Core Viewpoint - Jiuzi Holdings, Inc. will implement a reverse share split at a ratio of 1-for-13 to comply with Nasdaq's minimum bid price requirement of $1.00 per share, effective July 3, 2024 [1][2]. Group 1: Reverse Share Split Details - The reverse share split will adjust the par value of the Ordinary Shares from $0.00015 to $0.00195 per share [1]. - The number of issued and outstanding shares will decrease from approximately 135.3 million to about 10.4 million [2]. - No fractional shares will be issued; fractional interests will be rounded up to the nearest whole share [2]. Group 2: Company Overview - Jiuzi Holdings, Inc. is a leading NEV dealership group in China, established in 2017, operating retail stores under the brand name "Jiuzi" [4]. - The company focuses on selling battery-operated electric vehicles and sources NEVs from over twenty manufacturers [4]. - It operates 51 franchise stores and one company-owned store, primarily in third and fourth-tier cities in China [4].

Core Viewpoint - Jiuzi Holdings Inc. has received a notification from Nasdaq regarding non-compliance with minimum bid price requirements for its Class A ordinary shares, which have been below $1.00 for 30 consecutive business days [1][2]. Group 1: Nasdaq Compliance Notification - The notification does not have an immediate effect on the listing of the Company's shares on Nasdaq [2]. - The Company has until November 12, 2024, to regain compliance by achieving a closing bid price of at least $1 for a minimum of 10 consecutive business days [2]. - If compliance is not regained within the 180-day period, the Company may be eligible for an additional 180 days, provided it meets other listing requirements [2]. Group 2: Previous Compliance Issues - On March 29, 2024, the Company received another notification from Nasdaq for not timely filing its annual report on Form 20-F for the year ended October 31, 2023 [3]. - Nasdaq confirmed compliance with periodic filing requirements after the Company filed its 2023 Annual Report on May 17, 2024 [3]. Group 3: Company Overview - Jiuzi Holdings, Inc. is headquartered in Hangzhou, China, and was established in 2017, focusing on the sale of New Energy Vehicles (NEVs) in third and fourth-tier cities [4]. - The Company operates 51 franchise stores and one company-owned store, primarily selling battery-operated electric vehicles sourced from over twenty NEV manufacturers [4].

Core Viewpoint - Jiuzi Holdings Inc. has received a notification from Nasdaq regarding non-compliance with minimum bid price requirements for its Class A ordinary shares, which have been below $1.00 for 30 consecutive business days [1][2] Group 1: Nasdaq Compliance Notification - The company has until November 12, 2024, to regain compliance with Nasdaq's minimum bid price requirement [2] - If the closing bid price reaches at least $1 for 10 consecutive business days during the 180-day period, Nasdaq will confirm compliance [2] - The company may be eligible for an additional 180 days to regain compliance if it meets other listing requirements [2] Group 2: Previous Compliance Issues - On March 29, 2024, the company was notified of non-compliance with Nasdaq Listing Rule 5250(c)(1) due to the late filing of its 2023 Annual Report [3] - Nasdaq confirmed compliance with periodic filing requirements after the company filed its 2023 Annual Report on May 17, 2024 [3] Group 3: Company Overview - Jiuzi Holdings, Inc. is based in Hangzhou, China, and was established in 2017, focusing on the sale of New Energy Vehicles (NEVs) in third and fourth-tier cities [4] - The company operates 51 franchise stores and one company-owned store, sourcing NEVs from over twenty manufacturers [4]

Regulatory Compliance and Risks - The company is subject to unique risks due to its holding company structure, including potential sanctions from PRC regulatory agencies if compliance is not met[12]. - As of the date of the annual report, neither the company nor its subsidiary Zhejiang Jiuzi has been involved in any investigations or received sanctions from the China Securities Regulatory Commission[12]. - The company is classified as an Existing Issuer and is required to file with the CSRC for any subsequent offerings within three working days after completion[13]. - The PCAOB has determined it can secure complete access to inspect and investigate registered public accounting firms in mainland China and Hong Kong[15]. - The Accelerating Holding Foreign Companies Accountable Act reduces the number of consecutive non-inspection years from three to two, impacting trading on U.S. exchanges[15]. - The company is closely monitoring regulatory developments in China regarding necessary approvals from the China Securities Regulatory Commission and other authorities[23]. - The Draft Overseas Listing Regulations require PRC domestic enterprises seeking to issue and list shares overseas to complete filing procedures with the CSRC[23]. - The company is subject to new regulations under the Trial Measures, which could impose administrative penalties for non-compliance in future offerings[25]. - The company faces uncertainties regarding the ability to continue trading on U.S. exchanges if its auditor cannot be inspected by the PCAOB for consecutive years[27]. - The company is currently not required to obtain approval from Chinese authorities to list on U.S. exchanges, but future requirements could materially affect investor interests[25]. - The company is subject to potential tax audits by PRC authorities, which could result in increased tax liabilities and penalties[58]. - The company may face uncertainties regarding future regulatory changes that could impact its ability to offer securities to investors[91]. - The PRC legal system is evolving rapidly, creating uncertainties that could adversely affect the company's operations and the value of its securities[75]. - The company is subject to the U.S. Foreign Corrupt Practices Act and Chinese anti-corruption laws, which may expose it to liabilities and risks related to unauthorized payments by franchisees[75]. - The company may face significant scrutiny and negative publicity similar to other U.S.-listed Chinese companies, which could harm its operations and reputation[98]. Financial Performance - For the year ended October 31, 2022, the company reported revenues of $5,931,000, with a cost of revenues amounting to $4,592,471, resulting in a net loss of $9,832,389[29]. - The company experienced a comprehensive loss of $9,975,446 for the same period, indicating significant financial challenges[29]. - The company reported a net income loss of $16,361,639 for the year ended October 31, 2023, reflecting ongoing operational difficulties[31]. - The cost of revenues for the year ended October 31, 2023, was $6,316,831, indicating an increase in operational expenses compared to previous periods[31]. - The company’s share of loss from non-VIE subsidiaries was $11,825,084, highlighting significant financial strain from its subsidiaries[31]. - Total revenues for the period reached $9,285,628, with a cost of revenues amounting to $4,854,235, resulting in a gross profit of $4,431,393[32]. - The net income for the period was reported at $1,433,168, reflecting a significant recovery compared to the previous loss of $1,277,782[32]. - Current assets totaled $10,471,777, while total assets reached $16,946,303, indicating a strong asset base[33]. - Total liabilities were reported at $9,109,961, leading to shareholders' equity of $7,836,342[33]. - The comprehensive income for the period was $1,876,686, showcasing overall financial health[32]. Dividend Policy and Earnings Retention - The company has not distributed any earnings or dividends to date and does not anticipate doing so in the foreseeable future[14]. - Current PRC regulations permit the company's subsidiaries to pay dividends only out of accumulated profits, if any, determined in accordance with Chinese accounting standards[14]. - The company intends to retain all available funds and future earnings for business operations and expansion, with no plans for dividend distribution[14]. - The company has not made any transfers, dividends, or distributions between the holding company and its subsidiaries to date[14]. - The company relies on the ability to receive funds from its subsidiary Zhejiang Jiuzi for any future dividend payments[14]. - As of the date of the annual report, no dividends or distributions have been made between the company and its subsidiaries, and there are no plans to distribute earnings in the foreseeable future[20]. - The PRC government may impose future restrictions on foreign currency access for current account transactions, affecting the company's ability to transfer cash[20]. - Jiuzi Holdings relies on dividends from its PRC subsidiaries for cash needs, with potential limitations on these payments due to PRC regulations[61]. Market and Competitive Environment - The growth of the electric vehicle market is projected to increase the urban power grid's peak load by 10% to 11%, with maximum load demand reaching 1,000 to 4,000 MW due to NEVs[44]. - The Chinese government plans to reduce subsidies for NEVs by 20% in 2021 compared to 2020 levels, impacting the pricing advantage of the company's vehicles[44]. - The company faces increased competition from foreign electric vehicle manufacturers due to changes in government policies allowing foreign ownership without local partners[44]. - The electric vehicle market's development is contingent on consumer perceptions of quality, safety, and performance, which can fluctuate significantly[41]. - The limited range of electric vehicles on a single charge is a critical factor affecting consumer adoption, with most vehicles lasting only 100-200 miles[42]. - The company generates revenues through initial franchise fees and sales commissions, expecting revenue growth as it expands its franchise operations[46]. - The company has awarded a total of 20,800,000 ordinary shares under its equity incentive plans (2,000,000 under the 2022 Plan, 1,200,000 under the 2023 Plan, and 17,600,000 under the 2024 Plan)[54]. - The company emphasizes the importance of brand recognition in attracting new franchisees and customers, which is critical for future growth[51]. - The company has established partnerships with over twenty NEV manufacturers, including BYD, Geely, and Chery, to enhance product offerings and competitive pricing[134]. - The company focuses marketing efforts in third to fifth tier cities in China, where the NEV market is relatively unexplored[156]. Operational Challenges and Strategies - The company relies heavily on collaboration with suppliers, with no long-term contractual commitments, posing risks to future revenue stability[39]. - The company may encounter operational risks if it cannot collect advances paid to suppliers, impacting cash flow and financial stability[56]. - The company plans to adopt a one-stop vehicle sales model, integrating online and offline services for vehicle selection, purchase, and maintenance[136]. - The company is developing an online-offline technology platform to enhance consumer shopping experiences and operational efficiency for suppliers[145]. - The company plans to establish display and distribution centers in first- and second-tier cities to support franchise stores in surrounding areas[146]. - The company intends to reduce overall operational costs by sourcing vehicles from 4S stores, which require smaller deposits and offer flexible return policies[147]. - The franchise arrangement allows franchisees to set their own sales prices, but they must cover any losses if the sales price is below the vehicle cost[150]. - The company has plans for market expansion and new product development, although specific details were not disclosed in the call[32]. - Future guidance indicates a focus on improving operational efficiency and exploring potential acquisitions to enhance market position[32]. Legal and Tax Considerations - The company may be classified as a "Resident Enterprise" under the EIT Law, subjecting it to a 25% enterprise income tax on worldwide income[73]. - If classified as a "Resident Enterprise," dividends paid to non-PRC shareholders may be subject to a 10% withholding tax[73]. - The Enterprise Income Tax Law imposes a withholding tax rate of up to 10% on dividends payable by Chinese companies to non-PRC resident enterprises[61]. - The PRC Foreign Investment Law establishes a framework for foreign investments, but uncertainties remain regarding its implementation and potential impact on the company's corporate structure[81]. - The company is not restricted from distributing profits and dividends to its parent company or carrying out cross-border foreign exchange activities due to its completed foreign exchange registration[200]. - The company has completed foreign exchange registration formalities for its WFOE, allowing it to receive capital contributions and make distributions without restrictions[197]. - The company has not filed required forms with PRC tax authorities to benefit from the reduced withholding tax rate[207]. Environmental and Social Compliance - The company is subject to various environmental protection and work safety regulations, which include penalties for non-compliance[190]. - The company must comply with the Catalogue for the Guidance of Foreign Investment Industries and the Negative List for market access[191]. - Employers in the PRC are required to provide employees with social insurance covering basic pension, medical, unemployment, maternity, and occupational injury insurance[209]. - The company has established a work safety protection scheme and is required to provide safety training and protective equipment to employees[190]. - The Cyber Security Law mandates internet service providers to safeguard personal data and maintain network security[187]. - The PRC Cybersecurity Law imposes obligations on network operators to protect users' personal information and mandates breach notification[170]. Shareholder and Corporate Governance - The company is classified as a "controlled company" under Nasdaq rules, allowing it to rely on exemptions from certain corporate governance requirements[125]. - The company may face challenges in protecting shareholder interests due to its incorporation in the Cayman Islands and operations in China[100]. - The issuance and sale of additional ordinary shares could dilute existing shareholders' holdings and reduce the prevailing market price[122]. - Future sales of ordinary shares could adversely affect their market price and impair the company's ability to raise capital through equity offerings[115]. - The trading price of the ordinary shares is volatile, influenced by factors such as net revenue variations, announcements of new investments, and changes in financial estimates by analysts[112]. - The company is classified as an "emerging growth company," allowing it to take advantage of reduced reporting requirements under the JOBS Act[119]. - The company is required to file an annual report on Form 20-F within four months of the fiscal year-end, with less extensive information compared to U.S. domestic issuers[121].

Core Viewpoint - Jiuzi Holdings Inc. has entered into a non-binding letter of intent to acquire Shenzhen Maigesong Electric Technology Co., Ltd., aiming to enhance its capabilities in the new energy vehicle sector through this strategic acquisition [1][2]. Group 1: Acquisition Details - Shenzhen Jiuzi will acquire 100% of Shenzhen Maigesong's equity in exchange for restricted share compensation and will invest RMB 30 million to construct a rechargeable lithium battery production line, with investments split into two stages of RMB 15 million each [2][3]. - The construction of the battery production line will be led by the original shareholders of Shenzhen Maigesong, who will also oversee the immediate commencement of production and sales upon completion [2]. Group 2: Revenue Targets and Earnout Provision - The LOI includes an earnout provision requiring Shenzhen Maigesong to achieve revenue targets of RMB 119.81 million by December 2025 and RMB 504.22 million by December 2026 [3]. - If actual revenue falls below 80% of the targets between 2024 and 2025, the Maigesong Shareholders will provide compensation measures and lose control of Shenzhen Maigesong, emphasizing the importance of achieving these targets for both parties [3]. Group 3: Company Background - Jiuzi Holdings, established in 2017 and headquartered in Hangzhou, operates retail stores under the "Jiuzi" brand, focusing on selling new energy vehicles in third and fourth-tier cities in China, with 51 franchise stores and one company-owned store [4]. - Shenzhen Maigesong specializes in embedded battery control systems and holds nearly a hundred patents, providing products through ODM or SKD models, along with comprehensive technical support [5].

Core Viewpoint - Jiuzi Holdings Inc. has received a deficiency letter from Nasdaq due to the late filing of its annual report for the year ended October 31, 2023, which may affect its compliance status on the exchange [1][2]. Group 1: Compliance and Regulatory Actions - The company has 60 calendar days from March 25, 2024, to submit a Compliance Plan to regain compliance with Nasdaq Listing Rules [2]. - If the Compliance Plan is accepted, Nasdaq may grant an extension until September 10, 2024, for the company to regain compliance [2]. - The deficiency letter does not have an immediate impact on the listing of the company's ordinary shares on the Nasdaq Capital Market [2]. Group 2: Company Overview - Jiuzi Holdings, Inc. is headquartered in Hangzhou, China, and was established in 2017, focusing on the sale of New Energy Vehicles (NEVs) in third and fourth-tier cities [3]. - The company operates 51 franchise stores and one company-owned store, primarily selling battery-operated electric vehicles sourced from over twenty NEV manufacturers [3].

Financial Performance - Total revenues for the six months ended April 30, 2023, were $925,759, a decrease of 77.5% compared to $4,109,736 for the same period in 2022[4]. - Gross profit for the six months ended April 30, 2023, was a loss of $10,555, compared to a gross profit of $468,427 for the same period in 2022[4]. - Net loss attributable to controlling interest for the six months ended April 30, 2023, was $6,537,968, compared to a net loss of $5,243,232 for the same period in 2022[4]. - Net income for the six months ended April 30, 2023, was $(6,548,630), compared to $(5,250,739) for the same period in 2022, indicating a decline in profitability[8]. - The company reported a significant accumulated deficit of $15,880,079 as of April 30, 2023, raising concerns about its ability to continue as a going concern[22][24]. Assets and Liabilities - Total current assets decreased to $8,721,661 as of April 30, 2023, from $12,248,396 as of October 31, 2022, representing a decline of 28.5%[2]. - Total liabilities decreased to $6,800,160 as of April 30, 2023, from $9,244,954 as of October 31, 2022, a reduction of 26.4%[2]. - Cash and cash equivalents decreased to $827,308 as of April 30, 2023, from $2,329,401 as of October 31, 2022, a decline of 64.5%[2]. - Total equity attributable to Jiuzi Holdings, Inc. decreased to $3,506,838 as of April 30, 2023, from $5,943,807 as of October 31, 2022, a decrease of 41.0%[2]. Expenses - Selling and marketing expenses decreased to $1,760 for the six months ended April 30, 2023, from $3,005 for the same period in 2022, a decrease of 41.3%[4]. - Advertising and promotional expenses for the six months ended April 30, 2023, were recorded at $79,400, a decrease of approximately 64% compared to $220,850 for the same period in 2022[42]. - The company recorded depreciation expenses of $105,392 for the six months ended April 30, 2023, compared to $42,471 for the same period in 2022, indicating an increase of approximately 148%[76]. Cash Flow - Net cash used in operating activities was $(2,677,367) for the six months ended April 30, 2023, an improvement from $(4,295,043) in the prior year[8]. - The company recorded a net cash provided by investing activities of $828,248, a turnaround from $(946,930) in the previous year[8]. - Cash, cash equivalents, and restricted cash at the end of the period totaled $870,711, down from $5,950,372 a year earlier[8]. Credit and Loans - The company reported a provision for credit loss on loans receivable of $4,186,862 for the six months ended April 30, 2023, compared to $3,846,415 for the same period in 2022[4]. - The provision for credit losses rose significantly to $11,168,049 as of April 30, 2023, compared to $7,309,516 on October 31, 2022, reflecting an increase of approximately 53%[66]. - Current loan receivables, net of allowance for credit losses, decreased to $5,101,224 as of April 30, 2023, down from $6,661,290 on October 31, 2022, representing a decline of approximately 23%[69]. Market Strategy - The company plans to establish provincial regional sales centers nationwide to expand market reach and reduce overhead costs through a centralized procurement system[23]. - Management aims to cooperate with more NEV brands and enhance service quality to attract additional franchisees[23]. - The company is focusing on expanding its market presence through new franchise agreements, as indicated by the various unearned franchise fees from multiple agents across different regions[91]. Stock and Equity - The weighted average number of ordinary shares outstanding for the six months ended April 30, 2023, was 1,905,793, compared to 1,190,380 for the same period in 2022, an increase of 60.0%[4]. - A reverse stock split at a ratio of 1-for-18 was declared effective July 10, 2023, with no effect on total stockholders' equity[22]. Related Party Transactions - The company’s total accounts receivable from related parties was $374,796 as of April 30, 2023, an increase from $354,857 as of October 31, 2022[54]. - The company has advanced amounts to related parties for business purposes, with the highest receivable being $32,215 million from Mr. Ruchun Huang as of April 30, 2023[96]. - Accounts payable to related parties' franchisees were noted, indicating ongoing financial obligations[87]. Revenue Concentration - NEVs sales accounted for $884,083, representing 95% of total revenues for the six months ended April 30, 2023, compared to $3,208,591 or 78% for the same period in 2022[120]. - Related party sales revenues were recorded at $41,802, representing 4% of total revenues for the six months ended April 30, 2023[133]. - The concentration of sales revenues from third-party customers shows significant contributions from Customer C at $270,120 and Customer D at $140,275[134].

PART I [ITEM 3. KEY INFORMATION](index=6&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section presents key financial data for FY2020-2022, highlighting a significant net loss in 2022, and outlines extensive business and operational risks [Selected Financial Data](index=6&type=section&id=A.%20Selected%20Financial%20Data) The company reported a consolidated net loss of **$16.83 million** in FY2022, a reversal from prior net income, driven by decreased revenue and increased expenses Consolidated Statements of Operations Highlights (USD) | Indicator | FY 2022 | FY 2021 | FY 2020 | | :--- | :--- | :--- | :--- | | Revenues | 6,215,718 | 9,536,987 | 8,210,595 | | Cost of revenues | 6,458,162 | 4,909,704 | 2,190,768 | | Net Income (loss) | (16,832,101) | 778,037 | 3,423,542 | Consolidated Balance Sheet Highlights (USD) | Indicator | As of Oct 31, 2022 | As of Oct 31, 2021 | | :--- | :--- | :--- | | Total assets | 15,326,174 | 28,152,924 | | Total liabilities | 9,244,954 | 5,823,552 | | Shareholders' equity | 6,081,220 | 22,329,372 | Consolidated Cash Flow Highlights (USD) | Indicator | FY 2022 | FY 2021 | FY 2020 | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | (8,872,650) | (4,811,137) | 515,297 | | Net cash provided by (used in) investing activities | 236,884 | (1,485,306) | (26,288) | | Net cash provided by financing activities | 3,626,748 | 12,848,156 | (164,056) | - The company's Variable Interest Entity (VIE) structure was dissolved on January 20, 2023[23](index=23&type=chunk) [Risk Factors](index=9&type=section&id=D.%20Risk%20Factors) The company faces significant risks across its business, corporate structure, operations in China, and its publicly traded shares - Business risks include reliance on China's automotive industry, dependence on suppliers without long-term contracts, and various factors affecting NEV adoption like battery range, charging infrastructure, and government incentives[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) - During the year ended October 31, 2022, the company wrote off **$2,942,315** in advances to suppliers who failed to deliver purchased vehicles[62](index=62&type=chunk) - The company is a holding company and relies on dividends from its PRC subsidiaries, which are subject to PRC laws restricting profit distribution, such as setting aside funds for a statutory reserve[69](index=69&type=chunk)[70](index=70&type=chunk) - The PRC government has significant oversight over the business, and recent regulations on overseas listings and data security (e.g., from CSRC and CAC) could impact the company's ability to offer securities and remain listed on U.S. exchanges[75](index=75&type=chunk)[110](index=110&type=chunk)[130](index=130&type=chunk) - The Holding Foreign Companies Accountable Act (HFCAA) poses a risk, where a future inability to inspect auditors could lead to delisting, despite PCAOB inspections in 2022[172](index=172&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) - CEO Shuibo Zhang beneficially owns **33.10%** of the company's ordinary shares, giving him significant influence over corporate actions requiring shareholder approval[191](index=191&type=chunk) [ITEM 4. INFORMATION ON THE COMPANY](index=39&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) Jiuzi Holdings Inc. operates NEV retail stores in China via franchising, generating revenue from sales and fees, and recently dissolved its VIE structure as part of a corporate restructuring [History and Development of the Company](index=39&type=section&id=A.%20History%20and%20development%20of%20the%20company) Jiuzi Holdings Inc., incorporated in the Cayman Islands, completed a major restructuring on January 20, 2023, dissolving its VIE structure - The company was incorporated in the Cayman Islands on October 10, 2019, and operates in China through its PRC Operating Subsidiaries[225](index=225&type=chunk) - On January 20, 2023, the company completed a restructuring that dissolved its VIE structure, resulting in its main operating entity, Zhejiang Jiuzi, becoming a wholly-owned subsidiary of Jiuzi WFOE[231](index=231&type=chunk)[233](index=233&type=chunk) [Business Overview](index=40&type=section&id=B.%20Business%20overview) The company franchises and operates "Jiuzi" branded NEV retail stores in China, with revenue from sales, initial fees, and royalties, focusing on network expansion - The company operates a franchise model for retail stores under the "Jiuzi" brand, selling NEVs in third- and fourth-tier cities in China, with **31** operating franchise stores and one company-owned store as of the report date[236](index=236&type=chunk) - Revenue streams consist of NEV sales, initial franchisee fees of RMB **4,000,000** (approx. **US$575,500**) per store, and ongoing royalties of **10%** of net income from franchisees[238](index=238&type=chunk) - The company sources NEVs from over twenty manufacturers, including BYD, Geely, and Chery, and partners with financing platforms to support franchisees and customers[240](index=240&type=chunk) - Key growth strategies include continued brand building and franchise expansion, converting traditional 4S stores into Jiuzi franchises, and developing an integrated online-offline technology platform for sales and services[247](index=247&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk) [Organizational Structure](index=62&type=section&id=C.%20Organizational%20structure) Jiuzi Holdings Inc. is a Cayman Islands holding company operating through PRC subsidiaries, with its VIE structure dissolved on January 20, 2023 - The company is a Cayman Islands holding company operating through PRC subsidiaries, with the VIE structure dissolved on January 20, 2023[376](index=376&type=chunk)[388](index=388&type=chunk) - The corporate structure flows from Jiuzi Holdings Inc. (Cayman) -> Jiuzi HK (Hong Kong) -> Jiuzi WFOE (PRC) -> Zhejiang Jiuzi (PRC Operating Company) and its subsidiaries[377](index=377&type=chunk)[378](index=378&type=chunk)[379](index=379&type=chunk)[380](index=380&type=chunk) [Property, Plants and Equipment](index=63&type=section&id=D.%20Property,%20plants%20and%20equipment) The company's principal office is leased in Hangzhou, China, with its company-owned Shangli Jiuzi store also leased in Jiangxi Province - The principal executive office is leased in Hangzhou, China, with a lease expiring on July 31, 2026[391](index=391&type=chunk) - The company-owned Shangli Jiuzi store is leased in Pingxiang City, China, with the lease expiring in February 2023[392](index=392&type=chunk) [ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS](index=63&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) For FY2022, Jiuzi Holdings reported a net loss of **$16.83 million**, driven by decreased revenue and surging operating expenses, leading to weakened liquidity and going concern doubts Consolidated Results of Operations (FY 2022 vs. FY 2021) | Financial Metric | FY 2022 (USD) | FY 2021 (USD) | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenue | 6,215,718 | 9,536,987 | (34.83)% | | Gross Profit (Loss) | (242,444) | 4,627,283 | (105.24)% | | Selling, General & Admin Expenses | 6,692,049 | 2,983,582 | 124.30% | | Provision for credit loss | 7,267,026 | 309,024 | 2,251.61% | | Write-offs of advances | 2,942,315 | - | N/A | | Net Income (Loss) | (16,832,101) | 778,037 | (2,263.41)% | - The decrease in total net revenue was mainly due to a **96.49%** drop in franchise initial fees, from **$8.09 million** in 2021 to **$0.28 million** in 2022, attributed to the re-outbreak of the pandemic in China[407](index=407&type=chunk)[410](index=410&type=chunk) - NEV sales revenue increased by **309.19%** to **$5.91 million** in FY2022 from **$1.44 million** in FY2021, driven by an increase in franchisee sales[407](index=407&type=chunk)[408](index=408&type=chunk) - The company wrote off **$2,942,315** in advances to suppliers due to their failure to deliver purchased vehicles, with civil claims filed against these vendors[416](index=416&type=chunk) Summary of Cash Flows (FY 2022 vs. FY 2021) | Cash Flow Activity | FY 2022 (USD) | FY 2021 (USD) | | :--- | :--- | :--- | | Net cash used in operating activities | (8,872,650) | (4,811,137) | | Net cash provided by (used in) investing activities | 236,884 | (1,485,306) | | Net cash provided by financing activities | 3,626,748 | 12,848,156 | [ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](index=73&type=section&id=ITEM%206.%20DIRECTORS,%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) The company is led by CEO Shuibo Zhang and CFO Francis Zhang, with a five-member board including three independent directors, and has established equity incentive plans - The board of directors consists of five members, including three independent directors: Richard Chen (Chair of Audit Committee), Junjun Ge (Chair of Compensation Committee), and Jehn Min Lim (Chair of Nomination Committee)[466](index=466&type=chunk)[493](index=493&type=chunk) Executive Compensation Summary (USD) | Name and Principal Position | Fiscal Year | Salary ($) | Total ($) | | :--- | :--- | :--- | :--- | | Shuibo Zhang, CEO | 2022 | 306,751 | 306,751 | | | 2021 | 17,335 | 17,335 | | Francis Zhang, CFO | 2022 | 120,000 | 120,000 | | | 2021 | 17,335 | 17,335 | - The company has adopted three equity incentive plans: the 2021 Plan (**1,000,000** shares), the 2022 Plan (**2,000,000** shares), and the 2023 Plan (**1,200,000** shares), with **1,000,000** shares awarded under the 2021 Plan and **700,000** under the 2023 Plan as of the report date[483](index=483&type=chunk)[484](index=484&type=chunk) - As of the date of the report, the company had **33** full-time employees, with **55%** in Marketing and Sales[505](index=505&type=chunk) - CEO Shuibo Zhang beneficially owns **11,925,000** ordinary shares, representing **33.10%** of the issued and outstanding shares[508](index=508&type=chunk) [ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](index=80&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section details the company's relationships and transactions with related parties, primarily franchisees, including significant loans receivable and contract liabilities - The company's franchisees are considered related parties due to a nominal equity interest (**1.25%**) held by the company, which is for business name registration purposes and does not confer control[511](index=511&type=chunk) Key Related Party Balances (USD) | Account | Oct 31, 2022 | Oct 31, 2021 | | :--- | :--- | :--- | | Accounts receivable from related franchisees | 214,946 | 529,407 | | Loans to related franchisees, net | 8,292,630 | 13,810,550 | | Accounts payable to related franchisees | 6,986 | 44,366 | | Contract liability – related party | 976,484 | 164,804 | - As of October 31, 2022, the company had outstanding receivables of **$13,556** from CEO Shuibo Zhang and **$22,922** from VP of Marketing Qi Zhang for business purposes[524](index=524&type=chunk)[525](index=525&type=chunk) [ITEM 8. FINANCIAL INFORMATION](index=85&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section refers to the consolidated financial statements and outlines the company's dividend policy, which is to retain earnings for expansion, with future dividends subject to PRC regulations - The company does not anticipate paying any cash dividends in the foreseeable future, intending to retain earnings to finance business expansion[530](index=530&type=chunk) - As a holding company, its ability to pay dividends depends on receiving funds from its PRC subsidiaries, which are subject to PRC regulations, including statutory reserve requirements and controls on currency conversion and remittance[532](index=532&type=chunk)[533](index=533&type=chunk)[534](index=534&type=chunk) [ITEM 9. THE OFFER AND LISTING](index=86&type=section&id=ITEM%209.%20THE%20OFFER%20AND%20LISTING) The company's ordinary shares have been listed and trading on the Nasdaq Capital Market under the ticker symbol "JZXN" since May 18, 2021 - The company's ordinary shares are listed on the Nasdaq Capital Market under the symbol "JZXN" since May 18, 2021[540](index=540&type=chunk) [ITEM 10. ADDITIONAL INFORMATION](index=86&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section details the company's share capital history, including its IPO and convertible debenture, summarizes its articles of association, and discusses PRC exchange controls and various tax implications - On May 20, 2021, the company completed its initial public offering, selling **5,200,000** ordinary shares at **$5.00** per share and receiving net proceeds of approximately **$22 million**[546](index=546&type=chunk) - In December 2021, the company entered into an agreement for a convertible debenture with a principal amount of up to **$2.5 million**[548](index=548&type=chunk) - The company's memorandum and articles of association are governed by Cayman Islands law, which does not obligate the company to hold annual general meetings[551](index=551&type=chunk)[582](index=582&type=chunk) - The company discusses the risk of being classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, which depends on the composition of its income and assets and could have adverse tax consequences for U.S. holders[645](index=645&type=chunk)[646](index=646&type=chunk) PART II [ITEM 15. CONTROLS AND PROCEDURES](index=104&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) As of October 31, 2022, management concluded that the company's disclosure controls and procedures were ineffective due to a material weakness, with remediation plans underway - Management concluded that as of October 31, 2022, the company's disclosure controls and procedures were ineffective[673](index=673&type=chunk) - A material weakness was identified in internal control over financial reporting due to the company not having sufficient accounting and finance personnel with U.S. GAAP experience[673](index=673&type=chunk) - The company plans to hire additional personnel with experience in U.S. GAAP financial reporting and control procedures to remediate the material weakness[673](index=673&type=chunk) [ITEM 16. CORPORATE GOVERNANCE AND ACCOUNTANT INFORMATION](index=104&type=section&id=ITEM%2016.%20CORPORATE%20GOVERNANCE%20AND%20ACCOUNTANT%20INFORMATION) This section covers corporate governance, including the audit committee financial expert, Code of Conduct, independent auditor WWC, P.C., and adherence to Cayman Islands governance practices - The Board of Directors has determined that Richard Chen qualifies as an "audit committee financial expert"[675](index=675&type=chunk) Principal Accountant Fees (WWC, P.C.) | Fee Category | FY 2022 (USD) | FY 2021 (USD) | | :--- | :--- | :--- | | Audit Fees | 265,000 | 200,000 | | Audit-Related Fees | 0 | 0 | | Tax Fees | 0 | 0 | | All Other Fees | 0 | 0 | - As a foreign private issuer, the company is permitted to follow Cayman Islands corporate governance practices, which may differ from Nasdaq listing standards[687](index=687&type=chunk) PART III [ITEM 18. FINANCIAL STATEMENTS](index=107&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) The consolidated financial statements for FY2020-2022, prepared under U.S. GAAP, include an auditor's emphasis on going concern due to accumulated deficit, detailing the company's financial position and results [Report of Independent Registered Public Accounting Firm](index=108&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The independent auditor, WWC, P.C., issued an unmodified opinion on the financial statements but highlighted substantial doubt about the company's ability to continue as a going concern due to its accumulated deficit - The auditor's report contains an "Emphasis of Matter" paragraph regarding the company's ability to continue as a going concern, citing its accumulated deficit[700](index=700&type=chunk) [Consolidated Financial Statements](index=109&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show a significant deterioration in financial health for FY2022, with total assets declining, liabilities rising, a net loss of **$16.8 million**, and increased cash used in operations Consolidated Balance Sheet (USD) | Account | Oct 31, 2022 | Oct 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | 12,248,396 | 22,220,204 | | **Total Assets** | 15,326,174 | 28,152,924 | | **Total Current Liabilities** | 8,334,530 | 4,022,280 | | **Total Liabilities** | 9,244,954 | 5,823,552 | | **Total Stockholders' Equity** | 6,081,220 | 22,329,372 | Consolidated Statement of Income (USD) | Account | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Total Revenues | 6,215,718 | 9,536,987 | | Gross Profit (Loss) | (242,444) | 4,627,283 | | Operating Income (Loss) | (17,151,253) | 1,317,135 | | Net Income (Loss) | (16,832,101) | 778,037 | [Notes to the Financial Statements](index=113&type=section&id=Notes%20to%20the%20Financial%20Statements) The notes detail the company's organization, accounting policies, and VIE dissolution, noting going concern uncertainty due to accumulated deficit, significant credit loss provisions, and related-party transactions - The financial statements were prepared assuming the company will continue as a going concern, but an accumulated deficit of **$9.3 million** as of October 31, 2022, raises substantial doubt about this ability[745](index=745&type=chunk) - The company's VIE structure, which was in place for the reporting periods, was dissolved on January 20, 2023, after the fiscal year-end[882](index=882&type=chunk) - The allowance for credit losses on loans to franchisees increased significantly to **$7.3 million** in FY2022 from **$0.8 million** in FY2021, due to aging balances and adverse market conditions[816](index=816&type=chunk) - In December 2021 and January 2022, the company issued convertible debentures, with an outstanding balance of **$2.84 million** as of October 31, 2022[855](index=855&type=chunk)[857](index=857&type=chunk) - The company has filed civil claims against certain vendors for failing to deliver vehicles and has written off **$2.75 million** in advances paid to these suppliers as of October 31, 2022[883](index=883&type=chunk)[884](index=884&type=chunk)