This document is in two parts. The first part
is the prospectus supplement, which describes the specific terms of this offering of securities and also adds to and updates information
contained in the accompanying prospectus and the documents incorporated by reference into this prospectus supplement and the accompanying
prospectus. The second part is the accompanying prospectus dated November 30, 2022, included in the registration statement on Form F-3
(Registration No. 333-263315), including the documents incorporated by reference therein, which provides more general information, some
of which may not be applicable to this offering.
This prospectus supplement provides specific
terms of this offering of our Units and other matters relating to us and our financial condition. If the description of the
offering varies between this prospectus supplement and the accompanying prospectus, you should rely on the information in this prospectus
supplement.
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus or any free writing prospectus provided in connection with this
offering. We have not authorized any other person to provide you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. You should assume that the information appearing in this prospectus supplement, the
accompanying prospectus and the documents incorporated by reference is accurate only as of their respective dates, regardless of the time
of delivery of this prospectus supplement, the accompanying prospectus or any other offering materials, or any sale of the securities.
Our business, financial condition, results of operations and prospects may have changed since those dates. We are not making an offer
to sell these securities in any jurisdiction where the offer or sale is not permitted. Neither this prospectus supplement nor the accompanying
prospectus constitutes an offer, or an invitation on behalf of us to subscribe for and purchase, any of the securities and may not be
used for or in connection with an offer or solicitation by anyone, in any jurisdiction in which such an offer or solicitation is not authorized
or to any person to whom it is unlawful to make such an offer or solicitation.
It is important for you to read and consider
all the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus in making your
investment decision.
In this prospectus supplement and the accompanying
prospectus, unless otherwise indicated or unless the context otherwise requires, references to:
All discrepancies in any table between the amounts identified as total
amounts and the sum of the amounts listed therein are due to rounding.
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 supplement
and the accompanying 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 supplement 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 This Offering
Since our management will have broad discretion
in how we use the proceeds from this offering, we may use the proceeds in ways with which you disagree.
Our management will have significant flexibility
in applying the net proceeds of this offering. You will be relying on the judgment of our management with regard to the use of these net
proceeds, and you will not have the opportunity, as part of your investment decision, to influence how the proceeds are being used. It
is possible that the net proceeds will be invested in a way that does not yield a favorable, or any, return for us. The failure of our
management to use such funds effectively could have a material adverse effect on our business, financial condition, operating results
and cash flow.
You may experience future dilution as a
result of future equity offerings or other equity issuances.
We may in the future issue additional Ordinary
Shares or other securities convertible into or exchangeable for Ordinary Shares. We cannot assure you that we will be able to sell our
Ordinary Shares or other securities in any other offering or other transactions at a price per share that is equal to or greater than
the price per share paid by investors in this offering. The price per share at which we sell additional Ordinary Shares or other securities
convertible into or exchangeable for our Ordinary Shares in future transactions may be higher or lower than the price per share in this
offering.
There is no public market for the Warrants
issued in this offering.
We do not intend to apply to list the Warrants
being sold in this offering on any securities exchange. Accordingly, there is no established public trading market for the Warrants, and
we do not expect a market to develop. Without an active market, the liquidity of the Warrants will be limited.
Holders of the Warrants will have no rights
as shareholders until they hold applicable until they hold applicable Ordinary Shares issuable upon exercise of the Warrants.
Until you hold Ordinary Shares issuable upon exercise
of any of the Warrants, you will have no rights with respect to such Ordinary Shares as a shareholder. Upon exercise of the Warrants held,
you will be entitled to exercise the rights of a shareholder, with respect to those Ordinary Shares, only as to matters for which the
record date occurs after the exercise date.
Securities analysts may not cover our Ordinary
Shares and this may have a negative impact on the market price of our Ordinary Shares.
The trading market for our Ordinary Shares will
depend, in part, on the research and reports that securities or industry analysts publish about us or our business. We do not have any
control over independent analysts (provided that we have engaged various non-independent analysts). We do not currently have and may never
obtain research coverage by independent securities and industry analysts. If no independent securities or industry analysts commence coverage
of us, the trading price for our Ordinary Shares would be negatively impacted. If we obtain independent securities or industry analyst
coverage and if one or more of the analysts who covers us downgrades our Ordinary Shares, changes their opinion of our Ordinary Shares
or publishes inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts
ceases coverage of us or fails to publish reports on us regularly, demand for our Ordinary Shares could decrease and we could lose visibility
in the financial markets, which could cause our stock price and trading volume to decline.
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 seek 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 (Shenzhen),
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 (Shenzhen), 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 (Shenzhen), 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 (Shenzhen), 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 supplement, 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 supplement, 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 the 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 regulations 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
(Shenzhen), 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 supplement, 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 supplement, 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.
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 by EZGO 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.
PROSPECTUS
EZGO
Technologies Ltd.
US$200,000,000
Ordinary
Shares
Preferred
Shares
Debt
Securities
Warrants
Rights
Units
We may offer, issue
and sell from time to time ordinary shares, par value US$0.001 per share (“Ordinary Shares”), preferred shares, no par value
(“Preferred Shares”), debt securities, warrants, rights or units up to US$200,000,000 or its equivalent in any other currency,
currency units, or composite currency or currencies in one or more issuances. We may sell any combination of these securities in one
or more offerings.
This
prospectus describes some of the general terms that may apply to these securities and the general manner in which they may be offered.
The specific terms of any securities to be offered, and the specific manner in which they may be offered, will be described in a supplement
to this prospectus or incorporated into this prospectus by reference. You should read this prospectus and any supplement carefully before
you invest. Each prospectus supplement will indicate if the securities offered thereby will be listed or quoted on a securities exchange
or quotation system.
The
information contained or incorporated in this prospectus or in any prospectus supplement is accurate only as of the date of this prospectus,
or such prospectus supplement, as applicable, regardless of the time of delivery of this prospectus or any sale of EZGO Technologies
Ltd. (“EZGO”)’s securities.
EZGO’s Ordinary Shares are listed on
the Nasdaq Capital Market under the symbol “EZGO.” On November 10, 2022, the closing sale price of the Ordinary Shares was
US$0.3858. As of November 10, 2022, the aggregate market value of EZGO’s outstanding Ordinary Shares held by non-affiliates was
approximately US$8,199,919.36 based on 24,626,891 issued and outstanding Ordinary Shares, of which approximately 21,254,327 Ordinary
Shares were held by non-affiliates. We have not offered any securities pursuant to General Instruction I.B.5 of Form F-3 during the prior
12 calendar month period that ends on, and includes, the date of this prospectus. The highest closing sale price of EZGO’s Ordinary
Shares as reported by the Nasdaq Capital Market within the 60 days prior to the date of this filing was US$0.5651 per share on September
12, 2022, which would allow us to offer up to approximately $4,003,606.73 of securities pursuant to General Instruction I.B.5 of Form
F-3 as of the date of this prospectus. We received a written notification from the Nasdaq Stock Market LLC (the “Nasdaq”)
on June 3, 2022, notifying us that we are not in compliance with the minimum bid price requirement set forth in the Nasdaq rules for
continued listing on the Nasdaq (the “Minimum Bid Price Requirement”). To regain compliance, our Ordinary Shares must have
a closing bid price of at least US$1.00 for a minimum of 10 consecutive trading days by November 30, 2022. Since it appears that we will
not regain compliance with the Minimum Bid Price Requirement by November 30, 2022, we may be eligible for additional time to regain compliance
or may face delisting. We are currently preparing a compliance plan explaining to Nasdaq how we plan to regain compliance with the Minimum
Bid Price Requirement and intend to submit such compliance plan with a request to Nasdaq for an additional 180-day extension to regain
compliance with the Minimum Bid Price Requirement. This compliance plan will include, among other things, our commitment to effect a
reverse share split of our Ordinary Shares if we are unable to regain compliance with the Minimum Bid Price Requirement before the end
of such 180-day extension. For more information, see “Risk Factors – Risks Related to Our Ordinary Shares – The
market price of EZGO’s Ordinary Shares has recently declined significantly, and EZGO’s Ordinary Shares could be delisted
from the Nasdaq or trading could be suspended.” on page 36 of this prospectus.
We
may offer securities through underwriting syndicates managed or co-managed by one or more underwriters, through agents, or directly to
purchasers. The prospectus supplement for each offering of securities will describe the plan of distribution for that offering. For general
information about the distribution of securities offered, please see “Plan of Distribution” in this prospectus.
The
principal executive offices of EZGO Technologies Ltd. is 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 its telephone number is + 86 51983683805.
The registered address of EZGO Technologies Ltd. in the British Virgin Islands is located at Maples Corporate Services (BVI) Limited,
PO Box 173, Kingston Chambers, Road Town Tortola, British Virgin Islands.
In this prospectus, “we,” “us,”
“our,” “our company,” the “Company,” or similar terms refer to EZGO Technologies Ltd. and/or its
consolidated subsidiaries, other than the VIE, Jiangsu EZGO Electronic Technologies, Co., Ltd. (formerly known as Jiangsu Baozhe Electric
Technologies, Co., Ltd.), a PRC company, unless the context otherwise indicates, and the “VIE” refers to the variable interest
entity, Jiangsu EZGO Electronic Technologies, Co., Ltd. EZGO conducts operations in China through Changzhou EZGO Enterprise Management
Co., Ltd. (the “WFOE”), the VIE and its subsidiaries in China, and EZGO does not conduct any business on its own. The financial
results of the VIE and its subsidiaries are consolidated into our financial statements for accounting purposes, but we do not hold any
equity interest in the VIE or any of its subsidiaries. Investors are purchasing an interest in EZGO, the British Virgin Islands
holding company.
Investing in EZGO’s securities
is highly speculative and involves a significant degree of risk. EZGO is not an operating company established in the People’s Republic
of China, or the PRC, but a holding company incorporated in the British Virgin Islands. As a holding company with no material operations
of its own, EZGO conducts the majority of its operations through contractual arrangements with its operating entities established in
the PRC, primarily the VIE, in which EZGO does not hold any equity interest, and the VIE’s subsidiaries based in the PRC. This
variable interest entity structure involves unique risks to investors. The contractual arrangements with the VIE have not been tested
in court. The variable interest entity 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 our investors own any equity ownership in, direct foreign investment in, or control through such ownership/investment
of the VIE. Investors may never hold equity interests in the Chinese operating company. The securities offered in this prospectus are
securities of our British Virgin Islands holding company that maintains contractual arrangements with the associated operation companies.
The Chinese regulatory authorities could disallow this variable interest entity structure, 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
EZGO is registering for sale, including that it could cause the value of its securities to significantly decline or become worthless.
For a description of our corporate structure and contractual arrangements with the VIE, see “Risk Factors – Risks
Related to Our Corporate Structure” on page 35 of this prospectus and “Item 3.D. Key Information—Risk Factors—Risks
Related to Our Corporate Structure” in our Annual Report on Form 20-F for the fiscal year ended September 30, 2021 (the “2021
Annual Report”), which is incorporated herein by reference. See also “Risk Factors” on page 19.
In addition, as EZGO conducts substantially
all of its operations in China through the WFOE, the VIE and its subsidiaries in China, it is subject to legal and operational risks
associated with having substantially all of its operations in China, which risks could result in a material change in its operations
and/or the value of the securities EZGO is registering for sale or could significantly limit or completely hinder its ability to offer
or continue to offer its securities to investors and cause the value of its securities to significantly decline or be worthless. 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. Our PRC counsel, DeHeng Law Offices, is of the view that as of the date of this prospectus, we are not directly subject
to these regulatory actions or statements, as we have not implemented any monopolistic behavior and EZGO’s business operations
through the WFOE, the VIE and its subsidiaries in China do not involve large-scale collection of user data, implicate cybersecurity,
or involve any other type of restricted industry. As further advised by our PRC counsel, as of the date of this prospectus, no relevant
laws or regulations in the PRC explicitly require us to seek approval from the China Securities Regulatory Commission (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 our offering of securities 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 potential impact such
modified or new laws and regulations will have on the VIE’s daily business operations, or ability to accept foreign investments
and list on a U.S. or other foreign exchange. The Standing Committee of the National People’s Congress (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 any of its subsidiaries to obtain regulatory approval from Chinese authorities before offering securities in the U.S.
Any future Chinese, U.S., British Virgin Islands 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” beginning on
page 19 for a detailed description of various risks related to doing business in China and other information that should be considered
before making a decision to purchase any of EZGO’s securities.
Furthermore, as more stringent criteria
have been imposed by the SEC and the Public Company Accounting Oversight Board (the “PCAOB”) recently, EZGO’s securities
may be prohibited from trading if our auditor cannot be fully inspected. On December 16, 2021, the PCAOB issued its determination 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 list does not include our former auditors,
Marcum Asia CPAs LLP (formerly known as Marcum Bernstein & Pinchuk LLP) and Briggs & Veselka Co., LLP, or our current auditor,
Wei, Wei & Co., LLP. On August 26, 2022, the PCAOB announced that it had signed a Statement of Protocol (the “Statement of
Protocol”) with the CSRC and the Ministry of Finance of China (“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. According to the PCAOB, its December 2021 determinations under the Holding Foreign
Companies Accountable Act (the “HFCAA”) remain in effect. The PCAOB is required to reassess these determinations by the end
of 2022. Under the PCAOB’s rules, a reassessment of a determination under the HFCAA may result in the PCAOB reaffirming, modifying
or vacating the determination. Our auditor, 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. However, the PCAOB is currently unable to conduct inspections in China
without the approval of Chinese government authorities, but access to audit work and papers may be available in the near future, as a
result of the Statement of Proposal. If the PCAOB does gain such access, there is no assurance that it may not later be determined that
the PCAOB is unable to inspect or investigate our auditor completely, and 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. See risks disclosed under “Risk Factors— Risks Related
to Doing Business in China - EZGO’s Ordinary Shares may be delisted under the HFCAA 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 the value of your investment. Additionally, the inability of the PCAOB to conduct adequate inspections deprives
our investors with the benefits of such inspections. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign
Companies Accountable Act, which, if enacted, would amend the HFCAA and require 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 33.
As a holding company, EZGO relies on dividends
and other distributions on equity paid by its operating subsidiaries for cash and financing requirements, including the funds necessary
to pay dividends and other cash distributions to its shareholders or to service any expenses it may incur. Our PRC subsidiaries’
ability to distribute dividends is based upon their distributable earnings. Current PRC regulations permit our PRC subsidiaries to pay
dividends to their respective shareholders only out of their accumulated profits, if any, as determined in accordance with PRC accounting
standards and regulations. In addition, under PRC law, each of our PRC subsidiaries is required to set aside at least 10% of its after-tax
profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. These
reserves are not distributable as cash dividends. If any of our PRC subsidiaries incurs debt on its own behalf in the future, the instruments
governing such debt may restrict its ability to pay dividends to EZGO. To date, there have not been any such dividends or other distributions
from our PRC subsidiaries to our subsidiaries located outside of China. In addition, as of the date of this prospectus, none of our PRC
subsidiaries have ever issued any dividends or distributions to EZGO or its shareholders outside of China. Furthermore, as of the date
of this prospectus, neither EZGO nor any of its subsidiaries have ever paid dividends or made distributions to U.S. investors. EZGO is
permitted under PRC laws and regulations as an offshore holding company to provide funding to its PRC subsidiaries in China through shareholder
loans or capital contributions, subject to satisfaction of applicable government registration, approval and filing requirements. According
to the relevant PRC regulations on foreign-invested enterprises in China, there are no quantity limits on EZGO’s ability to make
capital contributions to its PRC subsidiaries. However, our PRC subsidiaries may not procure loans which exceed the difference between
their total investment amount as recorded in the Foreign Investment Comprehensive Management Information System and their respective
registered capital or 2.5 times of their net worth. In the future, cash proceeds raised from overseas financing activities may continue
to be transferred by EZGO to the PRC subsidiaries via capital contribution or shareholder loans, as the case may be. EZGO intends to
retain most, if not all, of its available funds and any future earnings for the development and growth of its business in China. EZGO
does not expect to pay dividends or distribute earnings in the foreseeable future. EZGO intends to settle amounts owed under the contractual
arrangements with the VIE.
Under existing PRC foreign exchange regulations,
currently our PRC subsidiaries may purchase foreign currency for settlement of “current account transactions,” including
payment of dividends to us, without the approval of the State Administration of Foreign Exchange, or 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 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 or make distributions in foreign currencies to our shareholders, including holders of EZGO’s Ordinary Shares. 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’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 26, “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 page 26
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 28.
To date, transfers have occurred between
EZGO, its subsidiaries, and the VIE. Prior to the completion of EZGO’s 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’s wholly-owned subsidiary, China EZGO Group
Ltd. (“EZGO HK”). EZGO HK transferred funds through an increase in the registered capital to EZGO HK’s wholly-owned
subsidiary, Changzhou EZGO Enterprise Management Co., Ltd. (“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 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 six months ended March 31, 2022,
EZGO provided an additional interest-free loan of US$313,200 to EZGO HK; EZGO HK injected registered capital of US$313,000 into Changzhou
EZGO. Changzhou EZGO provided loans of US$345,402 to the VIE and increase US$ 3,377,397 of payables due to the VIE and its subsidiary.
The details of loans as of March 31, 2022
provided by Changzhou EZGO are shown below:
Start Date |
|
Maturity Date |
|
Amount* |
|
|
Annual Interest
Rate |
|
April 6, 2021 |
|
April 5, 2026 |
|
$ |
3,943,653 |
|
|
|
5 |
% |
June 9, 2021 |
|
June 8, 2026 |
|
$ |
2,366,192 |
|
|
|
5 |
% |
September 17, 2021 |
|
September 16, 2024 |
|
$ |
630,984 |
|
|
|
4 |
% |
September 29, 2021 |
|
September 28, 2024 |
|
$ |
2,650,135 |
|
|
|
4 |
% |
October 13, 2021 |
|
October 13, 2026 |
|
$ |
3,943,653 |
|
|
|
Chinese Loan Prime
Rate (LPR)+0.25 |
% |
December 21, 2021 |
|
December 21, 2024 |
|
$ |
347,041 |
|
|
|
4 |
% |
Total |
|
|
|
$ |
13,881,659 |
|
|
|
|
|
* | The amount of the loans generated for the fiscal
year ended September 30, 2021 was adjusted for exchange rates with no actual cash inflows. |
For details of the transfers between EZGO,
its subsidiaries, and the VIE, see “Prospectus Summary—Transfer of Cash through our Organization.” For details
of VIE’s financial information, see “Prospectus Summary—VIE Financial Information” for the condensed consolidating
schedule and pages F-9 to F-12 of our 2021 Annual Report, which is incorporated herein by reference.
We maintain bank accounts in China, including
cash in Renminbi in the amount of RMB29,583,341 and RMB10,857,318 as of September 30, 2021 and March 31, 2022 respectively, and cash
in USD in the amount of US$7,831 and US$4,356 as of September 30, 2021 and March 31, 2022 respectively. 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.
Most of our cash is in Renminbi, and the
PRC government could prevent the cash maintained in mainland China or Hong Kong from leaving, 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— Restrictions on currency exchange or outbound capital flows may limit our ability to utilize our PRC revenue effectively,”
“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
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,” 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.”
Investing
in EZGO’s securities involves risks. You should carefully consider the risk factors beginning on page 19 of this prospectus, in
any accompanying prospectus supplement and in any related free writing prospectus, and in the documents incorporated by reference into
this prospectus, any accompanying prospectus supplement and any related free writing prospectus before making any decision to invest
in EZGO’s securities.
This
prospectus may not be used to offer or sell any securities unless accompanied by a prospectus supplement.
Neither
the United States Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities
or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is November 30, 2022
TABLE
OF CONTENTS
You
should rely only on the information provided by this prospectus, any prospectus supplement and any information incorporated by reference.
We have not authorized anyone else to provide you with different or additional information or to make any representations other than
those contained in or incorporated by reference to this prospectus or any accompanying prospectus supplement. We have not taken any action
to permit a public offering of the securities described in this prospectus outside the United States or to permit the possession or distribution
of this prospectus outside the United States. Persons outside the United States who come into possession of this prospectus must observe
any restrictions relating to the offering of the securities described in this prospectus and the distribution of this prospectus outside
of the United States. This prospectus is not an offer to sell, or solicitation of an offer to buy, any securities in any circumstances
under which the offer of solicitation is unlawful.
ABOUT
THIS PROSPECTUS
This prospectus is
part of a registration statement on Form F-3 that we filed with the Securities and Exchange Commission, or the SEC, using a “shelf
registration” process. Under this shelf registration process, we may, from time to time, sell any combination of the securities
of EZGO described in this prospectus in one or more offerings up to a total dollar amount of up to US$200,000,000 (or its equivalent
in foreign or composite currencies).
This prospectus provides
you with a general description of the securities that may be offered. Each time we offer EZGO’s securities, we will provide you
with a supplement to this prospectus that will describe the specific amounts, prices and terms of the securities we offer. The prospectus
supplement may also add, update or change information contained in this prospectus. This prospectus, together with applicable prospectus
supplements and the documents incorporated by reference in this prospectus and any prospectus supplements, includes all material information
relating to an offering pursuant to this prospectus. Please read carefully both this prospectus and any prospectus supplement together
with additional information described below under “Where You Can Find More Information.”
You
should rely only on the information contained in or incorporated by reference in this prospectus and any applicable prospectus supplement.
We have not authorized anyone to provide you with different or additional information. If anyone provides you with different or inconsistent
information, you should not rely on it. We take no responsibility for, and can provide no assurance as to the reliability of, any other
information that others may give you. The information contained in this prospectus is accurate only as of the date of this prospectus,
regardless of the time of delivery of this prospectus or any sale of securities described in this prospectus. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale
is not permitted.
You
should not assume that the information contained in this prospectus and any accompanying prospectus supplement is accurate on any date
subsequent to the date set forth on the front of the document or that any information that we have incorporated by reference is correct
on any date subsequent to the date of the document incorporated by reference. EZGO’s business, financial condition, results of
operations and prospects may have changed since those dates.
CONVENTIONS
THAT APPLY TO THIS PROSPECTUS
Unless
we indicate otherwise, all information in this prospectus reflects the following:
|
● |
“BVI” refers
to British Virgin Islands; |
|
|
|
|
● |
“CAC” refers to the Cyberspace Administration of China;
|
|
|
|
|
● |
“Changzhou EZGO” or “WFOE” refers to EZGO HK’s wholly-owned subsidiary
and wholly foreign owned enterprise, Changzhou EZGO Enterprise Management Co., Ltd. (formerly known as Changzhou Jiekai New Energy
Technology Company), a PRC company; |
|
● |
“China” or the “PRC”, in each case, refers to the People’s Republic of China, including Hong Kong and Macau. The term “Chinese” has a correlative meaning for the purpose of this prospectus; |
|
● |
“CSRC” refers
to the China Securities Regulatory Commission; |
|
● |
“Exchange Act”
refers to the Securities Exchange Act of 1934, as amended; |
|
● |
“EZGO” refers to EZGO Technologies
Ltd., a British Virgin Islands business company, and “we,” “us,” “our company,” the “Company,”
“our,” or similar terms used in this prospectus refer to EZGO Technologies Ltd. and/or its consolidated subsidiaries,
other than the variable interest entity, Jiangsu EZGO Electronic Technologies, Co., Ltd., unless the context otherwise indicates; |
|
● |
“EZGO HK” refers
to EZGO’s wholly-owned subsidiary, China EZGO Group Ltd. (formerly known as Hong Kong JKC Group Co., Limited), a Hong Kong
company; |
|
● |
“FINRA” refers
to the Financial Industry Regulatory Authority, Inc.; |
|
●
|
“Hengmao
Power Battery” refers to Changzhou Hengmao Power Battery Technology Co., Ltd., a PRC company of which 80.87% of the equity
interest is owned by the VIE; |
|
● |
“HK$,” “HKD”
or “Hong Kong dollars” refers to the legal currency of the Hong Kong Special Administrative Region; |
|
● |
“Hong Kong” refers to the Hong Kong
Special Administrative Region of the PRC; |
|
● |
“initial public offering” refers to our initial public offering, in which we offered and sold an aggregate of 3,038,500 Ordinary Shares at an offering price of US$4.00 per share, including a partial exercise of the underwriters’ over-allotment; |
|
|
|
|
● |
“Jiangsu Cenbird”
refers to Jiangsu Cenbird E-Motorcycle Technologies Co., Ltd., a PRC company of which 51% of the equity interest is owned by the
VIE; |
|
● |
“JOBS Act”
refers to the Jumpstart Our Business Startups Act, enacted in April 2012; |
|
|
|
|
● |
“MOFCOM” refers to China’s Ministry of Commerce; |
|
● |
“Ordinary Shares”
refers to EZGO’s Ordinary Shares, par value US$0.001 per share; |
|
● |
“PCAOB” refers
to the Public Company Accounting Oversight Board of the United States; |
|
● |
“RMB” or “Renminbi”
refer to the legal currency of the People’s Republic of China; |
|
● |
“SAFE” refers
to China’s State Administration of Foreign Exchange; |
|
● |
“SAT” refers
to China’s State Administration of Taxation; |
|
● |
“SEC” refers
to the United States Securities and Exchange Commission; |
|
● |
“Securities Act”
refers to the Securities Act of 1933, as amended; |
|
● |
“share capital”
or similar expressions include a reference to shares in a company that does not have a share capital under its governing law, but
which is authorized to issue a maximum or unlimited number of shares; |
|
|
|
|
● |
“Tianjin Dilang”
refers to Tianjin Dilang Technologies Co., Ltd., a PRC company of which Yizhiying IoT owns 80% of the equity interest; |
|
|
|
|
● |
“Tianjin Jiahao”
refers to Tianjin Jiahao Bicycle Co, Co. Ltd., a PRC company and a wholly-owned subsidiary of the VIE; |
|
● |
“US$,” “$,”
“dollars,” “USD” or “U.S. dollars” refer to the legal currency of the United States; |
|
● |
“U.S. GAAP”
refers to the generally accepted accounting principles in the United States; |
|
● |
“VIE” refers
to the variable interest entity, Jiangsu EZGO Electronic Technologies, Co., Ltd. (formerly known as Jiangsu Baozhe Electric Technologies,
Co., Ltd.), a PRC company; |
|
|
|
|
● |
“Yizhiying IoT”
refers to Changzhou Yizhiying IoT Technologies Co., Ltd., a PRC company and a wholly-owned subsidiary of the VIE. |
This prospectus contains information and statistics relating to
China’s economy and the industries in which EZGO operates through the WFOE, the VIE and its subsidiaries in China derived from
various publications issued by market research companies and PRC governmental entities, which have not been independently verified by
us. The information in such sources may not be consistent with other information compiled in or outside of China.
Unless
otherwise noted, all other financial and other data related to the Company in this prospectus is presented in U.S. dollars. We present
our financial results in RMB. We make no representation that any RMB or U.S. dollar amounts could have been, or could be, converted into
U.S. dollars or RMB, as the case may be, at any particular rate, or at all. The PRC government imposes control over its foreign currency
reserves in part through direct regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade.
This prospectus contains translations of certain foreign currency amounts into U.S. dollars for the convenience of the reader. Unless
otherwise stated, all translations of Renminbi into U.S. dollars in this prospectus were made at the rate at RMB6.4854 to US $1.00, the
middle price of RMB exchange rate announced by the People’s Bank of China as of September 30, 2021.
Our
fiscal year end is September 30. References to a particular “fiscal year” are to our fiscal year ended September 30 of that
calendar year.
References
in any prospectus supplement to “the accompanying prospectus” are to this prospectus and to “the prospectus”
are to this prospectus and the applicable prospectus supplement taken together.
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 British Virgin Islands holding company.
This
summary highlights selected information that is presented in greater detail elsewhere, or incorporated by reference, in this 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, including the matters set forth under the section of this prospectus
captioned “Risk Factors,” “Cautionary Note Regarding Forward-Looking Statements” and the financial statements
and related notes and other information that we incorporate by reference herein, including, but not limited to, our 2021 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 the 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, with substantially all of its operations and assets in China. This
variable interest entity structure involves unique risks to investors. The variable interest entity 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. However, the contractual arrangements with the VIE have not been tested in court. Our current corporate structure
and business operations and the market price of EZGO’s Ordinary Shares may be affected by the newly enacted PRC 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 enterprise if it is ultimately “controlled” by foreign investors. The securities offered in this
prospectus are shares of the BVI holding company, and, our shareholders will have an equity interest in an entity which does not have
ownership of the VIE and its subsidiaries, which manufacture the products and generate a significant portion of the consolidated revenue.
Because we do not have ownership of the VIE and its subsidiaries, we must rely on the shareholders of the VIE with our chief executive
officer being a substantial shareholder of the VIE to comply with their contractual obligations. The approval of PRC regulatory agencies
may be required in connection with an offering pursuant to this prospectus under a PRC regulation or any new laws, rules or regulations
to be enacted, and if required, we may not be able to obtain such approval. Changzhou EZGO has nominal operations or assets, has contractual
rights to determine the most significant economic activities of the VIE and receives the majority of the economic benefits of the VIE
through contractual arrangements rather than equity ownership. See “Corporate Structure” for a summary of the contractual
arrangements, “Risk Factors – Risks Related to Our Corporate Structure” on page 35 of this prospectus and “Item
3.D. Key Information—Risk Factors— Risks Related to Our Corporate Structure” in our 2021 Annual Report, which is
incorporated herein by reference, for certain risks related to the contractual arrangements.
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 law and regulations related to urban e-tricycles. Tianjin Dilang produces and sells the urban e-tricycles in suburban
areas in Beijing and Tianjin. 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, 2021, EZGO, through the WFOE, the VIE and its subsidiaries in China, did not have non-new standards e-bicycles
as its property, plants and equipment and no impairment was recognized for the fiscal years ended September 30, 2019, 2020 and 2021.
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 91%, 21% and 18% of
its total revenues for the fiscal years ended September 30, 2019, 2020 and 2021, respectively. The revenue from e-bicycles sales accounted
for approximately 8%, 73% and 78% of its total revenues for the fiscal years ended September 30, 2019, 2020 and 2021, respectively. For
the fiscal years ended September 30, 2019, 2020 and 2021, 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, 2021, the revenue from the smart charging piles business accounted
for 1% 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, was incorporated in Hong Kong on February 13, 2019. EZGO HK, in turn, holds
all of the capital stock of Changzhou EZGO, 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”). See “– Contractual Arrangements with
the VIE and Its Shareholders.” EZGO conducts its business in the PRC primarily through the VIE and its subsidiaries, Hengmao
Power Battery, Jiangsu Cenbird, Yizhiying IoT, Tianjin Dilang, and Tianjin Jiahao 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.
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 our 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
securities 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 our 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 the 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 EZGO is registering for sale, including that it could cause the value of its 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 in “Risk
Factors – Risks Related to Our Corporate Structure” on page 35 of this prospectus and under “Item 3. Key Information—D.
Risk Factors—Risks Related to Our Corporate Structure” in our 2021 Annual Report, which is incorporated by reference.
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 the VIE, and we treat the VIE as our
consolidated VIE 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 “Risk Factors
– Risks Related to Our Corporate Structure” on page 35 of this prospectus and “Item 3.D. Key Information —
Risk Factors — Risks Related to Our Corporate Structure” in our 2021 Annual Report, which is incorporated herein by reference.
We have relied on the opinion of DeHeng Law
Offices, our PRC counsel, that:
|
● |
the ownership structure of the VIE and Changzhou
EZGO in China does not violate any applicable PRC laws or regulations currently in effect; and |
|
● |
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, 2019, 2020 and 2021, and for the six months ended March 31, 2022,
and selected balance sheet information as of September 30, 2019, 2020 and 2021, and as of March 31, 2022, showing financial information
for parent company EZGO Technologies Ltd., 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 2.
|
● |
“parent” refers
to EZGO Technologies Ltd., a BVI business company; |
|
● |
“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 and (iii) Jiangsu Langyi Import and Export Trading Co., Ltd., which was established
in December 2021; |
|
● |
“WFOE” refers
to Changzhou EZGO Enterprise Management Co., Ltd., our wholly owned PRC subsidiary. “WFOE’s subsidiary” refers
to Jiangsu EZGO Energy Supply Chain Technologies, Co., Ltd., which was established in December 2021; |
|
● |
“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., (v) Tianjin Jiahao Bicycle Co, Co. Ltd., which became one of the subsidiaries of VIE in June 2021, (vi) Tianjin Dilang
Technologies Co., Ltd., and (vii) Tianjin Dilang Import and Export Trading Co., Ltd., which was established in June 2021; and |
|
● |
“VIE” refers
to Jiangsu EZGO Electronic Technologies, Co., Ltd. |
Consolidated
Statements of Operations Information
| |
For the six months ended March
31, 2022 | |
| |
Parent | | |
Non-VIE Subsidiaries | | |
WFOE and WFOE’s subsidiary | | |
VIE and its subsidiaries | | |
Eliminations | | |
Consolidated | |
Revenue | |
$ | - | | |
$ | - | | |
$ | 1,562,272 | | |
$ | 4,467,906 | | |
$ | - | | |
$ | 6,030,178 | |
Cost of revenue | |
| - | | |
| - | | |
| (1,493,022 | ) | |
| (4,254,940 | ) | |
| - | | |
| (5,747,962 | ) |
Gross profit | |
| - | | |
| - | | |
| 69,250 | | |
| 212,966 | | |
| - | | |
| 282,216 | |
Operating expenses | |
| (524,770 | ) | |
| (1,714 | ) | |
| (636,356 | ) | |
| (1,519,203 | ) | |
| - | | |
| (2,682,043 | ) |
Loss from operations | |
| (524,770 | ) | |
| (1,714 | ) | |
| (567,106 | ) | |
| (1,306,237 | ) | |
| - | | |
| (2,399,827 | ) |
Share of loss from subsidiaries | |
| (205,924 | ) | |
| (204,448 | ) | |
| - | | |
| - | | |
| 410,371 | | |
| - | |
Other income, net | |
| 224 | | |
| 4 | | |
| 301,166 | | |
| 51,073 | | |
| - | | |
| 352,467 | |
Loss before income tax expenses (benefit) | |
| (730,470 | ) | |
| (206,158 | ) | |
| (265,940 | ) | |
| (1,255,164 | ) | |
| 410,371 | | |
| (2,047,360 | ) |
Net loss | |
| (730,470 | ) | |
| (205,924 | ) | |
| (204,448 | ) | |
| (1,941,998 | ) | |
| 410,371 | | |
| (2,672,468 | ) |
Less: net loss attributable to non-controlling interests | |
| - | | |
| - | | |
| - | | |
| (328,029 | ) | |
| - | | |
| (328,029 | ) |
Net loss attributable to EZGO’s shareholders | |
| (730,470 | ) | |
| (205,924 | ) | |
| (204,448 | ) | |
| (1,613,969 | ) | |
| 410,371 | | |
| (2,344,439 | ) |
| |
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 | |
| |
Fiscal year ended September 30,
2019 | |
| |
Parent | | |
Non-VIE Subsidiaries | | |
WFOE | | |
VIE and its subsidiaries | | |
Eliminations | | |
Consolidated | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Revenue | |
$ | - | | |
$ | - | | |
| - | | |
$ | 1,371,201 | | |
$ | - | | |
$ | 1,371,201 | |
Cost of revenue | |
| - | | |
| - | | |
| - | | |
| (246,736 | ) | |
| - | | |
| (246,736 | ) |
Gross profit | |
| - | | |
| - | | |
| - | | |
| 1,124,465 | | |
| - | | |
| 1,124,465 | |
Operating expenses | |
| - | | |
| - | | |
| - | | |
| (348,602 | ) | |
| - | | |
| (348,602 | ) |
Income from operations | |
| - | | |
| - | | |
| - | | |
| 775,863 | | |
| - | | |
| 775,863 | |
Share of income from subsidiaries | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Other income, net | |
| - | | |
| - | | |
| - | | |
| 265,200 | | |
| - | | |
| 265,200 | |
Income before income tax expenses | |
| - | | |
| - | | |
| - | | |
| 1,041,063 | | |
| - | | |
| 1,041,063 | |
Net income | |
| - | | |
| - | | |
| - | | |
| 2,191,437 | | |
| - | | |
| 2,191,437 | |
Less: net income attributable to non-controlling interests | |
| - | | |
| - | | |
| - | | |
| 453,314 | | |
| - | | |
| 453,314 | |
Net income attributable to EZGO’s shareholders | |
| - | | |
| - | | |
| - | | |
| 1,738,123 | | |
| - | | |
| 1,738,123 | |
Consolidated
Balance Sheets Information
| |
As of March 31, 2022 | |
| |
Parent | | |
Non-VIE Subsidiaries | | |
WFOE and WFOE’s subsidiary | | |
VIE and its subsidiaries | | |
Eliminations | | |
Consolidated | |
Amounts due from other subsidiaries | |
$ | 16,166,400 | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | (16,166,400 | ) | |
$ | - | |
Prepaid on behalf of VIE and its subsidiaries | |
| 3,016,175 | | |
| - | | |
| - | | |
| - | | |
| (3,016,175 | ) | |
| - | |
Amount due from VIE and its subsidiaries | |
| - | | |
| - | | |
| 13,889,546 | | |
| - | | |
| (13,889,546 | ) | |
| - | |
Service fee receivable from VIE and its subsidiaries | |
| - | | |
| - | | |
| 116,190 | | |
| - | | |
| (116,190 | ) | |
| - | |
Amount due from non-VIE subsidiaries | |
| - | | |
| - | | |
| 1,735 | | |
| 808 | | |
| (2,543 | ) | |
| - | |
Amount due from WFOE and its subsidiary | |
| - | | |
| - | | |
| - | | |
| 5,292,225 | | |
| (5,292,225 | ) | |
| - | |
Amount due from EZGO | |
| - | | |
| - | | |
| - | | |
| 316,524 | | |
| (316,524 | ) | |
| - | |
Current assets | |
| 19,573,844 | | |
| 9,265 | | |
| 22,429,799 | | |
| 52,994,627 | | |
| (64,298,831 | ) | |
| 30,708,704 | |
Amount due to VIE and its subsidiaries | |
| (316,524 | ) | |
| (808 | ) | |
| (5,292,225 | ) | |
| - | | |
| 5,609,556 | | |
| - | |
Amount due to WFOE and its subsidiary | |
| - | | |
| (1,735 | ) | |
| - | | |
| (13,889,546 | ) | |
| 13,891,281 | | |
| - | |
Service fee payable to WFOE and its subsidiary | |
| - | | |
| - | | |
| - | | |
| (116,190 | ) | |
| 116,190 | | |
| - | |
Amount due to EZGO | |
| - | | |
| (16,166,400 | ) | |
| - | | |
| (3,016,175 | ) | |
| 19,182,575 | | |
| - | |
Working capital | |
| 19,257,320 | | |
| (16,159,678 | ) | |
| 16,384,283 | | |
| (2,903,617 | ) | |
| - | | |
| 16,578,308 | |
Investment in subsidiaries | |
| 286,626 | | |
| 16,446,069 | | |
| - | | |
| - | | |
| (16,732,694 | ) | |
| - | |
Assets | |
| 19,573,844 | | |
| 16,165,500 | | |
| 22,490,007 | | |
| 86,032,226 | | |
| (99,847,193 | ) | |
| 44,414,384 | |
| |
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 | |
| |
As of September 30, 2019 | |
| |
Parent | | |
Non-VIE Subsidiaries | | |
WFOE | | |
VIE and its subsidiaries | | |
Eliminations | | |
Consolidated | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Current assets | |
| - | | |
| - | | |
| - | | |
| 16,694,687 | | |
| - | | |
| 16,694,687 | |
Working capital | |
| - | | |
| - | | |
| - | | |
| 9,860,560 | | |
| - | | |
| 9,860,560 | |
Investment in non-VIE subsidiaries | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Assets | |
| - | | |
| - | | |
| - | | |
| 19,171,950 | | |
| - | | |
| 19,171,950 | |
Consolidated
Cash Flows Information
| |
For the six months ended March
31, 2022 | |
| |
Parent | | |
Non-VIE Subsidiaries | | |
WFOE and WFOE’s subsidiary | | |
VIE and its subsidiaries | | |
Eliminations | | |
Consolidated | |
Total cash provided
by (used in) operating activities | |
$ | 527,869 | | |
$ | (1,566 | ) | |
$ | (2,413,311 | ) | |
$ | (5,193,566 | ) | |
$ | - | | |
$ | (7,080,574 | ) |
Prepayment on behalf of VIE and its subsidiaries | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Loan to non-VIE subsidiaries | |
| (313,200 | ) | |
| - | | |
| - | | |
| - | | |
| 313,200 | | |
| - | |
Loan to VIE and its subsidiaries | |
| - | | |
| - | | |
| (345,402 | ) | |
| - | | |
| 345,402 | | |
| - | |
Amounts due from non-VIE subsidiaries | |
| - | | |
| - | | |
| - | | |
| (808 | ) | |
| 808 | | |
| - | |
Amounts due from Changzhou EZGO | |
| - | | |
| - | | |
| - | | |
| (3,377,397 | ) | |
| 3,377,397 | | |
| - | |
Invest in subsidiary | |
| - | | |
| (313,000 | ) | |
| - | | |
| - | | |
| 313,000 | | |
| - | |
Others(1) | |
| - | | |
| - | | |
| - | | |
| 1,431,553 | | |
| - | | |
| 1,431,553 | |
Total cash used in provided by investing
activities | |
| (313,200 | ) | |
| (313,000 | ) | |
| (345,402 | ) | |
| (1,946,652 | ) | |
| 4,349,807 | | |
| 1,431,553 | |
Loans from EZGO | |
| - | | |
| 313,200 | | |
| - | | |
| - | | |
| (313,200 | ) | |
| - | |
Loans from Changzhou EZGO | |
| - | | |
| 1,735 | | |
| - | | |
| 345,402 | | |
| (347,137 | ) | |
| - | |
Amounts due to VIE and its subsidiaries | |
| - | | |
| 808 | | |
| 3,377,397 | | |
| - | | |
| (3,378,205 | ) | |
| - | |
Contribution from shareholder | |
| - | | |
| - | | |
| 313,000 | | |
| - | | |
| (313,000 | ) | |
| - | |
Proceeds from issuance of ordinary shares in connection
with IPO, net of issuance cost | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Others(2) | |
| - | | |
| - | | |
| - | | |
| 1,840,048 | | |
| - | | |
| 1,840,048 | |
Total cash provided by financing
activities | |
| - | | |
| 315,743 | | |
| 3,690,397 | | |
| 2,185,450 | | |
| (4,351,542 | ) | |
| 1,840,048 | |
Effect of exchange rate changes | |
| 1,162 | | |
| - | | |
| (212,546 | ) | |
| 257,469 | | |
| - | | |
| 46,085 | |
Net increase (decrease) in cash,
cash equivalents and restricted cash | |
| 215,831 | | |
| 1,177 | | |
| 719,138 | | |
| (4,697,299 | ) | |
| (1,735 | ) | |
| (3,762,888 | ) |
| |
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 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 | ) |
| |
Fiscal year ended September 30,
2019 | |
| |
Parent | | |
Non-VIE Subsidiaries | | |
WFOE | | |
VIE and its subsidiaries | | |
Eliminations | | |
Consolidated | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Total cash used in operating activities | |
$ | - | | |
$ | - | | |
| - | | |
$ | (2,702,167 | ) | |
$ | - | | |
$ | (2,702,167 | ) |
Total cash used in investing activities | |
| - | | |
| - | | |
| - | | |
| (1,922,326 | ) | |
| - | | |
| (1,922,326 | ) |
Total cash provided by financing activities | |
| - | | |
| - | | |
| - | | |
| 8,217,985 | | |
| - | | |
| 8,217,985 | |
Effect of exchange rate changes | |
| - | | |
| - | | |
| - | | |
| 12,778 | | |
| - | | |
| 12,778 | |
Net increase in cash, cash equivalents and restricted cash | |
| - | | |
| - | | |
| - | | |
| 3,606,270 | | |
| - | | |
| 3,606,270 | |
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 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 six months ended March 31, 2022, EZGO
provided an additional interest-free loan of US$313,200 to EZGO HK; EZGO HK injected registered capital of US$313,000 into Changzhou
EZGO. Changzhou EZGO provided loans of US$345,402 to the VIE and increase US$ 3,377,397 of payables due to the VIE and its subsidiary.
The details of loans as of March 31, 2022
provided by Changzhou EZGO are shown below:
Start Date |
|
Maturity Date |
|
Amount |
|
|
Annual Interest
Rate |
|
April 6, 2021 |
|
April 5, 2026 |
|
$ |
3,943,653 |
|
|
|
5 |
% |
June 9, 2021 |
|
June 8, 2026 |
|
$ |
2,366,192 |
|
|
|
5 |
% |
September 17, 2021 |
|
September 16, 2024 |
|
$ |
630,984 |
|
|
|
4 |
% |
September 29, 2021 |
|
September 28, 2024 |
|
$ |
2,650,135 |
|
|
|
4 |
% |
October 13, 2021 |
|
October 13, 2026 |
|
$ |
3,943,653 |
|
|
|
Chinese Loan Prime
Rate (LPR)+0.25 |
% |
December 21, 2021 |
|
December 21, 2024 |
|
$ |
347,041 |
|
|
|
4 |
% |
Total |
|
|
|
$ |
13,881,659 |
|
|
|
|
|
* | The amount of the loans generated for the fiscal
year ended September 30, 2021 was adjusted for exchange rates with no actual cash inflows. |
Foresaid
transactions including capital injection and loans, would be eliminated upon consolidation.
We maintain bank accounts in China, including
cash in Renminbi in the amount of RMB29,583,341 and RMB10,857,318 as of September 30, 2021 and March 31, 2022 respectively, and cash
in USD in the amount of US$7,831 and US$4,356 as of September 30, 2021 and March 31, 2022 respectively. 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.” 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, Changzhou EZGO 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 any financing
we raise, including any offerings made pursuant to this prospectus, 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.”
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.”
Under existing PRC foreign exchange regulations,
currently our PRC subsidiaries 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 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 or make distributions in foreign currencies
to our shareholders, including holders of EZGO’s Ordinary Shares. 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. See also “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 26, “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 page 26 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 our EZGO’s operations through the WFOE, the VIE and its subsidiaries in China.” on page 28.
As of September 30, 2021, none of our subsidiaries
have 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 “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.”
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”.
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:
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we are not required to provide as many Exchange Act reports, or as
frequently, as a domestic public company; |
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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; |
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we are not required to provide the same level of disclosure on certain
issues, such as executive compensation; |
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we are exempt from provisions of Regulation FD aimed at preventing
issuers from making selective disclosures of material information; |
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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 |
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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$1.07 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$1.07 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 Developments
On January 31, 2022, EZGO terminated Briggs
& Veselka Co., LLP (“Briggs & Veselka”) as its independent registered public accounting firm effective as of January
31, 2022. Briggs & Veselka informed the Company that it was withdrawing as the Company’s independent registered public accounting
firm as Briggs & Veselka has joined the accounting firm of Crowe LLP, effective as of January 1, 2022, and Briggs & Veselka withdrew
from qualification as a PCAOB registered firm on January 27, 2022, as a result of its joining Crowe LLP. Briggs & Veselka’s
withdrawal and termination was considered and approved by the Company’s audit committee. The audit report of Briggs & Veselka
on the financial statements of the Company as of and for the year ended September 30, 2021, did not contain any adverse opinion or disclaimer
of opinion, nor was it qualified or modified as to uncertainty, audit scope, or accounting principles. There were no disagreements with
Briggs & Veselka on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures,
from the time of Briggs & Veselka’s engagement up to the date of termination which disagreements that, if not resolved to Briggs
& Veselka’s satisfaction, would have caused Briggs & Veselka to make reference in connection with its opinion to the subject
matter of the disagreement. Other than the material weakness in the Company’s internal control over financial reporting, there
were no “reportable events” as that term is described in Item 16F(a)(1)(v)(A) through (D) of Form 20-F occurred within the
fiscal year ended September 30, 2021 and subsequently up to the date of termination.
On February 28, 2022, EZGO appointed Wei, Wei &
Co., LLP (“WWC”) as successor independent registered public accounting firm of the Company effective as of the same day and
to perform independent audit services for the fiscal year ended September 30, 2022. The appointment of WWC was approved by the audit committee
of the board of directors on February 28, 2022. During the Company’s most recent two fiscal years and through the subsequent interim
period on or prior to the appointment of WWC, neither the Company nor anyone on its behalf has consulted with of WWC on either (a) the
application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might
be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company that
of WWC concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial
reporting issue; or (b) any matter that was the subject of a disagreement, as that term is defined in disagreement (as defined in Item
304(a)(1)(iv) of Regulation S-K and the related instructions) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).
On July 21, 2022, EZGO entered into a securities
purchase agreement (the “SPA”) with certain “non-U.S. Persons” (the “Purchasers”) as defined in Regulation
S of the Securities Act, pursuant to which EZGO agreed to sell 10,000,000 Ordinary Shares, at a per share purchase price of $0.80 (the
“Reg S Offering”). The gross proceeds to the Company from the Reg S Offering were US$8.0 million. Upon closing of the Reg
S Offering, there were 23,626,891 Ordinary Shares issued and outstanding. The Purchasers have each made customary representations, warranties
and covenants. The Ordinary Shares were issued to Purchasers upon satisfaction of all closing conditions, including Nasdaq’s completion
of its review of the notification to Nasdaq regarding the listing of the Ordinary Shares. The Ordinary Shares issued in the Reg S Offering
are exempt from the registration requirements of the Securities Act, pursuant to Regulation S promulgated thereunder.
On August 8, 2022, upon the Compensation Committee’s
approval and pursuant to EZGO’s 2022 Share Incentive Plan, EZGO awarded 320,000, 200,000, 330,000 and 150,000 Ordinary Shares to
Zhixiang Wen, Xiaofei Han, Yuxing Liu and Huiyan Xie, respectively, all of whom are employees of EZGO, except Xiaofei Han who is a consultant
of EZGO. The Ordinary Shares awarded to Zhixiang Wen and Xiaofei Han vested immediately as of the date of grant. The Ordinary Shares
awarded to Yuxing Liu will vest on the first anniversary of the date of grant. The Ordinary Shares awarded to Huiyan Xie will vest on
the second anniversary of the date of grant. The aggregate fair value of the Ordinary Shares awarded were $240,000, $150,000, $247,500
and $112,500, respectively, based on the closing price of EZGO’s Ordinary Shares on the date of grant.
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 the 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 32.
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 that
as a result of: (i) EZGO is listed on the Nasdaq and does not “seek to list on any other foreign stock exchange”; (ii) we
do not hold personal information on more than one million users in EZGO’s business operations through the WFOE, the VIE and its
subsidiaries; and (iii) data processed in its business does not have a bearing on national security and thus may not be classified as
core or important data by the authorities, we are not required to apply for a cybersecurity review under the Measures for Cybersecurity
Review (2021 version).
On December 24, 2021, the CSRC released the
Administrative Provisions of the State Council Regarding the Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft
for Comments) (the “Draft Administrative Provisions”) and the Measures for the Overseas Issuance of Securities and Listing
Record-Filings by Domestic Enterprises (Draft for Comments) (the “Draft Filing Measures,” collectively with the Draft Administrative
Provisions, the “Draft Rules Regarding Overseas Listing”), both of which have a comment period that expired on January 23,
2022. The Draft Rules Regarding Overseas Listing 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 implement any follow-on offering in an overseas 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 commitments; and (2) domestic legal opinions.
The Draft Rules Regarding Overseas Listing,
if enacted, 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 Draft Rules Regarding Overseas List on a timely basis, or at all. For instance, if we complete
any offering under this prospectus after the enactment of the Draft Rules Regarding Overseas Listing, we may be required to submit additional
filings. As of the date of this prospectus, the Draft Rules Regarding Overseas Listings have not been promulgated, and we have not been
required to complete the record-filings procedure to the government of China for any offering pursuant to this prospectus. While the
final version of the Draft Rules Regarding Overseas Listings are expected to be adopted in 2022, we believe that none of the situations
that would clearly prohibit overseas offering and listing applies to us. In reaching this conclusion, we have relied on an opinion of
DeHeng Law Offices, our PRC counsel, provided that there is uncertainty inherent in relying on an opinion of counsel in connection with
whether we are required to obtain permission 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 any offerings made pursuant to this prospectus. Any failure of EZGO to fully comply
with new regulatory requirements may significantly limit or completely hinder its 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
its financial condition and results of operations and cause its securities, including the securities EZGO is registering for sale in
this prospectus, 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:
Company |
License/Permission |
Issuing
Authority |
Validity |
EZGO
HK |
Business
Registration Certificate |
Registrar
of Companies Hong Kong Special Administrative Region |
February
13, 2022 - February 12, 2023 |
|
|
|
|
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 |
Tianjin
Dilang |
Business
License |
Market
Supervision Administrative Bureau of Tianjin Wuqing |
July
2, 2019 -
July 1, 2049 |
Tianjin
Dilang Import and Export Trading Co., Ltd. |
Business
License |
Market
Supervision Administrative Bureau of Tianjin Wuqing |
June
18, 2021 -
June 17, 2061 |
Jiangsu
Cenbird |
Business
License |
Economic
Development Zone Administrative Committee of Jiangsu Changzhou |
May
7, 2018 -
Long-term |
Tianjin
Jiahao |
Business
License |
Market
Supervision Administrative Bureau of Tianjin Wuqing |
September
25, 2007 -
Long-term |
Tianjin
Jiahao |
Construction
Land Planning Permit |
Planning
Bureau of Tianjin Wuqing |
January
24, 2008 -
Long-term |
Tianjin
Jiahao |
Environmental
Protection Permit for Construction |
Environmental
Protection Bureau of Tianjin Wuqing |
January
17, 2008-
Long-term |
Tianjin
Jiahao |
Construction
Project Planning Acceptance Certificate |
Planning
Bureau of Tianjin Wuqing |
November
5, 2013 -
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 |
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 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 planned 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 VIE or its subsidiaries to obtain regulatory approval from Chinese authorities before offering securities
in the U.S. 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 21
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 HFCAA, 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. The U.S. Senate passed the Accelerating Holding Foreign Companies Accountable
Act on June 22, 2021, which, if enacted, would decrease the number of non-inspection years from three years to two, thus reducing the
time period before EZGO’s Ordinary Shares may be prohibited from trading or delisted. 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 our 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 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 list does not
include our former auditors, Marcum Asia CPAs LLP (formally known as Marcum Bernstein & Pinchuk LLP, “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. According
to the PCAOB, its December 2021 determinations under the HFCAA remain in effect. The PCAOB is required to reassess these determinations
by the end of 2022. Under the PCAOB’s rules, a reassessment of a determination under the HFCAA may result in the PCAOB reaffirming,
modifying or vacating the determination. Our auditor, 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. However, the PCAOB is currently unable to conduct inspections in China without
the approval of Chinese government authorities, but access to audit work and papers may be available in the near future, as a result
of the Statement of Proposal. If the PCAOB does gain such access, there is no assurance that it may not later be determined that the
PCAOB is unable to inspect or investigate our auditor completely, and 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 HFCAA. 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 HFCAA. 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. If a registrant is identified as a Commission-Identified
Issuer based on its annual report for the fiscal year ended, for example, September 30, 2021, the registrant will be required to comply
with the submission or disclosure requirements in its annual report filing covering the fiscal year ended September 30, 2022.
For details on the effects of HFCAA on us,
see “Risk Factors— Risks Related to Doing Business in China - EZGO’s Ordinary Shares may be delisted under the HFCAA
if the PCAOB is unable to adequately inspect audit documentation located in China. The delisting of ESZGO’s Ordinary Shares, or
the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of
the PCAOB to conduct adequate inspections deprives our investors with the benefits of such inspections. Furthermore, on June 22, 2021,
the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which, if enacted, would amend the HFCAA and require
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 33.
Corporate Information
Our principal executive offices in China are
located at Building #A, Floor 2, Changzhou Institute of Dalian University of Technology, Science and Education Town, Wujin District,
Changzhou, Jiangsu Province. Our telephone number at this address 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 and the VIE face. For a detailed description of the risk factors we, our subsidiaries and the VIE may face,
see “Item 3. Key Information—D. Risk Factors” in our 2021 Annual Report, which is incorporated by reference in this
prospectus and “Risk Factors” in this prospectus.
Risks Related to Doing Business
in China
We are also subject to risks and uncertainties
relating to doing business in China in general, including, but are not limited to, the following:
|
● |
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. 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 through the WFOE, the VIE and its
subsidiaries in China and the value of EZGO’s Ordinary Shares. See “Risk Factors—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” in this prospectus
and “Item 3. Key Information —D. Risk Factors—Risks Related to Doing Business in
China—Changes in China’s economic, political, or social conditions or government policies
could have a material adverse effect on EZGO’s business and operations” in the 2021 Annual
Report. |
|
|
|
|
● |
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, which could result in a material change in EZGO’s operations and/or the value of the securities EZGO
is registering 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. 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 influence EZGO’s operations at any time, which could result in a material
change in its operations and its ordinary shares could decline in value or become worthless” in this prospectus. |
|
● |
Regulation and censorship of
information disseminated over the Internet in China may adversely affect EZGO’s business through
the WFOE, the VIE and its subsidiaries in China, and we may be liable for content that is displayed
on our website. See “Risk Factors—Risks Related to Doing Business in China—Regulation
and censorship of information disseminated over the Internet in China may adversely affect EZGO’s
business through the WFOE, the VIE and its subsidiaries in China, and we may be liable for content
that is displayed on our website” in this prospectus. |
|
|
|
|
● |
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. See “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”
in this prospectus. |
|
|
|
|
● |
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. See “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” in this prospectus. |
|
● |
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 this 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. 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 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”
in this prospectus. |
| ● | The Draft Rules
Regarding Overseas Listing 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 implement
any follow-on offering in an overseas 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 commitments; and (2) domestic legal opinions. The Draft
Rules Regarding Overseas Listing, if enacted, 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 securities
to investors, cause significant disruption to its business operations, and severely damage
its reputation, which would materially and adversely affect its financial condition and results
of operations and cause its securities to significantly decline in value or become worthless.
See “Risk Factors—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” in this prospectus. |
| ● | Substantially
all of EZGO’s current operations are conducted in the PRC through the WFOE, 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, 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 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. See “Risk Factors—Risks
Related to Doing Business in China—You may experience difficulties in effecting service
of legal process, enforcing foreign judgments or bringing actions in China against us or
our management named in this prospectus based on foreign laws” in this prospectus.
|
| ● | EZGO’s
Ordinary Shares may be delisted or prohibited from trading under the HFCAA if the PCAOB is
unable to inspect our auditors. The delisting of EZGO’s Ordinary Shares, or the threat
of their being delisted, may materially and adversely affect the value of your investment.
Additionally, the inability of the PCAOB to conduct adequate inspection deprives our investors
with the benefits of such inspections. Furthermore, on June 22, 2021, the U.S. Senate passed
the Accelerating Holding Foreign Companies Accountable Act, which, if enacted, would amend
the HFCAA and require 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 EZGO’s Ordinary Shares could be prohibited from trading
and delisted after two years instead of three. See “Risk Factors—Risks Related
to Doing Business in China— EZGO’s Ordinary Shares may be delisted under the
HFCAA 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 the value of your investment. Additionally, the inability
of the PCAOB to conduct adequate inspections deprives our investors with the benefits of
such inspections. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating
Holding Foreign Companies Accountable Act, which, if enacted, would amend the HFCAA and require
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”
in this prospectus. |
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:
|
● |
EZGO may incur losses
in the future. |
|
|
|
|
● |
If EZGO fails to develop and
introduce new models of e-bicycle products in anticipation of market demand primarily through the
VIE and its subsidiaries in China in a timely and cost-effective manner, its competitive position
and ability to generate revenues may be materially and adversely affected. |
|
|
|
|
● |
If EZGO is unable to manage
its growth or execute its strategies effectively through the WFOE, the VIE and its subsidiaries in
China, its business and prospects may be materially and adversely affected. |
|
|
|
|
● |
EZGO’s marketing
strategy of appealing to and growing sales to a more diversified group of users may not be successful. |
|
|
|
|
● |
Each of EZGO, the WFOE, the
VIE and its subsidiaries faces intense competition in the charging pile market, and if any of them
fails to compete effectively, it may lose market share and customers. |
|
|
|
|
● |
EZGO’s products and services
provided through the WFOE, the VIE and its subsidiaries in China may experience quality problems
from time to time, which could result in decreased sales, adversely affect its results of operations
and harm its reputation. |
|
|
|
|
● |
EZGO’s products provided
through the WFOE, the VIE and its subsidiaries in China are subject to safety and other standards
and failure to satisfy such mandated standards would have a material adverse effect on its 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:
|
● |
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. |
|
|
|
|
● |
We rely on contractual arrangements
with the VIE and its shareholders to operate EZGO’s business, which may not be as effective
as direct ownership in providing operational control and otherwise have a material adverse effect
as to EZGO’s business primarily through the VIE and its subsidiaries in China. |
|
|
|
|
● |
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 EZGO’s business primarily through the VIE and its subsidiaries
in China. |
|
|
|
|
● |
The shareholders of the VIE
may have potential conflicts of interest with us, which may materially and adversely affect EZGO’s
business primarily through the VIE and its subsidiaries in China and financial condition. |
|
● |
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 is registering may decline in value or become worthless if the determinations, changes, or interpretations
result in its inability to assert contractual rights over the assets of its PRC subsidiaries or the VIE that conducts a substantial
part of EZGO’s operations. |
|
● |
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. |
|
|
|
|
● |
We may lose the ability to
use and enjoy assets held by the VIE that are material to the operation of EZGO’s business
primarily through the VIE and its subsidiaries in China if the entity goes bankrupt or becomes subject
to a dissolution or liquidation proceeding. |
|
|
|
|
● |
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, EZGO’s business and operations primarily through
the VIE and its subsidiaries in China may be materially and adversely affected. |
Risks Related to Our 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:
|
● |
The market price of
EZGO’s Ordinary Shares has recently declined significantly, and EZGO’s Ordinary Shares could be delisted from the Nasdaq
or trading could be suspended. |
|
|
|
|
● |
In the event that EZGO’s
Ordinary Shares are delisted from Nasdaq, U.S. broker-dealers may be discouraged from effecting transactions in EZGO’s Ordinary
Shares because they may be considered penny stocks and thus be subject to the penny stock rules. |
|
|
|
|
● |
An active trading market
for EZGO’s Ordinary Shares may not continue and the trading price for EZGO’s Ordinary Shares may fluctuate significantly. |
|
● |
The trading price of
EZGO’s Ordinary Shares may be volatile, which could result in substantial losses to investors. |
|
● |
EZGO may not be able
to maintain its listing on Nasdaq which could limit investors’ ability to make transactions in its securities and subject it
to additional trading restrictions. |
|
● |
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. |
|
● |
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, 2019, 2020 and 2021
and the Consolidated Balance Sheet data as of September 30, 2020 and 2021 have been derived from our audited consolidated financial statements,
which are included in our 2021 Annual Report, which is incorporated herein by reference. The selected consolidated balance sheet data
as of September 30, 2019 have been derived from our audited consolidated financial statements not included in our 2021 Annual Report.
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 2021 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 income data for the years ended September 30, 2019, 2020
and 2021:
| |
For the years ended September
30, | |
| |
2019 | | |
2020 | | |
2021 | |
| |
| | |
| | |
| |
Net revenues | |
$ | 1,371,201 | | |
$ | 15,243,282 | | |
$ | 23,422,006 | |
Cost of revenues | |
| (246,736 | ) | |
| (13,704,248 | ) | |
| (23,039,528 | ) |
Gross profit | |
| 1,124,465 | | |
| 1,539,034 | | |
| 382,478 | |
| |
| | | |
| | | |
| | |
Selling and marketing expenses | |
| (28,995 | ) | |
| (385,722 | ) | |
| (1,558,719 | ) |
General and administrative expenses | |
| (319,607 | ) | |
| (1,081,346 | ) | |
| (2,701,178 | ) |
Total operating expenses | |
| (348,602 | ) | |
| (1,467,068 | ) | |
| (4,259,897 | ) |
| |
| | | |
| | | |
| | |
Income (loss) from operations | |
| 775,863 | | |
| 71,966 | | |
| (3,877,419 | ) |
| |
| | | |
| | | |
| | |
Interest expense, net | |
| (9,712 | ) | |
| (14,803 | ) | |
| (60,756 | ) |
Other income, net | |
| 274,912 | | |
| 393,198 | | |
| 141,530 | |
Total other income, net | |
| 265,200 | | |
| 378,395 | | |
| 80,774 | |
| |
| | | |
| | | |
| | |
Income (loss) from continuing
operations before income tax expense | |
| 1,041,063 | | |
| 450,361 | | |
| (3,796,645 | ) |
Income tax (expense) benefit | |
| (273,927 | ) | |
| (116,063 | ) | |
| 419,405 | |
Net income (loss) from continuing operations | |
| 767,136 | | |
| 334,298 | | |
| (3,377,240 | ) |
Income (loss) from discontinued operation, net of tax | |
| 1,424,301 | | |
| (57,376 | ) | |
| (36,404 | ) |
Net income (loss) | |
| 2,191,437 | | |
| 276,922 | | |
| (3,413,644 | ) |
| |
| | | |
| | | |
| | |
Net income (loss) from continuing operations | |
| 767,136 | | |
| 334,298 | | |
| (3,377,240 | ) |
Less: net income (loss) attributable to
non-controlling interests from continuing operations | |
| 403,334 | | |
| 129,748 | | |
| (434,971 | ) |
Net income (loss) attributable to EZGO
Technologies Ltd.’s shareholders from continuing operations | |
| 363,802 | | |
| 204,550 | | |
| (2,942,269 | ) |
| |
| | | |
| | | |
| | |
Income (loss) from discontinued operation, net of tax | |
| 1,424,301 | | |
| (57,376 | ) | |
| (36,404 | ) |
Less: net income attributable to non-controlling
interests from discontinued operation | |
| 49,980 | | |
| - | | |
| - | |
Net income (loss) attributable to EZGO
Technologies Ltd.’s shareholders from discontinued operation | |
| 1,374,321 | | |
| (57,376 | ) | |
| (36,404 | ) |
Net income (loss) attributable to EZGO Technologies Ltd.’s
shareholders | |
$ | 1,738,123 | | |
$ | 147,174 | | |
$ | (2,978,673 | ) |
| |
| | | |
| | | |
| | |
Net income (loss) from continuing operations per Ordinary Share: | |
| | | |
| | | |
| | |
Basic and diluted | |
$ | 0.05 | | |
$ | 0.03 | | |
$ | (0.27 | ) |
Net income (loss) from discontinued operation per Ordinary Share: | |
| | | |
| | | |
| | |
Basic and diluted | |
$ | 0.18 | | |
$ | (0.01 | ) | |
$ | (0.00 | ) |
Net income (loss) per Ordinary Share: | |
| | | |
| | | |
| | |
Basic and diluted | |
$ | 0.23 | | |
$ | 0.02 | | |
$ | (0.27 | ) |
Weighted average shares outstanding | |
| | | |
| | | |
| | |
Basic and diluted | |
| 7,800,000 | | |
| 7,800,000 | | |
| 10,735,606 | |
The following table presents a summary of our
consolidated balance sheet data as of September 30, 2019, 2020 and 2021:
| |
As of September 30, | |
| |
2019 | | |
2020 | | |
2021 | |
| |
| | |
| | |
| |
Balance Sheet Data: | |
| | |
| | |
| |
Cash and cash equivalents | |
$ | 3,633,645 | | |
$ | 322,598 | | |
$ | 4,774,531 | |
Total assets | |
| 19,171,950 | | |
| 19,817,798 | | |
| 42,011,670 | |
Total liabilities | |
| 6,840,965 | | |
| 6,672,653 | | |
| 9,475,170 | |
Total EZGO Technologies Ltd.’s shareholders’ equity | |
| 8,226,779 | | |
| 8,869,462 | | |
| 28,518,002 | |
Non-controlling interests | |
| 4,104,206 | | |
| 4,275,683 | | |
| 4,018,498 | |
Total equity | |
| 12,330,985 | | |
| 13,145,145 | | |
| 32,536,500 | |
RISK FACTORS
An investment
in the securities that we are offering involves a high degree of risk. EZGO operates, through the WFOE, the VIE and its subsidiaries
in China, in a highly competitive environment in which there are numerous factors that can influence its business, financial position
or results of operations and that can also cause the market value of the Ordinary Shares to decline. Many of these factors are beyond
our control and therefore, are difficult to predict. Prior to making a decision about investing in the securities, you should carefully
consider the risk factors discussed in the sections entitled “Risk Factors” contained in our 2021 Annual Report filed with
the SEC, and in any applicable prospectus supplement and our other filings with the SEC and incorporated by reference in this prospectus
or any applicable prospectus supplement, together with all of the other information contained in this prospectus or any applicable prospectus
supplement or related free writing prospectus. If any of the risks or uncertainties described in our SEC filings or any prospectus supplement
or any additional risks and uncertainties actually occur, EZGO’s business, financial condition and results of operations could
be materially and adversely affected. In that case, the trading price of the securities could decline and you might lose all or part
of your investment.
The following
disclosure is intended to highlight, update or supplement previously disclosed risk factors facing the Company set forth in the Company’s
public filings. These risk factors should be carefully considered along with any other risk factors identified in the Company’s
other filings with the SEC.
Such risks are not exhaustive. We may face
additional risks that are presently unknown to us or that we believe to be immaterial as of the date of this prospectus. Known and unknown
risks and uncertainties may significantly impact and impair EZGO’s business operations through the WFOE, the VIE and its subsidiaries
in China.
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 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.
On December 28, 2021, the Measures for Cybersecurity
Review (2021 version) was promulgated and took effect 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 business operations through the WFOE, the VIE and its subsidiaries in China would
be considered an “operator of critical information infrastructure” or a “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 December 24, 2021, the CSRC released the
Administrative Provisions of the State Council Regarding the Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft
for Comments) and the Measures for the Overseas Issuance of Securities and Listing Record-Filings by Domestic Enterprises (Draft for
Comments), both of which have a comment period that expired on January 23, 2022, and if enacted, may subject us to additional compliance
requirements in the future. See “The CSRC has released for public consultation the draft rules for China-based companies seeking
to conduct initial public offerings in foreign markets. While such rules have not yet gone into effect, 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 securities to investors and could cause the value of its Ordinary
Shares to significantly decline or become worthless” below.
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.
We have relied on the opinion of DeHeng Law
Offices, our PRC legal counsel, 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 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 is registering.
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 the company’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 and 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 has released for public consultation
the draft rules for China-based companies seeking to conduct initial public offerings in foreign markets. While such rules have not yet
gone into effect, 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
securities to investors and could cause the value of its Ordinary Shares to significantly decline or become worthless.
On December 24, 2021, the CSRC released the Draft
Rules Regarding Overseas Listing, which have a comment period that expired on January 23, 2022. The Draft Rules Regarding Overseas Listing
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 Draft Rules Regarding Overseas Listing
stipulate that the Chinese-based companies, or the issuer, shall fulfill the filing procedures within three working days after the issuer
makes an application for initial public offering and listing in an overseas market. Among other things, if an overseas listed issuer
intends to implement any follow-on offering in an overseas 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 commitments; and (2) domestic legal opinions.
In addition, an overseas offering and listing
is prohibited under any of the following circumstances: (1) if the intended securities offering and listing is specifically prohibited
by national laws and regulations and relevant provisions; (2) if 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) if there are material ownership disputes over the equity, major assets, and core technology, etc. of the issuer; (4) if, 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, or are currently under
judicial investigation for suspicion of criminal offenses, or are under investigation for suspicion of major violations; (5) if, in past
three years, directors, supervisors, or senior executives have been subject to administrative punishments for severe violations, or are
currently under judicial investigation for suspicion of criminal offenses, or are under investigation for suspicion of major violations;
(6) other circumstances as prescribed by the State Council. The Draft Administration Provisions defines the legal liabilities of breaches
such as failure in fulfilling filing obligations or fraudulent filing conducts, imposing a fine between RMB 1 million and RMB 10 million,
and in cases of severe violations, a parallel order to suspend relevant business or halt operation for rectification, revoke relevant
business permits or operational license.
The Draft Rules Regarding Overseas Listing,
if enacted, 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 Draft Rules Regarding Overseas List on a timely basis, or at all. For instance, if we complete
any offering under this prospectus after the enactment of the Draft Rules Regarding Overseas Listing, we may be required to submit additional
filings. As of the date of this prospectus, the Draft Rules Regarding Overseas Listings have not been promulgated, and we have not been
required to complete the record-filings procedure to the government of China for any offering pursuant to this prospectus. While the
final version of the Draft Rules Regarding Overseas Listings are expected to be adopted in 2022, we believe that none of the situations
that would clearly prohibit overseas offering and listing applies to us. In reaching this conclusion, we have relied on an opinion of
our PRC counsel, DeHeng Law Offices, and 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 its financial condition and
results of operations and cause its securities, including the securities EZGO is registering for sale in this 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:
| ● | 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, EZGO may be required to comply with additional legal and licensing
requirements. For example, EZGO is providing mobile applications to mobile device users and
it is in the process of applying for the valued-added telecommunications business operating
license for electronic data interchange business, or the EDI License thorough the WFOE, the
VIE and its subsidiaries. It is uncertain if our PRC 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 EZGO
is not required to obtain such separate license which is in line with the current market
practice, there can be no assurance that EZGO will not be required to apply for an operating
license for its mobile applications in the future. |
| ● | 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 Ministry of Industry and Information Technology (“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. |
|
● |
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 through the WFOE, the VIE and its subsidiaries in
China. If EZGO’s operations through the WFOE, the VIE and its subsidiaries in China 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 business in China or will be able to maintain
existing licenses or obtain new ones.
Regulation
and censorship of information disseminated over the Internet in China may adversely affect EZGO’s business through the WFOE, the
VIE and its subsidiaries in China, and we may be liable for content that is displayed on our website.
China has enacted
laws and regulations governing Internet access and the distribution of products, services, news, information, audio-video programs and
other content through the Internet. In the past, the PRC government has prohibited the distribution of information through the internet
that it deems to be in violation of PRC laws and regulations. If any of our internet information was deemed by the PRC government to
violate any content restrictions, we would not be able to continue to display such content and could become subject to penalties, including
confiscation of income, fines, suspension of business and revocation of required licenses, which could materially and adversely affect
EZGO’s business through the WFOE, the VIE and its subsidiaries in China, financial condition and results of operations. We may
also be subject to potential liability for any unlawful actions of our customers or users of our website or for content we distribute
that is deemed inappropriate. It may be difficult to determine the type of content that may result in liability to us, and if we are
found to be liable, we may be prevented from operating our website in China.
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 seeks 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. DeHeng
Law Offices, our PRC counsel, is of the view that we are 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 does 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 for
this offering.
In addition, the Data
Security Law of the People’s Republic of China (the “Data Security Law”) was promulgated by the Standing Committee
of the National People’s Congress of China (the “SCNPC”) on June 10, 2021 and took effect on September 1, 2021. Further,
the CAC released the Measures for the Security Assessment of Cross-Border Data (Revised Draft for Comments) on October 29, 2021, which
specifies the government security review procedure for the transfer of a wide range of data out of the territory of China. The draft
measures for the first time clarify the threshold for being treated as a massive personal information processor to be—(i) personal
information processors holding over one million users which transfer personal information out of the territory of China, or (ii) personal
information processors which transfer accumulatively personal information of more than 100,000 users out of the territory of China or
accumulatively sensitive personal information of more than 10,000 users out of the territory of China. Massive personal information processors
would be required to apply for the CAC’s security review of cross-border data transfer with the provincial cyberspace administration.
Before personal information processors can transfer data out of the territory of China, they are required to conduct an internal risk
assessment, regardless of whether they are subject to the CAC security review. 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 in 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 its 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, 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 its subsidiaries and substantially all of its 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, EZGO’s 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 through the WFOE, the VIE and
its subsidiaries in China, 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 our operations.
Restrictions on currency exchange or outbound
capital flows may limit our ability to utilize our PRC revenue effectively.
Substantially 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, a foreign invested enterprise, may purchase foreign currency for settlement of “current
account transactions,” including payment of dividends to us, without the approval of the 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:
| ● | investments
through enterprises established for only a few months without substantive operation; |
| ● | investments
with amounts far exceeding the registered capital of onshore parent and not supported by
its business performance shown on financial statements; |
| ● | investments
in targets that are not related to onshore parent’s main business; and |
| ● | 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 through the WFOE, the VIE and its subsidiaries in China, 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 regulations 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 is able to 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 subsidiaries 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 our PRC subsidiaries’
and the VIE’s ability 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 “Prospectus Summary—Contractual Arrangements and Corporate
Structure” in this prospectus. 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 EZGO’s 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 EZGO’s financial condition and results of operations or such non-PRC resident investors’
investment in us.
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
5.20% 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, EZGO’s results of operations and financial condition, and the value of, and dividends payable on, our
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 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 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 through the WFOE, the VIE and its subsidiaries in China, 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 named in this prospectus
based on foreign laws.
EZGO is a company incorporated under the laws
of the BVI, and EZGO conducts 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 HFCAA 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 the value of your investment. Additionally,
the inability of the PCAOB to conduct adequate inspections deprives our investors with the benefits of such inspections. Furthermore,
on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which, if enacted, would amend the
HFCAA and require 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 HFCAA was enacted on December 18, 2020. The HFCAA 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 HFCAA. 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 HFCAA, including the listing and trading prohibition
requirements described above. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable
Act, which, if enacted, would amend the HFCAA and require 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 September 22, 2021, the PCAOB adopted a final rule implementing
the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, 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 HFCAA. 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 HFCAA. 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. If a registrant is identified as a Commission-Identified
Issuer based on its annual report for the fiscal year ended, for example, September 30, 2021, the registrant will be required to comply
with the submission or disclosure requirements in its annual report filing covering the fiscal year ended September 30, 2022.
On December 16, 2021, the PCAOB issued its
determination 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 list 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. According to the PCAOB, its December 2021 determinations under the HFCAA remain in effect. The PCAOB is required
to reassess these determinations by the end of 2022. Under the PCAOB’s rules, a reassessment of a determination under the HFCAA
may result in the PCAOB reaffirming, modifying or vacating the determination.
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 that issued one of the audit reports included in the Annual Report, 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 inspection by the PCAOB on a regular basis with the last inspection in 2020.
Our former auditor, Briggs & Veselka,
the independent registered public accounting firm that issued one of the audit reports included in the 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 PCAOB became effective on May 24, 2022.
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. 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 2018.
The audit workpapers for our company and the
VIE’s operations are located in China, and the PCAOB is currently unable to conduct inspections in China without the approval of
Chinese government authorities, but access to audit work and papers may be available in the near future, as a result of the Statement
of Proposal. If the PCAOB does gain such access, there is no assurance that it may not later be determined that the PCAOB is unable to
inspect or investigate our auditor completely, and 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 this 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 HFCAA. However, some of the recommendations were more stringent than the HFCAA. 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 HFCAA 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 HFCAA 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 national securities exchange earlier than would be required by the HFCAA. 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 securities when desired, and the risk and uncertainty associated with a potential delisting would have
a negative impact on the price of its 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.
Risks Related
to Our Business and Industry
The COVID-19 pandemic has, and will likely continue to, negatively impact the global economy and disrupt normal
business activity, which may have an adverse effect on our business, financial condition and results of operations.
The global spread
of COVID-19 and the efforts to control it have slowed global economic activity and disrupted, and reduced the efficiency of, normal business
activities in much of the world. The pandemic has resulted in authorities around the world implementing numerous unprecedented measures
such as travel restrictions, quarantines, shelter in place orders, and factory and office shutdowns. These measures impacted our workforce
and operations, and those of our customers and suppliers. In particular, from October 2021 to March 2022 we experienced some disruption
to our operations during the Chinese government mandated lockdown, due to the COVID-19 pandemic, including random shutdowns of out Tianjin
and Changzhou factories, restrictions or suspensions of logistics and shipping services in certain areas of China. While we and our major
suppliers are currently fully operational, there can be no assurance that these measures related to additional or increased outbreaks
will not be implemented again.
In
response to governmental directives and recommended safety measures, we have implemented personal safety measures at all our facilities.
However, these measures may not be sufficient to mitigate the risk of infection by COVID-19. If a significant number of our employees,
or employees and third parties performing key functions, including our management and members of our board of directors, become ill,
our business may be further adversely impacted.
More generally, the COVID-19 pandemic has and is expected to continue
to adversely affect economies and financial markets globally in the longer-term, and could result in a continued economic downturn and
a recession. This would likely adversely affect demand for some of our products, which may, in turn negatively impact our results of operations,
but it is not possible at this time to estimate the full impact that COVID-19 will have on our business, as the impact will depend on
future developments, which are highly uncertain and cannot be predicted.”
Recent increased cases of COVID-19 and/or shutdowns related to
additional or increased outbreaks have not currently had a material impact on our operations, supply chain, liquidity or capital resources.
We continue to see demand in our products and have implemented a new marketing channel and sales model with increasing urban agent stores,
as well as the launch of our new products. However, the environment remains uncertain and the impact of COVID-19 and the gradual recovery
in sales of our products may not be sustainable over the longer term. There can be no assurance that increased cases of COVID-19 and/or
shutdowns related to additional or increased outbreaks will not, in the future, have a material impact on our operations, supply chain,
liquidity or capital resources. The degree to which the pandemic ultimately impacts our business and results of operations will depend
on future developments beyond our control, including the severity of the pandemic, the extent of actions to contain or treat the virus,
how quickly and to what extent normal economic and operating conditions can resume, and the severity and duration of the global economic
downturn that results from the pandemic.
Risks Related to Our Corporate Structure
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
is registering may decline in value or become worthless if the determinations, changes, or interpretations result in its inability to
assert contractual rights over the assets of its PRC subsidiaries or the VIE that conducts a substantial part of EZGO’s operations.
Because EZGO is a business
company incorporated in the BVI, it is classified as a foreign enterprise under PRC laws and regulations, and EZGO’s WFOE in the
PRC is a foreign-invested enterprise (“FIE”). Changzhou EZGO has entered into a series of contractual arrangements with the
VIE and its shareholders, which enable us to (i) have rights of determination over 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 EZGO under U.S. GAAP, of which we are a primary beneficiary of the VIE for accounting purposes,
and (iii) have an exclusive option to purchase all or part of the equity interests and assets in the VIE when and to the extent permitted
by PRC law. As a result of these contractual arrangements, we have the contractual rights to determine the most significant economic
activities, receive the majority of the economic benefits and are the primary beneficiary of the VIE and hence consolidate its financial
results as the VIE under U.S. GAAP. For a description of these contractual arrangements, see “Prospectus Summary—Contractual
Arrangements and Corporate Structure—Contractual Arrangements with the VIE and Its Shareholders.”
We believe that our corporate structure and contractual arrangements
comply with the current applicable PRC laws and regulations. We have relied on the opinion of our PRC legal counsel, DeHeng Law Offices,
that based on its understanding of the relevant laws and regulations, each of the contracts among our wholly-owned PRC subsidiary, Changzhou
EZGO, the VIE and its shareholders is valid, binding and enforceable in accordance with its terms. However, there are substantial uncertainties
regarding the interpretation and application of PRC laws and regulations, including the M&A Rules and the relevant regulatory measures
concerning the telecommunications industry. There can be no assurance that the PRC government authorities, such as MOFCOM or MIIT, or
other authorities that regulate online services providers and other participants in the telecommunications industry, would agree that
our corporate structure or any of the above contractual arrangements comply with PRC licensing, registration or other regulatory requirements,
with existing policies or with requirements or policies that may be adopted in the future. PRC laws and regulations governing the validity
of these contractual arrangements are uncertain and the relevant government authorities have broad discretion in interpreting these laws
and regulations.
If our corporate structure and contractual arrangements are deemed
by the MIIT, the MOFCOM or other regulators that have competent authority, to be illegal, either in whole or in part, we may lose our
rights to determine the most significant economic activities and 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. GAPP,
for which we are a primary beneficiary of the VIE, and have to modify such structure to comply with regulatory requirements. However,
there can be no assurance that we can achieve this without material disruption to EZGO’s business primarily through the VIE and
its subsidiaries in China. Further, if our corporate structure and contractual arrangements are found to be in violation of any existing
or future PRC laws or regulations, the relevant regulatory authorities would have broad discretion in dealing with such violations, including:
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revoking
the VIE and its subsidiaries’ business and operating licenses; |
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confiscating any of our income that they deem to be obtained through illegal operations; |
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shutting down the VIE
and its subsidiaries’ services; |
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discontinuing or restricting EZGO’s operations primarily through
the VIE and its subsidiaries in China; |
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imposing conditions or requirements with which we may not be able to comply; |
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requiring us to change our corporate structure and contractual arrangements; |
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restricting or prohibiting our use of the proceeds from overseas offering to finance the VIE’s business and operations; and |
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taking other regulatory or enforcement actions that could be harmful to EZGO’s business
primarily through the VIE and its subsidiaries in China. |
The PRC government
has broad discretion in determining rectifiable or punitive measures for non-compliance with or violations of PRC laws and regulations.
The PRC government could disallow the variable interest entity structure, which would likely result in a material change in EZGO’s
operations primarily through the VIE and its subsidiaries in China and/or value of its securities, including that it could cause the
value of such securities to significantly decline or become worthless. The VIE agreements have never been tested in a court of law in
China. If the PRC government deems that our contractual arrangements in relation to the VIE do not comply with PRC regulatory restrictions
on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change or are
interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
If the PRC government determines that we or the VIE do not comply with applicable law, it could revoke the VIE’s business and operating
licenses, require the VIE to discontinue or restrict the VIE’s operations, restrict the VIE’s right to collect revenues,
block the VIE’s websites, require the VIE to restructure its operations, impose additional conditions or requirements with which
the VIE may not be able to comply, impose restrictions on the VIE’s business operations, or take other regulatory or enforcement
actions against the VIE that could be harmful to its business. Any of these or similar occurrences could significantly disrupt our or
the VIE’s business operations or restrict the VIE from conducting a substantial portion of its business operations, which could
materially and adversely affect the VIE’s business, financial condition and results of operations. If any of these occurrences
results in our inability to determine the activities of the VIE that most significantly impact its economic performance, and/or our failure
to receive the economic benefits from the VIE, we may not be able to consolidate the VIE in our consolidated financial statements in
accordance with U.S. GAAP. In addition, EZGO’s securities may decline in value or become worthless if it is unable to consolidate
the VIE’s operations and financial results in EZGO’s financial statements in accordance with U.S. GAAP as the primary beneficiary
since the VIE and its subsidiaries conduct a significant part of EZGO’s operations.
Risks Related to Our Ordinary Shares
The market
price of EZGO’s Ordinary Shares has recently declined significantly, and EZGO’s Ordinary Shares could be delisted from the
Nasdaq or trading could be suspended.
The listing of EZGO’s
Ordinary Shares on the Nasdaq Capital Market is contingent on our compliance with the Nasdaq Capital Market’s conditions for continued
listing. On June 7, 2022, we announced that we received written notification, or the Notification Letter, from Nasdaq on June 3, 2022
that we were not in compliance with the minimum bid price requirement of US$1.00 per share under the Nasdaq Listing Rules (the “Minimum
Bid Price Requirement”). In accordance with Nasdaq Listing Rules, we must regain compliance with the Minimum Bid Price Requirement
within 180 calendar days, or by November 30, 2022. To regain compliance, EZGO’s Ordinary Shares need to have a closing bid price
of at least US$1.00 for a minimum of 10 consecutive trading days. Since it does not appear that we will regain compliance with the Minimum
Bid Price Requirement by November 30, 2022, we may be eligible for additional time to regain compliance or may face delisting. We are
currently preparing a compliance plan explaining to Nasdaq how we plan to regain compliance with the Minimum Bid Price Requirement and
intend to submit such compliance plan with a request to Nasdaq for an additional 180-day extension to regain compliance with the Minimum
Bid Price Requirement. During the additional 180-day extension period, we intend to monitor the closing bid price of EZGO’s Ordinary
Shares, and intend to hold a meeting of board of directors for the purpose of approving a reverse share split of EZGO’s issued
and outstanding Ordinary Shares at a ratio which will be sufficient to increase the price of our Ordinary Shares above $US$1.00. EZGO
plans to effect the reverse share split in a timely manner, only if the closing bid price of EZGO’s Ordinary Shares does not increase
above a minimum bid price of at least $1.00 per share for 10 consecutive trading days prior to the end of the 180-day extension period,
without effecting a reverse share split. There can be no assurance that we will be able to regain compliance with the Minimum Bid price
Requirement, without having to effect a reverse share split of EZGO’s Ordinary Shares, or maintain compliance with the Minimum
Bid Price Requirement, after we have regained compliance, even if we implement a reverse share split.
We cannot assure
you that we will be able to regain compliance with the minimum bid price requirement under the Nasdaq Listing Rules, or that we will
not receive other deficiency notifications from Nasdaq in the future. A decline in the closing price of EZGO’s Ordinary Shares
could result in a breach of the requirements for listing on the Nasdaq Capital Market. If we do not maintain compliance, Nasdaq could
commence suspension or delisting procedures in respect of EZGO’s Ordinary Shares. The commencement of suspension or delisting procedures
by an exchange remains at the discretion of such exchange and would be publicly announced by the exchange. If a suspension or delisting
were to occur, there would be significantly less liquidity in the suspended or delisted securities. In addition, our ability to raise
additional necessary capital through equity or debt financing would be greatly impaired. Furthermore, with respect to any suspended or
delisted ordinary shares, we would expect decreases in institutional and other investor demand, analyst coverage, market making activity
and information available concerning trading prices and volume, and fewer broker-dealers would be willing to execute trades with respect
to such ordinary shares. A suspension or delisting would likely decrease the attractiveness of EZGO’s Ordinary Shares to investors
and cause the trading volume of EZGO’s Ordinary Shares to decline, which could result in a further decline in the market price
of EZGO’s Ordinary Shares.
In the event
that EZGO’s Ordinary Shares are delisted from Nasdaq, U.S. broker-dealers may be discouraged from effecting transactions in EZGO’s
Ordinary Shares because they may be considered penny stocks and thus be subject to the penny stock rules.
The SEC has adopted
a number of rules to regulate “penny stock” that restricts transactions involving stock which is deemed to be penny
stock. Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Exchange Act.
These rules may have the effect of reducing the liquidity of penny stocks. “Penny stocks” generally are equity securities
with a price of less than $5.00 per share (other than securities registered on certain national securities exchanges or quoted on Nasdaq
if current price and volume information with respect to transactions in such securities is provided by the exchange or system). EZGO’s
Ordinary Shares could be considered to be a “penny stock” within the meaning of the rules. The additional sales practice
and disclosure requirements imposed upon U.S. broker-dealers may discourage such broker-dealers from effecting transactions in shares
of EZGO’s Ordinary Shares, which could severely limit the market liquidity of such ordinary shares and impede their sale in the
secondary market.
A U.S. broker-dealer selling a penny stock
to anyone other than an established customer or “accredited investor” (generally, an individual with a net worth in excess
of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse) must make a special suitability determination
for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or
the transaction is otherwise exempt. In addition, the “penny stock” regulations require the U.S. broker-dealer to deliver,
prior to any transaction involving a “penny stock”, a disclosure schedule prepared in accordance with SEC standards relating
to the “penny stock” market, unless the broker-dealer or the transaction is otherwise exempt. A U.S. broker-dealer is also
required to disclose commissions payable to the U.S. broker-dealer and the registered representative and current quotations for the securities.
Finally, a U.S. broker-dealer is required to submit monthly statements disclosing recent price information with respect to the “penny
stock” held in a customer’s account and information with respect to the limited market in “penny stocks”.
The market for “penny stocks” has suffered in recent
years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers
that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales
and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic
price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers;
and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired
level, resulting in investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market.
Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent the described patterns from being established with respect
to EZGO’s securities.
General Risk Factors
We are subject to changing law and regulations
regarding regulatory matters, corporate governance and public disclosure that have increased both our costs and the risk of non-compliance.
We are subject to rules and regulations by various
governing bodies, including, for example, the Securities and Exchange Commission, which are charged with the protection of investors
and the oversight of companies whose securities are publicly traded, and to new and evolving regulatory measures under applicable law,
including the laws of the BVI. Our efforts to comply with new and changing laws and regulations have resulted in and are likely to continue
to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating
activities to compliance activities.
Moreover, because these laws, regulations and standards are subject
to varying interpretations, their application in practice may evolve over time as new guidance becomes available. This evolution may result
in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance
practices. If EZGO fails to address and comply with these regulations and any subsequent changes, EZGO may be subject to penalty and its
business through the WFOE, the VIE and its subsidiaries in China may be harmed.
Handling of mail
Mail addressed to the Company and received at
its registered office will be forwarded unopened to the forwarding address supplied by Company to be dealt with. None of the Company,
its directors, officers, advisors or service providers (including the organization which provides registered office services in the BVI)
will bear any responsibility for any delay howsoever caused in mail reaching the forwarding address.
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:
|
● |
EZGO’s
goals and growth strategies; |
|
● |
EZGO’s expectations
regarding demand for and market acceptance of its brand and platforms; |
|
● |
EZGO’s future
business development, results of operations and financial condition; |
|
● |
EZGO’s ability to maintain and improve infrastructure necessary to operate its platforms
through the WFOE, the VIE and its subsidiaries; |
|
● |
competition in the car accessory and online retail industry in China; |
|
● |
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; |
|
● |
government policies
and regulations relating to EZGO’s corporate structure, business and industry; |
|
● |
our expectation regarding the use of proceeds from an offering pursuant to this prospectus; |
|
● |
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; |
|
● |
the development of COVID-19 in the PRC and globally; |
|
● |
general economic and business condition in China and elsewhere; and |
|
● |
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 to 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 2021 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.
Offer Statistics and Expected Timetable
We may sell from time to time pursuant to
this prospectus (as may be detailed in one or more prospectus supplements) an indeterminate number of securities as shall have a maximum
aggregate offering price of US$100,000,000. The actual price of the securities that we will offer pursuant hereto will depend on a number
of factors that may be relevant as of the time of offer. Pursuant to General Instruction I.B.5 of Form F-3, in no event will we sell
securities pursuant to the registration statement of which this prospectus forms a part with a value of more than one-third of the aggregate
market value of EZGO’s Ordinary Shares held by non-affiliates in any 12 calendar month period, so long as the aggregate market
value of EZGO’s Ordinary Shares held by non-affiliates is less than US$75,000,000. In the event that subsequent to the effective
date of the registration statement of which this prospectus forms a part, the aggregate market value of EZGO’s outstanding Ordinary
Shares held by non-affiliates equals or exceeds US$75,000,000, then the one-third limitation on sales shall not apply to additional sales
made pursuant to this registration statement. We will state on the cover of each prospectus supplement the amount of EZGO’s outstanding
Ordinary Shares held by non-affiliates, the amount of securities being offered and the amount of securities sold during the prior 12
calendar month period that ends on, and includes, the date of the prospectus supplement.
USE OF PROCEEDS
Except as described in any prospectus supplement and any free writing
prospectus in connection with a specific offering, we currently intend to use the net proceeds from the sale of the securities offered
by us under this prospectus to fund the growth of EZGO’s business through the WFOE, the VIE and its subsidiaries in China, primarily
working capital, and for general corporate purposes.
We may also use a
portion of the net proceeds to acquire or invest in technologies, products and/or businesses that we believe will enhance the value of
our company, although we do not currently have any agreements or understandings with third parties to make any material acquisitions
of, or investment in, other businesses. Depending on future events and others changes in the business climate, we may determine at a
later time to use the net proceeds for different purposes. As a result, our management will have broad discretion in the allocation of
the net proceeds and investors will be relying on the judgment of our management regarding the application of the proceeds of any sale
of the securities. Additional information on the use of net proceeds from the sale of securities covered by this prospectus may be set
forth in the prospectus supplement relating to the specific offering.
CAPITALIZATION
Our capitalization will
be set forth in a prospectus supplement to this prospectus or in a report of foreign private issuer on Form 6-K subsequently furnished
to the SEC and specifically incorporated by reference into this prospectus.
DILUTION
If required, we will set forth in a prospectus supplement the following
information regarding any material dilution of the equity interests of investors purchasing securities in an offering under this prospectus:
| ● | the
net tangible book value per share of our equity securities before and after the offering; |
| ● | the
amount of the increase in such net tangible book value per share attributable to the cash
payments made by purchasers in the offering; and |
| ● | the
amount of the immediate dilution from the public offering price which will be absorbed by
such purchasers. |
DESCRIPTION OF EQUITY
SECURITIES
The following
describes EZGO’s securities, summarizes the material provisions of EZGO’s amended and restated memorandum and articles of
association, which is based upon, and is qualified by reference to, its amended and restated memorandum and articles of association.
This summary does not purport to be a summary of all of the provisions of EZGO’s amended and restated memorandum and articles of
association. You should read EZGO’s amended and restated memorandum and articles of association which are filed as exhibits to
our Registration Statement on Form F-1 (File No. 333-249687), as amended, initially filed with the SEC on October 28, 2020 for the provisions
that are important to you.
The Company is authorized
to issue 100,000,000 Ordinary Shares, with a par value of US$0.001 each and up to 10,000 Preferred Shares of no par value. As of November
14, 2022, there were (a) 24,626,891 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
Exhibit 2.1 to our 2021 Annual Report, which is incorporated by reference herein.
DESCRIPTION OF DEBT SECURITIES
We may issue series
of debt securities, which may include debt securities exchangeable for or convertible into Ordinary Shares or Preferred Shares. When
we offer to sell a particular series of debt securities, we will describe the specific terms of that series in a supplement to this prospectus.
The following description of debt securities will apply to the debt securities offered by this prospectus unless we provide otherwise
in the applicable prospectus supplement. The applicable prospectus supplement for a particular series of debt securities may specify
different or additional terms.
The debt securities
offered by this prospectus may be secured or unsecured, and may be senior debt securities, senior subordinated debt securities or subordinated
debt securities. The debt securities offered by this prospectus may be issued under an indenture between us and the trustee under the
indenture. The indenture may be qualified under, subject to, and governed by, the Trust Indenture Act of 1939, as amended. We have summarized
selected portions of the indenture below. The summary is not complete. The form of the indenture has been filed as an exhibit to the
registration statement on Form F-3, of which this prospectus is a part, and you should read the indenture for provisions that may be
important to you.
The terms of each series
of debt securities will be established by or pursuant to a resolution of our board of directors and detailed or determined in the manner
provided in a board of directors’ resolution, an officers’ certificate and by a supplemental indenture. The particular terms
of each series of debt securities will be described in a prospectus supplement relating to the series, including any pricing supplement.
We may issue any amount
of debt securities under the indenture, which may be in one or more series with the same or different maturities, at par, at a premium
or at a discount. We will set forth in a prospectus supplement, including any related pricing supplement, relating to any series of debt
securities being offered, the initial offering price, the aggregate principal amount offered and the terms of the debt securities, including,
among other things, the following:
| ● | the
title of the debt securities; |
| ● | the
price or prices (expressed as a percentage of the aggregate principal amount) at which we
will sell the debt securities; |
| ● | any
limit on the aggregate principal amount of the debt securities; |
| ● | the
date or dates on which we will repay the principal on the debt securities and the right,
if any, to extend the maturity of the debt securities; |
| ● | the
rate or rates (which may be fixed or variable) per annum or the method used to determine
the rate or rates (including any commodity, commodity index, stock exchange index or financial
index) at which the debt securities will bear interest, the date or dates from which interest
will accrue, the date or dates on which interest will be payable and any regular record date
for any interest payment date; |
| ● | the
place or places where the principal of, premium, and interest on the debt securities will
be payable, and where the debt securities of the series that are convertible or exchangeable
may be surrendered for conversion or exchange; |
| ● | any
obligation or right we have to redeem the debt securities pursuant to any sinking fund or
analogous provisions or at the option of holders of the debt securities or at our option,
and the terms and conditions upon which we are obligated to or may redeem the debt securities; |
| ● | any
obligation we have to repurchase the debt securities at the option of the holders of debt
securities, the dates on which and the price or prices at which we will repurchase the debt
securities and other detailed terms and provisions of these repurchase obligations; |
| ● | the
denominations in which the debt securities will be issued; |
| ● | whether
the debt securities will be issued in the form of certificated debt securities or global
debt securities; |
| ● | the
portion of principal amount of the debt securities payable upon declaration of acceleration
of the maturity date, if other than the principal amount; |
| ● | the
currency of denomination of the debt securities; |
| ● | the
designation of the currency, currencies or currency units in which payment of principal of,
premium and interest on the debt securities will be made; |
| ● | if
payments of principal of, premium or interest on, the debt securities will be made in one
or more currencies or currency units other than that or those in which the debt securities
are denominated, the manner in which the exchange rate with respect to these payments will
be determined; |
| ● | the
manner in which the amounts of payment of principal of, premium or interest on, the debt
securities will be determined, if these amounts may be determined by reference to an index
based on a currency or currencies other than that in which the debt securities are denominated
or designated to be payable or by reference to a commodity, commodity index, stock exchange
index or financial index; |
| ● | any
provisions relating to any security provided for the debt securities; |
| ● | any
addition to or change in the events of default described in the indenture with respect to
the debt securities and any change in the acceleration provisions described in the indenture
with respect to the debt securities; |
| ● | any
addition to or change in the covenants described in the indenture with respect to the debt
securities; |
| ● | whether
the debt securities will be senior or subordinated and any applicable subordination provisions; |
| ● | a
discussion of material income tax considerations applicable to the debt securities; |
| ● | any
other terms of the debt securities, which may modify any provisions of the indenture as it
applies to that series; and |
| ● | any
depositaries, interest rate calculation agents, exchange rate calculation agents or other
agents with respect to the debt securities. |
We may issue debt securities
that are exchangeable for and/or convertible into Ordinary Shares or Preferred Shares. The terms, if any, on which the debt securities
may be exchanged and/or converted will be set forth in the applicable prospectus supplement. Such terms may include provisions for exchange
or conversion, which can be mandatory, at the option of the holder or at our option, and the manner in which the number of Ordinary Shares,
Preferred Shares or other securities to be received by the holders of debt securities would be calculated.
We may issue debt securities
that provide for an amount less than their stated principal amount to be due and payable upon declaration of acceleration of their maturity
pursuant to the terms of the indenture. We will provide you with information on the U.S. federal income tax considerations, and other
special considerations applicable to any of these debt securities in the applicable prospectus supplement. If we denominate the purchase
price of any of the debt securities in a foreign currency or currencies or a foreign currency unit or units, or if the principal of and
any premium and interest on any series of debt securities is payable in a foreign currency or currencies or a foreign currency unit or
units, we will provide you with information on the restrictions, elections, specific terms and other information with respect to that
issue of debt securities and such foreign currency or currencies or foreign currency unit or units in the applicable prospectus supplement.
We may issue debt securities
of a series in whole or in part in the form of one or more global securities that will be deposited with, or on behalf of, a depositary
identified in the prospectus supplement. Global securities will be issued in registered form and in either temporary or definitive form.
Unless and until it is exchanged in whole or in part for the individual debt securities, a global security may not be transferred except
as a whole by the depositary for such global security to a nominee of such depositary or by a nominee of such depositary to such depositary
or another nominee of such depositary or by such depositary or any such nominee to a successor of such depositary or a nominee of such
successor. The specific terms of the depositary arrangement with respect to any debt securities of a series and the rights of and limitations
upon owners of beneficial interests in a global security will be described in the applicable prospectus supplement.
The indenture and the
debt securities will be governed by, and construed in accordance with, the internal laws of the State of New York, unless we otherwise
specify in the applicable prospectus supplement.
DESCRIPTION OF WARRANTS
We may issue and offer warrants under the material
terms and conditions described in this prospectus and any accompanying prospectus supplement. The accompanying prospectus supplement
may add, update or change the terms and conditions of the warrants as described in this prospectus.
General
We may issue warrants to purchase Ordinary Shares,
Preferred Shares or debt securities. Warrants may be issued independently or together with any securities and may be attached to or separate
from those securities. If applicable, the warrants will be issued under warrant agreements to be entered into between us and a bank or
trust company, as warrant agent, all of which will be described in the prospectus supplement relating to the warrants we are offering.
The warrant agent will act solely as our agent in connection with the warrants and will not have any obligation or relationship of agency
or trust for or with any holders or beneficial owners of warrants.
Equity Warrants
Each equity warrant issued by us will entitle
its holder to purchase the equity securities designated at an exercise price set forth in, or to be determinable as set forth in, the
related prospectus supplement. Equity warrants may be issued separately or together with equity securities.
If applicable, the equity warrants are to be
issued under equity warrant agreements to be entered into between us and one or more banks or trust companies, as equity warrant agent,
as will be set forth in the applicable prospectus supplement and this prospectus.
The particular terms of the equity warrants,
the equity warrant agreements relating to the equity warrants, as applicable, and the equity warrant certificates representing the equity
warrants will be described in the applicable prospectus supplement, including, as applicable:
| ● | the
title of the equity warrants; |
| | |
| ● | the
initial offering price; |
| | |
| ● | the
aggregate amount of equity warrants and the aggregate amount of equity securities purchasable
upon exercise of the equity warrants; |
| | |
| ● | the
currency or currency units in which the offering price, if any, and the exercise price are
payable; |
| | |
| ● | if
applicable, the designation and terms of the equity securities with which the equity warrants
are issued, and the amount of equity warrants issued with each equity security; |
| | |
| ● | the
date, if any, on and after which the equity warrants and the related equity security will
be separately transferable; |
| | |
| ● | if
applicable, the minimum or maximum amount of the equity warrants that may be exercised at
any one time; |
| | |
| ● | the
date on which the right to exercise the equity warrants will commence and the date on which
the right will expire; |
| | |
|
● |
if
applicable, a discussion of United States federal income tax, accounting or other considerations applicable to the equity warrants; |
|
|
|
|
● |
anti-dilution
provisions of the equity warrants, if any; |
|
|
|
|
● |
redemption
or call provisions, if any, applicable to the equity warrants; and |
|
|
|
|
● |
any
additional terms of the equity warrants, including terms, procedures and limitations relating to the exchange and exercise of the equity
warrants. |
Holders of equity warrants will not be entitled,
solely by virtue of being holders, to vote, to consent, to receive dividends, to receive notice as shareholders with respect to any meeting
of shareholders for the appointment of directors or any other matters, or to exercise any rights whatsoever as a holder of the equity
securities purchasable upon exercise of the equity warrants.
Debt Warrants
Each debt warrant issued by us will entitle its
holder to purchase the debt securities designated at an exercise price set forth in, or to be determinable as set forth in, the related
prospectus supplement. Debt warrants may be issued separately or together with debt securities.
If applicable, the debt warrants are to be issued
under debt warrant agreements to be entered into between us, and one or more banks or trust companies, as debt warrant agent, as will
be set forth in the applicable prospectus supplement and this prospectus.
The particular terms of each issue of debt warrants,
the debt warrant agreement relating to the debt warrants, if applicable, and the debt warrant certificates representing debt warrants
will be described in the applicable prospectus supplement, including, as applicable:
| ● | the
title of the debt warrants; |
| | |
| ● | the
initial offering price; |
| | |
| ● | the
title, aggregate principal amount and terms of the debt securities purchasable upon exercise
of the debt warrants; |
| | |
| ● | the
currency or currency units in which the offering price, if any, and the exercise price are
payable; |
| | |
| ● | the
title and terms of any related debt securities with which the debt warrants are issued and
the amount of the debt warrants issued with each debt security; |
| | |
| ● | the
date, if any, on and after which the debt warrants and the related debt securities will be
separately transferable; |
| | |
| ● | the
principal amount of debt securities purchasable upon exercise of each debt warrant and the
price at which that principal amount of debt securities may be purchased upon exercise of
each debt warrant; |
| | |
| ● | if
applicable, the minimum or maximum amount of warrants that may be exercised at any one time; |
| | |
| ● | the
date on which the right to exercise the debt warrants will commence and the date on which
the right will expire; |
| | |
| ● | if
applicable, a discussion of United States federal income tax, accounting or other considerations
applicable to the debt warrants; |
| | |
| ● | whether
the debt warrants represented by the debt warrant certificates will be issued in registered
or bearer form, and, if registered, where they may be transferred and registered; |
| | |
| ● | anti-dilution
provisions of the debt warrants, if any; |
| | |
| ● | redemption
or call provisions, if any, applicable to the debt warrants; and |
| | |
| ● | any
additional terms of the debt warrants, including terms, procedures and limitations relating
to the exchange and exercise of the debt warrants. |
Debt warrant certificates will be exchangeable
for new debt warrant certificates of different denominations and, if in registered form, may be presented for registration of transfer,
and debt warrants may be exercised at the corporate trust office of the debt warrant agent or any other office indicated in the related
prospectus supplement. Before the exercise of debt warrants, holders of debt warrants will not be entitled to payments of principal of,
premium, if any, or interest, if any, on the debt securities purchasable upon exercise of the debt warrants, or to enforce any of the
covenants in the indentures governing such debt securities.
DESCRIPTION OF RIGHTS
We may issue rights to purchase the Ordinary
Shares, Preferred Shares, debt securities or other securities. Rights may be issued independently or together with any other offered
security and may or may not be transferable by the person purchasing or receiving the rights. In connection with any rights offering,
we may enter into a standby underwriting or other arrangement with one or more underwriters or other persons pursuant to which such underwriters
or other persons would purchase any offered securities remaining unsubscribed for after such rights offering. Each series of rights will
be issued under a separate rights agent agreement to be entered into between us and one or more banks, trust companies, or other financial
institutions, as rights agent that we will name in the applicable prospectus supplement. The rights agent will act solely as our agent
in connection with the rights and will not assume any obligation or relationship of agency or trust for or with any holders of rights
certificates or beneficial owners of rights.
The prospectus supplement relating to any rights
that we offer will include specific terms relating to the offering, including, among other matters:
|
● |
the date of determining the security holders
entitled to the rights distribution;
|
|
● |
the aggregate number of rights issued and
the aggregate amount of securities purchasable upon exercise of the rights;
|
|
● |
the exercise price for the rights;
|
|
● |
the conditions to the completion of the rights
offering;
|
|
● |
the date on which the right to exercise the rights
will commence and the date on which the right will expire; |
|
|
|
|
● |
the extent to which subscription rights are
transferable;
|
|
● |
if applicable, a discussion of the material
BVI or United States federal income tax considerations applicable to the issuance or exercise of such subscription rights;
|
|
● |
any other terms of the rights, including
terms, procedures and limitations relating to the exchange and exercise of the rights;
|
|
● |
the extent to which the rights include an over-subscription
privilege with respect to unsubscribed securities; and |
| ● | the material terms
of any standby underwriting agreement or other arrangement entered into by us in connection
with the rights offering. |
Each right would entitle the holder of the rights
to purchase for cash the principal amount of securities at the exercise price set forth in the applicable prospectus supplement. Rights
may be exercised at any time up to the close of business on the expiration date for the rights provided in the applicable prospectus
supplement. After the close of business on the expiration date, all unexercised rights will become void.
If less than all of the rights issued in any
rights offering are exercised, we may offer any unsubscribed securities directly to persons other than our security holders, to or through
agents, underwriters, or dealers, or through a combination of such methods, including pursuant to standby arrangements, as described
in the applicable prospectus supplement.
DESCRIPTION OF UNITS
We may issue units comprised of one or more of
the other securities described in this prospectus in any combination. Each unit will be issued so that the holder of the unit is also
the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations of a holder of each
included security. The unit agreement under which a unit is issued may provide that the securities included in the unit may not be held
or transferred separately, at any time or at any time before a specified date.
The applicable prospectus supplement may describe:
| ● | the
designation and terms of the units and of the securities comprising the units, including
whether and under what circumstances those securities may be held or transferred separately; |
|
● |
any provisions for the issuance, payment,
settlement, transfer or exchange of the units or of the securities comprising the units; and
|
|
● |
any additional terms of the governing unit agreement.
|
The applicable prospectus supplement will describe
the terms of any units. The preceding description and any description of units in the applicable prospectus supplement does not purport
to be complete and is subject to and is qualified in its entirety by reference to the unit agreement and, if applicable, collateral arrangements
and depositary arrangements relating to such units.
ENFORCEABILITY OF CIVIL
LIABILITIES
We are incorporated in the
British Virgin Islands in order to enjoy the following benefits:
|
● |
political and economic stability; |
|
● |
an effective judicial system; |
|
● |
a favorable tax system; and |
|
● |
the absence of exchange control or currency restrictions; and the availability
of professional and support services. |
However, certain
disadvantages accompany incorporation in the British Virgin Islands. These disadvantages include, but are not limited to, the following:
|
● |
the British Virgin Islands has a less exhaustive body of securities
laws as compared to the United States and these securities laws provide significantly less protection to investors; and |
|
● |
British Virgin Islands companies may not have standing to sue before
the federal courts of the United States. |
The courts of the
British Virgin Islands will not necessarily enter judgments in original actions brought in those courts predicated on U.S. federal or
state securities laws. Additionally, there is no statutory enforcement in the British Virgin Islands of judgments obtained in the United
States, however, the courts of the British Virgin Islands will in certain circumstances recognize such a foreign judgment and treat it
as a cause of action in itself which may be sued upon as a debt at common law so that no retrial of the issues would be necessary provided
that the U.S. judgment, provided that:
|
● |
the U.S. court issuing the judgment had jurisdiction in the matter
and the company either submitted to such jurisdiction or was resident or carrying on business within such jurisdiction and was duly
served with process; |
|
● |
the judgement is final and for a liquidated sum; |
|
● |
the judgment given by the U.S. court was not in respect of penalties,
taxes, fines or similar fiscal or revenue obligations of the company; |
|
● |
in obtaining judgment there was no fraud on the part of the person
in whose favor judgment was given or on the part of the court; |
|
● |
recognition or enforcement of the judgment in the British Virgin Islands
would not be contrary to public policy; and |
|
● |
the proceedings pursuant to which judgment was obtained were not contrary
to natural justice. |
The British Virgin
Islands courts are unlikely:
|
● |
to recognize or enforce against the Company, judgments of courts of
the U.S. predicated upon the civil liability provisions of the securities laws of the U.S.; and |
|
● |
to impose liabilities against the Company, predicated upon the certain
civil liability provisions of the securities laws of the U.S. so far as the liabilities imposed by those provisions are penal in
nature. |
Our constitutional
documents do not contain provisions requiring that disputes, including those arising under the securities laws of the United States,
between us, our officers, directors and shareholders, be arbitrated.
Substantially all of EZGO’s current
operations are conducted in the PRC through the WFOE, 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, 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 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. DeHeng Law Offices, our counsel as to PRC law,
have advised us that there is uncertainty as to whether the courts of China would:
|
● |
recognize or enforce judgments of United States courts obtained against
us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any
state in the United States; or |
|
● |
entertain original actions brought in each respective jurisdiction
against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States. |
We have been advised
by DeHeng Law Offices that there is uncertainty as to whether the courts of the PRC would enforce judgments of United States courts or
BVI courts obtained against us or these persons predicated upon the civil liability provisions of the United States federal and state
securities laws. DeHeng Law Offices has further advised us that the recognition and enforcement of foreign judgments are provided for
under PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of PRC Civil
Procedures Law based either on treaties between China and the country where the judgment is made or on reciprocity between jurisdictions.
China does not have any treaties or other form of reciprocity with the United States or the British Virgin Islands that provide for the
reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, courts in the PRC
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 law 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 or in the British Virgin Islands.
Anti-money laundering
In order comply with legislation
or regulations aimed at the prevention of money laundering the Company is required to adopt and maintain anti-money laundering procedures,
and may require members to provide evidence to verify their identity. Where permitted, and subject to certain conditions, the Company
also may delegate the maintenance of our anti-money laundering procedures (including the acquisition of due diligence information) to
a suitable person.
If any person resident in
the British Virgin Islands knows or suspects that another person is engaged in money laundering or terrorist financing and the information
for that knowledge or suspicion came to their attention in the course of their business the person will be required to report his belief
or suspicion to the Financial Investigation of the British Virgin Islands, pursuant to the Proceeds of Criminal Conduct Act 1997 (as
amended). Such a report shall not be treated as a breach of confidence or of any restriction upon the disclosure of information imposed
by any enactment or otherwise.
TAXATION
Our 2021 Annual Report provides a discussion
of certain tax considerations that may be relevant to prospective investors in EZGO’s securities. The applicable prospectus supplement
may also contain information about certain material tax considerations relating to the securities covered by such prospectus supplement.
You should consult your own tax advisors prior to acquiring any of EZGO’s securities.
PLAN OF DISTRIBUTION
We may sell the securities offered by this prospectus
in any one or more of the following ways (or in any combination) from time to time:
| ● | directly
to investors, including through privately negotiated transactions, a specific bidding, auction
or other process; |
| ● | to
investors through agents; |
| ● | to
or through underwriters or dealers; |
| ● | in
“at the market” offerings, within the meaning of Rule 415(a)(4) of the Securities
Act, to or through a market or into an existing trading market on an exchange or otherwise; |
| ● | through
a combination of any such methods of sale; or |
| ● | through
any other method permitted by applicable law and described in the applicable prospectus supplement. |
The prospectus supplement with respect to the
securities may state or supplement the terms of the offering of the securities.
In addition, we may issue the securities as
a dividend or distribution or in a subscription rights offering to our existing security holders. In some cases, we or dealers acting
for us or on our behalf may also repurchase securities and reoffer them to the public by one or more of the methods described above.
This prospectus may be used in connection with any offering of EZGO’s securities through any of these methods or other methods
described in the applicable prospectus supplement.
EZGO’s securities distributed by any
of these methods may be sold to the public, in one or more transactions, either:
| ● | at
a fixed price or prices, which may be changed; |
|
● |
at market prices prevailing
at the time of sale;
|
|
|
|
|
● |
at prices related to prevailing market prices; or |
Sale through Underwriters or Dealers
If underwriters are used in the sale, the underwriters
will acquire the securities for their own account, including through underwriting, purchase, security lending or repurchase agreements
with us. The underwriters may resell the securities from time to time in one or more transactions, including negotiated transactions.
Underwriters may sell the securities in order to facilitate transactions in any of our other securities (described in this prospectus
or otherwise), including other public or private transactions and short sales. Underwriters may offer the securities to the public either
through underwriting syndicates represented by one or more managing underwriters or directly by one or more firms acting as underwriters.
Unless otherwise indicated in the applicable prospectus supplement, the obligations of the underwriters to purchase the securities will
be subject to certain conditions, and the underwriters will be obligated to purchase all the offered securities if they purchase any
of them. The underwriters may change from time to time any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers.
If dealers are used in the sale of securities
offered through this prospectus, we will sell the securities to them as principals. They may then resell those securities to the public
at varying prices determined by the dealers at the time of resale. The applicable prospectus supplement will include the names of the
underwriters or dealers and the terms of the transaction, including compensation for the underwriters or dealers.
Direct Sales and Sales through Agents
We may sell the securities offered through this
prospectus directly. In this case, no underwriters or agents would be involved. Such securities may also be sold through agents designated
from time to time. The applicable prospectus supplement will name any agent involved in the offer or sale of the offered securities and
will describe any commissions payable to the agent. Unless otherwise indicated in the applicable prospectus supplement, any agent will
agree to use its commonly reasonable efforts to solicit purchases for the period of its appointment. We may sell the securities directly
to institutional investors or others who may be deemed to be underwriters within the meaning of the Securities Act with respect to any
sale of those shares. The terms of any such sales will be described in the applicable prospectus supplement.
Offered securities may be sold at a fixed price
or prices, which may be changed, or at varying prices determined at the time of sale. Any agent involved in the offer or sale of the
offered securities in respect of which this prospectus is delivered will be named, and any commissions payable by us to such agent will
be set forth, in the supplement relating to that offering. Unless otherwise specified in connection with a particular offering of securities,
any such agent will be acting on a best efforts basis for the period of its appointment.
As one of the means of direct issuance of offered
securities, we may utilize the services of an entity through which it may conduct an electronic “dutch auction” or similar
offering of the offered securities among potential purchasers who are eligible to participate in the auction or offering of such offered
securities, if so described in the applicable prospectus supplement.
Delayed Delivery Contracts
If the applicable prospectus supplement indicates,
we may authorize agents, underwriters or dealers to solicit offers from certain types of institutions to purchase securities at the public
offering price under delayed delivery contracts. These contracts would provide for payment and delivery on a specified date in the future.
The contracts would be subject only to those conditions described in the prospectus supplement. The applicable prospectus supplement
will describe the commission payable for solicitation of those contracts.
Market Making, Stabilization and Other Transactions
Unless the applicable prospectus supplement states
otherwise, each series of offered securities will be a new issue and will have no established trading market. We may elect to list any
series of offered securities on an exchange. Any underwriters that we use in the sale of offered securities may make a market in such
securities, but may discontinue such market making at any time without notice. Therefore, we cannot assure you that the securities will
have a liquid trading market.
Any underwriter may also engage in stabilizing
transactions, syndicate covering transactions and penalty bids in accordance with Rule 104 under the Exchange Act. Stabilizing transactions
involve bids to purchase the underlying security in the open market for the purpose of pegging, fixing or maintaining the price of the
securities. Syndicate covering transactions involve purchases of the securities in the open market after the distribution has been completed
in order to cover syndicate short positions.
Penalty bids permit the underwriters to reclaim
a selling concession from a syndicate member when the securities originally sold by the syndicate member are purchased in a syndicate
covering transaction to cover syndicate short positions. Stabilizing transactions, syndicate covering transactions and penalty bids may
cause the price of the securities to be higher than it would be in the absence of the transactions. The underwriters may, if they commence
these transactions, discontinue them at any time.
Derivative Transactions and Hedging
We and the underwriters may engage in derivative
transactions involving the securities. These derivatives may consist of short sale transactions and other hedging activities. The underwriters
may acquire a long or short position in the securities, hold or resell securities acquired and purchase options or futures on the securities
and other derivative instruments with returns linked to or related to changes in the price of the securities. In order to facilitate
these derivative transactions, we may enter into security lending or repurchase agreements with the underwriters. The underwriters may
effect the derivative transactions through sales of the securities to the public, including short sales, or by lending the securities
in order to facilitate short sale transactions by others. The underwriters may also use the securities purchased or borrowed from us
or others (or, in the case of derivatives, securities received from us in settlement of those derivatives) to directly or indirectly
settle sales of the securities or close out any related open borrowings of the securities.
Loans of Securities
We may loan or pledge securities to a financial
institution or other third parties that in turn may sell the securities using this prospectus and an applicable prospectus supplement.
General Information
Agents, underwriters, and dealers may be entitled,
under agreements entered into with us, to indemnification by us, against certain liabilities, including liabilities under the Securities
Act. Our agents, underwriters, and dealers, or their affiliates, may be customers of, engage in transactions with or perform services
for us or our affiliates, in the ordinary course of business for which they may receive customary compensation.
Conflicts of Interest
Underwriters, dealers and agents may be entitled,
under agreements with us, to indemnification by us relating to material misstatements and omissions in our offering documents. Underwriters,
dealers and agents may engage in transactions with, or perform services for, us in their ordinary course of business.
Except for securities issued upon a reopening
of a previous series, each series of offered securities will be a new issue of securities and will have no established trading market.
Any underwriters to whom offered securities are sold for public offering and sale may make a market in such offered securities, but such
underwriters will not be obligated to do so and may discontinue any market making at any time without notice. The offered securities
may or may not be listed on a securities exchange. No assurance can be given that there will be a market for the offered securities.
EXPENSES OF ISSUANCE AND
DISTRIBUTION
The following table sets forth the various expenses
in connection with the sale and distribution of the securities being registered. We will bear all of the expenses shown below.
SEC Registration Fee |
|
$ |
18,540.00 |
|
FINRA filing fee |
|
|
30,500.00 |
|
Printing and engraving expenses |
|
|
* |
|
Legal fees and expenses |
|
|
* |
|
Accounting fees and expenses |
|
|
* |
|
Transfer agent fees and expenses |
|
|
* |
|
Miscellaneous |
|
|
* |
|
Total |
|
$ |
* |
|
| * | The amount of securities
and number of offerings are indeterminable, and the expenses cannot be estimated at this
time. To be provided by a prospectus supplement or as an exhibit to a report on Form 6-K
that is incorporated by reference into the registration statement of which this prospectus
forms a part. |
LEGAL MATTERS
The validity of the debt securities and warrants
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 and Preferred 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. If legal matters in connection with offerings made pursuant to
this prospectus are passed upon by counsel to underwriters, dealers or agents, such counsel will be named in the applicable prospectus
supplement relating to any such offering.
EXPERTS
The consolidated financial statements of EZGO
Technologies Ltd. appearing in our 2021 Annual Report for the year ended September 30, 2021 have been audited by Briggs & Veselka
Co., LLP and for the years ended September 30, 2020 and 2019 have been audited by Marcum Asia CPAs LLP (formally known as Marcum Bernstein
& Pinchuk LLP), independent registered public accounting firms, as set forth in the reports thereon included therein and incorporated
herein by reference.
Such consolidated financial statements are incorporated
herein by reference in reliance upon such reports given on the authority of such firms as experts in accounting and auditing.
INDEMNIFICATION
Insofar as indemnification by us for liabilities
arising under the Securities Act may be permitted to our directors, officers or persons controlling the company pursuant to provisions
of our amended and restated memorandum and articles of association, or otherwise, we have been advised that in the opinion of the SEC,
such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a
claim for indemnification by such director, officer or controlling person of us 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 offered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication
of such issue.
MATERIAL CHANGES
Except as otherwise disclosed in this prospectus,
there have been no reportable material changes that have occurred since September 30, 2021, and that have not been described in a report
on Form 6-K furnished under the Exchange Act and incorporated by reference into this prospectus.
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
supplement:
We incorporate by reference the documents listed below:
|
● |
our annual report on Form
20-F for the fiscal year ended September 30, 2021 filed with the SEC on January 27, 2022;
|
|
|
|
|
● |
our current report on Form
6-K furnished to the SEC on February 1, 2022, including exhibit 99.1 thereto; |
|
|
|
|
● |
our current report on Form 6-K furnished to the SEC on March 2, 2022; |
|
|
|
|
● |
our current report on Form 6-K furnished to the SEC on May 17, 2022;
|
|
|
|
|
● |
our
current report on Form 6-K furnished to the SEC on June 7, 2022;
|
|
|
|
|
● |
our current
report on Form
6-K furnished to the SEC on July 27, 2022; |
|
|
|
|
● |
our current report on Form
6-K furnished to the SEC on August 18, 2022; |
|
● |
our
current report on Form 6-K/A furnished to the SEC on September 22, 2022; |
|
|
|
|
● |
the description of the Company’s Ordinary
Shares contained in the Form
8-A12B, filed with the SEC on December 29, 2020, and any further amendment or report filed hereafter for the purpose of updating
such description; and |
|
|
|
|
● |
with respect to each offering of the securities
under this prospectus, all our subsequent annual reports on Form 20-F and any report on Form 6-K that indicates that it is being
incorporated by reference that we file or furnish with the SEC on or after the date on which the registration statement is first
filed with the SEC and until the termination or completion of the offering by means of this prospectus. |
Our 2021 Annual Report contains a description
of EZGO’s business primarily through the VIE and its subsidiaries in China and audited consolidated financial statements with reports
by our independent auditors. The consolidated financial statements are prepared and presented in accordance with U.S. GAAP.
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 documents 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, telephone number: + 86 51983683805.
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 that contains
reports and other information regarding issuers, like us, that file electronically with the SEC. The address of the website is www.sec.gov.
The information on our website (www.ezgotech.com.cn), other than our SEC filings, is not, and should not be, considered part of this
prospectus and is not incorporated by reference into this document.
We are subject to periodic reporting and other
informational requirements of the Exchange Act as applicable to foreign private issuers. Accordingly, we will be required to file reports,
including annual reports on Form 20-F, and other information with the SEC. You can read our SEC filings, including the registration statement,
over the Internet at the SEC’s website at www.sec.gov, which contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. We also maintain a corporate website at www.ezgotech.com.cn, at which
you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished
to, the SEC. The information contained in, and that can be accessed through, our website is not incorporated into and is not part of
this prospectus.
EZGO Technologies Ltd.
US$200,000,000
Ordinary Shares
Preferred Shares
Debt Securities
Warrants
Rights
Units
November 30, 2022
No dealer, salesperson or any other person
is authorized to give any information or make any representations in connection with any offering pursuant to this prospectus other than
those contained in this prospectus and, if given or made, the information or representations must not be relied upon as having been authorized
by us. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any security other than the securities
offered by this prospectus, or an offer to sell or a solicitation of an offer to buy any securities by anyone in any jurisdiction in
which the offer or solicitation is not authorized or is unlawful.
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