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Filed
pursuant to Rule 424(b)(5)
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|
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Registration
No. 333-227211
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Prospectus
Supplement
(To Prospectus dated September 6, 2018, as amended)
URBAN
TEA, INC.
9,000,000
Ordinary Shares
We are offering 9,000,000
of our ordinary shares, with no par value directly to certain institutional investors pursuant to this prospectus supplement and
the accompanying prospectus. We are offering the ordinary shares in this offering at a price per share of $0.555.
Our
ordinary shares are listed on the NASDAQ Capital Market under the symbol “MYT.” On June 24, 2020, the closing sale
price of our ordinary shares was $1.10 per share.
The
aggregate market value of our issued and outstanding ordinary shares held by non-affiliates was approximately 37.9 million based
on 36,188,648 ordinary shares issued and outstanding, of which 31,827,454 shares are held by non-affiliates, and a per share price
of $1.19, which was the last reported price on the NASDAQ Capital Market of our ordinary shares on June 15, 2020. 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 supplement and accordingly we may sell up to approximately $12.6 million of our ordinary
shares hereunder.
We
have retained Maxim Group LLC to act as our exclusive placement agent in connection with this offering to use its “reasonable
best efforts” to solicit offers to purchase our ordinary shares. The placement agent is not purchasing or selling any of
our ordinary shares offered pursuant to this prospectus supplement or the accompanying prospectus. See “Plan of Distribution”
beginning on page S-13 of this prospectus supplement for more information regarding these arrangements.
Investing
in our securities involves a high degree of risk. You should purchase our securities only if you can afford a complete loss of
your investment. See “Risk Factors” beginning on page S-6 of this prospectus supplement and on page 4 of the accompanying
prospectus.
Neither
the Securities and Exchange Commission (the “Commission” or “SEC”) nor any state securities commission
has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus supplement or the accompanying
prospectus. Any representation to the contrary is a criminal offense.
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Per Share
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Total
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Offering Price
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$
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0.555
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4,995,000
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Placement Agent’s Fees (1)
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$
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0.03885
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349,650
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Proceeds, before expenses, to us
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$
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0.51615
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4,645,350
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(1)
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We will pay the
placement agent a fee equal to the sum of 7.0% of the aggregate purchase price paid by the investors placed by the placement
agent. We have also agreed to reimburse the Placement Agent $15,000 for non-accountable expenses and up to $35,000 for the
reasonable and accounted fees and expenses of legal counsel. For additional information about the compensation paid
to the placement agent, see “Plan of Distribution” beginning on page S-13 of this prospectus supplement.
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We
expect that delivery of the ordinary shares being offered pursuant to this prospectus supplement and the accompanying prospectus
will be made on or about June 29, 2020, subject to customary closing conditions.
9,000,000
Ordinary Shares
Maxim
Group LLC
The
date of this prospectus supplement is June 25, 2020
TABLE
OF CONTENTS
Prospectus
Supplement
Prospectus
You
should rely only on the information contained in this prospectus supplement and the accompanying prospectus. We have not authorized
anyone else to provide you with additional or different information. We are offering to sell, and seeking offers to buy, ordinary
shares only in jurisdictions where offers and sales are permitted. You should not assume that the information in this prospectus
supplement or the accompanying prospectus is accurate as of any date other than the date on the front of those documents or that
any document incorporated by reference is accurate as of any date other than its filing date.
No
action is being taken in any jurisdiction outside the United States to permit a public offering of the ordinary shares or possession
or distribution of this prospectus supplement or the accompanying prospectus in that jurisdiction. Persons who come into possession
of this prospectus supplement or the accompanying prospectus in jurisdictions outside the United States are required to inform
themselves about and to observe any restrictions as to this offering and the distribution of this prospectus supplement and the
accompanying prospectus applicable to that jurisdiction.
ABOUT
THIS PROSPECTUS SUPPLEMENT
On
September 6, 2018, we filed with the SEC a registration statement on Form F-3 (File No. 333-227211), as amended, utilizing a shelf
registration process relating to the securities described in this prospectus supplement, which registration statement was declared
effective on September 19, 2018. Under this shelf registration process, we may, from time to time, issue up to $50 million in
the aggregate of ordinary shares, preferred shares, warrants, and units. We may issue up to approximately $12.6 million of ordinary
shares in this offering and as of the date of this prospectus supplement.
This
document is in two parts. The first part is this prospectus supplement, which describes the specific terms of this share offering
and also adds to and updates information contained in the accompanying prospectus and the documents incorporated by reference
into the prospectus. The second part, the accompanying prospectus, gives more general information, some of which does not apply
to this offering. You should read this entire prospectus supplement as well as the accompanying prospectus and the documents incorporated
by reference that are described under “Where You Can Find More Information” in this prospectus supplement and the
accompanying prospectus.
If
the description of the offering varies between this prospectus supplement and the accompanying prospectus, you should rely on
the information contained in this prospectus supplement. However, if any statement in one of these documents is inconsistent with
a statement in another document having a later date – for example, a document incorporated by reference in this prospectus
supplement and the accompanying prospectus – the statement in the document having the later date modifies or supersedes
the earlier statement. Except as specifically stated, we are not incorporating by reference any information submitted under any
Current Report on Form 6-K into any filing under the Securities Act or the Securities Exchange Act of 1934, as amended, or the
Exchange Act, into this prospectus supplement or the accompanying prospectus.
Any
statement contained in a document incorporated by reference, or deemed to be incorporated by reference, into this prospectus supplement
or the accompanying prospectus will be deemed to be modified or superseded for purposes of this prospectus supplement or the accompanying
prospectus to the extent that a statement contained herein, therein or in any other subsequently filed document which also is
incorporated by reference in this prospectus supplement or the accompanying prospectus modifies or supersedes that statement.
Any such statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of
this prospectus supplement or the accompanying prospectus.
We
further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any
document that is incorporated by reference in this prospectus supplement and the accompanying prospectus were made solely for
the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to
such agreements, and should not be deemed to be a representation, warranty or covenant to you unless you are a party to such agreement.
Moreover, such representations, warranties or covenants were accurate only as of the date when made or expressly referenced therein.
Accordingly, such representations, warranties and covenants should not be relied on as accurately representing the current state
of our affairs unless you are a party to such agreement.
Unless
we have indicated otherwise, or the context otherwise requires, references in this prospectus supplement and the accompanying
prospectus to “MYT,” the “Company,” “we,” “us” and “our” or similar
terms refer to Urban Tea, Inc., a British Virgin Islands (“BVI”) company and its consolidated subsidiaries.
CAUTIONARY
NOTE REGARDING FORWARD LOOKING STATEMENTS
This
prospectus supplement and our SEC filings that are incorporated by reference into this prospectus supplement contain or incorporate
by reference forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. All statements other than statements of historical fact are “forward-looking statements,” including any projections
of earnings, revenue or other financial items, any statements of the plans, strategies and objectives of management for future
operations, any statements concerning proposed new projects or other developments, any statements regarding future economic conditions
or performance, any statements of management’s beliefs, goals, strategies, intentions and objectives, and any statements
of assumptions underlying any of the foregoing. The words “believe,” “anticipate,” “estimate,”
“plan,” “expect,” “intend,” “may,” “could,” “should,”
“potential,” “likely,” “projects,” “continue,” “will,” and “would”
and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain
these identifying words. Forward-looking statements reflect our current views with respect to future events, are based on assumptions
and are subject to risks and uncertainties. We cannot guarantee that we actually will achieve the plans, intentions or expectations
expressed in our forward-looking statements and you should not place undue reliance on these statements. There are a number of
important factors that could cause our actual results to differ materially from those indicated or implied by forward-looking
statements. These important factors include those discussed under the heading “Risk Factors” contained or incorporated
by reference in this prospectus and in the applicable prospectus supplement and any free writing prospectus we may authorize for
use in connection with a specific offering. These factors and the other cautionary statements made in this prospectus should be
read as being applicable to all related forward-looking statements whenever they appear in this prospectus. You are cautioned
not to place undue reliance on the forward-looking statements contained in, or incorporated by reference into, this prospectus
supplement. Each forward-looking statement speaks only as of the date this prospectus supplement or, in the case of documents
incorporated by reference, the date of the applicable document (or any earlier date indicated in the statement), and except as
required by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information,
future events or otherwise. We qualify all such forward-looking statements by these cautionary statements.
PROSPECTUS
SUPPLEMENT SUMMARY
The
following summary highlights selected information contained or incorporated by reference in this prospectus supplement. This summary
does not contain all of the information you should consider before investing in the securities. Before making an investment decision,
you should read the entire prospectus and any supplement hereto carefully, including the risk factors section, the financial statements
and the notes to the financial statements incorporated herein by reference, and the documents that we incorporate by reference
herein.
Our
Business
History
and Development of the Company
Urban
Tea, Inc. (formerly known as Delta Technology Holdings Ltd, and prior to that as CIS Acquisition Ltd.) was incorporated in the
British Virgin Islands as a company with limited liability on November 28, 2011. We have become a retailer and distributor of
specialty tea products in China (also referred to as “PRC”) since November 2018, and have fully completed the disposition
of our fine and specialty chemical manufacturing business in April 2019. Our goal is to be a leading brand of tea beverages in
each city in which we currently and will operate, by selling the finest quality tea beverages and related products, as well as
complementary food offerings, and by providing each customer with a pleasant and comfortable environment. Our current business
solely consists of the specialty tea product distribution and retail business.
Prior
to November 2018, Urban Tea, Inc. was solely a fine and specialty chemical manufacturer, primarily engaged in manufacturing and
selling of organic compounds including para-chlorotoluene (“PCT”), ortho-chlorotoluene (“OCT”),
PCT/OCT downstream products, and other by-product chemicals and distributing fine and specialty chemicals to end application markets
including automotive, pharmaceutical, agrochemical, dye & pigments, aerospace, ceramics, coating-printing, clean energy and
food additives. Since November 2018, we started a specialty tea product distribution and retail business through our newly formed
subsidiary, Shanghai Ming Yun Tang Tea Limited (“Shanghai MYT”) which controls Hunan Ming Yun Tang Brand Management
Co., Ltd. (“Hunan MYT”) via a series of contractual agreements. Currently we market a wide range of trendy
tea drinks, light meals, and pastries targeting China’s new urban generation in the Hunan province. Our products are focused
on not only their taste but also their aesthetic presentation and health benefits. Our products are currently being offered via
our own stores.
Disposition
of Elite
On
February 9, 2019, we entered into that certain Share Purchase Agreement (“SPA” and the transaction contemplated
by the SPA is referred to as the “Disposition”) with HG Capital Group Limited pursuant to which HG Capital
agreed to purchase Elite Ride Limited (“Elite”), which was our wholly owned subsidiary and a company registered
in the BVI, in exchange for a cash purchase price of $1,750,000. Elite, via its 100% owned subsidiary Delta Advanced Materials
Limited, a Hong Kong corporation, holds all the equity interests in all the operating subsidiaries. The Disposition closed upon
satisfaction of the closing conditions of the SPA, including but not limited to the approval by the Company’s shareholders
of the SPA and the transactions contemplated thereunder and receipt of a fairness opinion opining on the fairness of the Disposition
to the Company’s shareholders from a financial point of view.
VIE
Agreement with 39 PU Tea Co., Ltd.
MYT
entered into a Share Purchase Agreement (the “39 Pu SPA”) on September 28, 2019, with Ming Yun Tang
(Shanghai) Tea Co., Ltd., a wholly owned subsidiary of the Company organized under the laws of PRC (“WFOE”),
Hunan 39 PU Tea Co., Ltd., (“39 Pu”), and certain shareholders of 39 Pu, who collectively hold 51% equity interest
of 39 Pu (the “39 Pu Shareholders”).
Pursuant
to the 39 Pu SPA, 39 Pu and the 39 Pu Shareholders have entered into a set of variable interest entity agreements (the “VIE
Agreements”) with WFOE on October 2, 2019. The Company has made the initial payment of $2.4 million on October 28, 2019
and issued to certain recipients (the “Recipients”) an aggregate of 10,000,000 ordinary shares of the Company,
no par value on October 17, 2019. The remaining portion of the cash consideration of $0.6 million and share consideration of 4,000,000
ordinary shares will be delivered according to the earn-out payment based on the financial performance of 39 Pu in its next fiscal
year. The VIE Agreements are designed to provide Shanghai MYT with the power, rights and obligations equivalent in all material
respects to those it would possess as the majority equity holder of 39 Pu, including absolute rights to control the management,
operations, assets, property and revenue of 39 Pu. 39 Pu has the necessary license to carry out the tea business in China. The
39 Pu SPA closed upon satisfaction of the closing conditions of the 39 Pu SPA, including, among other things, (a) Nasdaq approval
of the listing of the share consideration, (b) the delivery of the duly executed VIE Agreements, and (c) the Company’s receipt
of a fairness opinion from ViewTrade Securities, Inc., an independent valuation firm engaged by the Company.
Joint
Venture with T&O Management Group LLC
On
October 29, 2019, the Company entered into a joint venture agreement (the “JV Agreement”) with T&O
Management Group LLC, a New York State corporation (“OTTA”). Pursuant to the JV Agreement, the Company and
OTTA formed Urban Tea Management Inc. under the laws of the State of New York (the “Joint Venture”). Pursuant
to the terms of the JV Agreement, the Joint Venture will be directed, controlled and managed by a management committee formed
by both OTTA and the Company. The Company holds 51% of the total ownership of the Joint Venture, and OTTA holds the remaining
49%. The Company is responsible for providing technology services and the overall operation planning of the Joint Venture in the
United States. OTTA is responsible for applying for the business license, trademark registration, and any other necessary legal
documents for the establishment of Joint Venture.
Below
is the Company’s organizational structure chart as of the date of this prospectus.
Business
Overview
The
tea drinks we are currently offering are developed based on Anhua dark tea, which is famous in the Hunan province. These tea-based
beverages include fresh milk tea, fruit tea, milk cap tea, etc. The light meals offered include selections such as salads, sandwiches,
pasta, steak, burritos and other healthy options. The pastries we are offering include fresh baked bread, fresh baked cakes, frosting
cakes, etc. Our goal is to be a leading brand of tea beverages in each city in which we currently and will operate, by selling
the finest quality tea beverages and related products, as well as complementary food offerings, and by providing each customer
with a pleasant and comfortable environment. We have generated sales at Company-owned stores and expect to receive fee and profit
sharing from the managed stores.
Products
Currently
we market a wide range of trendy tea drinks, light meals, and pastries targeting China’s new urban generation in Hunan province.
Our products are focused on not only their taste but also their aesthetic presentation and health benefits.
Sales
Channels
Generally,
in one given city, we operate one flagship store, which usually covers a floor area of 80-150 square meters (about 860-1,615 square
feet). We seek to maintain our flagship stores in strategic locations that support the brand image, targeting high customer traffic
locations including shopping malls, lifestyle centers and outlets. We regularly review our store portfolio, identifying new store
locations and monitoring existing locations for sufficient levels of customer traffic to maintain high exposure. We actively monitor
and manage the performance of our stores and seek to incorporate information learned through the monitoring process into our analytic
process and future site selection and store retention decisions.
We
will also operate a number of general stores, which usually cover a floor area of 60-80 square meters (about 646-860 square feet).
Our general stores mainly offer tea beverages and light meals only. If a general store desires to expand the product offerings
to include pastries, the store must acquire more equipment from us. The decision to offer baking products varies upon the location
of general stores.
The
mix of flagship stores and general stores in a given market varies is based on several factors, including our ability to access
desirable local retail space, the complexity, profitability and expected ultimate size of the market for us and our ability to
leverage the support infrastructure within a geographic region.
A
flagship store can only be a managed store while a general store can be either a managed store, JV store (as defined below) or
franchise store.
Managed
Stores
Currently,
all our products are offered in our managed stores where we lease the properties, hire managers and employees, purchase equipment
and operate the stores ourselves.
Below
is a summary of flagship and general stores operated by us as of June 2020:
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Total
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flagship stores
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1
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general stores
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4
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Total
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5
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We
plan to have a total of 8 managed stores by the end of 2020, all in the Hunan province. We expect to add 5 new managed stores
by June 2021 and have a total of 75 stores across China by June 2022.
JV
Stores
We
anticipate entering into joint venture agreements with corporate store owners pursuant to which we will contribute our products,
brands, our management services etc. in return for a fixed percentage of the profit generated by such stores. We refer to such
stores as “JV stores”. Such operations of managed store and JV store model is an interim step before we obtain a franchise
permit to operate franchise stores.
Franchise
Stores
On
May 20th, 2020, we received regulatory approval from the Commercial Franchise Enterprise Administration and were approved to seek
franchisees for growth opportunities throughout China.
Online
Delivery
We
have also teamed up with China’s leading online food ordering and delivery platforms—meituan.com (“美团”)
and ele.me (“饿了么”)—to allow consumers to order drinks, light meals, and pastries through
the Internet from the closest stores. Consumers, however, can order only products that are suitable for delivery, such as bread
with long expiration periods, light snacks, and certain tea beverages. Some tea beverages, such as milk foam cap tea, are not
offered online due to its unsuitability for delivery. After a customer places an order with these online platforms, our products
will be produced in the stores and delivered by professional deliverymen. The production and delivery process is typically completed
in forty (40) minutes. The online platforms charge us twenty percent (20%) to twenty five percent (25%) of the total sales amount.
Corporate
Information
Our
principal executive offices are located at Huakun Times Plaza, Room 1118, Floor 11, No. 200, Erduan, East Xiang Fu Road, Yuhua
District, Changsha City, Hunan Province, China, where we leased approximately 3,378 square feet of office space pursuant to a
lease agreement, which lasts from June 1, 2019 to July 31, 2022 with an average annual rent approximating RMB320,000 (approximately
US$46,900). We do not own any real property or have any land use rights. Our telephone number at that address is +86-511-8673-3102.
Our company website is www.h-n-myt.com. Our NASDAQ symbol is MYT, and we make our SEC filings available on the Investor Relations
page of our website, www.h-n-myt.com. Information contained on our website is not part of this prospectus. Our agent for service
in the United States is VStock Transfer, LLC, the current transfer agent of the Company, with a mailing address of 18 Lafayette
Place Woodmere, NY 11598.
The
Offering
|
Issuer:
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Urban
Tea, Inc.
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|
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Ordinary Shares offered by us pursuant to
this prospectus supplement:
|
|
9,000,000 ordinary
shares
|
|
|
|
|
|
Offering Price:
|
|
$0.555 per ordinary
share
|
|
|
|
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Ordinary shares issued and outstanding before
this offering:
|
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36,188,648
|
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Ordinary shares issued and outstanding immediately
after this offering (1):
|
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45,188,648
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Use of proceeds:
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We estimate the
net proceeds to us from this offering will be approximately $4.6 million after deducting the placement agent fee and estimated
offering expenses payable to us. We intend to use the net proceeds from this offering for improving and expanding our existing
business, working capital and other general corporate purposes. See “Use of Proceeds” on page S-11 of this prospectus
supplement.
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Transfer agent and registrar:
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VStock Transfer,
LLC
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Risk factors:
|
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Investing in our
securities involves a high degree of risk. For a discussion of factors you should consider carefully before deciding to invest
in our ordinary shares, see the information contained in or incorporated by reference under the heading “Risk Factors”
beginning on page S-6 of this prospectus supplement, on page 4 of the accompanying prospectus, and in the other documents
incorporated by reference into this prospectus supplement.
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NASDAQ Capital Market Symbol:
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“MYT”
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(1)
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The
number of our ordinary shares issued and outstanding immediately after this offering is based on 36,188,648 ordinary shares issued
and outstanding as of June 16, 2020 and 9,000,000 ordinary shares to be issued in this offering and excludes:
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|
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●
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1,809,420
ordinary shares issuable upon exercise of the warrants offered in the registered direct offering closed on May 24, 2019.
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RISK
FACTORS
Before
you make a decision to invest in our securities, you should consider carefully the risks described below, together with other
information in this prospectus supplement, the accompanying prospectus and the information incorporated by reference herein and
therein. If any of the following events actually occur, our business, operating results, prospects or financial condition could
be materially and adversely affected. This could cause the trading price of our ordinary shares to decline and you may lose all
or part of your investment. 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.
You
should also carefully consider the risk factors set forth under “Risk Factors” described in our most recent annual
report on Form 20-F, filed on October 25, 2019, together with all other information contained or incorporated by reference
in this prospectus supplement and in any related free writing prospectus in connection with a specific offering, before making
an investment decision.
Risks
Relating to the Current Pandemic
Our
business, results of operations and financial condition may be adversely affected by global public health epidemics, including
the strain of coronavirus known as COVID-19.
In
December 2019, a novel strain of coronavirus causing respiratory illness, or COVID-19, has surfaced in Wuhan, China, spreading
at a fast rate in January and February of 2020, and confirmed cases were also reported in other parts of the world. In reaction
to this outbreak, an increasing number of countries imposed travel suspensions to and from China following the World Health Organization’s
“public health emergency of international concern” (PHEIC) announcement on January 30, 2020. Since this outbreak,
business activities in China and many other countries including U.S. have been disrupted by a series of emergency quarantine measures
taken by the government.
As
a result, our operations in China and the U.S. have been materially affected. Our stores in China were temporarily closed until
early March and have been gradually opening since then. As a result, the Company expects a lower amount of revenue and net income
from February to April 2020 due to the downtime. In addition, the renovation of our new store in New York City which was expected
to open in early 2020 was delayed due to COVID-19 related restrictions in the U.S. Accordingly, our operation and business have
been and will continue to be adversely affected as the results of the wide-spread pandemic. Management may have to adjust or change
our business plan in response to the prolonged pandemic and change of social behavior.
The
extent to which COVID-19 negatively impacts our business is highly uncertain and cannot be accurately predicted. We believe that
the coronavirus outbreak and the measures taken to control it may have a significant negative impact on not only our business,
but economic activities globally. The magnitude of this negative effect on the continuity of our business operation in China and
U.S. remains uncertain. These uncertainties impede our ability to conduct our daily operations and could materially and adversely
affect our business, financial condition and results of operations, and as a result affect our share price and create more volatility.
Risks
Relating to our Joint Venture with T&O Management Group LLC
We
may not be able to oversee the new joint venture efficiently.
We
may not be able to oversee our new joint venture, efficiently, realize anticipated profits or effectively implement our growth
and operating strategies. As we begin our operations in the United States through our joint venture, we may encounter unforeseen
expenses, difficulties, complications, delays and other known and unknown factors. We will need to transition from a company with
our primary operations in China to a company capable of supporting operations in both China and the United States. We might not
be successful in such a transition. There can be no guarantee that the addition of the new joint venture will not cause us to
incur additional debt and increase our exposure to market and other risks. Our failure to successfully pursue our strategies or
effectively operate the joint venture entity could also have a material adverse effect on our rate of growth and operating performance.
There
may be integration issues between MYT and T&O Management Group LLC
The
tea kitchen’s technologies, overall operation planning, and guidance for the “Your Ladyship Tea” provided by
MYT from China will need to be integrated with T&O Management Group LLC existing business resources and business culture in
New York so as to achieve our operating strategies. If we are unable to achieve a successful integration with our tea making operation
and New York business demand, we may not be successful in developing and marketing our new services and courses and our operating
results will materially suffer. In addition, if the integrated services and courses we offer do not achieve acceptance by the
marketplace, our operating results will materially suffer.
We
may experience negative effects to our brand and reputation from real or perceived quality or safety issues with our tea, tea
accessories, and food and beverages, which could have an adverse effect on our operating results.
We
believe our customers rely on us to provide them with high-quality teas, food and tea beverages. Concerns regarding the safety
of our teas, food, and tea beverages or the safety and quality of our supply chain could cause consumers to avoid purchasing certain
products from us or to seek alternative sources of tea, food, and tea beverages, even if the basis for the concern has been addressed
or is outside of our control. Adverse publicity about these concerns, whether or not ultimately based on fact, and whether or
not involving teas, tea accessories, and food and beverages sold at our stores, could discourage consumers from buying our teas,
food, and tea beverages and have an adverse effect on our brand, reputation and operating results.
Furthermore,
the sale of teas, food, and tea beverages entail a risk of product liability claims and the resulting negative publicity. For
example, tea supplied to the U.S. operation store could contain contaminants that, if not detected by us, could result in
illness or death upon their consumption. Similarly, food and tea beverages could contain contaminants or contain design or manufacturing
defects that could result in illness, injury or death. It is possible that product liability claims will be asserted against us
in the future.
We
may also be subject to involuntary product recalls or may voluntarily conduct a product recall. The costs associated with any
future product recall could, individually and in the aggregate, be significant in any given fiscal year. In addition, any product
recall, regardless of direct costs of the recall, may harm consumer perceptions of our teas, tea accessories, and food and beverages
and have a negative impact on our future sales and results of operations.
Any
loss of confidence on the part of our customers in the safety and quality of our teas, tea accessories, and food and beverages
would be difficult and costly to overcome. Any such adverse effect could be exacerbated by our position in the market as a purveyor
of quality teas, tea accessories, and food and beverages and could significantly reduce our brand value. Issues regarding the
safety of any teas, tea accessories, and food and beverages sold by us, regardless of the cause, could have a substantial and
adverse effect on our sales and operating results.
Incidents
involving food or beverage-borne illnesses, tampering, adulteration, contamination or mislabeling, whether or not accurate, as
well as adverse public or medical opinions about the health effects of consuming our products, could harm our business
Instances
or reports, whether true or not, of unclean water supply or food-safety issues, such as food or beverage-borne illnesses,
tampering, adulteration, contamination or mislabeling, either during growing, manufacturing, packaging, storing or preparation,
have in the past severely injured the reputations of companies in the food and tea beverage processing, grocery and quick-service
restaurant sectors. Any report linking us to such instances could severely hurt our sales and could possibly lead to product liability
claims, litigation (including class actions) and/or temporary store closures. Clean water is critical to the preparation of tea
beverages, as well as ice for our cold beverages, and our ability to ensure a clean water and ice supply to our stores can be
limited, particularly in some international locations. We are also continuing to incorporate more products in our food and tea
beverage lineup that require freezing or refrigeration, which increases the risk of food safety related incidents
if correct temperatures are not maintained due to mechanical malfunction or human error.
We
also face risk by relying on third-party food and tea suppliers to provide and transport ingredients and finished products to
our stores. We monitor the operations of certain of these business partners, but the product quality and service they deliver
may be diminished by any number of factors beyond our control and it may be difficult to detect contamination or other defect
in these products.
Additionally,
we are evolving our product lineup to include more local or smaller suppliers for some of our products who may not have as rigorous
quality and safety systems and protocols as larger or more national suppliers. In addition, instances of food or beverage-safety
issues, even those involving solely the restaurants or stores of competitors or of suppliers or distributors (regardless of whether
we use or have used those suppliers or distributors), could, by resulting in negative publicity about us or the foodservice industry
in general, adversely affect our sales on a regional or global basis. A decrease in customer traffic as a result of food-safety concerns
or negative publicity, or as a result of a temporary closure of any of our stores, product recalls or food or beverage-safety
claims or litigation, could materially harm our business and results of operations.
Risks
Relating to British Virgin Islands Law
Rights
of shareholders under BVI law differ from those under United States law, and, accordingly, our shareholders may have fewer protections.
Our
corporate affairs are governed by our Memorandum and Articles of Association, the BVI Business Companies Act, 2004 (as amended,
the “BVI Act”) and the common law of the British Virgin Islands. The rights of shareholders to take legal action
against our directors, actions by minority shareholders and the fiduciary responsibilities of our directors under British Virgin
Islands law are to a large extent governed by the common law of the British Virgin Islands and by the BVI Act. The common law
of the British Virgin Islands is derived in part from comparatively limited judicial precedent in the British Virgin Islands as
well as from English common law, which has persuasive, but not binding, authority on a court in the British Virgin Islands. The
rights of our shareholders and the fiduciary responsibilities of our directors under British Virgin Islands law are not as clearly
established as they would be under statutes or judicial precedents in some jurisdictions in the United States. In particular,
the British Virgin Islands has a less developed body of securities laws as compared to the United States, and some states (such
as Delaware) have more fully developed and judicially interpreted bodies of corporate law. As a result of the foregoing, holders
of our ordinary shares may have more difficulty in protecting their interests through actions against our management, directors
or major shareholders than they would as shareholders of a U.S. company.
The
laws of the British Virgin Islands provide limited protection for minority shareholders, so minority shareholders will have limited
or no recourse if they are dissatisfied with the conduct of our affairs.
Under
the laws of the British Virgin Islands, there is limited statutory law for the protection of minority shareholders other than
the provisions of the BVI Act dealing with shareholders. The principal protection under statutory law is that shareholders may
bring an action to enforce the constituent documents of a British Virgin Islands company and are entitled to have the affairs
of the company conducted in accordance with the BVI Act and the memorandum and articles of association of the company. As such,
if those who control the company materially disregard the requirements of the BVI Act or the provisions of the company’s
memorandum and articles of association, then the courts may grant relief. Generally, the areas in which the courts will intervene
are the following: (i) an act complained of which is outside the scope of the authorized business or is illegal or not capable
of ratification by the majority; (ii) acts that constitute fraud on the minority where the wrongdoers control the company; (iii)
acts that infringe on the personal rights of the shareholders, such as the right to vote or breach of a duty owed to the shareholder
by the Company; and (iv) acts where the company has not complied with provisions requiring approval of a special or extraordinary
majority of shareholders, which are more limited than the rights afforded to minority shareholders under the laws of many states
in the United States.
It
may be difficult to enforce judgments against us or our executive officers and directors in jurisdictions outside the United States.
Under
our Memorandum and Articles of Association, as amended, we may indemnify and hold our directors harmless against all claims and
suits brought against them, subject to limited exceptions. Furthermore, to the extent allowed by law, the rights and obligations
among or between us, any of our current or former directors, officers and employees and any current or former shareholder will
be governed exclusively by the laws of the British Virgin Islands and subject to the jurisdiction of the British Virgin Islands
courts, unless those rights or obligations do not relate to or arise out of their capacities as such. Although there is doubt
as to whether United States courts would enforce these provisions in an action brought in the United States under United States
securities laws, these provisions could make judgments obtained outside of the British Virgin Islands more difficult to enforce
against our assets in the British Virgin Islands or jurisdictions that would apply British Virgin Islands law.
Risk
Relating 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.
Because
we are a small company, the requirements of being a public company, including compliance with the reporting requirements of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the requirements of the Sarbanes-Oxley Act and
the Dodd-Frank Act, may strain our resources, increase our costs and distract management, and we may be unable to comply with
these requirements in a timely or cost-effective manner.
As
a public company with listed equity securities, we must comply with the federal securities laws, rules and regulations, including
certain corporate governance provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and the
Dodd-Frank Act, related rules and regulations of the SEC and the NASDAQ, with which a private company is not required to comply.
Complying with these laws, rules and regulations occupies a significant amount of the time of our Board of Directors and management
and significantly increases our costs and expenses. Among other things, we must:
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●
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maintain
a system of internal control over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley
Act and the related rules and regulations of the SEC and the Public Company Accounting Oversight Board;
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●
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comply
with rules and regulations promulgated by the NASDAQ;
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●
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prepare
and distribute periodic public reports in compliance with our obligations under the federal securities laws;
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●
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maintain
various internal compliance and disclosures policies, such as those relating to disclosure controls and procedures and insider
trading in our ordinary shares;
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●
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involve
and retain to a greater degree outside counsel and accountants in the above activities;
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maintain
a comprehensive internal audit function; and
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●
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maintain
an investor relations function.
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Future
sales of our ordinary shares, whether by us or our shareholders, could cause our share price to decline
If
our existing shareholders sell, or indicate an intent to sell, substantial amounts of our ordinary shares in the public market,
the trading price of our ordinary shares could decline significantly. Similarly, the perception in the public market that our
shareholders might sell of our ordinary shares could also depress the market price of our ordinary shares. A decline in the price
of our ordinary shares might impede our ability to raise capital through the issuance of additional of our ordinary shares or
other equity securities. In addition, the issuance and sale by us of additional of our ordinary shares or securities convertible
into or exercisable for our ordinary shares, or the perception that we will issue such securities, could reduce the trading price
for our ordinary shares as well as make future sales of equity securities by us less attractive or not feasible. The sale of ordinary
shares issued upon the exercise of our outstanding options and warrants could further dilute the holdings of our then existing
shareholders.
Investors
in this offering will experience immediate and substantial dilution
Because
the price per share of our ordinary shares being offered is substantially higher than the net tangible book value per share of
our ordinary shares, you will suffer substantial dilution in the net tangible book value of our ordinary shares. Based on an offering
price of $0.555 per share, after deducting estimated offering commissions and expenses, and based on our net tangible book value
of the ordinary shares per share as of December 31, 2019, if you purchase our ordinary shares in this offering, you will suffer
immediate dilution of $0.0808 per share in the net tangible book value of the ordinary shares.
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 shares or publishes inaccurate or unfavorable research
about our business, our share 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 share price and trading volume to decline.
You
may experience future dilution as a result of future equity offerings or other equity issuances
We
may in the future issue additional of our ordinary shares or other securities convertible into or exchangeable for of our ordinary
shares. We cannot assure you that we will be able to sell of 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 of our 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.
Risk Relating to Our Ordinary Shares
If we fail to comply with the continued listing requirements
of NASDAQ, we would face possible delisting, which would result in a limited public market for our shares and make obtaining future
debt or equity financing more difficult for us.
On July 10, 2019, the
Company received a notification letter from the Nasdaq Listing Qualifications Staff of The NASDAQ Stock Market LLC (“Nasdaq”)
notifying the Company that the minimum bid price per share for its common shares has been below $1.00 for a period of 30 consecutive
business days and the Company therefore no longer meets the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2)
(the “Deficiency”).
Under the Nasdaq Listing
Rules, the Company had until January 6, 2020 to regain compliance, and may be eligible for an extension of an additional 180 calendar
days, provided that the Company meets the continued listing requirement for market value of publicly held shares and all other
initial listing standards for Nasdaq except for Nasdaq Listing Rule 5550(a)(2), and provide a written notice of its intention to
cure this deficiency during the second compliance period, by effecting a reverse stock split, if necessary.
On December 3, 2019,
the Company provided written notice to Nasdaq requesting for an extension through July 3, 2020 to demonstrate compliance with the
Deficiency during the second compliance period.
On April 20, 2020,
the Company received a notification letter from Nasdaq notifying the Company that Nasdaq has determined to toll the compliance
periods for bid price requirements (the “Price-based Requirements”) through June 30, 2020. Accordingly, since the Company
had 79 calendar days remaining in its bid price compliance period as of April 16, 2020, it will, upon reinstatement of the Price-based
Requirements, still have 79 calendar days from July 1, 2020, or until September 17, 2020, to regain compliance.
If the Company has
not regained compliance with the Price-based Requirements by September 17, 2020, Nasdaq may commence delisting procedures against
the Company (during which the Company may have additional time of up to six months to appeal and correct its non-compliance). If
the Company fails to regain compliance with the Price-based Requirements or any other listing rules when required, we could be
subject to suspension and delisting proceedings. If our securities lose their status on The NASDAQ Capital Market, our securities
would likely trade in the over-the-counter market. If our securities were to trade on the over-the-counter market, selling our
securities could be more difficult because smaller quantities of securities would likely be bought and sold, transactions could
be delayed, and security analysts’ coverage of us may be reduced. In addition, in the event our securities are delisted,
broker-dealers have certain regulatory burdens imposed upon them, which may discourage broker-dealers from effecting transactions
in our securities, further limiting the liquidity of our securities. These factors could result in lower prices and larger spreads
in the bid and ask prices for our securities. Such delisting from The NASDAQ Capital Market and continued or further declines in
our share price could also greatly impair our ability to raise additional necessary capital through equity or debt financing, and
could significantly increase the ownership dilution to shareholders caused by our issuing equity in financing or other transactions.
USE
OF PROCEEDS
We
estimate that the net proceeds from this offering will be approximately $4.6 million, after deducting the placement agent fees
and the estimated offering expenses payable by us.
We
intend to use the net proceeds from this offering for improving and expanding our existing business, working capital and other
general corporate purposes.
The
amounts and timing of our use of proceeds will vary depending on a number of factors, including the amount of cash generated or
used by our operations, and the rate of growth, if any, of our business. As a result, we will retain broad discretion in the allocation
of the net proceeds of this offering. In addition, while we have not entered into any agreements, commitments or understandings
relating to any significant transaction as of the date of this prospectus supplement, we may use a portion of the net proceeds
to pursue acquisitions, joint ventures and other strategic transactions.
DILUTION
If
you invest in our ordinary shares, your interest will be diluted immediately to the extent of the difference between the public
offering price per share and the adjusted net tangible book value per share of our ordinary shares after this offering.
Our
net tangible book value on December 31, 2019, was approximately $16.89 million, or $0.4669 per ordinary share. “Net tangible
book value” is total assets minus the sum of liabilities and intangible assets. “Net tangible book value per share”
is net tangible book value divided by the total number of shares issued and outstanding.
After
giving effect to the issue of our ordinary shares of approximately $5 million in this offering at an assumed offering price of
$0.555 per share, and after deducting the placement agent fees and estimated offering expenses payable by us in connection with
this offering and our warrants, our as adjusted net tangible book value as of December 31, 2019 would have been approximately
$21.42 million, or approximately $0.4742 per ordinary share. This represents an immediate increase in net tangible book value
of $0.0073 per share to our existing shareholders and an immediate decrease in net tangible book value of $0.0808 per share to
investors participating in this offering. The following table illustrates this dilution per share to investors participating in
this offering:
|
Assumed offering price per ordinary share
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$
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0.555
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|
Net tangible book value per ordinary share as of December 31, 2019
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|
$
|
0.4669
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Increase in net tangible book value per ordinary share attributable to existing investors
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$
|
0.0073
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Net tangible book value per ordinary share after giving effect to this offering
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$
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0.4742
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Dilution per ordinary share to new investors
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|
$
|
0.0808
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The
above discussion and table are based on 36,180,314 ordinary shares outstanding as of December 31, 2019, and excludes:
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1,809,420
ordinary shares issuable upon exercise of the warrants offered in the registered direct offering closed on May 24, 2019.
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To
the extent that we grant additional options or other awards under our stock / share incentive plan or issue additional warrants,
or we issue additional ordinary shares in the future, there may be further dilution.
DIVIDEND
POLICY
While
we have no current intention of paying dividends, should we decide in the future to do so, as a holding company, our ability to
pay dividends and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiaries
and other holdings and investments.
In
addition, due to various restrictions under PRC laws on the distribution of dividends by WFOE, we may not be able to pay dividends
to our shareholders. The Wholly-Foreign Owned Enterprise Law (1986), as amended, and The Wholly-Foreign Owned Enterprise Law Implementing
Rules (1990), as amended, and the Company Law of the PRC (2006), contain the principal regulations governing dividend distributions
by wholly foreign owned enterprises. Under these regulations, wholly foreign owned enterprises may pay dividends only out of their
accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. Additionally, such companies
are required to set aside a certain amount of their accumulated profits each year, if any, to fund certain reserve funds until
such time as the accumulated reserve funds reach and remain above 50% of the registered capital amount. These reserves are not
distributable as cash dividends except in the event of liquidation and cannot be used for working capital purposes. Furthermore,
if our subsidiaries and affiliates in China incur debt on their own in the future, the instruments governing the debt may restrict
its ability to pay dividends or make other payments. If we or our subsidiaries and affiliates are unable to receive all of the
revenues from our operations through the current contractual arrangements, we may be unable to pay dividends on our ordinary shares.
CAPITALIZATION
The
following table sets forth our capitalization as of December 31, 2019:
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on a pro forma,
as adjusted basis to give effect to the issuance and sale of 9,000,000 ordinary shares at the offering price of $0.555 per
share, after deducting placement agent fees and expenses and estimated offering expenses payable by us;
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As of December 31, 2019
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|
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Actual
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|
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Pro Forma,
as adjusted
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|
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(in thousands of $)
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Cash and Cash Equivalents
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$
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1,810
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$
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6,333
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|
Total Current Liabilities
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|
$
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2,943
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|
$
|
2,943
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Shareholders’ equity:
|
|
|
|
|
|
|
|
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|
Preferred shares, $0.0001 par value, 5,000,000 shares authorized; none issued and outstanding
|
|
|
-
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|
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|
-
|
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|
Ordinary shares, no par value; unlimited number of shares authorized, 36,188,648 shares issued and outstanding
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|
$
|
4
|
|
|
$
|
5
|
|
|
Additional Paid in Capital*
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|
$
|
21,025
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|
|
$
|
25,556
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|
|
Accumulated deficit
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|
$
|
(9,510
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)
|
|
$
|
(9,510
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)
|
|
Total shareholders’ equity
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|
$
|
11,297
|
|
|
$
|
15,829
|
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|
Total capitalization
|
|
$
|
14,240
|
|
|
$
|
18,772
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|
The
above discussion and table are based on 36,180,314 ordinary shares outstanding as of December 31, 2019 and excludes:
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●
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1,809,420
ordinary shares issuable upon exercise of the warrants offered in the registered direct offering closed on May 24, 2019.
|
To
the extent that we grant additional options or other awards under our stock / share incentive plan or issue additional warrants,
or we issue additional ordinary shares in the future, there may be further dilution.
DESCRIPTION
OF OUR SECURITIES WE ARE OFFERING
We
are offering 9,000,000 of our ordinary shares pursuant to this prospectus supplement and the accompanying prospectus. The material
terms and provisions of our ordinary shares are described under the caption “Descriptions of Share Capital” beginning
on page 5 of the accompanying prospectus.
PLAN
OF DISTRIBUTION
Maxim
Group LLC, which we refer to as the Placement Agent, has agreed to act as the exclusive placement agent in connection with this
offering. The Placement Agent is not purchasing or selling ordinary shares offered by this prospectus supplement, nor is the Placement
Agent required to arrange the purchase or sale of any specific number or dollar amount of ordinary shares, but has agreed to use
its best efforts to arrange for the sale of all of the ordinary shares offered hereby. We have entered into a securities purchase
agreement with the investors pursuant to which we will sell to the investors 9,000,000 ordinary shares in this takedown from our
shelf registration statement. We negotiated the price for the securities offered in this offering with the investors. The factors
considered in determining the price included the recent market price of our ordinary shares, the general condition of the securities
market at the time of this offering, the history of, and the prospects, for the industry in which we compete, our past and present
operations, and our prospects for future revenues.
We
entered into securities purchase agreements directly with investors on June 24, 2020, and we will only sell to investors who have
entered into a securities purchase agreements.
We
expect to deliver the ordinary shares being offered pursuant to this prospectus supplement on or about June 29, 2020, subject
to customary closing conditions.
We
have agreed to pay the Placement Agent a fee equal to the sum of 7.0% of the aggregate purchase price paid by the investors placed
by the Placement Agent. We have also agreed to reimburse the Placement Agent $15,000 for non-accountable expenses and up to $35,000
for the reasonable and accounted fees and expenses of legal counsel.
The
following table shows per ordinary share and total cash Placement Agent’s fees we will pay to the Placement Agent in connection
with the sale of the ordinary shares pursuant to this prospectus supplement and the accompanying prospectus assuming the purchase
of all of the ordinary shares offered hereby:
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|
Per Share
|
|
|
Total
|
|
|
Offering Price
|
|
$
|
0.555
|
|
|
|
4,995,000
|
|
|
Placement Agent’s Fees (1)
|
|
$
|
0.03885
|
|
|
|
349,650
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|
|
Proceeds, before expenses, to us
|
|
$
|
0.51615
|
|
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4,645,350
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After
deducting certain fees and expenses due to the Placement Agent and our estimated offering expenses, we expect the net proceeds
from this offering to be approximately $4.6 million.
Right
of Participation
In
the event the offering is consummated, we have agreed to grant the Placement Agent a right of participation for a period of twelve
(12) months from the closing of this offering, to act as lead managing underwriter and lead left book runner or minimally as a
co-lead manager and co-lead left book runner and/or co-lead left book runner and/or co-lead left placement agent with at least
75.0% of the economics for any and all future equity, equity-linked or debt (excluding commercial bank debt) offerings undertaken
during the such period by the Company or any subsidiary of the Company.
Indemnification
We
have agreed to indemnify the Placement Agent and specified other persons against certain civil liabilities, including liabilities
under the Securities Act, and the Securities Exchange Act of 1934, as amended, or the Exchange Act, and to contribute to payments
that the placement agent may be required to make in respect of such liabilities.
The
Placement Agent may be deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act, and any commissions
received by it, and any profit realized on the resale of the ordinary shares and warrants sold by it while acting as principal,
might be deemed to be underwriting discounts or commissions under the Securities Act. As an underwriter, the placement agent would
be required to comply with the Securities Act and the Securities Exchange Act of 1934, as amended, or Exchange Act, including
without limitation, Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may limit the timing of purchases
and sales of ordinary shares and warrants by the placement agent acting as principal. Under these rules and regulations, the Placement
Agent:
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|
●
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may
not engage in any stabilization activity in connection with our securities; and
|
|
|
●
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may
not bid for or purchase any of our securities, or attempt to induce any person to purchase any of our securities, other than as
permitted under the Exchange Act, until it has completed its participation in the distribution in the securities offered by this
prospectus supplement.
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Relationships
The
Placement Agent and its affiliates may have provided us and our affiliates in the past and may provide from time to time in the
future certain commercial banking, financial advisory, investment banking and other services for us and such affiliates in the
ordinary course of their business, for which they have received and may continue to receive customary fees and commissions. In
addition, from time to time, the placement agent and its affiliates may effect transactions for their own account or the account
of customers, and hold on behalf of themselves or their customers, long or short positions in our debt or equity securities or
loans, and may do so in the future. However, except as disclosed in this prospectus supplement, we have no present arrangements
with the placement agent for any further services.
Transfer
Agent and Registrar
The
transfer agent and registrar for our ordinary shares is VStock Transfer, LLC, with a mailing address of 18 Lafayette Place Woodmere,
NY 11598.
Listing
Our
ordinary shares are listed on the NASDAQ Capital Market under the trading symbol “MYT.”
LEGAL
MATTERS
Certain
legal matters governed by the laws of the BVI with respect to the validity of the offered securities will be opined upon for us
by Harney Westwood & Riegels LP. Certain legal matters governed by the laws of New York will be passed upon for us by Hunter
Taubman Fischer & Li, LLC, New York, New York. Loeb & Loeb LLP, New York, New York, is counsel to the Placement Agent
in connection with this offering.
EXPERTS
The
audited financial statements incorporated in this prospectus by reference to the Annual Report on Form 20-F for the years ended
June 30, 2019 and 2018 have been so incorporated in reliance on the reports of Centurion ZD CPA Limited, the Company’s independent
registered public accounting firm, and its authority as experts in accounting and auditing.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The
SEC allows us to “incorporate by reference” into this prospectus the information we file with the SEC. This means
that we can disclose important information to you by referring you to those documents. Any statement contained in a document incorporated
by reference in this prospectus shall be deemed to be modified or superseded for purposes of this prospectus to the extent that
a statement contained herein, or in any subsequently filed document, which also is incorporated by reference herein, modifies
or supersedes such earlier statement. Any such statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus.
We
hereby incorporate by reference into this prospectus supplement the following documents that we have filed with the SEC under
the Exchange Act:
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the
Company’s Annual Report on Form 20-F for the fiscal year ended June 30, 2019, filed with the SEC on October 25,
2019; and
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●
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the
Company’s Current Reports on Form 6-K, as amended, filed with the SEC on August 14, 2019, August 30, 2019, October 1, 2019,
November 4, 2019, November 6, 2019, November 8, 2019, December 23, 2019, June 18, 2020, and June 22, 2020.
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●
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the
description of our ordinary shares incorporated by reference in our registration statement on Form 8-A, as amended (File No. 001-35755)
filed with the SEC on June 1, 2015, including any amendment and report subsequently filed for the purpose of updating that description.
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We
also incorporate by reference all additional documents that we file with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act that are filed after the filing date of the registration statement of which this prospectus supplement is
a part and prior to effectiveness of that registration statement. We are not, however, incorporating, in each case, any documents
or information that we are deemed to “furnish” and not file in accordance with SEC rules.
Upon
request, we will provide, without charge, to each person who receives this prospectus, a copy of any or all of the documents incorporated
by reference (other than exhibits to the documents that are not specifically incorporated by reference in the documents). Please
direct written or oral requests for copies to us at Huakun Times Plaza, Room 1118, Floor 11, No. 200, Erduan, East Xiang Fu Road,
Yuhua District, Changsha, People’s Republic of China, Attention: Long Yi, +86 511-8673-3102.
You
should rely only on the information incorporated by reference or provided in this prospectus supplement or the accompanying prospectus.
We have not authorized anyone else to provide you with different information. You should not assume that the information in this
prospectus supplement or the accompanying prospectus is accurate as of any date other than the date on the front page of those
documents.
WHERE
YOU CAN FIND MORE INFORMATION
As
permitted by SEC rules, this prospectus omits certain information and exhibits that are included in the registration statement
of which this prospectus forms a part. Since this prospectus may not contain all of the information that you may find important,
you should review the full text of these documents. If we have filed a contract, agreement or other document as an exhibit to
the registration statement of which this prospectus forms a part, you should read the exhibit for a more complete understanding
of the document or matter involved. Each statement in this prospectus, including statements incorporated by reference as discussed
above, regarding a contract, agreement or other document is qualified in its entirety by reference to the actual document.
We
are subject to the information reporting requirements of the Exchange Act that are applicable to foreign private issuers,
and, in accordance with these requirements, we file annual and current reports and other information with the SEC. You may inspect,
read (without charge) and copy the reports and other information we file with the SEC at the SEC’s Public Reference Room
located at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet website at www.sec.gov that contains
our filed reports and other information that we file electronically with the SEC.
We
maintain a corporate website at http://www.china-acm.com. Information contained on, or that can be accessed through, our website
does not constitute a part of this prospectus.
ENFORCEABILITY
OF CIVIL LIABILITIES
We
are incorporated under the laws of the BVI as an exempted company with limited liability. We incorporated in the BVI because of
certain benefits associated with being a BVI corporation, such as political and economic stability, an effective judicial system,
a favorable tax system, the absence of foreign exchange control or currency restrictions and the availability of professional
and support services. However, BVI has a less developed body of securities laws that provide significantly less protection to
investors as compared to the securities laws of the United States. In addition, BVI companies may not have standing to sue before
the federal courts of the United States.
All
of our assets are located in Hong Kong Special Administrative Region (“Hong Kong”), China, and the U.S. In addition,
some of our directors and officers are residents of jurisdictions other than the United States and all or a substantial portion
of their assets are located outside the United States. As a result, it may be difficult for investors to effect service of process
within the United States upon us or our directors and officers, 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.
According
to our local BVI’s counsel, there is uncertainty with regard to BVI law relating to whether a judgment obtained from the
United States courts under civil liability provisions of the securities laws will be determined by the courts of the BVI as penal
or punitive in nature. If such a determination is made, the courts of the BVI will not recognize or enforce the judgment against
a BVI’s company. The courts of the BVI in the past determined that disgorgement proceedings brought at the instance of the
Securities and Exchange Commission are penal or punitive in nature and such judgments would not be enforceable in the BVI. Other
civil liability provisions of the securities laws may be characterized as remedial, and therefore enforceable but the BVI’s
Courts have not yet ruled in this regard. Our BVI’s counsel has further advised us that a final and conclusive judgment
in the federal or state courts of the United States under which a sum of money is payable other than a sum payable in respect
of taxes, fines, penalties or similar charges, may be subject to enforcement proceedings as a debt in the courts of the BVI.
As
of the date hereof, no treaty or other form of reciprocity exists among the BVI, Hong Kong, and China governing the recognition
and enforcement of judgments.
BVI
counsel further advised that although there is no statutory enforcement in the BVI of judgments obtained in the United States,
Hong Kong, or China, a judgment obtained in such jurisdictions will be recognized and enforced in the courts of the BVI at common
law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in
the courts of BVI, provided such judgment (1) is given by a foreign court of competent jurisdiction, (2) imposes on the judgment
debtor a liability to pay a liquidated sum for which the judgment has been given, (3) is final, (4) is not in respect of taxes,
a fine or a penalty, and (5) was not obtained in a manner and is of a kind the enforcement of which is contrary to natural justice
or the public policy of the BVI.
INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and
controlling persons pursuant to the foregoing provisions, or otherwise, we have been informed that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
PROSPECTUS
DELTA TECHNOLOGY
HOLDINGS LIMITED
$50,000,000
Ordinary Shares
Preferred Shares
Warrants
Units
We may, from time to
time in one or more offerings, offer and sell up to $50,000,000 in the aggregate of ordinary shares, preferred shares, warrants
to purchase ordinary shares or preferred shares, or any combination of the foregoing, either individually or as units comprised
of one or more of the other securities.
This prospectus
provides a general description of the securities we may offer. We will provide the specific terms of the securities offered in
one or more supplements to this prospectus. We may also authorize one or more free writing prospectuses to be provided to you in
connection with these offerings. The prospectus supplement and any related free writing prospectus may add, update or change information
contained in this prospectus. You should read carefully this prospectus, the applicable prospectus supplement and any related free
writing prospectus, as well as the documents incorporated or deemed to be incorporated by reference, before you invest in any of
our securities. This prospectus may not be used to offer or sell any securities unless accompanied by the applicable prospectus
supplement.
Our ordinary
shares and redeemable warrants are no longer trading in the market. Pursuant to General Instruction I.B.5. of Form F-3, in no event
will we sell the securities covered hereby in a public primary offering with a value exceeding more than one-third of the aggregate
market value of our ordinary shares in any 12-month period so long as the aggregate market value of our outstanding ordinary shares
held by non-affiliates remains below $75,000,000. During the 12 calendar months prior to and including the date of this prospectus,
we have not offered or sold any securities pursuant to General Instruction I.B.5 of Form F-3.
Investing in our
securities involves a high degree of risk. See “Risk Factors” on page 4 of this prospectus and in the documents
incorporated by reference in this prospectus, as updated in the applicable prospectus supplement, any related free writing prospectus
and other future filings we make with the Securities and Exchange Commission that are incorporated by reference into this prospectus,
for a discussion of the factors you should consider carefully before deciding to purchase our securities.
We may
sell these securities directly to investors, through agents designated from time to time or to or through underwriters or dealers.
For additional information on the methods of sale, you should refer to the section entitled “Plan of Distribution”
in this prospectus. If any underwriters are involved in the sale of any securities with respect to which this prospectus is being
delivered, the names of such underwriters and any applicable commissions or discounts will be set forth in a prospectus supplement.
The price to the public of such securities and the net proceeds we expect to receive from such sale will also be set forth in a
prospectus supplement.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus
is September 6, 2018.
ABOUT THIS PROSPECTUS
This prospectus is part
of a registration statement that we filed with the Securities and Exchange Commission, or the SEC, under the Securities Act of
1933, as amended, or the Securities Act, using a “shelf” registration process. Under this shelf registration process,
we may from time to time sell ordinary shares, preferred shares or warrants to purchase ordinary shares or preferred shares, or
any combination of the foregoing, either individually or as units comprised of one or more of the other securities, in one or more
offerings up to a total dollar amount of $50,000,000. We have provided to you in this prospectus a general description of the securities
we may offer. Each time we sell securities under this shelf registration, we will, to the extent required by law, provide a prospectus
supplement that will contain specific information about the terms of that offering. We may also authorize one or more free writing
prospectuses to be provided to you that may contain material information relating to these offerings. The prospectus supplement
and any related free writing prospectus that we may authorize to be provided to you may also add, update or change information
contained in this prospectus or in any documents that we have incorporated by reference into this prospectus. To the extent there
is a conflict between the information contained in this prospectus and the prospectus supplement or any related free writing prospectus,
you should rely on the information in the prospectus supplement or the related free writing prospectus; provided that if any statement
in one of these documents is inconsistent with a statement in another document having a later date – for example, a document
filed after the date of this prospectus and incorporated by reference into this prospectus or any prospectus supplement or any
related free writing prospectus – the statement in the document having the later date modifies or supersedes the earlier
statement.
We have not authorized
any dealer, agent or other person to give any information or to make any representation other than those contained or incorporated
by reference in this prospectus and any accompanying prospectus supplement, or any related free writing prospectus that we may
authorize to be provided to you. You must not rely upon any information or representation not contained or incorporated by reference
in this prospectus or an accompanying prospectus supplement, or any related free writing prospectus that we may authorize to be
provided to you. This prospectus and the accompanying prospectus supplement, if any, do not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the registered securities to which they relate, nor do this prospectus
and the accompanying prospectus supplement constitute an offer to sell or the solicitation of an offer to buy securities in any
jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. You should not assume
that the information contained in this prospectus, any applicable prospectus supplement or any related free writing prospectus
is accurate on any date subsequent to the date set forth on the front of the document or that any information we have incorporated
by reference is correct on any date subsequent to the date of the document incorporated by reference (as our business, financial
condition, results of operations and prospects may have changed since that date), even though this prospectus, any applicable prospectus
supplement or any related free writing prospectus is delivered or securities are sold on a later date.
As permitted by
SEC rules and regulations, the registration statement of which this prospectus forms a part includes additional information not
contained in this prospectus. You may read the registration statement and the other reports we file with the SEC at its website
or at its offices described below under “Where You Can Find More Information.”
Unless the context
otherwise requires, all references in this prospectus to “Delta Technology,” “we,” “us,” “our,”
“the Company” or similar words refer to Delta Technology Holdings Limited, together with our subsidiaries.
ABOUT Delta Technology
Overview
Delta Technology
(formerly CIS Acquisition Limited) was incorporated in the British Virgin Islands as a company with limited liability on November
28, 2011 as a special purpose acquisition company. On September 19, 2014, we closed the business combination with Elite Ride Limited,
a British Virgin Islands corporation (“Elite”), pursuant to that certain Stock Purchase Agreement (the “Purchase
Agreement”) by and among Delta Technology, Elite, Delta Advanced Materials Limited, a Hong Kong corporation (“Delta”)
and the shareholders of Elite (the “Elite Shareholders”) dated September 16, 2014. Delta Technology acquired all of
the shares of Elite from Elite Shareholders in exchange for the issuance to Elite Shareholders an aggregate of 6,060,000 ordinary
shares, of which 4,560,000 shares were issued at closing and 1,500,000 shares (“Earnout Payment Shares”) are held
in escrow and was to be released upon meeting of certain performance targets as specified in the Purchase Agreement (the “Acquisition”).
500,000 of the Earnout Payment Shares were released as a result of the Company meeting its performance targets for the fiscal
year ending June 30, 2015. 1,000,000 of the Earnout Payment Shares were cancelled on July 6, 2017 when the performance targets
as specified were not met.
As a result of the consummation
of the Acquisition, Elite is now our wholly subsidiary. Elite was incorporated under British Virgin Islands law on September 13,
2014 solely in contemplation of the Acquisition. It is currently the holding company of all the shares of Delta, which, in turn,
holds all the equity interests in four operating subsidiaries in the PRC: Jiangsu Yangtze Delta Fine Chemical Co., Ltd (“Jiangsu
Delta”), Jiangsu Zhengxin New Material Research and Development Co., Ltd (“Jiangsu Zhengxin”), Jiangsu Delta
Logistics Co., Ltd (“Jiangsu Logistics”), and Binhai Deda Chemical Co., Ltd (“Binhai Deda”) (collectively,
the “PRC Subsidiaries”).
Delta (formerly known
as China Deltachem Holdings Limited) was incorporated in Hong Kong on June 17, 2010. The principal activity of Delta is investment
holding and currently operates two wholly-owned subsidiaries in the People’s Republic of China (“PRC”): Jiangsu
Delta and Binhai Deda. Jiangsu Delta is the principal operating subsidiary of the Company and is engaged in the production of fine
specialty chemicals.
Headquartered in Zhenjiang
city, Jiangsu province, we are a fine and specialty chemical manufacturer, primarily engaged in manufacturing and selling of organic
compound including para-chlorotoluene (“PCT”), ortho-chlorotoluene (“OCT”), PCT/OCT downstream products,
and other by-product chemicals and distributing fine and specialty chemicals to end application markets including automotive, pharmaceutical,
agrochemical, dye & pigments, aerospace, ceramics, coating-printing, clean energy and food additives.
We collaborate with
reputable universities, such as the East China Normal University in order to secure our position as a market leader. We also closely
monitor the market for development, trends and technological innovations and solicit customer feedback so as to keep abreast with
market demands and industrial development.
As of the date of
this prospectus, we have a diversified clientele with more than 300 customers based either in domestic or overseas market. Approximately
97% of our sales are to domestic customers based in Jiangsu province, Anhui province, Zhejiang province, Hubei province, Guangdong
province and Chongqing Metropolitan, and the rest of its products are exported via distributors or trading companies to countries
outside the PRC which include but not limited to India, Brazil, Japan, European Union member countries and America.
Our revenue for the
fiscal years ended June 30, 2015, 2016 and 2017 were approximately $202 million, $53 million and $56 million, respectively, and
our profit before tax for the fiscal years ended June 30, 2015, 2016 and 2017 were $5.1 million, loss before tax of $7.6 million
and $28.4 million, respectively.
Corporate Information
Our principal
executive offices are located at 16 Kaifa Avenue, Danyang, Jiangsu, China 212300. Our telephone number at that address is +86 511-8673-3102.
We make available free of charge through our website our annual report on Form 20-F, current reports on Form 6-K, and amendments
to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the
Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The
information contained in, or that can be accessed through, our website is not part of this prospectus or any prospectus supplement.
RISK FACTORS
Investing in our securities involves a high
degree of risk. You should carefully consider the risk factors set forth under “Risk Factors” described in our most
recent annual report on Form 20-F, filed on November 15, 2017, as supplemented and updated by subsequent current reports on Form
6-K that we have filed with the SEC, together with all other information contained or incorporated by reference in this prospectus
and any applicable prospectus supplement and in any related free writing prospectus in connection with a specific offering, before
making an investment decision. Each of the risk factors could materially and adversely affect our business, operating results,
financial condition and prospects, as well as the value of an investment in our securities, and the occurrence of any of these
risks might cause you to lose all or part of your investment.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and our SEC filings that
are incorporated by reference into this prospectus contain or incorporate by reference forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements, other than statements of historical fact,
included or incorporated by reference in this prospectus regarding our business strategy, future operations, projected financial
position, potential strategic transactions, proposed distribution channels, projected sales growth, proposed new products, estimated
future revenues, cash flows and profitability, projected costs, potential sources of additional capital, future prospects, future
economic conditions, the future of our industry and results that might be obtained by pursuing management’s current plans
and objectives are forward-looking statements. The words “believe,” “anticipate,” “estimate,”
“plan,” “expect,” “intend,” “may,” “could,” “should,” “potential,”
“likely,” “projects,” “continue,” “will,” and “would” and similar expressions
are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
Forward-looking statements reflect our current views with respect to future events, are based on assumptions and are subject to
risks and uncertainties. We cannot guarantee that we actually will achieve the plans, intentions or expectations expressed in our
forward-looking statements and you should not place undue reliance on these statements. There are a number of important factors
that could cause our actual results to differ materially from those indicated or implied by forward-looking statements. These important
factors include those discussed under the heading “Risk Factors” contained or incorporated by reference in this prospectus
and in the applicable prospectus supplement and any free writing prospectus we may authorize for use in connection with a specific
offering. These factors and the other cautionary statements made in this prospectus should be read as being applicable to all related
forward-looking statements whenever they appear in this prospectus. Except as required by law, we undertake no obligation to update
publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
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 under this prospectus to fund the growth of our business, 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 have no current commitments or agreements
with respect to any such transactions as of the date of this prospectus. We have not determined the amount of net proceeds to be
used specifically for the foregoing 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. If a material part of the net proceeds is to be used to repay indebtedness, we will set forth the interest rate
and maturity of such indebtedness in a prospectus supplement. Pending use of the net proceeds, we intend to invest the proceeds
in investment-grade, interest-bearing securities.
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:
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the net tangible book value per share of our equity securities before and after the offering;
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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
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the amount of the immediate dilution from the public offering price which will be absorbed by such purchasers.
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DESCRIPTION OF ORDINARY SHARES AND PREFERRED
SHARES
The following description
of our ordinary shares and preferred shares, together with any additional information we include in any applicable prospectus supplement
or any related free writing prospectus, summarizes the material terms and provisions of our ordinary shares and the preferred shares
that we may offer under this prospectus. While the terms we have summarized below will apply generally to any future ordinary shares
or preferred shares that we may offer, we will describe the particular terms of any class or series of these securities in more
detail in the applicable prospectus supplement. For the complete terms of our ordinary shares and preferred shares, please refer
to our Memorandum and Articles of Association, that is incorporated by reference into the registration statement of which this
prospectus is a part or may be incorporated by reference in this prospectus or any applicable prospectus supplement. The terms
of these securities may also be affected by British Virgin Islands law. The summary below and that contained in any applicable
prospectus supplement or any related free writing prospectus are qualified in their entirety by reference to our Memorandum and
Articles of Association, as in effect at the time of any offering of securities under this prospectus. For information on how to
obtain copies of our Memorandum and Articles of Association, see “Where You Can Find More Information.”
Our authorized capital stock consists of
155,000,000 shares divided into: (i) 150,000,000 ordinary shares; and (ii) 5,000,000 preferred shares, each par value $0.0001 per
share. As of July 17, 2018, 12,810,314 ordinary shares were outstanding. Each share, regardless if it is part of a class of ordinary
shares, has the right to one vote at a meeting of shareholders or on any resolution of shareholders, the right to an equal share
in any dividend paid by us, and the right to an equal share in the distribution of surplus assets. We may by a resolution of the
Board of Directors redeem our shares for such consideration as the Board of Directors determines.
If, at any time, our authorized number of
shares is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of
issue of the shares of that class) may, whether or not we are being wound-up, be varied with the consent in writing of the holders
of three-fourths of the issued shares of that class or with the sanction of a resolution passed by a majority of the votes cast
at a separate meeting of the holders of the shares of the class at which meeting the necessary quorum shall be two persons at least
holding or representing by proxy one-third of the issued shares of the class.
At least 10 days’ (exclusive of the
date that notice is given and the date on which event for which notice is given is to take effect) notice of a meeting shall be
given to each shareholder entitled to attend and vote thereat, stating the date, place, and time at which the meeting is to be
held, and if different, the record date for determining shareholders entitled to attend and vote at the meeting, and the general
nature of the business to be conducted at the meeting. A meeting shall, notwithstanding the fact that it is called on shorter notice
than otherwise required, be deemed to have been properly called if it is attended, or such notice is waived, by 90% of the shareholders
entitled to attend and vote thereat. The inadvertent failure to give notice of a meeting to, or the non-receipt of a notice of
a meeting by, any person entitled to receive notice shall not invalidate the proceedings at that meeting.
There are no limitations on the rights to
own our securities, or limitations on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our
securities, contained in our Amended and Restated Memorandum and Articles of Association (or under British Virgin Islands law).
DESCRIPTION OF WARRANTS
General
We may issue warrants for the purchase of
ordinary shares or preferred shares. Warrants may be offered independently or together with ordinary shares or preferred shares
offered by any prospectus supplement and may be attached to or separate from those securities. While the terms we have summarized
below will apply generally to any warrants that we may offer under this prospectus, we will describe in particular the terms of
any series of warrants that we may offer in more detail in the applicable prospectus supplement and any applicable free writing
prospectus. The terms of any warrants offered under a prospectus supplement may differ from the terms described below.
We will file as an exhibit
to the registration statement of which this prospectus is a part, or will incorporate by reference from another report that we
file with the SEC, the form of warrant and/or warrant agreement, which may include a form of warrant certificate, as applicable,
that describes the terms of the particular series of warrants we may offer before the issuance of the related series of warrants.
We may issue the warrants under a warrant agreement that we will enter into with a warrant agent to be selected by us. The warrant
agent will act solely as our agent in connection with the warrants and will not assume any obligation or relationship of agency
or trust for or with any registered holders of warrants or beneficial owners of warrants. The following summary of material provisions
of the warrants and warrant agreements is subject to, and qualified in its entirety by reference to, all the provisions of the
form of warrant and/or warrant agreement and warrant certificate applicable to a particular series of warrants. We urge you to
read the applicable prospectus supplement and any related free writing prospectus, as well as the complete form of warrant and/or
the warrant agreement and warrant certificate, as applicable, that contain the terms of the warrants.
The particular terms of any issue of warrants
will be described in the prospectus supplement relating to the issue. Those terms may include:
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the title of such warrants;
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the aggregate number of such warrants;
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the price or prices at which such warrants will be issued;
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the currency or currencies (including composite currencies) in which the price of such warrants may be payable;
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the terms of the securities purchasable upon exercise of such warrants and the procedures and conditions relating to the exercise of such warrants;
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the price at which the securities purchasable upon exercise of such warrants may be purchased;
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the date on which the right to exercise such warrants will commence and the date on which such right shall expire;
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any provisions for adjustment of the number or amount of securities receivable upon exercise of the warrants or the exercise price of the warrants;
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if applicable, the minimum or maximum amount of such warrants that may be exercised at any one time;
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if applicable, the designation and terms of the securities with which such warrants are issued and the number of such warrants issued with each such security;
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if applicable, the date on and after which such warrants and the related securities will be separately transferable;
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information with respect to book-entry procedures, if any;
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the terms of any rights to redeem or call the warrants;
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United States federal income tax consequences of holding or exercising the warrants, if material; and
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any other terms of such warrants, including terms, procedures and limitations relating to the exchange or exercise of such warrants.
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Each warrant will entitle
its holder to purchase the number of ordinary shares or preferred shares of the relevant class or series at the exercise price
set forth in, or calculable as set forth in, the applicable prospectus supplement. The warrants may be exercised as set forth in
the prospectus supplement relating to the warrants offered. Unless we otherwise specify in the applicable prospectus supplement,
warrants may be exercised at any time up to the close of business on the expiration date set forth in the prospectus supplement
relating to the warrants offered thereby. After the close of business on the expiration date, unexercised warrants will become
void.
We will specify the
place or places where, and the manner in which, warrants may be exercised in the form of warrant, warrant agreement or warrant
certificate and applicable prospectus supplement. Upon receipt of payment and the warrant or warrant certificate, as applicable,
properly completed and duly executed at the corporate trust office of the warrant agent, if any, or any other office, including
ours, indicated in the prospectus supplement, we will, as soon as practicable, issue and deliver the securities purchasable upon
such exercise. If less than all of the warrants (or the warrants represented by such warrant certificate) are exercised, a new
warrant or a new warrant certificate, as applicable, will be issued for the remaining amount of warrants. If we so indicate in
the applicable prospectus supplement, holders of the warrants may surrender securities as all or part of the exercise price for
warrants.
Prior to the exercise
of any warrants to purchase ordinary shares or preferred shares of the relevant class or series, holders of the warrants will not
have any of the rights of holders of ordinary shares or preferred shares purchasable upon exercise, including the right to vote
or to receive any payments of dividends or payments upon our liquidation, dissolution or winding up on the ordinary shares or preferred
shares purchasable upon exercise, if any.
Outstanding Warrants
As of the date of this prospectus,
2018, there were 359,727 outstanding warrants to purchase ordinary shares.
DESCRIPTION OF UNITS
The following description,
together with the additional information we may include in any applicable prospectus supplement, summarizes the material terms
and provisions of the units that we may offer under this prospectus. While the terms we have summarized below will apply generally
to any units that we may offer under this prospectus, we will describe the particular terms of any series of units in more detail
in the applicable prospectus supplement and any related free writing prospectus. The terms of any units offered under a prospectus
supplement may differ from the terms described below. However, no prospectus supplement will fundamentally change the terms that
are set forth in this prospectus or offer a security that is not registered and described in this prospectus at the time of its
effectiveness.
We will file as an exhibit
to the registration statement of which this prospectus is a part, or will incorporate by reference from another report we file
with the SEC, the form of unit agreement that describes the terms of the series of units we may offer under this prospectus, and
any supplemental agreements, before the issuance of the related series of units. The following summaries of material terms and
provisions of the units are subject to, and qualified in their entirety by reference to, all the provisions of the unit agreement
and any supplemental agreements applicable to a particular series of units. We urge you to read the applicable prospectus supplement
and any related free writing prospectus, as well as the complete unit agreement and any supplemental agreements that contain the
terms of the units.
General
We may issue units comprised
of ordinary shares or preferred shares and warrants 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.
We will describe in the applicable prospectus
supplement the terms of the series of units, including, but not limited to:
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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;
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any provisions of the governing unit agreement that differ from those described below; and
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any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units.
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The provisions described
in this section, as well as those described under “Description of Ordinary Shares and Preferred shares” and “Description
of Warrants” will apply to each unit and to any ordinary shares, preferred shares or warrant included in each unit, respectively.
Issuance in Series
We may issue units in such amounts and in
numerous distinct series as we determine.
Enforceability of Rights by Holders of Units
We may enter into unit
agreements with a unit agent. Each unit agent will act solely as our agent under the applicable unit agreement and will not assume
any obligation or relationship of agency or trust with any holder of any unit. A single bank or trust company may act as unit agent
for more than one series of units. A unit agent will have no duty or responsibility in case of any default by us under the applicable
unit agreement or unit, including any duty or responsibility to initiate any proceedings at law or otherwise, or to make any demand
upon us. Any holder of a unit may, without the consent of the related unit agent or the holder of any other unit, enforce by appropriate
legal action its rights as holder under any security included in the unit.
We, the unit agents and any of their agents
may treat the registered holder of any unit certificate as an absolute owner of the units evidenced by that certificate for any
purpose and as the person entitled to exercise the rights attaching to the units so requested, despite any notice to the contrary.
PLAN OF DISTRIBUTION
We may sell our securities
in any one or more of the following ways from time to time:
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through agents;
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to or through underwriters;
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through brokers or dealers;
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in “at the market offerings” within the meaning of Rule 415(a)(4) under the Securities Act, to or through a market maker or into an existing trading market, on an exchange or otherwise;
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directly by us to purchasers, including through a specific bidding, auction or other process; or
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through a combination of any of these methods of sale.
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The applicable
prospectus supplement will contain the terms of the transaction, the name or names of any underwriters, dealers, agents and the
respective amounts of securities underwritten or purchased by them, the initial public offering price of the securities, and the
applicable agent’s commission, dealer’s purchase price or underwriter’s discount. Any dealers and agents participating
in the distribution of the securities may be deemed to be underwriters, and compensation received by them on resale of the securities
may be deemed to be underwriting discounts.
Any initial offering
price, dealer purchase price, discount or commission may be changed from time to time.
The securities may be
distributed from time to time in one or more transactions, at negotiated prices, at a fixed price or fixed prices (that may be
subject to change), at market prices prevailing at the time of sale, at various prices determined at the time of sale or at prices
related to prevailing market prices.
Offers to purchase securities
may be solicited directly by us or by agents designated by us from time to time. Unless otherwise indicated in the prospectus supplement,
any such agent will use its commercially reasonable efforts to solicit purchases for the period of its appointment or to sell securities
on a continuing basis. Agents may receive compensation in the form of commissions, discounts or concessions from us. Agents may
also receive compensation from the purchasers of the securities for whom they sell as principals. Each particular agent will receive
compensation in amounts negotiated in connection with the sale, which might be in excess of customary commissions. Any such agent
may be deemed to be an underwriter, as that term is defined in the Securities Act, of the securities so offered and sold. Accordingly,
any commission, discount or concession received by them and any profit on the resale of the securities purchased by them may be
deemed to be underwriting discounts or commissions under the Securities Act. We have not entered into any agreements, understandings
or arrangements with any underwriters or broker-dealers regarding the sale of their securities. As of the date of this prospectus,
there are no special selling arrangements between any broker-dealer or other person and us. No period of time has been fixed within
which the securities will be offered and sold.
If underwriters are
utilized in the sale of any securities in respect of which this prospectus is being delivered, such securities will be acquired
by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated
transactions, at fixed public offering prices or at varying prices determined by the underwriters at the time of sale. Securities
may be offered to the public either through underwriting syndicates represented by managing underwriters or directly by one or
more underwriters. If any underwriter or underwriters are utilized in the sale of securities, unless otherwise indicated in the
applicable prospectus supplement, the obligations of the underwriters are subject to certain conditions precedent, and the underwriters
will be obligated to purchase all such securities if they purchase any of them.
If a dealer is utilized
in the sale of the securities in respect of which this prospectus is delivered, we will sell such securities to the dealer as principal.
The dealer may then resell such securities to the public at varying prices to be determined by such dealer at the time of resale.
Transactions through brokers or dealers may include block trades in which brokers or dealers will attempt to sell shares as agent
but may position and resell as principal to facilitate the transaction or in cross trades, in which the same broker or dealer acts
as agent on both sides of the trade. Any such dealer may be deemed to be an underwriter, as such term is defined in the Securities
Act, of the securities so offered and sold.
Offers to purchase securities
may be solicited directly by us, and the sale thereof may be made by us, directly to institutional investors or others who may
be deemed to be underwriters within the meaning of the Securities Act with respect to any resale thereof.
Agents, underwriters
and dealers may be entitled under relevant agreements with us to indemnification by us against certain liabilities, including liabilities
under the Securities Act, or to contribution with respect to payments which such agents, underwriters and dealers may be required
to make in respect thereof. The terms and conditions of any indemnification or contribution will be described in the applicable
prospectus supplement.
Underwriters, broker-dealers
or agents may receive compensation in the form of commissions, discounts or concessions from us. Underwriters, broker-dealers or
agents may also receive compensation from the purchasers of shares for whom they act as agents or to whom they sell as principals,
or both. Compensation as to a particular underwriter, broker-dealer or agent will be in amounts to be negotiated in connection
with transactions involving shares and might be in excess of customary commissions. In effecting sales, broker-dealers engaged
by us may arrange for other broker-dealers to participate in the resales.
Any securities offered
other than ordinary shares and warrants will be a new issue and, other than our ordinary shares, which are listed on The Nasdaq
Capital Market and The Over The Counter Bulletin Board, respectively, will have no established trading market. We may elect to
list any series of securities on an exchange, and in the case of our ordinary shares and warrants, on any additional exchange,
but, unless otherwise specified in the applicable prospectus supplement and/or other offering material, we shall not be obligated
to do so. It is possible that one or more underwriters may make a market in a class or series of securities, but the underwriters
will not be obligated to do so and may discontinue any market making at any time without notice. No assurance can be given as to
the liquidity of, or the trading market for, any of the securities.
Agents, underwriters
and dealers may engage in transactions with, or perform services for, us or our subsidiaries in the ordinary course of business.
Any underwriter may
engage in overallotment, stabilizing transactions, short covering transactions and penalty bids in accordance with Regulation M
under the Exchange Act. Overallotment involves sales in excess of the offering size, which create a short position. Stabilizing
transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.
Short covering transactions involve purchases of the securities in the open market after the distribution is completed to cover
short positions. Penalty bids permit the underwriters to reclaim a selling concession from a dealer when the securities originally
sold by the dealer are purchased in a covering transaction to cover short positions. Those activities may cause the price of the
securities to be higher than it would otherwise be. If commenced, the underwriters may discontinue any of the activities at any
time. An underwriter may carry out these transactions on The Nasdaq Capital Market, in the over-the-counter market or otherwise.
The place and
time of delivery for securities will be set forth in the accompanying prospectus supplement.
LEGAL MATTERS
Except
as otherwise set forth in the applicable prospectus supplement, certain legal matters in connection with the securities offered
pursuant to this prospectus will be passed upon for us by Hunter Taubman Fischer & Li to the extent governed by the laws of
the State of New York, and by Harney Westwood & Riegels LP to the extent governed by the laws of the British Virgin Islands.
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 audited financial
statements incorporated in this prospectus by reference to the Annual Report on Form 20-F for the years ended June 30, 2017 and
June 30, 2016 have been so incorporated in reliance on the reports of Centurion ZD CPA Limited, the Company’s independent
registered public accounting firm, and its authority as experts in accounting and auditing.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to
“incorporate by reference” into this prospectus the information we file with the SEC. This means that we can disclose
important information to you by referring you to those documents. Any statement contained in a document incorporated by reference
in this prospectus shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement
contained herein, or in any subsequently filed document, which also is incorporated by reference herein, modifies or supersedes
such earlier statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
We hereby incorporate
by reference into this prospectus the following documents that we have filed with the SEC under the Exchange Act:
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the Company’s Annual Report on Form 20-F for the fiscal year ended June 30, 2017, filed with the SEC on November 15, 2017;
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the
Company’s Current Reports on Form 6-K, filed with the SEC on November 24, 2017, November 27, 2017, January 29, 2018, June 15, 2018, June 25, 2018 and
July 12, 2018.
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All documents that we
file with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (other than Current Reports on Form 6-K, or
portions thereof, furnished under Form 6-K) (i) after the initial filing date of the registration statement of which this prospectus
forms a part and prior to the effectiveness of such registration statement and (ii) after the date of this prospectus and prior
to the termination of the offering shall be deemed to be incorporated by reference in this prospectus from the date of filing of
the documents, unless we specifically provide otherwise. Information that we file with the SEC will automatically update and may
replace information previously filed with the SEC. To the extent that any information contained in any Current Report on Form 6-K
or any exhibit thereto, was or is furnished to, rather than filed with the SEC, such information or exhibit is specifically not
incorporated by reference.
WHERE YOU CAN FIND MORE INFORMATION
As permitted by SEC
rules, this prospectus omits certain information and exhibits that are included in the registration statement of which this prospectus
forms a part. Since this prospectus may not contain all of the information that you may find important, you should review the full
text of these documents. If we have filed a contract, agreement or other document as an exhibit to the registration statement of
which this prospectus forms a part, you should read the exhibit for a more complete understanding of the document or matter involved.
Each statement in this prospectus, including statements incorporated by reference as discussed above, regarding a contract, agreement
or other document is qualified in its entirety by reference to the actual document.
We are subject
to the information reporting requirements of the Exchange Act, and, in accordance with these requirements, we file annual, quarterly
and current reports, proxy statements, and other information with the SEC. You may inspect, read and copy the reports and other
information we file with the SEC at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549.
You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains
an internet website at www.sec.gov that contains our filed reports, proxy and information statements, and other information
that we file electronically with the SEC.
9,000,000
Ordinary Shares
URBAN
TEA, INC.
Prospectus
Supplement
Maxim
Group LLC
June
24, 2020
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