Pursuant to this prospectus
supplement and the accompanying prospectus, we are offering to investors 2,576,600 ordinary shares of the Company (the “Shares”)
for a purchase price of $1.40 per share. This prospectus supplement and the accompanying prospectus cover the offer and sale
of Shares by the Company directly to five product distributors and business partners of the Company in China.
We expect that the delivery
of the securities being offered pursuant to this prospectus supplement and the accompanying prospectus will be made on or about October
25, 2022.
Our Ordinary Shares are listed
on the Nasdaq Capital Market under the symbol “JWEL”. On October 10, 2022, the last reported sale price of our ordinary shares
on Nasdaq was $1.49 per share.
We are an “emerging
growth company” as defined in the Jumpstart Our Business Act of 2012, as amended, and, as such, will be subject to reduced public
company reporting requirements.
We sell the securities offered
through this prospectus supplement and the accompanying prospectus directly to purchasers. See “Plan of Distribution” beginning
on page S-10 of this prospectus supplement for more information regarding these arrangements.
WHERE YOU CAN FIND
MORE INFORMATION
We are subject to the information
reporting requirements of the Exchange Act that are applicable to foreign private issuers, and, in accordance with these requirements,
we file annual and current reports and other information with the SEC. As a foreign private issuer, we are exempt from, among other things,
the rules under the Exchange Act prescribing the furnishing and content of proxy statements and our officers, directors and principal
shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.
You may inspect, read (without charge) and copy the reports and other information we file with the SEC at the SEC’s Public Reference
Room located at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet website at www.sec.gov that contains our filed
reports and other information that we file electronically with the SEC.
This prospectus supplement
and the accompanying prospectus are only part of a registration statement on Form F-3 that we have filed with the SEC under the Securities
Act and therefore omits certain information contained in the registration statement. We have also filed exhibits and schedules with the
registration statement that are excluded from this prospectus supplement and the accompanying prospectus, and you should refer to the
applicable exhibit or schedule for a complete description of any statement referring to any contract or other document. You may inspect
a copy of the registration statement, including the exhibits and schedules, without charge, at the public reference room or obtain a
copy from the SEC upon payment of the fees prescribed by the SEC.
We also maintain a website
at www.1juhao.com, through which you can access our SEC filings. The information contained on our website is not incorporated by reference
into, and does not form any part of, this prospectus supplement or the accompanying prospectus. We have included our website address
as a factual reference and do not intend it to be an active link to our website.
PROSPECTUS
Jowell Global Ltd.
$200,000,000
Ordinary Shares
Preferred Shares
Warrants
Rights and
Units
We may, from time to time
in one or more offerings, offer and sell up to $200,000,000 in the aggregate of Ordinary Shares, Preferred Shares, warrants to purchase
Ordinary Shares or Preferred Shares, rights or any combination of the foregoing, either individually or as units comprised of one or
more of the other securities. The prospectus supplement for each offering of securities will describe in detail the plan of distribution
for that offering. For general information about the distribution of securities offered, please see “Plan of Distribution”
in this prospectus.
This prospectus provides
a general description of the securities we may offer. We will provide the specific terms of the securities offered in one or more supplements
to this prospectus. We may also authorize one or more free writing prospectuses to be provided to you in connection with these offerings.
The prospectus supplement and any related free writing prospectus may add, update or change information contained in this prospectus.
You should read carefully this prospectus, the applicable prospectus supplement and any related free writing prospectus, as well as the
documents incorporated or deemed to be incorporated by reference, before you invest in any of our securities. This prospectus
may not be used to offer or sell any securities unless accompanied by the applicable prospectus supplement.
We are a Cayman Islands
holding company without material operations and our business is conducted by a variable interest entity (“VIE”) in China
and this structure involves unique risks to investors. We are not a Chinese operating company and that our business in China is conducted
through contractual arrangements with the VIE. However, the VIE agreements have not been truly tested in the courts in China. Chinese
regulatory authorities could disallow this structure, which would likely result in a material change in our operations and/or a material
change in the value of the securities that we are registering for sale, including that it could cause the value of such securities to
significantly decline or become worthless. See “Risk Factors— “If the Chinese government determines that
the contractual arrangements with the VIE do not comply with applicable regulations, our business could be adversely affected.”
and “Uncertainties and quick change in the interpretation and enforcement of Chinese laws and regulations with little advance
notice could result in a material and negative impact on our business operations, decrease the value of our securities and limit the
legal protections available to you and us.”
There are legal and operational
risks associated with being based in and having our operations in China. Recently, the PRC government initiated a series of regulatory
actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities
in the securities market, enhancing supervision over China-based companies listed overseas using variable interest entity structure,
adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. On July 6,
2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued
an announcement to crack down on illegal activities in the securities market and promote the high-quality development of the capital
market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement
and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system
of extraterritorial application of the PRC securities laws. On February 15, 2022, Cybersecurity Review Measures published by Cyberspace
Administration of China or the CAC, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry
of Public Security, Ministry of State Security, Ministry of Finance, Ministry of Commerce, People’s Bank of China, State Administration
of Radio and Television, China Securities Regulatory Commission, State Secrecy Administration and State Cryptography Administration became
effective, which provides that, Critical Information Infrastructure Operators (“CIIOs”) that intend to purchase internet
products and services and Data Processing Operators (“DPOs”) engaging in data processing activities that affect or may affect
national security shall be subject to the cybersecurity review by the Cybersecurity Review Office. On November 14, 2021, CAC published
the Administration Measures for Cyber Data Security (Draft for Public Comments), or the “Cyber Data Security Measure (Draft)”,
which requires cyberspace operators with personal information of more than 1 million users who want to list abroad to file a cybersecurity
review with the Office of Cybersecurity Review. On December 24, 2021, the CSRC released the Administrative Provisions of the State Council
Regarding the Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Comments) and the Management Rules Regarding
the Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Comments). On April 2, 2022, the CSRC released the
Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies
(Draft for Comments), which provides that PRC issuers listing their securities on foreign stock exchanges need to file a notice to CSRC.
In the event that the above proposed provisions and rules are enacted, the relevant filing procedures of the CSRC and other governmental
authorities may be required in connection with this offering. As of the date of this prospectus, these new laws and guidelines have
not impacted the Company’s ability to conduct its business, accept foreign investments, or list and trade on a U.S. or other foreign
exchange as the Company has listed on Nasdaq before these laws take effect and the data processing activities by the VIE do not affect
national security; however, there are uncertainties in the interpretation and enforcement of these new laws and guidelines, which could
materially and adversely impact our business and financial outlook and may impact our ability to accept foreign investments or continue
to list on a U.S. or other foreign exchange. Any change in foreign investment regulations, and other policies in China or related enforcement
actions by China government could result in a material change in our operations and the value of our securities and could significantly
limit or completely hinder our ability to offer our securities to investors or cause the value of our securities to significantly decline
or be worthless. See “Risk Factors—Uncertainties and quick change in the interpretation and enforcement of Chinese laws
and regulations with little advance notice could result in a material and negative impact our business operations, decrease the value
of our securities and limit the legal protections available to you and us.”
The Holding Foreign Companies
Accountable Act, or the HFCA Act, was enacted on December 18, 2020. In accordance with the HFCA Act, trading in securities of any
registrant on a national securities exchange or in the over-the-counter trading market in the United States may be prohibited if
the PCAOB determines that it cannot inspect or fully investigate the registrant’s auditor for three consecutive years beginning
in 2021, and, as a result, an exchange may determine to delist the securities of such registrant. On June 22, 2021, the U.S. Senate passed
the Accelerating Holding Foreign Companies Accountable Act (“Accelerating HFCAA”), which, if enacted, would amend the HFCA
Act and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject
to PCAOB inspections for two consecutive years instead of three. The Company’s auditor is headquartered in the U.S. and it is not
subject to the determinations announced by the Public Company Accounting Oversight Board (“PCAOB”)
on December 16, 2021, and Holding Foreign Companies Accountable Act and related regulations currently do not affect the Company as the
Company’s auditor is subject to PCAOB’s inspection on a regular basis. See “Risk Factors— The Holding Foreign
Companies Accountable Act, or the HFCA Act, and the related regulations including Accelerating HFCAA are evolving quickly. Further implementations
and interpretations of or amendments to the HFCA Act or the related regulations, or a PCOAB’s determination of its lack of sufficient
access to inspect our auditor, might pose regulatory risks to and impose restrictions on us because of our operations in mainland China.
A potential consequence is that our ordinary shares may be delisted by the exchange. The delisting of our ordinary shares, or the threat
of our ordinary shares being delisted, may materially and adversely affect the value of your investment. Additionally, the inability
of the PCAOB to conduct full inspections of our auditor deprives our investors of the benefits of such inspections.”
We are a holding
company incorporated in the Cayman Islands. As a holding company with no material operations of our own, we conduct a substantial
majority of our business through the operating VIE in China. The securities offered in this prospectus are securities of our Cayman
Islands holding company, and we do not have any equity ownership of the VIE, instead we are the primary beneficiary and receive the
economic benefits of the VIE’s business operations through certain contractual arrangements to consolidate financial results
of the VIE in our financial statements because we have satisfied conditions for consolidation of the VIE under U.S. GAAP, pursuant to which Shanghai Juhao is considered a VIE under the Statement
of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810 “Consolidation”,
because the equity investments in Shanghai Juhao no longer have the characteristics of a controlling financial interest, and the Company,
through Jowell Shanghai, is the primary beneficiary of Shanghai Juhao. A VIE is an entity that either has a total equity investment that is
insufficient to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristics
of a controlling financial interest, such as through voting rights, right to receive the expected residual returns of the entity. The
variable interest holder, if any, that has a controlling financial interest in a VIE is deemed to be the primary beneficiary of, and must
consolidate, the VIE. Jowell Shanghai is deemed to have a controlling financial interest through a series of contractual arrangements
and be the primary beneficiary of Shanghai Juhao because it has both of the following characteristics: (1) the power to direct activities
at Shanghai Juhao that most significantly impact such entity’s economic performance and (2) the obligation to absorb losses of,
and the right to receive benefits from, Shanghai Juhao that could potentially be significant to such entity. Pursuant to the contractual
arrangements with Shanghai Juhao, Shanghai Juhao shall pay service fees equal to all of its net profit after tax payments to Jowell Shanghai.
Such contractual arrangements are designed so that the Shanghai Juhao would operate for the benefit of Jowell Shanghai and ultimately,
the Company. VIE
structure is used to provide investors with exposure to foreign investment in China-based companies where the business of the
operating companies in China might be prohibited or restricted for foreign investment now or in the future. The business operations
of the VIE include value-added telecommunication services and foreign ownership of value-added telecommunications services is
subject to restrictions under current PRC laws and regulations, which prohibit foreign investment to own more than 50% equity
interest of the value-added telecommunication companies and will prevent the holding company consolidating
the financial results of such entities under equity ownership structure. Investors of our ordinary shares will not own any equity interests in the
VIE and may never hold equity interests in our Chinese operating companies, but instead own shares of a Cayman Islands holding
company. We treat the VIE as our consolidated affiliated entities for accounting purposes under U.S. GAAP and not the entities in
which we own equity interest.
Under existing PRC foreign
exchange regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange
transactions, can be made in foreign currencies without prior approval from State Administration of Foreign Exchange or SAFE by complying
with certain procedural requirements. Therefore, our WFOE is able to pay dividends in foreign currencies to us without prior approval
from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC
foreign exchange regulations, such as the overseas investment registrations by the shareholders of the Company who are PRC residents.
Approval from or registration with appropriate government authorities is, however, required where the RMB is to be converted into foreign
currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC
government may also at its discretion restrict access in the future to foreign currencies for current account transactions. For our Hong
Kong subsidiary and the holding company (“Non-PRC Entities”), there is no restrictions on foreign exchange for such entities
and they are able to transfer cash among these entities, across borders and to US investors. Also, there is no regulatory restrictions
and limitations on the abilities of Non-PRC Entities to distribute earnings from their businesses, including from subsidiaries to the
parent company or from the holding company to the U.S. investors as well as the abilities to settle amounts owed. However, to the extent
cash/assets in the business is in PRC/Hong Kong or our PRC/Hong Kong entity, the funds/assets may not be available to fund operations
or for other use outside of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability
of us, our subsidiaries, or the consolidated VIE by the PRC government to transfer cash/assets. See “Dividend Distribution and
Cash Transfer Between the Holding Company, Subsidiary and VIE.” on page 10, "Summary of risks related to our
corporate structure and having the majority of our operations in China” on page 15 and “Risk Factors—Uncertainties
and quick change in the interpretation and enforcement of Chinese laws and regulations with little advance notice could result in a material
and negative impact our business operations, decrease the value of our securities and limit the legal protections available to you and
us.” on page 20. We are a holding company, and we may rely on dividends and other distributions on equity paid by our subsidiaries
for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders
and service any debt we may incur. If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governing
the debt may restrict its ability to pay dividends or make other distributions to us. See “Item 3. Key Information — 3.D.
Risk Factors — Risks Related to Doing Business in China,” “— PRC regulation of loans to and
direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent
us from using the proceeds of our offerings and financings in the U.S. to make loans to or make additional capital contributions to our
PRC subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business.,” and
“— We rely on dividends and other distributions on equity paid by our PRC subsidiary to fund any cash and financing requirements
we may have, and any limitation on the ability of our PRC subsidiary to make payments to us could have a material adverse effect on our
ability to conduct our business.” in our annual report on Form 20-F for the year ended December 31, 2021, which is incorporated
in this prospectus by reference.
As
of the date of this prospectus, we do not have cash management policies and procedures in place that dictate how funds are transferred
through our organization. Rather, the funds can be transferred in accordance with the applicable PRC laws and regulations. See
“Dividend Distribution and Cash Transfer Between the Holding Company, Subsidiary and VIE.” on page 10
As of the date of this
prospectus, no dividends or distributions have been made between the holding company, its subsidiaries, and consolidated VIE, or to investors
including U.S. investors except that the VIE Shanghai Juhao made a cash dividend of $1.6 million to its shareholders in July 2019 before
we became a public company in March 2021. The holding company, its subsidiaries, and VIE do not have any plan to distribute dividend
or settle amounts owed under the VIE Agreements in the foreseeable future. The cash transfer among the holding company, its subsidiaries
and VIE is typically transferred through payment for investment, intercompany services or intercompany borrowing between holding company,
subsidiaries and VIE. Cash transfers have been made to date between the holding company, its subsidiaries, and consolidated VIE, include
the following: (1) the holding company made investment payment of US$24,330,000 to Jowell HK during the fiscal years ended December 31,
2021; (2) Jowell HK made investment payment of US$20,629,000 to Jowell Shanghai during the fiscal years ended December 31, 2021; (3)
Jowell HK loaned US$606,000 to VIE during the fiscal year ended December 31, 2021; (4) VIE paid US$12,462,715 to Jowell Shanghai for
purchase of products during the fiscal years ended December 31, 2021; and (5) the holding company loaned US$4,221,549 to VIE to pay for
expenses during the fiscal years ended December 31, 2021. See “Condensed and Consolidated Financial Statements” on
page 4, “Dividend Distribution and Cash Transfer Between the Holding Company, Subsidiary and VIE.” on page 10 and
“Risk Factor - Our contractual arrangements with the VIE may not be as effective in providing operational control as direct
ownership” on page 20.
The Company, JWEL, the
Registrant, the holding company, we, us, our company, and our are referred to Jowell Global Ltd. (“Jowell Global”), a holding
company incorporated under the laws of the Cayman Islands. We currently conduct our business through the VIE Shanghai Juhao Information
Technology Co., Ltd. (“Shanghai Juhao”) in China. Shanghai Juhao and its shareholders entered into a series of contractual
arrangements with Shanghai Jowell Information Technology Co., Ltd. (“WFOE” or “Jowell Shanghai”), a company incorporated
in China and a wholly owned subsidiary of Jowell Technology Limited (“Jowell HK”), which is a holding company incorporated
in Hong Kong and a wholly owned subsidiary of Jowell Global.
As a holding company,
we may rely on dividends and other distributions on equity paid by our subsidiaries in Hong Kong and China for our cash and financing
requirements. If any of our Hong Kong and Chinese subsidiaries incurs debt on its own behalf in the future, the instruments governing
such debt may restrict their ability to pay dividends to us. However, neither any of our subsidiaries or the VIE has made any dividends
or other distributions to our holding company or any U.S. investors as of the date of this prospectus. In the future, cash proceeds raised
from overseas financing activities, including this offering, may be transferred by us to our Hong Kong subsidiary and WFOE via capital
contribution or shareholder loans, as the case may be.
Our Ordinary Shares are listed
on the Nasdaq Capital Market under the symbol “JWEL.” The applicable prospectus supplement will contain information, where
applicable, as to other listings, if any, on the Nasdaq Capital Market or other securities exchange of the securities covered by the
prospectus supplement.
Investing in our
securities involves a high degree of risk. See “Risk Factors” on page 19 of this prospectus and in the documents
incorporated by reference in this prospectus, as updated in the applicable prospectus supplement, any related free writing
prospectus and other future filings we make with the Securities and Exchange Commission that are incorporated by reference into this
prospectus, for a discussion of the factors you should consider carefully before deciding to purchase our securities.
We may sell these securities
directly to investors, through agents designated from time to time or to or through underwriters or dealers. For additional information
on the methods of sale, you should refer to the section entitled “Plan of Distribution” in this prospectus. If any underwriters
are involved in the sale of any securities with respect to which this prospectus is being delivered, the names of such underwriters and
any applicable commissions or discounts will be set forth in a prospectus supplement. The price to the public of such securities and
the net proceeds we expect to receive from such sale will also be set forth in a prospectus supplement.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The date of this prospectus is _____, 2022.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
This prospectus is part
of a registration statement that we filed with the Securities and Exchange Commission, or the SEC, under the Securities Act of 1933,
as amended, or the Securities Act, using a “shelf” registration process. Under this shelf registration process, we may from
time to time sell Ordinary Shares, Preferred Shares, warrants to purchase Ordinary Shares or Preferred Shares, rights or any combination
of the foregoing, either individually or as units comprised of one or more of the other securities, in one or more offerings up to a
total dollar amount of $200,000,000. We have provided to you in this prospectus a general description of the securities we may offer.
Each time we sell securities under this shelf registration, we will, to the extent required by law, provide a prospectus supplement that
will contain specific information about the terms of that offering. We may also authorize one or more free writing prospectuses to be
provided to you that may contain material information relating to these offerings. The prospectus supplement and any related free writing
prospectus that we may authorize to be provided to you may also add, update or change information contained in this prospectus or in
any documents that we have incorporated by reference into this prospectus. To the extent there is a conflict between the information
contained in this prospectus and the prospectus supplement or any related free writing prospectus, you should rely on the information
in the prospectus supplement or the related free writing prospectus; provided that if any statement in one of these documents is inconsistent
with a statement in another document having a later date – for example, a document filed after the date of this prospectus and
incorporated by reference into this prospectus or any prospectus supplement or any related free writing prospectus – the statement
in the document having the later date modifies or supersedes the earlier statement.
We have not authorized any
dealer, agent or other person to give any information or to make any representation other than those contained or incorporated by reference
in this prospectus and any accompanying prospectus supplement, or any related free writing prospectus that we may authorize to be provided
to you. You must not rely upon any information or representation not contained or incorporated by reference in this prospectus or an
accompanying prospectus supplement, or any related free writing prospectus that we may authorize to be provided to you. This prospectus
and the accompanying prospectus supplement, if any, do not constitute an offer to sell or the solicitation of an offer to buy any securities
other than the registered securities to which they relate, nor do this prospectus and the accompanying prospectus supplement constitute
an offer to sell or the solicitation of an offer to buy securities in any jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction. You should not assume that the information contained in this prospectus, any applicable prospectus
supplement or any related free writing prospectus is accurate on any date subsequent to the date set forth on the front of such document
or that any information we have incorporated by reference is correct on any date subsequent to the date of such document incorporated
by reference (as our business, financial condition, results of operations and prospects may have changed since that date), even though
this prospectus, any applicable prospectus supplement or any related free writing prospectus is delivered or securities are sold on a
later date.
As permitted by SEC rules
and regulations, the registration statement of which this prospectus forms a part includes additional information not contained in this
prospectus. You may read the registration statement and the other reports we file with the SEC at its website or at its offices described
below under “Where You Can Find More Information.”
Unless the context otherwise
requires, all references in this prospectus to “Jowell Global”, “JWEL,” “the holding company,” “we,”
“us,” “our,” “the Company,” “our company,” “the “Registrant” or similar
words refer to Jowell Global Ltd. together with our subsidiaries and the VIE.
“China” or
the “PRC” are to the People’s Republic of China, excluding Taiwan and the special administrative regions
of Hong Kong and Macau for the purposes of this prospectus only.
PROSPECTUS SUMMARY
Overview
We were incorporated under
the laws of the Cayman Islands as an offshore holding company and we own 100% of the equity interest in Jowell Technology Limited (“Jowell
HK”), which was incorporated under the laws of Hong Kong.
Through Jowell HK, we
own 100% of the equity interest in Shanghai Jowell Information Technology Co., Ltd. (“WFOE” or “Jowell Shanghai”).
The WFOE entered into a series of agreements with Shanghai Juhao Information Technology Co., Ltd. (“Shanghai Juhao” or “VIE”)
and Shanghai Juhao’s shareholders, through which we are the primary beneficiary of Shanghai Juhao and derive all of the economic
interest and benefits from Shanghai Juhao. We treat Shanghai Juhao as our consolidated affiliated entities for accounting purposes under
U.S. GAAP and not the entities in which we own equity interest.
We, through the VIE Shanghai
Juhao, focuses on providing consumers with convenient and high-quality online retail experience through our retail platforms, www.1juhao.com,
and mobile app, as well as authorized retail stores. Shanghai Juhao also offers programs that enable third-party sellers to distribute
their products through our platforms. In an effort to differentiate our services, Shanghai Juhao focuses on and specialize in the online
retail of cosmetic products, health and nutritional supplements and household products.
In 2012, Shanghai Juhao started
its operation, which was among the first membership-based e-commerce platforms for online-to-offline sales of cosmetics, health and nutritional
supplements and household products in China. Today, Shanghai Juhao offer an online platform Juhao Mall which holds an EDI (Electronic
Data Interchange) certification approved by the Shanghai Communication Administration pursuant to the requirement of Ministry of Industry
and Information Technology of China, selling our own brand products manufactured by third parties as well as international and domestic
branded products.
Since August 2017, Shanghai Juhao has been also selling its products
in authorized retail stores all across China. Operating under the brand name “Love Home Store” or “LHH Store”,
the authorized retailers may operate as independent stores or store-in-shop (an integrated store), selling our products that they purchased
through Shanghai Juhao’s online platform under their special retailer accounts with us which provide them with major discounts.
As of December 31, 2021, Shanghai Juhao authorized 26,043 Love Home stores in 31 provinces of China, providing offline retail and wholesale
of our products.
On April 28, 2021, the
Company announced Shanghai Juhao has officially launched its “Juhao Best Choice” community group-buying store initiative
to continue growing its offline retail market presence. The community group-buying offline stores sell fresh produce, foods and daily
household consumer products in addition to the cosmetics and health and nutritional supplements currently sold in the Company’s
franchised LHH Stores. The community group-buying stores aim to provide a more convenient shopping experience and high-quality produce
and foods for consumers from local communities, towns and villages across China. Juhao Best Choice stores will be owned and operated
by Shanghai Juhao or third-party franchisee store owners which consolidate online and offline resources for store design and logistics
services and provide guidance and trainings for store owners with a unified system for store management, design, service criteria, SKU
management and product delivery. Shanghai Juhao also provides the store owners with live-streaming marketing skill training and upgrade
and expand certain existing LHH Stores to Juhao Best Choice stores. As of December 31, 2021, Shanghai
Juhao has opened seven self-operated Juhao Best Choice community group buying stores in various cities in China as the experimental and
demonstration stores for this development.
We are a holding
company incorporated in the Cayman Islands. Our securities offered in this prospectus are securities of our Cayman Islands holding
company. As a holding company with no material operations of our own, we conduct our business through the VIE in China. VIE
structure is used to provide investors with exposure to foreign investment in China-based companies where the business of the
operating companies in China might be prohibited or restricted for foreign investment now or in the future. The business operations
of Shanghai Juhao include value-added telecommunication services and foreign ownership of value-added telecommunications services is
subject to restrictions under current PRC laws and regulations which prohibit foreign investment to own more than 50% equity
interest of the value-added telecommunication companies and will prevent the holding company consolidating
the financial results of such entities under equity ownership structure. Investors of our ordinary shares will not own any equity interests in the
VIE and may never hold equity interests in our Chinese operating company, but instead own shares of a Cayman Islands holding
company. Neither we nor our subsidiaries own any shares in the VIE, Shanghai Juhao. Instead, we are the primary beneficiary and
receive the economic benefits of the business operations of Shanghai Juhao through a series of contractual arrangements (the
“VIE Agreements”). We evaluated the guidance in FASB ASC 810 and determined that Shanghai Juhao is a VIE. A VIE is an
entity that has either a total equity investment that is insufficient to permit the entity to finance its activities without
additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest,
such as through voting rights, right to receive the expected residual returns of the entity or obligation to absorb the expected
losses of the entity. Our WFOE has the power to direct activities at Shanghai Juhao that most significantly impact Shanghai
Juhao’s economic performance, and has the right to receive benefits from Shanghai Juhao. As such, the WFOE is the primary
beneficiary of the VIE, for accounting purposes, based upon such contractual arrangements. Accordingly, under U.S. GAAP, the
financial results of the VIE are consolidated in our financial statements. In addition, these VIE agreements have not been truly
tested in the courts in China. Investors of our securities of will not own any equity interests in the VIE, but instead own shares
of a Cayman holding company. Chinese regulatory authorities could disallow the VIE structure, which would likely result in a
material change in our operations and/or value of our securities, including that it could cause the value of our securities to
significantly decline or become worthless.
The VIE structure is subject
to various risks. For example, the contractual arrangements may not be as effective as direct ownership in providing us with exerting
the right over Shanghai Juhao. We expect to rely on the performance by the VIE shareholders of their respective obligations under the
contracts to consolidate financial results of the VIE in our financial statements under U.S. GAAP. The VIE shareholders may not act in
the best interests of our company or may not perform their obligations under these contracts. Such risks will exist throughout the period
in which we operate our business in China through the contractual arrangements. If any dispute relating to these contracts remains unresolved,
we will have to enforce our rights under these contracts through the operations of PRC law and arbitration, litigation or other legal
proceedings which could be a lengthy process and very costly.
Shanghai Juhao is incorporated
and operating in mainland China and it has received all required permissions from Chinese authorities to operate its current business
in China, including Business License, EDI (Electronic Data Interchange) Certificate, Retail License for Alcoholic Products, Food Business
License and International Trade Business Filing Form. Other than these permits, based on the advice of our PRC counsel Jiangsu Yiyou
Tianyuan Law Firm, we, our subsidiaries or VIE are not required to obtain permit and approval from Chinese authorities to operate our
business and to offer the securities being registered to foreign investors. We, our subsidiaries, or VIE are not covered by permissions
requirements from the China Securities Regulatory Commission (CSRC), Cyberspace Administration of China (CAC) or any other governmental
agency that is required to approve the VIE’s business and operations. As the VIE operates an e-commerce platforms for online-to-offline
sales of cosmetics, health and nutritional supplements and household products in China and our products and services do not pose national
security risks, based on the advice of our PRC counsel Jiangsu Yiyou Tianyuan Law Firm, we are not subject to the report requirement
under Cybersecurity Review Measures published by Cyberspace Administration of China, National Development and Reform Commission, Ministry
of Industry and Information Technology, Ministry of Public Security, Ministry of State Security, Ministry of Finance, Ministry of Commerce,
People’s Bank of China, State Administration of Radio and Television, China Securities Regulatory Commission, State Secrecy Administration
and State Cryptography Administration on December 28, 2021, which became effective on February 15, 2022. As of the date of this prospectus,
we (1) are not required to obtain permissions from any PRC authorities to issue our securities being registered for sale to foreign investors,
(2) are not subject to permission requirements from China Securities Regulatory Commission (the “CSRC”), Cyberspace Administration
of China (“CAC”) or any other authority that is required to approve of the VIE’s operations, and (3) have not
received or were denied such permissions by any PRC authorities. Nevertheless, the General Office of the Central Committee of the Communist
Party of China and the General Office of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities
Activities According to Law,” or the Opinions, which were made available to the public on July 6, 2021. The Opinions emphasized
the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas
listings by Chinese companies. On December 24, 2021, the CSRC released the Administrative Provisions of the State Council Regarding the
Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Comments) and the Management Rules Regarding the Overseas
Issuance and Listing of Securities by Domestic Enterprises (Draft for Comments). On April 2, 2022, the CSRC released the Provisions on
Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (Draft for
Comments), which provides that PRC issuers listing their securities on foreign stock exchanges need to file a notice to CSRC. In the
event that the above proposed provisions and rules are enacted, the relevant filing procedures of the CSRC and other governmental authorities
may be required in connection with this offering. Given the current PRC regulatory environment, it is uncertain when and whether we,
WFOE or VIE, will be required to obtain permission from the PRC government to list on U.S. exchanges in the future, and when such permission
is obtained, whether it will be denied or rescinded. If we, our subsidiaries, or the VIE do not receive or maintain such permissions
or approvals, inadvertently conclude that such permissions or approvals are not required, or applicable laws, regulations, or interpretations
change and we are required to obtain such permissions or approvals in the future, it could significantly limit or completely hinder our
ability to offer or continue to offer our securities to investors and cause the value of our securities to significantly decline or become
worthless.
There are legal and operational
risks associated with being based in and having all our operations in China. These risks could result in a material change in our operations
and/or the value of our securities and could significantly limit or completely hinder our ability to offer or continue to offer securities
to investors and cause the value of such securities to significantly decline or be worthless. The enforcement of laws and that rules
and regulations in China can change quickly with little advance notice and the risk that the Chinese government may intervene or influence
our operations at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China- based issuers,
could result in a material change in our operations and/or the value of our securities we are registering for sale. Any actions by the
Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based
issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the
value of such securities to significantly decline or be worthless. See “Risk Factors— “The Chinese government
exerts substantial influence over the manner in which we must conduct our business, and may intervene or influence our operations at
any time, which could result in a material change in our operations, significantly limit or completely hinder our ability to offer or
continue to offer our securities to investors and, and cause the value of our securities to significantly decline or be worthless.”
and “Uncertainties and quick change in the interpretation and enforcement of Chinese laws and regulations with little advance
notice could result in a material and negative impact on our business operations, decrease the value of our securities and limit the
legal protections available to you and us.” Recently, the PRC government initiated a series of regulatory actions and statements
to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities
market, enhancing supervision over China-based companies listed overseas using variable interest entity structure, adopting new measures
to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. On July 6, 2021, the General Office
of the Communist Party of China Central Committee and the General Office of the State Council jointly issued an announcement to crack
down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among other
things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation,
to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application
of the PRC securities laws. On February 15, 2022, Cybersecurity Review Measures published by Cyberspace Administration of China or the
CAC, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, Ministry
of State Security, Ministry of Finance, Ministry of Commerce, People’s Bank of China, State Administration of Radio and Television,
China Securities Regulatory Commission, State Secrecy Administration and State Cryptography Administration became effective, which provides
that, Critical Information Infrastructure Operators (“CIIOs”) that intend to purchase internet products and services and
Data Processing Operators (“DPOs”) engaging in data processing activities that affect or may affect national security shall
be subject to the cybersecurity review by the Cybersecurity Review Office. On November 14, 2021, CAC published the Administration Measures
for Cyber Data Security (Draft for Public Comments), or the “Cyber Data Security Measure (Draft)”, which requires cyberspace
operators with personal information of more than 1 million users who want to list abroad to file a cybersecurity review with the Office
of Cybersecurity Review. As of the date of this prospectus, these new laws and guidelines have not impacted the Company’s ability
to conduct its business, accept foreign investments, or trade on Nasdaq Stock Market; however, there are uncertainties in the interpretation
and enforcement of these new laws and guidelines, which could materially and adversely impact our business and financial outlook. See
“Risk Factors – Uncertainties and quick change in the interpretation and enforcement of Chinese laws and regulations with
little advance notice could result in a material and negative impact our business operations, decrease the value of our securities and
limit the legal protections available to you and us.”
We are incorporated in
the Cayman Islands and conduct our operations primarily in China. All of our assets are located outside of the United States. In addition,
Mr. Zhiwei Xu, the Chairman, Chief Executive Officer and a major shareholder of the Company, Ms. Dan Zhao, a board member and vice president
of the Company, Mr. Haitao Wang, an independent director of the Company and other officers of the Company reside outside of the United
States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United
States in the event that you believe we have violated your rights, either under United States federal or state securities laws or otherwise,
or if you have a claim against us. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and
of China may not permit you to enforce a judgment against our assets or the assets of our directors and officers.
It may also be difficult
for you or overseas regulators to conduct investigations or collect evidence within China. For example, in China, there are significant
legal and other obstacles to obtaining information needed for shareholder investigations or litigation outside China or otherwise with
respect to foreign entities. Although the authorities in China may establish a regulatory cooperation mechanism with its counterparts
of another country or region to monitor and oversee cross-border securities activities, such regulatory cooperation with the securities
regulatory authorities in the Unities States may not be efficient in the absence of practical cooperation mechanism. Furthermore, according
to Article 177 of the PRC Securities Law, or “Article 177,” which became effective in March 2020, no overseas securities
regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. Article 177
further provides that Chinese entities and individuals are not allowed to provide documents or materials related to securities business
activities to foreign agencies without prior consent from the securities regulatory authority of the PRC State Council and the competent
departments of the PRC State Council. While detailed interpretation of or implementing rules under Article 177 have yet to be promulgated,
the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may
further increase difficulties faced by you in protecting your interests.
The Holding Foreign Companies
Accountable Act, or the HFCA Act, was enacted on December 18, 2020. In accordance with the HFCA Act, trading in securities of any
registrant on a national securities exchange or in the over-the-counter trading market in the United States may be prohibited if
the PCAOB determines that it cannot inspect or fully investigate the registrant’s auditor for three consecutive years beginning
in 2021, and, as a result, an exchange may determine to delist the securities of such registrant. On June 22, 2021, the U.S. Senate passed
the Accelerating Holding Foreign Companies Accountable Act (“Accelerating HFCAA”), which, if enacted, would amend the HFCA
Act and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject
to PCAOB inspections for two consecutive years instead of three, thus reducing the time period before our securities may be prohibited
from trading or delisted if our auditor is unable to meet the PCAOB inspection requirement. Our independent registered public accounting
firm that issues the audit report included in our annual report which is incorporated by reference in this prospectus, as an auditor
of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States
pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Our auditor
is headquartered in New York City, and has been inspected by the PCAOB on a regular basis with the last inspection in June 2018 and is
not subject to the determinations announced by the PCAOB on December 16, 2021. However, the recent developments would add uncertainties
to our offering and we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria
to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel
and training, or sufficiency of resources, geographic reach, or experience as it relates to our audit. If it is later determined that
the PCAOB is unable to inspect or investigate completely our auditor because of a position taken by an authority in a foreign jurisdiction
or any other reasons, the lack of inspection could cause the trading in our securities to be prohibited under the Holding Foreign Companies
Accountable Act, and as a result Nasdaq may delist our securities. If our securities are unable to be listed on another securities exchange,
such a delisting would substantially impair your ability to sell or purchase our securities when you wish to do so, and the risk and
uncertainty associated with a potential delisting would have a negative impact on the price of our ordinary shares. Further, new laws
and regulations or changes in laws and regulations in both the United States and China could affect our ability to list and trade our
ordinary shares on Nasdaq, which could materially impair the market price for our securities.
Set forth below are condensed
consolidating statements that disaggregate the financial position and operations, including income (loss) and cash flows as of and for
the years ended December 31, 2021 and 2020, showing financial information for the Company (excluding the VIEs), the VIEs, eliminating
entries and consolidated information.
FOR THE YEAR ENDED
DEEMBER 31, 2021
| |
JWEL | | |
HK
subsidiary | | |
Elimination | | |
Total
outside PRC | | |
WFOE | | |
VIE | | |
Elimination | |
|
Total
inside
PRC | | |
Elimination | |
|
Consolidation | |
Cash | |
$ | 9,838 | | |
$ | 2,935 | | |
$ | - | | |
$ | 12,773 | | |
$ | 19,559 | | |
$ | 18,217,405 | | |
$ | - | |
|
$ | 18,236,964 | | |
$ | - | |
|
$ | 18,249,737 | |
Restricted
cash | |
$ | - | | |
$ | 2,999,990 | | |
$ | - | | |
$ | 2,999,990 | | |
$ | - | | |
$ | - | | |
$ | - | |
|
$ | - | | |
$ | - | |
|
$ | 2,999,990 | |
Other
receivable - intercompany | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 236,442 | | |
$ | - | |
|
$ | 236,442 | | |
$ | (236,442 | )(d2) |
|
$ | - | |
Other
receivable - VIE | |
$ | 4,221,549 | | |
$ | 606,000 | | |
$ | - | | |
$ | 4,827,549 | | |
$ | 30,319,344 | | |
$ | - | | |
$ | (30,319,344 | )(b)(d1) |
|
$ | - | | |
$ | (4,827,549 | )(d3) |
|
$ | - | |
Total
current assets | |
$ | 4,335,177 | | |
$ | 3,608,925 | | |
$ | - | | |
$ | 7,944,102 | | |
$ | 31,616,514 | | |
$ | 42,129,500 | | |
$ | (30,319,344 | ) |
|
$ | 43,426,670 | | |
$ | (5,063,991 | ) |
|
$ | 46,306,781 | |
Investment
in subsidiaries and VIE | |
$ | 35,584,716 | | |
$ | 16,269,799 | | |
$ | (19,878,724 | )(a) | |
$ | 31,975,791 | | |
$ | - | | |
$ | - | | |
$ | - | |
|
$ | - | | |
$ | (31,975,791 | )(c) |
|
$ | 0 | |
Total
Assets | |
$ | 39,919,893 | | |
$ | 19,878,724 | | |
$ | (19,878,724 | ) | |
$ | 39,919,893 | | |
$ | 31,616,514 | | |
$ | 54,550,637 | | |
$ | (30,319,344 | ) |
|
$ | 55,847,807 | | |
$ | (37,039,782 | ) |
|
$ | 58,727,918 | |
Other
payable - intercompany | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 35,166,443 | | |
$ | (29,979,619 | )(d1) |
|
$ | 5,186,824 | | |
$ | (5,186,824 | )(c)(d3) |
|
$ | - | |
Other
payable - VIE | |
$ | 236,442 | | |
$ | - | | |
$ | - | | |
$ | 236,442 | | |
$ | - | | |
$ | - | | |
$ | - | |
|
$ | - | | |
$ | (236,442 | )(d2) |
|
$ | - | |
Total
current liabilities | |
$ | 236,442 | | |
$ | - | | |
$ | - | | |
$ | 236,442 | | |
$ | (2 | ) | |
$ | 50,217,271 | | |
$ | (29,979,619 | ) |
|
$ | 20,237,650 | | |
$ | (5,423,266 | ) |
|
$ | 15,050,826 | |
Total
liabilities | |
$ | 236,442 | | |
$ | - | | |
$ | - | | |
$ | 236,442 | | |
$ | (2 | ) | |
$ | 54,210,912 | | |
$ | (29,979,619 | ) |
|
$ | 24,231,291 | | |
$ | (5,423,266 | ) |
|
$ | 19,044,467 | |
Total
Stockholders’ Equity | |
$ | 39,683,451 | | |
$ | 19,878,724 | | |
$ | (19,878,724 | )(a) | |
$ | 39,683,451 | | |
$ | 31,616,516 | | |
$ | 339,725 | | |
$ | (339,725 | )(b)
|
|
$ | 31,616,516 | | |
$ | (31,616,516 | )(c) |
|
$ | 39,683,451 | |
Total
Liabilities and Stockholders’ Equity | |
$ | 39,919,893 | | |
$ | 19,878,724 | | |
$ | (19,878,724 | ) | |
$ | 39,919,893 | | |
$ | 31,616,514 | | |
$ | 54,550,637 | | |
$ | (30,319,344 | ) |
|
$ | 55,847,807 | | |
$ | (37,039,782 | ) |
|
$ | 58,727,918 | |
| (a) | to eliminate holding company’s investments in subsidiary outside
PRC. |
| (b) | to eliminate receivables as a result of contractual agreements between
WFOE and VIE. |
| (c) | to eliminate holding
company’s investment in WFOE. |
| (d) | to
eliminate intercompany balances: |
| |
Due from | |
Due to | |
Amount | | |
|
(1 | ) |
WFOE | |
VIE | |
$ | 29,979,619 | | |
intercompany balances as a result of intercompany revenue |
(2 | ) |
VIE | |
JWEL | |
$ | 236,442 | | |
Intercompany balance |
(3 | ) |
JWEL and HK Subsidiary | |
VIE | |
$ | 4,827,549 | | |
Intercompany balance |
FOR THE YEAR ENDED DECEMBER 31, 2021
| |
JWEL | | |
HK
subsidiary | | |
Elimination | | |
Total
outside PRC | | |
WFOE | | |
VIE | | |
Elimination |
| |
Total
inside
PRC | | |
Elimination | | |
Consolidated | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
|
| |
| | |
| | |
| |
Total Net
Revenues | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 30,992,095 | | |
$ | 170,911,999 | | |
$ | (30,992,095 |
)(d) | |
$ | 170,911,999 | | |
$ | - | | |
$ | 170,911,999 | |
Operating
Expenses: | |
| (1,937,800 | ) | |
| (92,197 | ) | |
| - | | |
| (2,029,997 | ) | |
| (32,502,592 | ) | |
| (174,364,008 | ) | |
| 30,992,095 |
(d) | |
| (175,874,505 | ) | |
| - | | |
| (177,904,502 | ) |
Income From Operations | |
| (1,937,800 | ) | |
| (92,197 | ) | |
| - | | |
| (2,029,997 | ) | |
| (1,510,497 | ) | |
| (3,452,009 | ) | |
| - |
| |
| (4,962,506 | ) | |
| - | | |
| (6,992,503 | ) |
Other Income, net | |
| - | | |
| 122 | | |
| - | | |
| 122 | | |
| 1,711 | | |
| 411,078 | | |
| - |
| |
| 412,789 | | |
| - | | |
| 412,911 | |
Benefit (Provision) for
Income Taxes | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 190,516 | | |
| - |
| |
| 190,516 | | |
| - | | |
| 190,516 | |
Loss from VIE | |
| - | | |
| - | | |
| - | | |
| - | | |
| (2,850,415 | ) | |
| - | | |
| 2,850,415 |
(b) | |
| - | | |
| - | | |
| - | |
Loss
from subsidiaries | |
| (4,451,276 | ) | |
| (4,359,201 | ) | |
| 4,359,201 | (a) | |
| (4,451,276 | ) | |
| - | | |
| - | | |
| - |
| |
| - | | |
| 4,451,276 | (c) | |
| - | |
Net
loss | |
$ | (6,389,076 | ) | |
$ | (4,451,276 | ) | |
$ | 4,359,201 | | |
$ | (6,481,151 | ) | |
$ | (4,359,201 | ) | |
$ | (2,850,415 | ) | |
$ | 2,850,415 |
| |
$ | (4,359,201 | ) | |
$ | 4,451,276 | | |
$ | (6,389,076 | ) |
(a) |
to
eliminate net loss by HK subsidiary. |
(b) |
to
eliminate net loss by WFOE. |
(c) |
to
eliminate net loss by JWEL. |
(d) |
to
eliminate revenue and expenses for services provided by the WFOE to VIE. |
FOR THE YEAR ENDED DECEMBER 31, 2021
| |
JWEL | | |
HK
subsidiary | | |
Elimination | | |
Total
outside PRC | | |
WFOE | | |
VIE | | |
Elimination |
| |
Total
inside PRC | | |
Elimination | | |
Consolidated | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
|
| |
| | |
| | |
| |
Net cash used
in operating activities | |
$ | (778,390 | ) | |
$ | (92,075 | ) | |
$ | - | | |
$ | (870,465 | ) | |
$ | (2,768,576 | ) | |
$ | (14,394,918 | ) | |
$ | - |
| |
$ | (17,163,494 | ) | |
$ | - | | |
$ | (18,033,959 | ) |
Net cash used in investing
activities | |
| (28,323,808 | ) | |
| (21,235,000 | ) | |
| 24,330,000 | (a) | |
| (25,228,808 | ) | |
| (17,860,944 | ) | |
| (1,987,258 | ) | |
| 17,810,602 |
(b) | |
| (2,037,600 | ) | |
| 20,629,000 | (c) | |
| (6,637,408 | ) |
Net cash provided by financing
activities | |
| 24,509,792 | | |
| 24,330,000 | | |
| (24,330,000 | )(a) | |
| 24,509,792 | | |
| 20,629,000 | | |
| 20,555,262 | | |
| (17,852,916 |
)(b) | |
| 23,331,346 | | |
| (20,629,000 | )(c) | |
| 27,212,138 | |
Effect
of exchange rate changes on cash | |
| - | | |
| - | | |
| - | | |
| - | | |
| 20,079 | | |
| 402,507 | | |
| 42,314 |
(b) | |
| 464,900 | | |
| - | | |
| 464,900 | |
Net increase (decrease)
in cash | |
| (4,592,405 | ) | |
| 3,002,925 | | |
| - | | |
| (1,589,480 | ) | |
| 19,559 | | |
| 4,575,593 | | |
| - |
| |
| 4,595,152 | | |
| - | | |
| 3,005,672 | |
Cash,
beginning of year | |
| 4,602,243 | | |
| - | | |
| - | | |
| 4,602,243 | | |
| - | | |
| 13,641,812 | | |
| - |
| |
| 13,641,812 | | |
| - | | |
| 18,244,055 | |
Cash,
end of year | |
$ | 9,838 | | |
$ | 3,002,925 | | |
$ | - | | |
$ | 3,012,763 | | |
$ | 19,559 | | |
$ | 18,217,405 | | |
$ | - |
| |
$ | 18,236,964 | | |
$ | - | | |
$ | 21,249,727 | |
| (a) | to eliminated JWEL investment
in HK subsidiary |
| (b) | to eliminated intercompany
borrowing between WFOE and VIE |
| (c) | to eliminated HK subsidiary
investment in WFOE |
FOR THE YEAR ENDED DEEMBER 31, 2020
| |
JWEL | | |
HK
subsidiary | | |
Elimination | | |
Total
outside
PRC | | |
WFOE | | |
VIE | | |
Elimination | | |
Total
inside PRC | | |
Elimination | | |
Consolidation | |
Cash | |
$ | 4,602,243 | | |
$ | - | | |
$ | - | | |
$ | 4,602,243 | | |
$ | - | | |
$ | 13,641,812 | | |
$ | - | | |
$ | 13,641,812 | | |
$ | - | | |
$ | 18,244,055 | |
Other receivable - VIE | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 15,034,773 | | |
$ | - | | |
$ | (15,034,773 | )(b) | |
$ | - | | |
$ | - | | |
$ | - | |
Total current assets | |
$ | 4,894,243 | | |
$ | - | | |
$ | - | | |
$ | 4,894,243 | | |
$ | 15,034,773 | | |
$ | 25,120,401 | | |
$ | (15,034,773 | ) | |
$ | 25,120,401 | | |
$ | - | | |
$ | 30,014,644 | |
Investment in subsidiaries
and VIE | |
$ | 15,034,773 | | |
$ | 15,034,773 | | |
$ | (15,034,773 | )(a) | |
$ | 15,034,773 | | |
$ | - | | |
$ | - | | |
| - | | |
$ | - | | |
$ | (15,034,773 | )(c) | |
$ | - | |
Total Assets | |
$ | 19,929,016 | | |
$ | 15,034,773 | | |
$ | (15,034,773 | ) | |
$ | 19,929,016 | | |
$ | 15,034,773 | | |
$ | 28,970,611 | | |
$ | (15,034,773 | ) | |
$ | 28,970,611 | | |
$ | (15,034,773 | ) | |
$ | 33,864,854 | |
Total current liabilities | |
$ | 1,184,272 | | |
$ | - | | |
$ | - | | |
$ | 1,184,272 | | |
$ | - | | |
$ | 10,968,645 | | |
$ | - | | |
$ | 10,968,645 | | |
$ | - | | |
$ | 12,152,917 | |
Total liabilities | |
$ | 1,184,272 | | |
$ | - | | |
$ | - | | |
$ | 1,184,272 | | |
$ | - | | |
$ | 13,935,838 | | |
$ | - | | |
$ | 13,935,838 | | |
$ | - | | |
$ | 15,120,110 | |
Total Stockholders’ Equity | |
$ | 18,744,744 | | |
$ | 15,034,773 | | |
$ | (15,034,773 | )(a) | |
$ | 18,744,744 | | |
$ | 15,034,773 | | |
$ | 15,034,773 | | |
$ | (15,034,773 | )(b) | |
$ | 15,034,773 | | |
$ | (15,034,773 | )(c) | |
$ | 18,744,744 | |
Total Liabilities and
Stockholders’ Equity | |
$ | 19,929,016 | | |
$ | 15,034,773 | | |
$ | (15,034,773 | ) | |
$ | 19,929,016 | | |
$ | 15,034,773 | | |
$ | 28,970,611 | | |
$ | (15,034,773 | ) | |
$ | 28,970,611 | | |
$ | (15,034,773 | ) | |
$ | 33,864,854 | |
(a) |
to
eliminate holding company’s investment in subsidiaries outside PRC. |
(b) |
to
eliminate receivables as a result of contractual agreements between WFOE and VIE. |
(c) |
to
eliminate holding company’s investment in WFOE. |
FOR THE YEAR ENDED DECEMBER 31, 2020
| |
JWEL | | |
HK
subsidiary | | |
Elimination | | |
Total outside
PRC | | |
WFOE | | |
VIE | | |
Elimination | | |
Total
inside
PRC | | |
Elimination | | |
Consolidated | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Total
Net Revenues | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 96,879,173 | | |
$ | - | | |
$ | 96,879,173 | | |
$ | - | | |
$ | 96,879,173 | |
Operating
Expenses: | |
| (990,029 | ) | |
| - | | |
| - | | |
| (990,029 | ) | |
| - | | |
| (90,776,328 | ) | |
| - | | |
| (90,776,328 | ) | |
| - | | |
| (91,766,357 | ) |
Income
From Operations | |
| (990,029 | ) | |
| - | | |
| - | | |
| (990,029 | ) | |
| - | | |
| 6,102,845 | | |
| - | | |
| 6,102,845 | | |
| - | | |
| 5,112,816 | |
Other
Income, net | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 6,106 | | |
| - | | |
| 6,106 | | |
| - | | |
| 6,106 | |
Provision
for Income Taxes | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,532,230 | ) | |
| - | | |
| (1,532,230 | ) | |
| - | | |
| (1,532,230 | ) |
Income
from VIE | |
| - | | |
| - | | |
| - | | |
| - | | |
| 4,576,721 | | |
| - | | |
| (4,576,721 | )(b) | |
| - | | |
| - | | |
| - | |
Income
from subsidiaries | |
| 4,576,721 | | |
| 4,576,721 | | |
| (4,576,721 | )(a) | |
| 4,576,721 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (4,576,721 | )(c) | |
| - | |
Net
Income | |
$ | 3,586,692 | | |
$ | 4,576,721 | | |
$ | (4,576,721 | ) | |
$ | 3,586,692 | | |
$ | 4,576,721 | | |
$ | 4,576,721 | | |
$ | (4,576,721 | ) | |
$ | 4,576,721 | | |
$ | (4,576,721 | ) | |
$ | 3,586,692 | |
(a) | to
eliminate outside PRC subsidiaries income from the holding company. |
(b) | to eliminate VIE income by WFOE. |
(c) | to
eliminate WFOE investment income by the holding company. |
FOR THE YEAR ENDED DECEMBER 31, 2020
| |
JWEL | | |
HK
subsidiary | | |
Elimination | | |
Total outside
PRC | | |
WFOE | | |
VIE | | |
Elimination | | |
Total inside
PRC | | |
Elimination | | |
Consolidated | |
Net
cash provided by (used in) operating activities | |
$ | (990,029 | ) | |
$ | - | | |
$ | - | | |
$ | (990,029 | ) | |
$ | - | | |
$ | 7,329,182 | | |
$ | - | | |
$ | 7,329,182 | | |
$ | - | | |
$ | 6,339,153 | |
Net
cash used in investing activities | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (116,746 | ) | |
| - | | |
| (116,746 | ) | |
| - | | |
| (116,746 | ) |
Net
cash provided by financing activities | |
| 5,592,272 | | |
| - | | |
| - | | |
| 5,592,272 | | |
| - | | |
| 5,752,534 | | |
| - | | |
| 5,752,534 | | |
| - | | |
| 11,344,806 | |
Effect
of exchange rate changes on cash | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 665,331 | | |
| - | | |
| 665,331 | | |
| - | | |
| 665,331 | |
Net
increase (decrease) in cash | |
| 4,602,243 | | |
| - | | |
| - | | |
| 4,602,243 | | |
| - | | |
| 13,630,301 | | |
| - | | |
| 13,630,301 | | |
| - | | |
| 18,232,544 | |
Cash,
beginning of year | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 11,511 | | |
| - | | |
| 11,511 | | |
| - | | |
| 11,511 | |
Cash,
end of year | |
$ | 4,602,243 | | |
$ | - | | |
$ | - | | |
$ | 4,602,243 | | |
$ | - | | |
$ | 13,641,812 | | |
$ | - | | |
$ | 13,641,812 | | |
$ | - | | |
$ | 18,244,055 | |
Dividend Distribution and Cash Transfer Between the Holding
Company, Subsidiary and VIE.
We, through the VIE, operates
an e-commerce platform for cosmetics, health and nutritional supplements and household products in China. The VIE also sells our products
through authorized retail stores all across China. Operating under the brand name of “Love Home Store” or “LHH Store”,
the authorized retailers may operate as independent stores or store-in-shop (an integrated store), selling products that they purchased
through our online platform LHH Mall under their retailers accounts which provide them with major discounts. The VIE also sells
products through its “Juhao Best Choice” community group-buying stores in China.
The VIE receives its revenue
in RMB. Under our current corporate structure, to fund any cash and financing requirements we may have, the Company may rely on certain
dividend payments from our WFOE in China. If our WFOE receives payments from VIE, pursuant to the VIE Agreements, WFOE may make distribution
of such payments to Jowell HK as dividends, however, WFOE currently has not received any payments from the VIE pursuant to the VIE Agreements
which are discussed in more details on page 13.
Under existing PRC foreign
exchange regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange
transactions, can be made in foreign currencies without prior approval from State Administration of Foreign Exchange or SAFE by complying
with certain procedural requirements. Therefore, our WFOE is able to pay dividends in foreign currencies to us without prior approval
from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC
foreign exchange regulations, such as the overseas investment registrations by the shareholders of the Company who are PRC residents.
Approval from or registration with appropriate government authorities is, however, required where the RMB is to be converted into foreign
currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC
government may also at its discretion restrict access in the future to foreign currencies for current account transactions. For our Hong
Kong subsidiary and the holding company (“Non-PRC Entities”), there is no restrictions on foreign exchange for such entities
and they are able to transfer cash among these entities, across borders and to US investors. Also, there is no regulatory restrictions
and limitations on the abilities of Non-PRC Entities to distribute earnings from their businesses, including from subsidiaries to the
parent company or from the holding company to the U.S. investors as well as the abilities to settle amounts owed. However, to the extent
cash/assets in the business is in PRC/Hong Kong or our PRC/Hong Kong entity, the funds/assets may not be available to fund operations
or for other use outside of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability
of us, our subsidiaries, or the consolidated VIE by the PRC government to transfer cash/assets. See “Risk Factors—Uncertainties
and quick change in the interpretation and enforcement of Chinese laws and regulations with little advance notice could result in a material
and negative impact our business operations, decrease the value of our securities and limit the legal protections available to you and
us.”
We are a holding company,
and we may rely on dividends and other distributions on equity paid by our subsidiaries for our cash and financing requirements, including
the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. If any of our
subsidiaries incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends
or make other distributions to us. Current PRC regulations permit our WFOE to pay dividends to the Company only out of its accumulated
profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, our WFOE and VIE in China are
required to set aside at least 10% of their after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches
50% of its registered capital. Each such entity in China is also required to further set aside a portion of its after-tax profits to
fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors.
Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess
of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation.
In addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax at a rate of 10% will be applicable
to dividends payable by Chinese companies to non-PRC-resident enterprises unless reduced under treaties or arrangements between the PRC
central government and the governments of other countries or regions where the non-PRC resident enterprises are tax resident. Pursuant
to the tax agreement between mainland China and the Hong Kong Special Administrative Region, the withholding tax rate in respect to the
payment of dividends by a PRC enterprise to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10%. However, if the
relevant tax authorities determine that our transactions or arrangements are for the primary purpose of enjoying a favorable tax treatment,
the relevant tax authorities may adjust the favorable withholding tax in the future. Accordingly, there is no assurance that the reduced
5% withholding rate will apply to dividends received by our Hong Kong subsidiary from our PRC subsidiaries. This withholding tax will
reduce the amount of dividends we may receive from our PRC subsidiary. See “Item 3. Key Information — 3.D.
Risk Factors — Risks Related to Doing Business in China,” “— PRC regulation of loans to and
direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent
us from using the proceeds of our offerings and financings in the U.S. to make loans to or make additional capital contributions to our
PRC subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business.,” and
“— We rely on dividends and other distributions on equity paid by our PRC subsidiary to fund any cash and financing requirements
we may have, and any limitation on the ability of our PRC subsidiary to make payments to us could have a material adverse effect on our
ability to conduct our business.” in our annual report on Form 20-F for the year ended December 31, 2021, which is incorporated
in this prospectus by reference.
As of the date of this prospectus, we do not have cash management policies
and procedures in place that dictate how funds are transferred through our organization. Rather, the funds can be transferred in
accordance with the applicable PRC laws and regulations discussed in this section.
As of the date of this prospectus,
neither WFOE or any of our subsidiary in Hong Kong has not made any dividends or distributions to the Company, the Company has not made
any dividends or distribution to its investors. We intend to keep any future earnings to re-invest in and finance the expansion of our
business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. Under the Cayman Islands law, a Cayman
Islands company may pay a dividend on its shares out of either profit or share premium amount, provided that in no circumstances may a
dividend be paid if this would result in the company being unable to pay its debts due in the ordinary course of business.
As of the date of this
prospectus, no dividends or distributions have been made between the holding company, its subsidiaries, and consolidated VIE, or to investors
including the U.S. investors, except the VIE Shanghai Juhao made a cash dividend of $1.6 million to its shareholders in July 2019 before
we became a public company in March 2021.
The holding company, its
subsidiaries, and VIE do not have any plan to distribute dividend or settle amounts owed under the VIE Agreements in the foreseeable
future. The cash transfer among the holding company, its subsidiaries and VIE is typically transferred through payment for investments,
intercompany services or intercompany borrowing between holding company, subsidiaries and VIE. There are no tax consequences for the
intercompany borrowings and the payment for intercompany services, except for the standard value added taxes and/or income taxes for
the revenues and/or profits generated from such services.
During the fiscal years
ended December 31, 2021 and 2020, cash transfers between our Company, our subsidiaries, and the VIE were as follows:
For the Fiscal Year
Ended December 31, 2021 |
|
|
No. |
|
Transfer
From |
|
Transfer To |
|
Approximate
Value (US$) |
|
|
Type |
1 |
|
Jowell Global |
|
Jowell HK |
|
$ |
24,330,000 |
|
|
Cash investment |
2 |
|
Jowell HK |
|
Jowell Shanghai (WFOE) |
|
$ |
20,629,000 |
|
|
Cash investment |
3 |
|
Jowell HK |
|
VIE |
|
$ |
606,000 |
|
|
Cash (Intercompany borrowing) |
4 |
|
VIE |
|
Jowell Shanghai (WFOE) |
|
$ |
12,462,715 |
|
|
Cash (Intercompany purchase) |
5 |
|
Jowell Global |
|
VIE |
|
$ |
4,221,549 |
|
|
Cash (Intercompany borrowing to pay for expenses) |
For the Fiscal Year Ended December
31, 2020 | |
| |
No. | |
Transfer From | | |
Transfer To | | |
Approximate Value (US$) | | |
Type | |
None | |
| | | |
| | | |
| | | |
| | |
Impact of COVID-19
Beginning in late 2019,
there was an outbreak of COVID-19 (coronavirus) which has spread quickly to many parts in China, the U.S. and globally. In March 2020,
the World Health Organization declared the COVID-19 a pandemic. With an aim to contain the COVID-19 outbreak, the Chinese government
has imposed various strictive measures across the country including, but not limited to, travel restrictions, mandatory quarantine requirements,
and postponed resumption of business operations until after the Chinese New Year holiday in 2020. Starting from March 2020, businesses
in China began to reopen, and the interruptions to businesses were gradually removed. However, due to the outbreak of Omicron variant
in China, certain cities in China have imposed new restrictions and quarantine requirements with office closures, including Shanghai
city where our headquarters are located and the employees of the VIE in Shanghai office worked from home from March 30, 2022 to June
1, 2022.
As an online retailer
and retail platform and because the COVID-19 was generally under control in China during 2021, our operations in 2021 were not significantly
negatively impacted by the pandemic. However, it is not possible to determine the impact of the COVID-19 pandemic on our business operations
and financial results for 2022, which is highly dependent on numerous factors, including the duration and spread of the pandemic and
any resurgence of COVID-19 and new variants such as Omicron variant, efficacy and distribution of COVID-19 vaccines, and the actions
taken by government authorities and other entities in China and elsewhere to contain COVID-19 such as the recent restrictions and office
closures in Shanghai, almost all of which are beyond our control.
Our Organizational Structure
The Company’s organizational
chart as of the date of this prospectus is as follows:
* | Mr. Zhiwei Xu also owns 120,000 ordinary
shares of the Company under his own name. |
Variable Interest Entity Arrangements
In establishing our business,
we have used a variable interest entity, or VIE, structure. In the PRC, investment activities by foreign investors are principally governed
by Special Administrative Measures (Negative List) for Foreign Investment Access, which was promulgated and is amended from time to time
by the PRC Ministry of Commerce, or MOFCOM, and the PRC National Development and Reform Commission, or NDRC. Our Company and the WFOE
are considered as foreign investors or foreign invested enterprises under PRC law. These contractual arrangements with the variable interest
entity and its shareholders enable us to consolidate its financial results as the VIE for accounting purposes under U.S. GAAP.
The business we conduct
through the VIE is within the category for which foreign investment is currently restricted under the Negative List or other PRC Laws.
In addition, we intend to centralize our management and operation in the PRC without being restricted to conducting certain business
activities which are important for our current or future business but are restricted or might be restricted in the future. As such, we
believe the agreements between the WFOE and the VIE are necessary and essential to our business operations. These contractual arrangements
with the VIE and its shareholders enable us consolidate its financial results under U.S. GAAP.
WFOE assumed management
of the business activities of the VIE through a series of agreements which are referred to as the VIE Agreements. The VIE Agreements
are comprised of a series of agreements, including an Exclusive Business Cooperation and Management Agreement, an Equity Interest Pledge
Agreement, an Exclusive Option Agreement, Powers of Attorney and Spousal Consent Letters. Through the VIE Agreements, WFOE has the right
to advise, consult, manage and operate the VIE for an annual consulting service fee in an amount equal to all of the VIE’s net
income. The shareholders of the VIE have pledged all of their right, title and equity interests in the VIE as security for WFOE to collect
consulting services fees provided to the VIE through the Equity Interest Pledge Agreement. In order to further reinforce WFOE’s
rights to operate the variable interest entity to consolidate financial results of the VIE in our financial statements under U.S. GAAP,
the VIE’s shareholders have granted WFOE an exclusive right and option to acquire all of their equity interests in the VIE through
the Exclusive Option Agreement.
On October 31, 2019 and
November 1, 2019, Jowell Shanghai entered into a series of contractual arrangements with Shanghai Juhao and the shareholders of Shanghai
Juhao, as amended on October 10, 2020. These agreements include: 1) an Exclusive Business Cooperation and Management Agreement; 2) an
Equity Interest Pledge Agreement; 3) an Exclusive Option Agreements; 4) Powers of Attorney, and 5) Spousal Consent Letters, which are
described as follows:
Exclusive Business Cooperation and Service
Agreement
Pursuant to the Exclusive Business Cooperation
and Service Agreement between Shanghai Juhao and Jowell Shanghai, Jowell Shanghai provides Shanghai Juhao with complete business support,
operational management and technical and consulting services, on an exclusive basis, and Shanghai Juhao is obligated to pay an annual
service fee to Jowell Shanghai equal to the annual net income of Shanghai Juhao. Jowell Shanghai shall have exclusive and proprietary
rights and interests in all rights, ownership, interests and intellectual properties arising out of or created during the performance
of this agreement, including but not limited to copyrights, patents, patent applications, software, technical secrets, trade secrets
and others. The term of the agreement shall be continuously effective unless mutually terminated by all parties in writing.
Equity Interest Pledge Agreement
Under the Equity Interest
Pledge Agreement by and among Jowell Shanghai, Shanghai Juhao and shareholders of Shanghai Juhao, shareholders of Shanghai Juhao pledged
all of the equity interest that they now and in the future hold in Shanghai Juhao to Jowell Shanghai to guarantee the performance of
Shanghai Juhao’s obligations and payment of service fees under the Exclusive Business Cooperation and Service Agreement (“Service
Agreement”). Prior to the full payment of the service fees in the Service Agreement, without the Jowell Shanghai's written consent,
pledgors shall not assign the pledge or their equity interest in Shanghai Juhao. Upon the full payment of the service fees under the
Service Agreement and upon termination of Shanghai Juhao's obligations under the Service Agreement, the pledge agreement shall be terminated,
and Jowell Shanghai shall then cancel or terminate the agreement as soon as reasonably practicable.
Exclusive Option to Purchase Agreement
Under the Exclusive Option to Purchase Agreement,
shareholders of Shanghai Juhao and Shanghai Juhao irrevocably granted Jowell Shanghai (or its designee) an exclusive option right
to purchase, to the extent permitted under PRC law, once or at multiple times, at any time, all or part of the equity of Shanghai Juaho
held by the shareholders of Shanghai Juaho. Unless an appraisal is required by the laws of China applicable to the equity interest purchase
option when exercised by Jowell Shanghai, the purchase price shall equal to the actual capital contributions paid in the registered capital
by such shareholder for its equity interest in Shanghai Juhao or the lowest price allowed by Chinses laws and regulations. This agreement
remains effective for a term of 10 years, and may be renewed for an additional 10 years at Jowell Shanghai's election.
Power of Attorney
Under the Power of
Attorney, each of the shareholders of Shanghai Juhao authorized Jowell Shanghai act on his/her behalf as his/her exclusive agent and
attorney with respect to all rights as such shareholder, including but not limited to: (a) attending shareholders’ meetings of
Shanghai Juhao; (b) exercising all the shareholders’ rights and the voting rights that such shareholder is entitled to under
PRC laws and the articles of association of Shanghai Juhao, including, but not limited to, the sale or transfer or pledge or
disposition of shares of such shareholder in part or in whole; and (c) designating and appointing on behalf of such shareholder the
legal representative, the director, the supervisor, the chief executive officer and other senior management members of
Shanghai Juhao.
Spousal Consent Letters
The spouse of each shareholder of Shanghai
Juhao has signed a spousal consent letter agreeing that the equity interests in Shanghai Juhao held by and registered under the name
of such shareholder will be disposed pursuant to the agreements with the Jowell Shanghai (“Agreements”). The spouse of such
shareholder confirms that he/she does not have any rights and interests in the equity of the Shanghai Juhao and promises not to make
any claim on the equity of the Shanghai Juhao. The spouse of such shareholder also agrees if he/she obtains any equity interest in Shanghai
Juhao for any reason, he/she shall be bound by (as amended from time to time) the Agreements and comply with the obligations of the shareholders
of Shanghai Juhao under the Agreements.
Pursuant to these
agreements, Jowell Shanghai has satisfied conditions for consolidation of the VIE under
U.S. GAAP and become the primary beneficiary of the VIE for accounting purpose. Therefore, Shanghai Juhao is considered a VIE under
the Statement of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810
“Consolidation”, because the equity investments in Shanghai Juhao no longer have the characteristics of a controlling
financial interest, and the Company, through Jowell Shanghai, is the primary beneficiary of Shanghai Juhao. A VIE is an entity that either has a total equity investment that is insufficient to finance its activities without
additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest, such
as through voting rights, right to receive the expected residual returns of the entity. The variable interest holder, if any, that has
a controlling financial interest in a VIE is deemed to be the primary beneficiary of, and must consolidate, the VIE. Jowell Shanghai is
deemed to have a controlling financial interest through a series of contractual arrangements and be the primary beneficiary of Shanghai
Juhao because it has both of the following characteristics: (1) the
power to direct activities at Shanghai Juhao that most significantly impact such entity’s economic performance and (2) the obligation
to absorb losses of, and the right to receive benefits from, Shanghai Juhao that could potentially be significant to such entity. Pursuant
to the contractual arrangements with Shanghai Juhao, Shanghai Juhao shall pay service fees equal to all of its net profit after tax payments
to Jowell Shanghai. Such contractual arrangements are designed so that the Shanghai Juhao would operate for the benefit of Jowell Shanghai
and ultimately, the Company.
Although the VIE Contractual
Arrangements have been widely adopted by PRC companies seeking for listing aboard, such arrangements have not been truly tested in any
of the PRC courts. The VIE structure is subject to various risks. For example, the contractual arrangements may not be as effective as
direct ownership in exerting our rights over Shanghai Juhao. We expect to rely on the performance by the VIE shareholders of their respective
obligations under the contracts to consolidate financial results of the VIE in our financial statements under U.S. GAAP. The VIE shareholders
may not act in the best interests of our company or may not perform their obligations under these contracts. Such risks will exist throughout
the period in which we operate our business in China through the contractual arrangements. If any dispute relating to these contracts
remains unresolved, we will have to enforce our rights under these contracts through the operations of PRC law and arbitration, litigation
or other legal proceedings which could be a lengthy process and very costly. This type of corporate structure may also affect you and
the value of your investment in the Company. The PRC legal system could limit our ability to enforce the VIE agreements, through arbitration,
litigation, and other legal proceedings, which could limit our ability to enforce the VIE agreements against Shanghai Juhao and its shareholders.
Furthermore, these contracts may not be enforceable in the PRC if the PRC government authorities or courts take a view that such contracts
contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. In the event we are unable to enforce
the VIE agreements or assert our contractual rights over the business and assets of VIE that conducts our operations, our securities
may decline in value or become worthless.
Summary of risks related to our corporate
structure and having the majority of our operations in China
We are a Cayman Islands
holding company without material operations and our business is conducted by the variable interest entity (“VIE”) in China
and this structure involves unique risks to investors. Investors of our ordinary shares will not own any equity interests in the VIE
and may never hold equity interests in our Chinese operating companies, but instead own shares of a Cayman Islands holding company. We
are not a Chinese operating company and that our business in China is conducted through contractual arrangements with the VIE. However,
the VIE agreements have not been truly tested in the courts in China. Chinese regulatory authorities could disallow this structure, which
would likely result in a material change in our operations and/or a material change in the value of the securities that we are registering
for sale, including that it could cause the value of such securities to significantly decline or become worthless. See “Risk
Factors— “If the Chinese government determines that the contractual arrangements with the VIE do not comply with applicable
regulations, our business could be adversely affected.” and “Uncertainties and quick change in the interpretation
and enforcement of Chinese laws and regulations with little advance notice could result in a material and negative impact on our business
operations, decrease the value of our securities and limit the legal protections available to you and us.”
The VIE structure is
subject to various risks. For example, the contractual arrangements may not be as effective as direct ownership in exerting our
rights over Shanghai Juhao. We expect to rely on the performance by the VIE shareholders of their respective obligations under the
contracts to consolidate financial results of the VIE in our financial statements under U.S. GAAP. The VIE shareholders may not act
in the best interests of our company or may not perform their obligations under these contracts. Such risks will exist throughout
the period in which we operate our business in China through the contractual arrangements. If any dispute relating to these
contracts remains unresolved, we will have to enforce our rights under these contracts through the operations of PRC law and
arbitration, litigation or other legal proceedings which could be a lengthy process and very costly. See “Item 3. Key
Information—D. Risk Factors—Risks Related to Our Corporate Structure” in our annual report on Form 20-F for
the fiscal year ended December 31, 2021 (“2021 Annual Report”), which is incorporated in this prospectus by reference,
and “Risk Factors— If the Chinese government determines that the contractual arrangements with the VIE do not comply
with applicable regulations, our business could be adversely affected” in this prospectus.
Under existing PRC foreign
exchange regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange
transactions, can be made in foreign currencies without prior approval from State Administration of Foreign Exchange or SAFE by complying
with certain procedural requirements. Therefore, our WFOE is able to pay dividends in foreign currencies to us without prior approval
from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC
foreign exchange regulations, such as the overseas investment registrations by the shareholders of the Company who are PRC residents.
Approval from or registration with appropriate government authorities is, however, required where the RMB is to be converted into foreign
currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC
government may also at its discretion restrict access in the future to foreign currencies for current account transactions. For our Hong
Kong subsidiary and the holding company (“Non-PRC Entities”), there is no restrictions on foreign exchange for such entities
and they are able to transfer cash among these entities, across borders and to US investors. Also, there is no regulatory restrictions
and limitations on the abilities of Non-PRC Entities to distribute earnings from their businesses, including from subsidiaries to the
parent company or from the holding company to the U.S. investors as well as the abilities to settle amounts owed. However, to the extent
cash/assets in the business is in PRC/Hong Kong or our PRC/Hong Kong entity, the funds/assets may not be available to fund operations
or for other use outside of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability
of us, our subsidiaries, or the consolidated VIE by the PRC government to transfer cash/assets. See “Risk Factors—Uncertainties
and quick change in the interpretation and enforcement of Chinese laws and regulations with little advance notice could result in a material
and negative impact our business operations, decrease the value of our securities and limit the legal protections available to you and
us.” We are a holding company, and we may rely on dividends and other distributions on equity paid by our subsidiaries for
our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders
and service any debt we may incur. If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governing
the debt may restrict its ability to pay dividends or make other distributions to us. See “Item 3. Key Information — 3.D.
Risk Factors — Risks Related to Doing Business in China,— PRC regulation of loans to and direct investment
in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the
proceeds of our offerings and financings in the U.S. to make loans to or make additional capital contributions to our PRC subsidiary,
which could materially and adversely affect our liquidity and our ability to fund and expand our business, and — We rely on dividends
and other distributions on equity paid by our PRC subsidiary to fund any cash and financing requirements we may have, and any limitation
on the ability of our PRC subsidiary to make payments to us could have a material adverse effect on our ability to conduct our business.”
in our annual report on Form 20-F for the year ended December 31, 2021, which is incorporated in this prospectus by reference.
As of the date of this
prospectus, no dividends or distributions have been made between the holding company, its subsidiaries, and consolidated VIE, or to investors
including U.S. investors except that the VIE Shanghai Juhao made a cash dividend of $1.6 million to its shareholders in July 2019 before
we became a public company in March 2021. The holding company, its subsidiaries, and VIE do not have any plan to distribute dividend
or settle amounts owed under the VIE Agreements in the foreseeable future. The cash transfer among the holding company, its subsidiaries
and VIE is typically transferred through payment for investment, intercompany services or intercompany borrowing between holding company,
subsidiaries and VIE. Cash transfers have been made to date between the holding company, its subsidiaries, and consolidated VIE, include
the following: (1) the holding company made investment payment of US$24,330,000 to Jowell HK during the fiscal years ended December 31,
2021; (2) Jowell HK made investment payment of US$20,629,000 to Jowell Shanghai during the fiscal years ended December 31, 2021; (3)
Jowell HK loaned US$606,000 to the VIE during the fiscal year ended December 31, 2021; (4) the VIE paid US$12,462,715 to Jowell Shanghai
for purchase of products during the fiscal years ended December 31, 2021; and (5) the holding company loaned US$4,221,549 to the VIE
to pay for expenses during the fiscal years ended December 31, 2021. See “Condensed and Consolidated Financial Statements”
on page 4 and “Dividend Distribution and Cash Transfer Between the Holding Company, Subsidiary and VIE.” on page 10.
There are legal and
operational risks associated with being based in and having our operations in China. Recently, the PRC government initiated a series
of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on
illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable
interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in
anti-monopoly enforcement. On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General
Office of the State Council jointly issued an announcement to crack down on illegal activities in the securities market and promote
the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to
strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies
listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws. On February 15,
2022, Cybersecurity Review Measures published by Cyberspace Administration of China or the CAC, National Development and Reform
Commission, Ministry of Industry and Information Technology, Ministry of Public Security, Ministry of State Security, Ministry of
Finance, Ministry of Commerce, People’s Bank of China, State Administration of Radio and Television, China Securities
Regulatory Commission, State Secrecy Administration and State Cryptography Administration became effective, which provides that,
Critical Information Infrastructure Operators (“CIIOs”) that intend to purchase internet products and services and Data
Processing Operators (“DPOs”) engaging in data processing activities that affect or may affect national security shall
be subject to the cybersecurity review by the Cybersecurity Review Office. On November 14, 2021, CAC published the Administration
Measures for Cyber Data Security (Draft for Public Comments), or the “Cyber Data Security Measure (Draft)”, which
requires cyberspace operators with personal information of more than 1 million users who want to list abroad to file a cybersecurity
review with the Office of Cybersecurity Review. As of the date of this prospectus, these new laws and guidelines have not impacted
the Company’s ability to conduct its business, accept foreign investments, or list and trade on a U.S. or other foreign
exchange as the Company has listed on Nasdaq before these laws take effect and the data processing activities by the VIE do not
affect national security; however, there are uncertainties in the interpretation and enforcement of these new laws and guidelines,
which could materially and adversely impact our business and financial outlook and may impact our ability to accept foreign
investments or continue to list on a U.S. or other foreign exchange. On December 24, 2021, the CSRC released the Administrative
Provisions of the State Council Regarding the Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for
Comments) and the Management Rules Regarding the Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for
Comments). On April 2, 2022, the CSRC released the Provisions on Strengthening Confidentiality and Archives Administration of
Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments), which provides that PRC issuers listing their
securities on foreign stock exchanges need to file a notice to CSRC. In the event that the above proposed provisions and rules are
enacted, the filing procedures of the CSRC or other governmental authorities may be required in connection with this offering, and,
if so required, we cannot predict whether we will be able to complete such filling procedures for this offering in a timely manner
or at all. In addition, overseas listings of the securities of PRC issuers may be prohibited under certain circumstances under the
several CSRC proposals, including if the intended securities offerings and listings (i) are specifically prohibited by the PRC laws
or regulations, and (ii) may constitute a threat to, or endanger, national security as determined by competent authorities of the
State Council. It is uncertain whether and when the above proposed rules will be adopted, and whether the final version will contain
the same content as the above proposals. The enforcement of laws and that rules and regulations in China can change quickly with
little advance notice and the risk that the Chinese government may intervene or influence our operations at any time, or may exert
more control over offerings conducted overseas and/or foreign investment in China- based issuers, could result in a material change
in our operations and/or significantly limit or completely hinder our ability to offer or continue to offer securities to investors
and cause the value of such securities to significantly decline or be worthless. Any change in foreign investment regulations, VIE
structure and other policies in China or related enforcement actions by China government could result in a material change in our
operations and the value of our securities and could significantly limit or completely hinder our ability to offer our securities to
investors or cause the value of our securities to significantly decline or be worthless. See “Item 3. Key
Information—D. Risk Factors—Risks Related to Doing Business in China” in our 2021 Annual Report, which is
incorporated in this prospectus by reference, and “Risk Factors—Uncertainties and quick change in the interpretation
and enforcement of Chinese laws and regulations with little advance notice could result in a material and negative impact on our
business operations, decrease the value of our securities and limit the legal protections available to you and us.” in
this prospectus.
An investment in our securities
involves significant risks. The above is a summary of risks related to our corporate structure and having the majority of our operations
in China and these risks and other risks of the Company are discussed more fully in Item 3. Key Information—D. Risk Factors
in our 2021 Annual Report, which is incorporated in this prospectus by reference, and Risk Factors in this prospectus.
Recent Development
On June 13, 2022, the Company
entered into Securities Purchase Agreements (“Agreements”) with six investors (“Investors”), pursuant to which
the Company agreed to sell to the Investors in private placements of 5,230,000 ordinary shares (the “Shares”) of the Company,
par value $0.0001 per share, at a purchase price of $1.20 per share for an aggregate offering price of $6,276,000 (the “Private
Placements”), as disclosed in the Form 6-K filed by the Company on June 17, 2022 and incorporated herein by reference. The
Private Placements have been completed pursuant to the exemption from registration provided by Regulation S promulgated under the Securities
Act of 1933, as amended.
Corporate Information
Our principal executive offices
are located at 2nd Floor, No. 285 Jiangpu Road, Yangpu District, Shanghai, China 200082. Our telephone number at this address is +86-21-5521-01874.
Our registered office in the Cayman Islands is located at P.O. Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman,
KY1-1205, Cayman Islands. Our agent for service of process in the United States is Cogency Global Inc. located at 122 East 42nd Street,
18th Floor, New York, NY 10168. We maintain a website at www. 1juhao.com that contains information about our Company, though no information
contained on our website is part of this prospectus.
Transfer Agent and Registrar
The transfer agent and registrar
for our Ordinary Shares is VStock Transfer, LLC at 18 Lafayette Place, Woodmere, New York 11598.
NASDAQ Capital Market Listing
Our Ordinary Shares are listed
on the NASDAQ Capital Market under the symbol “JWEL”
The Offering
Issuer |
Jowell Global Ltd. |
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Securities We May Offer |
We may offer up to $200,000,000 in aggregate amount of our ordinary
shares and preferred shares, warrants, rights, either individually or in units. |
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Use of Proceeds |
We will use the net proceeds from the sale of our securities for general corporate purposes. |
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Risk Factors |
See “Risk Factors” on page 19 and other information we
include or incorporate by reference in this prospectus for a discussion of factors you should carefully consider before deciding to
invest in our ordinary shares. |
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|
NASDAQ Market Symbol |
JWEL |
RISK FACTORS
Investing in our securities
involves a high degree of risk. You should carefully consider the risk factors set forth under “Risk Factors” described in
our most recent annual report on Form 20-F, filed on April 25, 2022, as supplemented and updated by subsequent current reports on
Form 6-K that we have filed with the SEC, together with all other information contained or incorporated by reference in this prospectus
and any applicable prospectus supplement and in any related free writing prospectus in connection with a specific offering, before making
an investment decision. Each of the risk factors could materially and adversely affect our business, operating results, financial condition
and prospects, as well as the value of an investment in our securities, and the occurrence of any of these risks might cause you to lose
all or part of your investment.
If the Chinese government determines
that the contractual arrangements with the VIE do not comply with applicable regulations, our business could be adversely affected.
There are uncertainties
regarding the interpretation and application of PRC laws, rules and regulations, including but not limited to the laws, rules and regulations
governing the validity and enforcement of the contractual arrangements with Shanghai Juhao and its shareholders. Although we have been
advised by our PRC counsel that based on their understanding of the current PRC laws, rules and regulations, the contractual arrangements,
as well our ability to enforce our rights thereunder, comply with all applicable PRC laws, rules and regulations, and do not violate,
breach, contravene or otherwise conflict with any applicable PRC laws, rules or regulations, we cannot assure you that the PRC regulatory
authorities will not determine that our corporate structure and contractual arrangements violate PRC laws, rules or regulations. In addition,
new PRC laws, rules and regulations may be introduced from time to time to impose additional requirements that may be applicable to our
contractual arrangements. If the PRC government determines that the contractual arrangements constituting part of the VIE structure do
not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, the securities we are registering
may decline in value or become worthless if the determinations, changes, or interpretations result in our inability to assert contractual
right over the business and assets of the VIE that conduct all or substantially all of our operations in China.
The Chinese government has
broad discretion in dealing with violations of laws and regulations, including levying fines, revoking business and other licenses and
requiring actions necessary for compliance. In particular, licenses and permits issued or granted to us by relevant governmental bodies
may be revoked at a later time by higher regulatory bodies. We cannot predict the effect of the interpretation of existing or new Chinese
laws or regulations on our businesses. We cannot assure you that our current ownership and operating structure would not be found in violation
of any current or future Chinese laws or regulations. As a result, we may be subject to sanctions, including fines, and could be required
to restructure our operations or cease to provide certain services. Any of these or similar actions could significantly disrupt our business
operations or restrict us from conducting a substantial portion of our business operations, which could materially and adversely affect
our business, financial condition and results of operations and the securities we are registering may decline in value or become worthless.
We conduct our operations
in China through the VIE Shanghai Juhao, which entered into a series of contractual arrangements by and among WFOE, the VIE and its shareholders.
These contractual agreements enable us to (i) exercise contractual rights over the VIE to consolidate financial results of the VIE in
our financial statements under U.S. GAAP, (ii) receive substantially all of the economic benefits of the VIE, and (iii) have an exclusive
call option to purchase all or part of the equity and asset interests in the VIE when and to the extent permitted by PRC law. As a result
of these contractual arrangements, we exert contractual rights over the VIE and consolidate financial results of the VIE in our financial
statements under U.S. GAAP. A VIE is an entity that either has a total equity investment that is insufficient to finance its activities
without additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest,
such as through voting rights, right to receive the expected residual returns of the entity. The variable interest holder, if any, that
has a controlling financial interest in a VIE is deemed to be the primary beneficiary of, and must consolidate, the VIE. Jowell Shanghai
is deemed to have a controlling financial interest through a series of contractual arrangements and be the primary beneficiary of Shanghai
Juhao because it has both of the following characteristics: (1) the power to direct activities at Shanghai Juhao that most significantly
impact such entity’s economic performance and (2) the obligation to absorb losses of, and the right to receive benefits from, Shanghai
Juhao that could potentially be significant to such entity. Pursuant to the contractual arrangements with Shanghai Juhao, Shanghai Juhao
shall pay service fees equal to all of its net profit after tax payments to Jowell Shanghai. Such contractual arrangements are designed
so that the Shanghai Juhao would operate for the benefit of Jowell Shanghai and ultimately, the Company. Accordingly, the accounts of
the Shanghai Juhao are consolidated into the Company’s financial statements pursuant to ASC 810-10, “Consolidation”.
In the opinion of our PRC
legal counsel, (i) the ownership structures of the VIE and WFOE in China are not in violation of mandatory provisions of applicable PRC
laws and regulations currently in effect; and (ii) the agreements under the contractual arrangements among WFOE, the VIE and its shareholders
governed by PRC law are valid and binding upon each party to such agreements and enforceable against each party thereto in accordance
with their terms and applicable PRC laws and regulations currently in effect. However, we have been further advised by our PRC legal
counsel that there are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations.
If we or the VIE are determined to be in violation of any existing or future PRC laws, rules or regulations or fail to obtain or maintain
any of the required governmental permits or approvals, the relevant PRC regulatory authorities would have broad discretion in dealing
with such violations, including:
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● |
revoking the business and operating licenses of Shanghai Juhao and/or voiding the contractual arrangements; |
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● |
discontinuing or restricting the operations of Shanghai Juhao; |
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imposing conditions or requirements with which we or Shanghai Juhao may not be able to comply; |
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requiring us to restructure the relevant ownership structure or operations; |
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restricting or prohibiting our use of the proceeds from our offering to finance our business and operations in China; or |
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imposing fines or other forms of economic penalties. |
As we do not have direct
ownership of Shanghai Juhao, the imposition of any of these penalties may have a material adverse effect on our financial condition,
results of operations and prospects. If occurrences of any of these events result in our inability to direct the activities of the VIE
and its subsidiaries in China, and/or our failure to receive the economic benefits and residual returns from our consolidated variable
interest entity, and we are not able to restructure our ownership structure and operations in a satisfactory manner, we may not be able
to consolidate the financial results of the VIE in our consolidated financial statements in accordance with U.S. GAAP.
Our contractual arrangements with the
VIE may not be as effective in providing operational control as direct ownership.
We have relied and expect
to continue to rely on contractual arrangements with Shanghai Juhao and its shareholders to operate our business. These contractual arrangements
may not be as effective in exerting our rights over these affiliated entities as direct ownership. If we had direct ownership of these
entities, we would be able to exercise our rights as a shareholder to effect changes in the board of directors, which in turn could effect
changes, subject to any applicable fiduciary obligations, at the management level. However, under the current contractual arrangements,
we rely on the performance by VIE and its shareholders of their contractual obligations to exercise our rights over the VIE to consolidate
financial results of the VIE in our financial statements under U.S. GAAP. Therefore, our contractual arrangements with the VIE may not
be as effective in ensuring our rights over our China operations as direct ownership would be. As of the date of this prospectus,
no dividends or distributions have been made between the holding company, its subsidiaries, and consolidated VIE, or to investors including
U.S. investors except that the VIE Shanghai Juhao made a cash dividend of $1.6 million to its shareholders in July 2019 before we became
a public company in March 2021. The holding company, its subsidiaries, and VIE do not have any plan to distribute dividend or settle
amounts owed under the VIE Agreements in the foreseeable future. The cash transfer among the holding company, its subsidiaries and VIE
is typically transferred through payment for investments, intercompany services or intercompany borrowing between holding company, subsidiaries
and VIE. See “Condensed and Consolidated Financial Statements” on page 4 and “Dividend Distribution and Cash
Transfer Between the Holding Company, Subsidiary and VIE.” on page 10.
Uncertainties and quick change in the interpretation
and enforcement of Chinese laws and regulations with little advance notice could result in a material and negative impact our business
operations, decrease the value of our securities and limit the legal protections available to you and us.
The PRC legal system is based
on written statutes, and prior court decisions have limited value as precedents. Since these laws and regulations are relatively new and
the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform
and enforcement of these laws, regulations and rules involves uncertainties. The enforcement of laws and that rules and regulations
in China can change quickly with little advance notice and the risk that the Chinese government may intervene or influence our operations
at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China- based issuers, could result
in a material change in our operations and/or the value of our securities.
On July 6, 2021, the General
Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued an announcement to
crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among
other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation,
to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application
of the PRC securities laws. Since this announcement is relatively new, uncertainties still exist in relation to how soon legislative or
administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations
will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on companies like
us and our securities. Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas
and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer
securities to investors and cause the value of such securities to significantly decline or be worthless.
On February 15, 2022,
Cybersecurity Review Measures published by Cyberspace Administration of China, National Development and Reform Commission, Ministry of
Industry and Information Technology, Ministry of Public Security, Ministry of State Security, Ministry of Finance, Ministry of Commerce,
People’s Bank of China, State Administration of Radio and Television, China Securities Regulatory Commission, State Secrecy Administration
and State Cryptography Administration became effective, which provides that, Critical Information Infrastructure Operators (“CIIOs”)
that intend to purchase internet products and services and Data Processing Operators (“DPOs”) engaging in data processing
activities that affect or may affect national security shall be subject to the cybersecurity review by the Cybersecurity Review Office.
On November 14, 2021, CAC published the Administration Measures for Cyber Data Security (Draft for Public Comments), or the “Cyber
Data Security Measure (Draft)”, which requires cyberspace operators with personal information of more than 1 million users who
want to list abroad to file a cybersecurity review with the Office of Cybersecurity Review. As confirmed by our PRC counsel, we are currently
not subject to cybersecurity review with the Cyberspace Administration of China (“CAC”) under these new measures, because
we operate our online platforms and our data processing activities do not affect or may not affect national security. Nevertheless, the
aforementioned measures and any related implementation rules to be enacted may subject us to additional compliance requirement in the
future. On December 24, 2021, the CSRC released the Administrative Provisions of the State Council Regarding the Overseas Issuance and
Listing of Securities by Domestic Enterprises (Draft for Comments) and the Management Rules Regarding the Overseas Issuance and Listing
of Securities by Domestic Enterprises (Draft for Comments). On April 2, 2022, the CSRC released the Provisions on Strengthening Confidentiality
and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments), which provides that
PRC issuers listing their securities on foreign stock exchanges need to file a notice to CSRC. In the event that the above proposed provisions
and rules are enacted, the filing procedures of the CSRC or other governmental authorities may be required in connection with this offering,
and, if so required, we cannot predict whether we will be able to complete such filling procedures for this offering in a timely manner
or at all. In addition, overseas listings of the securities of PRC issuers may be prohibited under certain circumstances under the several
CSRC proposals, including if the intended securities offerings and listings (i) are specifically prohibited by the PRC laws or regulations,
and (ii) may constitute a threat to, or endanger, national security as determined by competent authorities of the State Council. It is
uncertain whether and when the above proposed rules will be adopted, and whether the final version will contain the same content as the
above proposals.
We cannot rule out
the possibility that the PRC government will institute a licensing regime or pre-approval requirement covering our industry at some point
in the future. If such a licensing regime or approval requirement were introduced, we cannot assure you that we would be able to obtain
any newly required license in a timely manner, or at all, which could materially and adversely affect our business and impede our ability
to continue our operations and could significantly limit or completely hinder our ability to offer or continue to offer securities to
investors and cause the value of such securities to significantly decline or be worthless.
Under existing PRC foreign
exchange regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange
transactions, can be made in foreign currencies without prior approval from State Administration of Foreign Exchange or SAFE by complying
with certain procedural requirements. Therefore, our WFOE is able to pay dividends in foreign currencies to us without prior approval
from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC
foreign exchange regulations, such as the overseas investment registrations by the shareholders of the Company who are PRC residents.
Approval from or registration with appropriate government authorities is, however, required where the RMB is to be converted into foreign
currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC
government may also at its discretion restrict access in the future to foreign currencies for current account transactions. For our Hong
Kong subsidiary and the holding company (“Non-PRC Entities”), there is no restrictions on foreign exchange for such entities
and they are able to transfer cash among these entities, across borders and to US investors. Also, there is no regulatory restrictions
and limitations on the abilities of Non-PRC Entities to distribute earnings from their businesses, including from subsidiaries to the
parent company or from the holding company to the U.S. investors as well as the abilities to settle amounts owed. However, to the extent
cash/assets in the business is in PRC/Hong Kong or our PRC/Hong Kong entity, the funds/assets may not be available to fund operations
or for other use outside of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability
of us, our subsidiaries, or the consolidated VIE by the PRC government to transfer cash/assets.
From time to time, we may
have to resort to administrative and court proceedings to enforce our legal rights. Since PRC administrative and court authorities have
significant discretion in interpreting and implementing statutory and contractual terms, however, it may be more difficult to evaluate
the outcome of administrative and court proceedings and the level of legal protection we enjoy in the PRC legal system than in more developed
legal systems. Furthermore, the PRC legal system is based in part on government policies and internal rules (some of which are not published
in a timely manner or at all) that may have retroactive effect. As a result, we may not be aware of our violation of these policies and
rules until sometime after the violation. Such uncertainties, including uncertainties over the scope and effect of our contractual, property
(including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in China
could materially and adversely affect our business and impede our ability to continue our operations.
You may face difficulties in protecting
your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman
Islands law.
We are an exempted
company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association,
the Companies Act (As Revised) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action
against our directors, actions by our minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law
are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from
comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts
are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary
duties of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent
in some jurisdictions in the United States. In particular, the Cayman Islands have a less developed body of securities laws than the
United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than
the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal
court of the United States.
Shareholders of Cayman
Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (other than the memorandum
and articles of association and any special resolutions passed by such companies, and the registers of mortgages and charges of such
companies) or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our articles of association
to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged
to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any
facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.
Currently, all of
our operations are conducted outside the United States, and substantially all of our assets are located outside the United States. Mr.
Zhiwei Xu, the Chairman, Chief Executive Officer and a major shareholder of the Company, Ms. Dan Zhao, a board member and vice president
of the Company and Mr. Haitao Wang, an independent director of the Company, are nationals or residents of jurisdictions other than the
United States and a substantial portion of their assets are located outside the United States. As a result, it may be difficult for a
shareholder to effect service of process within the United States upon these persons, or to enforce against us or them judgments obtained
in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States
or any state in the United States.
As a result of all
of the above, our shareholders may have more difficulty in protecting their interests through actions against us or our officers, directors
or major shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.
Litigation and negative publicity
surrounding China-based companies listed in the U.S. may result in increased regulatory scrutiny of us and negatively impact the trading
price of our Ordinary Shares and could have a material adverse effect upon our business, including our results of operations, financial
condition, cash flows and prospects.
We believe that litigation
and negative publicity surrounding companies with operations in China that are listed in the U.S. have negatively impacted stock prices
for such companies. Various equity-based research organizations have published reports on China-based companies after examining, among
other things, their corporate governance practices, related party transactions, sales practices and financial statements that have led
to special investigations and stock suspensions on national exchanges. Any similar scrutiny of us, regardless of its lack of merit, could
result in a diversion of management resources and energy, potential costs to defend ourselves against rumors, decreases and volatility
in the trading price of our Ordinary Shares, and increased directors and officers insurance premiums and could have a material adverse
effect upon our business, including our results of operations, financial condition, cash flows and prospects.
The Chinese government exerts substantial
influence over the manner in which we must conduct our business, and may intervene or influence our operations at any time, which could
result in a material change in our operations, significantly limit or completely hinder our ability to offer or continue to offer our
securities to investors and, and cause the value of our securities to significantly decline or be worthless.
The Chinese government has
exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state
ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation,
environmental regulations, land use rights, property and other matters. The central or local governments of these jurisdictions may impose
new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part
to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including any decision
not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in
the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof,
and could require us to divest ourselves of any interest we then hold in Chinese properties.
As such, our business in China
is subject to various government and regulatory interferences. We could be subject to regulation by various political and regulatory entities,
including various local and municipal agencies and government sub-divisions. The Company may incur increased costs necessary to comply
with existing and newly adopted laws and regulations or penalties for any failure to comply. Our operations could be adversely affected,
directly or indirectly, by existing or future laws and regulations relating to its business or industry, which could result in a material
change in our operation and the value of our securities.
Furthermore, given recent
statements by the Chinese government indicating an intent to exert more oversight and control over offerings that are conducted overseas,
although we are currently not required to obtain permission from any of the PRC federal or local government and has not received any
denial to list and trade on the U.S. exchange, it is uncertain when and whether we will be required to obtain permission from the PRC
government to list and trade on U.S. exchanges in the future, and even when such permission is obtained, whether it will be denied or
rescinded, which could significantly limit or completely hinder our ability to offer or continue to offer our securities to investors
and cause the value of our securities to significantly decline or be worthless.
The Holding Foreign Companies Accountable
Act, or the HFCA Act, and the related regulations including Accelerating HFCAA are evolving quickly. Further implementations and interpretations
of or amendments to the HFCA Act or the related regulations, or a PCOAB’s determination of its lack of sufficient access to inspect
our auditor, might pose regulatory risks to and impose restrictions on us because of our operations in mainland China. A potential consequence
is that our ordinary shares may be delisted by the exchange. The delisting of our ordinary shares, or the threat of our ordinary shares
being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct
full inspections of our auditor deprives our investors of the benefits of such inspections.
The Holding Foreign Companies
Accountable Act, or the HFCA Act, was enacted on December 18, 2020. In accordance with the HFCA Act, trading in securities of any
registrant on a national securities exchange or in the over-the-counter trading market in the United States may be prohibited if
the PCAOB determines that it cannot inspect or fully investigate the registrant’s auditor for three consecutive years beginning
in 2021, and, as a result, an exchange may determine to delist the securities of such registrant. On June 22, 2021, the U.S. Senate passed
the Accelerating Holding Foreign Companies Accountable Act (“Accelerating HFCAA”), which, if enacted, would amend the HFCA
Act and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject
to PCAOB inspections for two consecutive years instead of three, thus reducing the time period before our securities may be prohibited
from trading or delisted if our auditor is unable to meet the PCAOB inspection requirement.
On November 5, 2021, the
SEC adopted the PCAOB rule to implement HFCA Act, which provides a framework for the PCAOB to determine whether it is unable to inspect
or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more
authorities in that jurisdiction.
On December 2, 2021, SEC adopted
amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act. The rules apply to registrants the
SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in
a foreign jurisdiction and that the PCAOB is unable to inspect or investigate (the “Commission-Identified Issuers”). A Commission-Identified
Issuer will be required to comply with the submission and disclosure requirements in the annual report for each year in which it was identified.
If a registrant is identified as a Commission-Identified Issuer based on its annual report for the fiscal year ended December 31, 2021,
the registrant will be required to comply with the submission or disclosure requirements in its annual report filing covering the fiscal
year ended December 31, 2022.
On December 16, 2021,
the PCAOB issued its determinations (the “Determination”) that they are unable to inspect or investigate completely PCAOB-registered public
accounting firms headquartered in mainland China and in Hong Kong. The Determination includes lists of public accounting firms headquartered
in mainland China and Hong Kong that the PCAOB is unable to inspect or investigate completely.
On February 4, 2022, the U.S.
House of Representatives passed the America Creating Opportunities for Manufacturing Pre-Eminence in Technology and Economic Strength
(COMPETES) Act of 2022 (the “America COMPETES Act”). If the America COMPETES Act is enacted into law, it would amend the HFCA
Act and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject
to PCAOB inspections for two consecutive years instead of three.
The enactment of the HFCA Act
and any additional actions, proceedings, or new rules resulting from these efforts to increase U.S. regulatory access to audit information
could cause investors uncertainty for affected issuers and the market price of our ordinary shares could be adversely affected, and we
could be delisted if we and our auditor are unable to meet the PCAOB inspection requirement.
The lack of access to PCAOB
inspections prevents the PCAOB from fully evaluating audits and quality control procedures of the auditors based in China and Hong Kong.
As a result, investors may be deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of
auditors in China and Hong Kong makes it more difficult to evaluate the effectiveness of these accounting firm’s audit procedures
or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections.
Our
auditor, Friedman LLP, an independent registered public accounting firm that is headquartered in the United States, as an auditor of companies
that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to
which the PCAOB conducts inspections to assess its compliance with the applicable professional standards. Our auditor has been inspected
by the PCAOB on a regular basis, with the last inspection conducted in June 2018, and it is not subject to the determinations announced
by the PCAOB on December 16, 2021. However, the recent developments would add uncertainties to our offering and we cannot assure you
whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness
of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources,
geographic reach, or experience as it relates to our audit. If it is later determined that the PCAOB is unable to inspect or investigate
completely our auditor because of a position taken by an authority in a foreign jurisdiction or any other reasons, the lack of inspection
could cause the trading in our securities to be prohibited under the Holding Foreign Companies Accountable Act, and as a result Nasdaq
may delist our securities. If our securities are unable to be listed on another securities exchange, such a delisting would substantially
impair your ability to sell or purchase our securities when you wish to do so, and the risk and uncertainty associated with a potential
delisting would have a negative impact on the price of our ordinary shares. Further, new laws and regulations or changes in laws and regulations
in both the United States and China could affect our ability to list our ordinary shares on Nasdaq, which could materially impair the
market for and market price for our securities.
Future sales or other dilution of our
equity could depress the market price of our ordinary shares.
Sales of our ordinary shares,
preferred shares, warrants, rights, units or any combination of the foregoing in the public market, or the perception that such sales
could occur, could negatively impact the price of our ordinary shares. If one or more of our shareholders were to sell large portions
of their holdings in a relatively short time, for liquidity or other reasons, the prevailing market price of our ordinary shares could
be negatively affected.
In addition, the issuance of
additional shares of our ordinary shares, securities convertible into or exercisable for our ordinary shares, other equity-linked securities,
including preferred shares, warrants, rights or any combination of the securities pursuant to this prospectus will dilute the ownership
interest of our shareholders and could depress the market price of our ordinary shares and impair our ability to raise capital through
the sale of additional equity securities.
We may need to seek additional
capital. If this additional financing is obtained through the issuance of equity securities or warrants to acquire equity securities,
our existing shareholders could experience significant dilution upon the issuance, conversion or exercise of such securities.
Our management
will have broad discretion over the use of the proceeds we receive from the sale of our securities pursuant to this prospectus and might
not apply the proceeds in ways that increase the value of your investment.
Our management will
have broad discretion to use the net proceeds from any offerings under this prospectus, and you will be relying on the judgment of our
management regarding the application of these proceeds. Except as described in any prospectus supplement or in any related free writing
prospectus that we may authorize to be provided to you, the net proceeds received by us from our sale of the securities described in this
prospectus will be added to our general funds and will be used for general corporate purposes. Our management might not apply the net
proceeds from offerings of our securities in ways that increase the value of your investment and might not be able to yield a significant
return, if any, on any investment of such net proceeds. You may not have the opportunity to influence our decisions on how to use such
proceeds.
FORWARD-LOOKING STATEMENTS
Some
of the statements contained or incorporated by reference in this prospectus may be “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the
Exchange Act and may involve material risks, assumptions and uncertainties. Forward-looking statements typically are identified by the
use of terms such as “may,” “will,” “should,” “believe,” “might,” “expect,”
“anticipate,” “intend,” “plan,” “estimate” and similar words, although some forward-looking
statements are expressed differently.
Although
we believe that the expectations reflected in such forward-looking statements are reasonable, these statements are not guarantees of future
performance and involve certain risks and uncertainties that are difficult to predict and which may cause actual outcomes and results
to differ materially from what is expressed or forecasted in such forward-looking statements. These forward-looking statements speak only
as of the date on which they are made and except as required by law, we undertake no obligation to publicly release the results of any
revision or update of these forward-looking statements, whether as a result of new information, future events or otherwise. If we do update
or correct one or more forward-looking statements, you should not conclude that we will make additional updates or corrections with respect
thereto or with respect to other forward-looking statements. A detailed discussion of risks and uncertainties that could cause actual
results and events to differ materially from our forward-looking statements is included in our periodic reports filed with the SEC and
in the “Risk Factors” section of this prospectus.
USE OF PROCEEDS
Except as described in any
prospectus supplement and any free writing prospectus in connection with a specific offering, we currently intend to use the net proceeds
from the sale of the securities offered under this prospectus to fund the development and the growth of our business, primarily working
capital, and for general corporate purposes. We may also use a portion of the net proceeds to acquire or invest in technologies and/or
businesses that we believe will enhance the value of our Company, although we have no current commitments or agreements with respect to
any such transactions as of the date of this prospectus. We have not determined the amount of net proceeds to be used specifically for
the foregoing purposes. As a result, our management will have broad discretion in the allocation of the net proceeds and investors will
be relying on the judgment of our management regarding the application of the proceeds of any sale of the securities.
DESCRIPTION OF SHARE CAPITAL
The following is a summary
of our share capital and certain provisions of our Second Amended and Restated Memorandum and Articles of Association. This summary does
not purport to be complete and is qualified in its entirety by the provisions of our Second Amended and Restated Memorandum and Articles
of Association and applicable provisions of the laws of the Cayman Islands. You are encouraged to read the relevant provisions of the
Companies Act and of our Second Amended and Restated Memorandum and Articles of Association as they relate to the following summary.
See “Where You Can Find
More Information” elsewhere in this prospectus for information on where you can obtain copies of our Second Amended and Restated
Memorandum and Articles of Association, which have been filed with and are publicly available from the SEC.
Our authorized share capital
is $50,000.00 divided into 500,000,000 shares comprising of: (i) 450,000,000 Ordinary Shares, par value $0.0001 per share and (ii) 50,000,000
Preferred Shares, par value $0.0001 per share. As of date of this prospectus, 31,458,215 Ordinary Shares and 750,000 Preferred Shares are issued
and outstanding.
DESCRIPTION OF ORDINARY SHARES
As of the date of this
prospectus, 31,458,215 ordinary shares are issued and outstanding and listing on Nasdaq Capital Market under symbol “JWEL”.
Dividends. Subject to any rights and
restrictions of any other class or series of shares, our Board may, from time to time, declare dividends on the shares issued and authorize
payment of the dividends out of our lawfully available funds. No dividends shall be declared by the board out of our company except the
following:
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“share premium account,” which represents the excess of the price paid to our company on issue of its shares over the par or “nominal” value of those shares, which is similar to the U.S. concept of additional paid in capital. |
However, no dividend shall bear interest against
the Company.
Voting Rights. Each
Ordinary Share shall be entitled to one vote on all matters subject to vote at general and special meetings of our company and each Preferred
Share shall be entitled to two (2) votes on all matters subject to vote at general and special meetings of our company. Voting at any
meeting of shareholders is by show of hands unless a poll is demanded. A poll may be demanded by the chairman of such meeting or any one
or more shareholders who together hold not less than 10% of the votes attaching to the shares present in person or by proxy. An ordinary
resolution to be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching to
the Ordinary Shares cast at a meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes
cast attaching to the issued and outstanding Ordinary Shares at a meeting. A special resolution will be required for important matters
such as making changes to our second amended and restated memorandum and articles of association.
There are no limitations on non-residents or foreign
shareholders in the memorandum and articles to hold or exercise voting rights on the Ordinary Shares imposed by foreign law or by the
charter or other constituent document of our company. However, no person will be entitled to vote at any general meeting or at any separate
meeting of the holders of the Ordinary Shares unless the person is registered as of the record date for such meeting and unless all calls
or other sums presently payable by the person in respect of Ordinary Shares in the Company have been paid.
Winding Up; Liquidation. Upon the
winding up of our company, after the full amount that holders of any issued shares ranking senior to the Ordinary Shares as to distribution
on liquidation or winding up are entitled to receive has been paid or set aside for payment, the holders of our Ordinary Shares are entitled
to receive any remaining assets of the Company available for distribution as determined by the liquidator. The assets received by the
holders of our Ordinary Shares in a liquidation may consist in whole or in part of property, which is not required to be of the same kind
for all shareholders.
Calls on Ordinary Shares and Forfeiture of
Ordinary Shares. Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their Ordinary
Shares in a notice served to such shareholders at least 14 days prior to the specified time and place of payment. Any Ordinary Shares
that have been called upon and remain unpaid are subject to forfeiture.
Redemption of Ordinary Shares. We
may issue shares that are, or at its option or at the option of the holders are, subject to redemption on such terms and in such manner
as it may, before the issue of the shares, determine. Under the Companies Act, shares of a Cayman Islands exempted company may be redeemed
or repurchased out of profits of the company, out of the proceeds of a fresh issue of shares made for that purpose or out of capital,
provided the memorandum and articles authorize this and it has the ability to pay its debts as they come due in the ordinary course of
business.
No Preemptive Rights. Holders of Ordinary
Shares will have no preemptive or preferential right to purchase any securities of our company.
Variation of Rights Attaching to Shares. All
or any of the special rights attached to any class of shares may, subject to the provisions of the Companies Act, be materially adversely
varied with the written consent of the holders of all of the issued shares of that class or with the sanction of an ordinary resolution
passed at a general meeting of the holders of the shares of that class. The rights conferred upon the holders of the shares of any class
issued shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the
creation or issue of further shares ranking pari passu with such existing class of shares.
Anti-Takeover Provisions. Some provisions
of our current memorandum and articles of association may discourage, delay or prevent a change of control of our company or management
that shareholders may consider favorable, including provisions that authorize our board of directors to issue preferred shares in one
or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further
vote or action by our shareholders.
Transfer of Ordinary Shares. Subject
to the restrictions contained in our current articles of association, any of our shareholders may transfer all or any of his or her ordinary
shares by an instrument of transfer in the usual or common form or any other form approved by our board of directors.
Our board of directors may, in its absolute discretion,
decline to register any transfer of any ordinary share which is not fully paid up or on which we have a lien. Our board of directors may
also decline to register any transfer of any ordinary share unless:
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the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer; |
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the instrument of transfer is in respect of only one class of shares; |
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the instrument of transfer is properly stamped, if required; |
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in the case of a transfer to joint holders, the number of joint holders to whom the share is to be transferred does not exceed four; and |
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a fee of such maximum sum as the Nasdaq Capital Market may determine to be payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof. |
If our directors refuse to register a transfer,
they shall, within three months after the date on which the instrument of transfer was lodged, send to each of the transferor and the
transferee notice of such refusal.
The registration of transfers may, on ten calendar
days’ notice being given by advertisement in such one or more newspapers, by electronic means or by any other means in accordance
with the Nasdaq Rules, be suspended and the register closed at such times and for such periods as our board of directors may, in their
absolute discretion, from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the
register closed for more than 30 calendar days in any calendar year.
Inspection of Books and Records
Holders of our ordinary shares
have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records (other
than the memorandum and articles of association, the register of mortgages and charges, and copies of any special resolutions passed by
our shareholders). However, we will provide our shareholders with annual audited financial statements.
General Meeting of Shareholders. Shareholders’
meetings may be convened by a majority of our board of directors or our chairman. Advance notice of at least seven (7) calendar days
is required for the convening of our annual general shareholders’ meeting and any other general meeting of our shareholders. A quorum
required for and throughout a meeting of shareholders consists of at least one shareholder entitled to vote and present in person or by
proxy or (in the case of a shareholder being a corporation) by its duly authorized representative representing not less than one-third of all
voting power of our share capital in issue.
Exempted Company. We are an exempted
company with limited liability under the Companies Act. The Companies Act distinguishes between ordinary resident companies and exempted
companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to
be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except
that an exempted company:
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does not have to file an annual return of its shareholders with the Registrar of Companies; |
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is not required to open its register of members for inspection; |
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does not have to hold an annual general meeting; |
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may issue shares with no par value; |
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may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance); |
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may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; |
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may register as a limited duration company; and |
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may register as a segregated portfolio company. |
“Limited liability”
means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the company (except in
exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other
circumstances in which a court may be prepared to pierce or lift the corporate veil).
DESCRIPTION OF PREFERRED SHARES
As of the date of this prospectus,
there are 750,000 Preferred Shares issued and outstanding.
Conversion. Each Preferred Share is
convertible into one (1) ordinary share at any time at the option of the holder thereof. In no event shall Ordinary Shares be convertible
into Preferred Shares.
Voting Rights. Each share of Preferred
Shares shall have the voting rights equal to two (2) Ordinary Shares.
Dividends. Except for voting rights
and conversion rights as set out hereof, the Ordinary Shares and the Preferred Shares shall rank pari passu with one
another and shall have the same rights, preferences, privileges and restrictions.
Assignment and Transfer. The holders of
Preferred Shares shall have the right to transfer each share of the Preferred Shares to any third party at any time in such holder’s
sole and absolute discretion, subject to compliance with applicable securities laws. Upon any sale, transfer, assignment or disposition
of any Preferred Share by a shareholder to any person who is not an affiliate of such shareholder, or upon a change of control of any
Preferred Share to any person who is not an affiliate of the registered shareholder of such share, such Preferred Share shall be automatically
and immediately converted into one (1) ordinary share.
Our board of directors is empowered
to designate and issue from time to time one or more classes or series of preferred shares and to fix and determine the relative rights,
preferences, designations, qualifications, privileges, options, conversion rights, limitations and other special or relative rights of
each such class or series so authorized. Such action could adversely affect the voting power and other rights of the holders of our ordinary
shares or could have the effect of discouraging any attempt by a person or group to obtain control of us. You should refer to the prospectus
supplement relating to the series of preferred shares being offered for the specific terms of that series, including:
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title of the series and the number of shares in the series; |
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the price at which the preferred shares will be offered; |
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the dividend rate or rates or method of calculating the rates, the dates on which the dividends will be payable, whether or not dividends will be cumulative or noncumulative and, if cumulative, the dates from which dividends on the preferred shares being offered will cumulate; |
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the voting rights, if any, of the holders of preferred shares being offered; |
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the provisions for a sinking fund, if any, and the provisions for redemption, if applicable, of the preferred shares being offered, including any restrictions on the foregoing as a result of arrearage in the payment of dividends or sinking fund installments; |
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the liquidation preference per share; |
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the terms and conditions, if applicable, upon which the preferred shares being offered will be convertible into our Ordinary Shares, including the conversion price, or the manner of calculating the conversion price, and the conversion period; |
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the terms and conditions, if applicable, upon which the preferred shares being offered will be exchangeable for debt securities, including the exchange price, or the manner of calculating the exchange price, and the exchange period; |
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any listing of the preferred shares being offered on any securities exchange; |
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a discussion of any material federal income tax considerations applicable to the preferred shares being offered; |
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the relative ranking and preferences of the preferred shares being offered as to dividend rights and rights upon liquidation, dissolution or the winding up of our affairs; |
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any limitations on the issuance of any class or series of preferred shares ranking senior or equal to the series of preferred shares being offered as to dividend rights and rights upon liquidation, dissolution or the winding up of our affairs; and |
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any additional rights, preferences, qualifications, limitations and restrictions of the series. |
Upon
issuance, the preferred shares will be fully paid and nonassessable, which means that its holders will have paid their purchase price
in full and we may not require them to pay additional funds.
Any
preferred share terms selected by the Board could decrease the amount of earnings and assets available for distribution to holders of
our Ordinary Shares or adversely affect the rights and power, including voting rights, of the holders of our Ordinary Shares without any
further vote or action by the stockholders. The rights of holders of our Ordinary Shares will be subject to, and may be adversely affected
by, the rights of the holders of any preferred shares that may be issued by us in the future. The issuance of preferred shares could also
have the effect of delaying or preventing a change in control of our company or make removal of management more difficult.
Description
of Warrants
The following summary of certain
provisions of the warrants does not purport to be complete and is subject to, and qualified in its entirety by reference to, the provisions
of the warrant agreement that will be filed with the SEC in connection with the offering of such warrants.
General
We
may issue warrants for the purchase of Ordinary Shares and/or Preferred Shares in one or more series. We may issue warrants independently
or together with Ordinary Shares and/or Preferred Shares and the warrants may be attached to or separate from these securities. While
the terms summarized below will apply generally to any warrants that we may offer, we will describe the particular terms of any series
of warrants in more detail in the applicable prospectus supplement. The terms of any warrants offered under a prospectus supplement may
differ from the terms described below.
We
will file as exhibits to the Registration Statement of which this prospectus is a part, or will incorporate by reference from reports
that we file with the SEC, the form of warrant agreement, including a form of warrant certificate, that describes the terms of the particular
series of warrants we are offering. The following summaries of material provisions of the warrants and the warrant agreements are subject
to, and qualified in their entirety by reference to, all the provisions of the warrant agreement and warrant certificate applicable to
the particular series of warrants that we may offer under this prospectus. We urge you to read the applicable prospectus supplements related
to the particular series of warrants that we may offer under this prospectus, as well as any related free writing prospectuses, and the
complete warrant agreements and warrant certificates that contain the terms of the warrants.
We
will describe in the applicable prospectus supplement the terms of the series of warrants being offered, including:
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the title of such warrants; |
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the aggregate number of such warrants; |
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the price or prices at which such warrants will be issued and exercised; |
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the currency or currencies in which the price of such warrants will be payable; |
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the securities purchasable upon exercise of such warrants; |
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the date on which the right to exercise such warrants shall commence and the date on which such right shall expire; |
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if applicable, the minimum or maximum amount of such warrants which may be exercised at any one time; |
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if applicable, the designation and terms of the securities with which such warrants are issued and the number of such warrants issued with each such security; |
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if applicable, the date on and after which such warrants and the related securities will be separately transferable; |
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information with respect to book-entry procedures, if any; |
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any material Cayman Islands or United States federal income tax consequences; |
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the antidilution provisions of the warrants, if any; and |
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any other terms of such warrants, including terms, procedures and limitations relating to the exchange and exercise of such warrants. |
Exercise of Warrants
Each warrant will entitle the
holder to purchase the securities that we specify in the applicable prospectus supplement at the exercise price that we describe in the
applicable prospectus supplement. Holders of the warrants may exercise the warrants at any time up to the specified time on the expiration
date that we set forth in the applicable prospectus supplement. After the close of business on the expiration date, unexercised warrants
will become void.
Holders
of the warrants may exercise the warrants by delivering the warrant certificate representing the warrants to be exercised together with
specified information, and paying the required amount to the Company in immediately available funds, as provided in the applicable prospectus
supplement. We will set forth in the warrant certificate and in the applicable prospectus supplement the information that the holder of
the warrant will be required to deliver to the Company for warrant exercise.
If fewer than all of the warrants
represented by the warrant certificate are exercised, then we will issue a new warrant certificate for the remaining amount of warrants.
If we so indicate in the applicable prospectus supplement, holders of the warrants may surrender securities as all or part of the exercise
price for warrants.
DESCRIPTION OF SUBSCRIPTION RIGHTS
The following summary of certain
provisions of the subscription rights does not purport to be complete and is subject to, and qualified in its entirety by reference to,
the provisions of the certificate evidencing the subscription rights that will be filed with the SEC in connection with the offering of
such subscription rights.
General
We may issue subscription
rights to purchase ordinary shares or preferred shares. Subscription rights may be issued independently or together with any other offered
security and may or may not be transferable by the person purchasing or receiving the subscription rights. In connection with any subscription
rights offerings, we may enter into a standby underwriting arrangement with one or more underwriters pursuant to which such underwriters
will purchase any offered securities remaining unsubscribed for after such subscription rights offering. In connection with subscription
rights offering to our shareholders, we will distribute certificates evidencing the subscription rights and a prospectus supplement to
our shareholders on the record date that we set for receiving subscription rights in such subscription rights offering.
The applicable prospectus supplement
will describe the following terms of subscription rights in respect of which this prospectus is being delivered:
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the title of such subscription rights; |
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the securities for which such subscription rights are exercisable; |
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the exercise price for such subscription rights; |
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the number of such subscription rights issued to each shareholder; |
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the extent to which such subscription rights are transferable; |
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if applicable, a discussion of the material Cayman Islands or United States federal income tax considerations applicable to the issuance or exercise of such subscription rights; |
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the date on which the right to exercise such subscription rights shall commence, and the date on which such rights shall expire (subject to any extension); |
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the extent to which such subscription rights include an over-subscription privilege with respect to unsubscribed securities; |
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if applicable, the material terms of any standby underwriting or other purchase arrangement that we may enter into in connection with the subscription rights offering; and |
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any other terms of such subscription rights, including terms, procedures and limitations relating to the exchange and exercise of such subscription rights. |
Exercise of Subscription Rights
Each subscription right will
entitle the holder of the subscription right to purchase for cash such amount of securities at such exercise price as shall be set forth
in, or be determinable as set forth in, the prospectus supplement relating to the subscription rights offered thereby. Subscription rights
may be exercised at any time up to the close of business on the expiration date for such subscription rights set forth in the prospectus
supplement. After the close of business on the expiration date, all unexercised subscription rights will become void.
Subscription rights may be
exercised as set forth in the prospectus supplement relating to the subscription rights offered thereby. Upon receipt of payment and the
subscription rights certificate properly completed and duly executed at the corporate trust office of the subscription rights agent or
any other office indicated in the prospectus supplement, we will forward, as soon as practicable, the ordinary shares or preferred shares
purchasable upon such exercise. We may determine to offer any unsubscribed offered securities directly to persons other than shareholders,
to or through agents, underwriters or dealers or through a combination of such methods, including pursuant to standby underwriting arrangements,
as set forth in the applicable prospectus supplement.
DESCRIPTION OF UNITS
The following summary of certain
provisions of the units does not purport to be complete and is subject to, and qualified in its entirety by reference to, the provisions
of the certificate evidencing the units that will be filed with the SEC in connection with the offering of such units.
We may issue units comprised
of one or more of the other securities described in this prospectus in any combination. Each unit will be issued so that the holder of
the unit is also the holder, with the rights and obligations of a holder, of each security included in the unit. The unit agreement under
which a unit is issued may provide that the securities included in the unit may not be held or transferred separately, at any time or
at any time before a specified date or upon the occurrence of a specified event or occurrence.
The applicable prospectus supplement
will describe:
|
● |
the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately; |
|
● |
any unit agreement under which the units will be issued; |
|
● |
any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units; and |
|
● |
whether the units will be issued in fully registered or global form. |
PLAN OF DISTRIBUTION
We may sell the securities
offered through this prospectus (i) to or through underwriters or dealers, (ii) directly to purchasers, including our affiliates, (iii)
through agents, or (iv) through a combination of any these methods. The securities may be distributed at a fixed price or prices, which
may be changed, market prices prevailing at the time of sale, prices related to the prevailing market prices, or negotiated prices. The
prospectus supplement will include the following information:
|
● |
the terms of the offering; |
|
● |
the names of any underwriters or agents; |
|
● |
the name or names of any managing underwriter or underwriters; |
|
● |
the purchase price of the securities; |
|
● |
any over-allotment options under which underwriters may purchase additional securities from us; |
|
● |
the net proceeds from the sale of the securities; |
|
● |
any delayed delivery arrangements; |
|
● |
any underwriting discounts, commissions and other items constituting underwriters’ compensation; |
|
● |
any initial public offering price; |
|
● |
any discounts or concessions allowed or reallowed or paid to dealers; |
|
● |
any commissions paid to agents; and |
|
● |
any securities exchange or market on which the securities may be listed. |
Sale Through Underwriters or Dealers
Only underwriters named in
the prospectus supplement are underwriters of the securities offered by the prospectus supplement. If underwriters are used in the sale,
the underwriters will acquire the securities for their own account, including through underwriting, purchase, security lending or repurchase
agreements with us. The underwriters may resell the securities from time to time in one or more transactions, including negotiated transactions.
Underwriters may sell the securities in order to facilitate transactions in any of our other securities (described in this prospectus
or otherwise), including other public or private transactions and short sales. Underwriters may offer securities to the public either
through underwriting syndicates represented by one or more managing underwriters or directly by one or more firms acting as underwriters.
Unless otherwise indicated in the prospectus supplement, the obligations of the underwriters to purchase the securities will be subject
to certain conditions, and the underwriters will be obligated to purchase all the offered securities if they purchase any of them. The
underwriters may change from time to time any public offering price and any discounts or concessions allowed or reallowed or paid to dealers.
If dealers are used in the
sale of securities offered through this prospectus, we will sell the securities to them as principals. They may then resell those securities
to the public at varying prices determined by the dealers at the time of resale. The prospectus supplement will include the names of the
dealers and the terms of the transaction.
We will provide in the applicable
prospectus supplement any compensation we will pay to underwriters, dealers or agents in connection with the offering of the securities,
and any discounts, concessions or commissions allowed by underwriters to participating dealers.
Direct Sales and Sales Through Agents
We may sell the securities
offered through this prospectus directly. In this case, no underwriters or agents would be involved. Such securities may also be sold
through agents designated from time to time. The prospectus supplement will name any agent involved in the offer or sale of the offered
securities and will describe any commissions payable to the agent. Unless otherwise indicated in the prospectus supplement, any agent
will agree to use its reasonable best efforts to solicit purchases for the period of its appointment.
We may sell the securities
directly to institutional investors or others who may be deemed to be underwriters within the meaning of the Securities Act with respect
to any sale of those securities. The terms of any such sales will be described in the prospectus supplement.
Delayed Delivery Contracts
If the prospectus supplement
indicates, we may authorize agents, underwriters or dealers to solicit offers from certain types of institutions to purchase securities
at the public offering price under delayed delivery contracts. These contracts would provide for payment and delivery on a specified date
in the future. The contracts would be subject only to those conditions described in the prospectus supplement. The applicable prospectus
supplement will describe the commission payable for solicitation of those contracts.
Market Making, Stabilization and Other Transactions
Unless the applicable prospectus
supplement states otherwise, other than our Ordinary Shares, all securities we offer under this prospectus will be a new issue and will
have no established trading market. We may elect to list offered securities on an exchange or in the over-the-counter market. Any underwriters
that we use in the sale of offered securities may make a market in such securities, but may discontinue such market making at any time
without notice. Therefore, we cannot assure you that the securities will have a liquid trading market.
Any underwriter may also engage
in stabilizing transactions, syndicate covering transactions and penalty bids in accordance with Rule 104 under the Securities Exchange
Act. Stabilizing transactions involve bids to purchase the underlying security in the open market for the purpose of pegging, fixing or
maintaining the price of the securities. Syndicate covering transactions involve purchases of the securities in the open market after
the distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the underwriters
to reclaim a selling concession from a syndicate member when the securities originally sold by the syndicate member are purchased in a
syndicate covering transaction to cover syndicate short positions. Stabilizing transactions, syndicate covering transactions and penalty
bids may cause the price of the securities to be higher than it would be in the absence of the transactions. The underwriters may, if
they commence these transactions, discontinue them at any time.
General Information
Agents, underwriters, and dealers
may be entitled, under agreements entered into with us, to indemnification by us against certain liabilities, including liabilities under
the Securities Act. Our agents, underwriters, and dealers, or their affiliates, may be customers of, engage in transactions with or perform
services for us, in the ordinary course of business.
EXPENSES OF ISSUANCE
AND DISTRIBUTION
The following table sets forth
the various expenses in connection with the sale and distribution of the securities being registered. We will bear all of the expenses
shown below.
Securities and Exchange Commission registration fee | |
$ | 18,540 | |
Printing expenses | |
| | * |
Legal fees and expenses | |
| | * |
Accounting fees and expenses | |
| | * |
Transfer agent fees and expenses | |
| | * |
Miscellaneous | |
| | * |
Total | |
$ | | * |
| * | The amount of securities and number
of offerings are indeterminable, and the expenses cannot be estimated at this time. |
LEGAL MATTERS
We are being represented
by FisherBroyles, LLP with respect to legal matters of United States federal securities and New York State law. Maples and Calder (Hong
Kong) LLP will pass upon certain legal matters in connection with the securities offered to the extent governed by Cayman Islands
law. Certain legal matters as to PRC law will be passed upon for us by Jiangsu Yiyou Tianyuan Law Firm. FisherBroyles,
LLP may rely upon Maples and Calder (Hong Kong) LLP with respect to matters governed by Cayman Islands law, and upon Jiangsu Yiyou
Tianyuan Law Firm with respect to matters governed by PRC law.
EXPERTS
The consolidated financial
statements as of December 31, 2021 and 2020 and for the two years ended December 31, 2021 and 2020, incorporated by reference from the
Company’s Annual Report on Form 20-F for the year ended December 31, 2021 have been audited by Friedman, LLP, an independent registered
public accounting firm, as set forth in their report, which is incorporated herein by reference, and are included in reliance upon such
report given on the authority of such firm as experts in accounting and auditing. Friedman LLP is located at One Liberty Plaza, 165 Broadway,
Floor 21, New York, NY 10006.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to “incorporate
by reference” the information we file with them. This means that we can disclose important information to you by referring you to
those documents. Each document incorporated by reference is current only as of the date of such document, and the incorporation by reference
of such documents shall not create any implication that there has been no change in our affairs since the date thereof or that the information
contained therein is current as of any time subsequent to its date. The information incorporated by reference is considered to be a part
of this prospectus and should be read with the same care. When we update the information contained in documents that have been incorporated
by reference by making future filings with the SEC, the information incorporated by reference in this prospectus is considered to be automatically
updated and superseded. In other words, in the case of a conflict or inconsistency between information contained in this prospectus and
information incorporated by reference into this prospectus, you should rely on the information contained in the document that was filed
later.
We hereby incorporate by reference
into this prospectus the following documents that we have filed with the SEC under the Exchange Act:
|
(1) |
the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2021, filed with the SEC on April 25, 2022; |
|
(3) |
the description of our Ordinary Shares incorporated by reference in our registration statement on Form 8-A, as amended (File No. 001-40145) filed with the Commission on March 2, 2021, including any amendment and report subsequently filed for the purpose of updating that description; and |
|
|
|
|
(4) |
with respect to each offering of the securities under this prospectus, all our subsequent annual reports on Form 20-F and any report on Form 6-K that indicates that it is being incorporated by reference that we file or furnish with the SEC on or after the date on which the registration statement is first filed with the SEC and until the termination or completion of the offering by means of this prospectus. |
Our 2021 Annual Report
contains a description of our business and audited consolidated financial statements with a report by our independent auditors. The consolidated
financial statements are prepared and presented in conformity with U.S. generally accepted accounting principles.
Unless expressly incorporated
by reference, nothing in this prospectus shall be deemed to incorporate by reference information furnished to, but not filed with, the
SEC. Copies of all documents incorporated by reference in this prospectus, other than exhibits to those documents unless such exhibits
are specifically incorporated by reference in this prospectus, will be provided at no cost to each person, including any beneficial owner,
who receives a copy of this prospectus on the written or oral request of that person made to: Jowell Global Ltd. Attn: Company Secretary,
2nd Floor, No. 285 Jiangpu Road, Yangpu District, Shanghai, China 200082 and email: ir@1juhao.com
You should rely only on the
information that we incorporate by reference or provide in this prospectus. We have not authorized anyone to provide you with different
information. We are not making any offer of these securities in any jurisdiction where the offer is not permitted. You should not assume
that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front of those
documents.
WHERE YOU CAN FIND MORE INFORMATION
As permitted by SEC rules,
this prospectus omits certain information and exhibits that are included in the registration statement of which this prospectus forms
a part. Since this prospectus may not contain all of the information that you may find important, you should review the full text of these
documents. If we have filed a contract, agreement or other document as an exhibit to the registration statement of which this prospectus
forms a part, you should read the exhibit for a more complete understanding of the document or matter involved. Each statement in this
prospectus, including statements incorporated by reference as discussed above, regarding a contract, agreement or other document is qualified
in its entirety by reference to the actual document.
We are subject to the information
reporting requirements of the Exchange Act that are applicable to foreign private issuers, and, in accordance with these requirements,
we file annual and current reports and other information with the SEC. You may inspect, read (without charge) and copy the reports and
other information we file with the SEC at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549.
You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains
an internet website at www.sec.gov that contains our filed reports and other information that we file electronically
with the SEC.
We maintain a corporate website
at www.1juhao.com. Information contained on, or that can be accessed through, our website does not constitute a part of this prospectus.
ENFORCEABILITY OF CIVIL LIABILITIES
We are incorporated under the
laws of the Cayman Islands as an exempted company with limited liability. We incorporated in the Cayman Islands because of certain benefits
associated with being a Cayman Islands exempted company, such as political and economic stability, an effective judicial system, a favorable
tax system, the absence of foreign exchange control or currency restrictions and the availability of professional and support services.
However, the Cayman Islands have a less developed body of securities laws that provide significantly less protection to investors as compared
to the securities laws of the United States. In addition, Cayman Islands companies may not have standing to sue before the federal courts
of the United States.
All of our assets are
located in China. In addition, Mr. Zhiwei Xu, the Chairman, Chief Executive Officer and a major shareholder of the Company, Ms. Dan Zhao,
a board member and vice president of the Company and Mr. Haitao Wang, an independent director of the Company are residents of jurisdictions
other than the United States and all or a substantial portion of their assets are located outside the United States. As a result, it
may be difficult for investors to effect service of process within the United States upon these individuals, or to enforce against us
or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities
laws of the United States or any state in the United States.
Maples and Calder (Hong Kong)
LLP, our counsel as to Cayman Islands law has advised us, respectively, that there is uncertainty as to whether the courts of the Cayman
Islands would:
|
● |
recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States; or |
|
● |
entertain original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States. |
Maples
and Calder (Hong Kong) LLP has informed us that it is uncertain whether the courts of the Cayman Islands would (i) recognize
or enforce judgments of U.S. courts obtained against us or our directors or officers that are predicated upon the civil liability provisions
of the federal securities laws of the United States or the securities laws of any state in the United States, or (ii) entertain original
actions brought in the Cayman Islands against us or our directors or officers that are predicated upon the federal securities laws of
the United States or the securities laws of any state in the United States.
Maples
and Calder (Hong Kong) LLP has informed us that although there is no statutory enforcement in the Cayman Islands of judgments obtained
in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement
or recognition of such judgments), the courts of the Cayman Islands will, at common law, recognize and enforce a foreign monetary judgment
of a foreign court of competent jurisdiction without any re-examination of the merits of the underlying dispute based on the principle
that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the liquidated sum for which such judgment
has been given, provided such judgment (a) is given by a foreign court of competent jurisdiction, (b) imposes on the judgment debtor a
liability to pay a liquidated sum for which the judgment has been given, (c) is final, (d) is not in respect of taxes, a fine or a penalty,
and (e) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy
of the Cayman Islands. However, the Cayman Islands courts are unlikely to enforce a judgment obtained from the U.S. courts under civil
liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise
to obligations to make payments that are penal or punitive in nature. A Cayman Islands court may stay enforcement proceedings if concurrent
proceedings are being brought elsewhere.
JOWELL GLOBAL LTD.
2,576,600 Ordinary Shares
PROSPECTUS SUPPLEMENT
October 11, 2022
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