|
|
Filed
pursuant to Rule 424(b)(5)
|
|
|
Registration
No. 333-227211
|
Prospectus
Supplement
(To Prospectus dated September 6, 2018, as amended)
URBAN
TEA, INC.
6,950,000
Ordinary Shares
We
are offering 6,950,000 of our ordinary shares, no par value, directly to certain institutional investors at a price of $3.60 per share
pursuant to this prospectus supplement and the accompanying prospectus. In a concurrent private placement, we are also selling to the
investors warrants to purchase an aggregate of up to 6,950,000 of our ordinary shares. The warrants are exercisable immediately as of
the date of issuance at an exercise price of $3.60 per share and expire five and a half years from the date of issuance. The warrants
and the ordinary shares issuable upon the exercise of the warrants are not being registered under the Securities Act of 1933, as amended,
or the Securities Act, pursuant to the registration statement of which this prospectus supplement and the accompanying prospectus form
a part and are not being offered pursuant to this prospectus supplement and the accompanying prospectus. The warrants and the ordinary
shares issuable upon the exercise of the warrants are being offered pursuant to an exemption from the registration requirements of the
Securities Act provided in Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D.
Our
ordinary shares are listed on the NASDAQ Capital Market under the symbol “MYT.” On April 28, 2021, the closing sale price
of our ordinary shares was $2.90 per share.
We
have retained Maxim Group LLC to act as our exclusive placement agent in connection with this offering to use its “reasonable best
efforts” to solicit offers to purchase our securities. The placement agent is not purchasing or selling any of our securities offered
pursuant to this prospectus supplement or the accompanying prospectus. See “Plan of Distribution” beginning on page S-12
of this prospectus supplement for more information regarding these arrangements.
Investing
in our securities involves a high degree of risk. You should purchase our securities only if you can afford a complete loss of your
investment. See “Risk Factors” beginning on page S-4 of this prospectus supplement and on page S-1 of the
accompanying prospectus.
Neither
the Securities and Exchange Commission (the “Commission” or “SEC”) nor any state securities commission has approved
or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus supplement or the accompanying prospectus.
Any representation to the contrary is a criminal offense.
|
|
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Per
Share
|
|
|
Total
|
|
|
Offering Price
|
|
$
|
3.60
|
|
|
|
25,020,000
|
|
|
Placement Agent’s Fees (1)
|
|
$
|
0.252
|
|
|
|
1,751,400
|
|
|
Proceeds, before expenses, to us
|
|
$
|
3.348
|
|
|
|
23,268,600
|
|
|
|
(1)
|
We
will pay the placement agent a fee equal to the sum of 7.0% of the aggregate purchase price
paid by the investors placed by the placement agent. We have also agreed to reimburse the
Placement Agent $5,000 for non-accountable expenses and up to $40,000 for the reasonable
and accounted fees and expenses of legal counsel. For additional information about
the compensation paid to the placement agent, see “Plan of Distribution” beginning
on page S-12 of this prospectus supplement.
|
We
expect that delivery of the securities being offered pursuant to this prospectus supplement and the accompanying prospectus will be made
on or about April 30, 2021, subject to customary closing conditions.
Maxim
Group LLC
The
date of this prospectus supplement is April 28, 2021
TABLE
OF CONTENTS
Prospectus
Supplement
Prospectus
You
should rely only on the information contained in this prospectus supplement and the accompanying prospectus. We have not authorized anyone
else to provide you with additional or different information. We are offering to sell, and seeking offers to buy, securities only in
jurisdictions where offers and sales are permitted. You should not assume that the information in this prospectus supplement or the accompanying
prospectus is accurate as of any date other than the date on the front of those documents or that any document incorporated by reference
is accurate as of any date other than its filing date.
No
action is being taken in any jurisdiction outside the United States to permit a public offering of the ordinary shares or possession
or distribution of this prospectus supplement or the accompanying prospectus in that jurisdiction. Persons who come into possession of
this prospectus supplement or the accompanying prospectus in jurisdictions outside the United States are required to inform themselves
about and to observe any restrictions as to this offering and the distribution of this prospectus supplement and the accompanying prospectus
applicable to that jurisdiction.
ABOUT
THIS PROSPECTUS SUPPLEMENT
On September 6, 2018, we filed
with the SEC a registration statement on Form F-3 (File No. 333-227211), as amended, utilizing a shelf registration process relating to
the securities described in this prospectus supplement, which registration statement was declared effective on September 19, 2018. Under
this shelf registration process, we may, from time to time, issue up to $50 million in the aggregate of ordinary shares, preferred shares,
warrants, and units. We have previously issued a total of approximately $24.97 million pursuant to this registration statement and consequently,
we may issue up to approximately $25.03 million of securities in this offering and as of the date of this prospectus supplement.
This
document is in two parts. The first part is this prospectus supplement, which describes the specific terms of this securities offering
and also adds to and updates information contained in the accompanying prospectus and the documents incorporated by reference into the
prospectus. The second part, the accompanying prospectus, gives more general information, some of which does not apply to this offering.
You should read this entire prospectus supplement as well as the accompanying prospectus and the documents incorporated by reference
that are described under “Where You Can Find More Information” in this prospectus supplement and the accompanying prospectus.
If
the description of the offering varies between this prospectus supplement and the accompanying prospectus, you should rely on the information
contained in this prospectus supplement. However, if any statement in one of these documents is inconsistent with a statement in another
document having a later date – for example, a document incorporated by reference in this prospectus supplement and the accompanying
prospectus – the statement in the document having the later date modifies or supersedes the earlier statement. Except as specifically
stated, we are not incorporating by reference any information submitted under any Current Report on Form 6-K into any filing under the
Securities Act or the Securities Exchange Act of 1934, as amended, or the Exchange Act, into this prospectus supplement or the accompanying
prospectus.
Any
statement contained in a document incorporated by reference, or deemed to be incorporated by reference, into this prospectus supplement
or the accompanying prospectus will be deemed to be modified or superseded for purposes of this prospectus supplement or the accompanying
prospectus to the extent that a statement contained herein, therein or in any other subsequently filed document which also is incorporated
by reference in this prospectus supplement or the accompanying prospectus modifies or supersedes that statement. Any such statement so
modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus supplement or
the accompanying prospectus.
We
further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any document
that is incorporated by reference in this prospectus supplement and the accompanying prospectus were made solely for the benefit of the
parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such agreements, and should
not be deemed to be a representation, warranty or covenant to you unless you are a party to such agreement. Moreover, such representations,
warranties or covenants were accurate only as of the date when made or expressly referenced therein. Accordingly, such representations,
warranties and covenants should not be relied on as accurately representing the current state of our affairs unless you are a party to
such agreement.
Unless
we have indicated otherwise, or the context otherwise requires, references in this prospectus supplement and the accompanying prospectus
to “MYT,” the “Company,” “we,” “us” and “our” or similar terms refer to Urban
Tea, Inc., a British Virgin Islands (“BVI”) company and its consolidated subsidiaries.
CAUTIONARY
NOTE REGARDING FORWARD LOOKING STATEMENTS
This
prospectus supplement and our SEC filings that are incorporated by reference into this prospectus supplement contain or incorporate by
reference forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical fact are “forward-looking statements,” including any projections of earnings,
revenue or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements
concerning proposed new projects or other developments, any statements regarding future economic conditions or performance, any statements
of management’s beliefs, goals, strategies, intentions and objectives, and any statements of assumptions underlying any of the
foregoing. The words “believe,” “anticipate,” “estimate,” “plan,” “expect,”
“intend,” “may,” “could,” “should,” “potential,” “likely,” “projects,”
“continue,” “will,” and “would” and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain these identifying words. Forward-looking statements reflect our current
views with respect to future events, are based on assumptions and are subject to risks and uncertainties. We cannot guarantee that we
actually will achieve the plans, intentions or expectations expressed in our forward-looking statements and you should not place undue
reliance on these statements. There are a number of important factors that could cause our actual results to differ materially from those
indicated or implied by forward-looking statements. These important factors include those discussed under the heading “Risk Factors”
contained or incorporated by reference in this prospectus and in the applicable prospectus supplement and any free writing prospectus
we may authorize for use in connection with a specific offering. These factors and the other cautionary statements made in this prospectus
should be read as being applicable to all related forward-looking statements whenever they appear in this prospectus. You are cautioned
not to place undue reliance on the forward-looking statements contained in, or incorporated by reference into, this prospectus supplement.
Each forward-looking statement speaks only as of the date this prospectus supplement or, in the case of documents incorporated by reference,
the date of the applicable document (or any earlier date indicated in the statement), and except as required by law, we undertake no
obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. We
qualify all such forward-looking statements by these cautionary statements.
PROSPECTUS
SUPPLEMENT SUMMARY
The following summary highlights
selected information contained or incorporated by reference in this prospectus supplement. This summary does not contain all of the information
you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus and
any supplement hereto carefully, including the risk factors section, the financial statements and the notes to the financial statements
incorporated herein by reference, and the documents that we incorporate by reference herein. On August 27, 2020, we effectuated a 1-for-10
reverse split of our ordinary shares. Upon the effectiveness of the reverse split, shareholders of the Company received one new ordinary
share of the Company for every ten ordinary shares they held prior to the reverse split. All ordinary share numbers referenced in this
prospectus supplement are reflected on a post-reverse split basis.
Our
Business
Business Overview
Urban Tea, Inc. (formerly
known as Delta Technology Holdings Ltd, and prior to that as CIS Acquisition Ltd.) was incorporated in the British Virgin Islands as a
company with limited liability on November 28, 2011. We have become a retailer and distributor of specialty tea products in China (also
referred to as “PRC”) since November 2018, and have fully completed the disposition of our fine and specialty chemical manufacturing
business in April 2019. Our business currently consists of the distribution and retail of specialty tea products. We have recently decided
to start operations in the business of blockchain technology and cyptocurrency mining. We anticipate to utilize a new subsidiary to conduct
research and development of blockchain-based software and applications and the commercialization of such application as well as cryptocurrency
mining.
Recent
Developments
On February 17, 2021, the Company announced its planned entry into the
blockchain and cryptocurrency mining business and also appointed Dr. Yunfei Song as an independent director of the Company board of directors
to lead and support the Company’s critical strategic expansion.
Dr. Yunfei Song is a scientist
at the Chinese Academy of Sciences. His prominent strategy model achievement includes fields of blockchain technology application, artificial
intelligence, exchange quantification, and brick moving robots. Additionally, Dr. Song has extensive experience in cryptocurrency mining
and digital asset management. He will serve as an independent director and provide guidance to the Company's blockchain development strategy.
On March 26, 2021, the Company
entered into certain securities purchase agreement with certain “non-U.S. Persons” as defined in Regulation S of the Securities
Act pursuant to which the Company agreed to sell an aggregate of 3,797,488 units (the “Units”), each Unit consisting of one
ordinary share of the Company, no par value (“Share”) and a warrant to purchase three Shares (“Warrant”) with
an initial exercise price of $4.65 per Share, at a price of $3.72 per Unit, for an aggregate purchase price of approximately $14.1 million
(the “March 2021 PIPE”). The March 2021 PIPE closed on April 20, 2021 when all the closing conditions were satisfied. The
net proceeds to the Company from the March 2021 PIPE were approximately $14.1 million and shall be used by the Company for the planned
blockchain and cryptocurrency mining operations and for working capital and general corporate purposes.
Corporate
Information
Our
principal executive offices are located at Huakun Times Plaza, Room 1118, Floor 11, No. 200, Erduan, East Xiang Fu Road, Yuhua District,
Changsha City, Hunan Province, China, where we leased approximately 3,378 square feet of office space pursuant to a lease agreement,
which lasts from June 1, 2019 to July 31, 2022 with an average annual rent approximating RMB320,000 (approximately US$46,900). We do
not own any real property or have any land use rights. Our telephone number at that address is +86-511-8673-3102. Our company website
is www.h-n-myt.com. Our NASDAQ symbol is MYT, and we make our SEC filings available on the Investor Relations page of our website, www.h-n-myt.com.
Information contained on our website is not part of this prospectus. Our agent for service in the United States is VStock Transfer, LLC,
the current transfer agent of the Company, with a mailing address of 18 Lafayette Place Woodmere, NY 11598.
The
Offering
|
Issuer:
|
|
Urban Tea,
Inc.
|
|
|
|
|
|
Ordinary Shares offered by us pursuant to this prospectus
supplement:
|
|
6,950,000 ordinary shares
|
|
|
|
|
|
Offering Price:
|
|
$3.60 per ordinary share
|
|
|
|
|
|
Ordinary shares issued and outstanding before this
offering:
|
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13,434,630
|
|
|
|
|
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Ordinary shares issued and outstanding immediately
after this offering (1):
|
|
20,384,630
|
|
|
|
|
|
Use of proceeds:
|
|
We estimate the net proceeds
to us from this offering will be approximately $23.1 million after deducting the placement agent fee and estimated offering expenses
payable to us. We intend to use the net proceeds from this offering for research and development and commercialization of blockchain
software, crypto-currency mining and for working capital and general corporate purposes. See “Use of Proceeds” on page
S-10 of this prospectus supplement.
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|
|
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Concurrent private placement:
|
|
In a concurrent private
placement, we are selling to the purchasers of ordinary shares in this offering warrants to purchase up to 100% of the number of
our ordinary shares purchased by such investors in this offering, or up to 6,950,000 warrants. We will receive gross proceeds from
the concurrent private placement transaction solely to the extent such warrants are exercised for cash. The warrants will be exercisable
immediately at an exercise price of $3.60 per share and will expire five and a half (5.5) years from the date of issuance. The warrants
and the ordinary shares issuable upon the exercise of the warrants are not being offered pursuant to this prospectus supplement and
the accompanying prospectus and are being offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act
and Rule 506(b) of Regulation D promulgated thereunder. See “Private Placement Transaction and Warrants” beginning on
page S-11 of this prospectus supplement.
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Transfer agent and registrar:
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VStock Transfer, LLC
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Risk factors:
|
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Investing in our securities
involves a high degree of risk. For a discussion of factors you should consider carefully before deciding to invest in our ordinary
shares, see the information contained in or incorporated by reference under the heading “Risk Factors” beginning on page
S-4 of this prospectus supplement, on page 4 of the accompanying prospectus, and in the other documents incorporated
by reference into this prospectus supplement.
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NASDAQ Capital Market Symbol:
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“MYT”
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|
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(1)
|
The
number of our ordinary shares issued and outstanding immediately after this offering is based
on 13,434,630 ordinary shares issued and outstanding as of April 28, 2021 and 6,950,000 ordinary
shares to be issued in this offering and excludes:
|
|
|
●
|
35,972 ordinary shares
issuable upon exercise of the warrants issued in connection with a private placement closed on November 21, 2017;
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|
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|
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●
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32,760 ordinary shares
issuable upon exercise of the warrants offered in the registered direct offering closed on May 24, 2019;
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●
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11,392,464 ordinary shares
issuable upon exercise of the warrants issued in connection with a private placement closed on April 20, 2021; and
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|
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●
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6,950,000 ordinary shares issuable upon the exercise of the
warrants issued in the private placement concurrent with this offering.
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RISK
FACTORS
Before
you make a decision to invest in our securities, you should consider carefully the risks described below, together with other information
in this prospectus supplement, the accompanying prospectus and the information incorporated by reference herein and therein. If any of
the following events actually occur, our business, operating results, prospects or financial condition could be materially and adversely
affected. This could cause the trading price of our ordinary shares to decline and you may lose all or part of your investment. The risks
described below are not the only ones that we face. Additional risks not presently known to us or that we currently deem immaterial may
also significantly impair our business operations and could result in a complete loss of your investment.
You
should also carefully consider the risk factors set forth under “Risk Factors” described in our most recent annual report
on Form 20-F, filed on October 30, 2020, together with all other information contained or incorporated by reference in this prospectus
supplement and in any related free writing prospectus in connection with a specific offering, before making an investment decision.
Risks
Relating to the Planned Blockchain and Cryptocurrency Mining Business
Investment
in our new line of business could present risks not originally contemplated.
The
Company plans on investing in its planned expansion into the blockchain and cryptocurrency mining business. New ventures are inherently
risky and may not be successful. In evaluating such endeavors, we are required to make difficult judgments regarding the value of business
strategies, opportunities, technologies and other assets, and the risks and cost of potential liabilities. Furthermore, these investments
involve certain other risks and uncertainties, including the risks involved with entering new competitive categories or regions, the
difficulty in integrating the new business, and the challenges in achieving strategic objectives and other benefits expected from our
investment.
If
we are unable to successfully execute our planned blockchain and cryptocurrency mining business plan, it would affect our financial and
business condition and results of operations.
Our
previously announced growth strategy included the expansion of our operations to include a blockchain and cryptocurrency mining business.
There are various risks related to these efforts, including the risk that these efforts may not provide the expected benefits in our
anticipated time frame, if at all, and may prove costlier than expected; and the risk of adverse effects to our business, results of
operations and liquidity if past and future undertakings, and the associated changes to our business, do not prove to be cost effective
or do not result in the cost savings and other benefits at the levels that we anticipate. Our intentions and expectations with regard
to the execution of our business plan, and the timing of any related initiatives, are subject to change at any time based on management’s
subjective evaluation of our overall business needs. If we are unable to successfully execute our business plan, whether due to failure
to realize the anticipated benefits from our business initiatives in the anticipated time frame or otherwise, we may be unable to achieve
our financial targets.
Cryptocurrency
mining relies on a steady and inexpensive power supply for operating mining farms and running mining hardware. Failure to access a large
quantity of power at reasonable costs could significantly increase our operating expenses and adversely affect our demand for our mining
machines.
Cryptocurrency
mining consumes a significant amount of energy power to process the computations and cool down the mining hardware. Therefore, a steady
and inexpensive power supply is critical to cryptocurrency mining. There can be no assurance that the operations of our planned cryptocurrency
mining business will not be affected by power shortages or an increase in energy prices in the future. In addition, as we intend to establish
and operate mining machines and engage in key mainstream cryptocurrencies mining activities, such as Bitcoin, in the near future, any
increase in energy prices or a shortage in power supply in the area of our mining machines may be located will increase our potential
mining costs and reduce the expected economic returns from our mining operation significantly.
In
particular, the power supply could be disrupted by natural disasters, such as floods, mudslides and earthquakes, or other similar events
beyond our control. Further, we may experience power shortages due to seasonal variations in the supply of certain types of power such
as hydroelectricity. Power shortages, power outages or increased power prices could adversely affect our mining businesses. Under such
circumstances, our business, results of operations and financial condition could be materially and adversely affected.
Shortages
in, or rises in the prices of mining machines may adversely affect our business
Given
the long production period to manufacture and assemble mining machines, there is no assurance that we can acquire enough mining machines
for our planned cryptocurrency mining. We may rely on third parties to supply mining machines to us, and shortages of mining machines
or any delay in delivery of our orders could seriously interrupt our operations. The scale of our cryptocurrency mining capacity depends
on obtaining adequate mining machines on a timely basis and at competitive prices. Shortages of mining machines could result in reduced
mining capacity, as well as an increase in operation costs, which could materially delay the completion of our mining capacity and commencement
of our mining. As a result, our business, results of operations and reputation could be materially and adversely affected.
We
may not be able to develop our cryptocurrency mining capacity because we may fail to anticipate or adapt to technology innovations in
a timely manner, or at all.
The
cryptocurrencies mining industry is experiencing rapid technological changes. Failure to anticipate technology innovations or adapt to
such innovations in a timely manner, or at all, may result in our research becoming obsolete at sudden and unpredictable intervals and,
accordingly, we may not successfully develop our mining capacity at all. To establish our cryptocurrency mining capacity, we will invest
heavily in technology research and development. The process of research and developing new technologies in cryptocurrency is inherently
complex and involves significant uncertainties. There are a number of risks, including the following:
|
|
●
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our research and development
efforts may fail in resulting in the development or commercialization of new technologies or ideas in blockchain or cryptocurrency;
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|
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●
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our research and development
efforts may fail to translate new product plans into commercially feasible products;
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●
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our new technologies or
new products may not be well received by the markets;
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●
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we may not have adequate
funding and resources necessary for continual investments in research and development;
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|
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●
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even assuming our technologies
and products become marketable or profitable, they may become obsolete due to rapid advancements in technology and changes in the
mainstream markets; and
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|
|
●
|
our newly developed technologies
may not be protected as proprietary intellectual property rights.
|
Our
research and development efforts may not yield the expected results, or may prove to be futile due to the lack of market demand. Further,
any failure to anticipate the next-generation technology roadmap or changes in the mainstream markets or to timely develop new or enhanced
technologies in response could result in loss of our business.
Adverse
changes in the regulatory environment in the PRC market could have a material adverse impact on our planned cryptocurrency related business.
Our
planned cryptocurrency mining will be in China. Our cryptocurrency related products business could therefore be significantly affected
by, among other things, the regulatory developments in the PRC. Governmental authorities are likely to continue to issue new laws, rules
and regulations governing the cryptocurrency industry that we plan to enter and enhance enforcement of existing laws, rules and regulations.
For example, Xinjiang, an autonomous region in northwest China, warned local Bitcoin mining enterprises that were operating illegally
to close their operations before August 30, 2018 and the People’s Bank of China, or the PBOC, imposed a ban in September 2017 prohibiting
financial institutions from engaging in initial coin offering transactions. Some jurisdictions, including the PRC, restrict various uses
of cryptocurrencies, including the use of cryptocurrencies as a medium of exchange, the conversion between cryptocurrencies and fiat
currencies or between cryptocurrencies, the provision of trading and other services related to cryptocurrencies by financial institutions
and payment institutions, and initial coin offerings and other means of capital raising based on cryptocurrencies. In addition, cryptocurrencies
may be used by market participants for black market transactions, to conduct fraud, money laundering and terrorism-funding, tax evasion,
economic sanction evasion or other illegal activities. As a result, governments may seek to regulate, restrict, control or ban the mining,
use, holding and transferring of cryptocurrencies.
With
advances in technology, cryptocurrencies are likely to undergo significant changes in the future. It remains uncertain whether cryptocurrencies
will be able to cope with, or benefit from, those changes. In addition, as cryptocurrency mining employs sophisticated and high computing
power devices that need to consume large amounts of electricity to operate, future developments in the regulation of energy consumption,
including possible restrictions on energy usage in the jurisdictions where we intend to deploy our mining capacities, may also affect
the development of our business plan. There has been negative public reaction to surrounding the environmental impact of Bitcoin mining,
particularly the large consumption of electricity, and governments of various jurisdictions have responded.
Further,
relevant restrictions from existing and future regulations on mining, holding, using, or transferring of cryptocurrencies may adversely
affect our future business operations and results of operations. For example, although mining activities have not been explicitly prohibited
by the PRC government, any further order of the PRC government to limit cryptocurrency mining may result in a crackdown
on the cryptocurrency market and adversely affect our cryptocurrency-related business plans. If any jurisdictions impose limitations
on the mining, use, holding or transferring of cryptocurrencies or any cryptocurrency-related activity, our business prospects, operations
and financial results may be negatively impacted.
In
addition, if cryptocurrencies or the mining of cryptocurrencies are regarded as securities by various governmental authorities, our planned
cryptocurrency mining is likely to be deemed as issuance of cryptocurrencies to investors for financing purpose and thus prohibited under
the PRC laws. Any such regulations, if implemented, will cause us to incur additional compliance costs and have a material adverse effect
on our future business operations.
We
may face intense industry competition.
Cryptocurrency
mining, security, and insurance is in a highly competitive environment. Our competitors include companies that may have a longer history,
larger market share, greater brand recognition, greater financial resources in research or other competitive advantages. We anticipate
that competition will increase as cryptocurrencies gain greater acceptance and more players join the market of cryptocurrency mining
and mining farm operations.
Strong
competition in the market may require us to increase our marketing expenses and sales expenses, if any, or otherwise invest greater resources
to gain market shares and expand our mining capacities as needed to adequately compete. Such efforts may negatively impact our profitability.
If we are unable to effectively meet our business plans in the competitive landscape, our business, financial conditions and results
of operations may be adversely affected.
Because
cryptocurrencies may be determined to be investment securities, we may inadvertently violate the Investment Company Act and incur large
losses as a result and potentially be required to register as an investment company or terminate operations and we may incur third party
liabilities.
In
recent years, the SEC has ruled that the two most valuable cryptocurrencies—Bitcoin and Ethereum—are not securities. We therefore
believe that we will not be deemed to be engaged in the business of investing, reinvesting, or trading in securities, and we shall not
hold ourselves out as being engaged in those activities. However, under the Investment Company Act a company may be deemed an investment
company under section 3(a)(1)(C) thereof if the value of its investment securities is more than 40% of its total assets (exclusive of
government securities and cash items) on an unconsolidated basis.
As
a result of our planned investments and our mining activities, including investments in which we do not have a controlling interest,
the investment securities we hold could exceed 40% of our total assets, exclusive of cash items and, accordingly, we could determine
that we have become an inadvertent investment company. The bitcoins we own, acquire or mine may be deemed an investment security by the
SEC, although we do not believe any of the cryptocurrencies we own, acquire or mine are securities. An inadvertent investment company
can avoid being classified as an investment company if it can rely on one of the exclusions under the Investment Company Act. One such
exclusion, Rule 3a-2 under the Investment Company Act, allows an inadvertent investment company a grace period of one year from the earlier
of (a) the date on which an issuer owns securities and/or cash having a value exceeding 50% of the issuer’s total assets on either
a consolidated or unconsolidated basis and (b) the date on which an issuer owns or proposes to acquire investment securities having a
value exceeding 40% of the value of such issuer’s total assets (exclusive of government securities and cash items) on an unconsolidated
basis. We may take actions to cause the investment securities held by us to be less than 40% of our total assets, which may include acquiring
assets with our cash and bitcoin on hand or liquidating our investment securities or bitcoin or seeking a no-action letter from the SEC
if we are unable to acquire sufficient assets or liquidate sufficient investment securities in a timely manner.
As
the Rule 3a-2 exception is available to a company no more than once every three years, and assuming no other exclusion were available
to us, we would have to keep within the 40% limit for at least three years after we cease being an inadvertent investment company. This
may limit our ability to make certain investments or enter into joint ventures that could otherwise have a positive impact on our earnings.
In any event, we do not intend to become an investment company engaged in the business of investing and trading securities.
Classification
as an investment company under the Investment Company Act requires registration with the SEC. If an investment company fails to register,
it would have to stop doing almost all business, and its contracts would become voidable. Registration is time consuming and restrictive
and would require a restructuring of our operations, and we would be very constrained in the kind of business we could do as a registered
investment company. Further, we would become subject to substantial regulation concerning management, operations, transactions with affiliated
persons and portfolio composition, and would need to file reports under the Investment Company Act regime. The cost of such compliance
would result in the Company incurring substantial additional expenses, and the failure to register if required would have a materially
adverse impact to conduct our operations.
Risks
Relating to the Current Pandemic
Our
business, results of operations and financial condition may be adversely affected by global public health epidemics, including the strain
of coronavirus known as COVID-19.
In
December 2019, a novel strain of coronavirus causing respiratory illness, or COVID-19, has surfaced in Wuhan, China, spreading at a fast
rate in January and February of 2020, and confirmed cases were also reported in other parts of the world. In reaction to this outbreak,
an increasing number of countries imposed travel suspensions to and from China following the World Health Organization’s “public
health emergency of international concern” (PHEIC) announcement on January 30, 2020. Since this outbreak, business activities in
China and many other countries including U.S. have been disrupted by a series of emergency quarantine measures taken by the government.
As
a result, our operations in China and the U.S. have been materially affected. Our stores in China were temporarily closed until early
March and have been gradually opening since then. As a result, the Company expects a lower amount of revenue and net income from February
to April 2020 due to the downtime. In addition, the renovation of our new store in New York City which was expected to open in early
2020 was delayed due to COVID-19 related restrictions in the U.S. Accordingly, our operation and business have been and will continue
to be adversely affected as the results of the wide-spread pandemic. Management may have to adjust or change our business plan in response
to the prolonged pandemic and change of social behavior.
The
extent to which COVID-19 negatively impacts our business is highly uncertain and cannot be accurately predicted. We believe that the
coronavirus outbreak and the measures taken to control it may have a significant negative impact on not only our business, but economic
activities globally. The magnitude of this negative effect on the continuity of our business operation in China and U.S. remains uncertain.
These uncertainties impede our ability to conduct our daily operations and could materially and adversely affect our business, financial
condition and results of operations, and as a result affect our share price and create more volatility.
Techniques employed by short sellers may
drive down the market price of our ordinary shares.
Short selling is the practice
of selling securities that the seller does not own but rather has borrowed from a third party with the intention of buying identical securities
back at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the securities between the
sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than
it received in the sale. As it is in the short seller’s interest for the price of the security to decline, many short sellers publish,
or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative
market momentum and generate profits for themselves after selling a security short. These short attacks have, in the past, led to selling
of shares in the market.
Public companies listed in
the United States that have a substantial majority of their operations in China have been the subject of short selling. Much of the scrutiny
and negative publicity has centered on allegations of a lack of effective internal control over financial reporting resulting in financial
and accounting irregularities and mistakes, inadequate corporate governance policies or a lack of adherence thereto and, in many cases,
allegations of fraud. As a result, many of these companies are now conducting internal and external investigations into the allegations
and, in the interim, are subject to shareholder lawsuits and/or SEC enforcement actions.
We may in the future be, the
subject of unfavorable allegations made by short sellers. Any such allegations may be followed by periods of instability in the market
price of our ordinary shares and negative publicity. If and when we become the subject of any unfavorable allegations, whether such allegations
are proven to be true or untrue, we could have to expend a significant amount of resources to investigate such allegations and/or defend
ourselves. While we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed
against the relevant short seller by principles of freedom of speech, applicable federal or state law or issues of commercial confidentiality.
Such a situation could be costly and time-consuming and could distract our management from growing our business. Even if such allegations
are ultimately proven to be groundless, allegations against us could severely impact our business operations and shareholder’s equity,
and the value of any investment in our ordinary shares could be greatly reduced or rendered worthless.
Risk Relating
to This Offering
Since
our management will have broad discretion in how we use the proceeds from this offering, we may use the proceeds in ways with which you
disagree.
Our
management will have significant flexibility in applying the net proceeds of this offering. You will be relying on the judgment of our
management with regard to the use of these net proceeds, and you will not have the opportunity, as part of your investment decision,
to influence how the proceeds are being used. It is possible that the net proceeds will be invested in a way that does not yield a favorable,
or any, return for us. The failure of our management to use such funds effectively could have a material adverse effect on our business,
financial condition, operating results and cash flow.
Because
we are a small company, the requirements of being a public company, including compliance with the reporting requirements of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and the requirements of the Sarbanes-Oxley Act and the Dodd-Frank
Act, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in
a timely or cost-effective manner.
As
a public company with listed equity securities, we must comply with the federal securities laws, rules and regulations, including certain
corporate governance provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and the Dodd-Frank Act,
related rules and regulations of the SEC and the NASDAQ, with which a private company is not required to comply. Complying with these
laws, rules and regulations occupies a significant amount of the time of our Board of Directors and management and significantly increases
our costs and expenses. Among other things, we must:
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maintain a system of internal
control over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act and the related rules
and regulations of the SEC and the Public Company Accounting Oversight Board;
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comply with rules and regulations
promulgated by the NASDAQ;
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prepare and distribute
periodic public reports in compliance with our obligations under the federal securities laws;
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maintain various internal
compliance and disclosures policies, such as those relating to disclosure controls and procedures and insider trading in our ordinary
shares;
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involve and retain to a
greater degree outside counsel and accountants in the above activities;
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maintain a comprehensive
internal audit function; and
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maintain an investor relations
function.
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Future
sales of our ordinary shares, whether by us or our shareholders, could cause our share price to decline
If
our existing shareholders sell, or indicate an intent to sell, substantial amounts of our ordinary shares in the public market, the trading
price of our ordinary shares could decline significantly. Similarly, the perception in the public market that our shareholders might
sell of our ordinary shares could also depress the market price of our ordinary shares. A decline in the price of our ordinary shares
might impede our ability to raise capital through the issuance of additional of our ordinary shares or other equity securities. In addition,
the issuance and sale by us of additional of our ordinary shares or securities convertible into or exercisable for our ordinary shares,
or the perception that we will issue such securities, could reduce the trading price for our ordinary shares as well as make future sales
of equity securities by us less attractive or not feasible. The sale of ordinary shares issued upon the exercise of our outstanding options
and warrants could further dilute the holdings of our then existing shareholders.
Securities
analysts may not cover our ordinary shares and this may have a negative impact on the market price of our ordinary shares
The
trading market for our ordinary shares will depend, in part, on the research and reports that securities or industry analysts publish
about us or our business. We do not have any control over independent analysts (provided that we have engaged various non-independent
analysts). We do not currently have and may never obtain research coverage by independent securities and industry analysts. If no independent
securities or industry analysts commence coverage of us, the trading price for our ordinary shares would be negatively impacted. If we
obtain independent securities or industry analyst coverage and if one or more of the analysts who covers us downgrades our ordinary shares,
changes their opinion of our shares or publishes inaccurate or unfavorable research about our business, our share price would likely
decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our ordinary
shares could decrease and we could lose visibility in the financial markets, which could cause our share price and trading volume to
decline.
You
may experience future dilution as a result of future equity offerings or other equity issuances
We
may in the future issue additional of our ordinary shares or other securities convertible into or exchangeable for of our ordinary shares.
We cannot assure you that we will be able to sell of our ordinary shares or other securities in any other offering or other transactions
at a price per share that is equal to or greater than the price per share paid by investors in this offering. The price per share at
which we sell additional of our ordinary shares or other securities convertible into or exchangeable for our ordinary shares in future
transactions may be higher or lower than the price per share in this offering.
Risk Relating
to Our Ordinary Shares
If
we fail to comply with the continued listing requirements of NASDAQ, we would face possible delisting, which would result in a limited
public market for our shares and make obtaining future debt or equity financing more difficult for us.
On
July 10, 2019, the Company received a notification letter from the Nasdaq Listing Qualifications Staff of The NASDAQ Stock Market LLC
(“Nasdaq”) notifying the Company that the minimum bid price per share for its common shares has been below $1.00 for a period
of 30 consecutive business days and the Company therefore no longer meets the minimum bid price requirements set forth in Nasdaq Listing
Rule 5550(a)(2) (the “Deficiency”).
Under
the Nasdaq Listing Rules, the Company had until January 6, 2020 to regain compliance, and may be eligible for an extension of an additional
180 calendar days, provided that the Company meets the continued listing requirement for market value of publicly held shares and all
other initial listing standards for Nasdaq except for Nasdaq Listing Rule 5550(a)(2), and provide a written notice of its intention to
cure this deficiency during the second compliance period, by effecting a reverse stock split, if necessary.
On
December 3, 2019, the Company provided written notice to Nasdaq requesting for an extension through July 3, 2020 to demonstrate compliance
with the Deficiency during the second compliance period.
On
April 20, 2020, the Company received a notification letter from Nasdaq notifying the Company that Nasdaq has determined to toll the compliance
periods for bid price requirements (the “Price-based Requirements”) through June 30, 2020. Accordingly, since the Company
had 79 calendar days remaining in its bid price compliance period as of April 16, 2020, it will, upon reinstatement of the Price-based
Requirements, still have 79 calendar days from July 1, 2020, or until September 17, 2020, to regain compliance.
On
September 11, 2020, the Company received a written notification from the Nasdaq Stock Market Listing Qualifications Staff, indicating
that the Company has regained compliance with the minimum bid price requirement for continued listing on The Nasdaq Capital Market pursuant
to Nasdaq Listing Rule 5550(a)(2) based on the Company’s closing bid price being $1.00 per share or greater for 10 consecutive business
days from August 27 to September 10, 2020.
If
the Company fails to maintain compliance with other listing rules in the future, we could be subject to suspension and delisting proceedings.
If our securities lose their status on The NASDAQ Capital Market, our securities would likely trade in the over-the-counter market. If
our securities were to trade on the over-the-counter market, selling our securities could be more difficult because smaller quantities
of securities would likely be bought and sold, transactions could be delayed, and security analysts’ coverage of us may be reduced.
In addition, in the event our securities are delisted, broker-dealers have certain regulatory burdens imposed upon them, which may discourage
broker-dealers from effecting transactions in our securities, further limiting the liquidity of our securities. These factors could result
in lower prices and larger spreads in the bid and ask prices for our securities. Such delisting from The NASDAQ Capital Market and continued
or further declines in our share price could also greatly impair our ability to raise additional necessary capital through equity or
debt financing, and could significantly increase the ownership dilution to shareholders caused by our issuing equity in financing or
other transactions.
USE
OF PROCEEDS
We
estimate that the net proceeds from this offering will be approximately $23.1 million, after deducting the placement agent fees and the
estimated offering expenses payable by us.
We
intend to use the net proceeds from this offering for research and development and commercialization of blockchain software, crypto-currency
mining and for working capital and general corporate purpose.
The
amounts and timing of our use of proceeds will vary depending on a number of factors, including the amount of cash generated or used
by our operations, and the rate of growth, if any, of our business. As a result, we will retain broad discretion in the allocation of
the net proceeds of this offering. In addition, while we have not entered into any agreements, commitments or understandings relating
to any significant transaction as of the date of this prospectus supplement, we may use a portion of the net proceeds to pursue acquisitions,
joint ventures and other strategic transactions.
DILUTION
If
you invest in our ordinary shares, your interest will be diluted immediately to the extent of the difference between the public offering
price per share and the adjusted net tangible book value per share of our ordinary shares after this offering.
Our
net tangible book value on December 31, 2020, was approximately $32.9 million, or $4.1329 per ordinary share. Upon our issuance of 3,797,488
ordinary shares (post-reverse split) for net proceeds of approximately $14.1 million on April 20, 2021, our adjusted net tangible book
value on December 31, 2020 was approximately $47.0 million, or $3.9997 per ordinary share. “Net tangible book value” is total
assets minus the sum of liabilities and intangible assets. “Net tangible book value per share” is net tangible book value
divided by the total number of shares issued and outstanding.
After giving effect to the
issue of our ordinary shares of approximately $25 million in this offering at an offering price of $3.60 per share, and after deducting
the placement agent fees and estimated offering expenses payable by us in connection with this offering, and adjusted for the issuance
of 3,797,488 ordinary shares (post-reverse split) for net proceeds of approximately $14.1 million on April 20, 2021, our as adjusted net
tangible book value as of December 31, 2020 would have been approximately $70.2 million, or approximately $3.7527 per ordinary share.
This represents an immediate dilution in net tangible book value of $0.2471 per share to our existing shareholders and an immediate increase
in net tangible book value of $0.1527 per share to investors participating in this offering. The following table illustrates this dilution
per share to investors participating in this offering:
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Assumed offering price per ordinary share
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$
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3.60
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Net tangible book value
per ordinary share as of December 31, 2020, adjusted for issuance of 3,797,488 ordinary shares (post-reverse split) on April 20,
2021
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$
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3.9997
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Dilution in net tangible book value per ordinary
share attributable to existing investors
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$
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0.1332
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Net tangible
book value per ordinary share after giving effect to this offering, adjusted for issuance of 3,797,488 ordinary shares (post-reverse
split) on April 20, 2021
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$
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3.7527
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Increase per ordinary share to new investors
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$
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0.1527
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The
above discussion and table are based on 7,949,199 ordinary shares outstanding as of December 31, 2020, and excludes:
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35,972 ordinary shares
issuable upon exercise of the warrants issued in connection with a private placement closed on November 21, 2017;
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32,760 ordinary shares
issuable upon exercise of the warrants offered in the registered direct offering closed on May 24, 2019;
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11,392,464 ordinary shares
issuable upon exercise of the warrants issued in connection with a private placement closed on April 20, 2021; and
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6,950,000
ordinary shares issuable up the exercise of the warrants issued in the private placement concurrent with this offering
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To
the extent that we grant additional options or other awards under our share incentive plan or issue additional warrants and/or ordinary
shares in the future, there may be further dilution.
DIVIDEND
POLICY
While
we have no current intention of paying dividends, should we decide in the future to do so, as a holding company, our ability to pay dividends
and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiaries and other holdings
and investments.
In
addition, due to various restrictions under PRC laws on the distribution of dividends by WFOE, we may not be able to pay dividends to
our shareholders. The Wholly-Foreign Owned Enterprise Law (1986), as amended, and The Wholly-Foreign Owned Enterprise Law Implementing
Rules (1990), as amended, and the Company Law of the PRC (2006), contain the principal regulations governing dividend distributions by
wholly foreign owned enterprises. Under these regulations, wholly foreign owned enterprises may pay dividends only out of their accumulated
profits, if any, determined in accordance with PRC accounting standards and regulations. Additionally, such companies are required to
set aside a certain amount of their accumulated profits each year, if any, to fund certain reserve funds until such time as the accumulated
reserve funds reach and remain above 50% of the registered capital amount. These reserves are not distributable as cash dividends except
in the event of liquidation and cannot be used for working capital purposes. Furthermore, if our subsidiaries and affiliates in China
incur debt on their own in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments.
If we or our subsidiaries and affiliates are unable to receive all of the revenues from our operations through the current contractual
arrangements, we may be unable to pay dividends on our ordinary shares.
CAPITALIZATION
The
following table sets forth our capitalization as of December 31, 2020:
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on
an actual basis;
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on a pro forma basis to give effect to the issuance and sale of 3,797,488
units, each unit consisting of one ordinary share and a warrant to purchase three ordinary shares at a price of $3.72 per unit on April
20, 2021;
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on a pro forma, as adjusted
basis to give effect to the issuance and sale of 6,950,000 ordinary shares at the offering price of $3.60 per share, after deducting
placement agent fees and expenses and estimated offering expenses payable by us;
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As
of December 31, 2020
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Actual
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Pro
Forma
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Pro
Forma,
as adjusted
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US$
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US$
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US$
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Cash
and cash equivalents
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$
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13,333
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$
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27,463
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$
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50,642
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Total
current liabilities
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$
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1,355
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$
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1,355
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$
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1,355
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Shareholders’
equity:
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Preferred
shares, $0.0001 par value, 5,000,000 shares authorized; none issued and outstanding
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-
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-
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-
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Ordinary
shares, no par value; unlimited number of shares authorized, 7,949,199 shares issued and outstanding
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$
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1
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$
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2
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$
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2
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Additional
paid in capital
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$
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36,845
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$
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50,974
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$
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74,153
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Accumulated
deficit
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$
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(10,968
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)
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$
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(10,968
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)
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$
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(10,968
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)
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Total
shareholders’ equity
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$
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26,883
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$
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41,013
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$
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64,192
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Total
capitalization
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$
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28,238
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$
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42,368
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$
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65,547
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The
above discussion and table are based on 7,949,199 ordinary shares outstanding as of December 31, 2020 and excludes:
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35,972 ordinary shares
issuable upon exercise of the warrants issued in connection with a private placement closed on November 21, 2017;
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32,760 ordinary shares
issuable upon exercise of the warrants offered in the registered direct offering closed on May 24, 2019;
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11,392,464 ordinary shares
issuable upon exercise of the warrants issued in connection with a private placement closed on April 20, 2021; and
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6,950,000
ordinary shares issuable upon exercise of the warrants issued in the private placement concurrent with this offering.
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To
the extent that we grant additional options or other awards under our share incentive plan or issue additional warrants and/or ordinary
shares in the future, there may be further dilution.
DESCRIPTION
OF OUR SECURITIES WE ARE OFFERING
We
are offering 6,950,000 of our ordinary shares pursuant to this prospectus supplement and the accompanying prospectus. The material terms
and provisions of our ordinary shares are described under the caption “Descriptions of Share Capital” beginning on page 5
of the accompanying prospectus.
PRIVATE
PLACEMENT TRANSACTION OF WARRANTS
Concurrently
with the sale of ordinary shares in this offering, we shall issue and sell to the investors in this offering warrants to purchase up
to an aggregate of 6,950,000 ordinary shares at an exercise price equal to $3.60 per share (the “Warrants”). Each Warrant
shall be exercisable immediately and will expire five and a half (5.5) years from the date of issuance.
If,
at any time while the Warrants are outstanding, (i) we, directly or indirectly, in one or more related transactions effects any merger
or consolidation of the Company with or into another Person, (ii) we, directly or indirectly, effects any sale, lease, license, assignment,
transfer, conveyance or other disposition of all or substantially all of our assets in one or a series of related transactions, (iii)
any, direct or indirect, purchase offer, tender offer or exchange offer is completed pursuant to which holders of ordinary shares are
permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of fifty
percent (50%) or more of the outstanding ordinary shares, (iv) we, directly or indirectly, in one or more related transactions effects
any reclassification, reorganization or recapitalization of the ordinary shares or any compulsory share exchange pursuant to which the
ordinary shares are effectively converted into or exchanged for other securities, cash or property, or (v) we, directly or indirectly,
in one or more related transactions consummates a stock or share purchase agreement or other business combination with another person
or group of persons whereby such other person or group acquires more than fifty percent (50%) of the outstanding ordinary shares (each
a “Fundamental Transaction”), then, upon any subsequent exercise of the Warrants, the holder shall have the right to receive,
for each warrant share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction,
at the option of the holder, the number of ordinary shares of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and any additional consideration receivable as a result of such Fundamental Transaction by a holder of the number
of ordinary shares for which the Warrants are exercisable immediately prior to such Fundamental Transaction.
If,
at any time while the Warrants are outstanding, we (i) pay a stock dividend or otherwise make a distribution or distributions on our
ordinary shares or any other equity or equity equivalent securities payable in ordinary shares, (ii) subdivide our outstanding ordinary
shares into a larger number of shares, (iii) combine our outstanding ordinary shares into a smaller number of shares or (iv) issue by
reclassification of our ordinary shares any of our capital stock, then in each case the exercise price of the Warrant shall be multiplied
by a fraction of which the numerator shall be the number of shares of ordinary shares outstanding immediately before such event and of
which the denominator shall be the number of ordinary shares outstanding immediately after such event, and the number of shares issuable
upon exercise of the Warrants shall be proportionately adjusted such that the aggregate exercise price of the Warrants shall remain unchanged..
The
Warrants and the ordinary shares issuable upon exercise of the Warrants will be issued and sold without registration under the Securities
Act, or state securities laws, in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated
thereunder and in reliance on similar exemptions under applicable state laws. Accordingly, the investors may exercise the Warrants and
sell the underlying ordinary shares only pursuant to an effective registration statement under the Securities Act covering the resale
of those shares, an exemption under Rule 144 under the Securities Act, or another applicable exemption under the Securities Act.
PLAN
OF DISTRIBUTION
Maxim
Group LLC, which we refer to as the Placement Agent, has agreed to act as the exclusive placement agent in connection with this offering.
The Placement Agent is not purchasing or selling securities offered by this prospectus supplement, nor is the Placement Agent required
to arrange the purchase or sale of any specific number or dollar amount of securities, but has agreed to use its best efforts to arrange
for the sale of all of the securities offered hereby. We have entered into a securities purchase agreement with the investors pursuant
to which we will sell to the investors 6,950,000 ordinary shares in this takedown from our shelf registration statement. We negotiated
the price for the securities offered in this offering with the investors. The factors considered in determining the price included the
recent market price of our ordinary shares, the general condition of the securities market at the time of this offering, the history
of, and the prospects, for the industry in which we compete, our past and present operations, and our prospects for future revenues.
We
entered into securities purchase agreements directly with investors on April 28, 2021, and we will only sell to investors who have entered
into a securities purchase agreements.
We
expect to deliver the securities being offered pursuant to this prospectus supplement on or about April 30, 2021, subject to customary
closing conditions.
We
have agreed to pay the Placement Agent a fee equal to the sum of 7.0% of the aggregate purchase price paid by the investors placed by
the Placement Agent. We have also agreed to reimburse the Placement Agent $5,000 for non-accountable expenses and up to $25,000 for the
reasonable and accounted fees and expenses of legal counsel.
The
following table shows per ordinary share and total cash Placement Agent’s fees we will pay to the Placement Agent in connection
with the sale of the securities pursuant to this prospectus supplement and the accompanying prospectus assuming the purchase of all of
the securities offered hereby:
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Per
Share
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Total
|
|
|
Offering Price
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$
|
3.60
|
|
|
|
25,020,000
|
|
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Placement Agent’s Fees (1)
|
|
$
|
0.252
|
|
|
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1,751,400
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Proceeds, before expenses, to us
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|
$
|
3.348
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|
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23,268,600
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|
After
deducting certain fees and expenses due to the Placement Agent and our estimated offering expenses, we expect the net proceeds from this
offering to be approximately $23.1 million.
Right
of First Refusal
In
the event the offering is consummated, we have agreed to grant the Placement Agent a right of first refusal for a period of twelve (12)
months from the closing of this offering, to act as lead managing underwriter and lead left book runner or minimally as a co-lead manager
and co-lead left book runner and/or co-lead left book runner and/or co-lead left placement agent with at least 75.0% of the economics
for any and all future equity, equity-linked or debt (excluding commercial bank debt) offerings undertaken during the such period by
the Company or any subsidiary of the Company.
Indemnification
We
have agreed to indemnify the Placement Agent and specified other persons against certain civil liabilities, including liabilities under
the Securities Act, and the Securities Exchange Act of 1934, as amended, or the Exchange Act, and to contribute to payments that the
placement agent may be required to make in respect of such liabilities.
The
Placement Agent may be deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act, and any commissions
received by it, and any profit realized on the resale of the ordinary shares and warrants sold by it while acting as principal, might
be deemed to be underwriting discounts or commissions under the Securities Act. As an underwriter, the placement agent would be required
to comply with the Securities Act and the Securities Exchange Act of 1934, as amended, or Exchange Act, including without limitation,
Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may limit the timing of purchases and sales of ordinary
shares and warrants by the placement agent acting as principal. Under these rules and regulations, the Placement Agent:
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●
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may not engage in any stabilization
activity in connection with our securities; and
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●
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may not bid for or purchase
any of our securities, or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange
Act, until it has completed its participation in the distribution in the securities offered by this prospectus supplement.
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Relationships
The
Placement Agent and its affiliates may have provided us and our affiliates in the past and may provide from time to time in the future
certain commercial banking, financial advisory, investment banking and other services for us and such affiliates in the ordinary course
of their business, for which they have received and may continue to receive customary fees and commissions. In addition, from time to
time, the placement agent and its affiliates may effect transactions for their own account or the account of customers, and hold on behalf
of themselves or their customers, long or short positions in our debt or equity securities or loans, and may do so in the future. However,
except as disclosed in this prospectus supplement, we have no present arrangements with the placement agent for any further services.
Transfer
Agent and Registrar
The
transfer agent and registrar for our ordinary shares is VStock Transfer, LLC, with a mailing address of 18 Lafayette Place Woodmere,
NY 11598.
Listing
Our
ordinary shares are listed on the NASDAQ Capital Market under the trading symbol “MYT.”
LEGAL
MATTERS
Certain
legal matters governed by the laws of the BVI with respect to the validity of the offered securities will be opined upon for us by Harney
Westwood & Riegels LP. Certain legal matters governed by the laws of New York will be passed upon for us by Hunter Taubman Fischer
& Li, LLC, New York, New York. Loeb & Loeb LLP, New York, New York, is counsel to the Placement Agent in connection with this
offering.
EXPERTS
The
audited financial statements incorporated in this prospectus by reference to the Annual Report on Form 20-F for the years ended June
30, 2020 and 2019 have been so incorporated in reliance on the reports of Centurion ZD CPA & Co., the Company’s independent
registered public accounting firm, and its authority as experts in accounting and auditing.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The
SEC allows us to “incorporate by reference” into this prospectus the information we file with the SEC. This means that we
can disclose important information to you by referring you to those documents. Any statement contained in a document incorporated by
reference in this prospectus shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement
contained herein, or in any subsequently filed document, which also is incorporated by reference herein, modifies or supersedes such
earlier statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute
a part of this prospectus.
We
hereby incorporate by reference into this prospectus supplement the following documents that we have filed with the SEC under the Exchange
Act:
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the Company’s Annual
Report on Form 20-F for the fiscal year ended June 30, 2020, filed with the SEC on October 30, 2020;
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the Company’s
Current Reports on Form 6-K, as amended, filed with the SEC on July
20, 2020, July 27,
2020, August 18,
2020, November 17,
2020, February 19,
2021, March 22, 2021, March
26, 2021, March 29,
2021, April 20, 2021, April
27,2021, and April 28,
2021 ; and
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the description of our
ordinary shares incorporated by reference in our registration statement on Form 8-A, as amended (File No. 001-35755) filed with
the SEC on June 1, 2015, including any amendment and report subsequently filed for the purpose of updating that description.
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We
also incorporate by reference all additional documents that we file with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act that are filed after the filing date of the registration statement of which this prospectus supplement is a part and prior
to effectiveness of that registration statement. We are not, however, incorporating, in each case, any documents or information that
we are deemed to “furnish” and not file in accordance with SEC rules.
Upon
request, we will provide, without charge, to each person who receives this prospectus, a copy of any or all of the documents incorporated
by reference (other than exhibits to the documents that are not specifically incorporated by reference in the documents). Please direct
written or oral requests for copies to us at Huakun Times Plaza, Room 1118, Floor 11, No. 200, Erduan, East Xiang Fu Road, Yuhua District,
Changsha, People’s Republic of China, Attention: Long Yi, +86 511-8673-3102.
You
should rely only on the information incorporated by reference or provided in this prospectus supplement or the accompanying prospectus.
We have not authorized anyone else to provide you with different information. You should not assume that the information in this prospectus
supplement or the accompanying prospectus is accurate as of any date other than the date on the front page 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 http://http://ir.h-n-myt.com/investor. 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 BVI as an exempted company with limited liability. We incorporated in the BVI because of certain
benefits associated with being a BVI corporation, 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, BVI has 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, BVI companies may not have standing to sue before the federal courts of the United
States.
All
of our assets are located in Hong Kong Special Administrative Region (“Hong Kong”), China, and the U.S. In addition, some
of our directors and officers 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 us or our directors and officers, 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.
According
to our local BVI’s counsel, there is uncertainty with regard to BVI law relating to whether a judgment obtained from the United
States courts under civil liability provisions of the securities laws will be determined by the courts of the BVI as penal or punitive
in nature. If such a determination is made, the courts of the BVI will not recognize or enforce the judgment against a BVI’s company.
The courts of the BVI in the past determined that disgorgement proceedings brought at the instance of the Securities and Exchange Commission
are penal or punitive in nature and such judgments would not be enforceable in the BVI. Other civil liability provisions of the securities
laws may be characterized as remedial, and therefore enforceable but the BVI’s Courts have not yet ruled in this regard. Our BVI’s
counsel has further advised us that a final and conclusive judgment in the federal or state courts of the United States under which a
sum of money is payable other than a sum payable in respect of taxes, fines, penalties or similar charges, may be subject to enforcement
proceedings as a debt in the courts of the BVI.
As
of the date hereof, no treaty or other form of reciprocity exists among the BVI, Hong Kong, and China governing the recognition and enforcement
of judgments.
BVI
counsel further advised that although there is no statutory enforcement in the BVI of judgments obtained in the United States, Hong Kong,
or China, a judgment obtained in such jurisdictions will be recognized and enforced in the courts of the BVI at common law, without any
re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the courts of BVI, provided
such judgment (1) is given by a foreign court of competent jurisdiction, (2) imposes on the judgment debtor a liability to pay a liquidated
sum for which the judgment has been given, (3) is final, (4) is not in respect of taxes, a fine or a penalty, and (5) was not obtained
in a manner and is of a kind the enforcement of which is contrary to natural justice or the public policy of the BVI.
INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling
persons pursuant to the foregoing provisions, or otherwise, we have been informed that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
PROSPECTUS DELTA
TECHNOLOGY HOLDINGS LIMITED
$50,000,000
Ordinary
Shares
Preferred
Shares
Warrants
Units
We
may, from time to time in one or more offerings, offer and sell up to $50,000,000 in the aggregate of ordinary shares, preferred shares,
warrants to purchase ordinary shares or preferred shares, or any combination of the foregoing, either individually or as units comprised
of one or more of the other securities.
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.
Our
ordinary shares and redeemable warrants are no longer trading in the market. Pursuant to General Instruction I.B.5. of Form F-3, in no
event will we sell the securities covered hereby in a public primary offering with a value exceeding more than one-third of the aggregate
market value of our ordinary shares in any 12-month period so long as the aggregate market value of our outstanding ordinary shares held
by non-affiliates remains below $75,000,000. During the 12 calendar months prior to and including the date of this prospectus, we have
not offered or sold any securities pursuant to General Instruction I.B.5 of Form F-3.
Investing
in our securities involves a high degree of risk. See “Risk Factors” on page 4 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 September 6, 2018.
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 or warrants to purchase ordinary shares or preferred shares, 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 $50,000,000. 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 the document or that any information we have incorporated by reference is correct on any date subsequent
to the date of the 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 “Delta Technology,” “we,” “us,” “our,” “the Company” or similar
words refer to Delta Technology Holdings Limited, together with our subsidiaries.
ABOUT
Delta Technology
Overview
Delta
Technology (formerly CIS Acquisition Limited) was incorporated in the British Virgin Islands as a company with limited liability on November
28, 2011 as a special purpose acquisition company. On September 19, 2014, we closed the business combination with Elite Ride Limited,
a British Virgin Islands corporation (“Elite”), pursuant to that certain Stock Purchase Agreement (the “Purchase Agreement”) by and among
Delta Technology, Elite, Delta Advanced Materials Limited, a Hong Kong corporation (“Delta”) and the shareholders of Elite (the “Elite
Shareholders”) dated September 16, 2014. Delta Technology acquired all of the shares of Elite from Elite Shareholders in exchange for
the issuance to Elite Shareholders an aggregate of 6,060,000 ordinary shares, of which 4,560,000 shares were issued at closing and 1,500,000
shares (“Earnout Payment Shares”) are held in escrow and was to be released upon meeting of certain performance targets as specified
in the Purchase Agreement (the “Acquisition”). 500,000 of the Earnout Payment Shares were released as a result of the Company meeting
its performance targets for the fiscal year ending June 30, 2015. 1,000,000 of the Earnout Payment Shares were cancelled on July 6, 2017
when the performance targets as specified were not met.
As
a result of the consummation of the Acquisition, Elite is now our wholly subsidiary. Elite was incorporated under British Virgin Islands
law on September 13, 2014 solely in contemplation of the Acquisition. It is currently the holding company of all the shares of Delta,
which, in turn, holds all the equity interests in four operating subsidiaries in the PRC: Jiangsu Yangtze Delta Fine Chemical Co., Ltd
(“Jiangsu Delta”), Jiangsu Zhengxin New Material Research and Development Co., Ltd (“Jiangsu Zhengxin”), Jiangsu Delta Logistics Co.,
Ltd (“Jiangsu Logistics”), and Binhai Deda Chemical Co., Ltd (“Binhai Deda”) (collectively, the “PRC Subsidiaries”).
Delta
(formerly known as China Deltachem Holdings Limited) was incorporated in Hong Kong on June 17, 2010. The principal activity of Delta
is investment holding and currently operates two wholly-owned subsidiaries in the People’s Republic of China (“PRC”): Jiangsu Delta and
Binhai Deda. Jiangsu Delta is the principal operating subsidiary of the Company and is engaged in the production of fine specialty chemicals.
Headquartered
in Zhenjiang city, Jiangsu province, we are a fine and specialty chemical manufacturer, primarily engaged in manufacturing and selling
of organic compound including para-chlorotoluene (“PCT”), ortho-chlorotoluene (“OCT”), PCT/OCT downstream products, and other by-product
chemicals and distributing fine and specialty chemicals to end application markets including automotive, pharmaceutical, agrochemical,
dye & pigments, aerospace, ceramics, coating-printing, clean energy and food additives.
We
collaborate with reputable universities, such as the East China Normal University in order to secure our position as a market leader.
We also closely monitor the market for development, trends and technological innovations and solicit customer feedback so as to keep
abreast with market demands and industrial development.
As
of the date of this prospectus, we have a diversified clientele with more than 300 customers based either in domestic or overseas market.
Approximately 97% of our sales are to domestic customers based in Jiangsu province, Anhui province, Zhejiang province, Hubei province,
Guangdong province and Chongqing Metropolitan, and the rest of its products are exported via distributors or trading companies to countries
outside the PRC which include but not limited to India, Brazil, Japan, European Union member countries and America.
Our
revenue for the fiscal years ended June 30, 2015, 2016 and 2017 were approximately $202 million, $53 million and $56 million, respectively,
and our profit before tax for the fiscal years ended June 30, 2015, 2016 and 2017 were $5.1 million, loss before tax of $7.6 million
and $28.4 million, respectively.
Corporate
Information
Our
principal executive offices are located at 16 Kaifa Avenue, Danyang, Jiangsu, China 212300. Our telephone number at that address is +86
511-8673-3102. We make available free of charge through our website our annual report on Form 20-F, current reports on Form 6-K, and
amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended,
or the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The
information contained in, or that can be accessed through, our website is not part of this prospectus or any prospectus supplement.
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 November 15, 2017, 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.
NOTE
REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus and our SEC filings that are incorporated by reference into this prospectus contain or incorporate by reference forward-looking
statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements, other than statements
of historical fact, included or incorporated by reference in this prospectus regarding our business strategy, future operations, projected
financial position, potential strategic transactions, proposed distribution channels, projected sales growth, proposed new products,
estimated future revenues, cash flows and profitability, projected costs, potential sources of additional capital, future prospects,
future economic conditions, the future of our industry and results that might be obtained by pursuing management’s current plans and
objectives are forward-looking statements. The words “believe,” “anticipate,” “estimate,” “plan,” “expect,” “intend,” “may,” “could,”
“should,” “potential,” “likely,” “projects,” “continue,” “will,” and “would” and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain these identifying words. Forward-looking statements reflect our current
views with respect to future events, are based on assumptions and are subject to risks and uncertainties. We cannot guarantee that we
actually will achieve the plans, intentions or expectations expressed in our forward-looking statements and you should not place undue
reliance on these statements. There are a number of important factors that could cause our actual results to differ materially from those
indicated or implied by forward-looking statements. These important factors include those discussed under the heading “Risk Factors”
contained or incorporated by reference in this prospectus and in the applicable prospectus supplement and any free writing prospectus
we may authorize for use in connection with a specific offering. These factors and the other cautionary statements made in this prospectus
should be read as being applicable to all related forward-looking statements whenever they appear in this prospectus. Except as required
by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future
events or otherwise.
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 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, products
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. If a material
part of the net proceeds is to be used to repay indebtedness, we will set forth the interest rate and maturity of such indebtedness in
a prospectus supplement. Pending use of the net proceeds, we intend to invest the proceeds in investment-grade, interest-bearing securities.
DILUTION
If
required, we will set forth in a prospectus supplement the following information regarding any material dilution of the equity interests
of investors purchasing securities in an offering under this prospectus:
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net tangible book value per share of our equity securities before and after the offering;
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amount of the increase in such net tangible book value per share attributable to the cash payments made by purchasers in the offering;
and
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the
amount of the immediate dilution from the public offering price which will be absorbed by such purchasers.
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DESCRIPTION
OF ORDINARY SHARES AND PREFERRED SHARES
The
following description of our ordinary shares and preferred shares, together with any additional information we include in any applicable
prospectus supplement or any related free writing prospectus, summarizes the material terms and provisions of our ordinary shares and
the preferred shares that we may offer under this prospectus. While the terms we have summarized below will apply generally to any future
ordinary shares or preferred shares that we may offer, we will describe the particular terms of any class or series of these securities
in more detail in the applicable prospectus supplement. For the complete terms of our ordinary shares and preferred shares, please refer
to our Memorandum and Articles of Association, that is incorporated by reference into the registration statement of which this prospectus
is a part or may be incorporated by reference in this prospectus or any applicable prospectus supplement. The terms of these securities
may also be affected by British Virgin Islands law. The summary below and that contained in any applicable prospectus supplement or any
related free writing prospectus are qualified in their entirety by reference to our Memorandum and Articles of Association, as in effect
at the time of any offering of securities under this prospectus. For information on how to obtain copies of our Memorandum and Articles
of Association, see “Where You Can Find More Information.”
Our
authorized capital stock consists of 155,000,000 shares divided into: (i) 150,000,000 ordinary shares; and (ii) 5,000,000 preferred shares,
each par value $0.0001 per share. As of July 17, 2018, 12,810,314 ordinary shares were outstanding. Each share, regardless if it is part
of a class of ordinary shares, has the right to one vote at a meeting of shareholders or on any resolution of shareholders, the right
to an equal share in any dividend paid by us, and the right to an equal share in the distribution of surplus assets. We may by a resolution
of the Board of Directors redeem our shares for such consideration as the Board of Directors determines.
If,
at any time, our authorized number of shares is divided into different classes of shares, the rights attached to any class (unless otherwise
provided by the terms of issue of the shares of that class) may, whether or not we are being wound-up, be varied with the consent in
writing of the holders of three-fourths of the issued shares of that class or with the sanction of a resolution passed by a majority
of the votes cast at a separate meeting of the holders of the shares of the class at which meeting the necessary quorum shall be two
persons at least holding or representing by proxy one-third of the issued shares of the class.
At
least 10 days’ (exclusive of the date that notice is given and the date on which event for which notice is given is to take effect) notice
of a meeting shall be given to each shareholder entitled to attend and vote thereat, stating the date, place, and time at which the meeting
is to be held, and if different, the record date for determining shareholders entitled to attend and vote at the meeting, and the general
nature of the business to be conducted at the meeting. A meeting shall, notwithstanding the fact that it is called on shorter notice
than otherwise required, be deemed to have been properly called if it is attended, or such notice is waived, by 90% of the shareholders
entitled to attend and vote thereat. The inadvertent failure to give notice of a meeting to, or the non-receipt of a notice of a meeting
by, any person entitled to receive notice shall not invalidate the proceedings at that meeting.
There
are no limitations on the rights to own our securities, or limitations on the rights of non-resident or foreign shareholders to hold
or exercise voting rights on our securities, contained in our Amended and Restated Memorandum and Articles of Association (or under British
Virgin Islands law).
DESCRIPTION
OF WARRANTS
General
We
may issue warrants for the purchase of ordinary shares or preferred shares. Warrants may be offered independently or together with ordinary
shares or preferred shares offered by any prospectus supplement and may be attached to or separate from those securities. While the terms
we have summarized below will apply generally to any warrants that we may offer under this prospectus, we will describe in particular
the terms of any series of warrants that we may offer in more detail in the applicable prospectus supplement and any applicable free
writing prospectus. The terms of any warrants offered under a prospectus supplement may differ from the terms described below.
We
will file as an exhibit to the registration statement of which this prospectus is a part, or will incorporate by reference from another
report that we file with the SEC, the form of warrant and/or warrant agreement, which may include a form of warrant certificate, as applicable,
that describes the terms of the particular series of warrants we may offer before the issuance of the related series of warrants. We
may issue the warrants under a warrant agreement that we will enter into with a warrant agent to be selected by us. The warrant agent
will act solely as our agent in connection with the warrants and will not assume any obligation or relationship of agency or trust for
or with any registered holders of warrants or beneficial owners of warrants. The following summary of material provisions of the warrants
and warrant agreements is subject to, and qualified in its entirety by reference to, all the provisions of the form of warrant and/or
warrant agreement and warrant certificate applicable to a particular series of warrants. We urge you to read the applicable prospectus
supplement and any related free writing prospectus, as well as the complete form of warrant and/or the warrant agreement and warrant
certificate, as applicable, that contain the terms of the warrants.
The
particular terms of any issue of warrants will be described in the prospectus supplement relating to the issue. Those terms may include:
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aggregate number of such warrants;
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price or prices at which such warrants will be issued;
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the
currency or currencies (including composite currencies) in which the price of such warrants may be payable;
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the
terms of the securities purchasable upon exercise of such warrants and the procedures and conditions relating to the exercise of
such warrants;
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the
price at which the securities purchasable upon exercise of such warrants may be purchased;
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the
date on which the right to exercise such warrants will commence and the date on which such right shall expire;
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any
provisions for adjustment of the number or amount of securities receivable upon exercise of the warrants or the exercise price of
the warrants;
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if
applicable, the minimum or maximum amount of such warrants that 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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the
terms of any rights to redeem or call the warrants;
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United
States federal income tax consequences of holding or exercising the warrants, if material; and
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any
other terms of such warrants, including terms, procedures and limitations relating to the exchange or exercise of such warrants.
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Each
warrant will entitle its holder to purchase the number of ordinary shares or preferred shares of the relevant class or series at the
exercise price set forth in, or calculable as set forth in, the applicable prospectus supplement. The warrants may be exercised as set
forth in the prospectus supplement relating to the warrants offered. Unless we otherwise specify in the applicable prospectus supplement,
warrants may be exercised at any time up to the close of business on the expiration date set forth in the prospectus supplement relating
to the warrants offered thereby. After the close of business on the expiration date, unexercised warrants will become void.
We
will specify the place or places where, and the manner in which, warrants may be exercised in the form of warrant, warrant agreement
or warrant certificate and applicable prospectus supplement. Upon receipt of payment and the warrant or warrant certificate, as applicable,
properly completed and duly executed at the corporate trust office of the warrant agent, if any, or any other office, including ours,
indicated in the prospectus supplement, we will, as soon as practicable, issue and deliver the securities purchasable upon such exercise.
If less than all of the warrants (or the warrants represented by such warrant certificate) are exercised, a new warrant or a new warrant
certificate, as applicable, will be issued 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.
Prior
to the exercise of any warrants to purchase ordinary shares or preferred shares of the relevant class or series, holders of the warrants
will not have any of the rights of holders of ordinary shares or preferred shares purchasable upon exercise, including the right to vote
or to receive any payments of dividends or payments upon our liquidation, dissolution or winding up on the ordinary shares or preferred
shares purchasable upon exercise, if any.
Outstanding
Warrants
As
of the date of this prospectus, 2018, there were 359,727 outstanding warrants to purchase ordinary shares.
DESCRIPTION
OF UNITS
The
following description, together with the additional information we may include in any applicable prospectus supplement, summarizes the
material terms and provisions of the units that we may offer under this prospectus. While the terms we have summarized below will apply
generally to any units that we may offer under this prospectus, we will describe the particular terms of any series of units in more
detail in the applicable prospectus supplement and any related free writing prospectus. The terms of any units offered under a prospectus
supplement may differ from the terms described below. However, no prospectus supplement will fundamentally change the terms that are
set forth in this prospectus or offer a security that is not registered and described in this prospectus at the time of its effectiveness.
We
will file as an exhibit to the registration statement of which this prospectus is a part, or will incorporate by reference from another
report we file with the SEC, the form of unit agreement that describes the terms of the series of units we may offer under this prospectus,
and any supplemental agreements, before the issuance of the related series of units. The following summaries of material terms and provisions
of the units are subject to, and qualified in their entirety by reference to, all the provisions of the unit agreement and any supplemental
agreements applicable to a particular series of units. We urge you to read the applicable prospectus supplement and any related free
writing prospectus, as well as the complete unit agreement and any supplemental agreements that contain the terms of the units.
General
We
may issue units comprised of ordinary shares or preferred shares and warrants in any combination. Each unit will be issued so that the
holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations
of a holder of each included security. 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.
We
will describe in the applicable prospectus supplement the terms of the series of units, including, but not limited to:
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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;
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any
provisions of the governing unit agreement that differ from those described below; and
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any
provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units.
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The
provisions described in this section, as well as those described under “Description of Ordinary Shares and Preferred shares” and “Description
of Warrants” will apply to each unit and to any ordinary shares, preferred shares or warrant included in each unit, respectively.
Issuance
in Series
We
may issue units in such amounts and in numerous distinct series as we determine.
Enforceability
of Rights by Holders of Units
We
may enter into unit agreements with a unit agent. Each unit agent will act solely as our agent under the applicable unit agreement and
will not assume any obligation or relationship of agency or trust with any holder of any unit. A single bank or trust company may act
as unit agent for more than one series of units. A unit agent will have no duty or responsibility in case of any default by us under
the applicable unit agreement or unit, including any duty or responsibility to initiate any proceedings at law or otherwise, or to make
any demand upon us. Any holder of a unit may, without the consent of the related unit agent or the holder of any other unit, enforce
by appropriate legal action its rights as holder under any security included in the unit.
We,
the unit agents and any of their agents may treat the registered holder of any unit certificate as an absolute owner of the units evidenced
by that certificate for any purpose and as the person entitled to exercise the rights attaching to the units so requested, despite any
notice to the contrary.
PLAN
OF DISTRIBUTION
We
may sell our securities in any one or more of the following ways from time to time:
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through
agents;
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to
or through underwriters;
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through
brokers or dealers;
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in
“at the market offerings” within the meaning of Rule 415(a)(4) under the Securities Act, to or through a market maker or into an
existing trading market, on an exchange or otherwise;
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directly
by us to purchasers, including through a specific bidding, auction or other process; or
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through
a combination of any of these methods of sale.
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The
applicable prospectus supplement will contain the terms of the transaction, the name or names of any underwriters, dealers, agents and
the respective amounts of securities underwritten or purchased by them, the initial public offering price of the securities, and the
applicable agent’s commission, dealer’s purchase price or underwriter’s discount. Any dealers and agents participating in the distribution
of the securities may be deemed to be underwriters, and compensation received by them on resale of the securities may be deemed to be
underwriting discounts.
Any
initial offering price, dealer purchase price, discount or commission may be changed from time to time.
The
securities may be distributed from time to time in one or more transactions, at negotiated prices, at a fixed price or fixed prices (that
may be subject to change), at market prices prevailing at the time of sale, at various prices determined at the time of sale or at prices
related to prevailing market prices.
Offers
to purchase securities may be solicited directly by us or by agents designated by us from time to time. Unless otherwise indicated in
the prospectus supplement, any such agent will use its commercially reasonable efforts to solicit purchases for the period of its appointment
or to sell securities on a continuing basis. Agents may receive compensation in the form of commissions, discounts or concessions from
us. Agents may also receive compensation from the purchasers of the securities for whom they sell as principals. Each particular agent
will receive compensation in amounts negotiated in connection with the sale, which might be in excess of customary commissions. Any such
agent may be deemed to be an underwriter, as that term is defined in the Securities Act, of the securities so offered and sold. Accordingly,
any commission, discount or concession received by them and any profit on the resale of the securities purchased by them may be deemed
to be underwriting discounts or commissions under the Securities Act. We have not entered into any agreements, understandings or arrangements
with any underwriters or broker-dealers regarding the sale of their securities. As of the date of this prospectus, there are no special
selling arrangements between any broker-dealer or other person and us. No period of time has been fixed within which the securities will
be offered and sold.
If
underwriters are utilized in the sale of any securities in respect of which this prospectus is being delivered, such securities will
be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated
transactions, at fixed public offering prices or at varying prices determined by the underwriters at the time of sale. Securities may
be offered to the public either through underwriting syndicates represented by managing underwriters or directly by one or more underwriters.
If any underwriter or underwriters are utilized in the sale of securities, unless otherwise indicated in the applicable prospectus supplement,
the obligations of the underwriters are subject to certain conditions precedent, and the underwriters will be obligated to purchase all
such securities if they purchase any of them.
If
a dealer is utilized in the sale of the securities in respect of which this prospectus is delivered, we will sell such securities to
the dealer as principal. The dealer may then resell such securities to the public at varying prices to be determined by such dealer at
the time of resale. Transactions through brokers or dealers may include block trades in which brokers or dealers will attempt to sell
shares as agent but may position and resell as principal to facilitate the transaction or in cross trades, in which the same broker or
dealer acts as agent on both sides of the trade. Any such dealer may be deemed to be an underwriter, as such term is defined in the Securities
Act, of the securities so offered and sold.
Offers
to purchase securities may be solicited directly by us, and the sale thereof may be made by us, directly to institutional investors or
others who may be deemed to be underwriters within the meaning of the Securities Act with respect to any resale thereof.
Agents,
underwriters and dealers may be entitled under relevant agreements with us to indemnification by us against certain liabilities, including
liabilities under the Securities Act, or to contribution with respect to payments which such agents, underwriters and dealers may be
required to make in respect thereof. The terms and conditions of any indemnification or contribution will be described in the applicable
prospectus supplement.
Underwriters,
broker-dealers or agents may receive compensation in the form of commissions, discounts or concessions from us. Underwriters, broker-dealers
or agents may also receive compensation from the purchasers of shares for whom they act as agents or to whom they sell as principals,
or both. Compensation as to a particular underwriter, broker-dealer or agent will be in amounts to be negotiated in connection with transactions
involving shares and might be in excess of customary commissions. In effecting sales, broker-dealers engaged by us may arrange for other
broker-dealers to participate in the resales.
Any
securities offered other than ordinary shares and warrants will be a new issue and, other than our ordinary shares, which are listed
on The Nasdaq Capital Market and The Over The Counter Bulletin Board, respectively, will have no established trading market. We may elect
to list any series of securities on an exchange, and in the case of our ordinary shares and warrants, on any additional exchange, but,
unless otherwise specified in the applicable prospectus supplement and/or other offering material, we shall not be obligated to do so.
It is possible that one or more underwriters may make a market in a class or series of securities, but the underwriters will not be obligated
to do so and may discontinue any market making at any time without notice. No assurance can be given as to the liquidity of, or the trading
market for, any of the securities.
Agents,
underwriters and dealers may engage in transactions with, or perform services for, us or our subsidiaries in the ordinary course of business.
Any
underwriter may engage in overallotment, stabilizing transactions, short covering transactions and penalty bids in accordance with Regulation
M under the Exchange Act. Overallotment involves sales in excess of the offering size, which create a short position. Stabilizing transactions
permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. Short covering transactions
involve purchases of the securities in the open market after the distribution is completed to cover short positions. Penalty bids permit
the underwriters to reclaim a selling concession from a dealer when the securities originally sold by the dealer are purchased in a covering
transaction to cover short positions. Those activities may cause the price of the securities to be higher than it would otherwise be.
If commenced, the underwriters may discontinue any of the activities at any time. An underwriter may carry out these transactions on
The Nasdaq Capital Market, in the over-the-counter market or otherwise.
The
place and time of delivery for securities will be set forth in the accompanying prospectus supplement.
LEGAL
MATTERS
Except
as otherwise set forth in the applicable prospectus supplement, certain legal matters in connection with the securities offered pursuant
to this prospectus will be passed upon for us by Hunter Taubman Fischer & Li to the extent governed by the laws of the State of New
York, and by Harney Westwood & Riegels LP to the extent governed by the laws of the British Virgin Islands. If legal matters in connection
with offerings made pursuant to this prospectus are passed upon by counsel to underwriters, dealers or agents, such counsel will be named
in the applicable prospectus supplement relating to any such offering.
EXPERTS
The
audited financial statements incorporated in this prospectus by reference to the Annual Report on Form 20-F for the years ended June
30, 2017 and June 30, 2016 have been so incorporated in reliance on the reports of Centurion ZD CPA Limited, the Company’s independent
registered public accounting firm, and its authority as experts in accounting and auditing.
INFORMATION
INCORPORATED BY REFERENCE
The
SEC allows us to “incorporate by reference” into this prospectus the information we file with the SEC. This means that we can disclose
important information to you by referring you to those documents. Any statement contained in a document incorporated by reference in
this prospectus shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained
herein, or in any subsequently filed document, which also is incorporated by reference herein, modifies or supersedes such earlier statement.
Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
We
hereby incorporate by reference into this prospectus the following documents that we have filed with the SEC under the Exchange Act:
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the
Company’s Annual Report on Form 20-F for the fiscal year ended June 30, 2017, filed with the SEC on November 15, 2017;
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the
Company’s Current Reports on Form 6-K, filed with the SEC on November 24, 2017, November 27, 2017, January 29, 2018, June 15,
2018, June 25, 2018 and July 12, 2018.
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All
documents that we file with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (other than Current Reports on
Form 6-K, or portions thereof, furnished under Form 6-K) (i) after the initial filing date of the registration statement of which this
prospectus forms a part and prior to the effectiveness of such registration statement and (ii) after the date of this prospectus and
prior to the termination of the offering shall be deemed to be incorporated by reference in this prospectus from the date of filing of
the documents, unless we specifically provide otherwise. Information that we file with the SEC will automatically update and may replace
information previously filed with the SEC. To the extent that any information contained in any Current Report on Form 6-K or any exhibit
thereto, was or is furnished to, rather than filed with the SEC, such information or exhibit is specifically not incorporated by reference.
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, and, in accordance with these requirements, we file annual,
quarterly and current reports, proxy statements, and other information with the SEC. You may inspect, read 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, proxy and information statements, and other information that we file electronically
with the SEC.
6,950,000
Ordinary Shares
URBAN
TEA, INC.
Prospectus
Supplement
Maxim
Group LLC
April
28, 2021
Urban Tea (NASDAQ:MYT)
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