loan to non-VIE subsidiaries | |
| (308,200 | ) | |
| - | | |
| | | |
| - | | |
| 308,200 | | |
| - | |
Loan to VIE and its subsidiaries | |
| - | | |
| - | | |
| (335,714 | ) | |
| - | | |
| 335,714 | | |
| - | |
Amounts due from non-VIE subsidiaries | |
| - | | |
| - | | |
| (1,546 | ) | |
| (722 | ) | |
| 2,268 | | |
| - | |
Loan to Changzhou EZGO | |
| (8,000,000 | ) | |
| - | | |
| - | | |
| (5,675,124 | ) | |
| 13,675,124 | | |
| - | |
Invest in subsidiary | |
| - | | |
| (313,000 | ) | |
| - | | |
| - | | |
| 313,000 | | |
| - | |
Others(1) | |
| - | | |
| - | | |
| - | | |
| (4,481,075 | ) | |
| - | | |
| (4,481,075 | ) |
Total cash used in investing activities | |
| (8,308,200 | ) | |
| (313,000 | ) | |
| (337,260 | ) | |
| (10,156,921 | ) | |
| 14,634,306 | | |
| (4,481,075 | ) |
Loans from EZGO | |
| - | | |
| 308,200 | | |
| 8,000,000 | | |
| - | | |
| (8,308,200 | ) | |
| - | |
Loans from Changzhou EZGO | |
| - | | |
| - | | |
| - | | |
| 335,714 | | |
| (337,260 | ) | |
| - | |
Amount due to Changzhou EZGO | |
| | | |
| 1,546 | | |
| | | |
| | | |
| | | |
| | |
Amounts due to VIE and its subsidiaries | |
| - | | |
| 722 | | |
| 5,675,124 | | |
| - | | |
| (5,675,846 | ) | |
| - | |
Contribution from shareholder | |
| 8,000,000 | | |
| - | | |
| 313,000 | | |
| - | | |
| (313,000 | ) | |
| 8,000,000 | |
Others(2) | |
| - | | |
| - | | |
| - | | |
| 6,243,210 | | |
| - | | |
| 6,243,210 | |
Total cash provided by financing activities | |
| 8,000,000 | | |
| 310,468 | | |
| 13,988,124 | | |
| 6,578,924 | | |
| (14,634,306 | ) | |
| 14,243,210 | |
Effect of exchange rate changes | |
| 2,657 | | |
| - | | |
| 1,280,821 | | |
| (2,167,250 | ) | |
| - | | |
| (883,772 | ) |
Net increase in cash, cash equivalents and restricted cash | |
| (173,217 | ) | |
| (5,988 | ) | |
| 2,958,134 | | |
| (4,255,596 | ) | |
| - | | |
| (1,476,667 | ) |
| |
Fiscal Year Ended September 30, 2021 | |
| |
Parent | | |
Non-VIE Subsidiaries | | |
WFOE | | |
VIE and its subsidiaries | | |
Eliminations | | |
Consolidated | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Total cash used in operating activities | |
$ | (801,208 | ) | |
$ | (1,963 | ) | |
| (4,351,605 | ) | |
$ | (1,101,659 | ) | |
$ | - | | |
$ | (6,256,435 | ) |
Payment for acquisition of Tianjin Jiahao Bicycle Co., Ltd. on behalf of VIE | |
| (3,017,337 | ) | |
| - | | |
| | | |
| - | | |
| 3,017,337 | | |
| - | |
Loan to subsidiary of EZGO | |
| (15,853,200 | ) | |
| - | | |
| | | |
| - | | |
| 15,853,200 | | |
| - | |
Loan to VIE | |
| - | | |
| - | | |
| (13,323,711 | ) | |
| - | | |
| 13,323,711 | | |
| - | |
Invest in subsidiary | |
| | | |
| (15,843,000 | ) | |
| | | |
| | | |
| 15,843,000 | | |
| | |
Amount due from Changzhou EZGO | |
| - | | |
| - | | |
| | | |
| (1,914,828 | ) | |
| 1,914,828 | | |
| - | |
Others(1) | |
| - | | |
| - | | |
| | | |
| (11,037,254 | ) | |
| - | | |
| (11,037,254 | ) |
Total cash used in investing activities | |
| (18,870,537 | ) | |
| (15,843,000 | ) | |
| (13,323,711 | ) | |
| (12,952,082 | ) | |
| 49,952,076 | | |
| (11,037,254 | ) |
Loans from EZGO | |
| - | | |
| 15,853,200 | | |
| | | |
| 3,017,337 | | |
| (18,870,537 | ) | |
| - | |
Loans from Changzhou EZGO | |
| - | | |
| - | | |
| | | |
| 13,323,711 | | |
| (13,323,711 | ) | |
| - | |
Amount due to VIE | |
| - | | |
| - | | |
| 1,914,828 | | |
| - | | |
| (1,914,828 | ) | |
| - | |
Contribution from shareholder | |
| | | |
| | | |
| 15,843,000 | | |
| | | |
| (15,843,000 | ) | |
| | |
Proceeds from issuance of ordinary shares in connection with IPO, net of issuance cost | |
| 20,947,182 | | |
| - | | |
| | | |
| - | | |
| - | | |
| 20,947,182 | |
Others(2) | |
| - | | |
| - | | |
| | | |
| 1,816,894 | | |
| - | | |
| 1,816,894 | |
Total cash provided by financing activities | |
| 20,947,182 | | |
| 15,853,200 | | |
| 17,757,828 | | |
| 18,157,942 | | |
| (49,952,076 | ) | |
| 22,764,076 | |
Effect of exchange rate changes | |
| - | | |
| - | | |
| | | |
| 78,968 | | |
| - | | |
| 78,968 | |
Net increase in cash, cash equivalents and restricted cash | |
| 1,275,437 | | |
| 8,237 | | |
| 82,512 | | |
| 4,183,169 | | |
| - | | |
| 5,549,355 | |
(1) |
Other cash flows from investing activities mainly include the purchase of property, plants and equipment and land use right, and the purchase of short-term investments. |
|
|
(2) |
Other cash flows from financing activities mainly include the collection of loan to shareholder and proceeds from short-term borrowings. |
| |
Fiscal Year Ended September 30, 2020 | |
| |
Parent | | |
Non-VIE Subsidiaries | | |
WFOE | | |
VIE and its subsidiaries | | |
Eliminations | | |
Consolidated | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Total cash provided by operating activities | |
$ | - | | |
$ | - | | |
| - | | |
$ | 4,024,769 | | |
$ | - | | |
$ | 4,024,769 | |
Total cash used in investing activities | |
| - | | |
| - | | |
| - | | |
| (3,349,847 | ) | |
| - | | |
| (3,349,847 | ) |
Total cash used in financing activities | |
| - | | |
| - | | |
| - | | |
| (4,004,361 | ) | |
| - | | |
| (4,004,361 | ) |
Effect of exchange rate changes | |
| - | | |
| - | | |
| - | | |
| 36,324 | | |
| - | | |
| 36,324 | |
Net decrease in cash, cash equivalents and restricted cash | |
| - | | |
| - | | |
| - | | |
| (3,293,115 | ) | |
| - | | |
| (3,293,115 | ) |
Transfer of Cash through Our Organization
EZGO can transfer cash
to its subsidiaries through capital contributions and/or intercompany loans, and EZGO’s subsidiaries can transfer cash to EZGO through
dividends or other distributions and/or intercompany loans. Additionally, EZGO’s subsidiaries can transfer cash to the VIE through
loans, and the VIE can transfer cash to EZGO as service fees under the VIE Agreements and/or through loans. We intend to settle amounts
owed under the VIE Agreements.
Prior to the completion
of our initial public offering in January 2021, the sources of funds of the VIE and its subsidiaries primarily consisted of shareholders
capital injection and cash generated from operations.
After the completion
of our initial public offering, our holding company, EZGO, transferred funds through a shareholder loan to EZGO HK. EZGO HK transferred
funds through an increase in the registered capital to Changzhou EZGO. EZGO and Changzhou EZGO provided loans to the VIE, subject to statutory
limits and restrictions.
For the fiscal year ended
September 30, 2021, EZGO provided an interest-free loan of US$15,853,200 to EZGO HK; EZGO also paid US$3,017,337 on behalf of the VIE
for the acquisition of Tianjin Jiahao Bicycle Co., Ltd., a former subsidiary of the VIE, and insurance fees; and EZGO HK injected registered
capital of US$15,843,000 into Changzhou EZGO. Changzhou EZGO provided loans of US$13,323,711 to the VIE and had US$1,914,828 of payables
due to the VIE.
For the fiscal year ended
September 30, 2022, EZGO provided an additional interest-free loan of US$308,200 to EZGO HK and provided an interest-free loan of US$8,000,000
to Changzhou EZGO; and EZGO HK injected registered capital of US$313,000 into Changzhou EZGO. Changzhou EZGO provided loans of US$335,714
to the VIE and had US$7,589,951 of payables due to the VIE and its subsidiaries.
The details of loans
provided by Changzhou EZGO are shown below:
Start Date |
|
Maturity Date |
|
Amount |
|
Annual Interest Rate |
|
April 6, 2021 |
|
April 5, 2026 |
|
$ |
3,514,444 |
|
|
5 |
% |
June 9, 2021 |
|
June 8, 2026 |
|
$ |
2,108,667 |
|
|
5 |
% |
September 17, 2021 |
|
September 16, 2024 |
|
$ |
562,311 |
|
|
4 |
% |
September 29, 2021 |
|
September 28, 2024 |
|
$ |
2,361,707 |
|
|
4 |
% |
October 13, 2021 |
|
October 13, 2026 |
|
|
3,514,444 |
|
|
Chinese Loan Prime Rate (LPR)+0.25 |
% |
December 21, 2021 |
|
December 21, 2024 |
|
|
309,271 |
|
|
4 |
% |
Total |
|
|
|
$ |
12,370,844 |
|
|
|
|
Foresaid transactions, including capital
injection and loans, would be eliminated upon consolidation.
We maintain bank accounts in China, including
cash in Renminbi of RMB31,208,525 and cash in USD of US$7,187 as of September 30, 2022. Funds are transferred between EZGO, its
subsidiaries, and the VIE for their daily operation purposes. The transfer of funds between our PRC subsidiaries and the VIE are subject
to the Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Private Lending
Cases (2020 Revision, the “Provisions on Private Lending Cases”), which was implemented on August 20, 2020 to regulate the
financing activities between natural persons, legal persons and unincorporated organizations. The Provisions on Private Lending Cases
set forth that private lending contracts will be upheld as invalid under the circumstance that (i) the lender swindles loans from financial
institutions for relending; (ii) the lender relends the funds obtained by means of a loan from another profit-making legal person, raising
funds from its employees, illegally taking deposits from the public; (iii) the lender who has not obtained the lending qualification according
to the law lends money to any unspecified object of the society for the purpose of making profits; (iv) the lender lends funds to a borrower
when the lender knows or should have known that the borrower intended to use the borrowed funds for illegal or criminal purposes; (v)
the lending is in violation of public orders or good morals; or (vi) the lending is in violation of mandatory provisions of laws or administrative
regulations. Due to the circumstances aforementioned do not exist in the PRC subsidiaries’ operations, our PRC counsel, DeHeng Law
Offices, is of the view that the Provisions on Private Lending Cases does not prohibit using cash generated from one subsidiary to fund
another subsidiary’s operations. We have not been notified of any other restriction which could limit our PRC subsidiaries’
ability to transfer cash between subsidiaries. As of the date of this prospectus, we have not installed any cash management policies that
dictate how funds are transferred between us, our subsidiaries, and the VIE.
There is no assurance that the PRC government
will not intervene or impose restrictions on the ability of us, our subsidiaries and the VIE to transfer cash. Most of our cash is in
Renminbi, and the PRC government could prevent the cash maintained from leaving the PRC, could restrict deployment of the cash into the
business of the WFOE, the VIE and its subsidiaries and restrict the ability to pay dividends. For details regarding the restrictions on
our ability to transfer cash between us, our subsidiaries and the VIE, see “Risk Factors — Risks Related to Doing Business
in China — The PRC government could prevent the cash maintained from leaving the PRC, restrict deployment of the cash into the business
of the WFOE, the VIE and its subsidiaries and restrict the ability to pay dividends to U.S. investors, which could materially adversely
affect EZGO’s operations through the WFOE, the VIE and its subsidiaries in China” on page 32
of this prospectus. We currently do not have cash management
policies that dictate how funds are transferred between us, our subsidiaries, and the VIE.
Dividends and Other Distributions
EZGO is a holding company incorporated
in the BVI with no material operations of its own and does not generate any revenue. It currently conducts its business in China through
the WFOE, the VIE and its subsidiaries, with substantially all of its operations and assets in China. We are permitted under PRC laws
and regulations to provide funding to our wholly foreign-owned enterprise, the WFOE, only through loans or capital contributions, and
to the VIE only through loans, and only if we satisfy the applicable government registration and approval requirements. See “Risk
Factors — Risks Related to Doing Business in China — PRC regulation on loans to, and direct investment in, PRC entities by
offshore holding companies and governmental control in currency conversion may delay or prevent us from using the proceeds from our initial
public offering or follow-on offering to make loans to or make additional capital contributions to our PRC subsidiaries, which could materially
and adversely affect our liquidity and our ability to fund and expand EZGO’s business” on page 31
of this prospectus.
Under our current corporate
structure, we rely on dividend payments from our PRC subsidiaries to fund any cash and financing requirements we may have, including the
funds necessary to pay dividends and other cash distributions to our shareholders or to service any debt we may incur. Our subsidiaries
and VIE in the PRC generate and retain cash generated from operating activities and re-invest it in their business, respectively. If any
of our PRC subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict their ability to
pay dividends to us.
Our PRC subsidiaries are permitted to pay dividends only out of their retained
earnings. However, each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits each year, after making
up for previous year’s accumulated losses, if any, to fund certain statutory reserves, until the aggregate amount of such funds
reaches 50% of its registered capital. This portion of our PRC subsidiaries’ respective net assets are prohibited from being distributed
to their shareholders as dividends. However, neither any of our subsidiaries nor the VIE has paid any dividends or made any other distributions
to our holding company or any U.S. investors as of the date of this prospectus. See also “Risk Factors — Risks Related
to Doing Business in China - Our PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, which
may restrict our ability to satisfy our liquidity requirements, and any limitation on the ability of our PRC subsidiaries to make remittance
to pay dividends to us could limit our ability to access cash generated by the operations of those entities” on page 35 of this
prospectus.
Under existing PRC foreign exchange regulations,
currently EZGO’s PRC subsidiaries may purchase foreign currency for settlement of “current account transactions,” including
payment of dividends to EZGO without the approval of the State Administration of Foreign Exchange (“SAFE”), by complying with
certain procedural requirements. However, the relevant PRC governmental authorities may limit or eliminate EZGO’s ability to purchase
foreign currencies in the future for current account transactions. Since a significant amount of EZGO’s PRC revenue is denominated
in Renminbi, any existing and future restrictions on currency exchange or outbound capital flows may limit its ability to utilize revenue
generated in Renminbi to fund EZGO’s business activities outside of the PRC, make investments, service any debt EZGO may incur outside
of China or pay dividends or make distributions in foreign currencies to EZGO’s shareholders, including holders of EZGO’s
Ordinary Shares. In addition, any transfer of funds by EZGO to its PRC subsidiaries, either as a shareholder loan or as an increase in
the registered capital, is subject to a series of procedural requirements imposed by SAFE, SAMR, MOFCOM, or their local counterparts.
This may hinder or delay EZGO’s deployment of cash into its subsidiaries’ and the VIE’s business, which could result
in a material and adverse effect on EZGO’s operations through the WFOE, the VIE and its subsidiaries in China. See risks disclosed
under “Risk Factors — Risks Related to Doing Business in China – Restrictions on currency exchange or outbound capital
flows may limit our ability to utilize our PRC revenue effectively” on page 30
of the this prospectus, “Risk Factors — Risks
Related to Doing Business in China – PRC regulations relating to foreign exchange registration of overseas investment by PRC residents
may subject our PRC resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital
into these subsidiaries, limit PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, or may
otherwise adversely affect us” on page30
of this prospectus, and “Risk Factors — Risks
Related to Doing Business in China – The PRC government could prevent the cash maintained from leaving the PRC, restrict deployment
of the cash into the business of the WFOE, the VIE and its subsidiaries and restrict the ability to pay dividends to U.S. investors, which
could materially adversely affect EZGO’s operations through the WFOE, the VIE and its subsidiaries in China” on page 32
of the this prospectus.
As of September 30, 2022,
none of our subsidiaries had ever paid any dividends or made any other distributions to us or their respective holding companies nor have
we or any of our subsidiaries ever paid dividends or made any other distributions to U.S. investors. EZGO intends to retain most, if not
all, of its available funds and any future earnings and cash proceeds from overseas financing activities to fund the development and growth
of its business. As a result, we do not expect to pay any cash dividends in the foreseeable future.
In addition, the PRC government imposes
controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China.
If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands,
we may not be able to pay dividends in foreign currencies to our shareholders. See ““Risks Related to Doing Business in
China - Restrictions on currency exchange or outbound capital flows may limit our ability to utilize our PRC revenue effectively”
on page 30 of
this prospectus.
A 10% PRC withholding tax
is applicable to dividends payable to investors that are non-resident enterprises. Any gain realized on the transfer of Ordinary Shares
by such investors is also subject to PRC tax at a current rate of 10% which in the case of dividends will be withheld at source if such
gain is regarded as income derived from sources within the PRC. See also “Risk Factors — Risks Related to Doing Business
in China- There are significant uncertainties under the PRC EIT Law relating to the withholding tax liabilities of our PRC subsidiaries,
and dividends payable by our PRC subsidiaries to our offshore subsidiaries may not qualify to enjoy certain treaty benefits”
on page 34 of this prospectus.
Foreign Private Issuer Status
We are a foreign private issuer within the meaning
of the rules under the Exchange Act. As such, we are exempt from certain provisions applicable to United States domestic public companies.
For example:
|
● |
we are not required to provide as many Exchange Act reports, or as frequently, as a domestic public company; |
|
|
|
|
● |
for interim reporting, we are permitted to comply solely with our home country requirements, which are less rigorous than the rules that apply to domestic public companies; |
|
|
|
|
● |
we are not required to provide the same level of disclosure on certain issues, such as executive compensation; |
|
|
|
|
● |
we are exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; |
|
|
|
|
● |
we are not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; and |
|
|
|
|
● |
we are not required to comply with Section 16 of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and establishing insider liability for profits realized from any “short-swing” trading transaction. |
Implications of Being an Emerging Growth Company
As a company with less than US$1.235 billion
in revenue for the last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth
company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies.
These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404,
in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act also provides that an
emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private
company is otherwise required to comply with such new or revised accounting standards.
We will remain an emerging growth company until
the earliest of (i) the last day of our fiscal year during which we have total annual gross revenues of at least US$1.235 billion;
(ii) the last day of our fiscal year following the fifth anniversary of the completion of our initial public offering; (iii) the
date on which we have, during the previous three year period, issued more than US$1.0 billion in non-convertible debt; or (iv) the
date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which would occur if the market value
of EZGO’s Ordinary Shares that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently
completed second fiscal quarter and we have been publicly reporting for at least 12 months. Once we cease to be an emerging growth company,
we will not be entitled to the exemptions provided in the JOBS Act discussed above.
Recent Regulatory
Developments in China
Recently, the PRC government
initiated a series of regulatory actions and made a number of public statements on the regulation of business operations in China with
little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based
companies listed overseas, adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts in anti-monopoly
enforcement.
Among other things, the
Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “M&A Rules”) and Anti-Monopoly
Law of the People’s Republic of China promulgated by the SCNPC which became effective in 2008 (“Anti-Monopoly Law”),
established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming
and complex. Such regulation requires, among other things, that the SAMR be notified in advance of any change-of-control transaction in
which a foreign investor acquires control of a PRC domestic enterprise or a foreign company with substantial PRC operations, if certain
thresholds under the Provisions of the State Council on the Standard for Declaration of Concentration of Business Operators, issued by
the State Council in 2008, are triggered. Moreover, the Anti-Monopoly Law requires that transactions which involve national security,
the examination on the national security shall also be conducted according to the relevant provisions of the State. In addition, the PRC
Measures for the Security Review of Foreign Investment which became effective in January 2021 require acquisitions by foreign investors
of PRC companies engaged in military-related or certain other industries that are crucial to national security be subject to security
review before consummation of any such acquisition.
On
July 6, 2021, the relevant PRC government authorities made public the “Opinions on Strictly Cracking Down Illegal Securities Activities
in Accordance with the Law” or the “Opinions.” The Opinions emphasized the need to strengthen the administration over
illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures,
such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed
companies. As the Opinions are recently issued, official guidance and related implementation rules have not been issued yet and the interpretation
of the Opinions remains unclear at this stage. See “Risk Factors – Risks Related to Doing Business in China —
The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign
investors, which could make it more difficult for us to pursue growth through acquisitions in China” on page 37
of this prospectus.
In addition, on December
28, 2021, the Measures for Cybersecurity Review (2021 version) was promulgated and became effective on February 15, 2022, which iterates
that any “online platform operators” controlling personal information of more than one million users which seeks to list on
a foreign stock exchange should also be subject to cybersecurity review. The Measures for Cybersecurity Review (2021 version), further
elaborates the factors to be considered when assessing the national security risks of the relevant activities, including, among others,
(i) the risk of core data, important data or a large amount of personal information being stolen, leaked, destroyed, and illegally used
or exited the country; and (ii) the risk of critical information infrastructure, core data, important data or a large amount of personal
information being affected, controlled, or maliciously used by foreign governments after listing abroad. Our PRC counsel, DeHeng Law Offices,
is of the view as a result of: (i) EZGO is listed on the Nasdaq and does not “seek to list on any other foreign stock exchange”;
(ii) EZGO does not hold personal information on more than one million users in its business operations through the WFOE, the VIE and its
subsidiaries; and (iii) data processed in EZGO’s business does not have a bearing on national security and thus may not be classified
as core or important data by the authorities, EZGO is not required to apply for a cybersecurity review under the Measures for Cybersecurity
Review (2021 version).
On February 17, 2023,
the CSRC issued the Overseas Listing Regulations, which became effective on March 31, 2023. The Overseas Listing Regulations are applicable
to overseas securities offerings and/or listings conducted by issuers who are (i) PRC domestic companies and (ii) companies incorporated
overseas with substantial operations in the PRC. The Overseas Listing Regulations stipulate that such issuer shall fulfill the filing
procedures within three working days after it makes an application for initial public offering and listing in an overseas stock market.
Among other things, if an overseas listed issuer intends to effect any follow-on offering in an overseas stock market, it should, through
its major operating entity incorporated in the PRC, submit filing materials to the CSRC within three working days after the completion
of the offering. The required filing materials shall include, but not be limited to, (1) filing report and relevant commitment letter
and (2) domestic legal opinions. The Overseas Listing Regulations may subject us to additional compliance requirements in the future,
and we cannot assure you that we will be able to get the clearance of filing procedures under the Overseas Listing Regulations on a timely
basis, or at all. Any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder our
ability to offer or continue to offer our securities, cause significant disruption to our business operations, and severely damage our
reputation, which would materially and adversely affect our financial condition and results of operations and cause our Ordinary Shares
to significantly decline in value or become worthless.
According to the Notice
by the General Office of the State Council of Comprehensively Implementing the List-based Management of Administrative Licensing Items
(No. 2 [2022] of the General Office of the State Council) and its attachment, the List of Administrative Licensing Items Set by Laws,
Administrative Regulations, and Decisions of the State Council (2022 Edition), as of the date of this prospectus, we, our PRC subsidiaries,
the VIE and its subsidiaries have received from PRC authorities all requisite licenses, permissions or approvals needed to engage
in the businesses currently conducted in China, and no permission or approval has been denied. Such licenses and permissions include,
but not be limited to, business registration, pollutant discharge permit, construction planning permit, fire protection design review
of construction project, and fire protection acceptance of construction project. The following table provides details on the licenses
and permissions held by our PRC subsidiaries, the VIE and its subsidiaries:
Company |
|
License/Permission |
|
Issuing Authority |
|
Validity |
Changzhou EZGO |
|
Business License |
|
Market Supervision Administrative Bureau of Changzhou Wujin |
|
June 12, 2019 -
Long-term |
Jiansu EZGO Energy Supply Chain Technologies Co., Ltd. |
|
Business License |
|
Administrative Examination and Approval Bureau of Changzhou Wujin |
|
December 10, 2021 -
Long-term |
Jiangsu EZGO Electronic Technologies, Co., Ltd. |
|
Business License |
|
Administrative Examination and Approval Bureau of Changzhou Wujin |
|
July 30, 2019 -
Long-term |
Hengmao Power Battery |
|
Business License |
|
Administrative Examination and Approval Bureau of Changzhou Wujin |
|
May 5, 2014 -
May 4, 2034 |
Yizhiying IoT |
|
Business License |
|
Administrative Examination and Approval Bureau of Changzhou Wujin |
|
August 21, 2018 -
Long-term |
Jiangsu Cenbird |
|
Business License |
|
Economic Development Zone Administrative Committee of Jiangsu Changzhou |
|
May 7, 2018 -
Long-term |
Changzhou Langyi |
|
Business License |
|
Administrative Examination and Approval Bureau of Changzhou Wujin |
|
August 6, 2021 -
Long-term |
Jiangsu Langyi Import and Export Trading Co., Ltd. |
|
Business License |
|
Administrative Examination and Approval Bureau of Changzhou Wujin |
|
December 7, 2021 -
Long-term |
Changzhou Sixun Technology Co., Ltd. |
|
Business License |
|
Administrative Examination and Approval Bureau of Changzhou Tianning |
|
February 17, 2023-
Long-term |
Changzhou Higgs Intelligent Technology Co., Ltd. |
|
Business License |
|
Administrative Examination and Approval Bureau of Changzhou Xinbei |
|
January 20, 2023-
Long-term |
As of the date of this
prospectus, as advised by our PRC legal counsel, DeHeng Law Offices, none of our company, our subsidiaries, or the VIE are covered by
permissions requirements from the CSRC, the Cyberspace Administration of China (the “CAC”), or any other governmental agency
that is required to approve the VIE’s operations, and therefore no such permission or approval has been denied.
As of the date of this
prospectus, no relevant laws or regulations in the PRC explicitly require us, our subsidiaries, or the VIE to seek approval from the CSRC
or any other PRC governmental authorities for our overseas listing or securities offering plans, nor has our company, any of our subsidiaries,
or the VIE or any of its subsidiaries, received any inquiry, notice, warning or sanctions regarding any securities offering from the CSRC
or any other PRC governmental authorities. However, since these statements and regulatory actions by the PRC government are newly published
and official guidance and related implementation rules have not been issued, it is highly uncertain what the potential impact such modified
or new laws and regulations will have on our daily business operations, or the ability to accept foreign investments and list on a U.S.
or other foreign exchange. The SCNPC or other PRC regulatory authorities may in the future promulgate laws, regulations or implementing
rules that require our company, the WFOE, the VIE or its subsidiaries to obtain regulatory approval from Chinese authorities before offering
securities in the U.S., BVI or other rules and regulations that place restrictions on capital raising or other activities by companies
with extensive operations in China could adversely affect EZGO’s business through the WFOE, the VIE and its subsidiaries in China
and results of operations. See Risk Factors – Risks Related to Doing Business in China – The PRC government exerts
substantial influence over the manner in which EZGO conducts its business activities through the WFOE, the VIE and its subsidiaries in
China. The PRC government may also intervene or influence EZGO’s operations through the WFOE, the VIE and its subsidiaries in China
at any time, which could result in a material change in its operations and its ordinary shares could decline in value or become worthless”
on page 24 of this prospectus for a discussion of these legal and operational risks and other information that should be considered before
making a decision to purchase EZGO’s securities. In the event that we, our subsidiaries, or the VIE (i) do not receive or maintain
any requisite permissions or approvals, (ii) inadvertently conclude that such permissions or approvals are not required, or (iii) applicable
laws, regulations, or interpretations change and we are required to obtain such permissions or approvals in the future, we, our subsidiaries,
and the VIE may be subject to sanctions imposed by the relevant PRC regulatory authority, including fines and penalties, revocation of
the licenses of the WFOE, the VIE and its subsidiaries, and suspension of these entities’ business, restrictions or limitations
on our ability to pay dividends outside of China, regulatory orders, including injunctions requiring the WFOE, the VIE and its subsidiaries
to cease collecting or processing data, litigation or adverse publicity, the delisting of EZGO’s securities on Nasdaq, and other
forms of sanctions, which may materially and adversely affect its business, financial condition, and results of operations.
Effect of Holding
Foreign Companies Accountable Act
The HFCA Act, which was
signed into law on December 18, 2020, requires a foreign company to submit that it is not owned or manipulated by a foreign government
or disclose the ownership of governmental entities and certain additional information, if the PCAOB, is unable to inspect completely a
foreign auditor that signs the company’s financial statements. If the PCAOB is unable to inspect the Company’s auditors for
three consecutive years, the Company’s securities will be prohibited from trading on a national exchange. On June 22, 2021, the
U.S. Senate passed the AHFCA Act, which amends the HFCA Act and requires the SEC to prohibit an issuer’s securities from trading
on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, and thus, would
reduce the time before EZGO’s securities may be prohibited from trading or delisted. On December 29, 2022, the AHFCA Act was signed
into law. Due to a position taken by the CSRC, the PCAOB is prevented from fully inspecting auditing records and evaluating quality control
procedures of the auditors based in China. As a result, the investors may be deprived of the benefits of such PCAOB inspections. Any inability
of the PCAOB to conduct inspections of auditors in China could make it more difficult to evaluate the effectiveness of these accounting
firms’ audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections,
which could cause existing and potential investors in EZGO’s Ordinary Shares to lose confidence in our reported financial information
and the quality of our financial statements. These developments could add uncertainties to EZGO’s offering, including the possibility
that the SEC may prohibit trading in EZGO’s securities if the PCAOB cannot fully inspect or investigate our auditor and we fail
to appoint a new auditor that is accessible to the PCAOB and that Nasdaq can delist EZGO’s Ordinary Shares.
On December 16, 2021,
the PCAOB issued its determination report that the PCAOB is unable to inspect or investigate completely PCAOB-registered public accounting
firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions, and the
PCAOB included in the report of its determination a list of the accounting firms that are headquartered in mainland China or Hong Kong.
This report does not include our former auditors, MarcumAsia and Briggs & Veselka, or our current auditor, WWC. On August 26, 2022,
the PCAOB announced that it had signed the Statement of Protocol with the CSRC and the MOF. The terms of the Statement of Protocol would
grant the PCAOB complete access to audit work papers and other information so that it may inspect and investigate PCAOB-registered accounting
firms headquartered in mainland China and Hong Kong. On December 15, 2022, the PCAOB announced that it has secured complete access to
inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate the previous
2021 determination report to the contrary. Our current auditor, WWC, as an auditor of companies that are traded publicly in the United
States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections
to assess its compliance with the applicable professional standards. Notwithstanding the foregoing, in the future, if there is any regulatory
change or step taken by PRC regulators that does not permit our auditor to provide audit documentations located in China to the PCAOB
for inspection or investigation, investors may be deprived of the benefits of such inspection. Any audit reports not issued by auditors
that are completely inspected by the PCAOB, or a lack of PCAOB inspections of audit work undertaken in China that prevents the PCAOB from
regularly evaluating our auditors’ audits and their quality control procedures, could result in a lack of assurance that our financial
statements and disclosures are adequate and accurate, then such lack of inspection could cause EZGO’s securities to be delisted
from the stock exchange.
On December 2, 2021,
the SEC adopted final amendments to its rules implementing the HFCA Act. Such final rules establish procedures that the SEC will follow
in (i) determining whether a registrant is a “Commission-Identified Issuer” (a registrant identified by the SEC as having
filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and
that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction) and (ii)
prohibiting the trading of an issuer that is a Commission-Identified Issuer for three consecutive years under the HFCA Act. The SEC began
identifying Commission-Identified Issuers for the fiscal years beginning after December 18, 2020. A Commission-Identified Issuer is required
to comply with the submission and disclosure requirements in the annual report for each year in which it was identified. Since we were
not identified as a Commission-Identified Issuer for the fiscal year ended September 30, 2022, we were not required to comply with the
submission or disclosure requirements in the 2022 Annual Report. As of the date of this prospectus, we have not been, and do not expect
to be identified by the SEC under the HFCA Act. As disclosed earlier, on December 15, 2022, the PCAOB announced that it had secured complete
access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate
the previous 2021 determination report to the contrary. However, whether the PCAOB will continue to conduct inspections and investigations
completely to its satisfaction of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to
uncertainty and depends on a number of factors out of our, and our auditor’s control including positions taken by authorities of
the PRC. The PCAOB is required under the HFCA Act to make its determination on an annual basis with regards to its ability to inspect
and investigate completely accounting firms based in the mainland China and Hong Kong. The possibility of being a “Commission-Identified
Issuer” and risk of delisting could continue to adversely affect the trading price of our securities. Should the PCAOB again encounter
impediments to inspections and investigations in mainland China or Hong Kong as a result of positions taken by any authority in either
jurisdiction, the PCAOB will make determinations under the HFCA Act as and when appropriate.
For
details on the effects of HFCA Act on us, see “Risk Factors— Risks Related to Doing Business in China — EZGO’s
Ordinary Shares may be delisted under the HFCA Act if the PCAOB is unable to adequately inspect audit documentation located in China.
The delisting of EZGO’s Ordinary Shares, or the threat of their being delisted, may materially and adversely affect EZGO’s
Ordinary Shares. Additionally, the inability of the PCAOB to conduct adequate inspections deprives our shareholders of the benefits of
such inspections. Furthermore, the Accelerating Holding Foreign Companies Accountable Act, which amends the HFCA Act and requires the
SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections
for two consecutive years instead of three on page 39 of
this prospectus. .”
Corporate Information
Our principal executive offices are located at
Building #A, Floor 2, Changzhou Institute of Dalian University of Technology, Science and Education Town, Wujin District, Changzhou City,
Jiangsu, China 213164, and our phone number is + 86 51983683805. Our registered agent in the BVI is Maples Corporate Services (BVI) Limited,
PO Box 173, Kingston Chambers, Road Town Tortola, British Virgin Islands. Investors should submit any inquiries to the address and telephone
number of our principal executive offices.
Our principal website is www.ezgotech.com.cn.
The information contained on this website is not a part of this prospectus.
Summary of Risk Factors
Below please find a summary of the principal risks
we, our subsidiaries, the VIE and its subsidiaries face. For a detailed description of the risk factors we, our subsidiaries, the VIE
and its subsidiaries may face, see “Item 3. Key Information — D. Risk Factors” in our 2022 Annual Report, which
is incorporated by reference in this prospectus and “Risk Factors” in this prospectus. We have also included risk factors
relating to Risks Related to Doing Business in China in this prospectus in Risk Factors.
Risks Related to Doing Business in China
We are subject to risks and uncertainties
relating to doing business in China in general, including, but are not limited to, the following:
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Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us. |
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We may be adversely affected by the complexity, uncertainties, and changes in PRC regulation of internet retailers. |
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Changes in China’s economic, political, or social conditions or government policies could have a material adverse effect on EZGO’s business and operations. The enforcement of laws and rules and regulations in China may change quickly with little advance notice, which could result in a material adverse change in EZGO’s operations and the value of EZGO’s Ordinary Shares. |
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The Chinese government may intervene or influence EZGO’s operations at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in EZGO’s operations and/or the value of the securities EZGO has registered for sale. Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder EZGO’s ability to offer or continue to offer its securities to investors and cause the value of such securities to significantly decline or become worthless. |
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Restrictions on currency exchange or outbound capital flows may limit our ability to utilize our PRC revenue effectively. In addition, our PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, which may restrict our ability to satisfy our liquidity requirements, and any limitation on the ability of our PRC subsidiaries to make remittance to pay dividends to us could limit our ability to access cash generated by the operations of those entities. |
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PRC regulations relating to foreign exchange registration of overseas investment by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into these subsidiaries, limit PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us. |
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PRC regulation on loans to, and direct investment in, PRC entities by offshore holding companies and governmental control in currency conversion may delay or prevent us from using the proceeds of our initial public offering or follow-on offering to make loans to or make additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand EZGO’s business. |
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Our PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, which may restrict our ability to satisfy our liquidity requirements, and any limitation on the ability of our PRC subsidiaries to make remittance to pay dividends to us could limit our ability to access cash generated by the operations of those entities. |
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The Overseas Listing Regulations lay out the filing regulation arrangement for both direct and indirect overseas listing, and clarify the determination criteria for indirect overseas listing in overseas markets. Among other things, if an overseas listed issuer intends to effect any follow-on offering in an overseas stock market, it should, through its major operating entity incorporated in the PRC, submit filing materials to the CSRC within three working days after the completion of the offering. The required filing materials shall include, but not be limited to, (1) filing report and relevant commitment letter and (2) domestic legal opinions. The Overseas Listing Regulations may subject us to additional compliance requirements in the future. Any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder EZGO’s ability to offer or continue to offer its Ordinary Shares, cause significant disruption to its business operations, and severely damage its reputation, which would materially and adversely affect our financial condition and results of operations and cause EZGO’s Ordinary Shares to significantly decline in value or become worthless. |
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Substantially all of EZGO’s current operations are conducted in the PRC through the VIE and its subsidiaries, and substantially all of its assets are located in the PRC. A majority of EZGO’s current directors and officers are nationals and residents of the PRC and a substantial portion of their assets are located outside the United States. As a result, it may be difficult for a shareholder to effect service of process within the United States upon these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. |
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EZGO’s Ordinary Shares may be delisted under the HFCA Act if
the PCAOB is unable to adequately inspect audit documentation located in China. The delisting of EZGO’s Ordinary Shares, or the
threat of their being delisted, may materially and adversely affect EZGO’s Ordinary Shares. Additionally, the inability of the PCAOB
to conduct adequate inspections deprives our shareholders of the benefits of such inspections. Furthermore, the Accelerating Holding Foreign
Companies Accountable Act amends the HFCA Act and requires the SEC to prohibit an issuer’s securities from trading on any U.S. stock
exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three. |
Risks Related to Our Business and Industry
Risks and uncertainties related to EZGO’s
business operations through the WFOE, the VIE and its subsidiaries in China, and industry include, but are not limited to, the following:
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We may incur losses in the future. |
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We are an early-stage company of e-bicycle products and charging piles with a limited operating history. Our limited operating history in the industry may not provide an adequate basis to judge our future prospects and results of operations for this segment, and may increase the risk of your investment. |
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If we fail to develop and introduce new models of e-bicycle products in anticipation of market demand in a timely and cost-effective manner, our competitive position and ability to generate revenues may be materially and adversely affected. |
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If we fail to adopt new technologies or adapt our e-bicycles to changing customer requirements or the industry standards, our business may be materially and adversely affected. |
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If we are unable to manage our growth or execute our strategies effectively, our business and prospects may be materially and adversely affected. |
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Our marketing strategy of appealing to and growing sales to a more diversified group of users may not be successful. |
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We face intense competition in the charging pile market, and if we fail to compete effectively, we may lose market share and customers. |
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Our products and services may experience quality problems from time to time, which could result in decreased sales, adversely affect our results of operations and harm our reputation. |
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We may be subject to product liability claims if people or properties are harmed by our products and we may be compelled to undertake product recalls or take other actions, which could adversely affect our brand image and results of operations. |
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Our products are subject to safety and other standards and failure to satisfy such mandated standards would have a material adverse effect on our business and operating results. |
Risks Related to Our Corporate Structure
Risks and uncertainties relating to our corporate
structure include, but are not limited to, the following:
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Our current corporate structure and business operations may be affected by the newly enacted Foreign Investment Law which does not explicitly classify whether a variable interest entity that is controlled through contractual arrangements would be deemed as foreign-invested enterprises if it is ultimately “controlled” by foreign investors. |
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We rely on contractual arrangements with the VIE and its shareholders to operate our business, which may not be as effective as direct ownership in providing operational control and otherwise have a material adverse effect as to our business. |
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Any failure by the VIE or its shareholders to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business. |
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The shareholders of the VIE may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition. |
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If the PRC government deems that the contractual arrangements in relation to the VIE do not comply with PRC regulatory restrictions on foreign investment in the relevant industries or other PRC regulations, or if these regulations change or are interpreted differently in the future, the securities EZGO has registered may decline in value or become worthless if the determinations, changes, or interpretations result in EZGO’s inability to assert contractual rights over the assets of its PRC subsidiaries or the VIE that conducts a substantial part of EZGO’s operations. |
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Contractual arrangements in relation to the VIE may be subject to scrutiny by the PRC tax authorities and they may determine that the VIE owes additional taxes, which could negatively affect our financial condition and the value of your investment. |
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We may lose the ability to use and enjoy assets held by the VIE that are material to the operation of our business if the entity goes bankrupt or becomes subject to a dissolution or liquidation proceeding. |
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If the custodians or authorized users of our controlling non-tangible assets, including chops and seals, fail to fulfill their responsibilities, or misappropriate or misuse these assets, our business and operations may be materially and adversely affected. |
Risks Related to EZGO’s Ordinary
Shares
In addition to the risks
and uncertainties described above, we are subject to risks relating to EZGO’s Ordinary Shares, including, but not limited to, the
following:
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An active trading market for EZGO’s Ordinary Shares may not continue and the trading price for EZGO’s Ordinary Shares may fluctuate significantly. |
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The trading price of EZGO’s Ordinary Shares may be volatile, which could result in substantial losses to investors. |
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We may not be able to maintain our listing on Nasdaq which could limit investors’ ability to make transactions in EZGO’s securities and subject us to additional trading restrictions. |
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Because we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of EZGO’s Ordinary Shares for return on your investment. |
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Restrictive covenants related to our previous registered direct offering may restrict our ability to obtain future financing. |
Summary Consolidated Financial Information
The following table represents our selected consolidated
financial information. The selected Consolidated Statements of Operations data for the years ended September 30, 2020, 2021 and 2022 and
the Consolidated Balance Sheet data as of September 30, 2021 and 2022 were derived from our audited consolidated financial statements,
which are included in the 2022 Annual Report, which is incorporated herein by reference. Our consolidated financial statements are prepared
and presented in accordance with the U.S. GAAP.
These selected consolidated financial data below
should be read in conjunction with, and are qualified in their entirety by reference to, our consolidated financial statements and related
notes included elsewhere in our 2022 Annual Report, which is incorporated herein by reference, and “Item 5. Operating and
Financial Review and Prospects” therein. Our historical results do not necessarily indicate results expected for any future
periods. The following table presents our selected consolidated statements of operations data for the years ended September 30, 2020,
2021 and 2022:
| |
Years Ended
September 30, | |
| |
2020 | | |
2021 | | |
2022 | |
| |
| | |
| | |
| |
Net revenues | |
$ | 15,243,282 | | |
$ | 23,422,006 | | |
$ | 17,389,217 | |
Cost of revenues | |
| (13,704,248 | ) | |
| (23,039,528 | ) | |
| (17,170,178 | ) |
Gross profit | |
| 1,539,034 | | |
| 382,478 | | |
| 219,039 | |
| |
| | | |
| | | |
| | |
Selling and marketing expenses | |
| (385,722 | ) | |
| (1,558,719 | ) | |
| (1,008,422 | ) |
General and administrative expenses | |
| (1,081,346 | ) | |
| (2,701,178 | ) | |
| (5,673,224 | ) |
Total operating expenses | |
| (1,467,068 | ) | |
| (4,259,897 | ) | |
| (6,681,646 | ) |
| |
| | | |
| | | |
| | |
Income (loss) from operations | |
| 71,966 | | |
| (3,877,419 | ) | |
| (6,462,607 | ) |
| |
| | | |
| | | |
| | |
Interest expense, net | |
| (14,803 | ) | |
| (60,756 | ) | |
| (40,051 | ) |
Other income (expenses), net | |
| 393,198 | | |
| 141,530 | | |
| (357,448 | ) |
Total other income (expenses), net | |
| 378,395 | | |
| 80,774 | | |
| (397,499 | ) |
| |
| | | |
| | | |
| | |
Income (loss) from continuing operations before income tax expense | |
| 450,361 | | |
| (3,796,645 | ) | |
| (6,860,106 | ) |
Income tax (expense) benefit | |
| (116,063 | ) | |
| 419,405 | | |
| (527,119 | ) |
Net income (loss) from continuing operations | |
| 334,298 | | |
| (3,377,240 | ) | |
| (7,387,225 | ) |
Loss from discontinued operation, net of tax | |
| (57,376 | ) | |
| (36,404 | ) | |
| (81,605 | ) |
Net income (loss) | |
| 276,922 | | |
| (3,413,644 | ) | |
| (7,468,830 | ) |
| |
| | | |
| | | |
| | |
Net income (loss) from continuing operations | |
| 334,298 | | |
| (3,377,240 | ) | |
| (7,468,830 | ) |
Less: net income (loss) attributable to non-controlling interests from continuing operations | |
| 129,748 | | |
| (434,971 | ) | |
| (1,005,032 | ) |
Net income (loss) attributable to EZGO Technologies Ltd.’s shareholders from continuing operations | |
| 204,550 | | |
| (2,942,269 | ) | |
| (6,382,193 | ) |
| |
| | | |
| | | |
| | |
Loss from discontinued operation, net of tax | |
| (57,376 | ) | |
| (36,404 | ) | |
| (81,605 | ) |
Less: net income attributable to non-controlling interests from discontinued operation | |
| - | | |
| - | | |
| - | |
Net loss attributable to EZGO Technologies Ltd.’s shareholders from discontinued operation | |
| (57,376 | ) | |
| (36,404 | ) | |
| (81,605 | ) |
Net income (loss) attributable to EZGO Technologies Ltd.’s shareholders | |
$ | 147,174 | | |
$ | (2,978,673 | ) | |
$ | (6,463,798 | ) |
| |
| | | |
| | | |
| | |
Net income (loss) from continuing operations per Ordinary Share: | |
| | | |
| | | |
| | |
Basic and diluted | |
$ | 0.03 | | |
$ | (0.27 | ) | |
$ | (0.47 | ) |
Net loss from discontinued operation per Ordinary Share: | |
| | | |
| | | |
| | |
Basic and diluted | |
$ | (0.01 | ) | |
$ | (0.00 | ) | |
$ | (0.01 | ) |
Net income (loss) per Ordinary Share: | |
| | | |
| | | |
| | |
Basic and diluted | |
$ | 0.02 | | |
$ | (0.27 | ) | |
$ | (0.48 | ) |
Weighted average shares outstanding | |
| | | |
| | | |
| | |
Basic and diluted | |
| 7,800,000 | | |
| 10,735,606 | | |
| 13,662,927 | |
The following table presents a summary of our
consolidated balance sheet data as of September 30, 2020, 2021 and 2022:
| |
As of September 30, | |
| |
2020 | | |
2021 | | |
2022 | |
| |
| | |
| | |
| |
Balance Sheet Data: | |
| | |
| | |
| |
Cash and cash equivalents | |
$ | 322,598 | | |
$ | 4,774,531 | | |
$ | 4,389,990 | |
Total assets | |
| 19,817,798 | | |
| 42,011,670 | | |
| 47,507,582 | |
Total liabilities | |
| 6,672,653 | | |
| 9,475,170 | | |
| 13,968,203 | |
Total EZGO Technologies Ltd.’s shareholders’ equity | |
| 8,869,462 | | |
| 28,518,002 | | |
| 30,637,915 | |
Non-controlling interests | |
| 4,275,683 | | |
| 4,018,498 | | |
| 2,901,464 | |
Total equity | |
| 13,145,145 | | |
| 32,536,500 | | |
| 33,539,379 | |
THE OFFERING
Issuer |
EZGO Technologies Ltd. |
Securities being registered for resale by the Selling Shareholders named in the prospectus |
7,104,350 Ordinary Shares issued by us to the Selling Shareholders
in connection with the terms and conditions of the Equity Transfer Agreement. |
Offering prices |
The securities offered by this prospectus may be offered and sold at prevailing market prices, privately negotiated prices or such other prices as the Selling Shareholders may determine. See “Plan of Distribution.” |
Use of proceeds |
The Selling Shareholders will receive all
of the net proceeds from the sale of any Ordinary Shares offered by them under this prospectus.
We will pay all costs, fees and expenses incurred
in connection with the registration of the Ordinary Shares covered by this prospectus. See “Use of Proceeds.” |
Dividend policy |
As of September 30, 2022, none of our subsidiaries had ever paid any dividends or made any other distributions to us or their respective holding companies nor have we or any of our subsidiaries ever paid dividends or made any other distributions to U.S. investors. EZGO intends to retain most, if not all, of its available funds and any future earnings and cash proceeds from overseas financing activities to fund the development and growth of its business. As a result, we do not expect to pay any cash dividends in the foreseeable future. |
Market for our Ordinary Shares |
Our Ordinary Shares are listed on Nasdaq Capital Market under the trading symbols “EZGO.” |
Risk factors |
Prospective investors should carefully consider the “Risk Factors” for a discussion of certain factors that should be considered before buying the securities offered hereby. |
RISK FACTORS
The following is a summary of certain risks
that should be carefully considered along with the other information contained or incorporated by reference in this prospectus and any
applicable prospectus. You should carefully consider the risk factors incorporated by reference to the 2022 Annual Report, as well as
the other documents incorporated by reference and the other information contained in this prospectus and accompanying prospectus, as updated
by our subsequent filings under the Exchange Act. If any of the following events actually occurs, our business, operating results,
prospects, or financial condition could be materially and adversely affected. The risks described below are not the only ones that we
face. Additional risks not presently known to us or that we currently deem immaterial may also significantly impair our business operations
and could result in a complete loss of your investment.
Risks Related to Doing
Business in China
Uncertainties in
the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us.
Our PRC subsidiaries,
the VIE and its subsidiaries are subject to various PRC laws and regulations generally applicable to companies in China. The PRC legal
system is based on written statutes. Unlike common law systems, it is a system in which legal cases have limited value as precedents.
In the late 1970s, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in
general. The overall effect of legislation over the past four decades has significantly increased the protections afforded to various
forms of foreign or private-sector investment in China.
As relevant laws and
regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and
rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties.
From time to time, we
may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative and court authorities
have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the
outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. Furthermore,
the PRC legal system is based in part on government policies and internal rules (some of which are not published in a timely manner
or at all) that may have retroactive effect. As a result, we may not be aware of our violation of these policies and rules until
sometime after the violation. Such uncertainties, including uncertainty over the scope and effect of our contractual, property (including
intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in China could materially
and adversely affect EZGO’s business through the WFOE, the VIE and its subsidiaries in China and impede its ability to continue
its operations.
Recently, the General
Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the “Opinions
on Severely Cracking Down on Illegal Securities Activities According to Law,” or the Opinions, which was made available to the public
on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to
strengthen the supervision over overseas listings by Chinese companies. Effective measures, such as promoting the construction of relevant
regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and
data privacy protection requirements and similar matters. The Opinions remain unclear on how the law will be interpreted, amended, and
implemented by the relevant PRC governmental authorities, but the Opinions and any related implementing rules to be enacted may subject
us to compliance requirements in the future.
The Measures for Cybersecurity
Review (2021 version) was promulgated on December 28, 2021 and became effective on February 15, 2022, which iterates that any “online
platform operators” controlling personal information of more than one million users which seeks to list in a foreign stock exchange
should also be subject to cybersecurity review. We do not believe EZGO’s operations through the WFOE, the VIE and its subsidiaries
in China would be considered an “operator of critical information infrastructure” or “data processor” as mentioned
above, however, the revised draft of the Measures for Cybersecurity Review is in the process of being formulated and the Opinions remain
unclear on how it will be interpreted, amended, and implemented by the relevant PRC governmental authorities. Thus, it is still uncertain
how PRC governmental authorities will regulate overseas listing in general and whether we are required to obtain any specific regulatory
approvals. Furthermore, if the CSRC or other regulatory agencies later promulgate new rules or explanations requiring that EZGO obtains
their approvals for any follow-on offering, EZGO may be unable to obtain such approvals which could significantly limit or completely
hinder its ability to offer or continue to offer its securities to its investors.
On February 17, 2023,
the CSRC issued the Overseas Listing Regulations, which became effective on March 31, 2023. The Overseas Listing Regulations are applicable
to overseas securities offerings and/or listings conducted by issuers who are (i) PRC domestic companies and (ii) companies incorporated
overseas with substantial operations in the PRC. The Overseas Listing Regulations stipulate that such issuer shall fulfill the filing
procedures within three working days after it makes an application for initial public offering and listing in an overseas stock market.
Among other things, if an overseas listed issuer intends to effect any follow-on offering in an overseas stock market, it should, through
its major operating entity incorporated in the PRC, submit filing materials to the CSRC within three working days after the completion
of the offering. The Overseas Listing Regulations may subject us to additional compliance requirements in the future. See “–
The CSRC issued the Overseas Listing Regulations for China-based companies seeking to offer its securities in foreign markets. The Chinese
government may exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers,
which could significantly limit or completely hinder EZGO’s ability to offer or continue to offer its securities to investors and
could cause the value of its Ordinary Shares to significantly decline or become worthless.”
Furthermore, the PRC
government authorities may strengthen oversight and control over offerings that are conducted overseas and/or foreign investment in China-based
issuers like us. Such actions taken by the PRC government authorities may intervene or influence EZGO’s operations through the WFOE,
the VIE and its subsidiaries in China at any time, which are beyond its control. Therefore, any such action may adversely affect EZGO’s
operations through the WFOE, the VIE and its subsidiaries in China and significantly limit or hinder its ability to offer or continue
to offer its securities to investors and reduce the value of such securities.
Uncertainties regarding
the enforcement of laws and the fact that rules and regulations in China can change quickly with little advance notice, along with the
risk that the Chinese government may intervene or influence EZGO’s operations through the WFOE, the VIE and its subsidiaries in
China at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers could
result in a material change in its operations, financial performance and/or the value of EZGO’s Ordinary Shares or impair its ability
to raise money.
The PRC government
exerts substantial influence over the manner in which EZGO conducts its business activities through the WFOE, the VIE and its subsidiaries
in China. The PRC government may also intervene or influence EZGO’s operations through the WFOE, the VIE and its subsidiaries in
China at any time, which could result in a material change in its operations and its Ordinary Shares could decline in value or become
worthless.
Based on the advice of
our PRC counsel, DeHeng Law Offices, that we are currently not required to obtain approval from Chinese authorities for listing on U.S
exchanges, nor the execution of the VIE Agreements. However, if the VIE or the holding company were required to obtain approval in the
future and were denied permission from Chinese authorities for listing on U.S. or other foreign exchanges, EZGO will not be able to continue
listing on a U.S. or other foreign exchange, continue to offer its securities to investors, or materially affect the interest of the investors
and cause significantly depreciation of the price of its Ordinary Shares.
The Chinese government
has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and
state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation,
environmental regulations, land use rights, property, and other matters. The central or local governments of these jurisdictions may impose
new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part
to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including any decision
not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in
the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof,
and could require EZGO to divest ourselves of any interest it then holds in its operations in China. Accordingly, the Chinese government
may intervene or influence EZGO’s operations through the WFOE, the VIE and its subsidiaries in China at any time, which could result
in a material change in its operations and/or the value of the securities EZGO has registered.
For example, the Chinese
cybersecurity regulator announced on July 2, 2021, that it had begun an investigation of Didi Global Inc. (NYSE: DIDI) and two days later
ordered that Didi’s app be removed from smartphone app stores. Similarly, EZGO’s business segments may be subject to various
government and regulatory interference in the regions in which it operates through the WFOE, the VIE and its subsidiaries in China. We
could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government
sub-divisions. We may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for
any failure to comply.
Furthermore, it is uncertain
when and whether we will be required to obtain permission from the PRC government for listing on U.S. or other foreign exchanges, or enter
into VIE Agreements in the future, and even when such permission is obtained, whether it will be denied or rescinded. Although, in the
opinion of our PRC legal counsel, DeHeng Law Offices, we are currently not required to obtain permission from any of the PRC central or
local government and has not received any denial for listing on the U.S. or other foreign exchange or enter into VIE Agreements, EZGO’s
operations through the WFOE, the VIE and its subsidiaries in China could be adversely affected, directly or indirectly, by existing or
future laws and regulations relating to its business or industry. Recent statements by the Chinese government indicating an intent, and
the PRC government may take actions to exert more oversight and control over offerings that are conducted overseas and/or foreign investment
in China-based issuers, which could significantly limit or completely hinder EZGO’s ability to offer or continue to offer its securities
to investors and cause the value of its securities to significantly decline or become worthless.
The CSRC issued
the Overseas Listing Regulations for China-based companies seeking to offer its securities in foreign markets. The Chinese government
may exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers, which could
significantly limit or completely hinder EZGO’s ability to continue to offer its Ordinary Shares to investors and could cause the
value of its securities to significantly decline or become worthless.
On February 17, 2023,
the CSRC issued the Overseas Listing Regulations, which became effective on March 31, 2023. The Overseas Listing Regulations lay out the
filing regulation arrangement for both direct and indirect overseas listing, and clarify the determination criteria for indirect overseas
listing in overseas markets.
The Overseas Listing
Regulations are applicable to overseas securities offerings and/or listings conducted by issuers who are (i) PRC domestic companies and
(ii) companies incorporated overseas with substantial operations in the PRC. The Overseas Listing Regulations stipulate that such issuer
shall fulfill the filing procedures within three working days after it makes an application for initial public offering and listing in
an overseas stock market. Among other things, if an overseas listed issuer intends to effect any follow-on offering in an overseas stock
market, it should, through its major operating entity incorporated in the PRC, submit filing materials to the CSRC within three working
days after the completion of the offering. The required filing materials shall include, but not be limited to, (1) filing report and relevant
commitment letter and (2) domestic legal opinions.
In addition, an overseas
offering and listing is prohibited under any of the following circumstances: (1) that the intended securities offering and listing is
specifically prohibited by national laws and regulations and relevant provisions; (2) that the intended securities offering and listing
may constitute a threat to or endangers national security as reviewed and determined by competent authorities under the State Council
in accordance with law; (3) that, in the past three years, the domestic enterprise or its controlling shareholders or actual controllers
have committed corruption, bribery, embezzlement, misappropriation of property, or other criminal offenses disruptive to the order of
the socialist market economy; (4) that the domestic enterprise is currently under judicial investigation for suspicion of criminal offenses
or is under investigation for suspicion of major violations, and there are no clear conclusions yet; and (5) that there are material ownership
disputes over the equity of the domestic enterprise held by the controlling shareholder, a shareholder controlled by the controlling shareholder
or the actual controller. The Overseas Listing Regulations stipulate the legal consequences for breaches, including failure to fulfill
filing obligations or engaging in fraudulent filing behavior, which may result in a fine ranging from RMB1 million to RMB10 million, and
in cases of severe violations, the relevant responsible persons may also be barred from entering the securities market.
The Overseas Listing
Regulations may subject us to additional compliance requirements in the future, and we cannot assure you that we will be able to get the
clearance of filing procedures under the Overseas Listing Regulations on a timely basis, or at all. We believe that none of the situations
that would clearly prohibit overseas offering and listing applies to us. In reaching this conclusion, based on the advice of our PRC counsel,
DeHeng Law Offices, that there is uncertainty inherent in relying on an opinion of counsel in connection with whether we are required
to obtain permissions from the Chinese government that is required to approve of EZGO’s operations through the WFOE, the VIE and
its subsidiaries in China and/or offering. Any failure of EZGO to fully comply with new regulatory requirements may significantly limit
or completely hinder EZGO’s ability to continue to offer its securities to investors, cause significant disruption to its business
operations, and severely damage its reputation, which could materially and adversely affect our financial condition and results of operations
and cause its securities, including the securities EZGO has registered for sale in a prospectus, to significantly decline in value or
become worthless.
We may be adversely
affected by the complexity, uncertainties, and changes in PRC regulation of internet retailers.
The PRC government extensively
regulates the Internet industry, including foreign ownership of, and the licensing and permit requirements pertaining to, companies in
the Internet industry. These internet-related laws and regulations are relatively new and evolving, and their interpretation and enforcement
involve significant uncertainties. As a result, in certain circumstances it may be difficult to determine what actions or omissions may
be deemed to be in violation of applicable laws and regulations. Issues, risks, and uncertainties relating to PRC government regulation
of the Internet industry include, but are not limited to, the following:
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The online commerce industry in China is still in an early stage of development and the PRC laws applicable to the industry are still evolving. Due to the lack of clarity under the existing PRC regulatory regime, we may be required to comply with additional legal and licensing requirements. For example, we are providing mobile applications to mobile device users and we are in the process of applying for the valued-added telecommunications business operating license for electronic data interchange business, or the EDI License. It is uncertain if our PRC subsidiaries, the VIE and its subsidiaries will be required to obtain a separate valued-added telecommunications business operating license for Internet content provision, or the ICP License in addition to the EDI License. Although we believe that we are not required to obtain such separate license which is in line with the current market practice, there can be no assurance that we will not be required to apply for an operating license for our mobile applications in the future. |
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The evolving PRC regulatory system for the Internet industry may lead to the establishment of new regulatory agencies. For example, in May 2011, the State Council announced the establishment of a new department, the State Internet Information Office (with the involvement of the State Council Information Office, the MIIT, and the Ministry of Public Security). The primary role of this new agency is to facilitate the policy-making and legislative development in this field to direct and coordinate with the relevant departments in connection with online content administration and to deal with cross-ministry regulatory matters in relation to the Internet industry. |
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New laws and regulations may be promulgated that will regulate internet activities, including online retail. If these new laws and regulations are promulgated, additional licenses may be required for EZGO’s operations. If EZGO’s operations do not comply with these new regulations at the time they become effective, or if EZGO fails to obtain any licenses required under these new laws and regulations, it could be subject to penalties. |
The interpretation and
application of existing PRC laws, regulations and policies and possible new laws, regulations or policies relating to the internet industry
have created substantial uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities
of, internet businesses in China, including EZGO’s business through the WFOE, the VIE and its subsidiaries in China. We cannot assure
you that the WFOE, the VIE and its subsidiaries have obtained all the permits or licenses required for conducting our business in China
or will be able to maintain existing licenses or obtain new ones.
EZGO’s business,
through the WFOE, the VIE and its subsidiaries in China, is subject to complex and evolving Chinese laws and regulations regarding data
privacy and security. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims,
penalties, changes to EZGO’s business practices, increased cost of operations, damages to its reputation and brand, or otherwise
harm its business through the WFOE, the VIE and its subsidiaries in China.
In the PRC, governmental
authorities have enacted a series of laws and regulations to enhance the protection of data privacy and cybersecurity. The Cybersecurity
Law of the PRC and relevant regulations require network operators, which may include us, to ensure the security and stability of the services
provided via network and protect individual privacy and the security of personal data in general by requiring the consent of internet
users prior to the collection, use or disclosure of their personal data. Under the Cybersecurity Law, the owners and administrators of
networks and network service providers have various personal information security protection obligations, including restrictions on the
collection and use of personal information of users, and they are required to take steps to prevent personal data from being divulged,
stolen, or tampered with. Regulatory requirements regarding the protection of personal information are constantly evolving and can be
subject to differing interpretations or significant changes, making the extent of our responsibilities in that regard uncertain. An example
of such evolving regulatory requirements is the Measures for Cybersecurity Review (2021 version), which was promulgated on December 28,
2021 and took effect on February 15, 2022. The measures, among others, stipulate that any “online platform operators” controlling
personal information of more than one million users which seek to list in a foreign stock exchange should also be subject to cybersecurity
review by the CAC. The cybersecurity review, among others, evaluates the potential risks of critical information infrastructure, core
data, important data, or a large amount of personal information being influenced, controlled or maliciously used by foreign governments
after the overseas listing of an operator. The procurement of network products and services, data processing activities and overseas listing
should also be subject to the cybersecurity review if the CAC concerns or they potentially pose risks to national security. Our PRC counsel,
DeHeng Law Offices, is of the view that EZGO is not subject to the cybersecurity review by the CAC, since (i) the cybersecurity review
is not applicable to further equity or debt offerings by companies that have completed their initial public offerings in the United States;
(ii) data processed in EZGO’s business operations through the WFOE, the VIE and its subsidiaries in China do not have a bearing
on national security and may not be classified as core or important data by the PRC governmental authorities. However, we cannot assure
you that the PRC governmental authorities will not hold opposing views or interpretations regarding the applicability of the cybersecurity
review to us. As of the date of this prospectus, we have not been identified as an “operator of critical information infrastructure”
by any PRC governmental authority, nor have we been informed by any PRC governmental authority to undergo a cybersecurity review.
In addition, the Data
Security Law of the People’s Republic of China (the “Data Security Law”) was promulgated by the SCNPC on June 10, 2021
and took effect on September 1, 2021. Further, on July 7, 2022, the CAC released the Measures for the Security Assessment of Cross-Border
Data, which became effective on September 1, 2022. According to the Measures for the Security Assessment of Cross-Border Data, where
a data processor provides data abroad under any of the following circumstances, it shall apply for exit security assessment of data to
the national cyberspace administration through the local provincial cyberspace administration: (i) the data processor provides important
data abroad; (ii) the operators of key information infrastructure and data processors that process the personal information of more than
1 million people provide personal information abroad; (iii) data processors who have provided 100,000 personal information or 10,000 sensitive
personal information abroad since January 1 of last year provide personal information abroad; and (iv) other situations required for security
assessment as stipulated by the state cyberspace administration. Given the recency of the issuance of the Measures for the Security Assessment
of Cross-Border Data and their pending effectiveness, there is a general lack of guidance and substantial uncertainties exist with respect
to their interpretation and implementation. On November 14, 2021, the CAC released the Regulations on Cyber Data Security Management (Draft
for Comments), or the draft regulations, which shall apply to the processing of personal and organizational data out of the territory
of China, under the following circumstances: (i) for the purpose of providing products or services in the PRC; (ii) conducting analysis
and evaluation of domestic individuals and organizations; (iii) processing of important domestic data; or (iv) other circumstances provided
by laws and administrative regulations. The draft regulations classify data into three categories–general data, important data and
core data. Data processors that transfer data collected and generated in the PRC outside of the territory of China are required to prepare
a data security assessment report to the local cyberspace administration if (i) the data to be transmitted outside of the territory of
China include important data, (ii) critical information technology infrastructure operators and data processors holding over one million
users that transfer data outside the territory of China, or (iii) other circumstances that the CAC deems necessary. Meanwhile, a data
processor that transfers personal information and important data out of the territory of China shall report to the local cyberspace administration
of the following in the past calendar year: (i) the identities and contact information of all data receivers, (ii) the types, quantities
and purposes of the transmitted data, (iii) the locations and periods of storage as well as the scope and method of use of the transmitted
data, (iv) user complaints and the corresponding treatments related to the transmitted data, (v) violation of data security and the corresponding
treatments related to the transmitted data, (vi) the re-transmission of the transmitted data, and (vii) other circumstances that the CAC
deems necessary. A maximum of RMB10 million can be imposed on a data processor that is in violation of the draft regulations. It is uncertain
whether and when the abovementioned draft measures and regulations will be adopted, and if adopted, whether the final version will contain
the same provisions as the draft regulations.
The Data Security Law
and the Cybersecurity Law, together with other relevant regulations, are promulgated to jointly regulate China’s online spheres
in relation to personal information cybersecurity protection. There remain uncertainties regarding the further interpretation and implementation
of those laws and regulations. Despite our efforts to comply with applicable laws, regulations and other obligations relating to privacy,
data protection and information security, we cannot assure you that we will be compliant with such new laws, regulations and obligations
in all respects, and we may be ordered to rectify and terminate any actions that are deemed non-compliant by the regulatory authorities
and become subject to fines and other sanctions. As of the date of this prospectus, we have not been involved in any investigations on
cybersecurity review made by the CAC on such basis, and we have not received any inquiry, notice, warning, or sanctions in such respect.
We believe that that we are compliant with the regulations and policies that have been issued by the CAC to date.
In order for us to maintain
or achieve compliance with applicable laws as they come into effect, it may require substantial expenditures of resources to continually
evaluate our policies and processes and adapt to new requirements that are or become applicable to us. Complying with any additional or
new regulatory requirements may impose significant burdens and costs on EZGO’s operations through the WFOE, the VIE and its subsidiaries
in China or require it to alter its business practices. While we strive to protect our users’ privacy and data security and to comply
with data protection laws and regulations applicable to us, however, we cannot assure that our existing user information protection system
and technical measures will be considered sufficient under all applicable laws and regulations in all respects. Any failure or perceived
failure by us to comply with applicable data privacy laws and regulations, including in relation to the collection of necessary end-user
consents and providing end-users with sufficient information with respect to our use of their personal data, may result in fines and penalties
imposed by regulators, governmental enforcement actions (including enforcement orders requiring us to cease collecting or processing data
in a certain way), litigation and/or adverse publicity. Proceedings against us—regulatory, civil or otherwise—could force
us to spend money and devote resources to the defense or settlement of, and remediation related to, such proceedings. EZGO’s business
operations through the WFOE, the VIE and its subsidiaries in China could be adversely affected if the existing or future laws and regulations
are interpreted or implemented in a manner that is inconsistent with our current business practices or requires changes to these practices.
The enforcement
of the PRC Labor Contract Law and other labor-related regulations in the PRC may adversely affect EZGO’s business through the WFOE,
the VIE and its subsidiaries in China and its results of operations.
The PRC Labor Law and
the Labor Contract Law require that employers must execute written employment contracts with full-time employees. All employers must compensate
their employees with wages equal to at least the local minimum wage standards. Violations of the PRC Labor Law and the Labor Contract
Law may result in the imposition of fines, compensations and other administrative sanctions, and serious violations may constitute criminal
offenses.
The PRC Labor Contract
Law became effective and was implemented on January 1, 2008, which was amended on December 28, 2012. It has reinforced the protection
of employees who, under the PRC Labor Contract Law, have the right, among others, to enter into written labor contracts, to enter into
labor contracts with no fixed terms under certain circumstances, to receive overtime wages and to terminate or alter terms in labor contracts.
According to the PRC Social Insurance Law, which became effective on July 1, 2011, and the Administrative Regulations on the Housing Funds,
companies operating in China are required to participate in pension insurance, work-related injury insurance, medical insurance, unemployment
insurance, maternity insurance and housing funds plans, and the employers must pay all or a portion of the social insurance premiums and
housing funds for their employees.
As the interpretation
and implementation of these laws and regulations are still evolving, our employment practice may not at all times be deemed in compliance
with the new laws and regulations. If we are subject to severe penalties or incur significant liabilities in connection with labor disputes
or investigations, EZGO’s business through the WFOE, the VIE and its subsidiaries in China and results of operations may be adversely
affected.
Failure to make
adequate contributions to various employee benefit plans and withhold individual income tax on employees’ salaries as required by
PRC regulations may subject us to penalties.
Companies operating in
China are required to participate in various government-mandated employee benefit contribution plans, including certain social insurance,
housing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of salaries,
including bonuses and allowances, of EZGO’s employees up to a maximum amount specified by the local government from time to time
at locations where EZGO, through the WFOE, the VIE and its subsidiaries in China, operates its businesses. The requirement of employee
benefit contribution plans has not been implemented consistently by the local governments in China given the different levels of economic
development in different locations. Companies operating in China are also required to withhold individual income tax on employees’
salaries based on the actual salary of each employee upon payment. We may be subject to late fees and fines in relation to the underpaid
employee benefits and under-withheld individual income tax, EZGO’s financial condition and results of operations may be adversely
affected.
Changes in China’s
economic, political, or social conditions or government policies could have a material adverse effect on EZGO’s business and operations
through the WFOE, the VIE and its subsidiaries in China.
Currently substantially
all of EZGO’s business operations are conducted in China through the WFOE, the VIE and the VIE’s subsidiaries, and substantially
all of EZGO’s sales are made in China. Accordingly, EZGO’s business through the WFOE, the VIE and its subsidiaries in China,
financial condition, results of operations and prospects may be influenced to a significant degree by political, economic, and social
conditions in China generally and by continued economic growth in China as a whole.
China’s economy
differs from the economies of most developed countries in many respects, including the level of government involvement, level of development,
growth rate, control of foreign exchange and allocation of resources. Although the PRC government has implemented measures since the late
1970’s emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets,
and the establishment of improved corporate governance in business enterprises, which are generally viewed as a positive development for
foreign business investment, a substantial portion of productive assets in China is still owned by the PRC government. In addition, the
PRC government continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government
also exercises significant control over the PRC economic growth through allocating resources, controlling payments of foreign currency-denominated
obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.
While China’s economy
has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the
economy, and the rate of growth has been slowing down. Some of the governmental measures may benefit the overall Chinese economy, but
may have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government
control over capital investments or changes in tax regulations. Any stimulus measures designed to boost the Chinese economy may contribute
to higher inflation, which could adversely affect our results of operations and financial condition. For example, certain operating costs
and expenses, such as employee compensation and office operating expenses, may increase as a result of higher inflation. In addition,
the PRC government has implemented in the past certain measures to control the pace of economic growth. These measures may cause decreased
economic activity, which in turn could lead to a reduction in demand for EZGO’s products and services provided through the WFOE,
the VIE and its subsidiaries in China, and consequently have a material adverse effect on its businesses, financial condition, and results
of operations. The purchase price of steel, one of main raw materials for EZGO e-bicycles production, kept stable from October 2021 to
September 2022. Although the purchase price of cathode material, one of main raw materials for EZGO lithium battery production, continues
rising in 2022, EZGO was able to pass those costs to end consumers by raising the selling price of products. As a result, recent inflationary
pressures have not materially impacted EZGO’s operations through the WFOE, the VIE and its subsidiaries in China.
Restrictions on
currency exchange or outbound capital flows may limit our ability to utilize our PRC revenue effectively.
All of our revenue is
denominated in Renminbi. The Renminbi is currently convertible under the “current account,” which includes dividends, trade,
and service-related foreign exchange transactions, but requires approval from or registration with appropriate government authorities
or designated banks under the “capital account,” which includes foreign direct investment and loans, such as loans we may
secure from our onshore subsidiaries. Currently, our PRC subsidiaries, foreign invested enterprises, may purchase foreign currency for
settlement of “current account transactions,” including payment of dividends to us, without the approval of SAFE by complying
with certain procedural requirements. However, the relevant PRC governmental authorities may limit or eliminate our ability to purchase
foreign currencies in the future for current account transactions.
Since 2016, PRC governmental
authorities have imposed more stringent restrictions on outbound capital flows, including heightened scrutiny over “irrational”
overseas investments for certain industries, as well as over four kinds of “abnormal” offshore investments, which are:
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investments through enterprises established for only a few months without substantive operation; |
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investments with amounts far exceeding the registered capital of onshore parent and not supported by its business performance shown on financial statements; |
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investments in targets that are not related to onshore parent’s main business; and |
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investments with abnormal sources of Renminbi funding suspected to be involved in illegal transfer of assets or illegal operation of underground banking. |
On January 26, 2017,
SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance
Verification, which tightened the authenticity and compliance verification of cross-border transactions and cross-border capital flow.
In addition, the Outbound Investment Sensitive Industry Catalogue (2018) lists certain sensitive industries that are subject to NDRC pre-approval
requirements prior to remitting investment funds offshore, which subjects us to increased approval requirements and restrictions with
respect to our overseas investment activity. Since a significant amount of our PRC revenue is denominated in Renminbi, any existing and
future restrictions on currency exchange or outbound capital flows may limit our ability to utilize revenue generated in Renminbi to fund
EZGO’s business activities outside of the PRC, make investments, service any debt we may incur outside of China or pay dividends
in foreign currencies to our shareholders, including holders of EZGO’s Ordinary Shares.
PRC regulations
relating to foreign exchange registration of overseas investment by PRC residents may subject our PRC resident beneficial owners or our
PRC subsidiaries to liability or penalties, limit our ability to inject capital into these subsidiaries, limit PRC subsidiaries’
ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.
On July 4, 2014, SAFE
promulgated the Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through
Special Purpose Vehicles, or SAFE Circular 37, which replaced the former Notice on Relevant Issues Concerning Foreign Exchange Administration
for PRC Residents to Engage in Financing and Inbound Investment via Overseas Special Purpose Vehicles (generally known as SAFE Circular
75) promulgated by SAFE on October 21, 2005. On February 13, 2015, SAFE further promulgated the Circular on Further Simplifying and Improving
the Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Circular 13, which took effect on June 1, 2015. This
SAFE Circular 13 has amended SAFE Circular 37 by requiring PRC residents or entities to register with qualified banks rather than SAFE
or its local branch in connection with their direct establishment or indirect control of an offshore entity established for the purpose
of overseas investment or financing with such PRC residents’ legally owned assets or equity interests in domestic enterprises or
offshore assets or interests. Qualified local banks will directly examine and accept foreign exchange registration for overseas direct
investment, including the initial foreign exchange registration and amendment registration, under SAFE Circular 37 from June 1, 2015.
These circulars further
require amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as an
increase or decrease of capital contributed by PRC residents, share transfer or exchange, merger, division, or other material events.
In the event that a PRC resident holding interests in a special purpose vehicle fails to complete the required SAFE registration, the
PRC subsidiary of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying
out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute
additional capital into its PRC subsidiary. Furthermore, it is unclear how this regulation, and any future regulation concerning offshore
or cross-border transactions, will be interpreted, amended, and implemented by the relevant PRC government authorities, and we cannot
predict how these regulations will affect EZGO’s business operations through the WFOE, the VIE and its subsidiaries in China or
future strategy. Failure to comply with the various SAFE registration requirements described above could result in liability under PRC
law for evasion of foreign exchange controls. This may have a material adverse effect on EZGO’s business, financial condition, and
results of operations.
According to SAFE Circular
37 and SAFE Circular 13, our shareholders or beneficial owners who are PRC residents are subject to SAFE Circular 37 or other foreign
exchange administrative regulations in respect of their investment in our company. To the best of our knowledge, our PRC resident shareholders
who directly or indirectly hold shares in our BVI holding company and who are known to us have completed the application for foreign exchange
registrations for their foreign investment in our company in accordance with SAFE Circular 37 and SAFE Circular 13. We have taken steps
to notify significant beneficial owners of Ordinary Shares whom we know are PRC residents of their filing obligations. However, we may
not at all times be fully aware or informed of the identities of all our shareholders or beneficial owners that are required to make such
registrations, and we may not always be able to compel them to comply with all relevant foreign exchange regulations. As a result, we
cannot assure you that all of our shareholders or beneficial owners who are PRC residents will at all times comply with, or in the future
make or obtain any applicable registrations or approvals required by all relevant foreign exchange regulations. The failure or inability
of such individuals to comply with the registration procedures set forth in these regulations may subject us to fines or legal sanctions,
restrictions on our cross-border investment activities or our PRC subsidiaries’ ability to distribute dividends to, or obtain foreign-exchange-dominated
loans from, our company, or prevent us from making distributions or paying dividends. As a result, EZGO’s business operations through
the WFOE, the VIE and its subsidiaries in China and its ability to make distributions to the investors could be materially and adversely
affected.
Furthermore, as these
foreign exchange regulations are still relatively new and their interpretation and implementation have been constantly evolving, it is
unclear how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended
and implemented by the relevant government authorities. We cannot predict how these regulations will affect EZGO’s business operations
through the WFOE, the VIE and its subsidiaries in China or future strategy. In addition, if we decide to acquire a PRC domestic company,
we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete
the necessary filings and registrations required by the foreign exchange regulations. This may restrict our ability to implement our acquisition
strategy and could adversely affect EZGO’s business through the WFOE, the VIE and its subsidiaries in China and prospects.
PRC regulation
on loans to, and direct investment in, PRC entities by offshore holding companies and governmental control in currency conversion may
delay or prevent us from using the proceeds of our initial public offering or follow-on offering to make loans to or make additional capital
contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand EZGO’s
business.
EZGO is a company incorporated
in the BVI structured as a holding company conducting its operations in China through its PRC subsidiaries. As permitted under PRC laws
and regulations, in utilizing the proceeds of its initial public offering or follow-on offering, EZGO may make loans to its PRC subsidiaries
subject to the approval from governmental authorities and limitation of amount, or EZGO may make additional capital contributions to its
PRC subsidiaries. Furthermore, loans by EZGO to its PRC subsidiaries to finance their activities cannot exceed the difference between
their respective total project investment amount and registered capital or 2.5 times of their net worth and capital contributions to its
PRC subsidiaries are subject to the requirement of making necessary filings in the Foreign Investment Comprehensive Management Information
System and registration with other governmental authorities in China.
The SAFE promulgated
the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of
Foreign-invested Enterprises, or SAFE Circular 19, effective on June 1, 2015, in replacement of the Circular on the Relevant Operating
Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested
Enterprises, the Notice from the State Administration of Foreign Exchange on Relevant Issues Concerning Strengthening the Administration
of Foreign Exchange Businesses, and the Circular on Further Clarification and Regulation of the Issues Concerning the Administration of
Certain Capital Account Foreign Exchange Businesses. According to SAFE Circular 19, the flow and use of the RMB capital converted from
foreign currency-denominated registered capital of a foreign-invested company is regulated such that RMB capital may not be used for the
issuance of RMB entrusted loans, the repayment of inter-enterprise loans or the repayment of bank loans that have been transferred to
a third party. Although SAFE Circular 19 allows RMB capital converted from foreign currency-denominated registered capital of a foreign-invested
enterprise to be used for equity investments within the PRC, it also reiterates the principle that RMB converted from the foreign currency-denominated
capital of a foreign-invested company may not be directly or indirectly used for purposes beyond its business scope. Thus, it is unclear
whether the SAFE will permit such capital to be used for equity investments in the PRC in actual practice. The SAFE promulgated the Notice
of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital
Account, or SAFE Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth in SAFE Circular 19, but changes
the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company
to issue RMB entrusted loans to a prohibition against using such capital to grant loans to non-associated enterprises. Violations of SAFE
Circular 19 and SAFE Circular 16 could result in administrative penalties. SAFE Circular 19 and SAFE Circular 16 may significantly limit
our ability to transfer any foreign currency we hold, including the net proceeds from our initial public offering or follow-on offering,
to our PRC subsidiaries, which may adversely affect our liquidity and our ability to fund and expand EZGO’s business in the PRC
through the WFOE, the VIE and its subsidiaries.
In light of the various
requirements imposed by PRC regulation on loans to, and direct investment in, PRC entities by offshore holding companies, we cannot assure
you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis,
if at all, with respect to future loans by us to our PRC subsidiaries or with respect to future capital contributions by us to our PRC
subsidiaries. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds from our initial public
offering or follow-on offering and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially
and adversely affect our liquidity and our ability to fund and expand EZGO’s business.
The PRC government
could prevent the cash maintained from leaving the PRC, restrict deployment of the cash into the business of the WFOE, the VIE and its
subsidiaries and restrict the ability to pay dividends to U.S. investors, which could materially adversely affect EZGO’s operations
through the WFOE, the VIE and its subsidiaries in China.
The PRC government controls
the conversion of Renminbi into foreign currencies and the remittance of currencies out of the PRC. We receive substantially all of our
revenues in Renminbi, and most of our cash is in Renminbi. Under our corporate structure, EZGO, a BVI holding company, primarily relies
on dividend payments from our PRC subsidiaries to fund any cash and financing requirements it may have. Under the existing PRC foreign
exchange regulations, payments of current account items, including profit distributions, interest payments and trade- and-service-related
foreign exchange transactions, can be made in foreign currencies without prior approval from the SAFE by complying with certain procedural
requirements. As such, under the existing exchange restrictions, cash generated from the operations of our PRC subsidiaries can be paid
as dividends in foreign currencies to EZGO without prior approval from the SAFE by complying with certain procedural requirements. However,
approval from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currency
and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government
may also at its discretion in the future restrict access to foreign currencies for current account transactions. There is no assurance
that the PRC government will not intervene or impose restrictions on the ability of us, our subsidiaries or the VIE to transfer cash.
If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands,
we may not be able to pay dividends in foreign currencies from the PRC subsidiary to the offshore subsidiaries, across borders, and to
our shareholders, including the U.S. investors. These foreign exchange restrictions and limitations could prevent the cash maintained
from leaving the PRC, and restrict our ability to pay dividends to EZGO and the U.S. investors.
There are limitations
on the ability of our PRC subsidiaries to distribute earnings to their respective shareholders. On the one hand, under the current PRC
laws and regulations, our PRC subsidiaries may pay dividends only out of their accumulated profits. In addition, our PRC subsidiaries
are required to set aside at least 10% of their accumulated after-tax profits each year, if any, to fund certain statutory reserve funds,
until the aggregate amount of such fund reaches 50% of their registered capital. Our PRC subsidiaries may at their discretion allocate
a portion of their after-tax profits to staff welfare and bonus funds in accordance with relevant PRC rules and regulations. These reserve
funds and staff welfare and bonus funds cannot be distributed as cash dividends. Moreover, if the PRC subsidiaries incur debt on their
own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to
us. On the other hand, through the VIE Agreements among Changzhou EZGO, the VIE and its shareholders, we receive substantially all of
the economic benefits of the VIE, most importantly, the ability to consolidate the financial statements of the VIE with the financial
statements of our holding company, EZGO under U.S. GAAP, for which we are the primary beneficiary of the VIE for accounting purposes,
in consideration for the services provided by Changzhou EZGO. For more information, see “Item 3. Key Information—Contractual
Arrangements and Corporate Structure” in the 2022 Annual Report. The VIE agreements are not equivalent to equity ownership,
and may limit our ability to settle amounts owed by the VIE under the VIE agreements. For example, the contractually bound shareholders
of the VIE could potentially breach their contractual agreements with us by failing to fulfill their contractual obligations, failing
to act in our interest, or acting to the detriment of our interest. Moreover, as these shareholders, rather than Changzhou EZGO, are the
actual shareholders of the VIE, we are unable to independently exercise any rights as a shareholder of the VIE and force the VIE to distribute
its earnings to us. In addition, the legality or enforceability of the VIE agreements have never been tested in a court of law in China.
If any relevant contractual provisions were to ultimately be held unenforceable by the PRC courts or other governmental authorities, such
uncertainty could result in us facing a reduced ability or complete inability to receive the economic benefits of the business operations
of the VIE. These restrictions and limitations could limit our ability to settle amounts owed under the VIE agreements and our subsidiaries’
ability to pay dividends.
In addition, any transfer
of funds by EZGO to our PRC subsidiaries, either as a shareholder loan or as an increase in the registered capital, is subject to a series
of procedural requirements imposed by SAFE, SAMR, MOFCOM, or their local counterparts. This may hinder or delay EZGO’s deployment
of cash into its subsidiaries’ and the VIE’ business, which could result in a material and adverse effect on EZGO’s
operations through the WFOE, the VIE and its subsidiaries in China.
Under the PRC EIT
Law, we may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes. Such classification would
likely result in unfavorable tax consequences to us and our non-PRC shareholders and has a material adverse effect on our results of operations
and the value of your investment.
Under the PRC EIT Law,
that became effective in January 2008 and was amended in February 2017 and December 2018, as well as its implementing rules, an enterprise
established outside the PRC with “de facto management bodies” within the PRC is considered a “resident enterprise”
for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. Under
the implementation rules to the EIT Law, a “de facto management body” is defined as a body that has material and overall management
and control over the manufacturing and business operations, personnel and human resources, finances and properties of an enterprise. In
addition, a circular, known as SAT Circular 82, issued in April 2009 by the State Administration of Taxation, or the SAT, specifies that
certain offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will be classified as PRC resident enterprises
if the following are located or resident in the PRC: senior management personnel and departments that are responsible for daily production,
operation and management; financial and personnel decision making bodies; key properties, accounting books, company seal, and minutes
of board meetings and shareholders’ meetings; and half or more of the senior management or directors having voting rights. Further
to SAT Circular 82, the SAT issued a bulletin, known as SAT Bulletin 45, which took effect in September 2011, to provide more guidance
on the implementation of SAT Circular 82 and clarify the reporting and filing obligations of such “Chinese-controlled offshore incorporated
resident enterprises.” SAT Bulletin 45 provides procedures and administrative details for the determination of resident status and
administration on post-determination matters. Although both SAT Circular 82 and SAT Bulletin 45 only apply to offshore enterprises controlled
by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign individuals, the determining criteria
set forth in SAT Circular 82 and SAT Bulletin 45 may reflect the SAT’s general position on how the “de facto management body”
test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC
enterprises, PRC enterprise groups or by PRC or foreign individuals.
We do not believe that
EZGO, as a company incorporated in the BVI, meets all of the conditions above thus we do not believe that EZGO is a PRC resident enterprise,
though all members of our management team as well as the management team of our offshore holding company are located in China. However,
if the PRC tax authorities determine that we are a PRC resident enterprise for PRC enterprise income tax purposes, a number of unfavorable
PRC tax consequences could follow. First, we will be subject to the uniform 25% enterprise income tax on our world-wide income, which
could materially reduce our net income. In addition, we will also be subject to PRC enterprise income tax reporting obligations. However,
the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect
to the interpretation of the term “de facto management body.”
Finally, dividends payable
by us to our investors and gains on the sale of our shares may become subject to PRC withholding tax, at a rate of 10% in the case of
non-PRC enterprises or 20% in the case of non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty),
if such gains are deemed to be from PRC sources. It is unclear whether non-PRC shareholders of our company would be able to claim the
benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise.
Any such tax may reduce the returns on your investment in the Ordinary Shares.
There are significant
uncertainties under the PRC EIT Law relating to the withholding tax liabilities of our PRC subsidiaries, and dividends payable by our
PRC subsidiaries to our offshore subsidiaries may not qualify to enjoy certain treaty benefits.
Under the PRC EIT Law
and its implementation rules, we, as a non-resident enterprise, that is, an enterprise lawfully incorporated pursuant to the laws of a
foreign country (region) that has an office or premises established in China with no actual management functions performed in China, or
an enterprise that has income derived from or accruing in China although it does not have an office or premises in China, will be subject
to a withholding tax rate of 10%. Pursuant to a special arrangement between Hong Kong and mainland China, such rate may be reduced to
5% if a Hong Kong resident enterprise owns more than 25% of the equity interest in the PRC company. Changzhou EZGO is wholly owned by
EZGO HK, EZGO’s wholly-owned subsidiary. Accordingly, EZGO HK may qualify for a 5% tax rate in respect of distributions from Changzhou
EZGO. Under the Notice of the State Administration of Taxation on Issues regarding the Administration of the Dividend Provision in Tax
Treaties promulgated on February 20, 2009, the taxpayer needs to satisfy certain conditions to enjoy the benefits under a tax treaty.
These conditions include: (1) the taxpayer must be the beneficial owner of the relevant dividends, and (2) the corporate shareholder to
receive dividends from the PRC subsidiaries must have continuously met the direct ownership thresholds during the 12 consecutive months
preceding the receipt of the dividends. Further, under Announcement of the State Administration of Taxation on Issues Relating to “Beneficial
Owner” in Tax Treaties, which took effect on April 1, 2018, a “Beneficial Owner” shall mean a person who has ownership
and control over the income and the rights and property from which the income is derived. To determine the “beneficial owner”
status of a resident of the treaty counterparty who needs to enjoy the tax treaty benefits, a comprehensive analysis shall be carried
out, taking into account actual conditions of the specific case.
Entitlement to a lower
tax rate on dividends according to tax treaties or arrangements between the PRC central government and governments of other countries
or regions is subject to State Administration of Taxation Circular 60 (“Circular 60”). Circular 60 provides that non-resident
enterprises are not required to obtain pre-approval from the relevant tax authority in order to enjoy the reduced withholding tax. Instead,
non-resident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to enjoy
the tax treaty benefits are met, directly apply the reduced withholding tax rate, and file necessary forms and supporting documents when
performing tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities. As a result, we cannot
assure you that we will be entitled to any preferential withholding tax rate under tax treaties for dividends received from WFOE.
Enhanced scrutiny
over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future.
Pursuant to the Notice
on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or SAT Circular 698, issued
by the SAT on December 10, 2009, where a foreign investor transfers the equity interests of a resident enterprise indirectly via disposition
of the equity interests of an overseas holding company, or an “indirect transfer,” and such overseas holding company is located
in a tax jurisdiction that (i) has an effective tax rate less than 12.5% or (ii) does not tax foreign income of its residents, the foreign
investor shall report the indirect transfer to the competent tax authority. The PRC tax authority will examine the true nature of the
indirect transfer, and if the tax authority considers that the foreign investor has adopted an “abusive arrangement” in order
to avoid PRC tax, it may disregard the existence of the overseas holding company and re-characterize the indirect transfer and as a result,
gains derived from such indirect transfer may be subject to PRC withholding tax at a rate of up to 10%.
On February 3, 2015,
the SAT issued the Announcement of the State Administration of Taxation on Several Issues Concerning the Enterprise Income Tax on Indirect
Property Transfer by Non-Resident Enterprises, or SAT Bulletin 7, to supersede existing provisions in relation to the “indirect
transfer” as set forth in SAT Circular 698, while the other provisions of SAT Circular 698 remain in force. Pursuant to SAT Bulletin
7, where a non-resident enterprise indirectly transfers properties such as equity in PRC resident enterprises without any justifiable
business purposes and aiming to avoid the payment of enterprise income tax, such indirect transfer must be reclassified as a direct transfer
of equity in PRC resident enterprise. To assess whether an indirect transfer of PRC taxable properties has reasonable commercial purposes,
all arrangements related to the indirect transfer must be considered comprehensively and factors set forth in SAT Bulletin 7 must be comprehensively
analyzed in light of the actual circumstances. SAT Bulletin 7 also provides that, where a non-PRC resident enterprise transfers its equity
interests in a resident enterprise to its related parties at a price lower than the fair market value, the competent tax authority has
the power to make a reasonable adjustment to the taxable income of the transaction.
On October 17, 2017,
the SAT issued the Announcement of the State Administration of Taxation on Matters Concerning Withholding of Income Tax of Non-resident
Enterprises as Source, or SAT Bulletin 37, which repealed the entire SAT Circular 698 and the provision in relation to the time limit
for the withholding agent to declare to the competent tax authority for payment of such tax of SAT Bulletin 7. Pursuant to SAT Bulletin
37, the income from a property transfer, as stipulated in the second item under Article 19 of the Law on Enterprise Income Tax, shall
include the income derived from transferring such equity investment assets as stock equity. The balance of deducting the equity’s
net value from the total income from equity transfer shall be taxable income from equity transfer. Where a withholding agent enters into
a business contract, involving the income specified in the third paragraph of Article 3 in the Law on Enterprise Income Tax, with
a non-resident enterprise, the tax-excluding income of the non-resident enterprise will be treated as the tax-including income, based
on which the tax payment will be calculated and remitted, if it is agreed in the contract that the withholding agent shall assume the
tax payable.
There has been very limited
application of SAT Bulletin 7 and SAT Bulletin 37 because these regulations were newly issued and came into force in February 2015
and in December 2017 respectively. During the effective period of SAT Circular 698, some intermediary holding companies were actually
looked through by the PRC tax authorities, and consequently the non-PRC resident investors were deemed to have transferred the PRC subsidiary
and PRC corporate taxes were assessed accordingly. It is possible that we or our non-PRC resident investors may become at risk of being
taxed under SAT Bulletin 7 and SAT Bulletin 37 and may be required to expend valuable resources to comply with SAT Bulletin 7
and SAT Bulletin 37 or to establish that we or our non-PRC resident investors should not be taxed under SAT Bulletin 7 and SAT Bulletin
37, which may have an adverse effect on our financial condition and results of operations or such non-PRC resident investors’ investment
in EZGO.
Our PRC subsidiaries
are subject to restrictions on paying dividends or making other payments to us, which may restrict our ability to satisfy our liquidity
requirements, and any limitation on the ability of our PRC subsidiaries to make remittance to pay dividends to us could limit our ability
to access cash generated by the operations of those entities.
EZGO is a company incorporated
in the BVI structured as a holding company. EZGO may need dividends and other distributions on equity from our PRC subsidiaries to satisfy
EZGO’s liquidity requirements. Current PRC regulations permit our PRC subsidiaries to pay dividends to EZGO only out of their accumulated
profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, EZGO’s PRC subsidiaries are
required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until the
total amount set aside reaches 50% of their respective registered capital. EZGO’s PRC subsidiaries may also allocate a portion of
its after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion. These reserves are not
distributable as cash dividends. Furthermore, if our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing
the debt may restrict their ability to pay dividends or make other payments to us. Any limitation on the ability of EZGO’s subsidiaries
to distribute dividends or to make payments to it may restrict EZGO’s ability to satisfy its liquidity requirements.
In addition, the EIT
Law, and its implementation rules provide that a withholding tax rate of up to 10% will be applicable to dividends payable by Chinese
companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the PRC central
government and governments of other countries or regions where the non-PRC-resident enterprises are incorporated.
Fluctuations in
exchange rates could result in foreign currency exchange losses to us.
The value of the Renminbi
against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions
and the foreign exchange policy adopted by the PRC government. In August 2015, the People’s Bank of China, or PBOC, changed
the way it calculates the mid-point price of Renminbi against the U.S. dollar, requiring the market-makers who submit for reference rates
to consider the previous day’s closing spot rate, foreign-exchange demand and supply as well as changes in major currency rates.
In 2017, the value of the Renminbi appreciated by approximately 6.3% against the U.S. dollar; and in 2018, the Renminbi depreciated by
approximately 5.7% against the U.S. dollar. From the end of 2018 through the end of September 2021, the value of the Renminbi appreciated
by approximately 5.2% against the U.S. dollar. It is difficult to predict how market forces or PRC or U.S. government policy, including
any interest rate increases by the Federal Reserve, may impact the exchange rate between the Renminbi and the U.S. dollar in the future.
There remains significant international pressure on the PRC government to adopt a more flexible currency policy, including from the U.S.
government, which has threatened to label China as a “currency manipulator,” which could result in greater fluctuation of
the Renminbi against the U.S. dollar. However, the PRC government may still at its discretion restrict access to foreign currencies for
current account transactions in the future. Therefore, it is difficult to predict how market forces or government policies may impact
the exchange rate between the RMB and the U.S. dollar or other currencies in the future. In addition, the PBOC regularly intervenes in
the foreign exchange market to limit fluctuations in RMB exchange rates and achieve policy goals. If the exchange rate between RMB and
U.S. dollar fluctuates in unanticipated manners, our results of operations and financial condition, and the value of, and dividends payable
on, EZGO’s shares in foreign currency terms may be adversely affected. EZGO may not be able to pay dividends in foreign currencies
to its shareholders. Appreciation of RMB to the U.S. dollar will result in exchange loss, while depreciation of RMB to the U.S. dollar
will result in exchange gain.
It may be difficult
for overseas shareholders and/or regulators to conduct investigation or collect evidence within China.
Shareholder claims or
regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law or practicality
in China. For example, in China, there are significant legal and other obstacles to providing information needed for regulatory investigations
or litigation initiated outside China. Although the authorities in China may establish a regulatory cooperation mechanism with the securities
regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with the
securities regulatory authorities in the Unities States may not be efficient in the absence of mutual and practical cooperation mechanism.
Furthermore, according to Article 177 of the PRC Securities Law, or Article 177, which became effective in March 2020, no overseas
securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. While
detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities
regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by
you in protecting your interests.
The M&A Rules and
certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could
make it more difficult for us to pursue growth through acquisitions in China.
The M&A Rules discussed
in the preceding risk factor and related regulations and rules concerning mergers and acquisitions established additional procedures and
requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex. For example, the
M&A Rules require that MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control
of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that have or may have
impact on the national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds
a famous trademark or PRC time-honored brand, (iv) or in circumstances where overseas companies established or controlled by PRC enterprises
or residents acquire affiliated domestic companies. Mergers, acquisitions or contractual arrangements that allow one market player to
take control of or to exert decisive impact on another market player must also be notified in advance to the MOFCOM when the threshold
under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, or the Prior Notification Rules, issued by
the State Council in August 2008 is triggered.
We have relied on the
opinion of our PRC counsel, DeHeng Law Offices, that we do not need to obtain prior approval from the CSRC pursuant to the M&A Rules.
However, uncertainties still exist as to how the M&A Rules will be interpreted and implemented, and we may be subject to any new laws,
rules, and regulations or detailed implementations and interpretations in any form relating to the M&A Rules. If the CSRC or other
PRC regulatory body subsequently determines that we need to obtain the CSRC’s approval for any future offering or if the CSRC or
any other PRC government authorities promulgates any interpretation or implements rules before our listing that would require us to obtain
CSRC or other governmental approvals for any future offering, we may face adverse actions or sanctions by the CSRC or other PRC regulatory
agencies. In any such event, these regulatory agencies may impose fines and penalties on EZGO’s operations through the WFOE, the
VIE and its subsidiaries in China, limit its operating privileges in China, delay or restrict the repatriation of the proceeds from any
future offering into the PRC or take other actions that could have a material adverse effect on its business, financial condition, results
of operations, reputation and prospects, as well as its ability to complete any future offering. The CSRC or other PRC regulatory agencies
may also take actions requiring us, or making it advisable for us, to halt any future offering before settlement and delivery. Consequently,
if you engage in market trading or other activities in anticipation of and prior to settlement and delivery, you do so at the risk that
such settlement and delivery may not occur.
In addition, the security
review rules issued by the MOFCOM that became effective in September 2011 specify that mergers and acquisitions by foreign investors
that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire
de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by the MOFCOM,
and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a
proxy or contractual control arrangement. Furthermore, according to the security review, foreign investments that would result in acquiring
the actual control of assets in certain key sectors, such as critical agricultural products, energy and resources, equipment manufacturing,
infrastructure, transport, cultural products and services, information technology, Internet products and services, financial services,
and technology sectors, are required to obtain approval from designated governmental authorities in advance.
In the future, EZGO may
grow its business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other
relevant rules to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval
from the MOFCOM or its local counterparts may delay or inhibit our ability to complete such transactions. It is unclear whether EZGO’s
business operations through the WFOE, the VIE and its subsidiaries in China would be deemed to be in an industry that raises “national
defense and security” or “national security” concerns. However, the MOFCOM or other government agencies may publish
explanations in the future determining that EZGO’s business through the WFOE, the VIE and its subsidiaries in China is in an industry
subject to the security review, in which case our future acquisitions in the PRC, including those by way of entering into contractual
control arrangements with target entities, may be closely scrutinized or prohibited. EZGO’s ability to expand its business or maintain
or expand its market share through future acquisitions would as such be materially and adversely affected. Furthermore, according to the
M&A Rules, if a PRC entity or individual plans to merge or acquire its related PRC entity through an overseas company legitimately
incorporated or controlled by such entity or individual, such a merger and acquisition will be subject to examination and approval by
the MOFCOM. There is a possibility that the PRC regulators may promulgate new rules or explanations requiring that we obtain the approval
of the MOFCOM or other PRC governmental authorities for our completed or ongoing mergers and acquisitions. There is no assurance that,
if we plan to make an acquisition, we can obtain such approval from the MOFCOM or any other relevant PRC governmental authorities for
our mergers and acquisitions, and if we fail to obtain those approvals, we may be required to suspend our acquisition and be subject to
penalties. Any uncertainties regarding such approval requirements could have a material adverse effect on EZGO’s business, results
of operations and corporate structure.
In addition, on July
6, 2021, the relevant PRC government authorities made public the Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance
with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision
on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant
regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies. As these opinions are recently
issued, official guidance and related implementation rules have not been issued yet and the interpretation of these opinions remains unclear
at this stage. If the CSRC or other regulatory agencies later promulgate new rules or explanations requiring that EZGO obtains their approvals
for any future follow-on offering, EZGO may be unable to obtain such approvals which could significantly limit or completely hinder its
ability to offer or continue to offer its securities to its investors outside China.
U.S. regulatory
bodies may be limited in their ability to conduct investigations or inspections of EZGO’s operations through the WFOE, the VIE and
its subsidiaries in China.
Any disclosure of documents
or information located in China by foreign agencies may be subject to jurisdiction constraints and must comply with China’s state
secrecy laws, which broadly define the scope of “state secrets” to include matters involving economic interests and technologies.
There is no guarantee that requests from U.S. federal or state regulators or agencies to investigate or inspect EZGO’s operations
through the WFOE, the VIE and its subsidiaries in China will be honored by us, by entities who provide services to us or with whom we
associate, without violating PRC legal requirements, especially as those entities are located in China. Furthermore, under the current
PRC laws, an on-site inspection of our facilities by any of these regulators may be limited or prohibited.
You may experience
difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management
based on foreign laws.
EZGO is a company incorporated
under the laws of the BVI, and EZGO conduct substantially all of its operations in China through the WFOE, the VIE and its subsidiaries
and substantially all of its assets are located in China. In addition, a majority of EZGO’s current directors and officers, including
Mr. Jianhui Ye, Mr. Zebin Zhao, Ms. Peiyao Jin, Mr. Guanghui Yang and Mr. Guanneng Lai are nationals and residents of the PRC and a substantial
portion of their assets are located outside the United States. As a result, it may be difficult for you to effect service of process upon
us or those persons inside mainland China. It may also be difficult for you to enforce in U.S. courts judgments obtained in U.S. courts
based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors as none of them
currently resides in the United States or has substantial assets located in the United States. In addition, there is uncertainty
as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the
civil liability provisions of the securities laws of the United States or any state.
The recognition and enforcement
of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance
with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made
or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of written arrangement with the
United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC
Civil Procedures Law, the PRC courts will not enforce a foreign judgment against us or our directors and officers if they decide that
the judgment violates the basic principles of PRC laws or national sovereignty, security, or public interest. As a result, it is uncertain
whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States.
EZGO’s Ordinary
Shares may be delisted under the HFCA Act if the PCAOB is unable to adequately inspect audit documentation located in China. The delisting
of EZGO’s Ordinary Shares, or the threat of their being delisted, may materially and adversely affect EZGO’s Ordinary Shares.
Additionally, the inability of the PCAOB to conduct adequate inspections deprives our shareholders of the benefits of such inspections.
Furthermore, the Accelerating Holding Foreign Companies Accountable Act amends the HFCA Act and requires the SEC to prohibit an issuer’s
securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead
of three.
The HFCA Act was enacted
on December 18, 2020. The HFCA Act states if the SEC determines that a company has filed audit reports issued by a registered public accounting
firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit such Ordinary
Shares from being traded on a national securities exchange or in the over-the-counter trading market in the U.S.
On March 24, 2021, the
SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCA Act. A
company will be required to comply with these rules if the SEC identifies it as having a “non-inspection” year under a process
to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCA Act, including the listing
and trading prohibition requirements described above. Furthermore, on June 22, 2021, the U.S. Senate passed the AHFCA Act, which amends
the HFCA Act and requires the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is
not subject to PCAOB inspections for two consecutive years instead of three, and thus, would reduce the time before EZGO’s securities
may be prohibited from trading or delisted. On December 29, 2022, the AHFCA Act was signed into law. On September 22, 2021, the PCAOB
adopted a final rule implementing the HFCA Act, which provides a framework for the PCAOB to use when determining, as contemplated under
the HFCA Act, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign
jurisdiction because of a position taken by one or more authorities in that jurisdiction.
On December 2, 2021,
the SEC adopted final amendments to its rules implementing the HFCA Act. Such final rules establish procedures that the SEC will follow
in (i) determining whether a registrant is a “Commission-Identified Issuer” (a registrant identified by the SEC as having
filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and
that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction) and (ii)
prohibiting the trading of an issuer that is a Commission-Identified Issuer for three consecutive years under the HFCA Act. The SEC began
identifying Commission-Identified Issuers for the fiscal years beginning after December 18, 2020. A Commission-Identified Issuer is required
to comply with the submission and disclosure requirements in the annual report for each year in which it was identified. Since we were
not identified as a Commission-Identified Issuer for the fiscal year ended September 30, 2022, we were not required to comply with the
submission or disclosure requirements in the 2022 Annual Report. As of the date of this prospectus, we have not been, and do not expect
to be identified by the SEC under the HFCA Act.
On December 16, 2021,
the PCAOB issued its determination report that the PCAOB is unable to inspect or investigate completely PCAOB-registered public accounting
firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions, and the
PCAOB included in the report of its determination a list of the accounting firms that are headquartered in mainland China or Hong Kong.
This report does not include our former auditors, MarcumAsia and Briggs & Veselka, or our current auditor, WWC.
On August 26, 2022, the
PCAOB announced that it had signed the Statement of Protocol with the CSRC and the MOF. The terms of the Statement of Protocol would grant
the PCAOB complete access to audit work papers and other information so that it may inspect and investigate PCAOB-registered accounting
firms headquartered in mainland China and Hong Kong. On December 15, 2022, the PCAOB announced that it has secured complete access to
inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate the previous
2021 determination report to the contrary. However, whether the PCAOB will continue to conduct inspections and investigations completely
to its satisfaction of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainty
and depends on a number of factors out of our, and our auditor’s control including positions taken by authorities of the PRC. The
PCAOB is expected to continue to demand complete access to inspections and investigations against accounting firms headquartered in mainland
China and Hong Kong in the future and states that it has already made plans to resume regular inspections in early 2023 and beyond. The
PCAOB is required under the HFCA Act to make its determination on an annual basis with regards to its ability to inspect and investigate
completely accounting firms based in the mainland China and Hong Kong. The possibility of being a “Commission-Identified Issuer”
and risk of delisting could continue to adversely affect the trading price of our securities. Should the PCAOB again encounter impediments
to inspections and investigations in mainland China or Hong Kong as a result of positions taken by any authority in either jurisdiction,
the PCAOB will make determinations under the HFCA Act as and when appropriate.
Furthermore, various
equity-based research organizations have recently published reports on China-based companies after examining their corporate governance
practices, related party transactions, sales practices and financial statements, and these reports have led to special investigations
and listing suspensions on U.S. national exchanges. Any similar scrutiny on us, regardless of its lack of merit, could cause the market
price of EZGO’s Ordinary Shares to fall, divert management resources and energy, cause us to incur expenses in defending ourselves
against rumors, and increase the premiums we pay for director and officer insurance.
Our former auditor, MarcumAsia,
an independent registered public accounting firm, as an auditor of companies that are traded publicly in the United States and a firm
registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess
its compliance with the applicable professional standards. MarcumAsia is headquartered in Manhattan, New York, and is subject to laws
in the U.S. pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.
Our former auditor, Briggs
& Veselka, the independent registered public accounting firm that issued one of the audit reports included in the 2022 Annual Report,
an auditor of companies that are traded publicly in the United States and an U.S.-based accounting firm registered with the PCAOB, was
subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable
professional standards. Briggs & Veselka was headquartered in Houston, Texas, and was subject to inspection by the PCAOB with the
last inspection in 2019. Briggs & Veselka’s withdrawal of its registration with the PCAOB became effective on May 24, 2022.
Our current auditor as
of the date of this prospectus, WWC, as an auditor of companies that are traded publicly in the United States and a firm registered with
the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with
the applicable professional standards. WWC is headquartered in Flushing, New York, and is subject to inspection by the PCAOB on a regular
basis with the last inspection in February 2022.
Notwithstanding the foregoing,
in the future, if there is any regulatory change or step taken by PRC regulators that does not permit our auditor to provide audit documentations
located in China to the PCAOB for inspection or investigation, investors may be deprived of the benefits of such inspection. Any audit
reports not issued by auditors that are completely inspected by the PCAOB, or a lack of PCAOB inspections of audit work undertaken in
China that prevents the PCAOB from regularly evaluating our auditors’ audits and their quality control procedures, could result
in a lack of assurance that our financial statements and disclosures are adequate and accurate, then such lack of inspection could cause
EZGO’s securities to be delisted from the stock exchange. The recent developments would add uncertainties to our offering pursuant
to a prospectus and we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to
us after considering the effectiveness of such auditor’s audit procedures and quality control procedures, adequacy of personnel
and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements.
The SEC may propose additional
rules or guidance that could impact us if such auditor is not subject to PCAOB inspection. For example, on August 6, 2020, the President’s
Working Group on Financial Markets, or the PWG, issued, to the then President of the United States, the Report on Protecting United States
Investors from Significant Risks from Chinese Companies. This report recommended the SEC implement five recommendations to address companies
from jurisdictions that do not provide the PCAOB with sufficient access to fulfill its statutory mandate. Some of the concepts of these
recommendations were implemented with the enactment of the HFCA Act. However, some of the recommendations were more stringent than the
HFCA Act. For example, if a company’s auditor was not subject to PCAOB inspection, the report recommended that the transition period
before a company would be delisted would end on January 1, 2022.
The SEC has announced
that the SEC staff is preparing a consolidated proposal for the rules regarding the implementation of the HFCA Act and to address the
recommendations in the PWG report. It is unclear when the SEC will complete its rulemaking and when such rules will become effective and
what, if any, of the PWG recommendations will be adopted. The implications of this possible regulation in addition to the requirements
of the HFCA Act are uncertain. While we understand that there has been dialogue among the CSRC, the SEC and the PCAOB regarding the inspection
of PCAOB-registered accounting firms in China, there can be no assurance that we will be able to comply with requirements imposed by U.S.
regulators. Such uncertainty could cause the market price of EZGO’s Ordinary Shares to be materially and adversely affected, and
EZGO’s securities could be delisted and prohibited from being traded on a national securities exchange earlier than would be required
by the HFCA Act. If EZGO’s securities are unable to be listed on another securities exchange by then, such a delisting would substantially
impair the ability to sell or purchase EZGO’s Ordinary Shares when desired, and the risk and uncertainty associated with a potential
delisting would have a negative impact on the price of EZGO’s Ordinary Shares.
Should the PCAOB be unable
to fully conduct inspections in China, which prevents it from fully evaluating the audits and quality control procedures of our independent
registered public accounting firm, we and investors in EZGO’s securities may be deprived of the benefits of such PCAOB inspections.
Any inability of the PCAOB to conduct inspections of auditors in China could make it more difficult to evaluate the effectiveness of our
independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of
China that are subject to the PCAOB inspections, which could cause investors and potential investors in our shares to lose confidence
in our audit procedures and reported financial information and the quality of our financial statements, which could materially and adversely
affect the value of in its securities. Further, new laws and regulations or changes in laws and regulations in both the United States
and China could affect our ability to list EZGO’s Ordinary Shares on Nasdaq, which could materially impair the market for and market
price of its Ordinary Shares.
USE OF PROCEEDS
We will not receive any proceeds from the sale of our Ordinary Shares
offered by this prospectus. The Selling Shareholders will receive all of the proceeds.
We will pay all costs, fees and expenses incurred
in connection with the registration of the Ordinary Shares covered by this prospectus.
DESCRIPTION OF SECURITIES
Information relating
to our Ordinary Shares and certain provisions of EZGO’s amended and restated memorandum
and articles of association is incorporated by reference from our 2022 Annual Report, under the caption “Item 10. Additional
Information – 10.B. Memorandum and Articles of Association.” Such information does not purport to be complete and is qualified
in its entirety by the provisions of EZGO’s amended and restated memorandum and articles of association and applicable provisions
of the laws of the BVI. You should read EZGO’s amended and restated memorandum and articles of association which are filed as Exhibit
3.1 to our Report of Foreign Private Issuer on Form 6-K furnished with the SEC on April 11, 2023 for the provisions that are important
to you.
The
Company is authorized to issue 500,000,000 Ordinary Shares, with a par value of US$0.001 each, and up to 10,000 Preferred Shares of no
par value. As of May 16, 2023, there were (a) 52,055,460 Ordinary Shares outstanding, all of which were fully paid and (b) no Preferred
Shares outstanding. For a description of EZGO’s Ordinary Shares and Preferred Shares, including the rights and obligations thereto,
please refer to our Report of Foreign Private Issuer on Form 6-K furnished with the SEC on April 11, 2023 and Exhibit 2.1 to our 2022
Annual Report, which is incorporated by reference herein.
See “Where You Can Find More Information”
elsewhere in this prospectus for information on where you can obtain copies of our amended and restated memorandum and articles of association,
which have been filed with and are publicly available from the SEC.
SELLING SHAREHOLDERS
We have agreed to register
an aggregate of 7,104,350 Ordinary Shares issued by us to the Selling Shareholders, in connection with the terms and conditions of the
Equity Transfer Agreement. In order to address an issue relating to corporate authorization of the issuance of the 7,104,350 Ordinary
Shares to the Selling Shareholders under BVI law, the holders of such Ordinary Shares surrendered
their shares for no consideration on May 13, 2023 and resubscribed
for 7,104,350 Ordinary Shares on May 15, 2023.
The Ordinary Shares held by the Selling Shareholders were issued to
such Selling Shareholders and six other shareholders of the Company as partial consideration for the transfer by such Selling Shareholders
and such other shareholders of 100% of the equity interests of Changzhou Sixun Technology Co., Ltd. to our indirect wholly owned subsidiary,
Jiangsu EZGO New Energy Technologies Co., Ltd., pursuant to the terms and conditions of the Equity Transfer Agreement. The Ordinary Shares
were issued to the Selling Shareholders pursuant to an exemption from registration under the Securities Act in reliance upon Regulation
S promulgated thereunder.
The Ordinary Shares beneficially
owned by the Selling Shareholders are being registered to permit public secondary trading of these securities, and the Selling Shareholders
may offer these shares for resale from time to time as described in the “Plan of Distribution.”
The following table sets forth
the names of the Selling Shareholders, the number of Ordinary Shares owned beneficially by the Selling Shareholders as of May 16, 2023,
and the number of shares that may be offered for resale by the Selling Shareholders from time to time. These shares may also be sold by
donees, pledgees, and other transferees or successors in the interest of the Selling Shareholders.
The Selling Shareholders may
decide to sell all, some, or none of the Ordinary Shares listed below. We currently have no agreements, arrangements or understandings
with the Selling Shareholders regarding the sale of any of the securities covered by this prospectus. We cannot provide you with any estimate
of the number of Ordinary Shares that the Selling Shareholders will hold in the future.
For purposes of this table,
beneficial ownership is determined in accordance with Rule 13d-3 promulgated under the Exchange Act, and includes voting power and investment
power with respect to such shares. In calculating the percentage ownership or percent of equity vote for a given individual or group,
the number of Ordinary Shares outstanding for that individual or group includes unissued shares subject to options, warrants, rights or
conversion privileges exercisable within sixty days held by such individual or group, but are not deemed outstanding by any other person
or group.
The
applicable percentages of ownership are based on an aggregate of 52,055,460 Ordinary Shares outstanding on May 16, 2023.
Name of Selling Shareholder | |
Number of Common Shares Owned Prior to Offering | | |
Maximum Number of Common Shares to be Offered Pursuant to this | | |
Number of Common
Shares Owned
After Offering | |
| |
Number(1) | | |
Percent | | |
Prospectus | | |
Number(2) | | |
Percent(2) | |
Yaoting Lu | |
| 1,330,388 | | |
| 2.56 | % | |
| 1,330,388 | | |
| - | | |
| - | |
Chuyao Wang | |
| 1,372,562 | | |
| 2.64 | % | |
| 1,372,562 | | |
| - | | |
| - | |
Jingsong Xia | |
| 2,058,843 | | |
| 3.96 | % | |
| 2,058,843 | | |
| - | | |
| - | |
Lei Wang | |
| 1,372,562 | | |
| 2.64 | % | |
| 1,372,562 | | |
| - | | |
| - | |
Feng Xiao | |
| 969,995 | | |
| 1.86 | % | |
| 969,995 | | |
| - | | |
| - | |
(1) |
Because each of the Selling Shareholders may offer all or some of the Ordinary Shares that such shareholder holds in the offering contemplated by this prospectus, (b) the offering of Ordinary Shares is not being underwritten on a firm commitment basis, and (c) the Selling Shareholders could purchase additional Ordinary Shares from time to time, no estimate can be given as to the number of shares or percent of our Ordinary Shares that will be held by the Selling Shareholders upon termination of the offering. |
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(2) |
Assumes the sale of all of the Ordinary Shares (being offered pursuant to this prospectus) to third parties, if any. |
PLAN OF DISTRIBUTION
The Ordinary Shares covered by this prospectus
may be offered and sold from time to time by the Selling Shareholders. The term “Selling Shareholders” includes pledgees,
donees, transferees or other successors in interest selling shares received after the date of this prospectus from each of the Selling
Shareholders as a pledge, gift, partnership distribution or other non-sale related transfer. The number of shares beneficially owned by
Selling Shareholders will decrease as and when they effect any such transfers. The plan of distribution for the Selling Shareholders’
shares sold hereunder will otherwise remain unchanged, except that the transferees, pledgees, donees or other successors will be Selling
Shareholders hereunder. To the extent required, we may amend and supplement this prospectus from time to time to describe a specific plan
of distribution. The Selling Shareholders will act independently of us in making decisions with respect to the timing, manner and size
of each sale. Once sold under this registration statement, of which this prospectus forms a part, the Ordinary Shares will be freely tradable
in the hands of persons other than our affiliates.
We will not receive any of the proceeds from the sale by the Selling
Shareholders of the Ordinary Shares. We will bear all fees and expenses incident to our obligation to register the Ordinary Shares.
The Selling Shareholders may make these sales
at prices and under terms then prevailing or at prices related to the then current market price. The Selling Shareholders may also make
sales in negotiated transactions. The Selling Shareholders may offer their shares from time to time pursuant to one or more of the following
methods:
| ● | ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| ● | one
or more block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction; |
| ● | purchases
by a broker-dealer as principal and resale by the broker-dealer for its account; |
| ● | an
exchange distribution in accordance with the rules of the applicable exchange; |
| ● | public
or privately negotiated transactions; |
| ● | on
the Nasdaq Capital Market (or through the facilities of any national securities exchange or U.S. inter- dealer quotation system of a
registered national securities association, on which the shares are then listed, admitted to unlisted trading privileges or included
for quotation); |
| ● | through
underwriters, brokers or dealers (who may act as agents or principals) or directly to one or more purchasers; |
| ● | a
combination of any such methods of sale; and |
| ● | any
other method permitted pursuant to applicable law. |
In connection with distributions of the shares
or otherwise, the Selling Shareholders may:
| ● | enter
into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the shares
in the course of hedging the positions they assume; |
| ● | sell
the shares short after the effective date of the registration statement of which this prospectus forms a part and redeliver the shares
to close out such short positions; |
| ● | enter
into option or other transactions with broker-dealers or other financial institutions which require the delivery to them of shares offered
by this prospectus, which they may in turn resell; and |
| ● | pledge
shares to a broker-dealer or other financial institution, which, upon a default, they may in turn resell. |
In addition to the foregoing methods, the Selling
Shareholders may offer their shares from time to time in transactions involving principals or brokers not otherwise contemplated above,
in a combination of such methods as described above or any other lawful methods. The Selling Shareholders may also transfer, donate or
assign their shares to lenders, family members and others and each of such persons will be deemed to be a Selling Shareholder for purposes
of this prospectus. A Selling Shareholder or their successors in interest may from time to time pledge or grant a security interest in
some or all of the Ordinary Shares, and if the Selling Shareholder default in the performance of their secured obligations, the pledgees
or secured parties may offer and sell the Ordinary Shares from time to time under this prospectus; provided, however in
the event of a pledge or then default on a secured obligation by the Selling Shareholder, in order for the shares to be sold under this
registration statement, unless permitted by law, we must distribute a prospectus supplement and/or amendment to this registration statement
amending the list of Selling Shareholders to include the pledgee, secured party or other successors in interest of the Selling Shareholder
under this prospectus.
The Selling Shareholders may also sell their shares
pursuant to Rule 144 under the Securities Act, provided the Selling Shareholders meet the criteria and conform to the requirements of
such rule.
The Selling Shareholders may effect such transactions
directly or indirectly through underwriters, broker-dealers or agents acting on their behalf. Broker-dealers or agents may receive commissions,
discounts or concessions from the Selling Shareholders, in amounts to be negotiated immediately prior to the sale (which compensation
as to a particular broker-dealer might be in excess of customary commissions for routine market transactions). If the Ordinary Shares
are sold through underwriters or broker-dealers, the Selling Shareholders will be responsible for underwriting discounts or commissions
or agent’s commissions. Neither we, nor the Selling Shareholders, can presently estimate the amount of that compensation. If a Selling
Shareholder notifies us that a material arrangement has been entered into with a broker- dealer for the sale of shares through a block
trade, special offering, exchange, distribution or secondary distribution or a purchase by a broker or dealer, we will file a prospectus
supplement, if required by Rule 424 under the Securities Act, setting forth: (i) the name of each of the Selling Shareholders and the
participating broker-dealers; (ii) the number of shares involved; (iii) the price at which the shares were sold; (iv) the commissions
paid or discounts or concessions allowed to the broker-dealers, where applicable; (v) a statement to the effect that the broker-dealers
did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus; and any other fact
material to the transaction.
The Selling Shareholders and any other person
participating in a distribution of the shares covered by this prospectus will be subject to applicable provisions of the Exchange Act,
including, without limitation, Regulation M, which may limit the timing of purchases and sales of any of the shares by the Selling Shareholders
and any other such person. Furthermore, under Regulation M, any person engaged in the distribution of the shares may not simultaneously
engage in market-making activities with respect to the particular shares being distributed for certain periods prior to the commencement
of, or during, that distribution. All of the above may affect the marketability of the shares and the ability of any person or entity
to engage in market-making activities with respect to the shares. We have advised the Selling Shareholders that the anti-manipulation
rules of Regulation M under the Exchange Act may apply.
In offering the shares covered by this prospectus,
the Selling Shareholders, and any broker-dealers and any other participating broker-dealers who execute sales for the Selling Shareholders,
may be deemed to be “underwriters” within the meaning of the Securities Act in connection with these sales. Any profits realized
by the Selling Shareholders and the compensation of such broker-dealers may be deemed to be underwriting discounts and commissions. We
are not aware that any Selling Shareholder has entered into any arrangements with any underwriters or broker-dealers regarding the sale
of its Ordinary Shares.
LEGAL MATTERS
The validity of the securities offered by this
prospectus, to the extent governed by the laws of the State of New York, will be passed upon for us by Ellenoff Grossman & Schole
LLP, New York, New York, our special United States counsel. The validity of the Ordinary Shares, to the extent governed by BVI law, will
be passed upon for us by Maples and Calder, our special legal counsel as to BVI law. Certain legal matters as to PRC law will be passed
upon for us by DeHeng Law Offices.
EXPERTS
The consolidated financial statements of the Company
as of September 30, 2020, 2021 and 2022, and for each of the three-year periods ended September 30, 2020, 2021 and 2022, incorporated
in this prospectus by reference to the 2022 Annual Report, have been so incorporated in reliance on the reports of Marcum
Asia CPAs LLP, Briggs & Veselka Co., LLP and Wei, Wei & Co., LLP, respectively, given
on the authority of said independent registered public accounting firms as experts in accounting and auditing.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to “incorporate by reference”
the information we file with it into this prospectus. This means that we can disclose important information about us and our financial
condition to you by referring you to another document filed separately with the SEC instead of having to repeat the information in this
prospectus. The information incorporated by reference is considered to be part of this prospectus and later information that we file with
the SEC will automatically update and supersede this information. We incorporate by reference into this prospectus the information contained
in the documents listed below and any future filings made by us with the SEC under Section 13(a), 13(c) or 15(d) of the Exchange Act,
except for information “furnished” to the SEC which is not deemed filed and not incorporated by reference into this prospectus
(unless otherwise indicated below), until the termination of the offering of securities described in the applicable prospectus:
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● |
the Company’s Annual Report on Form 20-F for the fiscal year ended September 30, 2022, filed with the SEC on January 20, 2023; |
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the Company’s Reports of Foreign Private Issuer on Form 6-K furnished with the SEC on December 6, 2022, January 25, 2023, January 26, 2023, February 16, 2023, February 22, 2023, March 9, 2023, March 20, 2023, April 11, 2023 and April 18, 2023; and |
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● |
The description of EZGO’s Ordinary Shares contained Exhibit 2.1 to the Company’s Annual Report on Form 20-F for the fiscal year ended September 30, 2022, filed with the SEC on January 20, 2023. |
We also incorporate by reference any future annual
reports on Form 20-F we file with the SEC under the Exchange Act after the date of this prospectus and prior to the termination of the
offering of securities by means of this prospectus, and any future reports of foreign private issuer on Form 6-K we furnish with the SEC
during such period that are identified in such reports as being incorporated by reference in this prospectus.
Any reports filed by us with the SEC after the
date of this prospectus and before the date that the offering of securities by means of this prospectus is terminated will automatically
update and, where applicable, supersede any information contained in this prospectus or incorporated by reference in this prospectus.
This means that you must look at all of the SEC filings that we incorporate by reference to determine if any of the statements in this
prospectus or in any documents incorporated by reference have been modified or superseded. Unless expressly incorporated by reference,
nothing in this prospectus shall be deemed to incorporate by reference information furnished to, but not filed with, the SEC.
We will provide without charge to any person (including
any beneficial owner) to whom this prospectus is delivered, upon oral or written request, a copy of any document incorporated by reference
in this prospectus but not delivered with the prospectus (except for exhibits to those documents unless a document states that one of
its exhibits is incorporated into the document itself). Such request should be directed to EZGO Technologies Ltd., Building #A, Floor
2, Changzhou Institute of Dalian University of Technology, Science and Education Town, Wujin District, Changzhou City Jiangsu, China 213164,
and telephone number + 86 519 83683805.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part
of a registration statement on Form F-3 that we filed with the SEC registering the securities that may be offered and sold hereunder.
This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration
statement, the exhibits filed therewith or the documents incorporated by reference therein. For further information about us and the securities
offered hereby, reference is made to the registration statement, the exhibits filed therewith and the documents incorporated by reference
therein. Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit
to the registration statement are not necessarily complete, and in each instance, we refer you to the copy of such contract or other document
filed as an exhibit to the registration statement. We are required to file reports and other information with the SEC pursuant to the
Exchange Act, including annual reports on Form 20-F and reports of foreign private issuer on Form 6-K.
The SEC maintains a website
at www.sec.gov that contains reports and other information regarding issuers, like us, that file electronically with the SEC. The information
on our website (www.ezgotech.com.cn), other than the Company’s SEC filings, is not, and should not be, considered part of this prospectus
and is not incorporated by reference into this document.
As a foreign private
issuer, EZGO is exempt under the Exchange Act from, among other things, the rules prescribing the furnishing and content of proxy statements,
and EZGO’s officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions
contained in Section 16 of the Exchange Act. In addition, EZGO is not required under the Exchange Act to file periodic reports and financial
statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 8. Indemnification of Directors and Officers.
BVI law does not limit the extent to which a company’s
memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision
may be held by the BVI High Court to be contrary to public policy (e.g. for purporting to provide indemnification against the consequences
of committing a crime). An indemnity will be void and of no effect and will not apply to a person unless the person acted honestly and
in good faith and in what he believed to be in the best interests of the company and, in the case of criminal proceedings, the person
had no reasonable cause to believe that his conduct was unlawful. Our amended and restated memorandum and articles of association permit
indemnification of officers and directors for losses, damages, costs and expenses incurred in their capacities as such unless such losses
or damages arise from dishonesty or fraud of such directors or officers. This standard of conduct is generally the same as permitted under
the Delaware General Corporation Law for a Delaware corporation. In addition, we have entered into indemnification agreements with our
directors and executive officers that provide such persons with additional indemnification beyond that provided in our amended and restated
memorandum and articles of association.
Item 9. Exhibits.
The following exhibits are filed herewith or incorporated
by reference:
Item 10. Undertakings.
(a) | The
undersigned registrant hereby undertakes: |
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(1) |
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
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to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
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to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
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to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement, |
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provided, however, that subsections (i), (ii) and (iii) above do not apply if the information required to be included in a post-effective amendment by those subsections is contained in reports filed with or furnished to the SEC by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement. |
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(2) |
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
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(3) |
To remove from registration by means of a
post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
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(4) |
To file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Securities Act of 1933 need not be furnished, provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, with respect to registration statements on Form F-3, a post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of the Securities Act of 1933 if such financial statements and information are contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Form F-3. |
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(5) |
That, for the purpose of determining liability under the Securities Act of 1933, as amended, to any purchaser: |
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(i) |
Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of this registration statement as of the date the filed prospectus was deemed part of and included in this registration statement; and |
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(ii) |
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933, as amended, shall be deemed to be part of and included in this registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date. |
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(6) |
That, for the purpose of determining liability of the registrant under the Securities Act of 1933, as amended, to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
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(i) |
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
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(ii) |
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
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(iii) |
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
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(iv) |
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
(b) | The
undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, as amended,
each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended
(and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange
Act of 1934, as amended), that is incorporated by reference in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof. |
(c) |
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. |
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(d) |
The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. |
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(e) |
The undersigned registrant hereby undertakes that, for the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
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(f) |
The undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act, or the Act, in accordance with the rules and regulations prescribed by the SEC under section 305(b)(2) of the Act. |
SIGNATURES
Pursuant to the requirements
of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Changzhou, Jiangsu, China, on May 17, 2023.
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EZGO Technologies Ltd. |
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By: |
/s/ Jianhui Ye |
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Name: |
Jianhui Ye |
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Title: |
Chief Executive Officer |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS,
that each person whose signature appears below constitutes and appoints Jianhui Ye his true and lawful attorney-in-fact, with full power
of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all amendments
including post-effective amendments to this registration statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or
his substitute, each acting alone, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements
of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and
on the dates indicated.
Signature |
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Title |
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Date |
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/s/ Jianhui Ye |
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Chairman and Chief Executive Officer |
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May 17, 2023 |
Jianhui Ye |
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(Principal Executive Officer) |
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/s/ Jingyan Wu |
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Chief Financial Officer |
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May 17, 2023 |
Jingyan Wu |
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(Principal Financial and Accounting Officer) |
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/s/ Peiyao Jin |
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Director |
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May 17, 2023 |
Peiyao Jin |
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/s/ Guanghui Yang |
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Director |
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May 17, 2023 |
Guanghui Yang |
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/s/ Robert Johnson |
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Director |
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May 17, 2023 |
Robert Johnson |
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/s/ Guanneng Lai |
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Director |
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May 17, 2023 |
Guanneng Lai |
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SIGNATURE OF AUTHORIZED REPRESENTATIVE IN THE
UNITED STATES
Pursuant to the Securities Act
of 1933, as amended, the undersigned, the duly authorized representative in the United States of EZGO Technologies Ltd. has signed this
registration statement or amendment thereto in Newark, Delaware on May 17, 2023.
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Puglisi & Associates |
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By: |
/s/ Donald J. Puglisi |
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Name: |
Donald J. Puglisi |
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Title: |
Managing Director |
II-5
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