Filed pursuant to Rule 424(b)(4)

Registration No. 333-238885

 

 

PROSPECTUS

2,473,245 common shares

issuable upon exercise of outstanding warrants

offered by the Selling Shareholders

of

China Ceramics Co., Ltd.

 

This prospectus relates to the resale of:

 

· up to 1,200,000 of our common shares issuable upon the exercise of warrants at an exercise price of $0.82 per share (the “December 2019 Warrants”),
·

up to 60,000 of our common shares issuable upon the exercise of placement agent warrants at an exercise price of $0.9375 per share (the “December 2019 Placement Agent Warrants”),

· up to 1,102,950 of our common shares issuable upon the exercise of warrants at an exercise price of $0.79 per share (the “May 2020 Warrants”), and
· up to 110,295 of our common shares issuable upon the exercise of placement agent warrants at an exercise price of $0.85 per share (the “May 2020 Placement Agent Warrants”).

 

The common shares issuable upon conversion of such warrants may be offered for sale from time to time by the Selling Shareholders named in this prospectus. We will receive proceeds from any exercises of the warrants, but not from the sale of the underlying common stock.

 

The Selling Shareholders may sell any or all of the Shares on any stock exchange, market or trading facility on which the Shares are traded or in privately negotiated transactions at fixed prices that may be changed, at market prices prevailing at the time of sale or at negotiated prices. Information on the Selling Shareholders and the times and manners in which they may offer and sell our Shares is described under the sections entitled “Selling Shareholders” and “Plan of Distribution” in this prospectus. While we will bear all costs, expenses and fees in connection with the registration of the Shares, we will not receive any of the proceeds from the sale of our Shares by the Selling Shareholders.

 

Our Shares are currently traded on the Nasdaq Stock Market under the symbol “CCCL”. On June 8, 2020, the closing price for our Shares on Nasdaq was $0.76 per share.

 

We may amend or supplement this prospectus from time to time by filing amendments or supplements as required.

 

Investing in our securities involves risks. See “Risk Factors” beginning on page 6 of this prospectus.

 

Neither the Securities and Exchange Commission (the “SEC”) 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. 

 

Prospectus dated June 15, 2020

 

 

 

 

TABLE OF CONTENTS

 

PROSPECTUS SUMMARY 6
RISK FACTORS 6
NOTE REGARDING FORWARD-LOOKING STATEMENTS 6
PRICE RANGE OF OUR SHARES 7
CAPITALIZATION 8
USE OF PROCEEDS 8
DIVIDEND POLICY 8
SELLING SHAREHOLDERS 8
PLAN OF DISTRIBUTION 10
EXPENSES 11
LEGAL MATTERS 11
EXPERTS 11
ENFORCEABILITY OF CIVIL LIABILITIES 12

 

  3  

 

 

ABOUT THIS PROSPECTUS

 

This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission. Under this registration process, the selling shareholders may from time to time sell up to 2,473,245 common shares in one or more offerings. This prospectus provides you with a general description of the securities that our selling shareholders may offer. Specific information about the offering may also be included in a prospectus supplement, which may update or change information included in this prospectus. You should read both this prospectus and any prospectus supplement together with additional information described under the heading “Where You Can Find More Information.”

 

You should rely only on the information contained in this prospectus, any amendment or supplement to this prospectus or any free writing prospectus prepared by or on our behalf. Neither we, nor the selling shareholders, have authorized any other person to provide you with different or additional information. Neither we, nor the selling shareholders, take responsibility for, nor can we provide assurance as to the reliability of, any other information that others may provide. The selling shareholders are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus is accurate only as of the date of this prospectus or such other date stated in this prospectus, and our business, financial condition, results of operations and/or prospects may have changed since those dates.

 

Except as otherwise set forth in this prospectus, neither we nor the selling shareholders have taken any action to permit a public offering of these securities outside the United States or to permit the possession or distribution of this prospectus outside the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to the offering of these securities and the distribution of this prospectus outside the United States.

 

Certain Defined Terms and Conventions

 

Unless otherwise indicated, references in this prospectus to:

 

  “China” or the “PRC” are to the People’s Republic of China, excluding, for the purpose of this prospectus only, Taiwan and the special administrative regions of Hong Kong and Macau.

 

  “RMB” and “Renminbi” are to the legal currency of China (see “Exchange Rate Information” for translations of RMB into U.S. dollars in this prospectus). This prospectus contains translations of certain RMB amounts into U.S. dollar amounts at specified rates. Unless otherwise stated, the translations of RMB into U.S. dollars have been made at the exchange rate as set forth on May 1, 2020 in the H.10 statistical release of the Federal Reserve Board, which was RMB 7.0622 to US $1.00. We make no representation that the RMB or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or RMB, as the case may be, at any particular rate or at all (also see “Risk Factors”).

  

  “shares” are to our shares, par value US$0.008 per share.

 

  “US$” and “U.S. dollars” are to the legal currency of the United States.

 

  “we,” “us,” “our,” and “China Ceramics” refers to China Ceramics Co., Ltd., a British Virgin Islands company, and its subsidiaries, including Success Winner Limited (“Success Winner”), a British Virgin Islands company and wholly owned subsidiary of China Ceramics, Stand Best Creation Limited (“Stand Best”), a Hong Kong company and wholly owned subsidiary of Success Winner and the entity that wholly owns Jinjiang Hengda Ceramics Co., Ltd. (“Hengda”), a PRC operating company that in turn wholly owns Jiangxi Hengdali Ceramic Materials Co., Ltd. (“Hengdali”), and Fujian Province Hengdali Building Materials Co., Ltd. each a PRC operating company.

 

  4  

 

 

WHERE YOU CAN FIND MORE INFORMATION

 

We have filed with the SEC a registration statement on Form F-3 under the Securities Act of 1933, as amended (the “Securities Act”) with respect to the Shares offered under this prospectus. For the purposes of this section, the term registration statement means the original registration statement and any and all amendments including the schedules and exhibits to the original registration statement or any amendment. This prospectus does not contain all of the information included in the registration statement we filed. For further information regarding us and the Shares offered in this prospectus, you may desire to review the full registration statement, including the exhibits. The registration statement, including its exhibits and schedules, may be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the public reference room by calling 1-202-551-8090. Copies of such materials are also available by mail from the Public Reference Branch of the SEC at 100 F Street, N.E., Washington, D.C. 20549 at prescribed rates. In addition, the SEC maintains a website (http://www.sec.gov) from which interested persons can electronically access the registration statement, including the exhibits and schedules to the registration statement.

 

We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are applicable to a foreign private issuer. In accordance with the Exchange Act, we file reports with the SEC, including annual reports on Form 20-F. We also furnish to the SEC under cover of Form 6-K material information required to be made public in the British Virgin Islands, filed with and made public by any stock exchange or automated quotation system or distributed by us to our shareholders. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements to shareholders. In addition, our officers, directors and principal shareholders are exempt from the “short-swing profits” reporting and liability provisions contained in Section 16 of the Exchange Act and related Exchange Act rules.

 

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

 

The SEC allows us to “incorporate by reference” the information we file with them. This means that we can disclose important information to you by referring you to those documents. Each document incorporated by reference is current only as of the date of such document, and the incorporation by reference of such documents should not create any implication that there has been no change in our affairs since the date thereof or that the information contained therein is current as of any time subsequent to its date. The information incorporated by reference is considered to be a part of this prospectus and should be read with the same care. When we update the information contained in documents that have been incorporated by reference by making future filings with the SEC, the information incorporated by reference in this prospectus is considered to be automatically updated and superseded. In other words, in the case of a conflict or inconsistency between information contained in this prospectus and information incorporated by reference into this prospectus, you should rely on the information contained in the document that was filed later.

 

We incorporate by reference the documents listed below:

 

  our Annual Report on Form 20-F for the fiscal year ended December 31, 2019 filed with the SEC on May 20, 2020;

 

  our Reports on Form 6-K filed and/or furnished to the SEC on January 13, January 14, February 25, March 24, April 20, and May 26, 2020, respectively; and

 

  with respect to each offering of securities under this prospectus, all our subsequent Annual Reports on Form 20-F and any report on Form 6-K that (i) we file or furnish with the SEC on or after the date on which this prospectus is first filed with the SEC and until the termination or completion of the offering under this prospectus and (ii) indicates that it is being incorporated by reference in this prospectus.

 

Unless expressly incorporated by reference, nothing in this prospectus shall be deemed to incorporate by reference information furnished to, but not filed with, the SEC. We will provide to each person, including any beneficial owner, who receives a copy of this prospectus, upon written or oral request, without charge, a copy of any or all of the documents we refer to above which we have incorporated by reference in this prospectus, except for exhibits to such documents unless the exhibits are specifically incorporated by reference into this prospectus. You should direct your requests to the attention of our chief financial officer at our principal executive office located in c/o Junbing Industrial Zone, Anhai, Jinjiang City, Fujian Province, PRC. Our telephone number at this address is +86 (595) 8576 5053 and our fax number is Fax: +86 (595) 8576 5059.

 

You should rely only on the information contained or incorporated by reference in this prospectus, in any applicable prospectus supplement or any related free writing prospectus that we may authorize to be delivered to you. 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 will not make 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, the applicable supplement to this prospectus or in any related free writing prospectus is accurate as of its respective date, and that any information incorporated by reference is accurate only as of the date of the document incorporated by reference, unless we indicate otherwise. Our business, financial condition, results of operations and prospects may have changed since those dates.

 

  5  

 

  

PROSPECTUS SUMMARY

Our Business

 

We are a leading Chinese manufacturer of ceramic tiles used for exterior siding and for interior flooring and design in residential and commercial buildings. The ceramic tiles, sold under the “HD” or “Hengda,” “HDL” or “Hengdeli”, “Pottery Capital of Tang Dynasty”, “TOERTO” and ”WULIQIAO” brands are available in over two thousand styles, colors and size combinations. Currently, we have five principal product categories: porcelain tiles, glazed tiles, glazed porcelain tiles, rustic tiles, and polished glazed tiles. Ceramic tiles are widely used in the PRC as a construction material for residential and commercial buildings. Ceramic tiles are used for flooring, interior walls for decorative purposes and on exterior siding due to their resistance to temperature, extreme environments, erosion, abrasion and discoloration for extended periods of time. Our manufacturing facilities operated by Jinjiang Hengda Ceramics Co., Ltd. are located in Jinjiang, Fujian Province, and our manufacturing facilities operated by Jiangxi Hengdali Ceramic Materials Co., Ltd. are located in Gaoan, Jiangxi Province.

 

Corporate Information

 

Our principal executive office is located at Junbing Industrial Zone, Anhai, Jinjiang City, Fujian Province, People’s Republic of China. Our telephone number at this address is +86 595 8576 5053. Our registered office is Craigmuir Chambers, Road Town, Tortola, British Virgin Islands, and our registered agent is Harneys Corporate Services Limited. We maintain a website at http://www.cceramics.com that contains information about our company. Information on this web site is not part of this prospectus.

 

December 2019 Private Placement

 

On December 16, 2019, the Company entered into a Securities Purchase Agreement with certain institutional investors for the sale by the Company of 1,200,000 common shares at a purchase price of $0.75 per share. Concurrently with the sale of its common shares, pursuant to a Purchase Agreement the Company also sold common share purchase warrants to purchase 1,200,000 common shares of the Company (the “Warrant Shares”). Subject to certain beneficial ownership limitations, the five-year warrants will be initially exercisable on the six-month anniversary of the issuance date at an exercise price equal to $0.82 per share, subject to adjustments, and will terminate on the five-year anniversary of the initial exercise date of the warrants. The closing of this offering took place on December 18, 2019. The Company received net proceeds from the transactions of approximately $748,000, after deducting certain fees due to the placement agent and the Company’s estimated transaction expenses. The net proceeds received by the Company from the transactions were used for working capital and general corporate purposes. The warrants and the Warrant Shares were sold without registration under the Securities Act of 1933 (the “Securities Act”) in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering and Rule 506 promulgated under the Securities Act as sales to accredited investors, and in reliance on similar exemptions under applicable state laws.

 

Dawson James Securities, Inc. acted as the Company’s exclusive placement agent (the “Placement Agent”), on a best efforts basis, in connection with the offering. Pursuant to the terms and provisions of the engagement letter between the Company and the Placement Agent, the Company agreed to pay the Placement Agent a cash placement fee equal to 8% of the gross proceeds of the Offering, or $72,000, plus other expenses of the Placement Agent not to exceed $45,000. The Placement Agent also received five-year warrants to purchase up to 60,000 common shares (or 5% of the aggregate number of shares sold in the offering), which such compensation warrants have substantially the same terms as the Warrants sold in the Offering, except that such Placement Agent warrants have an exercise price of $0.9375 per share and will terminate on the five-year anniversary of the effective date of this offering. 

 

May 2020 Private Placement

 

On May 22, 2020, the Company entered into a Securities Purchase Agreement with certain institutional investors for the sale by the Company of 1,102,950 common shares at a purchase price of $0.68 per share. Concurrently with the sale of the common shares, pursuant to the Purchase Agreement the Company also sold warrants to purchase 1,102,950 common shares. The Company sold the common shares and Warrants for aggregate gross proceeds of $750,006. Subject to certain beneficial ownership limitations, the five-year warrants will be initially exercisable on the six-month anniversary of the issuance date at an exercise price equal to $0.79 per share, subject to adjustments as provided under the terms of the Warrants, and will terminate on the five-year anniversary of the initial exercise date of the Warrants. The net proceeds from the transactions will be approximately $595,000, after deducting certain fees due to the placement agent and the Company’s estimated transaction expenses, and were used for working capital and general corporate purposes. The warrants and the shares issuable upon exercise of the Warrants were sold without registration under the Securities Act of 1933 in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering and Rule 506 promulgated under the Securities Act as sales to accredited investors, and in reliance on similar exemptions under applicable state laws.

 

Dawson James Securities, Inc. acted as the Company’s exclusive placement agent, on a best-efforts basis, in connection with the Offering. Pursuant to the terms and provisions of the engagement letter between the Company and the Placement Agent, the Company agreed to pay the Placement Agent a cash placement fee equal to 8% of the gross proceeds of the Offering, or $60,000, plus other expenses of the Placement Agent not to exceed $45,000. The Placement Agent also received five-year warrants to purchase up to 101,295 common shares (or 5% of the aggregate number of shares sold in the offering), which such compensation warrants have substantially the same terms as the Warrants sold in the Offering, except that such Compensation Warrants have an exercise price of $0.85 per share and will terminate on the five year anniversary of the effective date of this offering.

 

RISK FACTORS

 

Any investment in the common shares of Company is speculative and involves a high degree of risk. Before making an investment decision, you should carefully consider the risks described under “Risk Factors” in our most recent Annual Report on Form 20-F, or any updates in our reports on Form 6-K, together with all of the other information appearing in, or incorporated by reference into, this prospectus and any applicable prospectus supplement. The risks so described are not the only risks facing our company. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. Our business, financial condition and results of operations could be materially adversely affected by any of these risks. The trading price of our securities could decline due to any of these risks, and you may lose all or part of your investment.

  

NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Some of the information in this prospectus, any prospectus supplement, and the documents we incorporate by reference contains forward-looking statements within the meaning of the federal securities laws. You should not rely on forward-looking statements in this prospectus, any prospectus supplement, or the documents we incorporate by reference. Forward-looking statements typically are identified by use of terms such as “anticipate,” “believe,” “plan,” “expect,” “future,” “intend,” “may,” “will,” “should,” “estimate,” “predict,” “potential,” “continue,” and similar words, although some forward-looking statements are expressed differently. This prospectus, any prospectus supplement, and the documents we incorporate by reference may also contain forward-looking statements attributed to third parties relating to their estimates regarding the growth of our markets. All forward-looking statements address matters that involve risks and uncertainties, and there are many important risks, uncertainties and other factors that could cause our actual results, as well as those of the markets we serve, levels of activity, performance, achievements and prospects to differ materially from the forward-looking statements contained in this prospectus, any prospectus supplement, and the documents we incorporate by reference.

  

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You should also consider carefully the statements under “Risk Factors” and other sections of this prospectus, any prospectus supplement, and the documents we incorporate by reference, which address additional facts that could cause our actual results to differ from those set forth in the forward-looking statements. We caution investors not to place significant reliance on the forward-looking statements contained in this prospectus, any prospectus supplement, and the documents we incorporate by reference. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise.

 

PRICE RANGE OF OUR SHARES

 

Our shares have been listed on the NASDAQ Stock Market under the symbols CCCL, since January 18, 2011. Our shares were listed on the NASDAQ Capital Market from November 3, 2010 through January 17, 2011 and were relisted on the Nasdaq Capital Market on March 23, 2016 following the listing transfer where it is trading now under the same symbol “CCCL.” Our shares were listed on the NASDAQ Global Market from January 18, 2011 until March 22, 2016. The shares were previously quoted on the OTC Bulletin Board from December 29, 2009 through November 2, 2010.

 

The following tables set forth, for the calendar quarters indicated and through April 2020, the quarterly high and low sale prices for our shares, as reported on NASDAQ Stock Market, the OTC Bulletin Board or the NYSE Amex, as applicable. The OTC Bulletin Board market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily reflect actual transactions.

 

    Shares  
    High     Low  
Annual Highs and Lows                
2012     36.32       11.76  
2013     32.48       15.84  
2014     20.48       5.92  
2015     11.36       6.00  
2016     8.64       2.09  
                 
Quarterly Highs and Lows                
2017                
First Quarter     2.53       2.08  
Second Quarter     2.26       1.32  
Third Quarter     1.68       1.31  
Fourth Quarter     2.39       1.32  
                 
2018                
First Quarter     2.69       1.43  
Second Quarter     1.76       1.37  
Third Quarter     1.87       1.32  
Fourth Quarter     3.67       0.80  
                 
2019                
First Quarter     2.08       1.38  
Second Quarter     1.76       0.80  
Third Quarter     0.93       0.73  
Fourth     1.06       0.67  
                 
2020                
January     0.90       0.67  
February     0.73       0.51  
March     0.55       0.27  
April     0.75       0.38  

 

On May 28, 2020, the closing price of our Shares on the NASDAQ Stock Market was $0.63. As of May 22, 2020, there were 8,015,084 of our common shares issued and outstanding.

 

  7  

 

 

CAPITALIZATION

 

The following table sets forth our capitalization as of December 31, 2019. Because we will not be receiving any proceeds pursuant to the sale of any Shares by the selling shareholders, our capitalization table is not adjusted to reflect such sales. You should read the following table in conjunction with our financial statements, which are incorporated by reference into this prospectus.

 

Capitalization   As of  
(in RMB except share data)   December 31, 2019  
Common shares     7,306,985  
Par Value Amount     397,016  
Additional Paid-In Capital     440,004,143  
Statutory Reserves     135,343,158  
Retained Earnings     (300,972,020 )
Accumulated Other Comprehensive Income     (1,879,723 )
 Total:     272,892,574   

  

USE OF PROCEEDS

 

We will not receive any proceeds from the sale of any shares by the selling shareholders. The selling shareholders will receive all of the net proceeds from the sale of any shares offered by them under this prospectus. The selling shareholders will pay any underwriting discounts and commissions and expenses incurred by the selling shareholders for brokerage, accounting, tax, legal services or any other expenses incurred by the selling shareholders in disposing of these shares. We will bear all other costs, fees and expenses incurred in effecting the registration of the shares covered by this prospectus.

 

DIVIDEND POLICY

 

We paid a cash dividend of US$0.10 (equivalent to RMB0.61) per share each on July 13, 2013 and January 14, 2014, respectively, to our shareholders which totaled in aggregate US$4.1 million (equivalent to RMB24.9 million). Also, we paid a cash dividend of US$0.0125 (equivalent to RMB0.08) per share each on July 14, 2014 and January 14, 2015, respectively, to its shareholders which totaled in aggregate US$0.5 million (equivalent to RMB3.2 million).

 

We do not currently have any plans to pay any cash dividends in the foreseeable future on our shares being sold in this offering. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business. The payment of dividends by entities organized in China is subject to limitations. Regulations in the PRC currently permit payment of dividends only out of accumulated profits as determined in accordance with PRC accounting standards and regulations. Each of our Chinese subsidiaries is also required to set aside at least 10% of its after-tax profit based on China’s accounting standards each year to its general reserves until the cumulative amount of such reserves reach 50% of its registered capital. These reserves are not distributable as cash dividends. The board of directors of our PRC subsidiaries, each of which is a wholly foreign owned enterprise, has the discretion to allocate a portion of its after-tax profits to its staff welfare and bonus funds, which is likewise not distributable to its equity owners except in the event of a liquidation of the foreign-invested enterprise. If we decide to pay dividends in the future, these restrictions may impede our ability to pay dividends. In addition, if any of these Chinese entities incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.

 

Our Board of Directors has discretion on whether to pay dividends. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that our board of directors may deem relevant.

 

SELLING SHAREHOLDERS

 

This prospectus covers the public resale of the shares owned by the selling shareholders named below. Such selling shareholders may from time to time offer and sell pursuant to this prospectus any or all of the shares owned by them. The selling shareholders, however, make no representations that the shares will be offered for sale. The tables below present information regarding the selling shareholders and the shares that each such selling shareholder may offer and sell from time to time under this prospectus.

  

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The shares being registered by the selling shareholders represent our securities sold and issued in the December 2019 and May 2020 private placements of our securities. Unless otherwise indicated, all information with respect to ownership of our Shares of the selling shareholders has been furnished by or on behalf of the selling shareholders and is as of May 22, 2020. We believe, based on information supplied by the selling shareholders, that except as may otherwise be indicated in the footnotes to the tables below, the selling shareholders have sole voting and dispositive power with respect to the Shares reported as beneficially owned by them. Because the selling shareholders identified in the tables may sell some or all of the Shares owned by them which are included in this prospectus, and because, except as set forth herein, to our knowledge, there are currently no agreements, arrangements or understandings with respect to the sale of any of the Shares, no estimate can be given as to the number of Shares available for resale hereby that will be held by the selling shareholders upon termination of this offering. In addition, the selling shareholders may have sold, transferred or otherwise disposed of, or may sell, transfer or otherwise dispose of, at any time and from time to time, the Shares they hold in transactions exempt from the registration requirements of the Securities Act after the date on which they provided the information set forth on the table below. We have, therefore, assumed for the purposes of the following table, that the selling shareholders will sell all of the Shares owned beneficially by them that are covered by this prospectus, but will not sell any other Shares that they presently own. Beneficial ownership for the purposes of this table is determined in accordance with the rules and regulations of the SEC. These rules generally provide that a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting thereof, or to dispose or direct the disposition thereof or has the right to acquire such powers within 60 days.

 

The selling shareholders and intermediaries through whom such securities are sold may be deemed “underwriters” within the meaning of the Securities Act with respect to the Shares offered by this prospectus, and any profits realized or commissions received may be deemed underwriting compensation. Additional selling shareholders not named in this prospectus will not be able to use this prospectus for resales until they are named in the tables above by prospectus supplement or post-effective amendment. Transferees, successors and donees of identified selling shareholders will not be able to use this prospectus for resales until they are named in the tables above by prospectus supplement or post-effective amendment. If required, we will add transferees, successors and donees by prospectus supplement in instances where the transferee, successor or donee has acquired its Shares from holders named in this prospectus after the effective date of this prospectus.

 

The following table sets forth:

 

  the name of each selling shareholder holding Shares;

 

  the number of Shares beneficially owned by each selling shareholder prior to the sale of the Shares covered by this prospectus;

 

  the number of Shares that may be offered by each selling shareholder pursuant to this prospectus;

 

  the number of Shares to be beneficially owned by each selling shareholder following the sale of the Shares covered by this prospectus; and

 

  the percentage of our issued and outstanding Shares to be owned by each selling shareholder before and after the sale of the Shares covered by this prospectus.

 

Name of Selling Shareholder   Number of
Shares
Beneficially
Owned
Prior to this
Offering
    Number of
Shares
Available
Pursuant to
this
Prospectus
    Number of
Shares
Beneficially
Owned
After Sale
of Shares (4)(5)
    Percent of
Outstanding
Shares
Beneficially
Owned
After Sale
of Shares (4)(5)
 
Anson Investments Master Fund LP (1)     767,650       767,650       0       0 %
CVI Investments, Inc. (2)     767,650       767,650       0       0 %
Intracoastal Capital, LLC (3)     767,650       767,650       0        0 %
Dawson James Securities, Inc. (6)     102,177       102,177       0         0
Robert Keyser, Jr. (7)     34,059       34,059       0                         0 %
Douglas Armstrong (8)     34,059       34,059       0                         0 %

 

Less than 1%.
(1) Includes 400,000 common shares issuable upon exercise of the December 2019 Warrants and 367,650 common shares issuance upon exercise of the May 2020 Warrants. The address of the selling shareholder is 155 University Avenue, Suite 207, Toronto, Ontario, Canada M5H 3B7.
(2) Includes 400,000 common shares issuable upon exercise of the December 2019 Warrants and 367,650 common shares issuance upon exercise of the May 2020 Warrants. The address of the selling shareholder is c/o Heights Capital Management, 101 California Street, Suite 3250, San Francisco, CA 94111. Heights Capital Management, Inc., the authorized agent of CVI Investments, Inc. ("CVI"), has discretionary authority to vote and dispose of the shares held by CVI and may be deemed to be the beneficial owner of these shares. Martin Kobinger, in his capacity as Investment Manager of Heights Capital Management, Inc., may also be deemed to have investment discretion and voting power over the shares held by CVI. Mr. Kobinger disclaims any such beneficial ownership of the shares. CVI Investments, Inc.is affiliated with one or more FINRA member, none of whom are currently expected to participate in the sale pursuant to the prospectus contained in the Registration Statement of shares purchased by the investor in the offering.
(3) Includes 400,000 common shares issuable upon exercise of the December 2019 Warrants and 367,650 common shares issuance upon exercise of the May 2020 Warrants. Mitchell P. Kopin (“Mr. Kopin”) and Daniel B. Asher (“Mr. Asher”), each of whom are managers of Intracoastal Capital LLC (“Intracoastal”), have shared voting control and investment discretion over the securities reported herein that are held by Intracoastal. As a result, each of Mr. Kopin and Mr. Asher may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of the securities reported herein that are held by Intracoastal. The address of the selling shareholder is s/b 245 Palm Trail, Delray Beach, FL 33483.
(4) Based on 8,015,084 shares outstanding as of the date of this prospectus; subject to the 9.99% beneficial ownership blocker provisions.
(5) Assumes that the selling shareholder sells all of the shares offered hereby.
(6) Includes (i) 36,000 common shares issuable upon exercise of the 2019 Placement Agent Warrants, and (ii) 66,177 common shares issuable upon exercise of the 2020 Placement Agent Warrants. Dawson James Securities, Inc. is a securities broker-dealer and FINRA member. The address of the selling shareholder is 1 North Federal Highway, 5th Floor, Boca Raton, FL 33432.
(7) Includes (i) 12,000 common shares issuable exercise of the 2019 Placement Agent Warrants, and (ii) 22,059 common shares issuable exercise of the 2020 Placement Agent Warrants. Mr. Keyser disclaims beneficial ownership of the securities owned by Dawson James Securities Inc.
(8) Includes (i) 12,000 common shares issuable exercise of the 2019 Placement Agent Warrants, and (ii) 22,059 common shares issuable exercise of the 2020 Placement Agent Warrants. Mr. Armstrong disclaims beneficial ownership of the securities owned by Dawson James Securities Inc.

 

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PLAN OF DISTRIBUTION

 

The selling shareholders, which as used herein includes donees, pledgees, transferees or other successors-in-interest selling Shares or interests in Shares received after the date of this prospectus from a selling shareholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of the Shares on any stock exchange, market or trading facility on which the Shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.

 

The selling shareholders may use any one or more of the following methods when disposing of Shares:

 

  ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

  block trades in which the broker-dealer will attempt to sell the 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;

 

  an exchange distribution in accordance with the rules of the applicable exchange;

 

  privately negotiated transactions;

 

  short sales effected after the date the registration statement of which this prospectus is a part is declared effective by the SEC;

 

  through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

 

  broker-dealers may agree with the selling shareholders to sell a specified number of such Shares at a stipulated price per share;

 

  a combination of any such methods of sale; and

 

  any other method permitted by applicable law.

 

The selling shareholders may, from time to time, pledge or grant a security interest in some or all of the Shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the Shares, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling shareholders to include the pledgee, transferee or other successors in interest as selling shareholders under this prospectus. The selling shareholders also may transfer the Shares in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

 

In connection with the sale of their 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 such Shares in the course of hedging the positions they assume. The selling shareholders may also sell Shares short and deliver these securities to close out their short positions, or loan or pledge the Shares to broker-dealers that in turn may sell these securities. The selling shareholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of the Shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

 

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The aggregate proceeds to the selling shareholders from the sale of the Shares offered by them will be the purchase price of such Shares less discounts or commissions, if any. Each of the selling shareholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of ordinary shares to be made directly or through agents. We will not receive any of the proceeds from the resale of the Shares.

 

The selling shareholders also may resell all or a portion of their Ordinary Shares in open market transactions in reliance upon Rule 144 under the Securities Act, provided that they meet the criteria and conform to the requirements of that rule.

 

The selling shareholders and any underwriters, broker-dealers or agents that participate in the sale of the Shares therein may be “underwriters” within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of the Ordinary Shares may be underwriting discounts and commissions under the Securities Act. Selling shareholders who are “underwriters” within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act.

 

To the extent required, the Shares to be sold, the names of the selling shareholders, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.

 

In order to comply with the securities laws of some states, if applicable, the Shares may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the Shares may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.

 

We have advised the selling shareholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of Shares in the market and to the activities of the selling shareholders and their affiliates. In addition, to the extent applicable, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling shareholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling shareholders may indemnify any broker-dealer that participates in transactions involving the sale of the Shares against certain liabilities, including liabilities arising under the Securities Act. We have agreed to indemnify the selling shareholders against liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the Ordinary Shares offered by this prospectus.

 

EXPENSES

 

We estimate the fees and expenses to be incurred by us in connection with the resale of the ordinary shares in this offering, other than underwriting discounts and commissions, to be as follows:

 

SEC registration fee   $ 208.59 *
Legal fees and expenses   $ 10,000  
Accounting fees and expenses   $ 10,000  
Miscellaneous expenses   $ 2,500  
         
Total   $ 22,708.59  

  

All amounts are estimated except the SEC registration fee.

*Previously paid.

 

LEGAL MATTERS

 

We are being represented by Schiff Hardin LLP, Washington, DC with respect to legal matters of United States federal securities. The validity of the shares offered in this offering and legal matters as to British Virgin Islands law will be passed upon for us by Harney Westwood & Riegels. Legal matters will be passed upon for any underwriters, dealers or agents by counsel named in the applicable prospectus supplement.

 

EXPERTS

 

The financial statements incorporated by reference in this prospectus have been audited by Centurion ZD CPA & Co., our independent registered public accounting firm, and are included in reliance upon such reports given upon the authority of said firm as experts in auditing and accounting.

 

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ENFORCEABILITY OF CIVIL LIABILITIES

 

Many of our officers and directors, and some of the experts named in this prospectus, are residents of PRC or elsewhere outside of the U.S., and all of our assets and the assets of such persons are located outside the U.S. As a result, it may be difficult for investors in the U.S. to effect service of process within the U.S. upon such directors, officers and representatives of experts who are not residents of the U.S. or to enforce against them judgments of a U.S. court predicated solely upon civil liability under U.S. federal securities laws or the securities laws of any state within the U.S.

 

Substantially all of our operations and records, and most of our senior management are located in the PRC. Our shareholders have limited ability to assert and collect on claims in litigation against us and our principals. In addition, corporate organization and structure could further impede the ability of a person to prove a claim or collect on a judgment against the Company. Finally, China has very restrictive secrecy laws that prohibit the delivery of many of the financial records maintained by a business located in China to third parties absent Chinese government approval. Since discovery is an important part of proving a claim in litigation, and since most if not all of the Company’s records are in China, Chinese secrecy laws could frustrate efforts to prove a claim against the Company or its management. In order to commence litigation in the United States against an individual such as an officer or director, that individual must be served. While directors and officers of a Delaware corporation are routinely served for purposes of a suit against them in Delaware for breach of fiduciary duty and there are means of serving individuals who reside outside the United States in other litigation, generally service requires the cooperation of the country in which a defendant resides. China has a history of failing to cooperate in efforts to effect such service upon Chinese citizens in China. These and other similar PRC laws and regulations could substantially impair our shareholders abilities to investigate and prosecute claims against our Company, our officers and our directors.

 

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