Exhibit 99.1
Jiuzi Holdings, Inc.
Consolidated Balance Sheets
(In U.S. Dollars)
| April 30, | October 31, | |||||||
| 2024 | 2023 | |||||||
| Unaudited | Audited | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Short-term investment | ||||||||
| Loans receivable | ||||||||
| Loans receivable - related party | ||||||||
| Accounts receivable | ||||||||
| Accounts receivable - related party | ||||||||
| Due from related parties | ||||||||
| Inventory, net | ||||||||
| Advances to suppliers | ||||||||
| Other receivables and other current assets | ||||||||
| Assets related to discontinued operation | ||||||||
| Total Current Assets | ||||||||
| Non-Current Assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Other non-current assets | ||||||||
| Operating lease right of use asset | ||||||||
| Assets related to discontinued operation | ||||||||
| Total Non-Current Assets | ||||||||
| Total Assets | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accruals and other payables | ||||||||
| Accounts payable | ||||||||
| Accounts payable – related party | ||||||||
| Due to related parties | ||||||||
| Taxes payable | ||||||||
| Operating lease liabilities – current | ||||||||
| Contract liability | ||||||||
| Contract liability - related party | ||||||||
| Liability related to discontinued operation | ||||||||
| Total Current Liabilities | ||||||||
| Non-Current Liabilities | ||||||||
| Operating lease liabilities - non-current | ||||||||
| Deferred income | ||||||||
| Liability related to discontinued operation | ||||||||
| Total Non-Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Shareholders’ Equity | ||||||||
| Ordinary shares, $ | ||||||||
| Additional paid-in capital | ||||||||
| Statutory reserve | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total equity attributable to Jiuzi Holdings, Inc. | ||||||||
| Non-controlling interest | ||||||||
| Total Equity | ||||||||
| Total Liabilities and Shareholders’ Equity | $ | $ | ||||||
See accompanying notes to financial statements.
1
Jiuzi Holdings, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(In U.S. Dollars) Unaudited
| Six Months Ended | Six Months Ended | |||||||
| April 30, | April 30, | |||||||
| 2024 | 2023 | |||||||
| Revenues, net | $ | $ | ||||||
| Revenues – related party, net | ||||||||
| Total Revenues | ||||||||
| Cost of revenues | ||||||||
| Cost of revenues– related party | ||||||||
| Total cost of revenues | ||||||||
| Gross loss | ( | ) | ( | ) | ||||
| Selling and marketing expense | ||||||||
| General and administrative expenses | ||||||||
| Share-based compensation | ||||||||
| Provision for credit loss on loans receivable | ||||||||
| Reversal of bad debt provision | ( | ) | ||||||
| Operating expense | ||||||||
| Loss before tax | ( | ) | ( | ) | ||||
| Non-operating income (expense) items: | ||||||||
| Other income (expense), net | ||||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| ( | ) | ( | ) | |||||
| Loss before income tax | ( | ) | ( | ) | ||||
| Income tax | ||||||||
| Gain/(loss) from discontinued operations | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ||||
| Less: Loss attributable to non-controlling interest | ( | ) | ( | ) | ||||
| Net income (loss) attributable to controlling interest | ( | ) | ( | ) | ||||
| Loss per share | ||||||||
| ( | ) | ( | ) | |||||
| Weighted average number of ordinary shares outstanding* | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Other comprehensive income | ||||||||
| Foreign currency translation income | ||||||||
| Total comprehensive loss | ( | ) | ( | ) | ||||
See accompanying notes to financial statements.
2
Jiuzi Holdings, Inc.
Consolidated Statements of Changes in Shareholders’ Equity
(In U.S. Dollars) Unaudited
| Common Stock | Additional | Accumulated other | Equity attributable | Non- | ||||||||||||||||||||||||||||||||
| Number of | Paid-in | Statutory | Retained | Comprehensive | to | Controlling | Total | |||||||||||||||||||||||||||||
| Shares | Amount | Capital | Reserve | Earnings | Income | Jiuzi | interest | Equity | ||||||||||||||||||||||||||||
| Balance at October 31, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Shares issued for cash proceeds, net | ||||||||||||||||||||||||||||||||||||
| Shares issued for compensation | ||||||||||||||||||||||||||||||||||||
| Shares issued for debt conversion | ||||||||||||||||||||||||||||||||||||
| Contribution (Distribution) in capital | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Net income | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Non-Controlling Interest | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Appropriations to statutory reserves | - | |||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | |||||||||||||||||||||||||||||||||
| Balance at April 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance at October 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Shares issued for cash proceeds, net | ||||||||||||||||||||||||||||||||||||
| Shares issued for compensation | ||||||||||||||||||||||||||||||||||||
| Shares issued for debt conversion | - | |||||||||||||||||||||||||||||||||||
| Contribution (Distribution) in capital | - | |||||||||||||||||||||||||||||||||||
| Net income | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Non-Controlling Interest | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Disposition of discontinued operation | - | |||||||||||||||||||||||||||||||||||
| Appropriations to statutory reserves | - | |||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance at April 30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
See accompanying notes to financial statements.
3
Jiuzi Holdings, Inc.
Consolidated Statements of Cash Flows
(In U.S. Dollars) Unaudited
| Six Months Ended | Six Months Ended | |||||||
| April 30, | April 30, | |||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | ( | ) | $ | ( | ) | ||
| Net income (loss) from discontinued operation | ( | ) | ||||||
| Net income (loss) from continuing operation | ( | ) | ( | ) | ||||
| Depreciation and amortization | ||||||||
| (Recovery)/Provision for doubtful accounts | ( | ) | ||||||
| Amortization of operating lease ROU assets | ||||||||
| Impairment loss/write-downs off other assets | ||||||||
| Imputed interest expense | ||||||||
| Loss from disposal of assets | ||||||||
| Stock-based compensation | ||||||||
| Changes in assets and liabilities | ||||||||
| (Increase) decrease in accounts receivable | ||||||||
| (Increase) decrease in accounts receivable – related party | ( | ) | ||||||
| (Increase) decrease in inventories | ||||||||
| (Increase) decrease in advances to suppliers | ||||||||
| (Increase) decrease in notes receivable- customers sales | ||||||||
| (Increase) decrease in notes receivable-related party customers sales | ( | ) | ( | ) | ||||
| (Increase) decrease in loans to related parties | ( | ) | ||||||
| (Increase) decrease in due from related parties | ( | ) | ||||||
| (Increase) decrease other receivables | ( | ) | ||||||
| (Increase) decrease in other assets | ( | ) | ( | ) | ||||
| (Decrease) increase in accrued and other liabilities | ( | ) | ||||||
| Decrease in account payable | ( | ) | ( | ) | ||||
| (Increase) decrease in accounts payable – related party | ( | ) | ||||||
| (Increase) decrease in taxes payable | ( | ) | ||||||
| (Decrease) increase in contract liability | ( | ) | ||||||
| (Decrease) increase in contract liability – related party | ( | ) | ||||||
| (Decrease) increase in operating lease liabilities | ||||||||
| Net cash used in operating activities of continued operations | ( | ) | ( | ) | ||||
| Net cash provided by (used in) operating activities of discontinued operations | ( | ) | ||||||
| Cash Used in Operating Activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of fixed assets | ( | ) | ||||||
| Acquisition of investment | ( | ) | ||||||
| Disposal of fixed assets | ||||||||
| Redemption/disposal of investments | ||||||||
| Net cash (used in)/provided by investing activities of continued operations | ( | ) | ||||||
| Net cash (used in ) investing activities of discontinued operations | ( | ) | ( | ) | ||||
| Cash (used in)/provided by Investing Activities | ( | ) | ||||||
| Cash flows from financing activities | ||||||||
| Proceeds from owner’s injection of capital | ||||||||
| Repayment to related party payable | ( | ) | ||||||
| Repayments of convertible debenture | ( | ) | ||||||
| Net cash provided by financing activities of continued operations | ||||||||
| Net cash provided by financing activities of discontinued operations | ||||||||
| Cash provided by Financing Activities | ||||||||
| Net decrease of cash and cash equivalents | ( | ) | ( | ) | ||||
| Effect of foreign currency translation on cash and cash equivalents | ||||||||
| Cash, cash equivalents, and restricted cash – beginning of period | ||||||||
| Less: cash and cash equivalents of discontinued operations | ||||||||
| Cash, cash equivalents, and restricted cash – end of period | $ | $ | ||||||
| Reconciliation of Cash, Cash Equivalents & Restricted Cash to Statements of Cash Flows | ||||||||
| Cash & cash equivalents | ||||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents, and restricted cash | $ | $ | ||||||
| Supplementary cash flow information: | ||||||||
| Interest received | $ | $ | ||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Non-cash financing and investing activities: | ||||||||
| Notes payable converted to common stock | $ | $ | ||||||
See accompanying notes to financial statements.
4
Jiuzi Holdings, Inc.
Notes to the Financial Statements
NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION
Jiuzi Holdings, Inc. (the “Company” or “Jiuzi Holdings”) was incorporated in the Cayman Islands on October 10, 2019. The Company is a holding company whose operations are conducted through subsidiaries as described below.
Jiuzi New York Inc. (“Jiuzi New York”), a New York corporation established on April 3,2023. It is a wholly owned subsidiary of Jiuzi Holdings involved in corporate investment consulting.
Jiuzi (HK) Limited (“Jiuzi HK”) was incorporated in Hong Kong on October 25, 2019. It is a wholly owned subsidiary of the Company. It does not have any operation other than acting as a Hong Kong based holding company.
Zhejiang Navalant New Energy Automobile Co., Ltd. (“Jiuzi WFOE”) was incorporated on June 5, 2020 as a foreign owned entity in the People’s Republic of China (“PRC”). Jiuzi WFOE is a wholly owned subsidiary of Jiuzi HK. It does not have any operation other than acting as a PRC based holding company.
Zhejiang Jiuzi New Energy Holding Group Co., Ltd. (“Jiuzi Energy Holding) was incorporated on May 9, 2022 under the laws of the PRC. It is a wholly-owned subsidiary of Jiuzi HK and is mainly involved in research and development of automotive components; sales of new energy vehicles (“NEVs”) and electrical accessories for NEVs vehicles; sales of charging/battery swap infrastructure for NEVs; and sales of automotive spare parts and accessories.
Jiuzi HaoChe Supply Chain Co., Ltd. (“Haoche Supplychain”) was incorporated on September 6, 2021 under the laws of the PRC. It is a wholly-owned subsidiary of Zhejiang Navalant. It is mainly involved in management services of supply chain, automobiles sales and sales of NEVs..
Zhejiang Jiuzi New Energy Automobile Co. Ltd. (“Zhejiang Jiuzi”) was incorporated on May 26, 2017 in the PRC. Zhejiang Jiuzi’s scope of business includes the sale of NEVs and NEV components and parts, and the related development of products and services for the NEV industry. Zhejiang Jiuzi generates revenues by both selling NEVs and NEV components and parts to Jiuzi branded licensed NEV dealerships, and by rendering professional services to new Jiuzi NEV dealerships, such as initial setup, NEV product procurement services and specialized marketing campaigns.
5
Jiuzi Holdings, Inc.
Notes to the Financial Statements
Shangli
Jiuzi New Energy Automobile Co., Ltd. (“Shangli Jiuzi “) was incorporated on May 10, 2018 in the PRC. Its scope of business
is similar to Zhejiang Jiuzi. Zhejiang Jiuzi owns a
Hangzhou Zhitongche Technology Co., Ltd. (“Hangzhou Zhitongche”) was incorporated on February 2, 2018 in the PRC. It provides technical services, technical development, technical consulting and trading for NEVs and NEV accessories. Hangzhou Zhitongche is a wholly owned subsidiary of Zhejiang Jiuzi.
Guangxi
Nanning Zhitongche New Energy Technology Co., Ltd. (“Guangxi Nanning”) was incorporated on December 31, 2021 in the PRC. Its
scope of business includes technical service, development and consultation; sales of electrical accessories for NEVs; new car sales; business
agency services. Hangzhou Zhitongche owns a
Hangzhou
Jiuyao New Energy Automobile Technology Co. Ltd. (“Hangzhou Jiuyao “) was incorporated on January 24, 2022 in the PRC. Its
scope of business includes technical services, technology development, technical consultation and promotion, as well as sales of automobiles
and NEVs, and sales of electrical accessories and accessories for NEVs. Hangzhou Jiuyao is
Hangzhou
Jiuyao Youche Network Technology Co. Ltd. (“Jiuyao Youche”) was incorporated on August 8, 2022 in the PRC. Its scope of business
includes rentals and sales of NEVs. Jiuyao Youche is
Jiuzi International (HK) Limited. (“New Energy Holding HK”) was incorporated on May 23, 2023 under the laws of the Hong Kong Special Administrative Region of the PRC. It is a wholly owned subsidiary of Jiuzi New York.It is mainly involved in corporate investment consulting.
Shenzhen Jiuzi New Energy Holding Group Co., Ltd. was incorporated on August 1, 2023 under the laws of the PRC. It is a wholly owned subsidiary of New Energy Holding HK and is mainly involved in sales of electrical accessories for NEVs, sales of charging/battery swap infrastructure for NEVs, sales of electrical chargers, operating electric charging infrastructure for NEVs, leasing of charging control equipment, and research and development of emerging energy technology.
6
Jiuzi Holdings, Inc.
Notes to the Financial Statements
On November 10, 2022, Zhejiang Jiuzi New
Energy Automobile Co., Ltd.(“Zhejiang Jiuzi”), a variable interest entity (of the Company, entered into a termination
agreement (the “Termination Agreement”) Jiuzi WFOE, pursuant to which the Exclusive Option Agreement, the Exclusive
Business Cooperation Agreement and the Equity Pledge Agreement (collectively the “VIE Agreements”) entered into among
Zhejiang Jiuzi, Jiuzi WFOE and certain shareholders of Zhejiang Jiuzi would be terminated. On November 10, 2022, with approval
of Jiuzi WFOE and approval of the board of directors of Zhejiang Jiuzi, Zhejiang Jiuzi issued a
The chart below reflect our organization structure:
7
Jiuzi Holdings, Inc.
Notes to the Financial Statements
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its subsidiary. Significant inter-company transactions have been eliminated in consolidation.
Going Concern and Management’s Plan
The accompanying
consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the
realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future. As of April 30, 2024,
the Company had an accumulated deficit of $
The Company plans to establish provincial regional sales centers in key cities and regions across the PRC, particularly in the Pearl River Delta and Yangtze River Delta areas to geographically expand the market and adopt centralized procurement system to reduce overhead cost and obtain volume discount. The Company also intends to cooperate with more manufacturers of NEVs, introduce more quality services and strengthen its publicity to attract more franchisees. Additionally, the Company intends to raise additional capital to provide additional funds to meet current and future liquidity needs. Management believes that it will be able to obtain the necessary financing and fund future expansion plans; however, there is no assurance that the Company will be successful in securing sufficient funds to sustain or grow its operations.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of these uncertainties. Management believes that the actions presently being taken to obtain additional funding and implement its strategic plan provides the opportunity for the Company to continue as a going concern.
8
Jiuzi Holdings, Inc.
Notes to the Financial Statements
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Actual results and outcomes may differ from management’s estimates and assumptions. In particular, the novel coronavirus (“COVID-19”) pandemic and the resulting adverse impacts to global economic conditions, as well as our operations, may impact future estimates including, but not limited to, our allowance for loan losses, inventory valuations, fair value measurements, asset impairment charges and discount rate assumptions. Certain prior year amounts have been reclassified to conform to the current year’s presentation. Amounts and percentages may not total due to rounding.
Functional and presentation currency
The functional currency of the Company is the currency of the primary economic environment in which the Company operates which is Chinese Yuan (“RMB”).
Transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at the end of the reporting periods. Exchange differences arising on the settlement of monetary items and on translation of monetary items at period-end are included in income statement of the period.
For the purpose of presenting these financial statements, the Company’s assets and liabilities are expressed in US$ at the exchange rate on the balance sheet date, stockholder’s equity accounts are translated at historical rates, and income and expense items are translated at the weighted average exchange rate during the period. The resulting translation adjustments are reported under accumulated other comprehensive income in the stockholder’s equity section of the balance sheets.
US$ to RMB
| Period End | Average | |||||||
| April 30, 2024 | ||||||||
| October 31, 2023 | ||||||||
| April 30, 2023 | ||||||||
9
Jiuzi Holdings, Inc.
Notes to the Financial Statements
Fair Values of Financial Instruments
The Company adopted ASC 820 “Fair Value Measurements,” which defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosures requirements for fair value measures. Current assets and current liabilities qualified as financial instruments and management believes their carrying amounts are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and if applicable, their current interest rate is equivalent to interest rates currently available. The three levels are defined as follow:
| ● | Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. |
| ● | Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value. |
As of the balance sheet date, the estimated fair values of the financial instruments approximated their fair values due to the short-term nature of these instruments. Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates the hierarchy disclosures each year.
Related parties
The Company adopted ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.
Cash and Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
Restricted Cash
Restricted cash consists primarily of amounts preserved under a legal hold due to a complaint by a customer from an on-going litigation or amounts preserved for other purposes as required. Based on experience, they should be resolved within one calendar year or have a final conclusion. Conditions for lifting restrictions include withdrawal of the lawsuit by the customer, mutual settlement, or a final court judgment that has been fully executed.
10
Jiuzi Holdings, Inc.
Notes to the Financial Statements
Accounts Receivable
Accounts receivable are recorded at the net value less estimates for expected credit losses. Management regularly reviews outstanding accounts and provides an allowance for doubtful accounts. When collection of an original invoice amount is no longer probable, the Company will either partially or fully write-off the balance against the allowance for doubtful accounts.
Short-term investments
Short-term investments consist primarily of investments
in fixed deposits with original maturities between three months and one year and certain investments in wealth management products and
other investments that the Company has the intention to redeem within one year. As of April 30, 2024 and October 31, 2023, bank deposits
that were recorded as short-term investments amounted to $
Loans Receivable
Loans receivable are recorded at origination at the fair value less estimates for expected credit losses. Management regularly reviews outstanding accounts and provides an allowance for credit losses. When collection of the original amounts is no longer probable, the Company will either partially or fully write-off the balance against the allowance for credit losses.
Revenue Recognition
In 2014, the FASB issued guidance on revenue recognition (“ASC 606”), with final amendments issued in 2016. The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.
11
Jiuzi Holdings, Inc.
Notes to the Financial Statements
The Company’s revenues consist of sales of vehicles to third party customers by its retail store, sales of vehicles to franchisees, fees from retail stores operated by franchisees, and subleases of vehicles to third party customers. Revenues from franchised stores include initial franchise fees and annual royalties based on a percent of net income.
The Company recognizes revenues from the sale of vehicles at the point in time when the Company has transferred physical possession of the vehicle to the customer and the customer has accepted the vehicle, therefore, indicating control has been transferred to the customer. The transaction price is determined and allocated to the product prior to the transfer of the vehicle to the customer.
The franchise services include a series of performance obligations and an indefinite license to use the Company’s trademark. The series of performance obligations are specific services and deliverables that are set forth in the agreement and are billed and receivable as delivered and accepted by the franchisee. These services and deliverables may be customized and are not transferable to other third parties.
Royalty revenues are distinct from the initial franchise services. The Company recognizes royalty revenues only when the franchisee has generated positive annual net income, at which point the Company has the contractual right to request for payment of the royalty. The royalty is calculated as a percentage of the franchisees’ annual net income.
The Company subleases vehicles to third parties and recognizes revenues over time which is ratably on a monthly basis over the term of the lease agreement.
The Company estimates potential returns and records such estimates against its gross revenue to arrive at its reported net sales revenue. The Company has not experienced any sales returns.
Inventory
Inventories, which are primarily comprised of merchandise for sale, are stated at the lower of cost or net realizable value, using the first-in first-out method. The Company evaluates the need for reserves associated with obsolete, slow-moving and non-salable inventory by reviewing net realizable values on a periodic basis. Only products with defects can be return to our suppliers.
Advertising
The Company expenses advertising costs as incurred
and includes it in selling expenses. The Company recorded and $
12
Jiuzi Holdings, Inc.
Notes to the Financial Statements
Income Taxes
Income taxes are provided in accordance with ASC No. 740, Accounting for Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry-forwards. Deferred tax expense (benefit) results from the net change during the years of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
A tax benefit from an uncertain tax position may be recognized only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities. The determination is based on the technical merits of the position and presumes that the relevant taxing authority that has full knowledge of all relevant information will examine each uncertain tax position. Although the Company believes the estimates are reasonable, no assurance can be given that the final outcome of these matters will not be different than what is reflected in the historical income tax provisions and accruals.
Loss per share
Basic loss per share is computed by dividing net loss attributable to the holders of ordinary shares by the weighted average number of ordinary shares outstanding during the year. Diluted loss per share is calculated by dividing the net loss attributable to the holders of ordinary shares as adjusted for the effect of dilutive ordinary share equivalents, if any, by the weighted average number of ordinary shares and dilutive ordinary share equivalents outstanding during the period. However, ordinary share equivalents are not included in the denominator of the diluted earnings per share calculation when inclusion of such shares would be anti-dilutive, such as in a period in which a net loss is recorded.
All per share amounts for all periods presented herein have been adjusted to reflect the Share Subdivision and 2 for 1 stock dividend on a post-Share Subdivision basis. See Note 17.
Property and Equipment & Depreciation
Property and equipment are stated at historical
cost net of accumulated depreciation. Repairs and maintenance are expensed as incurred.
| Equipment | ||
| Furniture and fixtures | ||
| Motor vehicles |
13
Jiuzi Holdings, Inc.
Notes to the Financial Statements
Intangible Assets & Amortization
Intangible assets are stated at historical cost net of accumulated amortization. Software is amortized on a straight-line basis over the estimated useful life of the software which is years.
Impairment of Long-Lived assets
The Company accounts for impairment of property and equipment and amortizable intangible assets in accordance with ASC 360, “Accounting for Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of”, which requires the Company to evaluate a long-lived asset for recoverability when there is event or circumstance that indicate the carrying value of the asset may not be recoverable. An impairment loss is recognized when the carrying amount of a long-lived asset or asset group is not recoverable (when carrying amount exceeds the gross, undiscounted cash flows from use and disposition) and is measured as the excess of the carrying amount over the asset’s (or asset group’s) fair value.
New Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires incremental reportable segment disclosures, primarily about significant segment expenses. The amendments also require entities with a single reportable segment to provide all disclosures required by these amendments, and all existing segment disclosures. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods after December 15, 2024. The Company will adopt this guidance for the year ended October 31, 2024. This guidance is expected to only impact the disclosures with no impact on the results of operations, financial position or cash flows.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures. The guidance includes improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid. This guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is in the process of evaluating when it will adopt this guidance and the potential effects this guidance will have on its disclosures.
Besides the above, the Company’s management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted would have a material effect on the consolidated financial statements.
14
Jiuzi Holdings, Inc.
Notes to the Financial Statements
NOTE 3 – INVENTORY
| April 30, 2023 | October 31, 2023 | |||||||
| Merchandise | $ | $ | ||||||
| Total, net | $ | $ | ||||||
Inventory write-down expense was $ for the six months ended April 30, 2024 and 2023, respectively.
NOTE 4 – ACCOUNTS RECEIVABLE
| April 30, 2024 | October 31, 2023 | |||||||
| Accounts receivable | $ | $ | ||||||
| Allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Total, net | ||||||||
| April 30, | October 31, | |||||||
| 2024 | 2023 | |||||||
| Accounts receivable-related franchisees | $ | $ | ||||||
| Allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Total, net | $ | $ | ||||||
| April 30, 2024 | October 31, 2023 | |||||||
| Balance at beginning of period | $ | $ | ||||||
| Provision | ||||||||
| Effect of translation adjustment | ( | ) | ( | ) | ||||
| Balance at end | $ | $ | ||||||
Bad debt
expense (recoveries) was $
15
Jiuzi Holdings, Inc.
Notes to the Financial Statements
NOTE 5 – SHORT-TERM INVESTMENT
| As of April 30, 2024 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Bank deposits | $ | $ | ||||||||||||||
| $ | $ | |||||||||||||||
| As of October 31, 2023 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Bank deposits | $ | $ | ||||||||||||||
| $ | $ | |||||||||||||||
NOTE 6 – LOANS RECEIVABLE FRANCHISEES
Loans receivable include amounts due from related franchisees and are presented net of imputed interest and an allowance for estimated loan losses. The loans are provided in the form of credit line to related franchisee to support their operations. These loans are unsecured with a due date of 18 months upon initial drawing.
Management has determined that the 18-month borrowing rate most appropriately captures the financing cost for these loans. Given that the loans are in the form of credit lines to the franchisees that may have varying balances over time, as a practical expedient, management has elected to expense the interest as a cost of revenue at inception rather than amortize the expense over time.
The amounts
charged were $, and $
The allowance for loan losses represents an estimated amount of net losses inherent in our portfolio of managed receivables as of the applicable reporting date and expected to become evident during the following 12 months.
Each lending request is evaluated by considering the borrower’s financial condition. The Company uses a proprietary model to assign each franchisee a risk rating. This model uses historical franchisee performance data to identify key factors about a franchisee that are considered most significant in predicting a franchisee’s ability to meet its financial obligations. The Company also considers numerous other financial and qualitative factors of the franchisee’s operations, including capitalization and leverage, liquidity and cash flow, profitability, and credit history with the Company and other creditors.
16
Jiuzi Holdings, Inc.
Notes to the Financial Statements
The Company also consider recent trends in delinquencies and defaults, recovery rates, age of the loans. and the economic environment in assessing the models used in estimating the allowance for loan losses, and may adjust the allowance for loan losses to reflect factors that may not be captured in the models. In addition, the Company periodically consider whether the use of additional metrics would result in improved model performance and revise the models when appropriate. The provision for loan losses is the periodic expense of maintaining an adequate allowance.
An account is considered delinquent when the related franchisee fails to make a substantial portion of a scheduled payment three months after the due date. For purposes of determining impairment, loans are evaluated collectively, as they represent a large group of smaller-balance homogeneous loans, and therefore, are not individually evaluated for impairment.
As these loans are non-interest bearing, the Company
recorded a discount to the face amount using an imputed interest rate of
| April 30, 2024 | October 31, 2023 | |||||||
| Loan to related franchisees, gross | $ | $ | ||||||
| Discount based on imputed interest rate of | ( | ) | ( | ) | ||||
| Loan to franchisees, net of discount | $ | $ | ||||||
| April 30, 2024 | October 31, 2023 | |||||||
| Loan to franchisees, net of discount | $ | $ | ||||||
| Provision for credit losses | ( | ) | ( | ) | ||||
| Loan to franchisees, net of discount and allowance | $ | $ | ||||||
| April 30, 2024 | October 31, 2023 | |||||||
| Balance at beginning of period | $ | $ | ||||||
| Provision for credit losses | ||||||||
| Effect of translation adjustment | ( | ) | ||||||
| Balance at end | $ | $ | ||||||
Credit losses were $
17
Jiuzi Holdings, Inc.
Notes to the Financial Statements
| April 30, 2024 | October 30, 2023 | |||||||
| Loans to related franchisees, net of discounts and allowances, current | $ | $ | ||||||
| $ | $ | |||||||
Credit Quality
The Company extends credit to franchisees primarily in the form of lines of credit to purchase vehicles and support their daily operations. Each of the franchisees are assigned to one of four groups according to the risk ratings with Group I demonstrating the best credit history with the Company and Group IV demonstrating the weakest.
| ● | Group I – strong to superior credit rating; | |
| ● | Group II – fair to favorable credit rating; | |
| ● | Group III – marginal to weak credit rating; and | |
| ● | Group IV – poor credit rating, including franchisees classified as uncollectible. |
Generally, the Company suspends credit lines and does not extend further funding to franchisee who are unable to repay the balance within three months after the 18-month deadline.
The credit quality of the loans receivables is evaluated based on the Company’s adjusted aging schedule. The Company regularly reviews the model to confirm the continued business significance and statistical predictability of the model and may make updates to improve the performance of the model.
| April 30, 2024 | October 31, 2023 | |||||||
| Franchisee Financing: | ||||||||
| Group I | $ | $ | ||||||
| Group II | ||||||||
| Group III | ||||||||
| Group IV | ||||||||
| Balance at end | $ | $ | ||||||
18
Jiuzi Holdings, Inc.
Notes to the Financial Statements
NOTE 7 – OTHER RECEIVABLES AND OTHER CURRENT ASSETS
Other receivables and other current assets consist of the following:
| April 30, | October 31, | |||||||
| 2024 | 2023 | |||||||
| Deposits placed on cars | ||||||||
| Excess input VAT credits | ||||||||
| Prepaid expense | ||||||||
| Cash advances to employees | ||||||||
| Total | ||||||||
As of April 30, 2024, the balance of prepaid expenses
was $
On December 11, 2023, Shenzhen Jiuzi entered into an agreement with a third party, Beijing YunGuangTong Trading Co., Ltd.(“YunGuangTong”). Under the agreement, Shenzhen Jiuzi commissioned YunGuangTong to procure72V direct fit lithium batteries for electric motorcycles bearing the Company’s brand logo.
On December 14, 2023, Shenzhen Jiuzi”) entered into an agreement with a third party, Beijing JinYiChangHong Technonogy Co., Ltd.(“JinYiChangHong”). Under the agreement, Shenzhen Jiuzi commissioned JinYiChangHong to procure outdoor portable and rechargeable batteries bearing the Company’s brand logo.
On December 16, 2023, Shenzhen Jiuzi entered into an agreement with a third party, Beijing YanErYouXin Technonogy Co., Ltd.(“YanErYouXin”). Under the agreement, Shenzhen Jiuzi commissioned YanErYouXin to procure 220V outdoor portable and rechargeable batteries bearing the Company’s brand logo.
On December 17, 2023, Shenzhen Jiuzi entered into an agreement with a third party, Beijing ShengQi Technonogy Co., Ltd.(“ShengQi”). Under the agreement, Shenzhen Jiuzi commisioned ShegQi to procure and process original Lemiry lithium iron phosphate outdoor portable power banks bearing the Company’s brand logo.
19
Jiuzi Holdings, Inc.
Notes to the Financial Statements
As of April 30, 2024, the above four prepaid expenses were outstanding for less than 180 days, and according to the Company’s policies, management believes that no impairment was required and that the services and products will be provided within financial year 2024.
NOTE 8 – PROPERTY and EQUIPMENT
| April 30, | October 31, | |||||||
| 2024 | 2023 | |||||||
| At Cost: | ||||||||
| Equipment | $ | $ | ||||||
| Motor vehicles | ||||||||
| Leasehold improvements | ||||||||
| Furniture and fixtures | ||||||||
| $ | $ | |||||||
| Less: Accumulated depreciation | ||||||||
| Total, net | $ | $ | ||||||
Depreciation
expenses were $
NOTE 9 – INTANGIBLE ASSETS
| April 30, | October 31, | |||||||
| 2024 | 2023 | |||||||
| At Cost: | ||||||||
| Financial software | $ | $ | ||||||
| Domain name | ||||||||
| Less: Accumulated amortization | ||||||||
| Total, net | $ | $ | ||||||
Amortization
expenses were $
20
Jiuzi Holdings, Inc.
Notes to the Financial Statements
NOTE 10 – RELATED PARTY TRANSACTIONS
The franchisees
are related parties of the Company due to the nominal, symbolic equity interest ownership in the franchisees.
The Company did not and does not control the franchisees, exert significant influence over the franchisees, have the power to direct the use of the franchisee’s assets and the fulfillment of their obligations, appoint or dismiss directors, authorized representatives, or executive officers of the franchisees. Management has also determined that the percentage shareholding in the franchisee is not compensatory to the Company in nature, and accordingly, would not be subject to consideration as income under revenue recognition criteria. The Company did not contribute any permanent equity capital in these franchisees and if these franchisees were to incur substantial losses and accumulate significant liabilities, the Company is not obligated to absorb such losses on behalf of the franchisees. Accordingly, the management has determined that the financial positions and results of operations of these franchisees should not be included as part of the Company’s consolidated financial statements.
In addition,
the Company did not and will not receive any actual ownership interest in the franchisees, nor receive any benefits from being a
| April 30, | October 31, | |||||||
| 2024 | 2023 | |||||||
| Yulin Jiuzi New Energy Automobile Co., Ltd | $ | $ | ||||||
| Zhejiang Jiuzi New Energy Network Technology Co., Ltd. | ||||||||
| Jiuzi Haoche (Hangzhou) Automobile Service Co., Ltd. | ||||||||
| Total | $ | $ | ||||||
The above accounts receivable were derived from sales of vehicles supplied by the Company to franchisees without any special payment terms. Sales revenues derived from franchisees were $ and $ for the six months ended April 30, 2024 and 2023, respectively
21
Jiuzi Holdings, Inc.
Notes to the Financial Statements
| As of April 30, 2024 | As of October 31, 2023 | |||||||||||||||||||||||||||||||
| Gross | Discount | Allowance | Net | Gross | Discount | Allowance | Net | |||||||||||||||||||||||||
| Jiangsu Changshu | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Shandong Dongming | ||||||||||||||||||||||||||||||||
| Jiangxi Gao’an | ||||||||||||||||||||||||||||||||
| Hunan Huaihua | ||||||||||||||||||||||||||||||||
| Jiangxi Jiujiang | ||||||||||||||||||||||||||||||||
| Hunan Liuyang | ||||||||||||||||||||||||||||||||
| Hunan Loudi | ||||||||||||||||||||||||||||||||
| Hunan Pingjiang | ||||||||||||||||||||||||||||||||
| Jiangxi Pingxiang | ||||||||||||||||||||||||||||||||
| Henan Puyang | ||||||||||||||||||||||||||||||||
| Fujian Quanzhou | ||||||||||||||||||||||||||||||||
| Jiangxi Wanzai | ||||||||||||||||||||||||||||||||
| Jiangxi Xinyu | ||||||||||||||||||||||||||||||||
| Jiangxi Yichun | ||||||||||||||||||||||||||||||||
| Jiangxi Yudu | ||||||||||||||||||||||||||||||||
| Guangdong Zengcheng | ||||||||||||||||||||||||||||||||
| Jiangxi Shanggao | ||||||||||||||||||||||||||||||||
| Shandong Heze | ||||||||||||||||||||||||||||||||
| Jiangxi Ganzhou | ||||||||||||||||||||||||||||||||
| Hunan Liling | ||||||||||||||||||||||||||||||||
| Hunan Zhuzhou | ||||||||||||||||||||||||||||||||
| Hunan Changsha | ||||||||||||||||||||||||||||||||
| Guangxi Guilin | ||||||||||||||||||||||||||||||||
| Hunan Chenzhou | ||||||||||||||||||||||||||||||||
| Jiangxi Ji’an | ||||||||||||||||||||||||||||||||
| Guangxi Nanning | ||||||||||||||||||||||||||||||||
| Hunan Leiyang | ||||||||||||||||||||||||||||||||
| Guangdong Dongguan Changping | ||||||||||||||||||||||||||||||||
| Hunan Changsha County | ||||||||||||||||||||||||||||||||
| Guizhou Zunyi | ||||||||||||||||||||||||||||||||
| Jiangsu Xuzhou | ||||||||||||||||||||||||||||||||
| Hunan Yongxing | ||||||||||||||||||||||||||||||||
| Hunan Hengyang | ||||||||||||||||||||||||||||||||
| Hainan Sanya | ||||||||||||||||||||||||||||||||
| Hunan Changsha Yuhua | ||||||||||||||||||||||||||||||||
| Shandong Heze Dingtao | ||||||||||||||||||||||||||||||||
| Shandong Heze Yuncheng | ||||||||||||||||||||||||||||||||
| Shandong Heze Gaoxin | ||||||||||||||||||||||||||||||||
| Shandong Zouping | ||||||||||||||||||||||||||||||||
| Shandong Juye | ||||||||||||||||||||||||||||||||
| Shandong Juancheng | ||||||||||||||||||||||||||||||||
| Shandong Shanxian | ||||||||||||||||||||||||||||||||
| Jiangxi Zhangshu | ||||||||||||||||||||||||||||||||
| Guangdong Foshan | ||||||||||||||||||||||||||||||||
| Jiangxi Jingdezhen | ||||||||||||||||||||||||||||||||
| Guangxi Yulin | ||||||||||||||||||||||||||||||||
| Shandong Heze Cao County | ||||||||||||||||||||||||||||||||
| Dongguan Nancheng | ||||||||||||||||||||||||||||||||
| Hubei Macheng | ||||||||||||||||||||||||||||||||
| Shandong Jining Liangshan | ||||||||||||||||||||||||||||||||
| Guangdong Zhanjiang | ||||||||||||||||||||||||||||||||
| Hunan Hengyang Shigu | ||||||||||||||||||||||||||||||||
| Jiangxi Ji’an Yongfeng | ||||||||||||||||||||||||||||||||
| Hunan Changde | ||||||||||||||||||||||||||||||||
| Hunan Shaoyang | ||||||||||||||||||||||||||||||||
| Hunan Yongzhou | ||||||||||||||||||||||||||||||||
| Hunan Ningxiang | ||||||||||||||||||||||||||||||||
| Guangxi Nanning Jiangnan | ||||||||||||||||||||||||||||||||
| Jiangxi Shangrao | ||||||||||||||||||||||||||||||||
| Anhui Bengbu | ||||||||||||||||||||||||||||||||
| Zhejiang JinHua | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
22
Jiuzi Holdings, Inc.
Notes to the Financial Statements
The above loans were advanced to the Company’s franchisees as working capital to support their operations. Such advances are due within 18 months.
| April 30, | October 31, | |||||||
| 2024 | 2023 | |||||||
| Yudu Jiuzi New Energy Automobile Co., Ltd. | $ | $ | ||||||
| Total | $ | $ | ||||||
The above accounts payable were derived from vehicles purchased by the Company from the franchisees as inventory on a needed basis without any special payment terms.
| April 30, | October 31, | |||||||
| 2024 | 2023 | |||||||
| Current Portion | ||||||||
| Unearned franchise fees | $ | $ | ||||||
| Customer deposits | ||||||||
| Non-current Portion | ||||||||
| Total, net | $ | $ | ||||||
| April 30, | October 31, | |||||||
| 2024 | 2023 | |||||||
| Unearned franchise fees – current | ||||||||
| Zhejiang Hangzhou Xiaoshan Agent | $ | $ | ||||||
| Hunan Changsha Yuelu Agent | ||||||||
| Hunan Yueyang Xiangyin Agent | ||||||||
| Hunan Yueyang Yueyang Lou Agent | ||||||||
| Guangdong Zhongshan City Agent | ||||||||
| Total | $ | $ | ||||||
23
Jiuzi Holdings, Inc.
Notes to the Financial Statements
The deferred revenues above were derived from initial franchise fee payments received in advance for services which have not yet been performed. The initial franchise fees include a series of performance obligations and an indefinite license to use the Company’s trademark. Amounts are recognized as advances when received, and are recognized as deferred revenues when the minimum amount required under the franchise or license agreement is attained. The payments are received in advance progressively and are not refundable once certain conditions in the franchise agreements are met. Such amounts are recognized as revenue when the Company performs the initial services required under the franchise or license agreement, which is generally when a specific performance obligation is completed or when and if the franchise or license agreement is terminated.
| April 30, | October 31, | |||||||
| 2024 | 2023 | |||||||
| Mr. Bo Bai | $ | $ | ||||||
| Jiuzi Haoche (Hangzhou) Automotive Service Co., Ltd | ||||||||
| Mr. Xuemei Rang | ||||||||
| Mr. Shuibo Zhang | ||||||||
| Mr. Qi Zhang | ||||||||
| Mr. Ruchun Huang | ||||||||
| Zhejiang Jiuzi New Energy Network Technology Co., Ltd | ||||||||
| Hangzhou Jiuyao New Energy Automobile Technology Co. Ltd. | ||||||||
| Total | $ | $ | ||||||
As of April 30, 2024 and October 31, 2023, the
Company has outstanding receivables of $
As
of April 30, 2024 and October 31, 2023, the Company had outstanding receivables of $
As of April 30, 2024 and October 31, 2023, the
Company had outstanding receivables of $
24
Jiuzi Holdings, Inc.
Notes to the Financial Statements
| April 30, 2024 | October 31, 2023 | |||||||
| Zhejiang Jiuzi New Energy Network Technology Co., Ltd | $ | |||||||
| Mr. Shuibo Zhang | ||||||||
| Total | $ | |||||||
As of April 30, 2024 and October 31, 2023, the
Company had outstanding payables of $
NOTE 11 – DEFERRED INCOME AND OTHER LONG TERM LIABILITIES
| April 30, | October 31, | |||||||
| 2024 | 2023 | |||||||
| Subsidy for the maintenance and repair of office | $ | $ | ||||||
| Total | $ | $ | ||||||
25
Jiuzi Holdings, Inc.
Notes to the Financial Statements
NOTE 12 – LEASES
The Company
has
Operating
lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the
lease term. The discount rate used to calculate present value is incremental borrowing rate or, if available, the rate implicit in the
lease. The Company determines the incremental borrowing rate for each lease based primarily on its lease term in PRC which is approximately
Operating
lease expenses of the office and retail store were $
| Six Months Ended | ||||
| April 30, 2024 | ||||
| Lease Cost | ||||
| Operating lease cost (included in general and administrative expenses and cost in the Company’s statement of operations) | $ | |||
| Other Information | ||||
| Cash paid for amounts included in the measurement of lease liabilities | $ | |||
| Weighted average remaining lease term – operating leases (in years) | ||||
| Average discount rate – operating lease | % | |||
26
Jiuzi Holdings, Inc.
Notes to the Financial Statements
| April 30, | October 31, | |||||||
| 2024 | 2023 | |||||||
| Operating lease | ||||||||
| Right-of-use assets | $ | $ | ||||||
| Operating lease liabilities | $ | $ | ||||||
| For the fiscal years ended October 31, | Amounts | |||
| 2024 (six months from May 1, 2024 to October 31, 2024) | $ | |||
| 2025 | ||||
| 2026 | ||||
| Total | $ | |||
NOTE 13 – CONVERTIBLE DEBENTURES
Interest
expense related to convertible debentures that were repaid in June,
2023 was $
NOTE 14 – TAXES PAYABLE
| April 30, | October 31, | |||||||
| 2024 | 2023 | |||||||
| Value-added tax, net | $ | $ | ||||||
| Company income tax | ||||||||
| Other taxes | ||||||||
| Total | $ | $ | ||||||
NOTE 15 – CONTRACT LIABILITY
| April 30, | October 31, | |||||||
| 2024 | 2023 | |||||||
| Customer deposits for car purchase | $ | $ | ||||||
| Total, net | $ | $ | ||||||
Contract liability – related party See Note 10 for details.
27
Jiuzi Holdings, Inc.
Notes to the Financial Statements
NOTE 16 – SHAREHOLDERS’ EQUITY
As of April
30, 2024 and October 31, 2023, the Company had
On October
31, 2020, pursuant to a special resolution adopted by its shareholders to amend and restate the Company’s memorandum and articles
of association, the Company conducted a subdivision of its par value with each share of a par value of $
Subsequent
to the Share Subdivision on October 31, 2020, the Company increased its authorized share capital from
On May 20,
2021, we issued
On October
28, 2022, the Company issued
In the year
ended October 31, 2022, the Company also issued
In
the year ended October 31, 2023, the Company issued
28
Jiuzi Holdings, Inc.
Notes to the Financial Statements
On November
30, 2023, pursuant to a special resolution adopted by its shareholders, the authorized share capital of the Company was increased
from US$
On January 18, 2024, the Company filed a registration
statement on Form S-8 with the Securities and Exchange Commission relating to the registration under the United States Securities Act
of 1933, of up to
On February
15, 2024, pursuant to a special resolution adopted by its shareholders to amend and restate the Company’s memorandum and articles
of association, the Company increased the authorized share capital by the sum of US$
The Company’s shareholders approved by an
ordinary resolution, immediately following the share capital increase, a share consolidation or reverse stock split, of the Company’s
ordinary shares at a ratio of one-for-thirteen such that each thirteen ordinary shares were combined into one ordinary share (the “Share
Consolidation”). After the Share Consolidation, the Company’s authorized share capital was US$
The Board of Directors passed resolutions on May 10, 2024, to establish this date as the effective date for the share splits. All share and per share data have been retroactively restated to reflect the reverse stock split effected on May 10, 2024.
Reverse Stock Split
On July
7, 2023, our Board of Directors declared a reverse share split at a ratio of
29
Jiuzi Holdings, Inc.
Notes to the Financial Statements
Private Placement
On April 28, 2023, the Company entered into
a subscription agreement with selected non-affiliated accredited investors (collectively, the “Investors”). Pursuant to
the subscription agreement, the Company soldan aggregate of
On October 20, 2023, the Company entered into
certain securities purchase agreement with certain “non-U.S. Persons”, pursuant to which the Company sold an aggregate of
NOTE 16 – SEGMENTS AND GEOGRAPHIC INFORMATION
The Company
believes that it operates in
Sales of goods revenues consist of sales of vehicles to third party customers and to the franchisees. Franchise services revenues consist of initial fees and ongoing royalties from the franchisees. Under the franchise arrangement, franchisees are granted the right to operate retail stores using the Company’s Jiuzi brand and system. Other service revenues include the sublease of vehicles to third party customers with a mark-up to the rental price.
30
Jiuzi Holdings, Inc.
Notes to the Financial Statements
| Six Months Ended | ||||||||||||||||
| April 30, 2024 | April 30, 2023 | |||||||||||||||
| NEVs sales | $ | % | $ | % | ||||||||||||
| Franchisee services revenues | % | % | ||||||||||||||
| Other service revenues | % | % | ||||||||||||||
| Total | $ | % | $ | % | ||||||||||||
| Six Months Ended | ||||||||||||||||
| April 30, 2024 | April 30, 2023 | |||||||||||||||
| NEVs sales | $ | % | $ | % | ||||||||||||
| Franchisee services revenues | % | % | ||||||||||||||
| Other service revenues | % | % | ||||||||||||||
| Total | $ | % | $ | % | ||||||||||||
| Six Months Ended | ||||||||||||||||
| April 30, 2024 | April 30, 2023 | |||||||||||||||
| NEVs sales | $ | ( | ) | ( | )% | $ | ( | ) | ( | )% | ||||||
| Franchisee services revenues | % | ( | ) | ( | )% | |||||||||||
| Other service revenues | % | % | ||||||||||||||
| Total | $ | ( | ) | ( | )% | $ | ( | ) | ( | )% | ||||||
31
Jiuzi Holdings, Inc.
Notes to the Financial Statements
NOTE 17 – INCOME TAX
The Company
is subject to profits tax rate at
| Six Months Ended | ||||||||
| April 30, 2024 | April 30, 2023 | |||||||
| Loss attributed to the PRC | $ | ( | ) | $ | ( | ) | ||
| PRC statutory tax rate | % | % | ||||||
| Income tax expense at statutory rate | ||||||||
| PRC tax prepayment | ||||||||
| Income tax expense | $ | $ | ||||||
NOTE 18 – COMMITMENTS AND CONTINGENCIES
The Company
has filed civil suits against certain vendors for failing to deliver purchased vehicles according to the terms of the agreements. The
Company demanded that the vendors refund the advances paid and compensate the Company for liquidated damages.
| Suppliers (Defendant) | Status of the case (1) | Amount involved (USD equivalent) | ||||
| Shengzhou Baiyuan New Energy Vehicle Technology Co. | $ | |||||
| Jiangsu Yakai Auto Sales & Service Co. | ||||||
| Hengyang Jiuziming Chehui Automobile Sales and Service Co., Ltd. | ||||||
| Hangzhou Shicheng Auto Trading Co. | ||||||
| Nanning Huangyang Auto Sales Co. | ||||||
| Nanning Huangyang Auto Sales Co | ||||||
| Nanning Huangyang Auto Sales Co | ||||||
| Nanning Huangyang Auto Sales Co | ||||||
| Shanghai Aichi Yiwei Automobile Sales Co., Ltd | ||||||
| Guangxi Runyin Automobile Sales Co., Ltd | ||||||
| Gui’an New District Xinte Electric Vehicle Industry Co., Ltd. | ||||||
| Total | $ | |||||
| (1) |
32
Jiuzi Holdings, Inc.
Notes to the Financial Statements
NOTE 19 – CONCENTRATIONS, RISKS AND UNCERTAINTIES
Credit risk
Cash deposits are held in financial institutions in the PRC, which deposits are not insured. Accordingly, the Company has a concentration of credit risk related to the uninsured part of bank deposits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk.
Concentrations
The Company has a concentration risk related to suppliers and customers. Failure to maintain existing relationships with the suppliers or customers to establish new relationships in the future could negatively affect the Company’s ability to obtain goods sold to customers in a price advantage and timely manner. If the Company is unable to obtain ample supply of goods from existing suppliers or alternative sources of supply, the Company may be unable to satisfy the orders from its customers, which could materially and adversely affect revenues.
| Six Months Ended | ||||||||||||||||
| April 30, 2023 | April 30, 2022 | |||||||||||||||
| Third party sales revenues | % | $ | % | |||||||||||||
| Related party sales revenues | $ | % | % | |||||||||||||
| Third party franchise revenues | % | % | ||||||||||||||
| Related party franchise revenues | % | % | ||||||||||||||
| Third party other revenues | % | % | ||||||||||||||
| Related party other revenues | % | % | ||||||||||||||
| Total | $ | % | $ | % | ||||||||||||
| Six Months Ended | ||||||||||||||||
| April 30, 2023 | April 30, 2022 | |||||||||||||||
| Customer A | % | $ | % | |||||||||||||
| Customer B | % | % | ||||||||||||||
| Customer C | % | % | ||||||||||||||
| Customer D | % | % | ||||||||||||||
| Total | % | $ | % | |||||||||||||
NOTE 20 – DISPOSAL OF SUBSIDIARY
The Company holds
NOTE 21 – SUBSEQUENT EVENTS
Resignation of Officer
On July 31, 2024, Mr. Francis Zhang resigned from his position as the chief financial officer of the Company, effective immediately.
Appointment of Officer
On August 15, 2024, the board of directors of the Company appointed Mr. Huijie Gao as the CFO of the Company to fill the vacancy resulting from Mr. Zhang’s resignation.
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