United States securities and exchange commission logo
March 31, 2022
Jianhui Ye
Chief Executive Officer
EZGO Technologies Ltd.
Building #A, Floor 2
Changzhou Institute of Dalian University of Technology
Wujin District, Changzhou City
Jiangsu, China 213164
Re: EZGO Technologies
Ltd.
Registration
Statement on Form F-3
Filed March 4, 2022
File No. 333-263315
Dear Mr. Ye:
We have limited our review of your registration statement to
those issues we have
addressed in our comments. In some of our comments, we may ask you to
provide us with
information so we may better understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form F-3 filed March 4, 2022
Cover Page
1. Please disclose
prominently on the prospectus cover page that you are not a Chinese
operating company but a
British Virgin Islands Islands holding company with operations
conducted by your
subsidiaries and through contractual arrangements with a variable
interest entity (VIE)
based in China and that this structure involves unique risks to
investors. If true,
disclose that the contractual arrangements with your VIE have not been
tested in court. Also,
please revise the disclosure in the seventh paragraph of the cover
page to explain whether
the VIE structure is used to provide investors with exposure to
foreign investment in
China-based companies where Chinese law prohibits direct foreign
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FirstName LastNameJianhui Ye
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investment in the operating companies, and disclose that investors may
never hold equity
interests in the Chinese operating company. Also, revise the
disclosure in the seventh
paragraph to acknowledge that Chinese regulatory authorities could
disallow this VIE
structure, which would likely result in a material change in your
operations and/or a
material change in the value of the securities you are registering for
sale, including that it
could cause the value of such securities to significantly decline or
become worthless.
Provide a cross-reference to your detailed discussion of risks facing
the company and the
offering as a result of this structure.
2. We note your disclosure in the seventh paragraph on the cover page
that you "control and
receive the economic benefits of the VIE s business operations
through certain contractual
arrangements." Please remove the language that you "control" the VIE's
business.
3. Please revise the disclosure in the eighth paragraph on the cover page
to make clear
whether the legal and operational risks associated with being based in
or having the
majority of the company s operations in China could result in a
material change in your
operations and/or the value of the securities you are registering for
sale or could
significantly limit or completely hinder your ability to offer or
continue to offer securities
to investors and cause the value of such securities to significantly
decline or be worthless.
Also, revise the reference in the fifth sentence to "list on a U.S.
exchange" to instead refer
to list on a U.S. or other foreign exchange. Your prospectus summary
should address, but
not necessarily be limited to, the risks highlighted on the prospectus
cover page.
4. Clearly disclose how you will refer to the holding company,
subsidiaries, and VIE when
providing the disclosure throughout the document so that it is clear
to investors which
entity the disclosure is referencing and which subsidiaries or
entities are conducting the
business operations. Refrain from using terms such as we or
our when describing
activities or functions of a VIE. For example, disclose, if true, that
your subsidiaries
and/or the VIE conduct operations in China, that the VIE is
consolidated for accounting
purposes but is not an entity in which you own equity, and that the
holding company does
not conduct operations.
5. It appears from the disclosure in the last paragraph on page 28 and
from the disclosure in
the first paragraph on page 30 of your Annual Report on Form 20-F for
the fiscal year
ended September 30, 2021 that there is more than one VIE. Please
advise or revise.
6. Provide a description of how cash is transferred through your
organization. In addition,
expand disclosure in the last two sentences in the tenth paragraph on
the cover page to
disclose your intentions to distribute earnings or settle amounts owed
under the VIE
agreements. Also, state whether any transfers, dividends, or
distributions have been made
to date between the holding company, its subsidiaries, and
consolidated VIE, or to
investors, and quantify the amounts where applicable. In this regard,
we note the
disclosure that "To date, there have not been any such dividends or
other distributions
from our PRC subsidiaries to our subsidiaries located outside of China
.... as of the date of
this prospectus, none of our PRC subsidiaries have ever issued any
dividends or
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FirstName LastNameJianhui Ye
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distributions to EZGO or its shareholders outside of China ... as of
the date of this
prospectus, neither EZGO nor any of its subsidiaries have ever paid
dividends or made
distributions to U.S. investors." Provide cross-references to the
condensed consolidating
schedule and the consolidated financial statements.
7. Please state where you maintain bank accounts and balances. Please
clarify the amount of
your cash that is in RMB and Hong Kong dollars. Please disclose
whether cash generated
from one subsidiary is used to fund another subsidiary's operations,
whether your
subsidiaries have ever faced difficulties or limitations on their
ability to transfer cash
between subsidiaries, and whether your subsidiaries have cash
management policies that
dictate the amount of such funding. Also, disclose whether your
subsidiaries have cash
management policies/procedures that dictate how funds are transferred.
Your disclosure
should address the possibility that the PRC could prevent the cash
maintained in the PRC
or Hong Kong from leaving, or that the PRC could restrict deployment
of the cash into
the business or for the payment of dividends. Add similar disclosure
to risk factors and to
the summary of risk factors.
Prospectus Summary, page 1
8. Please revise the diagram of the corporate structure on page 2 to use
a dashed line without
an arrow to depict the relationship with a VIE. Also, revise the
disclosure on page 3 to
explain how and why the contractual arrangements may be less effective
than direct
ownership.
9. We note the disclosure on page 5 about the opinion of DeHeng Law
Offices and
the references on page 40 to you have been advised by DeHeng Law
Offices. Please file
the opinion and counsel's consent as exhibits to the registration
statement.
10. Please include in the prospectus summary a new subsection that
summarizes your risk
factors. In the summary of risk factors, please disclose the risks
that your corporate
structure and being based in or having the majority of the company s
operations in China
poses to investors. In particular, describe the significant
regulatory, liquidity, and
enforcement risks with cross-references to the more detailed
discussion of these risks in
the prospectus. For example, specifically discuss risks arising from
the legal system in
China, including risks and uncertainties regarding 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 your operations at
any time, or may
exert more control over offerings conducted overseas and/or foreign
investment in China-
based issuers, which could result in a material change in your
operations and/or the value
of the securities you are registering for sale. Acknowledge any risks
that 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 your ability to offer or continue to offer
securities to investors
and cause the value of such securities to significantly decline or be
worthless.
Jianhui Ye
FirstName LastNameJianhui Ye
EZGO Technologies Ltd.
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11. We note that the consolidated VIE constitutes a material part of your
consolidated
financial statements. Please provide in tabular form a condensed
consolidating schedule
that disaggregates the operations and depicts the financial position,
cash flows, and results
of operations as of the same dates and for the same periods for which
audited consolidated
financial statements are required. The schedule should present major
line items, such as
revenue and cost of goods/services, and subtotals and disaggregated
intercompany
amounts, such as separate line items for intercompany receivables and
investment in
subsidiary. The schedule should also disaggregate the parent company,
the VIE and its
consolidated subsidiaries, the WFOEs that are the primary beneficiary
of the VIE, and an
aggregation of other entities that are consolidated. The objective of
this disclosure is to
allow an investor to evaluate the nature of assets held by, and the
operations of, entities
apart from the VIE, as well as the nature and amounts associated with
intercompany
transactions. Any intercompany amounts should be presented on a gross
basis and when
necessary, additional disclosure about such amounts should be included
in order to make
the information presented not misleading.
12. We note your disclosure in the "Transfer of Cash through our
Organization" on page 8.
Provide a clear description of how cash is transferred through your
organization. Disclose
your intentions to distribute earnings or settle amounts owed under
the VIE agreements.
Quantify any cash flows and transfers of other assets by type that
have occurred between
the holding company, its subsidiaries, and the consolidated VIE, and
direction of transfer.
Quantify any dividends or distributions that a subsidiary or
consolidated VIE have made
to the holding company and which entity made such transfer, and their
tax consequences.
Similarly quantify dividends or distributions made to U.S. investors,
the source, and their
tax consequences. Your disclosure should make clear if no transfers,
dividends, or
distributions have been made to date. Describe any restrictions on
foreign exchange and
your ability to transfer cash between entities, across borders, and to
U.S. investors.
Describe any restrictions and limitations on your ability to
distribute earnings from the
company, including your subsidiaries and/or the consolidated VIE, to
the parent company
and U.S. investors as well as the ability to settle amounts owed under
the VIE
agreements.
13. We note your disclosure on page 12 that "no relevant laws or
regulations in the PRC
explicitly require us to seek approval ... authorities." Please revise
your prospectus
summary in accordance with comment number 8 of the Staff's "Sample
Letter to China
Based Companies" published on December 20, 2021. Please revise to
disclose each
permission or approval that you, your subsidiaries, or the VIE are
required to obtain from
Chinese authorities to operate your business and to offer the
securities being registered to
foreign investors. State whether you, your subsidiaries, or VIE are
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 operations, and state affirmatively whether you
have received all
requisite permissions or approvals and whether any permissions or
approvals have been
denied. Please also describe the consequences to you and your
investors if you, your
Jianhui Ye
FirstName LastNameJianhui Ye
EZGO Technologies Ltd.
Comapany
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subsidiaries, or the VIE: (i) do not receive or maintain such
permissions or approvals, (ii)
inadvertently conclude that such permissions or approvals are not
required, or (iii)
applicable laws, regulations, or interpretations change and you are
required to obtain such
permissions or approvals in the future.
14. We note the disclosure on page 12 that "we are relying on an opinion
of our PRC
counsel." Please revise the disclosure to identify counsel and file an
exhibit.
15. Disclose that trading in your securities may be prohibited under the
Holding Foreign
Companies Accountable Act if the PCAOB determines that it cannot
inspect or investigate
completely your auditor, and that as a result an exchange may
determine to delist your
securities. Disclose whether your auditor is subject to the
determinations announced by
the PCAOB on December 16, 2021.
16. We note the the references to "cause our Ordinary Shares to
significantly decline" and
"continue to offer our Ordinary Shares" on page 12. Please revise your
disclosure and
make conforming changes throughout the prospectus to clarify that the
references apply to
the value of the securities you are registering for sale, as we note
that you are registering
not only ordinary shares but also preferred shares, debt securities,
warrants, rights and
units. Please make conforming changes in each appropriate instance
throughout the
prospectus.
Risk Factors, page 14
17. Notwithstanding your reference on the cover page to a description of
your corporate
structure and VIE contractual arrangements in Item 3.D of your Form
20-F for the fiscal
year ended September 30, 2021, please revise your risk factor
disclosure in the prospectus
to address our comments. Revise your risk factors to acknowledge that
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 you are
registering may decline in value
or become worthless if the determinations, changes, or interpretations
result in your
inability to assert contractual control over the assets of your PRC
subsidiaries or the
VIE that conducts all or substantially all of your operations.
18. Notwithstanding the risk factors in your Form 20-F for the fiscal year
ended September
30, 2021, please revise your risk factor disclosure in the prospectus
to address our
comments. Given the Chinese government s significant oversight and
discretion over the
conduct of your business, please revise your prospectus to highlight
separately the risk
that the Chinese government may intervene or influence your operations
at any time,
which could result in a material change in your operations and/or the
value of the
securities you are registering. Also, given recent statements by the
Chinese government
indicating an intent to exert more oversight and control over
offerings that are conducted
overseas and/or foreign investment in China-based issuers, acknowledge
the risk that any
such action could significantly limit or completely hinder your
ability to offer or continue
Jianhui Ye
EZGO Technologies Ltd.
March 31, 2022
Page 6
to offer securities to investors and cause the value of such securities
to significantly
decline or be worthless.
19. In light of recent events indicating greater oversight by the Cyberspace
Administration of
China (CAC) over data security, particularly for companies seeking to
list on a foreign
exchange, please revise your disclosure to explain how this oversight
impacts your
business and your offering and to what extent you believe you are
compliant with the
regulations or policies that have been issued by the CAC to date.
The PRC government exerts substantial influence over the manner in which we
conduct our
business, page 16
20. We note the disclosure in the first and last paragraphs of this risk
factor that "We are
currently not required to obtain approval from Chinese authorities for
listing on U.S.
exchanges, nor the execution of the VIE Agreements" and "we are currently
not required
to obtain permission from any of the PRC central or local government,"
respectively.
Please explain how you determined whether any permissions or approvals
were not
required. If you relied on counsel, identify counsel and file an exhibit.
Our Ordinary Shares may be delisted under the Holding Foreign Companies
Accountable Act,
page 27
21. Please revise the disclosure in the first paragraph on page 28 to clarify
that the United
States Senate has passed the Accelerating Holding Foreign Companies
Accountable Act,
which, if enacted, would decrease the number of "non-inspection years"
from three years
to two years, and thus, would reduce the time before your securities may
be prohibited
from trading or delisted. Please revise the disclosure in the second
paragraph on page 28
to reflect that the Commission adopted rules to implement the HFCAA and
that, pursuant
to the HFCAA, the PCAOB has issued its report notifying the Commission of
its
determination that it is unable to inspect or investigate completely
accounting firms
headquartered in mainland China or Hong Kong.
You may contact Thomas Jones, Staff Attorney, at 202-551-3602 or Erin
Purnell, Legal
Branch Chief, at 202-551-3454 with any questions.
Sincerely,
FirstName LastNameJianhui Ye
Division of
Corporation Finance
Comapany NameEZGO Technologies Ltd.
Office of
Manufacturing
March 31, 2022 Page 6
cc: Richard I. Anslow, Esq.
FirstName LastName