As filed with the Securities and Exchange Commission on September 4, 2020

Registration No. 333-      

 

  

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM F-3

REGISTRATION STATEMENT UNDER SECURITIES ACT OF 1933

 

URBAN TEA, INC.

(Exact name of registrant as specified in its charter)

 

British Virgin Islands   Not Applicable
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)

 

Huakun Times Plaza, Room 1118, Floor 11

No. 200, Erduan, East Xiang Fu Road

Yuhua District, Changsha

People’s Republic of China, 410014 (86)

511-8673-3102

(Address, including zip code, and telephone number, including

area code, of Registrant’s principal executive offices)

 

VStock Transfer LLC

18 Lafayette Place

Woodmere, NY 11598

(212) 828-8436

((Name, address, including zip code, and telephone number, including area code, of agent for service)

 

Copy To:

Joan Wu, Esq.

Hunter Taubman Fischer & Li, LLP

800 Third Avenue, Suite 2800

New York, New York 10023

(212) 530-2210

 

Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement.

 

If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ☐

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. ☒

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this Form is a registration statement pursuant to general Instruction I.C. or a post-effective amendment thereto that shall become effective upon filing with the commission pursuant to Rule 462(e) under the Securities Act, check the following box. ☐

 

If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.C. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ☐

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

 

Emerging growth company ☐

 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.

 

 

 

 

CALCULATION OF REGISTRATION FEE

 

Title of each class of securities to be registered  Amount
to be
registered (1)
   Proposed
maximum
aggregate
price per
share
   Proposed
maximum
aggregate
offering
price (2)
   Amount of
registration
fee
 
                 
Ordinary shares, no par value   1,000,000   $1.735   $1,735,000   $226 
Total Fee due                 $226 

 

(1) The securities registered also include such indeterminate number of ordinary shares pursuant to the anti-dilution provisions of any such securities. In addition, pursuant to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), the securities being registered hereunder include such indeterminate number of ordinary shares as may be issuable with respect to the shares being registered hereunder as a result of stock splits, stock dividends or similar anti-dilutive transactions.
(2) The offering price has been estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) of the Securities Act with respect to the ordinary shares registered hereunder, based upon the price of $1.735, which was the average of the high and low prices reported on the Nasdaq Capital Market on September 3, 2020.

 

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

   

 

 

 

 

 

The information in this prospectus is not complete and may be changed. The selling shareholders may not sell these ordinary shares until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these ordinary shares, and it is not soliciting an offer to buy these ordinary shares in any jurisdiction where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION, DATED SEPTEMBER 4, 2020

 

PROSPECTUS

 

1,000,000 Ordinary Shares

URBAN TEA, INC.

 

This prospectus relates to the registration of the resale by the selling shareholders of 1,000,000 ordinary shares, no par value, of Urban Tea, Inc., a company incorporated under the laws of the British Virgin Islands (“Company”), by the selling shareholders set forth herein that were issued by the Company prior to the effective date of the registration statement of which this prospectus is a part. The resale of such shares by the selling shareholders pursuant to this prospectus is referred to as the “Offering.”

  

On August 27, 2020, we completed a reverse share split of our ordinary shares, pursuant to which every ten (10) ordinary shares outstanding as of the effective time of the reverse share split were combined into one (1) ordinary share. All share and per share information in this prospectus is presented on a post-reverse split basis.

 

We will not receive any of the proceeds from the sale of ordinary shares by the selling shareholders.

 

We will pay the expenses incurred in registering the shares, including legal and accounting fees. See “Plan of Distribution.”

 

Our ordinary shares are listed on the Nasdaq Capital Market under the symbol “MYT.” On September 3, 2020, the last reported sale price of our ordinary shares on the Nasdaq Capital Market was $1.81 per share. As of September 3, 2020, the aggregate market value of our issued and outstanding ordinary shares held by non-affiliates was $16,195,990.4 based on 7,944,211 issued and outstanding ordinary shares, of which 7,939,211 ordinary shares are held by non-affiliates, and a per share price of $2.04 which was the closing sale price of our ordinary shares as quoted on the Nasdaq Capital Market on August 27, 2020. We have issued and sold 900,000 ordinary shares on June 29, 2020 for gross proceeds of approximately $5 million, 1,500,000 ordinary shares on August 3, 2020 for gross proceeds of approximately $6 million and 1,875,000 ordinary shares on August 18, 2020 for gross proceeds of approximately $6 million pursuant to General Instruction I.B.5. of Form F-3 during the prior 12 calendar month period that ends on and includes the date hereof.

 

INVESTING IN OUR ORDINARY SHARES INVOLVES A HIGH DEGREE OF RISK. SEE “RISK FACTORS” ON PAGE 6, AS WELL AS THE RISKS DISCUSSED UNDER THE CAPTION “RISK FACTORS” IN THE DOCUMENTS INCORPORATED BY REFERENCE IN THIS PROSPECTUS. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

The date of this prospectus is September [*], 2020

  

 

 

 

TABLE OF CONTENTS

 

  Page
   
Prospectus Information 1
   
Business Description 1
   
Risk Factors 6
   
Special Note Regarding Forward–Looking Statements 11
   
Use Of Proceeds 11
   
Capitalization 12
   
Selling Shareholders 13
   
Plan of Distribution 14
   
Description of Share Capital 16
   
Expenses 16
   
Legal Matters 16
   
Experts 16
   
Where You Can Find More Information 16
   
Information Incorporated By Reference 17
   
Enforcement of Civil Liabilities 18
   
Disclosure Of Commission Position On Indemnification For Securities Act Liabilities 19

 

You should rely only on the information contained or incorporated by reference in this prospectus or any supplement. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and any underwriter or agent is not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

  

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PROSPECTUS INFORMATION

 

This prospectus is part of a registration statement on Form F-3 that we filed with the Securities and Exchange Commission. Under that registration statement, the selling shareholders may offer from time to time our ordinary shares in one or more offerings.

 

The information appearing in this prospectus, any applicable prospectus supplement or any related free writing prospectus is accurate only as of the date of the document and any information we have incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus, any applicable prospectus supplement or any related free writing prospectus, or any sale of a security. Our business, financial condition, results of operations and prospects may have changed since those dates.

 

This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under the heading “Where You Can Find More Information.”

 

In this prospectus, unless we indicate otherwise, “we,” “us,” “our,” “the Company,” “MYT” and/or “Urban Tea” refer to Urban Tea Inc., as consolidated with its various subsidiaries.

 

BUSINESS DESCRIPTION

URBAN TEA, INC.

 

History and Development of the Company

 

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 goal is to be a leading brand of tea beverages in each city in which we currently and will operate, by selling the finest quality tea beverages and related products, as well as complementary food offerings, and by providing each customer with a pleasant and comfortable environment. Our current business solely consists of the specialty tea product distribution and retail business.

 

Prior to November 2018, Urban Tea, Inc. was solely a fine and specialty chemical manufacturer, primarily engaged in manufacturing and selling of organic compounds 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. Since November 2018, we started a specialty tea product distribution and retail business through our newly formed subsidiary, Shanghai Ming Yun Tang Tea Limited (“Shanghai MYT”) which controls Hunan Ming Yun Tang Brand Management Co., Ltd. (“Hunan MYT”) via a series of contractual agreements. Currently we market a wide range of trendy tea drinks, light meals, and pastries targeting China’s new urban generation in the Hunan province. Our products are focused on not only their taste but also their aesthetic presentation and health benefits. Our products are currently being offered via our own stores.

 

 

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Disposition of Elite

 

On February 9, 2019, we entered into that certain Share Purchase Agreement (“SPA” and the transaction contemplated by the SPA is referred to as the “Disposition”) with HG Capital Group Limited pursuant to which HG Capital agreed to purchase Elite Ride Limited (“Elite”), which was our wholly owned subsidiary and a company registered in the BVI, in exchange for a cash purchase price of $1,750,000. Elite, via its 100% owned subsidiary Delta Advanced Materials Limited, a Hong Kong corporation, holds all the equity interests in all the operating subsidiaries. The Disposition closed upon satisfaction of the closing conditions of the SPA, including but not limited to the approval by the Company’s shareholders of the SPA and the transactions contemplated thereunder and receipt of a fairness opinion opining on the fairness of the Disposition to the Company’s shareholders from a financial point of view.

 

VIE Agreement with 39 PU Tea Co., Ltd.

 

MYT entered into a Share Purchase Agreement (the “39 Pu SPA”) on September 28, 2019, with Ming Yun Tang (Shanghai) Tea Co., Ltd., a wholly owned subsidiary of the Company organized under the laws of PRC (“WFOE”), Hunan 39 PU Tea Co., Ltd., (“39 Pu”), and certain shareholders of 39 Pu, who collectively hold 51% equity interest of 39 Pu (the “39 Pu Shareholders”).

  

Pursuant to the 39 Pu SPA, 39 Pu and the 39 Pu Shareholders have entered into a set of variable interest entity agreements (the “VIE Agreements”) with WFOE on October 2, 2019. The Company has made the initial payment of $2.4 million on October 28, 2019 and issued to certain recipients (the “Recipients”) an aggregate of 1,000,000 ordinary shares of the Company, no par value on October 17, 2019. The remaining portion of the cash consideration of $0.6 million and share consideration of 400,000 ordinary shares will be delivered according to the earn-out payment based on the financial performance of 39 Pu in its next fiscal year. The VIE Agreements are designed to provide Shanghai MYT with the power, rights and obligations equivalent in all material respects to those it would possess as the majority equity holder of 39 Pu, including absolute rights to control the management, operations, assets, property and revenue of 39 Pu. 39 Pu has the necessary license to carry out the tea business in China. The 39 Pu SPA closed upon satisfaction of the closing conditions of the 39 Pu SPA, including, among other things, (a) Nasdaq approval of the listing of the share consideration, (b) the delivery of the duly executed VIE Agreements, and (c) the Company’s receipt of a fairness opinion from ViewTrade Securities, Inc., an independent valuation firm engaged by the Company.

 

Joint Venture with T&O Management Group LLC

 

On October 29, 2019, the Company entered into a joint venture agreement (the “JV Agreement”) with T&O Management Group LLC, a New York State corporation (“OTTA”). Pursuant to the JV Agreement, the Company and OTTA formed Urban Tea Management Inc. under the laws of the State of New York (the “Joint Venture”). Pursuant to the terms of the JV Agreement, the Joint Venture will be directed, controlled and managed by a management committee formed by both OTTA and the Company. The Company holds 51% of the total ownership of the Joint Venture, and OTTA holds the remaining 49%. The Company is responsible for providing technology services and the overall operation planning of the Joint Venture in the United States. OTTA is responsible for applying for the business license, trademark registration, and any other necessary legal documents for the establishment of Joint Venture.

 

 

 

2

 

 

 

Below is the Company’s organizational structure chart as of the date of this prospectus.

 

  

  

Business Overview

 

The tea drinks we are currently offering are developed based on Anhua dark tea, which is famous in the Hunan province. These tea-based beverages include fresh milk tea, fruit tea, milk cap tea, etc. The light meals offered include selections such as salads, sandwiches, pasta, steak, burritos and other healthy options. The pastries we are offering include fresh baked bread, fresh baked cakes, frosting cakes, etc. Our goal is to be a leading brand of tea beverages in each city in which we currently and will operate, by selling the finest quality tea beverages and related products, as well as complementary food offerings, and by providing each customer with a pleasant and comfortable environment. We have generated sales at Company-owned stores and expect to receive fee and profit sharing from the managed stores.

 

Products

 

Currently we market a wide range of trendy tea drinks, light meals, and pastries targeting China’s new urban generation in Hunan province. Our products are focused on not only their taste but also their aesthetic presentation and health benefits.

 

 

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Sales Channels

 

Generally, in one given city, we operate one flagship store, which usually covers a floor area of 80-150 square meters (about 860-1,615 square feet). We seek to maintain our flagship stores in strategic locations that support the brand image, targeting high customer traffic locations including shopping malls, lifestyle centers and outlets. We regularly review our store portfolio, identifying new store locations and monitoring existing locations for sufficient levels of customer traffic to maintain high exposure. We actively monitor and manage the performance of our stores and seek to incorporate information learned through the monitoring process into our analytic process and future site selection and store retention decisions.

 

We will also operate a number of general stores, which usually cover a floor area of 60-80 square meters (about 646-860 square feet). Our general stores mainly offer tea beverages and light meals only. If a general store desires to expand the product offerings to include pastries, the store must acquire more equipment from us. The decision to offer baking products varies upon the location of general stores.

 

The mix of flagship stores and general stores in a given market varies is based on several factors, including our ability to access desirable local retail space, the complexity, profitability and expected ultimate size of the market for us and our ability to leverage the support infrastructure within a geographic region.

 

A flagship store can only be a managed store while a general store can be either a managed store, JV store (as defined below) or franchise store.

 

Managed Stores

 

Currently, all our products are offered in our managed stores where we lease the properties, hire managers and employees, purchase equipment and operate the stores ourselves.

 

Below is a summary of flagship and general stores operated by us as of June 2020:

 

    Total  
flagship stores     1  
general stores     4  
Total     5  

 

We plan to have a total of 8 managed stores by the end of 2020, all in the Hunan province. We expect to add 5 new managed stores by June 2021 and have a total of 75 stores across China by June 2022.

   

JV Stores

 

We anticipate entering into joint venture agreements with corporate store owners pursuant to which we will contribute our products, brands, our management services etc. in return for a fixed percentage of the profit generated by such stores. We refer to such stores as “JV stores”. Such operations of managed store and JV store model is an interim step before we obtain a franchise permit to operate franchise stores.

 

Franchise Stores

 

On May 20, 2020, we received regulatory approval from the Commercial Franchise Enterprise Administration and were approved to seek franchisees for growth opportunities throughout China.

  

Online Delivery

 

We have also teamed up with China’s leading online food ordering and delivery platforms—meituan.com (“美团”) and ele.me (“饿了么”)—to allow consumers to order drinks, light meals, and pastries through the Internet from the closest stores. Consumers, however, can order only products that are suitable for delivery, such as bread with long expiration periods, light snacks, and certain tea beverages. Some tea beverages, such as milk foam cap tea, are not offered online due to its unsuitability for delivery. After a customer places an order with these online platforms, our products will be produced in the stores and delivered by professional deliverymen. The production and delivery process is typically completed in forty (40) minutes. The online platforms charge us twenty percent (20%) to twenty five percent (25%) of the total sales amount.

 

 

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Recent Developments

 

On June 24, 2020, we entered into certain securities purchase agreement with certain institutional investors, pursuant to which the Company agreed to sell to such Purchasers an aggregate of 900,000 ordinary shares, (the “Shares”) no par value, at a price of $5.55 per share in a registered direct offering, for gross proceeds of approximately $5 million. The offering closed on June 29, 2020.

 

On July 30, 2020, we entered into certain securities purchase agreement with certain institutional investors, pursuant to which the Company agreed to sell to such Purchasers an aggregate of 1,500,000 ordinary shares, (the “Shares”) no par value, at a price of $4.00 per share in a registered direct offering, for gross proceeds of approximately $6 million. The offering closed on August 3, 2020.

 

On August 14, 2020, we entered into certain securities purchase agreement with certain institutional investors, pursuant to which the Company agreed to sell to such Purchasers an aggregate of 1,875,000 ordinary shares, (the “Shares”) no par value, at a price of $3.20 per share in a registered direct offering, for gross proceeds of approximately $6 million. The offering closed on August 18, 2020.

 

On August 27, 2020, the Company effected a 1-for-10 reverse share split of the Company’s issued and outstanding ordinary shares, no par value (the “Reverse Split”). As a result of the Reverse Split, every ten (10) shares of the Company’s issued and outstanding ordinary shares were combined into one (1) issued and outstanding ordinary share. Any fractional shares that resulted because of the Reverse Split were rounded up to the nearest whole share. There were no changes to the Company’s Amended and Restated Memorandum and Articles of Association in connection with the Reverse Split. The Company’s CUSIP number changed as a result of the Reverse Split to G9396G118.

 

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.

  

 

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RISK FACTORS

 

Before you make a decision to invest in our securities, you should consider carefully the risks described below. 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 25, 2019, 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. 

 

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.

 

Risks Relating to our Joint Venture with T&O Management Group LLC 

 

We may not be able to oversee the new joint venture efficiently.

 

We may not be able to oversee our new joint venture, efficiently, realize anticipated profits or effectively implement our growth and operating strategies. As we begin our operations in the United States through our joint venture, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors. We will need to transition from a company with our primary operations in China to a company capable of supporting operations in both China and the United States. We might not be successful in such a transition. There can be no guarantee that the addition of the new joint venture will not cause us to incur additional debt and increase our exposure to market and other risks. Our failure to successfully pursue our strategies or effectively operate the joint venture entity could also have a material adverse effect on our rate of growth and operating performance.

 

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There may be integration issues between MYT and T&O Management Group LLC

 

The tea kitchen’s technologies, overall operation planning, and guidance for the “Your Ladyship Tea” provided by MYT from China will need to be integrated with T&O Management Group LLC existing business resources and business culture in New York so as to achieve our operating strategies. If we are unable to achieve a successful integration with our tea making operation and New York business demand, we may not be successful in developing and marketing our new services and courses and our operating results will materially suffer. In addition, if the integrated services and courses we offer do not achieve acceptance by the marketplace, our operating results will materially suffer.

 

We may experience negative effects to our brand and reputation from real or perceived quality or safety issues with our tea, tea accessories, and food and beverages, which could have an adverse effect on our operating results.

 

We believe our customers rely on us to provide them with high-quality teas, food and tea beverages. Concerns regarding the safety of our teas, food, and tea beverages or the safety and quality of our supply chain could cause consumers to avoid purchasing certain products from us or to seek alternative sources of tea, food, and tea beverages, even if the basis for the concern has been addressed or is outside of our control. Adverse publicity about these concerns, whether or not ultimately based on fact, and whether or not involving teas, tea accessories, and food and beverages sold at our stores, could discourage consumers from buying our teas, food, and tea beverages and have an adverse effect on our brand, reputation and operating results.

 

Furthermore, the sale of teas, food, and tea beverages entail a risk of product liability claims and the resulting negative publicity. For example, tea supplied to the U.S. operation store could contain contaminants that, if not detected by us, could result in illness or death upon their consumption. Similarly, food and tea beverages could contain contaminants or contain design or manufacturing defects that could result in illness, injury or death. It is possible that product liability claims will be asserted against us in the future.

 

We may also be subject to involuntary product recalls or may voluntarily conduct a product recall. The costs associated with any future product recall could, individually and in the aggregate, be significant in any given fiscal year. In addition, any product recall, regardless of direct costs of the recall, may harm consumer perceptions of our teas, tea accessories, and food and beverages and have a negative impact on our future sales and results of operations.

 

Any loss of confidence on the part of our customers in the safety and quality of our teas, tea accessories, and food and beverages would be difficult and costly to overcome. Any such adverse effect could be exacerbated by our position in the market as a purveyor of quality teas, tea accessories, and food and beverages and could significantly reduce our brand value. Issues regarding the safety of any teas, tea accessories, and food and beverages sold by us, regardless of the cause, could have a substantial and adverse effect on our sales and operating results.

 

Incidents involving food or beverage-borne illnesses, tampering, adulteration, contamination or mislabeling, whether or not accurate, as well as adverse public or medical opinions about the health effects of consuming our products, could harm our business

 

Instances or reports, whether true or not, of unclean water supply or food-safety issues, such as food or beverage-borne illnesses, tampering, adulteration, contamination or mislabeling, either during growing, manufacturing, packaging, storing or preparation, have in the past severely injured the reputations of companies in the food and tea beverage processing, grocery and quick-service restaurant sectors. Any report linking us to such instances could severely hurt our sales and could possibly lead to product liability claims, litigation (including class actions) and/or temporary store closures. Clean water is critical to the preparation of tea beverages, as well as ice for our cold beverages, and our ability to ensure a clean water and ice supply to our stores can be limited, particularly in some international locations. We are also continuing to incorporate more products in our food and tea beverage lineup that require freezing or refrigeration, which increases the risk of food safety related incidents if correct temperatures are not maintained due to mechanical malfunction or human error.

 

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We also face risk by relying on third-party food and tea suppliers to provide and transport ingredients and finished products to our stores. We monitor the operations of certain of these business partners, but the product quality and service they deliver may be diminished by any number of factors beyond our control and it may be difficult to detect contamination or other defect in these products.

   

Additionally, we are evolving our product lineup to include more local or smaller suppliers for some of our products who may not have as rigorous quality and safety systems and protocols as larger or more national suppliers. In addition, instances of food or beverage-safety issues, even those involving solely the restaurants or stores of competitors or of suppliers or distributors (regardless of whether we use or have used those suppliers or distributors), could, by resulting in negative publicity about us or the foodservice industry in general, adversely affect our sales on a regional or global basis. A decrease in customer traffic as a result of food-safety concerns or negative publicity, or as a result of a temporary closure of any of our stores, product recalls or food or beverage-safety claims or litigation, could materially harm our business and results of operations.

 

Risks Relating to British Virgin Islands Law

 

Rights of shareholders under BVI law differ from those under United States law, and, accordingly, our shareholders may have fewer protections.

 

Our corporate affairs are governed by our Memorandum and Articles of Association, the BVI Business Companies Act, 2004 (as amended, the “BVI Act”) and the common law of the British Virgin Islands. The rights of shareholders to take legal action against our directors, actions by minority shareholders and the fiduciary responsibilities of our directors under British Virgin Islands law are to a large extent governed by the common law of the British Virgin Islands and by the BVI Act. The common law of the British Virgin Islands is derived in part from comparatively limited judicial precedent in the British Virgin Islands as well as from English common law, which has persuasive, but not binding, authority on a court in the British Virgin Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under British Virgin Islands law are not as clearly established as they would be under statutes or judicial precedents in some jurisdictions in the United States. In particular, the British Virgin Islands has a less developed body of securities laws as compared to the United States, and some states (such as Delaware) have more fully developed and judicially interpreted bodies of corporate law. As a result of the foregoing, holders of our ordinary shares may have more difficulty in protecting their interests through actions against our management, directors or major shareholders than they would as shareholders of a U.S. company.

 

The laws of the British Virgin Islands provide limited protection for minority shareholders, so minority shareholders will have limited or no recourse if they are dissatisfied with the conduct of our affairs.

 

Under the laws of the British Virgin Islands, there is limited statutory law for the protection of minority shareholders other than the provisions of the BVI Act dealing with shareholders. The principal protection under statutory law is that shareholders may bring an action to enforce the constituent documents of a British Virgin Islands company and are entitled to have the affairs of the company conducted in accordance with the BVI Act and the memorandum and articles of association of the company. As such, if those who control the company materially disregard the requirements of the BVI Act or the provisions of the company’s memorandum and articles of association, then the courts may grant relief. Generally, the areas in which the courts will intervene are the following: (i) an act complained of which is outside the scope of the authorized business or is illegal or not capable of ratification by the majority; (ii) acts that constitute fraud on the minority where the wrongdoers control the company; (iii) acts that infringe on the personal rights of the shareholders, such as the right to vote or breach of a duty owed to the shareholder by the Company; and (iv) acts where the company has not complied with provisions requiring approval of a special or extraordinary majority of shareholders, which are more limited than the rights afforded to minority shareholders under the laws of many states in the United States.

 

8

 

 

It may be difficult to enforce judgments against us or our executive officers and directors in jurisdictions outside the United States.

 

Under our Memorandum and Articles of Association, as amended, we may indemnify and hold our directors harmless against all claims and suits brought against them, subject to limited exceptions. Furthermore, to the extent allowed by law, the rights and obligations among or between us, any of our current or former directors, officers and employees and any current or former shareholder will be governed exclusively by the laws of the British Virgin Islands and subject to the jurisdiction of the British Virgin Islands courts, unless those rights or obligations do not relate to or arise out of their capacities as such. Although there is doubt as to whether United States courts would enforce these provisions in an action brought in the United States under United States securities laws, these provisions could make judgments obtained outside of the British Virgin Islands more difficult to enforce against our assets in the British Virgin Islands or jurisdictions that would apply British Virgin Islands law.

 

Risk Relating to This Offering

  

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:

 

  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;

 

  comply with rules and regulations promulgated by the NASDAQ;

 

  prepare and distribute periodic public reports in compliance with our obligations under the federal securities laws;

 

  maintain various internal compliance and disclosures policies, such as those relating to disclosure controls and procedures and insider trading in our ordinary shares;

 

  involve and retain to a greater degree outside counsel and accountants in the above activities;

 

  maintain a comprehensive internal audit function; and

 

  maintain an investor relations function.

 

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.

   

9

 

 

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.

 

If the Company has not regained compliance with the Price-based Requirements by September 17, 2020, Nasdaq may commence delisting procedures against the Company (during which the Company may have additional time of up to six months to appeal and correct its non-compliance). If the Company fails to regain compliance with the Price-based Requirements or any other listing rules when required, 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.

  

10

 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Certain statements contained or incorporated by reference in this prospectus supplement, including the documents referred to or incorporated by reference in this prospectus supplement or statements of our management referring to our summarizing the contents of this prospectus supplement, include “forward-looking statements”. We have based these forward-looking statements on our current expectations and projections about future events. Our actual results may differ materially or perhaps significantly from those discussed herein, or implied by, these forward-looking statements. Forward-looking statements are identified by words such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “plan,” “project” and other similar expressions. In addition, any statements that refer to expectations or other characterizations of future events or circumstances are forward-looking statements. Forward-looking statements included or incorporated by reference in this prospectus supplement or our other filings with the Securities and Exchange Commission, or the SEC, include, but are not necessarily limited to, those relating to:

 

  Our ability to maintain and increase brand awareness in Hunan province and to increase tea consumption in areas where we open stores;

 

  the identification and availability of suitable sites for store locations, the availability of which is beyond our control;

 

  the negotiation of acceptable lease terms;

 

  the maintenance of adequate distribution capacity, information systems and other operational system capabilities;

 

  integrating new company owned stores, managed stores, franchise stores and JV stores into our existing buying, distribution and other support operations;

 

  the hiring, training and retention of store management and other qualified personnel;

 

  assimilating new store employees into our corporate culture;

 

  the effective sourcing and management of inventory to meet the needs of our stores on a timely basis; and

 

  improve our operational efficiency;

 

  our ability to raise sufficient fund to expand our operations;

 

  attract, retain and motivate executives and talented employees;

 

  development of a liquid trading market for our securities; and

 

  our plan to maintain compliance with NASDAQ continue listing requirement

  

The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors with which we are faced that may cause our actual results to differ from those anticipated in our forward-looking statements. Please see “Risk Factors” in our reports filed with the SEC or in this prospectus supplement and the accompanying prospectus for additional risks which could adversely impact our business and financial performance.

 

Moreover, new risks regularly emerge after the outbreak of the COVID-19 and it is not possible for our management to predict or articulate all risks we face, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. All forward-looking statements included in this prospectus supplement and the accompanying prospectus are based on information available to us on the date of this prospectus supplement or the accompanying prospectus, as applicable. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout (or incorporated by reference in) this prospectus supplement and the accompanying prospectus.

 

USE OF PROCEEDS

 

This prospectus relates to our ordinary shares that may be offered and sold from time to time by the selling shareholders. We will receive no proceeds from the sale of our ordinary shares by the selling shareholders in this Offering. The proceeds from the sales will belong to the selling shareholders.

 

11

 

 

CAPITALIZATION

 

The following table sets forth our capitalization as of December 31, 2019. You should read this table in conjunction with our consolidated financial statements and the related notes included in our annual report on Form 20-F for the year ended June 30, 2019 and our unaudited interim consolidated financial statements on Form 6-K for the six months ended December 31, 2019, which are incorporated by reference herein.

 

The capitalization table does not include pro-forma adjustments for the number of shares which are being registered on the registration statement of which this prospectus is a part and may be sold under the prospectus, because the full number of shares that may be sold cannot be specifically determined as it will be based on the market price of an ordinary share from time to time when puts are made by the Company.

 

 

   As of
December 31,
2019
   (in thousands of USD$)
Cash and Cash Equivalents   1,801 
Total Current Liabilities   2,943 
Shareholders’ equity:     
Preferred Shares ($0.0001 par value; 5,000,000 shares authorized; none issued and outstanding)   —   
Ordinary Shares (no par value; unlimited shares authorized; 3,618,032 shares issued and outstanding)   4 
Additional paid in capital   21,025 
Accumulated deficit   (9,510)
Accumulated other comprehensive loss   (221)
Total Urban Tea, Inc. shareholders’ equity   11,298 
      
Total equity   19,911 
Total capitalization   19,911 

  

12

 

 

SELLING SHAREHOLDERS

 

This prospectus relates to the resale from time to time by the selling shareholders named in the table below.

 

This table is prepared based on information supplied to us by the selling shareholders, and reflects holdings as of September 3, 2020. As used in this prospectus, the term “selling shareholders” includes the selling shareholders set forth below and any donees, pledgees, transferees, or other successors-in-interest selling shares received after the date of this prospectus from the selling shareholders as a gift, pledge, or other non-sale related transfer. The number of shares in the column “Maximum Number of Ordinary Shares to be Offered” pursuant to this prospectus” represents all of the ordinary shares the selling shareholders may offer under this prospectus. The selling shareholders may sell some, all or none of its shares offered by this prospectus. We do not know how long the selling shareholders will hold the shares before selling them, and we currently have no agreements, arrangements, or understandings with the selling shareholders regarding the sale of any of the ordinary shares.

 

Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the SEC under the Exchange Act, and includes ordinary shares with respect to which the selling shareholders has voting and investment power.

 

   Number of
Ordinary
shares
Owned
Prior to
Offering
   Percentage
of the
Existing
Equity
Capital (2)
   Number of
Ordinary
Shares
Owned after
Offering
 
Name of Selling Shareholders  Number   Percent   Number (1)   Percent (1) 
Jun’an Hu1   127,000    1.599%           -            -%
Dean Hu2   126,500    1.592%   -    -%
Huiling Liu3   126,500    1.592%   -    -%
Yunliang Xia4   126,000    1.586%   -    -%
Wen Jiang5   125,000    1.573%   -    -%
Aiming Hu6   125,000    1.573%   -    -%
Chan Wang7   123,500    1.555%   -    -%
Miao Chen8   120,500    1.517%   -    -%
Total   1,000,000    12.588%   -    -%

 

1 The address of the selling shareholder is Wangguocheng, No. 19 West Fu Yuan Road, KaiFu District, Changsha, China.

 

2 The address of the selling shareholder is Fangzhou Building, West Renmin Road, Fu Rong District, Changsha, China.

 

3 The address of the selling shareholder is Floor 5, Building A, No. 188 Middle Huanbao Road, Yuhua District, Changsha, China.

 

4 The address of the selling shareholder is 2-2102, Yajule, North Xiang Jiang Road, Changsha, China.

 

5 The address of the selling shareholder is No. 168 Middle Xiangfu Road, Yuhua District, Changsha, China.

 

6 The address of the selling shareholder is No. 7 Kangpeng Road, Dongyang Town, Liuyang, China.

 

7 The address of the selling shareholder is Cunmin Road, Shufang Village, Nijiang Kou town, Yiyang City, China.

 

8 The address of the selling shareholder is No. 901, Huitong Building, Furong District, Changsha, China.

 

(1) Assumes the sale of all ordinary shares being offered pursuant to this prospectus.
   
(2) Based on the 7,944,211 outstanding shares as of the date of this prospectus.

 

13

 

  

PLAN OF DISTRIBUTION

 

The selling shareholders, including any of their donees, pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on Nasdaq or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at market prices prevailing at the time of sale, prices related to prevailing market prices, fixed prices or negotiated prices. The selling shareholders may use any one or more of the following methods when selling securities:

 

  ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
     
  block trades in which the broker-dealer will attempt to sell the ordinary shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
     
  purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
     
  exchange distributions in accordance with the rules of the applicable exchange;
     
  privately negotiated transactions;
     
  settlements of short sales;
     
  transactions through broker-dealers that agree with the selling shareholders to sell a specified number of such ordinary shares at a stipulated price per security;
     
  writings or settlements of options or other hedging transactions, whether through an options exchange or otherwise;
     
  combinations of any such methods of sale; or
     
  any other methods permitted pursuant to applicable law.

 

The selling shareholders may also sell ordinary under Rule 144 under the Securities Act, if available, rather than under this prospectus.

 

Broker-dealers engaged by the selling shareholders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling shareholders (or, if any broker-dealer acts as agent for the purchaser of ordinary shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.

 

In connection with the sale of the ordinary shares or interests therein, the selling shareholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the ordinary shares in the course of hedging the positions they assume. The selling shareholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of ordinary shares offered by this prospectus, which ordinary shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

 

14

 

 

The selling shareholders and any broker-dealers or agents that are involved in selling the ordinary shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the ordinary shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. The selling shareholders have informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the ordinary shares.

 

The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the ordinary shares.

 

In addition, any ordinary shares covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus.

 

We have agreed to keep this prospectus effective until the earlier of (i) the date on which the ordinary shares may be resold by the selling shareholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) the sale of all of the ordinary shares pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale ordinary shares will be sold only through registered or licensed brokers or dealers if required under applicable state ordinary shares laws. In addition, in certain states, the resale ordinary shares covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with. Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale ordinary shares may not simultaneously engage in market making activities with respect to the ordinary shares for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling shareholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of ordinary shares of the ordinary shares by the selling shareholders or any other person. We will make copies of this prospectus available to the selling shareholders and have informed it of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).

 

15

 

 

DESCRIPTION OF SHARE CAPITAL

 

The following description of our share capital which solely consists of 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 an unlimited number of shares divided into: (i) an unlimited number of ordinary shares with no par value; and (ii) 5,000,000 preferred shares, par value $0.0001 per share. As of September 3, 2020, 7,944,211 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. 

 

EXPENSES

 

We are paying all of the expenses of the registration of our ordinary shares under the Securities Act, including, to the extent applicable, registration and filing fees, printing and duplication expenses, administrative expenses, accounting fees and the legal fees of our counsel. We estimate these expenses to be approximately $20,226 which at the present time include the following categories of expenses:

 

SEC registration fee  $226 
      
Legal fees and expenses  $20,000 
      
Total  $20,226 

 

In addition, we anticipate incurring additional expenses in the future in connection with the offering of our ordinary shares pursuant to this prospectus. Any such additional expenses will be disclosed in a 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 LLC 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 Cayman Islands.

 

EXPERTS

 

The consolidated financial statements as of June 2019 and 2018 and for the fiscal years ended June 30, 2019, 2018 and 2017 are incorporated by reference into this prospectus have been audited by Centurion ZD CPA & Co., an independent registered public accounting firm, to the extent and for the periods set forth in their report incorporated herein by reference, and are incorporated by reference in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.

 

WHERE YOU CAN FIND MORE INFORMATION

 

Federal securities laws require us to file information with the SEC concerning our business and operations. Accordingly, we file annual, quarterly and current reports with the SEC. You may read and copy any document we file at the SEC’s public reference rooms, including those located at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on public reference rooms. Our SEC filings are also available to the public from the SEC’s web site at http://www.sec.gov.

 

We have filed with the SEC a registration statement on Form F-3 under the Securities Act with respect to the ordinary shares being offering under this prospectus. This prospectus, which is a part of that registration statement, does not include all the information contained in the registration statement and its exhibits. For further information with respect to our Company and the ordinary shares, you should consult the registration statement and its exhibits. Statements contained in this prospectus concerning the provisions of any documents are summaries of those documents, and we refer you to the document filed with the SEC for more information. The registration statement and any of its amendments, including exhibits filed as a part of the registration statement or an amendment to the registration statement are available for inspection and copying as described above.

 

16

 

 

INFORMATION INCORPORATED BY REFERENCE

 

The SEC allows us to “incorporate by reference” certain information we file with them in this prospectus. This means that we can disclose important information to you by referring you to the other information we have filed with the SEC. The information that we incorporate by reference is considered to be part of this prospectus. Information that we file later with the SEC will automatically update and supersede this information. Further, all filings we make under the Exchange Act prior to the termination of the offering shall be deemed to be incorporated by reference into this prospectus. The following documents filed by us with the SEC and any future filings under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act made prior to the termination of this offering are incorporated by reference:

 

the Company’s Annual Report on Form 20-F for the fiscal year ended June 30, 2019, filed with the SEC on October 25, 2019;

 

the Company’s Current Reports on Form 6-K, as amended, filed with the SEC on August 14, 2019August 30, 2019October 1, 2019November 4, 2019November 6, 2019November 8, 2019December 23, 2019June 18, 2020June 22, 2020June 29, 2020July 20, 2020July 27, 2020, and August 18, 2020; and

 

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.

 

This prospectus may contain information that updates, modifies or is contrary to information in one or more of the documents incorporated by reference in this prospectus. Reports we file with the SEC after the date of this prospectus may also contain information that updates, modifies or is contrary to information in this prospectus or in documents incorporated by reference in this prospectus. Investors should review these reports as they may disclose a change in our business, prospectus, financial condition or other affairs after the date of this prospectus.

 

We will also provide copies of our filings free of charge upon written or oral request. You can request a free copy of the above filings or any filings subsequently incorporated by reference into this prospectus by writing or calling us at:

 

Urban Tea, Inc.
Huakun Times Plaza, Room 1118, Floor 11
No. 200, Erduan, East Xiang Fu Road

Yuhua District, Changsha

People’s Republic of China, 410014

(+86) 511-8673-3102

 

17

 

 

ENFORCEMENT OF CIVIL LIABILITIES

 

We are incorporated in the British Virgin Islands to take advantage of certain benefits associated with being a British Virgin Islands company, such as:

 

  Political and economic stability:
     
  An effective judicial system;
     
  A favorable tax system;
     
  The absence of exchange control or currency restrictions; and
     
  The availability of professional and support services

 

However, certain disadvantages accompany incorporation in the British Virgin Islands. These disadvantages include:

 

  the British Virgin Islands has a less developed body of securities laws as compared to the United States and provides significantly less protection to investors; and
     
  British Virgin Islands companies may not have standing to sue before the federal courts of the United States.

 

Our organizational documents do not contain provisions requiring that disputes, including those arising under the securities laws of the United States, between us, our officers, directors and shareholders, be arbitrated.

 

Substantially all of our current operations are conducted in China, and substantially all of our assets are located in China. The majority of our directors and officers are nationals or residents of jurisdictions other than the United States. As a result, it may be difficult for a shareholder to effect service of process within the United States upon such persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States.

 

We have been informed by Harney Westwood & Riegels LP our counsel as to British Virgin Islands law, that the United States and the British Virgin Islands do not have a treaty providing for reciprocal recognition and enforcement of judgments of U.S. courts in civil and commercial matters and that a final judgment for the payment of money rendered by any general or state court in the United States based on civil liability, whether or not predicated solely upon the U.S. federal securities laws, would not be automatically enforceable in the British Virgin Islands. We have also been advised by Harney Westwood & Riegels LP that a final and conclusive judgment obtained in U.S. federal or state courts under which a sum of money is payable as compensatory damages (i.e., not being a sum claimed by a revenue authority for taxes or other charges of a similar nature by a governmental authority, or in respect of a fine or penalty or multiple or punitive damages) may be the subject of an action on a debt in the Supreme Court of the British Virgin Islands under the common law doctrine of obligation. This type of action should be successful upon proof that the sum of money is due and payable, without having to prove the facts supporting the underlying judgment, as long as:

 

  the foreign court issuing the judgment had jurisdiction in the matter and we either submitted to such jurisdiction or were resident or carrying on business within such jurisdiction and were duly served with process; and
     
  the judgment was not contrary to public policy in the British Virgin Islands, was not obtained by fraud or in proceedings contrary to the natural justice of the British Virgin Islands, and was not based on an in British Virgin Islands law.

 

A British Virgin Islands court may impose civil liability on us or our directors or officers in a suit brought in the Supreme Court of the British Virgin Islands against us or these persons with respect to a violation of U.S. federal securities laws, provided that the facts surrounding any violation constitute or give rise to a cause of action under British Virgin Islands law.

 

18

 

 

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR

SECURITIES ACT LIABILITIES

 

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the ordinary shares being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

 

19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

URBAN TEA, INC.

 

Up to

1,000,000 Ordinary Shares

 

PROSPECTUS

 

SEPTEMBER [*], 2020

 

WE HAVE NOT AUTHORIZED ANY DEALER, SALES PERSON OR OTHER PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER OF THESE ORDINARY SHARES IN ANY STATE WHERE AN OFFER IS NOT PERMITTED. THE INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF THE DATE OF THIS PROSPECTUS AND YOU SHOULD NOT ASSUME THAT THIS PROSPECTUS IS ACCURATE AS OF ANY OTHER DATE.

 

 

 

 

PART II

 

INFORMATION NOT REQUIRED IN PROSPECTUS

 

Item 8. Indemnification of Directors and Officers

 

British Virgin Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the British Virgin Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime.

 

Under our Memorandum and Articles of Association, we may indemnify and secure harmless our directors, secretary, other officers, auditors, liquidators and agents against expenses (including legal fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such persons in connection with legal, administrative or investigative proceedings to which they are a party or are threatened to be made a party by reason of their acting as our directors, secretary, officers, auditors, liquidators or agents. To be entitled to indemnification, these persons must not have acted with actual fraud or willful default in any matter on the part of any said persons, and, in the case of criminal proceedings, they must have had no reasonable cause to believe their conduct was unlawful.

 

Item 9. Exhibits

 

No.   Description
5.1   Opinion of Harney Westwood & Riegels LP
     
23.1   Consent of Harney Westwood & Riegels LP (included in Exhibit 5.1)
     
23.2   Consent of Centurion ZD CPA & Co.
     
24.1   Power of Attorney (included as part of the signature page of this Registration Statement)*

 

II-1

 

 

Item 10. Undertakings

 

(a) The undersigned Registrant hereby undertakes:

 

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

 

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of ordinary shares offered (if the total dollar value of ordinary shares offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

 

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

 

provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the SEC by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.

 

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the ordinary shares offered therein, and the offering of such ordinary shares at that time shall be deemed to be the initial bona fide offering thereof.

 

(3) To remove from registration by means of a post-effective amendment any of the ordinary shares being registered which remain unsold at the termination of the offering.

 

(4) To file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Securities Act of 1933 need not be furnished, provided that the Registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, a post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of the Securities Act of 1933 or Rule 3-19 of Regulation S-X if such financial statements and information are contained in periodic reports filed with or furnished to the SEC by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.

 

(5) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

 

(i) If the Registrant is relying on Rule 430B:

 

(A) Each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

 

(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of ordinary shares in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the ordinary shares in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

 

II-2

 

 

(ii) If the Registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use

 

(6) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the ordinary shares, the undersigned Registrant undertakes that in a primary offering of ordinary shares of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the ordinary shares to the purchaser, if the ordinary shares are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such ordinary shares to such purchaser:

 

(i) any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;

 

(ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;

 

(iii) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its ordinary shares provided by or on behalf of the undersigned Registrant; and

 

(iv) any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.

 

(b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the ordinary shares offered therein, and the offering of such ordinary shares at that time shall be deemed to be the initial bona fide offering thereof.

 

(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the ordinary shares being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

 

(d) The undersigned Registrant hereby undertakes:

 

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 will be deemed to be part of this registration statement as of the time it was declared effective.

 

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus will be deemed to be a new registration statement relating to the ordinary shares offered therein, and the offering of such ordinary shares at that time will be deemed to be the initial bona fide offering thereof.

 

II-3

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Beijing, the People’s Republic of China, on this 4th day of September, 2020.

 

  URBAN TEA, INC.
     
  By: /s/ Long Yi
    Long Yi
    Chief Executive Officer

 

POWER OF ATTORNEY

 

Each person whose signature appears below hereby constitutes and appoints Long Yi and Kan Lu and each of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including, without limitation, post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as each of them might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

 

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the date indicated.

 

Signature   Title   Date
         
/s/ Long Yi   Chairman and Chief Executive Officer   September 4, 2020
Long Yi   (Principal Executive Officer)    
         
/s/ Kan Lu   Chief Financial Officer   September 4, 2020
Kan Lu   (Principal Financial Officer)    
         
/s/ Qinbai Zhou   Director   September 4, 2020
Qinbai Zhou        
         
/s/ Anatoly Danilitskiy   Director   September 4, 2020
Anatoly Danilitskiy        
         
/s/ Jing Yi   Director   September 4, 2020
Jing Yi        
         
/s/ Changguang Wu   Director   September 4, 2020
Changguang Wu        

 

 

II-4

 

 

 

Exhibit 5.1

 

 

Harney Westwood & Riegels LP

Craigmuir Chambers

PO Box 71

Road Town

Tortola VG1110

British Virgin Islands

Tel: +1 284 494 2233

Fax: +1 284 494 3547

 

4 September 2020

 

greg.boyd@harneys.com

+1 284 852 4317

GAB/051341.0005

 

The Purchasers and the Holders (as defined below)

 

Dear Sirs

 

Urban Tea, Inc., Company No 1682727 (the Company)

 

We are lawyers qualified to practise in the British Virgin Islands and have been asked to provide this legal opinion to you in connection with the Company’s registration statement on Form F-3 (the Registration Statement) to be filed with the Securities and Exchange Commission (SEC) pursuant to the Securities Act of 1933 of the United States of America on 4 September 2020. The Registration Statement relates to the registration of the resale by the selling shareholders of 1,000,000 ordinary shares of no par value (the Sale Shares).

 

We have been asked to provide this legal opinion to you with regard to the laws of the British Virgin Islands in relation to the Transactions Documents (as defined in Schedule 1) being entered into by the Company. Capitalised terms defined in the Transactions Documents shall have the same meanings when used in this opinion.

 

For the purposes of giving this opinion, we have examined the Documents (as defined in Schedule 1). We have not examined any other documents, official or corporate records or external or internal registers and have not undertaken or been instructed to undertake any further enquiry or due diligence in relation to the transaction which is the subject of this opinion.

 

In giving this opinion we have relied upon the assumptions set out in Schedule 2 which we have not verified.

 

Based solely upon the foregoing examinations and assumptions and having regard to legal considerations which we deem relevant, and subject to the qualifications set out in Schedule 3, we are of the opinion that under the laws of the British Virgin Islands:

 

1Existence and Good Standing. The Company is a company duly incorporated with limited liability, and is validly existing and in good standing under the laws of the British Virgin Islands. The Company is a separate legal entity and is subject to suit in its own name.

 

A list of partners is available for inspection at our offices.

Bermuda legal services provided through an association with Zuill & Co.

VG:18102124_1

 

Anguilla | Bermuda | British Virgin Islands | Cayman Islands

Cyprus | Hong Kong | London | Luxembourg | Montevideo

São Paulo | Shanghai | Singapore | Vancouver

harneys.com

 

 

 

2Authorised Shares. Based solely on our review of the memorandum of association of the Company, the Company is authorised to issue an unlimited number of shares divided into the following classes of shares:

 

(a)an unlimited number of ordinary shares with no par value (Ordinary Shares); and

 

(b)5,000,000 preferred shares with a par value of US$0.0001 (Preferred Shares).

 

3Valid Issuance. Based solely on our review of the Corporate Documents and the Director’s Certificate, the Sale Shares are validly issued, fully paid and are non-assessable (which means that no further sums are required to be paid by the holders thereof).

 

4Searches. No court proceedings pending against the Company are indicated by our searches of the British Virgin Islands High Court Registry referred to at paragraph 4 of Schedule 1.

 

On the basis of our searches of the British Virgin Islands Registry of Corporate Affairs and the British Virgin Islands High Court Registry referred to at paragraphs 3 and 4 of Schedule 1, no currently valid order or resolution for liquidation of the Company and no current notice of appointment of a receiver over the Company or any of its assets appears on the records maintained in respect of the Company at the Registry of Corporate Affairs.

 

This opinion is confined to the matters expressly opined on herein and given on the basis of the laws of the British Virgin Islands as they are in force and applied by the British Virgin Islands courts at the date of this opinion. We have made no investigation of, and express no opinion on, the laws of any other jurisdiction. We express no opinion as to matters of fact. Except as specifically stated herein, we make no comment with respect to any representations and warranties which may be made by or with respect to the Company in the Transactions Documents. We express no opinion with respect to the commercial terms of the transactions the subject of this opinion.

 

This opinion is rendered for your benefit and the benefit of your legal counsel (in that capacity only) in connection with the transactions contemplated by the Transactions Documents. It may be disclosed to your successors and assigns only with our prior written consent. It may not be disclosed to or relied on by any other party or for any other purpose.

 

Yours faithfully
 
/s/ Harney Westwood & Riegels LP
 
Harney Westwood & Riegels LP

 

2

 

 

Schedule 1

 

List of Documents and Records Examined

 

1a copy of the Certificate of Incorporation and Memorandum and Articles of Association of the Company obtained from the Registry of Corporate Affairs on 30 July 2020, which our searches dated 3 September 2020 indicated were not subsequently amended;

 

2the records and information certified by FH Corporate Services Ltd., the registered agent of the Company, on 24 August 2020 of the statutory documents and records maintained by the Company at its registered office (the Registered Agent’s Certificate);

 

3a copy of the share register of the Company dated 27 August 2020;

 

4the public records of the Company on file and available for inspection at the Registry of Corporate Affairs, Road Town, Tortola, British Virgin Islands on 3 September 2020;

 

5the records of proceedings on file with, and available for inspection on 3 September 2020 at the High Court of Justice, British Virgin Islands;

 

6a copy of a director’s certificate of the Company dated 2 September 2020 confirming that the Sale Shares are fully paid and are non-assessable (which means that no further sums are required to be paid by the holders thereof) (the Director’s Certificate); and

 

7a copy of the minutes of a meeting of the directors of the Company dated 29 August 2020 approving the registration of 1,000,000 ordinary shares of the Company through the Registration Statement (the Resolutions),

 

(1 to 7 above are the Corporate Documents); and

 

8a copy of the Registration Statement

 

The Corporate Documents and the Registration Statement are collectively referred to in this opinion as the Documents.

 

3

 

 

Schedule 2

 

Assumptions

 

1Authenticity of Documents. All original Documents are authentic, all signatures, initials and seals are genuine, all copies of Documents are true and correct copies.

 

2Corporate Documents. All matters required by law to be recorded in the Corporate Documents are so recorded, and all corporate minutes, resolutions, certificates, documents and records which we have reviewed are accurate and complete, and all facts expressed in or implied thereby are accurate and complete, and the information recorded in the Registered Agent’s Certificate was accurate as at the date of the passing of the Resolutions.

 

3No Steps to Wind-up. The directors and shareholders of the Company have not taken any steps to appoint a liquidator of the Company and no receiver has been appointed over any of the property or assets of the Company.

 

4Resolutions. The Resolutions remain in full force and effect.

 

5Unseen Documents. Save for the Documents provided to us there are no resolutions, agreements, documents or arrangements which materially affect, amend or vary the transactions envisaged in the Documents.

 

4

 

 

Schedule 3

 

Qualifications

 

1Public Records. Records reviewed by us may not be complete for various reasons. In particular you should note that:

 

(a)in special circumstances the court may order the sealing of the court record, which would mean that a record of the court action would not appear on the High Court register;

 

(b)failure to file notice of appointment of a receiver with the Registry of Corporate Affairs does not invalidate the receivership but merely gives rise to penalties on the part of the receiver;

 

(c)a liquidator of a British Virgin Islands company has 14 days after their appointment within which they must file notice of their appointment at the Registry of Corporate Affairs; and

 

(d)although amendments to the Memorandum and Articles of Association of a company are normally effective from the date of registration with the Registry of Corporate Affairs, it is possible for a British Virgin Islands court to order that they be treated as being effective from an earlier date, and searches would not reveal the amendments until the court order was subsequently filed,

 

and accordingly our searches would not indicate such issues.

 

2Good Standing. To maintain the Company in good standing under the laws of the British Virgin Islands, annual licence fees must be paid to the Registrar of Corporate Affairs.

 

3Economic Substance. We have undertaken no enquiry and express no view as to the compliance of the Company with the Economic Substance (Companies and Limited Partnerships) Act 2018.

 

5

 

Exhibit 23.2

 

   

 

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT

We consent to the use in this Registration Statement Form F-3 of Urban Tea, Inc. of our report dated October 25, 2019 relating to the consolidated financial statements and schedule of Urban Tea, Inc. as of June 30, 2019, 2018 and 2017, and for each of the years in the three-year period ended June 30, 2019, which appears in such Registration Statement. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

 

/s/ Centurion ZD CPA & Co.

Centurion ZD CPA & Co.

Certified Public Accountants

Hong Kong, September 4, 2020