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 | |
$ | 271,645 | | |
$ | 1,139,191 | |
Restricted cash | |
| 1,805 | | |
| 5,047 | |
Short-term investment | |
| 44,198 | | |
| 43,733 | |
Loans receivable | |
| - | | |
| 400,000 | |
Loans receivable - related party | |
| 1,995,084 | | |
| 4,367,385 | |
Accounts receivable | |
| - | | |
| - | |
Accounts receivable - related party | |
| 1,207,752 | | |
| 158,197 | |
Due from related parties | |
| 1,174,245 | | |
| 457,469 | |
Inventory, net | |
| 211,108 | | |
| 840,557 | |
Advances to suppliers | |
| 4,596 | | |
| 720,518 | |
Other receivables and other current assets | |
| 50,567,571 | | |
| 1,516,331 | |
Assets related to discontinued operation | |
| - | | |
| 823,349 | |
Total Current Assets | |
| 55,478,004 | | |
| 10,471,777 | |
Non-Current Assets | |
| | | |
| | |
Property, plant and equipment, net | |
| 256,324 | | |
| 329,361 | |
Intangible assets, net | |
| 11,683 | | |
| 11,828 | |
Other non-current assets | |
| 78,359 | | |
| 22,625 | |
Operating lease right of use asset | |
| 398,026 | | |
| 473,246 | |
Assets related to discontinued operation | |
| - | | |
| 81,239 | |
Total Non-Current Assets | |
| 744,392 | | |
| 918,299 | |
Total Assets | |
| 56,222,396 | | |
| 11,390,076 | |
| |
| | | |
| | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| | | |
| | |
Current Liabilities | |
| | | |
| | |
Accruals and other payables | |
| 1,963,674 | | |
| 1,843,384 | |
Accounts payable | |
| 331 | | |
| 328 | |
Accounts payable – related party | |
| 7,044 | | |
| 6,970 | |
Due to related parties | |
| 598,581 | | |
| - | |
Taxes payable | |
| 2,795,181 | | |
| 2,686,879 | |
Operating lease liabilities – current | |
| 165,594 | | |
| 160,013 | |
Contract liability | |
| 190,989 | | |
| 971,525 | |
Contract liability - related party | |
| 12,592 | | |
| 56,466 | |
Liability related to discontinued operation | |
| - | | |
| 1,002,961 | |
Total Current Liabilities | |
| 5,733,986 | | |
| 6,728,526 | |
Non-Current Liabilities | |
| | | |
| | |
Operating lease liabilities - non-current | |
| 173,633 | | |
| 167,781 | |
Deferred income | |
| 174,721 | | |
| 172,883 | |
Liability related to discontinued operation | |
| - | | |
| 21,570 | |
Total Non-Current Liabilities | |
| 348,354 | | |
| 362,234 | |
Total Liabilities | |
| 6,082,340 | | |
| 7,090,760 | |
| |
| | | |
| | |
Commitments and Contingencies | |
| - | | |
| - | |
| |
| | | |
| | |
Shareholders’ Equity | |
| | | |
| | |
Ordinary shares, $0.00195 par value; (150,000,000 shares authorized, 135,301,969 shares issued and outstanding as of April 30, 2024 and 4,065,609 shares issued and outstanding as of October 31, 2023, respectively) | |
| 263,839 | | |
| 7,928 | |
Additional paid-in capital | |
| 85,566,862 | | |
| 23,467,575 | |
Statutory reserve | |
| 891,439 | | |
| 891,439 | |
Accumulated deficit | |
| (34,457,910 | ) | |
| (18,660,133 | ) |
Accumulated other comprehensive loss | |
| (2,231,603 | ) | |
| (1,477,025 | ) |
Total equity attributable to Jiuzi Holdings, Inc. | |
| 50,032,627 | | |
| 4,229,784 | |
Non-controlling interest | |
| 107,429 | | |
| 69,532 | |
Total Equity | |
| 50,140,056 | | |
| 4,299,316 | |
Total Liabilities and Shareholders’ Equity | |
$ | 56,222,396 | | |
$ | 11,390,076 | |
See accompanying notes
to financial statements.
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 | |
$ | - | | |
$ | 602,241 | |
Revenues – related party, net | |
| 2,281,238 | | |
| 12,573 | |
Total Revenues | |
| 2,281,238 | | |
| 614,815 | |
| |
| | | |
| | |
Cost of revenues | |
| - | | |
| 723,147 | |
Cost of revenues– related party | |
| 2,323,808 | | |
| 28,275 | |
Total cost of revenues | |
| 2,323,808 | | |
| 751,422 | |
| |
| | | |
| | |
Gross loss | |
| (42,570 | ) | |
| (136,607 | ) |
| |
| | | |
| | |
Selling and marketing expense | |
| 1,340 | | |
| 1,760 | |
General and administrative expenses | |
| 1,143,582 | | |
| 1,256,867 | |
Share-based compensation | |
| 12,355,200 | | |
| 540,000 | |
Provision for credit loss on loans receivable | |
| 2,546,467 | | |
| 481,612 | |
Reversal of bad debt provision | |
| (224,745 | ) | |
| 3,705,250 | |
Operating expense | |
| 15,821,844 | | |
| 5,985,489 | |
| |
| | | |
| | |
Loss before tax | |
| (15,864,414 | ) | |
| (6,122,096 | ) |
| |
| | | |
| | |
Non-operating income (expense) items: | |
| | | |
| | |
Other income (expense), net | |
| 28,963 | | |
| 25,523 | |
Interest income | |
| 857 | | |
| 3,501 | |
Interest expense | |
| (52,926 | ) | |
| (239,325 | ) |
| |
| (23,106 | ) | |
| (210,301 | ) |
| |
| | | |
| | |
Loss before income tax | |
| (15,887,520 | ) | |
| (6,332,397 | ) |
| |
| | | |
| | |
Income tax | |
| - | | |
| 20 | |
| |
| | | |
| | |
Gain/(loss) from discontinued operations | |
| 89,743 | | |
| (216,213 | ) |
Net loss | |
| (15,797,777 | ) | |
| (6,548,630 | ) |
Less: Loss attributable to non-controlling interest | |
| (8,245 | ) | |
| (10,662 | ) |
Net income (loss) attributable to controlling interest | |
| (15,789,532 | ) | |
| (6,537,968 | ) |
| |
| | | |
| | |
Loss per share | |
| | | |
| | |
Basic and diluted | |
| (0.12 | ) | |
| (3.44 | ) |
| |
| | | |
| | |
Weighted average number of ordinary shares outstanding* | |
| | | |
| | |
Basic and diluted | |
| 135,301,969 | | |
| 1,905,793 | |
| |
| | | |
| | |
Net loss | |
| (15,797,777 | ) | |
| (6,548,630 | ) |
| |
| | | |
| | |
Other comprehensive income | |
| | | |
| | |
Foreign currency translation income | |
| 235,328 | | |
| 671,495 | |
Total comprehensive loss | |
| (15,562,449 | ) | |
| (5,877,135 | ) |
See accompanying notes
to financial statements.
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 | |
| 1,363,630 | | |
| 2,659 | | |
| 15,466,119 | | |
| 891,439 | | |
| (9,342,111 | ) | |
| (1,074,299 | ) | |
| 5,943,807 | | |
| 137,413 | | |
| 6,081,220 | |
Shares issued for cash proceeds, net | |
| 444,444 | | |
| 866 | | |
| 1,199,134 | | |
| - | | |
| - | | |
| - | | |
| 1,200,000 | | |
| - | | |
| 1,200,000 | |
Shares issued for compensation | |
| 177,778 | | |
| 347 | | |
| 539,653 | | |
| - | | |
| - | | |
| - | | |
| 540,000 | | |
| - | | |
| 540,000 | |
Shares issued for debt conversion | |
| 598,952 | | |
| 1,168 | | |
| 1,671,932 | | |
| - | | |
| - | | |
| - | | |
| 1,673,100 | | |
| - | | |
| 1,673,100 | |
Contribution (Distribution) in capital | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (7,218 | ) | |
| (7,218 | ) |
Net income | |
| - | | |
| - | | |
| - | | |
| - | | |
| (6,537,968 | ) | |
| - | | |
| (6,537,968 | ) | |
| - | | |
| (6,537,968 | ) |
Non-Controlling Interest | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (10,662 | ) | |
| (10,662 | ) |
Appropriations to statutory reserves | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Foreign currency translation adjustment | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 687,899 | | |
| 687,899 | | |
| (16,404 | ) | |
| 671,495 | |
Balance at April 30, 2023 | |
| 2,584,804 | | |
| 5,040 | | |
| 18,876,838 | | |
| 891,439 | | |
| (15,880,079 | ) | |
| (386,400 | ) | |
| 3,506,838 | | |
| 103,129 | | |
| 3,609,967 | |
Balance at October 31, 2023 | |
| 4,065,609 | | |
| 7,928 | | |
| 23,467,575 | | |
| 891,439 | | |
| (18,660,133 | ) | |
| (1,477,025 | ) | |
| 4,229,784 | | |
| 69,532 | | |
| 4,299,316 | |
Shares issued for cash proceeds, net | |
| 113,636,360 | | |
| 221,591 | | |
| 49,778,407 | | |
| - | | |
| - | | |
| - | | |
| 49,999,998 | | |
| - | | |
| 49,999,998 | |
Shares issued for compensation | |
| 17,600,000 | | |
| 34,320 | | |
| 12,320,880 | | |
| - | | |
| - | | |
| - | | |
| 12,355,200 | | |
| - | | |
| 12,355,200 | |
Shares issued for debt conversion | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Contribution (Distribution) in capital | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Net income | |
| - | | |
| - | | |
| - | | |
| - | | |
| (15,789,532 | ) | |
| - | | |
| (15,789,532 | ) | |
| | | |
| (15,789,532 | ) |
Non-Controlling Interest | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (8,245 | ) | |
| (8,245 | ) |
Disposition of discontinued operation | |
| - | | |
| - | | |
| - | | |
| - | | |
| 89,743 | | |
| - | | |
| 89,743 | | |
| 41,357 | | |
| 131,100 | |
Appropriations to statutory reserves | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Foreign currency translation adjustment | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (754,578 | ) | |
| (754,578 | ) | |
| 4,785 | | |
| (749,793 | ) |
Balance at April 30, 2024 | |
| 135,301,969 | | |
| 263,839 | | |
| 85,566,862 | | |
| 891,439 | | |
| (34,457,910 | ) | |
| (2,231,603 | ) | |
| 50,032,627 | | |
| 107,429 | | |
| 50,140,056 | |
See accompanying notes
to financial statements.
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 | |
$ | (15,797,777 | ) | |
$ | (6,548,630 | ) |
Net income (loss) from discontinued operation | |
| 89,743 | | |
| (216,213 | ) |
Net income (loss) from continuing operation | |
| (15,887,520 | ) | |
| (6,332,417 | ) |
Depreciation and amortization | |
| 64,446 | | |
| 102,170 | |
(Recovery)/Provision for doubtful accounts | |
| (224,745 | ) | |
| 3,705,250 | |
Amortization of operating lease ROU assets | |
| 80,757 | | |
| - | |
Impairment loss/write-downs off other assets | |
| 2,546,467 | | |
| - | |
Imputed interest expense | |
| - | | |
| 137,699 | |
Loss from disposal of assets | |
| 11,881 | | |
| 1,883 | |
Stock-based compensation | |
| 12,355,200 | | |
| 540,000 | |
Changes in assets and liabilities | |
| | | |
| | |
(Increase) decrease in accounts receivable | |
| - | | |
| 14,611 | |
(Increase) decrease in accounts receivable – related party | |
| (1,236,980 | ) | |
| - | |
(Increase) decrease in inventories | |
| 629,449 | | |
| 313,239 | |
(Increase) decrease in advances to suppliers | |
| 1,491,787 | | |
| 195,741 | |
(Increase) decrease in notes receivable- customers sales | |
| 400,000 | | |
| - | |
(Increase) decrease in notes receivable-related party customers sales | |
| (174,166 | ) | |
| (212,472 | ) |
(Increase) decrease in loans to related parties | |
| - | | |
| (33,202 | ) |
(Increase) decrease in due from related parties | |
| (1,043,561 | ) | |
| 5,706 | |
(Increase) decrease other receivables | |
| (49,252,553 | ) | |
| - | |
(Increase) decrease in other assets | |
| (55,734 | ) | |
| (773,192 | ) |
(Decrease) increase in accrued and other liabilities | |
| 122,128 | | |
| (65,039 | ) |
Decrease in account payable | |
| (328 | ) | |
| (8,071 | ) |
(Increase) decrease in accounts payable – related party | |
| 74 | | |
| (135,038 | ) |
(Increase) decrease in taxes payable | |
| 107,907 | | |
| (38,947 | ) |
(Decrease) increase in contract liability | |
| (780,536 | ) | |
| - | |
(Decrease) increase in contract liability – related party | |
| (43,875 | ) | |
| 113,094 | |
(Decrease) increase in operating lease liabilities | |
| 11,433 | | |
| 88,380 | |
Net cash used in operating activities of continued operations | |
| (50,878,469 | ) | |
| (2,380,605 | ) |
Net cash provided by (used in) operating activities of discontinued operations | |
| 48,305 | | |
| (296,762 | ) |
Cash Used in Operating Activities | |
| (50,830,164 | ) | |
| (2,677,367 | ) |
| |
| | | |
| | |
Cash flows from investing activities | |
| | | |
| | |
Purchase of fixed assets | |
| - | | |
| (7,499 | ) |
Acquisition of investment | |
| (465 | ) | |
| - | |
Disposal of fixed assets | |
| - | | |
| 7,626 | |
Redemption/disposal of investments | |
| - | | |
| 1,088,383 | |
Net cash (used in)/provided by investing activities of continued operations | |
| (465 | ) | |
| 1,088,510 | |
Net cash (used in ) investing activities of discontinued operations | |
| (728,332 | ) | |
| (260,262 | ) |
Cash (used in)/provided by Investing Activities | |
| (728,797 | ) | |
| 828,248 | |
| |
| | | |
| | |
Cash flows from financing activities | |
| | | |
| | |
Proceeds from owner’s injection of capital | |
| 49,999,998 | | |
| 1,192,782 | |
Repayment to related party payable | |
| (144,397 | ) | |
| - | |
Repayments of convertible debenture | |
| - | | |
| (866,668 | ) |
Net cash provided by financing activities of continued operations | |
| 49,855,601 | | |
| 326,114 | |
Net cash provided by financing activities of discontinued operations | |
| 734,771 | | |
| - | |
Cash provided by Financing Activities | |
| 50,590,372 | | |
| 326,114 | |
| |
| | | |
| | |
Net decrease of cash and cash equivalents | |
| (968,589 | ) | |
| (1,523,005 | ) |
| |
| | | |
| | |
Effect of foreign currency translation on cash and cash equivalents | |
| 120,611 | | |
| 23,084 | |
Cash, cash equivalents, and restricted cash – beginning of period | |
| 1,184,344 | | |
| 2,370,632 | |
Less: cash and cash equivalents of discontinued operations | |
| 62,916 | | |
| 126,286 | |
Cash, cash equivalents, and restricted cash – end of period | |
$ | 273,450 | | |
$ | 744,425 | |
| |
| | | |
| | |
Reconciliation of Cash, Cash Equivalents & Restricted Cash to Statements of Cash Flows | |
| | | |
| | |
Cash & cash equivalents | |
| 271,645 | | |
| 827,308 | |
Restricted cash | |
| 1,805 | | |
| 43,403 | |
Total cash, cash equivalents, and restricted cash | |
$ | 273,450 | | |
$ | 870,711 | |
| |
| | | |
| | |
Supplementary cash flow information: | |
| | | |
| | |
Interest received | |
$ | - | | |
$ | 3,623 | |
Interest paid | |
$ | - | | |
$ | 101,626 | |
Income taxes paid | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
Non-cash financing and investing activities: | |
| | | |
| | |
Notes payable converted to common stock | |
$ | - | | |
$ | 1,673,100 | |
See accompanying notes
to financial statements.
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.
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 59.0% equity interest in Shangli Jiuzi, and the remaining 41% equity interest
is owned by unrelated third-party investors Shangli Jiuzi is accounted for as a subsidiary of Zhejiang Jiuzi.
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 90% equity interest in Guangxi Nanning and the remaining 10% equity interest is
owned by an unrelated third-party investor. Guangxi Nanning is accounted for as a subsidiary of Zhejiang Jiuzi.
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 51% owned by Hangzhou Zhitongche and
the remaining 49% equity interest is owned by an unrelated third-party. Hangzhou Jiuyao is accounted for as a subsidiary of Zhejiang
Jiuzi.
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 51% owned by Hangzhou Zhitongche and the remaining 49% equity interest
is owned by unrelated third-party investors. Hangzhou Jiuyao is accounted for as a subsidiary of Zhejiang Jiuzi.
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.
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 0.1% equity interest in Zhejiang
Jiuzi to a third-party investor. The issuance was completed on November 27, 2022. On January 20, 2023, Jiuzi WFOE exercised its
call option under the Exclusive Option Agreements dated June 15, 2020 with a certain shareholder of Zhejiang Jiuzi and entered into
equity transfer agreements with all of the shareholders of Zhejiang Jiuzi to purchase all the equity interest in Zhejiang Jiuzi. The
transaction underlying the equity transfer agreements was completed and the VIE Agreements were terminated pursuant to the
Termination Agreement on January 20, 2023. As a result, the VIE structure was dissolved and Zhejiang Jiuzi became a wholly owned
subsidiary of Jiuzi WFOE.
The chart below reflect our organization
structure:
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 $43,398,710.
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.
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.
Exchange rate used for the translation as
follows:
US$ to RMB
| |
Period End | | |
Average | |
April 30, 2024 | |
| 7.2401 | | |
| 7.1949 | |
October 31, 2023 | |
| 7.3171 | | |
| 7.0590 | |
April 30, 2023 | |
| 6.9120 | | |
| 6.9270 | |
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.
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 $44,198 and $43,733, respectively.
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.
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 nil and $79,400 of advertising and promotional expenses for the six
months ended April 30. 2024 and 2023, respectively.
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. Property and equipment are depreciated on a straight-line
basis over the following periods:
Equipment | | 5 years |
Furniture and fixtures | | 5 years |
Motor vehicles | | 10 years |
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 three 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.
Jiuzi Holdings, Inc.
Notes to the Financial
Statements
NOTE
3 – INVENTORY
Inventory,
net consists of the following:
| |
April 30, 2023 | | |
October 31, 2023 | |
Merchandise | |
$ | 211,108 | | |
$ | 840,557 | |
Total, net | |
$ | 211,108 | | |
$ | 840,557 | |
Inventory
write-down expense was $nil for the six months ended April 30, 2024 and 2023, respectively.
NOTE
4 – ACCOUNTS RECEIVABLE
Accounts
receivable, net consists of the following:
| |
April 30, 2024 | | |
October 31, 2023 | |
Accounts receivable | |
$ | 42,140 | | |
$ | 41,697 | |
Allowance for doubtful accounts | |
| (42,140 | ) | |
| (41,697 | ) |
Total, net | |
| - | | |
| - | |
| |
April 30, | | |
October 31, | |
| |
2024 | | |
2023 | |
Accounts receivable-related franchisees | |
$ | 1,767,120 | | |
$ | 513,914 | |
Allowance for doubtful accounts | |
| (559,368 | ) | |
| (355,717 | ) |
Total, net | |
$ | 1,207,752 | | |
$ | 158,197 | |
The following
is a summary of the activity in the allowance for doubtful accounts:
| |
April 30, 2024 | | |
October 31, 2023 | |
Balance at beginning of period | |
$ | 397,414 | | |
$ | 145,664 | |
Provision | |
| 248,585 | | |
| 261,301 | |
Effect of translation adjustment | |
| (80,830 | ) | |
| (9,551 | ) |
Balance at end | |
$ | 565,169 | | |
$ | 397,414 | |
Bad debt
expense (recoveries) was $248,585 and $25,528 for the six months ended April 30,
2024 and 2023, respectively.
Jiuzi Holdings, Inc.
Notes
to the Financial Statements
NOTE
5 – SHORT-TERM INVESTMENT
Short-term
investment comprised of the following:
| |
As of April 30, 2024 | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
Bank deposits | |
| - | | |
$ | 44,198 | | |
| - | | |
$ | 44,198 | |
| |
| - | | |
$ | 44,198 | | |
| - | | |
$ | 44,198 | |
| |
As of October 31, 2023 | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
Bank deposits | |
| - | | |
$ | 43,733 | | |
| - | | |
$ | 43,733 | |
| |
| - | | |
$ | 43,733 | | |
| - | | |
$ | 43,733 | |
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 $nil, and $28,281 for the six months ended April 30, 2024 and 2023, respectively.
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.
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 11.75% for the six months ended April 30, 2024 and October
31, 2023 to reflect the fair value of the loan at origination. The imputed interest rate reflects the borrowing rate in the
market under similar terms and duration. Direct costs associated with loan originations are not considered material, and thus, are
expensed as incurred.
| |
April 30, 2024 | | |
October 31, 2023 | |
Loan to related franchisees, gross | |
$ | 18,296,645 | | |
$ | 17,993,467 | |
Discount based on imputed interest rate of 11.75% | |
| (2,094,046 | ) | |
| (2,072,010 | ) |
Loan to franchisees, net of discount | |
$ | 16,202,599 | | |
$ | 15,921,457 | |
| |
April 30, 2024 | | |
October 31, 2023 | |
Loan to franchisees, net of discount | |
$ | 16,202,599 | | |
$ | 15,921,457 | |
Provision for credit losses | |
| (14,207,515 | ) | |
| (11,554,072 | ) |
Loan to franchisees, net of discount and allowance | |
$ | 1,995,084 | | |
$ | 4,367,385 | |
The following is a summary of the activity in
the allowance for credit loss:
| |
April 30, 2024 | | |
October 31, 2023 | |
Balance at beginning of period | |
$ | 11,554,072 | | |
$ | 7,309,516 | |
Provision for credit losses | |
| 2,546,467 | | |
| 4,417,126 | |
Effect of translation adjustment | |
| 106,976 | | |
| (172,570 | ) |
Balance at end | |
$ | 14,207,515 | | |
$ | 11,554,072 | |
Credit losses were $2,546,467 and $3,440,368 for
the six months ended April 30, 2024 and 2023, respectively. The Company has made additional allowance for credit losses for the six months
ended April 30, 2024 due to the aging of the balances and the current market and economic condition.
Jiuzi Holdings, Inc.
Notes to the Financial
Statements
The following is a summary of current and non-current
loans receivable from franchisees, net of allowance for credit losses:
| |
April 30, 2024 | | |
October 30, 2023 | |
Loans to related franchisees, net of discounts and allowances, current | |
$ | 1,995,084 | | |
$ | 4,367,385 | |
| |
| | | |
| | |
| |
$ | 1,995,084 | | |
$ | 4,367,385 | |
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.
The credit quality analysis of franchisee loan
receivables as follows:
| |
April 30, 2024 | | |
October 31, 2023 | |
Franchisee Financing: | |
| | |
| |
Group I | |
$ | 43,962 | | |
$ | 283,519 | |
Group II | |
| 300,119 | | |
| 3,192,491 | |
Group III | |
| 3,248,880 | | |
| 6,347,667 | |
Group IV | |
| 12,609,638 | | |
| 6,097,780 | |
Balance at end | |
$ | 16,202,599 | | |
$ | 15,921,457 | |
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 | |
| - | | |
| 197,002 | |
Excess input VAT credits | |
| 622 | | |
| 7,612 | |
Prepaid expense | |
| 50,554,537 | | |
| 38,493 | |
Cash advances to employees | |
| 12,412 | | |
| 1,273,224 | |
Total | |
| 50,567,571 | | |
| 1,516,331 | |
As of April 30, 2024, the balance of prepaid expenses
was $50,554,537.
On December 11, 2023, Shenzhen Jiuzi entered into
an agreement with a third party, Beijing YunGuangTong Trading Co., Ltd.(“YunGuangTong”). Shenzhen Jiuzi provided a prepayment
in full to YunGuangTong of RMB71.00 million (approximately $9.81 million). 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”). Shenzhen Jiuzi provided
a prepayment in full to JinYiChangHong in the amount of RMB88.75 million (approximately $12.26 million). 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”). Shenzhen Jiuzi provided a prepayment
in full to YanErYouXin in the amount of RMB88.75 million (approximately $12.26 million). 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”). Shenzhen Jiuzi provided a prepayment in
full to ShenQi in the amount of RMB106.5 million (approximately $14.71 million). 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.
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
Property
and equipment, net consists of the following:
| |
April 30, | | |
October 31, | |
| |
2024 | | |
2023 | |
At Cost: | |
| | |
| |
Equipment | |
$ | 57,007 | | |
$ | 56,407 | |
Motor vehicles | |
| 69,202 | | |
| 87,593 | |
Leasehold improvements | |
| 507,154 | | |
| 501,817 | |
Furniture and fixtures | |
| 4,786 | | |
| 4,735 | |
| |
$ | 638,149 | | |
$ | 663,946 | |
| |
| | | |
| | |
Less: Accumulated depreciation | |
| 381,825 | | |
| 321,191 | |
Total, net | |
$ | 256,324 | | |
$ | 329,361 | |
Depreciation
expenses were $64,173 and $101,093 for the six months ended April 30, 2024 and 2023, respectively.
NOTE
9 – INTANGIBLE ASSETS
Intangible
assets, net consist of the following:
| |
April 30, | | |
October 31, | |
| |
2024 | | |
2023 | |
At Cost: | |
| | |
| |
Financial software | |
$ | 15,193 | | |
$ | 15,033 | |
Domain name | |
| 2,665 | | |
| 2,637 | |
| |
| 17,858 | | |
| 17,670 | |
Less: Accumulated amortization | |
| 6,175 | | |
| 5,842 | |
Total, net | |
$ | 11,683 | | |
$ | 11,828 | |
Amortization
expenses were $273 and $1,077 for the six months ended April 30 2024 and 2023, respectively.
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 franchisees were
originally incorporated with the Company shown as a 51.0% owner and subsequently as a 1.25% owner. The intent of having such ownership
percentage in the franchisees was to enable the franchisees to register their respective individual business name to include the words
“Jiuzi” as required by the local business bureau. Subsequent to the successful registration by the franchisees and completion
of the Company’s obligations under the franchise and license agreement, the Company will decrease its ownership interest in these
franchisees to 0%. The Company’s percentage of shareholding is nominal, inconsequential, and symbolic. The Company’s equity
interest of 51.0% and 1.25% in the franchisees were symbolic in nature.
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 51%
or 1.25% owner in the franchisees. Any after tax profits generated by the franchisees that are potentially distributable to the Company
are governed by the royalty agreements between the Company and the franchisee not the shareholding percentage. Accordingly, the management
has determined that the ownership interest is not part of the initial franchise fee.
Accounts
receivable from related franchisees comprised of the following:
| |
April 30, | | |
October 31, | |
| |
2024 | | |
2023 | |
Yulin Jiuzi New Energy Automobile Co., Ltd | |
$ | - | | |
$ | 15,055 | |
Zhejiang Jiuzi New Energy Network Technology Co., Ltd. | |
| 22,099 | | |
| 38,267 | |
Jiuzi Haoche (Hangzhou) Automobile Service Co., Ltd. | |
| 1,185,653 | | |
| 104,875 | |
Total | |
$ | 1,207,752 | | |
$ | 158,197 | |
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 $nil and $nil for the six months ended April 30, 2024 and 2023, respectively
Jiuzi Holdings, Inc.
Notes to the Financial
Statements
Loans to franchisees consist of the following
(See Note 6 for details):
| |
As of April 30, 2024 | | |
As of October 31, 2023 | |
| |
Gross | | |
Discount | | |
Allowance | | |
Net | | |
Gross | | |
Discount | | |
Allowance | | |
Net | |
Jiangsu Changshu | |
$ | 423,316 | | |
$ | 42,190 | | |
$ | 308,582 | | |
$ | 72,544 | | |
$ | 417,558 | | |
$ | 41,746 | | |
$ | 269,107 | | |
$ | 106,705 | |
Shandong Dongming | |
| 443,549 | | |
| 74,365 | | |
| 293,571 | | |
| 75,613 | | |
| 437,733 | | |
| 73,583 | | |
| 195,571 | | |
| 168,579 | |
Jiangxi Gao’an | |
| 593,050 | | |
| 71,735 | | |
| 462,553 | | |
| 58,761 | | |
| 586,809 | | |
| 70,980 | | |
| 393,844 | | |
| 121,985 | |
Hunan Huaihua | |
| 782,018 | | |
| 85,261 | | |
| 542,905 | | |
| 153,852 | | |
| 773,378 | | |
| 84,364 | | |
| 428,430 | | |
| 260,584 | |
Jiangxi Jiujiang | |
| 296,464 | | |
| 33,080 | | |
| 246,503 | | |
| 16,881 | | |
| 293,344 | | |
| 32,732 | | |
| 220,333 | | |
| 40,279 | |
Hunan Liuyang | |
| 356,923 | | |
| 48,980 | | |
| 291,150 | | |
| 16,793 | | |
| 345,227 | | |
| 48,464 | | |
| 242,666 | | |
| 54,097 | |
Hunan Loudi | |
| 549,312 | | |
| 64,044 | | |
| 455,962 | | |
| 29,307 | | |
| 542,151 | | |
| 63,370 | | |
| 393,419 | | |
| 85,362 | |
Hunan Pingjiang | |
| 374,747 | | |
| 46,432 | | |
| 314,042 | | |
| 14,273 | | |
| 368,809 | | |
| 45,944 | | |
| 268,849 | | |
| 54,016 | |
Jiangxi Pingxiang | |
| 535,685 | | |
| 69,138 | | |
| 447,203 | | |
| 19,345 | | |
| 529,194 | | |
| 68,410 | | |
| 383,013 | | |
| 77,771 | |
Henan Puyang | |
| 586,401 | | |
| 76,414 | | |
| 486,772 | | |
| 23,214 | | |
| 575,447 | | |
| 75,610 | | |
| 378,500 | | |
| 121,337 | |
Fujian Quanzhou | |
| 467,948 | | |
| 51,807 | | |
| 375,742 | | |
| 40,400 | | |
| 460,974 | | |
| 51,261 | | |
| 349,604 | | |
| 60,109 | |
Jiangxi Wanzai | |
| 558,570 | | |
| 60,748 | | |
| 454,325 | | |
| 43,497 | | |
| 552,692 | | |
| 60,109 | | |
| 379,254 | | |
| 113,329 | |
Jiangxi Xinyu | |
| 951,986 | | |
| 109,113 | | |
| 799,227 | | |
| 43,646 | | |
| 941,216 | | |
| 107,965 | | |
| 633,558 | | |
| 199,693 | |
Jiangxi Yichun | |
| 142,353 | | |
| 11,288 | | |
| 103,650 | | |
| 27,415 | | |
| 131,767 | | |
| 11,169 | | |
| 93,683 | | |
| 26,915 | |
Jiangxi Yudu | |
| 522,188 | | |
| 67,021 | | |
| 418,657 | | |
| 36,510 | | |
| 516,693 | | |
| 66,316 | | |
| 337,587 | | |
| 112,790 | |
Guangdong Zengcheng | |
| 452,363 | | |
| 54,119 | | |
| 380,397 | | |
| 17,847 | | |
| 444,028 | | |
| 53,549 | | |
| 374,109 | | |
| 16,370 | |
Jiangxi Shanggao | |
| 605,226 | | |
| 70,365 | | |
| 461,996 | | |
| 72,865 | | |
| 598,092 | | |
| 69,625 | | |
| 338,890 | | |
| 189,577 | |
Shandong Heze | |
| 849,505 | | |
| 101,415 | | |
| 674,388 | | |
| 73,702 | | |
| 840,565 | | |
| 100,348 | | |
| 548,779 | | |
| 191,438 | |
Jiangxi Ganzhou | |
| 143,055 | | |
| 14,371 | | |
| 111,667 | | |
| 17,018 | | |
| 141,550 | | |
| 14,220 | | |
| 102,702 | | |
| 24,628 | |
Hunan Liling | |
| 83,782 | | |
| 7,830 | | |
| 65,555 | | |
| 10,397 | | |
| 82,490 | | |
| 7,748 | | |
| 48,767 | | |
| 25,975 | |
Hunan Zhuzhou | |
| 153,526 | | |
| 15,455 | | |
| 115,129 | | |
| 22,942 | | |
| 146,580 | | |
| 15,292 | | |
| 97,531 | | |
| 33,757 | |
Hunan Changsha | |
| 9,668 | | |
| 1,055 | | |
| 6,014 | | |
| 2,600 | | |
| 9,567 | | |
| 1,044 | | |
| 3,987 | | |
| 4,536 | |
Guangxi Guilin | |
| 39,828 | | |
| 4,679 | | |
| 25,049 | | |
| 10,100 | | |
| 39,409 | | |
| 4,629 | | |
| 16,353 | | |
| 18,427 | |
Hunan Chenzhou | |
| 513,158 | | |
| 60,239 | | |
| 425,314 | | |
| 27,605 | | |
| 498,383 | | |
| 59,605 | | |
| 351,372 | | |
| 87,406 | |
Jiangxi Ji’an | |
| 624,557 | | |
| 67,851 | | |
| 487,230 | | |
| 69,475 | | |
| 617,985 | | |
| 67,137 | | |
| 412,712 | | |
| 138,136 | |
Guangxi Nanning | |
| 173,570 | | |
| 19,513 | | |
| 143,755 | | |
| 10,301 | | |
| 171,196 | | |
| 19,308 | | |
| 138,408 | | |
| 13,480 | |
Hunan Leiyang | |
| 811,695 | | |
| 74,948 | | |
| 554,400 | | |
| 182,347 | | |
| 803,153 | | |
| 74,159 | | |
| 448,545 | | |
| 280,449 | |
Guangdong Dongguan Changping | |
| 470,118 | | |
| 54,325 | | |
| 340,021 | | |
| 75,772 | | |
| 462,780 | | |
| 53,753 | | |
| 251,795 | | |
| 157,232 | |
Hunan Changsha County | |
| 62,430 | | |
| 7,301 | | |
| 52,782 | | |
| 2,347 | | |
| 61,500 | | |
| 7,224 | | |
| 50,615 | | |
| 3,661 | |
Guizhou Zunyi | |
| 251,074 | | |
| 28,683 | | |
| 188,537 | | |
| 33,854 | | |
| 248,432 | | |
| 28,381 | | |
| 157,266 | | |
| 62,785 | |
Jiangsu Xuzhou | |
| 233,367 | | |
| 27,414 | | |
| 197,723 | | |
| 8,230 | | |
| 230,911 | | |
| 27,125 | | |
| 191,017 | | |
| 12,769 | |
Hunan Yongxing | |
| 238,222 | | |
| 28,721 | | |
| 191,656 | | |
| 17,845 | | |
| 235,155 | | |
| 28,419 | | |
| 180,522 | | |
| 26,214 | |
Hunan Hengyang | |
| 170,219 | | |
| 19,996 | | |
| 125,734 | | |
| 24,489 | | |
| 168,427 | | |
| 19,785 | | |
| 99,770 | | |
| 48,872 | |
Hainan Sanya | |
| 129,059 | | |
| 15,161 | | |
| 97,284 | | |
| 16,614 | | |
| 127,701 | | |
| 15,001 | | |
| 68,617 | | |
| 44,083 | |
Hunan Changsha Yuhua | |
| 587,078 | | |
| 58,419 | | |
| 414,845 | | |
| 113,814 | | |
| 580,900 | | |
| 57,804 | | |
| 295,964 | | |
| 227,132 | |
Shandong Heze Dingtao | |
| 580,194 | | |
| 61,664 | | |
| 419,875 | | |
| 98,655 | | |
| 574,066 | | |
| 61,015 | | |
| 298,098 | | |
| 214,953 | |
Shandong Heze Yuncheng | |
| 469,676 | | |
| 55,173 | | |
| 373,798 | | |
| 40,704 | | |
| 464,733 | | |
| 54,593 | | |
| 289,754 | | |
| 120,386 | |
Shandong Heze Gaoxin | |
| 96,753 | | |
| 6,498 | | |
| 68,914 | | |
| 21,341 | | |
| 95,735 | | |
| 6,430 | | |
| 52,477 | | |
| 36,828 | |
Shandong Zouping | |
| 63,535 | | |
| 7,464 | | |
| 50,815 | | |
| 5,256 | | |
| 62,866 | | |
| 7,385 | | |
| 44,670 | | |
| 10,811 | |
Shandong Juye | |
| 470,713 | | |
| 48,800 | | |
| 381,389 | | |
| 40,523 | | |
| 465,717 | | |
| 48,288 | | |
| 324,584 | | |
| 92,845 | |
Shandong Juancheng | |
| 494,606 | | |
| 53,226 | | |
| 390,900 | | |
| 50,480 | | |
| 489,401 | | |
| 52,668 | | |
| 285,428 | | |
| 151,305 | |
Shandong Shanxian | |
| 484,850 | | |
| 58,576 | | |
| 363,922 | | |
| 62,351 | | |
| 479,725 | | |
| 57,960 | | |
| 256,232 | | |
| 165,533 | |
Jiangxi Zhangshu | |
| 67,679 | | |
| 7,950 | | |
| 51,310 | | |
| 8,418 | | |
| 66,966 | | |
| 7,867 | | |
| 44,920 | | |
| 14,179 | |
Guangdong Foshan | |
| 97,582 | | |
| 11,463 | | |
| 82,677 | | |
| 3,441 | | |
| 96,555 | | |
| 11,342 | | |
| 72,856 | | |
| 12,357 | |
Jiangxi Jingdezhen | |
| 78,728 | | |
| 9,248 | | |
| 53,133 | | |
| 16,347 | | |
| 77,900 | | |
| 9,151 | | |
| 35,833 | | |
| 32,916 | |
Guangxi Yulin | |
| 394,774 | | |
| 46,365 | | |
| 323,285 | | |
| 25,124 | | |
| 390,538 | | |
| 45,877 | | |
| 303,523 | | |
| 41,138 | |
Shandong Heze Cao County | |
| 428,262 | | |
| 51,928 | | |
| 361,203 | | |
| 15,131 | | |
| 423,733 | | |
| 51,382 | | |
| 264,877 | | |
| 107,474 | |
Dongguan Nancheng | |
| 5,525 | | |
| 649 | | |
| 3,475 | | |
| 1,401 | | |
| 5,467 | | |
| 642 | | |
| 2,269 | | |
| 2,556 | |
Hubei Macheng | |
| 150,192 | | |
| 11,729 | | |
| 84,982 | | |
| 53,481 | | |
| 98,797 | | |
| 11,606 | | |
| 40,995 | | |
| 46,196 | |
Shandong Jining Liangshan | |
| 13,812 | | |
| 1,623 | | |
| 8,687 | | |
| 3,503 | | |
| 13,667 | | |
| 1,605 | | |
| 5,672 | | |
| 6,390 | |
Guangdong Zhanjiang | |
| 36,256 | | |
| 4,259 | | |
| 22,803 | | |
| 9,195 | | |
| 35,875 | | |
| 4,214 | | |
| 14,886 | | |
| 16,775 | |
Hunan Hengyang Shigu | |
| 20,718 | | |
| 2,434 | | |
| 13,030 | | |
| 5,254 | | |
| 20,500 | | |
| 2,408 | | |
| 8,506 | | |
| 9,586 | |
Jiangxi Ji’an Yongfeng | |
| 19,751 | | |
| 2,190 | | |
| 12,277 | | |
| 5,283 | | |
| 19,133 | | |
| 2,167 | | |
| 7,957 | | |
| 9,009 | |
Hunan Changde | |
| 37,983 | | |
| 4,462 | | |
| 23,888 | | |
| 9,632 | | |
| 37,583 | | |
| 4,415 | | |
| 15,594 | | |
| 17,574 | |
Hunan Shaoyang | |
| 13,812 | | |
| - | | |
| 7,354 | | |
| 6,458 | | |
| 13,667 | | |
| - | | |
| 6,023 | | |
| 7,644 | |
Hunan Yongzhou | |
| 13,812 | | |
| - | | |
| 7,354 | | |
| 6,458 | | |
| 13,667 | | |
| - | | |
| 6,023 | | |
| 7,644 | |
Hunan Ningxiang | |
| 6,906 | | |
| - | | |
| 3,677 | | |
| 3,229 | | |
| 6,833 | | |
| - | | |
| 3,011 | | |
| 3,822 | |
Guangxi Nanning Jiangnan | |
| 41,436 | | |
| 4,868 | | |
| 26,060 | | |
| 10,508 | | |
| 41,000 | | |
| 4,816 | | |
| 17,013 | | |
| 19,171 | |
Jiangxi Shangrao | |
| 12,583 | | |
| - | | |
| 6,665 | | |
| 5,918 | | |
| 12,081 | | |
| - | | |
| 5,324 | | |
| 6,757 | |
Anhui Bengbu | |
| 6,630 | | |
| - | | |
| 3,175 | | |
| 3,455 | | |
| 2,733 | | |
| - | | |
| 1,204 | | |
| 1,529 | |
Zhejiang JinHua | |
| 3,867 | | |
| - | | |
| 2,549 | | |
| 1,319 | | |
| 2,733 | | |
| - | | |
| 1,204 | | |
| 1,529 | |
Total | |
$ | 18,296,645 | | |
$ | 2,094,046 | | |
$ | 14,207,515 | | |
$ | 1,995,084 | | |
$ | 17,993,467 | | |
$ | 2,072,010 | | |
$ | 11,554,072 | | |
$ | 4,367,385 | |
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.
Accounts payable to franchisees consist of the
following:
| |
April 30, | | |
October 31, | |
| |
2024 | | |
2023 | |
Yudu Jiuzi New Energy Automobile Co., Ltd. | |
$ | 7,044 | | |
$ | 6,970 | |
Total | |
$ | 7,044 | | |
$ | 6,970 | |
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.
Contract liability – related party consists
of the following:
| |
April 30, | | |
October 31, | |
| |
2024 | | |
2023 | |
Current Portion | |
| | |
| |
Unearned franchise fees | |
$ | 12,592 | | |
$ | 15,466 | |
Customer deposits | |
| - | | |
| 41,000 | |
| |
| 12,592 | | |
| 56,466 | |
Non-current Portion | |
| | | |
| | |
Total, net | |
$ | 12,592 | | |
$ | 56,466 | |
Unearned franchise fees consist of the following:
| |
April 30, | | |
October 31, | |
| |
2024 | | |
2023 | |
Unearned franchise fees – current | |
| | |
| |
Zhejiang Hangzhou Xiaoshan Agent | |
$ | 1,658 | | |
$ | 2,050 | |
Hunan Changsha Yuelu Agent | |
| 1,726 | | |
| 2,118 | |
Hunan Yueyang Xiangyin Agent | |
| 1,726 | | |
| 2,118 | |
Hunan Yueyang Yueyang Lou Agent | |
| 1,726 | | |
| 2,118 | |
Guangdong Zhongshan City Agent | |
| 5,756 | | |
| 7,062 | |
Total | |
$ | 12,592 | | |
$ | 15,466 | |
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.
Related parties receivables comprised of the following:
| |
April 30, | | |
October 31, | |
| |
2024 | | |
2023 | |
Mr. Bo Bai | |
$ | - | | |
$ | 23,165 | |
Jiuzi Haoche (Hangzhou) Automotive Service Co., Ltd | |
| 13,534 | | |
| 846 | |
Mr. Xuemei Rang | |
| 147,788 | | |
| 146,233 | |
Mr. Shuibo Zhang | |
| 18,922 | | |
| 80,496 | |
Mr. Qi Zhang | |
| 3,002 | | |
| 3,753 | |
Mr. Ruchun Huang | |
| 30,703 | | |
| 30,432 | |
Zhejiang Jiuzi New Energy Network Technology Co., Ltd | |
| 226,979 | | |
| 172,544 | |
Hangzhou Jiuyao New Energy Automobile Technology Co. Ltd. | |
| 733,317 | | |
| - | |
Total | |
$ | 1,174,245 | | |
$ | 457,469 | |
As of April 30, 2024 and October 31, 2023, the
Company has outstanding receivables of $13,534 and $846, respectively, due from the Company’s shareholder, Jiuzi Haoche (Hangzhou)
Automotive Service Co., Ltd. (“Haoche”). The amounts were for space rental and utilities payable to the Company. The advances
were considered due on demand in nature and have not been formalized by a promissory note and are non-interest bearing.
As
of April 30, 2024 and October 31, 2023, the Company had outstanding receivables of $147,788 and $146,233, respectively, due from Mr. Xuemei
Rang, the Company’s shareholder, director, and officer. The amount was the consideration for the sale by the Company of its former
subsidiary Zhejiang Jiuzi New Energy Network Technology Co., Ltd. to Mr. Rang, which closed in September 2024. Such Consideration was
not paid by Mr. Rang to date.
As of April 30, 2024 and October 31, 2023, the
Company had outstanding receivables of $3,002 and $3,753, respectively, from Mr. Qi Zhang, the Company’s vice president of marketing
.. The amount was advanced to Mr. Zhang for travel expenses. The advances were considered due on demand in nature and have not been formalized
by a promissory note and are non-interest bearing and due on demand without a specified maturity date.
Jiuzi Holdings, Inc.
Notes to the Financial
Statements
Related party payables consist of the following:
| |
April 30, 2024 | | |
October 31, 2023 | |
Zhejiang Jiuzi New Energy Network Technology Co., Ltd | |
$ | 392,303 | | |
| - | |
Mr. Shuibo Zhang | |
| 206,278 | | |
| - | |
Total | |
$ | 598,581 | | |
| - | |
As of April 30, 2024 and October 31, 2023, the
Company had outstanding payables of $206,278 and $nil, respectively, to Mr. Shuibo Zhang, the Company’s shareholder, director, and
officer. The amount was advanced by Mr. Zhang to help cover emergency and incidental cash needs. The payables were considered due on demand
in nature and are non-interest bearing.
NOTE
11 – DEFERRED INCOME AND OTHER LONG TERM LIABILITIES
Deferred
income consists of the following government grants which have not yet been earned:
| |
April 30, | | |
October 31, | |
| |
2024 | | |
2023 | |
Subsidy for the maintenance and repair of office | |
$ | 174,721 | | |
$ | 172,883 | |
Total | |
$ | 174,721 | | |
$ | 172,883 | |
Jiuzi Holdings, Inc.
Notes to the Financial
Statements
NOTE
12 – LEASES
The Company
has one operating lease for its corporate office and retail store. The current lease agreement is for the period from August
1, 2021 to July 31, 2026. The Company does not expect to receive the subsidy from PRC government as the Company may not meet the requirement
of paying RMB 20 million in income taxes to the government, therefore the specific deferred government subsidy was not recognized.
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 4.75%.
Operating
lease expenses of the office and retail store were $88,754 and $83,306 for the six months ended April 30, 2024 and 2023, respectively.
The components
of lease expense and supplemental cash flow information related to the lease for the period are as follows:
| | 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) | | $ | 88,754 | |
| | | | |
Other Information | | | | |
Cash paid for amounts included in the measurement of lease liabilities | | $ | 88,754 | |
Weighted average remaining lease term – operating leases (in years) | | | 2.25 | |
Average discount rate – operating lease | | | 4.75 | % |
Jiuzi Holdings, Inc.
Notes to the Financial
Statements
The supplemental
balance sheet information related to the lease is as follows:
| |
April 30, | | |
October 31, | |
| |
2024 | | |
2023 | |
Operating lease | |
| | |
| |
Right-of-use assets | |
$ | 398,026 | | |
$ | 473,246 | |
| |
| | | |
| | |
Operating lease liabilities | |
$ | 339,227 | | |
$ | 327,794 | |
The undiscounted future minimum lease payment
schedule as follows:
For the fiscal years ended October 31, | |
Amounts | |
2024 (six months from May 1, 2024 to October 31, 2024) | |
$ | 88,199 | |
2025 | |
| 176,398 | |
2026 | |
| 74,630 | |
Total | |
$ | 339,227 | |
NOTE
13 – CONVERTIBLE DEBENTURES
Interest
expense related to convertible debentures that were repaid in June,
2023 was $239,325 for the six months ended April 30, 2023.
NOTE 14 – TAXES PAYABLE
Taxes payable
comprised of the following:
| |
April 30, | | |
October 31, | |
| |
2024 | | |
2023 | |
Value-added tax, net | |
$ | 957,760 | | |
$ | 868,805 | |
Company income tax | |
| 1,720,195 | | |
| 1,702,093 | |
Other taxes | |
| 117,226 | | |
| 115,981 | |
Total | |
$ | 2,795,181 | | |
$ | 2,686,879 | |
NOTE
15 – CONTRACT LIABILITY
Contract
liability consists of the following:
| |
April 30, | | |
October 31, | |
| |
2024 | | |
2023 | |
Customer deposits for car purchase | |
$ | 190,989 | | |
$ | 971,525 | |
Total, net | |
$ | 190,989 | | |
$ | 971,525 | |
Contract
liability – related party See Note 10 for details.
Jiuzi Holdings, Inc.
Notes to the Financial
Statements
NOTE
16 – SHAREHOLDERS’ EQUITY
As of April
30, 2024 and October 31, 2023, the Company had 135,301,969 and 4,065,609 shares
issued and outstanding.
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 $0.09 of the authorized share
capital of the Company (including issued and unissued share capital) being subdivided into 5 shares of par value $0.018 each
(the “Share Subdivision”). Immediately following the Share Subdivision, the authorized share capital of the Company was $27,778 divided
into 2,777,778 shares of par value $0.018 each, and the total issued and outstanding shares were 277,778.
Subsequent
to the Share Subdivision on October 31, 2020, the Company increased its authorized share capital from 2,777,778 shares to 8,333,333 shares
with a par value of $0.018 per share, and issued a stock dividend on 2 for 1 post-Share Subdivision basis, whereby each shareholder
holding 1 share was issued an additional 2 shares; therefore, a total of 555,556 shares were issued; immediately following this
transaction, there were a total of 833,333 shares issued and outstanding.
On May 20,
2021, we issued 288,889 ordinary shares to investors in connection with the closing of our initial public offering at the offering
price of $90.00 per share.
On October
28, 2022, the Company issued 11,111 ordinary shares to a non-related party as service compensation for $60,000
In the year
ended October 31, 2022, the Company also issued 162,139 ordinary shares for the conversion of a note payable in the amount of
$2,236,684.
In
the year ended October 31, 2023, the Company issued 598,943 ordinary shares for conversion of a note payable in the amount of $1,720,800,
issued 1,925,259 ordinary shares in consideration of net cash proceeds in the amount of $3,568,599, and issued 177,778 ordinary shares
compensation payable in the amount of $ 2,717,326 to YA II PN LTD, an institutional
investor.
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$150,000.00 divided into 1,000,000,000 shares, each of a par value of US$0.00015 each.
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 17,600,000 ordinary shares, par value US$0.00015 per share, issuable under its 2024 Equity Incentive
Plan. The plan was approved by the Board of Directors of the Company on January 12, 2024.
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$9,600,000 by the creation of 64,000,000,000 shares
of par value of US$0.00015 each, such that the total authorized share capital of the Company is US$9,750,000 divided into 65,000,000,000 Shares
of par value US$0.00015 each.
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$9,750,000 divided into 5,000,000,000 ordinary
shares of a par value of US$0.00195 each.
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 1-for-18 shares having a par value of $0.001 per share with
effect from July 10. Following the reverse split, the shares had a par value of $0.018 per share. There was no effect on total stockholders’
equity. All references made to share or per share amounts in the accompanying consolidated financial statements and applicable disclosures
have been retroactively adjusted to reflect the effects of the reverse stock split.
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 8,000,000 units at a price of $0.15 per unit for an
aggregate purchase price of $1,200,000 in the private placement. Each unit was comprised of one (1) ordinary share
and five (5) warrants to purchase one ordinary share (collectively, the “Warrants”). Each Warrant is exercisable to
purchase one ordinary share at a price of $0.35 per share at any time during the six (6) months after the closing
(November 5, 2023). The closing occurred on May 5, 2023, and the Company received proceeds of $1.2 million. On September 12,
2023, the Company entered into a securities purchase agreement with certain non-affiliated accredited investors pursuant to which
the Company sold an aggregate of 62,242 restricted ordinary shares of the Company for gross proceeds of $66,600. The
offering closed on September 18, 2023.
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 113,636,360 units
(the “Units”), each Unit consisting of one ordinary share of the Company and a warrant to purchase three ordinary
shares with an initial exercise price of $1.10 per share, at a price of $0.44 per Unit, for an aggregate purchase price of approximately
$50 million. The Offering closed on December 21, 2023. The warrants were exercisable immediately upon the date of issuance at an
initial exercise price of $1.10, for cash. The warrants may also be exercised on a cashless basis if at any time after the six-month anniversary
of the issuance date, there is no effective registration statement registering, or no current prospectus available for, the resale of
the underlying ordinary shares. The warrants will expire five years from the date of issuance and are subject to customary anti-dilution
provisions reflecting stock dividends and splits or other similar transactions.
NOTE
16 – SEGMENTS AND GEOGRAPHIC INFORMATION
The Company
believes that it operates in two business segments which consist of sales of NEVs and franchise services; and it operates in
one geographical location, the PRC. The Company disaggregates its revenue into categories that depict how the nature, amount, timing and
uncertainty of revenue and cash flows are affected by economic factors.
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.
Jiuzi Holdings, Inc.
Notes to the Financial
Statements
Sales revenues
consist of the following:
| |
Six Months Ended | |
| |
April 30, 2024 | | |
April 30, 2023 | |
NEVs sales | |
$ | 2,278,353 | | |
| 100 | % | |
$ | 573,139 | | |
| 93 | % |
Franchisee services revenues | |
| 2,885 | | |
| - | % | |
| 13,527 | | |
| 2 | % |
Other service revenues | |
| - | | |
| - | % | |
| 28,149 | | |
| 5 | % |
Total | |
$ | 2,281,238 | | |
| 100 | % | |
$ | 614,815 | | |
| 100 | % |
Direct costs
consist of the following:
| |
Six Months Ended | |
| |
April 30, 2024 | | |
April 30, 2023 | |
NEVs sales | |
$ | 2,322,140 | | |
| 100 | % | |
$ | 697,268 | | |
| 93 | % |
Franchisee services revenues | |
| 1,668 | | |
| - | % | |
| 28,275 | | |
| 4 | % |
Other service revenues | |
| - | | |
| - | % | |
| 25,879 | | |
| 3 | % |
Total | |
$ | 2,323,808 | | |
| 100 | % | |
$ | 751,422 | | |
| 100 | % |
Gross profit (loss) consist of the following:
| |
Six Months Ended | |
| |
April 30, 2024 | | |
April 30, 2023 | |
NEVs sales | |
$ | (43,787 | ) | |
| (2 | )% | |
$ | (124,129 | ) | |
| (22 | )% |
Franchisee services revenues | |
| 1,217 | | |
| 42 | % | |
| (14,748 | ) | |
| (109 | )% |
Other service revenues | |
| - | | |
| - | % | |
| 2,270 | | |
| 8 | % |
Total | |
$ | (42,570 | ) | |
| (2 | )% | |
$ | (136,607 | ) | |
| (22 | )% |
Jiuzi Holdings, Inc.
Notes to the Financial
Statements
NOTE
17 – INCOME TAX
The Company
is subject to profits tax rate at 25% for income generated for its operation in the PRC. Net operating losses can be carried forward
for no longer than five years starting from the year subsequent to the year in which the loss was incurred.
The net
taxable income (losses) before income taxes and its provision for income taxes comprised of the following:
| |
Six Months Ended | |
| |
April 30, 2024 | | |
April 30, 2023 | |
Loss attributed to the PRC | |
$ | (15,887,520 | ) | |
$ | (6,332,397 | ) |
PRC statutory tax rate | |
| 25 | % | |
| 25 | % |
Income tax expense at statutory rate | |
| - | | |
| - | |
PRC tax prepayment | |
| - | | |
| 20 | |
Income tax expense | |
$ | - | | |
$ | 20 | |
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. The details are shown as
follows.
Suppliers (Defendant) | | Status of the case (1) | | Amount involved (USD equivalent) | |
Shengzhou Baiyuan New Energy Vehicle Technology Co. | | Successful | | $ | 1,825,816 | |
Jiangsu Yakai Auto Sales & Service Co. | | Settled out-of-court | | | 368,989 | |
Hengyang Jiuziming Chehui Automobile Sales and Service Co., Ltd. | | Successful | | | 36,907 | |
Hangzhou Shicheng Auto Trading Co. | | Successful | | | 303,413 | |
Nanning Huangyang Auto Sales Co. | | Successful | | | 100,949 | |
Nanning Huangyang Auto Sales Co | | Successful | | | 75,392 | |
Nanning Huangyang Auto Sales Co | | Successful | | | 48,592 | |
Nanning Huangyang Auto Sales Co | | Successful | | | 17,338 | |
Shanghai Aichi Yiwei Automobile Sales Co., Ltd | | Pending | | | 172,644 | |
Guangxi Runyin Automobile Sales Co., Ltd | | Pending | | | 147,041 | |
Gui’an New District Xinte Electric Vehicle Industry Co., Ltd. | | Successful | | | 27,333 | |
Total | | | | $ | 3,124,414 | |
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.
The concentration
on sales revenues generated by customers type comprised of the following:
| |
Six Months Ended | |
| |
April 30, 2023 | | |
April 30, 2022 | |
Third party sales revenues | |
| - | | |
| - | % | |
$ | 573,139 | | |
| 93 | % |
Related party sales revenues | |
$ | 2,278,353 | | |
| 100 | % | |
| - | | |
| - | % |
Third party franchise revenues | |
| - | | |
| - | % | |
| - | | |
| - | % |
Related party franchise revenues | |
| 2,885 | | |
| - | % | |
| 13,527 | | |
| 3 | % |
Third party other revenues | |
| - | | |
| - | % | |
| 28,149 | | |
| 4 | % |
Related party other revenues | |
| - | | |
| - | % | |
| - | | |
| - | % |
Total | |
$ | 2,281,238 | | |
| 100 | % | |
$ | 614,815 | | |
| 100 | % |
The concentration
of sales revenues generated by third-party customers consist of the following:
| |
Six Months Ended | |
| |
April 30, 2023 | | |
April 30, 2022 | |
Customer A | |
| - | | |
| - | % | |
$ | 88,189 | | |
| 10 | % |
Customer B | |
| - | | |
| - | % | |
| 166,337 | | |
| 18 | % |
Customer C | |
| - | | |
| - | % | |
| 270,120 | | |
| 29 | % |
Customer D | |
| - | | |
| - | % | |
| 140,275 | | |
| 15 | % |
Total | |
| - | | |
| - | % | |
$ | 664,921 | | |
| 72 | % |
NOTE 20 – DISPOSAL OF SUBSIDIARY
The Company holds 100% of the equity interest
of Hangzhou ZiTongChe Technology Co., Ltd. (“Hangzhou ZhiTongChe”), a company organized under the laws of the PRC. Hangzhou
ZhiTongChe held 51% of the equity interest of Hangzhou Jiuyao Bew Energy Automobile Technology Co., Ltd. (“Hangzhou Jiuyao”),
a company incorporated under the laws of the PRC. On January 24, 2024, Hangzhou ZhiTongChe completed the transfer of its ownership interest
in Hangzhou Jiuyao to Mr Shuibo Zhang, a related party for a total price of RMB5,998 (approximately $6,000), which sale was approved at
the special shareholders meeting of the Company held on November 30, 2023.
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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