君长数码美股招股说明书(2024-07-03版)

This offering is being made on a firm commitment basis. We have agreed to grant the Underwriters (asdefined below) an option exercisable for a period of 45 days after the date of this prospectus to purchase upto 15% of the total number of the shares offered in this offering for the purpose of covering over-allotments, if any, at the Offering Price less the underwriting discounts (the “Over-Allotment Option”). TheUnderwritersexpect to deliver the Class A Ordinary Shares against payment as set forth under“Underwriting” on page 189. Our issued and outstanding share capital is a dual class structure consisting of Class A Ordinary Shares andClass B Ordinary Shares. Holders of Class A Ordinary Shares and Class B Ordinary Shares shall at alltimes vote together as one class on all matters submitted to a vote by the shareholders at any generalmeeting of the Company. Each Class A Ordinary Share shall entitle the holder thereof to one (1) vote on allmatters subject to vote at general meetings of the Company and each Class B Ordinary Share shall entitlethe holder thereof to ten (10) votes on all matters subject to vote at general meetings of the Company. Also,each Class B Ordinary Share is convertible into one (1) Class A Ordinary Share at any time at the option ofthe holder thereof, but Class A Ordinary Shares are not convertible into Class B Ordinary Shares under anycircumstances. Holders of Class A Ordinary Shares and Class B Ordinary Shares have the same rightsexcept for voting and conversion rights. Investors are cautioned that you are not buying shares of a China-based operating company butinstead are buying shares of a shell company issuer that operates through its subsidiaries andvariable interest entities (“VIEs”). Unless otherwise stated, as used in this prospectus, the terms “Eshallgo,” “we,” “us,” “our Company,” andthe “Company” refer to Eshallgo Inc, an exempted company with limited liability incorporated under thelaws of Cayman Islands; “PRC subsidiary,” “Eshallgo WFOE” or “WFOE” refer to Shanghai EshallgoEnterprise Development (Group) Co., Ltd, a limited liability company organized under the laws of the PRCand our indirect wholly owned subsidiary; the term “consolidated VIEs” or “VIEs” refer to JunzhangShanghai and Junzhang Beijing, and 19 individually-owned businesses organized under the laws of thePRC. We are incorporated in the Cayman Islands. As a holding company with no material operations ofour own, we conduct our operations in China through the variable interest entities, Junzhang Digital Technology (Beijing) Co., Ltd. and Junzhang Digital Technology (Shanghai) Co., Ltd., or JunzhangBeijing and Junzhang Shanghai. This is an offering of the ordinary shares of the offshore holdingcompany. You are not investing in Junzhang Beijing or Junzhang Shanghai, the VIEs. Neither wenor our subsidiaries own any share in, Junzhang Beijing and Junzhang Shanghai. Instead, we receivethe economic benefits of, Junzhang Beijing or Junzhang Shanghai’s business operation through aseries of contractual agreements, or the VIE Agreements, which have not been tested in court. As aresult of our indirect ownership in the WFOE and the VIE Agreements, we are regarded as theprimary beneficiary of the VIE. The VIE structure provides contractual exposure to foreigninvestment in Chinese-based companies where Chinese law prohibits direct foreign investment in theoperating companies and investors directly holding equity interests in the Chinese operating entities.However, as of the date of this prospectus, the VIE agreements have not been tested in a court of law.We and our investors do not have an equity ownership in, direct foreign investment in, or controlthrough such ownership/investment of the VIEs. Therefore, the VIE agreements do not give us thesame controlling power as if we had equity ownership in the VIE. In August and December 2021,Eshallgo WFOE, which is our PRC subsidiary, Junzhang Shanghai and Junzhang Beijing, andshareholders of Junzhang Shanghai and Junzhang Beijing entered into a series of contractualagreements (the “VIE Agreements”) that established the VIE structure. We have evaluated theguidance in FASB ASC 810 and determined that Eshallgo WFOE is the primary beneficiary ofJunzhang Shanghai and Junzhang Beijing and their subsidiaries, for accounting purposes, because,pursuant to the VIE Agreements, the VIE shall pay service fees equal to all of its net income toEshallgo WFOE, while Eshallgo WFOE has the power to direct the activities of the VIEs that cansignificantly impact the VIEs’ economic performance and is obligated to absorb all of losses of theVIEs. Such contractual arrangements are designed so that the operations of the VIEs are solely forthe benefit of Eshallgo WFOE and, ultimately, Eshallgo. Eshallgo has indirect ownership in 100% ofthe equity in Eshallgo WFOE. Accordingly, under U.S. GAAP, we treat the VIE and its subsidiariesas consolidated affiliated entities and have consolidated their financial