Exhibit 99.1
Jiuzi Holdings, Inc.
Consolidated Balance Sheets
As of April 30, 2023 and October 31, 2022
Unaudited
| April 30, | October 31, | |||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Short-term investment | ||||||||
| Accounts receivable | ||||||||
| Accounts receivable - related party | ||||||||
| Due from related parties | ||||||||
| Inventory, net | ||||||||
| Advances to suppliers | ||||||||
| Loans receivable from related parties, net - current portion | ||||||||
| Other receivables and other current assets | ||||||||
| Total Current Assets | ||||||||
| Non-Current Assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Other non-current assets | ||||||||
| Operating lease right of use asset | ||||||||
| Loans receivable from related parties, net | ||||||||
| Total Non-Current Assets | ||||||||
| Total Assets | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accruals and other payables | ||||||||
| Accounts payable – related party | ||||||||
| Due to related parties | ||||||||
| Convertible debenture | ||||||||
| Taxes payable | ||||||||
| Operating lease liabilities - current | ||||||||
| Contract liability | ||||||||
| Contract liability - related party | ||||||||
| Total Current Liabilities | ||||||||
| Non-Current Liabilities | ||||||||
| Operating lease liabilities - non-current | ||||||||
| Deferred income | ||||||||
| Contract liability – related party non-current | ||||||||
| Other long-term liability | ||||||||
| Total Non-Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Shareholders’ Equity | ||||||||
| Ordinary Shares ( | ||||||||
| Additional paid in capital | ||||||||
| Statutory reserve | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total equity attributable to Jiuzi Holdings, Inc. | ||||||||
| Non-controlling interest | ||||||||
| Total Equity | ||||||||
| Total Liabilities and Shareholders’ Equity | $ | $ | ||||||
See accompanying notes to financial statements.
Jiuzi Holdings, Inc.
Consolidated Statements of Loss and Comprehensive Loss
For the Six Months Ended April 30, 2023 and 2022
Unaudited
| Six Months Ended | Six Months Ended | |||||||
| April 30, | April 30, | |||||||
| 2023 | 2022 | |||||||
| Revenues, net | $ | $ | ||||||
| Revenues – related party, net | ||||||||
| Total Revenues | ||||||||
| Cost of revenues | ||||||||
| Cost of revenues – related party | ||||||||
| Total cost of revenues | ||||||||
| Gross profit | ( | ) | ||||||
| Selling and marketing expense | ||||||||
| General and administrative expenses | ||||||||
| Provision for credit loss on loans receivable | ||||||||
| Operating expense | ||||||||
| Loss before tax | ( | ) | ( | ) | ||||
| Non-operating income (expense) items: | ||||||||
| Other income (expense), net | ||||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| ( | ) | |||||||
| Loss before income tax | ( | ) | ( | ) | ||||
| Income tax | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Less: Loss attributable to non-controlling interest | ( | ) | ( | ) | ||||
| Net loss attributable to controlling interest | $ | ( | ) | $ | ( | ) | ||
| Earnings (Loss) per share | ||||||||
| Basic | ( | ) | ( | ) | ||||
| Diluted | ( | ) | ( | ) | ||||
| Weighted average number of ordinary shares outstanding* | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Other comprehensive income (loss): | ||||||||
| Foreign currency translation income | ||||||||
| Total comprehensive loss | ( | ) | ( | ) | ||||
See accompanying notes to financial statements.
2
Jiuzi Holdings, Inc.
Consolidated Statements of Changes in Shareholders’ Equity
For the Six Months Ended April 30, 2023 and 2022
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, 2021 | ||||||||||||||||||||||||||||||||||||
| (Distribution)/Contribution in capital | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Appropriations to statutory reserves | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance at April 30, 2022 | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance at October 31, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Shares issued for cash proceeds, net | ||||||||||||||||||||||||||||||||||||
| Shares issued for compensation | ||||||||||||||||||||||||||||||||||||
| Shares issued for debt conversion | ||||||||||||||||||||||||||||||||||||
| Contribution (Distribution) in capital | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Net income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Appropriations to statutory reserves | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance at April 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
See accompanying notes to financial statements.
3
Jiuzi Holdings, Inc.
Consolidated Statements of Cash Flows
For the Six Months Ended April 30, 2023 and 2022
Unaudited
| Six Months Ended | Six Months Ended | |||||||
| April 30, | April 30, | |||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | ( |
) | $ | ( |
) | ||
| Depreciation and amortization | ||||||||
| Provision (Recovery) for doubtful accounts | ||||||||
| Amortization of operating lease ROU assets | ||||||||
| Provision for credit losses | ||||||||
| Imputed interest expense | ||||||||
| Loss (gain) from disposal of investments | ||||||||
| Loss (gain) from disposal of assets | ||||||||
| Stock-based compensation | ||||||||
| Changes in assets and liabilities | ||||||||
| (Increase) decrease in accounts receivable | ||||||||
| (Increase) decrease in accounts receivable – related party | ( |
) | ||||||
| (Increase) decrease in inventories | ( |
) | ||||||
| (Increase) decrease in advances to suppliers | ||||||||
| (Increase) decrease in notes receivable-related party customers sales | ( |
) | ||||||
| (Increase) decrease in loans to related parties | ( |
) | ( |
) | ||||
| (Increase) decrease in due from relates parties | ||||||||
| (Increase) decrease in other assets | ( |
) | ||||||
| (Decrease) increase in accrued and other liabilities | ||||||||
| Decrease in account payable | ( |
) | ||||||
| Increase in accounts payable – related party | ( |
) | ( |
) | ||||
| Increase in taxes payable | ( |
) | ||||||
| (Decrease) increase in contract liability | ( |
) | ||||||
| (Decrease) increase in contract liability – related party | ( |
) | ||||||
| (Decrease) increase in operating lease liabilities | ( |
) | ||||||
| (Decrease) increase in other long term liabilities | - | ( |
) | |||||
| Net cash used in operating activities | ( |
) | ( |
) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of fixed assets | ( |
) | ( |
) | ||||
| Acquisition of investment | ( |
) | ||||||
| Disposal of fixed assets | ||||||||
| Redemption/Disposal of investments | - | |||||||
| Net cash provided by (used in) investing activities | ( |
) | ||||||
| Cash flows from financing activities | ||||||||
| Proceeds from owner’s injection of capital | ||||||||
| Proceeds from convertible debenture | ||||||||
| Repayments to convertible debenture | ( |
) | - | |||||
| Net cash provided by financing activities | ||||||||
| Net decrease of cash and cash equivalents | ( |
) | ( |
) | ||||
| Effect of foreign currency translation on cash and cash equivalents | ( |
) | ||||||
| Cash, cash equivalents, and restricted cash – beginning of period | ||||||||
| Cash, cash equivalents, and restricted cash – end of period | $ | $ | ||||||
| Reconciliation of Cash, Cash Equivalents & Restricted Cash to Statements of Cash Flows | ||||||||
| Cash & cash equivalents | ||||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents, and restricted cash | $ | $ | ||||||
| Supplementary cash flow information: | ||||||||
| Interest received | $ | $ | ||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Non-cash financing and investing activities: | ||||||||
| Notes payable converted to common stock | $ | $ | ||||||
See accompanying notes to financial statements.
4
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION
Jiuzi Holdings, Inc. (“Company” or “Jiuzi”) was incorporated in the Cayman Islands on October 10, 2019. The Company is an investment holding company; its primary operations are conducted through subsidiaries and variable interest entities as described below.
Jiuzi (HK) Limited (“Jiuzi HK”) was incorporated in Hong Kong on October 25, 2019. It is wholly owned subsidiary of the Company.
Zhejiang Navalant New Energy Automobile Co., Ltd. (“Jiuzi WFOE”) was incorporated on June 5, 2020 as wholly foreign owned entity in the People’s Republic of China (“PRC”). Jiuzi WFOE is a wholly owned subsidiary of Jiuzi HK.
Zhejiang Jiuzi (“Zhejiang Jiuzi”) was incorporated on May 26, 2017 in the PRC. Zhejiang Jiuzi’s scope of business includes the sale of new energy vehicles (“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. The Zhejiang Jiuzi also provides short term financing solutions to the new Jiuzi NEV dealerships for the procurement of NEVs.
Shangli Jiuzi was incorporated on May 10, 2018
in the PRC. Its scope of business is similar to Zhejiang Jiuzi. Zhejiang Jiuzi owns
Hangzhou Zhitongche Technology Co., Ltd. (“Hangzhou Zhitongche”) was incorporated on February 2, 2018 in the PRC. The company is providing technical services, technical development, technical consulting and trading for new energy for motor vehicle and its accessories. Zhitongche is a wholly owned subsidiary of Zhejiang Jiuzi.
Zhejiang Jiuzi New Energy Network Technology Co.,
Ltd was incorporated on July 1, 2021 in PRC. Its scope of business includes software outsourcing services; industrial internet data services;
network and information security software development; artificial intelligence application software development; Internet of Things technology
research and development; internet security services; information system operation and maintenance services; artificial intelligence basic
software development; cloud computing equipment technical services; research and development of robots (except for projects subject to
approval according to law, business activities are carried out independently according to law with business licenses). Zhejiang Jiuzi
owns
Guangxi Nanning Zhitongche New Energy Technology
Co., Ltd was incorporated on December 31, 2021 in PRC. Its scope of business includes technical service, development and consultation;
sales of electrical accessories for new energy vehicles; automobiles new car sales; business agency services; motor vehicle charging sales;
sales of new energy prime movers; R&D of emerging energy technologies; car trailers, assistance, and clearance services; auto parts
wholesale; auto parts retail; sales agency; domestic trade agency; import and export agency. Hangzhou Zhitongche owns
Hangzhou Jiuyao New Energy Automobile Technology
Co. Ltd. was incorporated on January 24, 2022 in PRC. Its scope of business includes technical service, technology development, technical
consultation and promotion, as well as sales of automobiles and new energy vehicles, and sales of electrical accessories and accessories
for new energy vehicles. Hangzhou Jiuyao is
5
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
Hangzhou Jiuzi Haoche Technology Co., Ltd. was
incorporated on January 21, 2022 under the laws of the People’s Republic of China. Its registered business scope is software outsourcing
services, industrial internet data services, network and information security software development, artificial intelligence application
software development, technology development, consulting and transfer, market planning, convention planning, and cloud computing equipment
technical services. Hangzhou Jiuzi Haoche Technology Co., Ltd. is a wholly owned subsidiary of Jiuzi New Energy and has a registered capital
with the amount of RMB
On November 10, 2022, Zhejiang Jiuzi New Energy
Automobile Co., Ltd.(“Zhejiang Jiuzi”), the variable interest entity (the “VIE”) of the Company, entered into
a termination agreement (the “Termination Agreement”) with Zhejiang Navalant New Energy Automobile Co. Ltd., a wholly foreign-owned
entity of the Company (“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 shall be terminated effective upon the conditions are met.
6
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
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”).
The accompanying financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 20-F for the fiscal year ended October 31, 2022, filed with the SEC on March 15, 2023. The interim financial information is not necessarily indicative of the results to be expected for the fiscal year ended or for any other interim period or for any future year.
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.
Reverse Stock Split
On July 7, 2023, our Board of Directors declared a reverse share split at a ratio of 1-for-18 for shares having a par value of $0.001 per share with effect from July 10. Following the reverse split, the shares will have 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.
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, 2023, the Company had an accumulated deficit
of
The Company plans to establish provincial regional sales centers nationwide to geographically expand the market and adopt centralized procurement system to reduce overhead cost and obtain volume discount. The company will also cooperate with more brands of NEV, introduce more quality services and strengthen its publicity to attract more franchisees to join. Additionally, the Company will be undertaking capital raising activities to provide additional cash 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.
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.
7
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
Functional and presentation currency
The functional currency of the Company is the currency of the primary economic environment in which the Company operates which is Chinese Yuan (“RMB”).
Transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at the end of the reporting periods. Exchange differences arising on the settlement of monetary items and on translation of monetary items at period-end are included in income statement of the period.
For the purpose of presenting these financial statements, the Company’s assets and liabilities are expressed in US$ at the exchange rate on the balance sheet date, stockholder’s equity accounts are translated at historical rates, and income and expense items are translated at the weighted average exchange rate during the period. The resulting translation adjustments are reported under accumulated other comprehensive income in the stockholder’s equity section of the balance sheets.
US$ to RMB
| Period End |
Average | |||||||
| April 30, 2023 | ||||||||
| October 31, 2022 | ||||||||
| April 30, 2022 | ||||||||
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.
8
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
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.
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 the original invoice amounts 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, 2023 and October 31, 2022, the investments
in bank wealth management and security that were recorded as short-term investments amounted to $
Loans Receivable
Loans receivable are recorded at origination at the fair value less estimates for expected credit losses. Management regularly reviews outstanding accounts and provides an allowance for credit losses. When collection of the original amounts is no longer probable, the Company will either partially or fully write-off the balance against the allowance for credit losses.
Revenue Recognition
In 2014, the FASB issued guidance on revenue recognition (“ASC 606”), with final amendments issued in 2016. The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients. The Company has concluded that the new guidance did not require any significant change to its revenue recognition processes.
The Company’s revenues consist of sales of vehicle by the Company’s own corporate retail store to third party customers, sales of vehicle to franchisees as a supplier, fees from retail stores operated by franchisees, and sublease of vehicles to third party customers. Revenues from franchised stores include initial franchise fees and annual royalties based on a percent of net incomes.
The Company recognizes sales of vehicle revenues at the point in time when the Company has transferred physical possession of the goods to the customer and the customer has accepted the goods, therefore, indicating as control of the goods has been transferred to the customer. The transaction price is determined and allocated to the product prior to the transfer of the goods to the customer.
9
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
The initial 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.
The 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 party and recognizes revenues over time which is ratably on a monthly basis over the lease period according to 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 finished goods 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 defects products can be return to our suppliers.
Advertising
The Company expenses advertising costs as incurred
and includes it in selling expenses. The Company recorded $
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.
Earnings (loss) per share
Basic income (loss) per share is computed by dividing net income (loss) attributable to the holders of ordinary shares by the weighted average number of ordinary shares outstanding during the year. Diluted income (loss) per share is calculated by dividing net income (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.
10
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
All per share amounts for all periods presented herein have been adjusted to reflect the Share Subdivision and 2 for 1 stock dividend on post-Share Subdivision basis. See Note 17.
Property and Equipment & Depreciation
| Equipment | ||
| Furniture and fixtures | ||
| Motor vehicles |
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
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 October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” This ASU requires contract assets and contract liabilities (e.g., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, “Revenue from Contracts with Customers”. Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree. Historically, such amounts were recognized by the acquirer at fair value in purchase accounting. This ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including in interim periods, for any financial statements that have not yet been issued. The adoption is not expected to have a material impact on the Company’s consolidated financial statements.
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.
11
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
NOTE 3 – INVENTORY
| April 30, 2023 | October 31, 2022 | |||||||
| Finished goods | ||||||||
| Total, net | ||||||||
Inventory write-down expense was $ and $ for the six months ended April 30, 2023 and 2022, respectively.
NOTE 4 – ACCOUNTS RECEIVABLES
| April 30, 2023 | October 31, 2022 | |||||||
| Accounts receivables | ||||||||
| Allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Total, net | ||||||||
| April 30, | October 31, | |||||||
| 2023 | 2022 | |||||||
| Accounts receivables-related parties | ||||||||
| Allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Total, net | ||||||||
| April 30, 2023 | October 31, 2022 | |||||||
| Balance at beginning of year | ||||||||
| Provision | ||||||||
| Charge-offs | ||||||||
| Recoveries | ||||||||
| Effect of translation adjustment | ( | ) | ||||||
| Balance at end | ||||||||
Bad debt expense (recoveries) was $
12
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
NOTE 5 – SHORT-TERM INVESTMENT
| As of April 30, 2023 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Bank Wealth Management | ||||||||||||||||
| Securities | ||||||||||||||||
| As of October 31, 2022 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Bank Wealth Management | ||||||||||||||||
| Securities | ||||||||||||||||
NOTE 6 – LOANS RECEIVABLES
Loans receivables 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 capture the financing cost for these loans. Given that the loans are in the forms of credit lines to the franchisees that may have varying balances over time, as a practical expedient, management has elected to the expense the interest as a cost of revenue at inception rather than amortize over time.
The amounts charged were $
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.
13
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
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.
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 3 months after the due date. For purposes of determining impairment, loans are evaluated collectively, as they represent a large group of smaller-balance homogeneous loans, and therefore, are not individually evaluated for impairment.
As these loans are non-interest bearing, the Company
recorded a discount to the face amount using an imputed interest rate of
| April 30, 2023 | October 31, 2022 | |||||||
| Loan to related franchisees, gross | ||||||||
| Discount based on imputed interest rate of | ( | ) | ( | ) | ||||
| Loan to related franchisees, net of discount | ||||||||
| April 30, 2023 | October 31, 2022 | |||||||
| Loan to related franchisees, net of discount | ||||||||
| Provision for credit losses | ( | ) | ( | ) | ||||
| Loan to related franchisees, net of discount and allowance | ||||||||
| April 30, 2023 | October 31, 2022 | |||||||
| Balance at beginning of year | ||||||||
| Provision | ||||||||
| Charge-offs | ||||||||
| Recoveries | ||||||||
| Effect of translation adjustment | ( | ) | ||||||
| Balance at end | ||||||||
14
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
Credit loss was $
| April 30, 2023 | October 30, 2022 | |||||||
| Loan to related franchisees, net of discount and allowances, current | ||||||||
| Loan to related franchisees, net of discount and allowances, non-current | ||||||||
Credit Quality
The Company extends credit to related 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 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 3 months after the 18-month deadline.
The credit quality of the loans receivables is evaluated based on the Company’s adjusted aging schedule. The Company regularly reviews the model to confirm the continued business significance and statistical predictability of the model and may make updates to improve the performance of the model.
| April 30, 2023 | October 31, 2021 | |||||||
| Franchisee Financing: | ||||||||
| Group I | ||||||||
| Group II | ||||||||
| Group III | ||||||||
| Group IV | ||||||||
| Balance at end | ||||||||
15
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
NOTE 7 – OTHER RECEIVABLES AND OTHER CURRENT ASSETS
| April 30, | October 31, | |||||||
| 2023 | 2022 | |||||||
| Deposits put down on the car | ||||||||
| Excess input VAT credits | ||||||||
| Prepaid expense | ||||||||
| Cash advance to employee | ||||||||
| Total | ||||||||
NOTE 8 – PROPERTY & EQUIPMENT
| April 30, | October 31, | |||||||
| 2023 | 2022 | |||||||
| At Cost: | ||||||||
| Equipment | ||||||||
| Motor vehicles | ||||||||
| Leasehold Improvement | ||||||||
| Furniture and fixtures | ||||||||
| Less: Accumulated depreciation | ||||||||
| Total, net | ||||||||
Depreciation expenses was $
16
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
NOTE 9 – INTANGIBLE ASSETS
| April 30, | October 31, | |||||||
| 2023 | 2022 | |||||||
| At Cost: | ||||||||
| Financial software | ||||||||
| Domain name | ||||||||
| Less: Accumulated Amortization | ||||||||
| Total, net | ||||||||
Amortization expenses was $
NOTE 10 – RELATED PARTY TRANSACTIONS
The franchisees are related parties of the Company
due to the nominal, symbolic equity interest ownership in the franchisees.
The Company did not and does not control the franchisees, exert significant influence over the franchisees, have the power to direct the use of the franchisee’s assets and the fulfillment of their obligations, appoint or dismiss directors, authorized representatives, or executive officers of the franchisees. Management has also determined that the percentage shareholding in the franchisee is not compensatory to the Company in nature, and accordingly, would not be subject to consideration as income under revenue recognition criteria. The Company did not contribute any permanent equity capital in these franchisees and if these franchisees were to incur substantial losses and accumulate significant liabilities, the Company is not obligated to absorb such losses on behalf of the franchisees. Accordingly, the management has determined that the financial positions and results of operations of these franchisees should not be included as part of the Company’s consolidated financial statements.
In addition, the Company did not and will not
receive any actual ownership interest in the franchisees, nor receive any benefits from being a
| April 30, | October 31, | |||||||
| 2023 | 2022 | |||||||
| Yichun Jiuzi New Energy Automobile Co., Ltd | ||||||||
| Wanzai Jiuzi New Energy Automobile Co., Ltd | ||||||||
| Xinyu Jiuzi New Energy Automobile Co., Ltd | ||||||||
| Quanzhou Jiuzi New Energy Automobile Co., Ltd | ||||||||
| Yulin Jiuzi New Energy Automobile Co., Ltd | ||||||||
| Total | ||||||||
Accounts receivables above derived from sales
of vehicles supplied to the Company’s franchisees without any special payment terms. Sales revenues from related parties’
franchisees were $ and $
17
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
| As of April 30, 2023 | As of October 31, 2022 | |||||||||||||||||||||||||||||||
| Gross | Discount | Allowance | Net | Gross | Discount | Allowance | Net | |||||||||||||||||||||||||
| Jiangsu Changshu | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Shandong Dongming | ||||||||||||||||||||||||||||||||
| Jiangxi Gao’an | ||||||||||||||||||||||||||||||||
| Hunan Huaihua | ||||||||||||||||||||||||||||||||
| Jiangxi Jiujiang | ||||||||||||||||||||||||||||||||
| Hunan Liuyang | ||||||||||||||||||||||||||||||||
| Hunan Loudi | ||||||||||||||||||||||||||||||||
| Hunan Pingjiang | ||||||||||||||||||||||||||||||||
| Jiangxi Pingxiang | ||||||||||||||||||||||||||||||||
| Henan Puyang | ||||||||||||||||||||||||||||||||
| Fujian Quanzhou | ||||||||||||||||||||||||||||||||
| Jiangxi Wanzai | ||||||||||||||||||||||||||||||||
| Jiangxi Xinyu | ||||||||||||||||||||||||||||||||
| Jiangxi Yichun | ||||||||||||||||||||||||||||||||
| Jiangxi Yudu | ||||||||||||||||||||||||||||||||
| Guangdong Zengcheng | ||||||||||||||||||||||||||||||||
| Jiangxi Shanggao | ||||||||||||||||||||||||||||||||
| Shandong Heze | ||||||||||||||||||||||||||||||||
| Jiangxi Ganzhou | ||||||||||||||||||||||||||||||||
| Hunan Liling | ||||||||||||||||||||||||||||||||
| Hunan Zhuzhou | ||||||||||||||||||||||||||||||||
| Hunan Changsha | ||||||||||||||||||||||||||||||||
| Guangxi Guilin | ||||||||||||||||||||||||||||||||
| Hunan Chenzhou | ||||||||||||||||||||||||||||||||
| Jiangxi Ji’an | ||||||||||||||||||||||||||||||||
| Guangxi Nanning | ||||||||||||||||||||||||||||||||
| Hunan Leiyang | ||||||||||||||||||||||||||||||||
| Guangdong Dongguan Changping | ||||||||||||||||||||||||||||||||
| Hunan Changsha County | ||||||||||||||||||||||||||||||||
| Guizhou Zunyi | ||||||||||||||||||||||||||||||||
| Jiangsu Xuzhou | ||||||||||||||||||||||||||||||||
| Hunan Yongxing | ||||||||||||||||||||||||||||||||
| Hunan Hengyang | ||||||||||||||||||||||||||||||||
| Hainan Sanya | ||||||||||||||||||||||||||||||||
| Hunan Changsha Yuhua | ||||||||||||||||||||||||||||||||
| Shandong Heze Dingtao | ||||||||||||||||||||||||||||||||
| Shandong Heze Yuncheng | - | |||||||||||||||||||||||||||||||
| Shandong Heze Gaoxin | ||||||||||||||||||||||||||||||||
| Shandong Zouping | ||||||||||||||||||||||||||||||||
| Shandong Juye | ||||||||||||||||||||||||||||||||
| Shandong Juancheng | ||||||||||||||||||||||||||||||||
| Shandong Shanxian | ||||||||||||||||||||||||||||||||
| Jiangxi Zhangshu | ||||||||||||||||||||||||||||||||
| Guangdong Foshan | ||||||||||||||||||||||||||||||||
| Jiangxi Jingdezhen | ||||||||||||||||||||||||||||||||
| Guangxi Yulin | ||||||||||||||||||||||||||||||||
| Shandong Heze Cao County | ||||||||||||||||||||||||||||||||
| Dongguan Nancheng | ||||||||||||||||||||||||||||||||
| Hubei Macheng | ||||||||||||||||||||||||||||||||
| Shandong Jining Liangshan | ||||||||||||||||||||||||||||||||
| Guangdong Zhanjiang | ||||||||||||||||||||||||||||||||
| Hunan Hengyang Shigu | ||||||||||||||||||||||||||||||||
| Jiangxi Ji’an Yongfeng | ||||||||||||||||||||||||||||||||
| Hunan Changde | ||||||||||||||||||||||||||||||||
| Hunan Shaoyang | ||||||||||||||||||||||||||||||||
| Hunan Yongzhou | ||||||||||||||||||||||||||||||||
| Hunan Ningxiang | ||||||||||||||||||||||||||||||||
| Guangxi Nanning Jiangnan | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
18
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
The advances paid above are derived from funds advanced to the Company’s franchisees as working capital to support its operations. Such advances are due within 18 months.
| April 30, | October 31, | |||||||
| 2023 | 2022 | |||||||
| Yudu Jiuzi New Energy Automobile Co., Ltd. | ||||||||
| Total | ||||||||
Accounts payable above derived from vehicles purchased by the Company from the franchisees as inventory on a needed basis without any special payment terms.
| April 30, | October 31, | |||||||
| 2023 | 2022 | |||||||
| Current Portion | ||||||||
| Customer deposit | ||||||||
| Non-current Portion | ||||||||
| Unearned franchise fee | ||||||||
| Total, net | ||||||||
19
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
| April 30, | October 31, | |||||||
| 2023 | 2022 | |||||||
| Unearned franchise fee - current | ||||||||
| Jinan Chuangtu New Energy Co., Ltd. | - | |||||||
| Hunan Changsha | - | |||||||
| Hunan Yueyang | - | |||||||
| Zhejiang Hangzhou Xiaoshan | - | |||||||
| Hunan Yueyang Xiangyin | - | |||||||
| Guangdong Zhongshan | - | |||||||
| Hunan Hengyang | ||||||||
| Henan Luohe Yancheng Agent | - | |||||||
| Guangdong Foshan Shunde Agent | - | |||||||
| Chongqing Banan Agent | - | |||||||
| Zhejiang Hangzhou Gongshu Agent | - | |||||||
| Jiangsu Jingjiang Agent | - | |||||||
| Shanghai Fengxian Agent | - | |||||||
| Chengdu municipal level Agent | - | |||||||
| Zhejiang Jiaxing Nanhu Agent | - | |||||||
| Hunan Yueyang Miluo Agent | ||||||||
| Zhejing JiaXing | ||||||||
| Henan Jiuzi New Energy Vehicle Sales and Service Co. LTD | - | |||||||
| Zhejiang Huasu Automobile Service Co., LTD | - | |||||||
| Huzhou Fengtao New Energy Automobile Sales Co., LTD | - | |||||||
| Shandong Shenglong Automobile Sales Co. LTD | - | |||||||
| Nantong Meixinyao Vehicle Sales Service Co., LTD | - | |||||||
| Anhui Auto e-Link Auto Sales Co., LTD | - | |||||||
| Fengshang Network Technology (Shaoxing) Co., LTD | - | |||||||
| Anhui LiuAn | ||||||||
| Guangxi Qinzhou | ||||||||
| Guangxi Qinzhou Lingshan | ||||||||
| Zhejiang Shaoxing Shengzhou | ||||||||
| Xinjiang Urumqi | ||||||||
| Hunan Changzhutan | - | |||||||
| Hunan Shaoyang | ||||||||
| Guangxi Liuzhou (Guangxi Shuangru Trading Co., Ltd.) | ||||||||
| Guangxi Nanning | ||||||||
| Guangxi Yulin | ||||||||
| Guangxi Nanning (Guangxi Zhanyuan Automobile) | ||||||||
| Guangxi Yulin (Yulin Qihui Automobile) | ||||||||
| Zhejiang Huzhou | ||||||||
| Sanmen Xian Wuji Automobile Sales | ||||||||
| Shandong Yuncheng (Yuncheng Zhanteng New Energy Automobile Co., Ltd.) | ||||||||
| Zhejiang Shaoxing Niuniu Automobile Sales Service Co., Ltd. | ||||||||
| Yongkang Yijie Automobile Trading Co., LTD | - | |||||||
| Ningbo Jinhui Internet Technology Service Co., LTD | - | |||||||
| Xingtai Wanhua Botian Automobile Trading Co., LTD | - | |||||||
| Zhejiang Hangzhou Xiaoshan Agent | - | |||||||
| Hunan Changsha Yuelu Agent | - | |||||||
| Hunan Yueyang Xiangyin Agent | - | |||||||
| Hunan Yueyang Yueyang Lou Agent | - | |||||||
| Guangdong Zhongshan City Agent | - | |||||||
| Guangxi Yulin (Yulin Haorui Automobile Sales Co., Ltd.) | - | |||||||
| Zhejiang Hangzhou Gongshu Agent | - | |||||||
| Zhejiang Jiaxing Nanhu Agent | - | |||||||
| Unearned franchise fee – non-current | ||||||||
| Guizhou 320 Automobile Service Co., LTD | - | |||||||
| Yongkang Yijie Automobile Trading Co., LTD | - | |||||||
| Ningbo Jinhui Internet Technology Service Co., LTD | - | |||||||
| Xingtai Wanhua Botian Automobile Trading Co., LTD | - | |||||||
| Zhejiang Hangzhou Xiaoshan Agent | - | |||||||
| Hunan Changsha Yuelu Agent | - | |||||||
| Hunan Yueyang Xiangyin Agent | - | |||||||
| Hunan Yueyang Yueyang Lou Agent | - | |||||||
| Guangdong Zhongshan City Agent | - | |||||||
| Hunan Yueyang Miluo Agent | - | |||||||
| Henan Luohe Yancheng Agent | - | |||||||
| Guangdong Foshan Shunde Agent | - | |||||||
| Chongqing Banan Agent | - | |||||||
| Zhejiang Hangzhou Gongshu Agent | - | |||||||
| Jiangsu Jingjiang Agent | - | |||||||
| Shanghai Fengxian Agent | - | |||||||
| Chengdu municipal level Agent | - | |||||||
| Zhejiang Jiaxing Nanhu Agent | - | |||||||
| Hunan Hengyang Agent | - | |||||||
| - | ||||||||
| Total | ||||||||
20
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
The deferred revenues above derived from initial franchise fees 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 the required amount is attained. Such amounts are recognized as revenues when the Company performed the initial services required under the franchise or license agreement, which is generally when a specific performance obligation is completed or when and if the franchise or license agreement is terminated.
| April 30, | October 31, | |||||||
| 2023 | 2022 | |||||||
| Mr. Shuibo Zhang | ||||||||
| Mr. Qi Zhang | ||||||||
| Mr. Dewen Chen | ||||||||
| Mr. Ruchun Huang | ||||||||
| Total | ||||||||
As of April 30, 2023 and October 31, 2022, the
Company has an outstanding receivable of $
As of April 30, 2023 and October 31, 2022, the
Company has an outstanding receivable of $
As of April 30, 2023 and October 31, 2022, the
Company has an outstanding receivable of $
As of April 30, 2023 and October 31, 2022, the
Company has an outstanding receivable of $
| April 30, | October 31, | |||||||
| 2023 | 2022 | |||||||
| Mr. Ligui Xu | ||||||||
| Total | ||||||||
As of April 30, 2023 and October 31, 2022, the
Company has an outstanding payable of $
21
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
NOTE 11 – DEFERRED INCOME AND OTHERS LONG TERM LIABILITIES
| April 30, | October 31, | |||||||
| 2023 | 2022 | |||||||
| Subsidy for the maintenance and repair of the office | ||||||||
| Total | ||||||||
| April 30, | October 31, | |||||||
| 2023 | 2022 | |||||||
| Guangxi Rongxian Junsheng Automobile Trading Co., Ltd. | ||||||||
| Chongqing Suiqian Trading Co., Ltd. | ||||||||
| Guangxi Yulin Shangfeng Automobile Sales Co., Ltd. | ||||||||
| Jiangxi Haomen Automobile Sales Co., Ltd. | ||||||||
| Guangxi Zhanyuan Automobile Sales Co., Ltd. | ||||||||
| Total | ||||||||
NOTE 12 – LEASES
The Company has
Operating lease right-of-use assets and liabilities
are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate
present value is incremental borrowing rate or, if available, the rate implicit in the lease. The Company determines the incremental borrowing
rate for each lease based primarily on its lease term in PRC which is approximately
Operating lease expenses of office and retail
store were $
The Company has three operating leases for multiple
vehicles. The leases have different leasing periods which are from June 1, 2022 to June 30, 2025. The discount rate used to calculate
present value is incremental borrowing rate or, if available, the rate implicit in the lease. The Company determines the incremental borrowing
rate for each lease based primarily on its lease term in PRC which is approximately
Operating lease cost for the subleases of vehicles
were $
| Six Months Ended | ||||
| April 30, 2023 | ||||
| Lease Cost | ||||
| Operating lease cost (included in general and administrative expenses and cost in the Company’s statement of operations) | $ | |||
| Other Information | ||||
| Cash paid for amounts included in the measurement of lease liabilities | $ | |||
| Weighted average remaining lease term – operating leases (in years) | ||||
| Average discount rate – operating lease | % | |||
| April 30, | October 31, | |||||||
| 2023 | 2022 | |||||||
| Operating leases | ||||||||
| Right-of-use assets | $ | $ | ||||||
| Operating lease liabilities | $ | $ | ||||||
22
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
| For the fiscal years ended October 31, | Amounts | |||
| 2023 (six months from May 1, 2023 to October 31, 2023) | ||||
| 2024 | ||||
| 2025 | ||||
| Total | ||||
NOTE 13 – CONVERTIBLE DEBENTURES
On December 2, 2021 and on December 6, 2021, the
Company issued convertible debenture of $
On December 30, 2022 (the “Maturity Date”),
the outstanding balance of the convertible debenture dated December 2, 2021 in the amount of $
The outstanding convertible debenture were $
Interest expenses were $
NOTE 14 – TAXES PAYABLE
| April 30, | October 31, | |||||||
| 2023 | 2022 | |||||||
| Value-added tax, net | ||||||||
| Company Income tax | ||||||||
| Other taxes | ||||||||
| Total | ||||||||
NOTE 15 – CONTRACT LIABILITY
| April 30, | October 31, | |||||||
| 2023 | 2022 | |||||||
| Customer deposit for car purchase | ||||||||
| Total, net | ||||||||
Contract liability – related party See Note 10 for details.
23
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
NOTE 16 – SHAREHOLDERS’ EQUITY
As of April 30, 2023 and October 31, 2022, the
Company had
On October 31, 2020, pursuant to a special resolution
adopted by its shareholders to amend and restate the memorandum and articles of associations, the Company conducted a subdivision of its
par value with each share of a par value of $
Subsequent to the Share Subdivision, the Company
increased its authorized share capital from
On May 20, 2021, we issued
On October 28, 2022, the Company issued
For the year ended October 31, 2022, the Company
also issued
For the six months ended April 30, 2023, the Company
issued
Reverse Stock Split
24
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
NOTE 17 – SEGMENTS AND GEOGRAPHIC INFORMATION
The Company believes that it operates in
Sales of goods revenues comprised of sales of vehicles to third party customers and to the franchisees. Franchise services revenues comprised of initial fees and ongoing royalties from the franchisees. Under the franchise arrangement, franchisees are granted the right to operate retail store using the Company’s Jiuzi brand and system. Other service revenues comprised of sublease of vehicles to third party customers with a mark-up to the rental price.
| Six Months Ended | ||||||||||||||||
| April 30, 2023 | April 30, 2022 | |||||||||||||||
| NEVs sales | % | % | ||||||||||||||
| Franchisees service revenues | % | % | ||||||||||||||
| Other service revenues | % | % | ||||||||||||||
| Total | % | % | ||||||||||||||
| Six Months Ended | ||||||||||||||||
| April 30, 2023 | April 30, 2022 | |||||||||||||||
| NEVs sales | % | % | ||||||||||||||
| Franchisees service revenues | % | % | ||||||||||||||
| Other service revenues | % | % | ||||||||||||||
| Total | % | % | ||||||||||||||
25
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
| Six Months Ended | ||||||||||||||||
| April 30, 2023 | April 30, 2022 | |||||||||||||||
| NEVs sales | ( | )% | % | |||||||||||||
| Franchisees service revenues | ( | ) | % | % | ||||||||||||
| Other service revenues | ( | )% | % | |||||||||||||
| Total | ( | ) | % | % | ||||||||||||
NOTE 18 – INCOME TAX
The Company is subject to profits tax rate at
| Six Months Ended | ||||||||
| April 30, 2023 | April 30, 2022 | |||||||
| Income (loss) attributed to China | ( | ) | ( | ) | ||||
| PRC statutory tax rate | % | % | ||||||
| Income tax expense at statutory rate | ||||||||
| Reconciliation | ||||||||
| Income tax expense/ (benefit) | ||||||||
NOTE 19 – COMMITMENTS AND CONTINGENCIES
The
Company has filed civil claim suits against certain vendors for failing to deliver the purchased vehicles according to the terms of
the agreements. The Company demands the vendors to refund the advance paid and to compensate the Company for liquidated damages.
| Suppliers (Defendant) | Status of the case | Amount involved (USD equivalent) | ||||
| Shengzhou Baiyuan New Energy Vehicle Technology Co. | ||||||
| Jiangsu Yakai Auto Sales & Service Co. | ||||||
| Hangzhou Shicheng Auto Trading Co. | ||||||
| Nanning Huangyang Auto Sales Co. | ||||||
| Anhui Junmao Automobile Sales and Service Co., Ltd | ||||||
| Shanghai Aichi Yiwei Automobile Sales Co., Ltd | ||||||
| Guangxi Runyin Automobile Sales Co., Ltd | ||||||
| Other suppliers | ||||||
| Total | ||||||
26
Jiuzi Holdings, Inc.
Notes to the Financial Statements
(Unaudited)
NOTE 20 – CONCENTRATIONS, RISKS AND UNCERTAINTIES
Credit risk
Cash deposits with banks are held in financial institutions in China, which deposits are not federally 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.
Concentration
The Company has a concentration risk related to suppliers and customers. Failure to maintain existing relationships with the suppliers or customers to establish new relationships in the future could negatively affect the Company’s ability to obtain goods sold to customers in a price advantage and timely manner. If the Company is unable to obtain ample supply of goods from existing suppliers or alternative sources of supply, the Company may be unable to satisfy the orders from its customers, which could materially and adversely affect revenues.
| Six Months Ended | ||||||||||||||||
| April 30, 2023 | April 30, 2022 | |||||||||||||||
| Third party sales revenues | % | % | ||||||||||||||
| Related party sales revenues | % | % | ||||||||||||||
| Third party franchise revenues | % | % | ||||||||||||||
| Related party franchise revenues | % | % | ||||||||||||||
| Third party other revenues | % | % | ||||||||||||||
| Related party other revenues | % | % | ||||||||||||||
| Total | % | % | ||||||||||||||
| Six Months Ended | ||||||||||||||||
| April 30, 2023 | April 30, 2022 | |||||||||||||||
| Customer A | % | % | ||||||||||||||
| Customer B | % | % | ||||||||||||||
| Customer C | % | % | ||||||||||||||
| Customer D | % | % | ||||||||||||||
| Customer E | % | % | ||||||||||||||
| Customer F | % | % | ||||||||||||||
| Customer G | % | % | ||||||||||||||
| Customer H | % | % | ||||||||||||||
| Total | % | % | ||||||||||||||
NOTE 21 – SUBSEQUENT EVENTS
The Company evaluates subsequent events that have occurred after the balance sheet date but before the financial statements are issued. Subsequent to the date the financial statements were available to be issued. There was no subsequent event that would require disclosure to or adjustment to the financial statements.
On July 17, 2023 the Company sold an aggregate of
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