As filed with the Securities
and Exchange Commission on May 19, 2020
Registration
No. 333-[ ]
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
F-3
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
Color
Star Technology Co., Ltd.
(Exact
name of registrant as specified in its charter)
Cayman
Islands
|
|
N/A
|
(State
or other jurisdiction of
incorporation or organization)
|
|
(I.R.S.
Employer
Identification Number)
|
800
3rd Ave, Suite 2800
New
York, NY 10022
Tel:
+1 (212) 220-3967
(Address,
including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Yang
(Sean) Liu
Chief
Executive Officer
800
3rd Ave, Suite 2800
New
York, NY 10022
Tel:
+1 (212) 220-3967
(Name,
address, including zip code, and telephone number, including area code, of agent for service)
Copies
to:
Joan
Wu Esq.
Hunter
Taubman Fischer & Li, LLC 1450 Broadway, Floor 26
New
York, NY 10018
Tel:
(212) 530-2210
Facsimile:
(212) 202-6380
Approximate
date of commencement of proposed sale to the public: From time to time after the effective date of the 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, 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. ☐
†The
term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards
Board to its Accounting Standards Codification after April 5, 2012.
CALCULATION
OF REGISTRATION FEE
Title of Each Class of Securities to be Registered
|
|
Amount
to be
Registered(1)
|
|
|
Proposed
Maximum
Aggregate Price
Per Share(2)
|
|
|
Proposed
Maximum
Aggregate
Offering Price
|
|
|
Amount of
Registration Fee(3)
|
|
Ordinary Shares, $0.001 par value, issuable upon exercise of warrants(4)(5)
|
|
|
2,727,274
|
|
|
$
|
0.55
|
|
|
$
|
1,500,000
|
|
|
$
|
195
|
|
Ordinary Shares, $0.001 par value, issuable upon exercise of warrants(4)(5)
|
|
|
2,600,000
|
|
|
$
|
0.55
|
|
|
$
|
1,430,000
|
|
|
$
|
186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
5,327,274
|
|
|
$
|
-
|
|
|
$
|
2,930,000
|
|
|
$
|
381
|
|
(1)
|
All
shares registered pursuant to this registration statement are to be offered for resale by the Selling Shareholders (defined
below). Pursuant to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), this registration
statement also covers such indeterminate number of additional ordinary shares of the registrant, $0.001 par value per share,
issued to prevent dilution resulting from stock splits, stock dividends or similar events. No additional consideration will
be received for such additional number of Ordinary Shares, and therefore no registration fee is required pursuant to Rule
457(i) under the Securities Act.
|
(2)
|
Calculated pursuant
to Rule 457(g) under the Securities Act.
|
(3)
|
Calculated pursuant to Rule 457(o) under the
Securities act of 1933, as amended.
|
(4)
|
As described in greater detail in the prospectus
contained in this registration statement, the ordinary shares to be offered for resale by selling shareholders include an
aggregate of 5,327,274 ordinary shares underlying warrants to purchase ordinary shares issued to the selling shareholders
in connection with private placement transactions.
|
(5)
|
Relates to the ordinary shares underlying the
ordinary shares purchase warrants, if such warrants are exercised for cash. If such warrants are exercised on a cashless basis,
then the underlying ordinary shares shall be covered by the registration fee in respect of the ordinary shares.
|
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 that specifically states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this 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. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it
is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT
TO COMPLETION, DATED MAY 19, 2020
PROSPECTUS
Color
Star Technology Co., Ltd.
5,327,274
Ordinary Shares underlying Warrants
This prospectus relates
to the offer and resale of up to an aggregate of 5,327,274 ordinary shares of Color Star Technology Co., Ltd. (the “Company,”
“we,” “us” or “our”), par value $0.001 per share (“Ordinary Shares”) issuable upon
exercise of certain warrants (the “Warrants”) currently held by such Selling Shareholders as follows: (a) 2,727,274
Ordinary Shares issuable upon exercise of certain Ordinary Shares purchase warrants issued on April 2, 2020 (the “April Warrants”);
and (b) 2,600,000 Ordinary Shares issuable upon exercise of certain ordinary shares purchase warrants issued on May 13, 2020 (the
“May Warrants”). The holders of the Warrants are each referred to herein as a “Selling Shareholder” and
collectively as the “Selling Shareholders.” Each of the Warrants is exercisable for one Ordinary Share at an initial
exercise price of $0.55 per share.
This prospectus also
covers any additional Ordinary Shares that may become issuable upon any anti-dilution adjustment pursuant to the terms of the Warrants
by reason of stock splits, stock dividends, subsequent equity sale and other events described therein.
The
Selling Shareholders identified in this prospectus, or their respective transferees, pledgees, donees or other successors-in-interest,
may offer the Warrants issuable from time to time upon exercise of the Warrants, through public or private transactions at prevailing
market prices, at prices related to prevailing market prices or at privately negotiated prices. For additional information on
the methods of sale for the Warrants that may be used by the Selling Shareholders, see the section entitled “Plan of Distribution”
on page 17. For a list of the Selling Shareholders, see the section entitled “Selling Shareholders” on page 15.
The
Selling Shareholders may sell any, all or none of the securities offered by this prospectus, and we do not know when or in what
amount the Selling Shareholders may sell their Ordinary Shares hereunder following the effective date of this registration statement.
We
are registering the Warrants on behalf of the Selling Shareholders, to be offered and sold by them from time to time. While we
will not receive any proceeds from the sale of the Ordinary Shares underlying the Warrants, we may receive up to $0.55 per share
upon the cash exercise of each of the Warrants. However, we cannot predict when and in what amounts or if the Warrants will be
exercised, and it is possible that the Warrants may expire and never be exercised, in which case we would not receive any cash
proceeds. We have agreed to bear all of the expenses incurred in connection with the registration of the Warrants. The Selling
Shareholders will pay or assume discounts, commissions, fees of underwriters, selling brokers or dealer managers and similar expenses,
if any, incurred for the sale the Warrants.
Our
Ordinary Shares are listed on the Nasdaq Capital Market under the symbol “HHT.” On May 18, 2020, the last reported
sale price of our Ordinary Shares on the Nasdaq Capital Market was $0.41 per share. The applicable prospectus supplement will
contain information, where applicable, as to other listings, if any, on the Nasdaq Capital Market or other securities exchange
of the securities covered by the prospectus supplement.
Investing
in our securities involves a high degree of risk. See “Risk Factors” on page 7 of this prospectus and in the documents
incorporated by reference in this prospectus, as updated in the applicable prospectus supplement, any related free writing prospectus
and other future filings we make with the Securities and Exchange Commission that are incorporated by reference into this prospectus,
for a discussion of the factors you should consider carefully before deciding to purchase our securities.
This
prospectus describes the general manner in which the Warrants may be offered and sold. If necessary, the specific manner in which
the Warrants may be offered and sold will be described in a supplement to this prospectus.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The
date of this prospectus is May 19, 2020.
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
This
prospectus describes the general manner in which the Selling Shareholders may offer from time to time up to an aggregate of 5,327,274
Ordinary Shares issuable upon the exercise of the Warrants. You should rely only on the information contained in this prospectus
and the related exhibits, any prospectus supplement or amendment thereto and the documents incorporated by reference, or to which
we have referred you, before making your investment decision. Neither we nor the Selling Shareholders have authorized anyone to
provide you with different information. If anyone provides you with different or inconsistent information, you should not rely
on it. This prospectus, any prospectus supplement or amendments thereto do not constitute an offer to sell, or a solicitation
of an offer to purchase, the Ordinary Shares offered by this prospectus, any prospectus supplement or amendments thereto in any
jurisdiction to or from any person to whom or from whom it is unlawful to make such offer or solicitation of an offer in such
jurisdiction. You should not assume that the information contained in this prospectus, any prospectus supplement or amendments
thereto, as well as information we have previously filed with the U.S. Securities and Exchange Commission (the “SEC”),
is accurate as of any date other than the date on the front cover of the applicable document.
If
necessary, the specific manner in which the Ordinary Shares may be offered and sold will be described in a supplement to this
prospectus, which supplement may also add, update or change any of the information contained in this prospectus. To the extent
there is a conflict between the information contained in this prospectus and the prospectus supplement, you should rely on the
information in the prospectus supplement, provided that if any statement in one of these documents is inconsistent with a statement
in another document having a later date-for example, a document incorporated by reference in this prospectus or any prospectus
supplement-the statement in the document having the later date modifies or supersedes the earlier statement.
Neither
the delivery of this prospectus nor any distribution of Ordinary Shares pursuant to this prospectus shall, under any circumstances,
create any implication that there has been no change in the information set forth or incorporated by reference into this prospectus
or in our affairs since the date of this prospectus. Our business, financial condition, results of operations and prospects may
have changed since such date.
As
permitted by SEC rules and regulations, the registration statement of which this prospectus forms a part includes additional information
not contained in this prospectus. You may read the registration statement and the other reports we file with the SEC at its website
or at its offices described below under “Where You Can Find More Information.”
Unless
the context otherwise requires, all references in this prospectus to “Color Star,” “Color Star Technology,”
“we,” “us,” “our,” “the Company” or similar words refer to Color Star Technology
Co., Ltd., together with our subsidiaries.
NOTE
REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus and our SEC filings that are incorporated by reference into this prospectus contain or incorporate by reference forward-looking
statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than
statements of historical fact are “forward-looking statements,” including any projections of earnings, revenue or
other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements
concerning proposed new projects or other developments, any statements regarding future economic conditions or performance, any
statements of management’s beliefs, goals, strategies, intentions and objectives, and any statements of assumptions underlying
any of the foregoing. The words “believe,” “anticipate,” “estimate,” “plan,” “expect,”
“intend,” “may,” “could,” “should,” “potential,” “likely,”
“projects,” “continue,” “will,” and “would” and similar expressions are intended
to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking
statements reflect our current views with respect to future events, are based on assumptions and are subject to risks and uncertainties.
We cannot guarantee that we actually will achieve the plans, intentions or expectations expressed in our forward-looking statements
and you should not place undue reliance on these statements. There are a number of important factors that could cause our actual
results to differ materially from those indicated or implied by forward-looking statements. These important factors include those
discussed under the heading “Risk Factors” contained or incorporated by reference in this prospectus and in the applicable
prospectus supplement and any free writing prospectus we may authorize for use in connection with a specific offering. These factors
and the other cautionary statements made in this prospectus should be read as being applicable to all related forward-looking
statements whenever they appear in this prospectus. Except as required by law, we undertake no obligation to update publicly any
forward-looking statements, whether as a result of new information, future events or otherwise.
OUR
BUSINESS
History
and Development of the Company
We
are currently engaged in the education service business, which is carried out via the Company’s wholly owned subsidiary,
Sunway Kids International Education Group Ltd., which controls Chengdu Hengshanghui Education Consulting Co., Ltd. via a certain
contractual arrangement, our wholly-owned subsidiary CACM Group NY, Inc. (“CACM”) and our joint venture with Baytao
LLC.
Color
Star Technology Co., Ltd. (formerly known as Huitao Technology Co., Ltd.) was founded as an unincorporated business on September
1, 2005, under the name TJS Wood Flooring, Inc., and became a C-corporation in the State of Delaware on February 15, 2007. On
April 29, 2008, we changed our name to China Advanced Construction Materials Group, Inc.
On
August 20, 2018, CACM Group NY, Inc. (“CACM”) was incorporated in the State of New York and is wholly owned by us.
The establishment of CACM was to expand the Company’s business in the U.S. CACM has not commenced operations.
On
December 31, 2018, we consummated a re-domicile merger pursuant to which we merged with and into our wholly-owned subsidiary,
China Advanced Construction Materials Group, Inc., a newly formed Cayman Islands company and the surviving entity in the merger,
pursuant to the terms and conditions of an Agreement and Plan of Merger adopted in July 2018. As a result of the reincorporation,
the Company is now governed by the laws of the Cayman Islands.
On
June 27, 2019, upon effectiveness of the Company’s amendment and restatement of the Company’s memorandum and articles
of association which was approved by the Company’s shareholders, the Company’s name was changed from China Advanced
Construction Materials Group, Inc. to Huitao Technology Co., Ltd.
On
December 31, 2019, we entered into a share exchange agreement with Sunway Kids International Education Group Ltd. (“Sunway
Kids”) and its shareholders. On February 14, 2020, the Company consummated the acquisition of Sunway Kids whereby we issued
1,989,262 ordinary shares and $2 million of cash to be paid in exchange for all of the issued and outstanding capital stock of
Sunway Kids. The $2 million cash consideration is payable in five installments over five years according to an earn-out schedule.
Sunway Kids thereby became our wholly-owned subsidiary. Sunway Kids was established on February 29, 2012, under the laws of the
British Virgin Islands as an offshore holding company. On August 23, 2018, Sunway Kids established its wholly-owned subsidiary,
Brave Millenium Limited (“Brave Millenium”) under the laws of Hong Kong. On December 4, 2019, Brave Millenium established
Chengdu Hengshanghui Intelligent Technology Co., Ltd. (“Chengdu Hengshanghui”) in China as a wholly foreign owned
limited liability company (the “WFOE”). On December 9, 2019, Chengdu Hengshanghui entered into a series of variable
interest entity agreements with Chengdu Hengshanghui Education Consulting Co., Ltd. (“Hengshanghui Education”). Through
Sunway Kids and its variable interest entity Hengshanghui Education, we are engaged in providing education and health services
to day-care and preschools in China.
On
March 10, 2020, CACM entered into a certain joint venture agreement (the “JV Agreement”) with Baydolphin, Inc., a
company organized under the laws of New York (“Baydolphin”). Pursuant to the JV Agreement, CACM and Baydolphin have
established a limited liability company under the laws of New York, Baytao LLC (“Baytao”), which will be the 100%
owner of one or more operating entities in the U.S. to engage in the business of online and offline after-school education.
Prior
to acquisition of Sunway Kids in February 2020, our core business has been the concrete business in China. Our concrete business
is highly affected by the economic cycle and government policies. The concrete industry was influenced by the decline in the macro
economy in recent years. The entire concrete industry in the Beijing area experienced a slowdown in industry production and economic
growth in the last few years as the Beijing government continues to enforce concrete production reformation and tightened environmental
laws from late 2017 to date. The reformation causes great uncertainties for local enterprises in the construction market. Since
2017, the pressure on small concrete companies has further increased and many have been shut down. Also, the Beijing government
ordered the suspension of construction jobsites during winters to reduce air pollution since 2017. The operations of Beijing Xin
Ao were also severely affected. As a result of the Company’s deteriorating cash position, we defaulted on bank loans and
experienced a substantial increase in contingent liabilities. As of December 31, 2019, there was a default on a bank loan of $24,345,129.
As of December 31, 2019, Beijing Xin Ao is subject to several civil lawsuits for which the Company estimated that it is more than
likely to pay judgments in the amount of approximately $6.8 million (including interest and penalties of $1.6 million). During
the six months ended December 31, 2019 and 2018, there were additional estimated claims of approximately $0.3 million and $1.1
million, respectively. The Company believes it would be very difficult, if not impossible, to turn around the concrete business.
As such, the Company has been actively seeking to dispose of the concrete business after the acquisition of Sunway Kids.
On
May 6, 2020, the Company completed the disposition (the “Disposition”) of its former subsidiary, Xin Ao Construction
Materials, Inc. (“BVI-ACM”), after obtaining its shareholders’ approval on April 27, 2020 and satisfaction or
waiver of all other closing conditions. Upon the closing of the Disposition, Mr. Xianfu Han and Mr. Weili He became the sole shareholders
of BVI-ACM and as a result, assumed all assets and liabilities of all the subsidiaries and variable interest entities owned or
controlled by BVI-ACM. The proceeds of $600,000 from the Disposition will be used for the Company’s working capital and
general corporate purposes.
On
May 1, 2020, upon effectiveness of the Company’s amendment and restatement of its memorandum and articles of association
(which was approved by the Company’s shareholders), the Company’s name was changed to Color Star Technology Co., Ltd.
On
May 7, 2020, we entered into a Share Exchange Agreement (“Exchange Agreement”) with Color China Entertainment Limited
(“Color China”), a Hong Kong limited company, and shareholders of Color China (the “Sellers”), pursuant
to which, among other things and subject to the terms and conditions contained therein, the Company will acquire all of the outstanding
issued shares and other equity interests in Color China from the sellers (the “Acquisition”). Pursuant to the Exchange
Agreement, in exchange for all of the outstanding shares of Color China, the Company will issue 4,633,333 ordinary shares of the
Company and pay an aggregate of $2,000,000 to the sellers. Headquartered in Hong Kong, China, Color China is an emerging performance
equipment and music education provider with a significant collection of performance specific assets and unique experience in working
with many renowned artists. Immediately after the Acquisition, Color Star will own 100% of Color China. The closing of the Acquisition
is subject to Nasdaq’s approval of the shares to be issued to the sellers as well as other customary closing condition.
Below
is the Company’s corporate structure chart as of the date of this prospectus.
Business
Overview
Early
Childhood Education Service Business
Sunway
Kids is an education service provider to day-care and preschools in China. Sunway Kids has a skilled professional team experienced
in early childhood development. It provides a well-structured system for early childhood education, including artificial intelligence
(AI) and robotic technologies, intellectual campus administration software as a service system (“SAAS System”) and
online education courses for kids and parents. Sunway Kids provides personalized growth plans for each child based on the analysis
of performance data. Sunway Kids helps schools in increasing their education quality as well as generating derivative revenues
by providing targeted courses and AI lessons for kids. Sunway Kids believes its ability to cooperate closely with various schools
and research institutes in China has contributed to its significant position in the industry.
Management
believes that the convergence of artificial intelligence and education is an emerging and high growth industry. According to Deloitte’s
estimation in its 2018 China Education Development Report (Deloitte China Report), China’s education market will reach RMB2.68
trillion (approximately US$383 billion) by 2018 with training organizations, Kto12 and Science, Technology, Engineering, the Arts
and Mathematics (STEAM) education and private kindergartens comprising the three largest segments. The total scale of private
education is expected to reach RMB3.36 trillion (approximately US$480 billion) by 2020 and approach RMB5 trillion (approximately
US$714 billion) by 2025 with an annual growth rate (CAGR) of 10.8%.
With
the introduction of the national two-child policy in China since 2015, the birth rate has been increasing and thus provides a
guaranteed increase in opportunity for the preschool education industry. We believe that China’s K12 after-school tutoring
market is currently relatively fragmented, and the regulation over the education industry is loosely managed in general. Management
believes with its experience in AI technology and the Company’s advantage as a U.S. public company, acquisition of Sunway
Kids will increase revenue and create value for our shareholders.
Sunway
Kids provides its products and services to kindergartens, vocational schools, training schools and other education institutions.
Its current products and services are categorized as follows: (1) U Campus SAAS System; (2) Childhood AI Analysis Service; (3)
Targeted Teaching Programs Consulting Service for Preschool Children; and (4) Online Education Service.
U
Campus SAAS System
Sunway
Kids provides a smart school management SAAS System with U Campus, an online service that provides a package of comprehensive
support for the operation and management of preschool education institutions, including student management, employee management,
financial management, attendance management and health management. Through U Campus, subscribers are able to handle essential
school functions such as adding new classes, enrolling new students and receiving tuition, all online in one place.
U
Campus is constantly maintained and updated by Shenzhen Qianhai Peiwen Technology Co., Ltd., our contracted third-party service
provider, to provide effective, intuitive, and secure services to our subscribers.
Childhood
AI Analysis Service
Sunway
Kids provides schools with monitoring equipment which utilizes AI technology to record and analyze key information about the children
in real time, such as emotions, movement, concentration and points of interest. The information is automatically compiled into
intuitive data reports that are used to create targeted teaching programs for the children to maximize effectiveness.
Targeted
Teaching Programs Consulting Service for Preschool Children
The
data reports generated from the AI monitoring equipment are provided to Sichuan Lanjingling Enterprise Management Co., Ltd. (“Lanjingling”),
our contracted third-party service provider, which then creates customized curriculum based on the data in the reports. Sunway
Kids sells the customized curriculum back to the schools.
Online
Education Service
Sunway
Kids offers an English as a Second Language (“ESL”) curriculum named Precise Mind (“Precise Mind”) to
kindergartens in China, supplementing their existing English curriculum. The Precise Mind curriculum is divided into multiple
levels, each tailored to a specific age group of children and their learning levels. Precise Mind is designed to educate children
from a young age with ESL while including fun and engaging activities that create an enjoyable and effective teaching structure
for the children. Precise Mind offers online lessons taught by professional native English speaking ESL teachers, who are contracted
from Lanjingling. These teachers provide live broadcasted English lessons that last for 45 minutes per session and are usually
held 1 to 2 times per week. Through combining our Precise Mind curriculum with each school’s existing English curriculum,
we believe students have been able to achieve outstanding results.
Sunway
Kids has generated approximately $935,000 of revenue and $263,000 of net income as of December 31, 2019, although these numbers
are unaudited.
Joint
Venture with Baydolphin, Inc.
On
March 10, 2020, CACM, a New York corporation and wholly owned subsidiary of the Company, entered into a certain joint venture
agreement (the “JV Agreement”) with Baydolphin, Inc., a company organized under the laws of New York, (“Baydolphin”).
Pursuant to the JV Agreement, among other things and subject to the terms and conditions contained therein, CACM and Baydolphin
agreed to establish a limited company under the laws of New York, Baytao LLC (the “JV”), which will be the 100% owner
of one or more operating entities in the U.S. to engage in the business of after-school education (the “Operating Entities”).
Pursuant to the JV
Agreement, CACM shall contribute necessary capital for the Operating Entities to fund their operations and obtain the right to
use of certain software platform and other technologies related to it from the Company, which will be provided to the JV and Operating
Entities with no charge to facilitate the operation of the Operating Entities and provide online classes to the registered students
of Operating Entities, and Baydolphin shall be responsible for managing the Operating Entities with its expertise in after-school
education, including but not limited to recruiting and training personnel for the Operating Entities and implementing all promotional
and marketing activities incidental to the Operating Entities. Eighty percent (80%) of the net profits or net loss of the joint
venture will be distributed to or assigned to CACM and the remaining twenty percent (20%) being distributed to or assigned to Baydolphin.
U.S. After-School Education Business
Pursuant to the JV Agreement, once Baytao sets up one or more
Operating Entities, CACM shall contribute the necessary capital for the Operating Entities to fund their operations, and the Company
will provide Baytao and Operating Entities with the use of its U Campus SAAS System and other related technologies at no extra
costs to facilitate the operations of the Operating Entities and provide online classes to the registered students of the Operating
Entities. Furthermore, Baydolphin is responsible for managing the Operating Entities with its expertise in after-school education,
including but not limited to recruiting and training personnel for the Operating Entities and implementing all promotional and
marketing activities incidental to the Operating Entities.
Corporate Information
Our principal executive office is located on 800 3rd Ave, Suite
2800, New York, NY 10022. Our telephone number is (212) 220-3967. We maintain a website at www.china-acm.com that contains information
about our Company, though no information contained on our website is part of this prospectus.
About
This Offering
This
prospectus relates to the offer and resale by the Selling Shareholders of an aggregate of 5,327,274 Ordinary Shares issuable upon
the exercise of the Warrants. All of the Ordinary Shares underlying the Warrants, when sold, will be sold by the Selling Shareholders.
The Selling Shareholders may sell the Ordinary Shares underlying the Warrants from time to time at prevailing market prices or
at privately negotiated prices.
Ordinary
Shares underlying Warrants Offered by the Selling Shareholders:
|
|
5,327,274
Ordinary Shares.
|
|
|
|
Ordinary
Shares Outstanding at May 19, 2020:
|
|
17,970,489(1)
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|
|
|
Use
of Proceeds:
|
|
While
we will not receive any proceeds from the sale of the Ordinary Shares underlying the Warrants offered by this prospectus by
the Selling Shareholders, we may receive cash proceeds of up to $2,930,000 from the cash exercise of the Warrants, as each
of the Warrants have an exercise price of $0.55 per share and such Warrants are exercisable into an aggregate of 5,327,274
Ordinary Shares.
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|
|
|
Risk
Factors:
|
|
An
investment in the Ordinary Shares offered under this prospectus is highly speculative and involves substantial risk. Please
carefully consider the “Risk Factors” section on page 7 and other information in this prospectus
for a discussion of risks. Additional risks and uncertainties not presently known to us or that we currently deem to be immaterial
may also impair our business and operations.
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|
|
|
Nasdaq
Symbol:
|
|
HHT
|
|
(1)
|
The
number of Ordinary Shares outstanding prior to and that will be outstanding after this offering excludes all Warrants outstanding
or issuable in connection with this offering.
|
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 November 15, 2019, and our most recent prospectus supplement, filed on May 13, 2020 as supplemented
and updated by any subsequent prospectus and prospectus supplement that we have filed with the SEC, together with all other information
contained or incorporated by reference in this prospectus and any applicable prospectus supplement and in any related free writing
prospectus in connection with a specific offering, before making an investment decision. Each of the risk factors could materially
and adversely affect our business, operating results, financial condition and prospects, as well as the value of an investment
in our securities, and the occurrence of any of these risks might cause you to lose all or part of your investment.
Risks
Related 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 U.S. have been materially affected. Our offices in Chengdu were temporarily closed until early March. Although our
offices re-opened in early March, since no children have been allowed to attend daycare centers or preschools as of the date of
this Prospectus, Sunway Kids has not been able to generate any meaningful revenue since the start of the pandemic. Management believes
the execution of the Company’s smart campus contracts and collection of payments will be delayed. Additionally, New York,
where our U.S. operations are based, is currently significantly affected by COVID-19, which led to measures taken by the New York
government trying to contain the spread of COVID-19, such as shelter in place, closure of schools and travel restrictions. Additional
travel and other restrictions may be put in place to further control the outbreak in U.S. As a result of these, management has
to temporarily postpone the rolling out of our afterschool centers in New York. The launching of the online education platform
we are jointly developing with Color China has been delayed. 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 stock price and create more volatility.
Risks
Related to our Joint Venture with Baydolphin, Inc.
We
may not be able to oversee the new joint venture efficiently.
We
may not be able to oversee Baytao, 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.
There
may be integration issues between Baytao and Sunway Kids’ technologies.
The
services provided by Baytao will need to be integrated with Sunway Kids’ existing software and technologies so as to achieve
our operating strategies. If we are unable to achieve a successful integration with Sunway Kids’ software and technologies,
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. Also, if new industry standards emerge that we do not anticipate or adapt to, our software products could
be rendered obsolete and, as a result, our business and operating results, as well as our ability to compete in the marketplace,
would be materially harmed.
Risks
Related to our Acquisition of Sunway Kids International Education Group Ltd.
We
may not be able to oversee the combined entity efficiently.
We may not be able to oversee
the combined entity efficiently, realize anticipated profits or effectively implement our growth and operating strategies. We are
now managing two related businesses in the education industry, the early childhood education services business conducted through
Sunway Kids and the online learning platform conducted via Baytao, which have different customers, suppliers, and competition landscapes.
This involves risks that could adversely affect our operating results due to uncertainties involved with the new business, diversion
of management’s attention in operating and managing the new business. There can be no guarantee that the addition of the
new business will not cause us to incur additional debt and increase our exposure to market and other risks. In addition, the Sunway
Kids management team has very little experience with the necessary disclosure practices of a public company and may not be able
to timely provide sufficient information to our accounting staff. Our failure to successfully pursue our strategies or effectively
operate and manage the combined entity could also have a material adverse effect on our rate of growth and operating performance.
Risks
Related to our Education Service Business
Our
education service revenue model depends on developing a subscriber base of users. If we fail to reach a critical mass of subscribers,
our net revenues may decline, and we may not be able to implement our business plan.
We
expect to generate revenue primarily from the fees we collect from our users. It is critical for us to enroll subscribers
in a cost-effective manner. Some of the factors, many of which are largely beyond our control, could prevent us from successfully
increasing subscriptions in a cost-effective manner, or at all. These factors include, among other things, (i) reduced interest
in the products and services we offer; (ii) negative publicity or perceptions regarding us, or electronic education services in
general; (iii) the emergence of alternative technologies not offered by us; (iv) the inability of subscribers to pay the fees;
(v) increasing market competition, particularly price reductions by competitors that we are unable or unwilling to match; and
(vi) adverse changes in relevant government policies or general economic conditions. If one or more of these factors reduce market
demand for our services, our subscriber base may not materialize as anticipated or our costs associated with subscriber acquisition
and retention could increase, or both, any of which could materially affect our ability to grow our gross billings and net revenues.
These developments could also harm our brand and reputation, which would negatively impact our ability to establish or expand
our business.
Our
education service business and growth will be highly dependent on the development of AI childhood education industries in China.
Mainland
China is a key driver of revenues and growth in our business plan. Our business plan assumes that we will be able to successfully
develop our AI childhood education business in mainland China. The evolution of the AI childhood education is affected by a number
of factors, most of which are beyond our control. These factors include:
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(1)
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Penetration
and usage by schools, teachers, parents and students, as well as government support over AI childhood education, in relation
to its related products and services;
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(2)
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The
availability, reliability and security of AI childhood education platforms;
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(3)
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The
growth of broadband and advanced technology, including mobile internet and 5G;
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(4)
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The
emergence of alternative business models that better suits or becomes a substitute which suits the needs of consumers in the
countries we serve; and
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(5)
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Changes
in laws and regulations, as well as government policies that govern the AI childhood education industry.
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If
the AI childhood education industries fail to develop as anticipated in China, our ability to grow our AI childhood education
business may be materially and adversely affected.
We
expect to invest in our growth for the foreseeable future. If we fail to manage this growth effectively, the success of our business
model will be compromised.
We
anticipate rapid growth in gross billings and net revenues upon the acquisition of our AI childhood education business segment,
which growth is expected to be driven primarily by the growth of our subscriber base. Rapid growth may place a significant strain
on our sales and marketing capacities, administrative and operating infrastructure, facilities and other resources. To manage
our anticipated our growth, we may need to continue to acquire more subscribers, scale up our product and service offerings, as
well as strengthen our platforms and systems. We will also be required to refine our operational, financial and management controls
and reporting systems and procedures. If we fail to efficiently manage the establishment and future expansion of our business,
our costs and expenses may increase more than we plan and we may not successfully attract a sufficient number of subscribers and
strategic partners in a cost-effective manner, respond to competitive challenges, or otherwise execute our business plans. In
addition, we may, as part of carrying out our growth strategies, adopt new initiatives to offer additional educational content
and to implement new pricing models and strategies. We cannot assure you that these initiatives may achieve the anticipated results.
These proposed changes may not be well received by our existing and prospective users, in which case their experience with our
education services may suffer, which could damage our reputation and business prospects.
Our
ability to effectively implement our strategies and manage any significant growth of our business will depend on a number of factors,
including our ability to: (i) identify and effectively market our products and services in new markets with sufficient growth
potential; (ii) develop and improve service and product offerings to make them appealing to our users; (iii) maintain and increase
our subscriber base; (iv) effectively recruit, train and motivate a large number of new employees, including sales and marketing
personnel; (v) successfully implement enhancements and improvements to the systems and platforms; (vi) continue to improve our
operational, financial and management controls and efficiencies; (vii) protect and further develop our intellectual property rights;
and (viii) make sound business decisions in light of the scrutiny associated with operating as a public company. These activities
require significant capital expenditures and investment of valuable management and financial resources, and our growth will continue
to place significant demands on our management. There are no guarantees that we will be able to effectively manage any future
growth in an efficient, cost-effective and timely manner, or at all. If we do not effectively manage the growth of our business
and operations, our reputation, results of operations and overall business and prospects could be negatively impacted.
We
expect to rely heavily on information and technology to operate our existing and future education products and services, and any
cybersecurity incident or other disruption to our AI and technology infrastructure could result in the loss of critical confidential
information or adversely impact our reputation, business or results of operations.
Our
ability to attract and retain customers and to compete effectively depends in part upon the satisfactory performance and reliability
of our technology network, including the ability to provide features of services that are important to our customers and to protect
our confidential business information and the information provided by our customers. We also rely on our technology to maintain
and process various operating and financial data that are essential to the day-to-day operation of our business (i.e., AI
Classroom) and formulation of our development strategies. Our business operations and growth prospects depend on our ability to
maintain and make timely and cost-effective enhancements and upgrades to our technology system and to introduce innovative additions
that can meet changing operational needs in future. Therefore, we expect to continue to invest in advanced information technology
and any equipment to enhance operational efficiency and reliability as we grow. Accordingly, any errors, defects, disruptions
or other performance problems with our IT infrastructure could damage our reputation, decrease user satisfaction and retention,
adversely impact our ability to attract new users and expand our service and product offerings, and materially disrupt our operations.
If any of these occur, our business operations, reputation and prospects could be harmed.
If
our security measures are breached or fail and result in unauthorized disclosure of data by our employees or our third-party agents,
we could lose existing subscribers, fail to attract new subscribers and be exposed to protracted and costly litigation.
Maintaining
platform security is of critical importance to our subscribers because the platform stores and transmits proprietary and confidential
information, which may include sensitive personally identifiable information that may be subject to stringent legal and regulatory
obligations. As an electronic education service provider, we face an increasing number of threats to our IT infrastructure, including
unauthorized activity and access by our employees or third-party agents, system viruses, worms, malicious code and organized cyber-attacks,
which could breach our security and disrupt our business. We hope to introduce data security and confidentiality protocols into
the cooperation agreements we enter into with third-party sales agents with whom we share prospective subscribers’ contact
information. As we expand, we hope to invest in improving our technology security initiatives, information technology risk management
and disaster recovery plans to prevent unauthorized access of confidential or sensitive personal information by our employees
and third-party sales agents in the process of engaging prospective subscribers.
These
measures, however, may not be as effective as we anticipate. In addition, there is no assurance that our third-party sales agents
will comply with contractual and legal requirements with respect to data privacy when they collect data from our prospective customers.
If our security measures are breached or fail as a result of third-party action, employee error, malfeasance or otherwise, we
could be subject to liability or our business could be interrupted, potentially over an extended period of time. Any or all of
these issues could harm our reputation, adversely affect our ability to attract and enroll prospective subscribers, cause prospective
subscribers not to enroll or stay enrolled, or subject us to third-party lawsuits, regulatory fines or other action or liability.
Further, any reputational damage resulting from breach of our security measures could create distrust of our company by prospective
subscribers or investors. We may be required to expend significant management time and additional resources to protect against
the threat of these disruptions and security breaches or to alleviate problems caused by such disruptions or breaches.
Privacy
concerns could limit our ability to collect and leverage our user data and disclosure of user data could adversely impact our
business and reputation.
In
the ordinary course of our business and in particular in connection with conducting sales and marketing activities with our existing
and prospective subscribers as well as the utilization of our AI-powered platform programs, we collect and utilize data supplied
by our users. We currently face certain legal obligations regarding the manner in which we treat such information. Increased regulation
of data utilization practices, including self-regulation or findings under existing laws that limit our ability to collect, transfer
and use data, could have an adverse effect on our business. In addition, if we were to disclose data about our users in a manner
that was objectionable to them, our business reputation could be adversely affected, and we could face potential legal claims
that could impact our operating results.
Internationally,
we may become subject to additional and/or more stringent legal obligations concerning our treatment of customer and other personal
information, such as laws regarding data localization and/or restrictions on data export. Failure to comply with these obligations
could subject us to liability, and to the extent that we need to alter our business model or practices to adapt to these obligations,
we could incur additional expenses.
We
face risks associated with uncertainties surrounding PRC laws and regulations governing the education industry in general, including
the Law for Promoting Private Education and its Implementation Rules.
Pursuant
to the Administrative Regulations on Educational Websites and Online and Distance Education Schools promulgated by the Ministry
of Education of the PRC, or the MOE, on July 5, 2000, “educational websites and online education schools” that provide
educational services in relation to higher education, elementary education, pre-school education, teaching education, occupational
education, adult and other education and public educational information services, are subject to approval from competent education
authorities, depending on the type of education service provided. In February 2016, the State Council issued a government decision
which explicitly withdrew the above-mentioned approval requirement. On November 7, 2016, China’s National People’s
Congress passed an amendment to the Promotion of Private Education Law, or the Amendment, which became effective on September
1, 2017. The Amendment applies different regulatory requirements to non-profit and for-profit private schools.
In
December 2016, several PRC government agencies, including the MOE, the State Administration for Industry and Commerce, or the
SAIC, and the Ministry of Human Resources and Social Welfare, jointly promulgated the Implementation Rules on the Supervision
and Administration of For-profit Private Schools, or the Implementation Rules. Under the Implementation Rules, the establishment,
division, merger or any other material change in a for-profit private school shall be approved by the competent education authorities
or the authorities in charge of labor and social welfare and be registered with the competent local branch of SAIC, and a duly
approved private school will be granted a private school operating permit. The Implementation Rules also provide that the provisions
contained therein should be applicable to “for-profit private training institutions” in an analogous manner.
As
of the date of this prospectus, we have not received any notice of warning or been subject to any penalties or disciplinary action
from government authorities due to our lack of a private school operating permit for our electronic education services. Nonetheless,
the current PRC laws and regulations, including the Amendment and the Implementation Rules, remain unclear as to whether the requirement
for a private school operating permit is applicable to an electronic education service provider. We cannot assure you that the
PRC government will not in the future require us to obtain a private school operating permit, given the lack of clear and consistent
statutory interpretation regarding the implementation of the Amendment and the Implementation Rules and other relevant laws and
regulations. If the PRC government requires us to obtain a private school operating permit or introduces additional amendments
and guidelines to expand the coverage of the Amendment to explicitly cover electronic education service providers, and if we fail
to do so, we may be subject to fines up to five times the illegitimate gains generated from the provision of training services
without a proper license, other administrative sanctions, such as being ordered to refund payments to users, or criminal liabilities,
for our lack of a private school operating permit. In addition, uncertainties exist as new laws and regulations, including without
limitation the for review draft of Implementation Rules of the Promotion of Private Education Law, or the draft Implementation
Rules, published by the Ministry of Justice in August, 2018, may require online education service providers to obtain private
school operating permit or make filing with its competent provincial department of education or department of human resources
and social security. It is uncertain when the draft would be signed into law and whether the final version would have any substantial
changes from the draft. If enacted as the draft, we may be unable to obtain the private school operating permit or complete the
required filing in a prompt manner or incur additional costs in complying with relevant requirements, which may adversely affect
our business, financial conditions and results of operations. We may also be subject to regulatory requirements that are more
stringent than the ones currently applicable to us, including those relating to sales and marketing, courses and educational content
offerings, teachers’ qualification, as well as tuition fee rates and tuition refund policies, or laws and regulations that
require us to obtain and maintain additional licenses and permits, and we may incur substantial expenses or alter or change our
business to comply with these requirements. If any of the foregoing were to happen, our business operations may be disrupted,
and our financial condition, results of operations and reputation may be materially and adversely affected.
We
face regulatory risks and uncertainties with respect to the licensing requirement for the online transmission of internet
audio-visual programs.
On
December 20, 2007, the National Radio and Television Administration fka known as the State Administration of Press Publication
Radio Film and Television, or SAPPRFT, and the Ministry of Industry and Information Technology, or the MIIT, jointly promulgated
the Administrative Provisions on Internet Audio Visual Program Services, or the Audio Visual Program Provisions, which became
effective on January 31, 2008 and were amended on August 28, 2015. Among other things, the Audio Visual Program Provisions stipulate
that no entities or individuals may provide Internet audio-visual program services without a License for Online Transmission of
Audio-Visual Programs issued by SAPPRFT or completing the relevant filing with SAPPRFT or its local bureaus, and only state-owned
or state-controlled entities are eligible to apply for a License for Online Transmission of Audio Visual Programs. On April 1,
2010, SAPPRFT promulgated the Provisional Implementations of Tentative Categories of Internet Audio Visual Program Services, or
the Categories, which clarified the scope of Internet audio-visual programs services, which was amended on March 10, 2017. According
to the Categories, there are four categories of Internet audio-visual program services which are further divided into seventeen
sub-categories. Sub-category No. 3 to the second category covers the making and editing of certain specialized audio-visual programs
concerning, among other things, educational content, and broadcasting such content to the general public online. Sub-category
No. 5 of the first category and sub-category No. 7 of the second category cover the live broadcasting of important political,
martial, economic, social, cultural, sports activities or events or general social or community cultural activities, sports games
and other organized activities. However, there are still significant uncertainties relating to the interpretation and implementation
of the Audio Visual Program Provisions, in particular, the scope of “internet audio-visual programs.” See “Regulations
Relating to Online Transmission of Audio-Visual Programs.”
We
plan to deliver our courses in live streaming format. Our teachers and students communicate and interact live with each other
via our virtual learning community. The audio and video data will likely be transmitted through the platforms between specific
recipients instantly without any further redaction. We believe the nature of the raw data we transmit will distinguish us from
general providers of internet audio-visual program services, such as the operator of online video websites, and the provision
of the Audio-Visual Program Provisions are not applicable with regard to our offering of the courses. However, we cannot assure
you that the competent PRC government authorities will not ultimately take a view contrary to our opinion. In addition, we also
plan to offer video recordings of live streaming courses and certain other audio-video contents on our electronic platforms to
our students as supplementary course materials on our platforms. If the government authorities determine that our offering of
the courses fall within the relevant category of Internet audio-visual program services under the Categories, we may be required
to obtain the License for Online Transmission of Audio Visual Programs.
The
Categories describe “Internet audio-visual program services” in a very broad, vague manner and are unclear as to whether
electronic courses, whether delivered in a live streaming format or through video recordings, fall into the definition of audio-visual
programs. We have made inquiries to the relevant bureaus of SAPPRFT and were informed that online educational content provided
through live streaming or recorded courses does not fall within the scope of internet audio-visual programs, the transmission
of which does not require a License for Online Transmission of Audio-Visual Programs. We cannot assure you that the PRC government
will not ultimately take a view that live streaming or recorded courses or any other content offered on our platforms are subject
to the Audio Visual Program Provisions. We currently do not hold a License for Online Transmission of Audio Visual Programs, and
since we are not a state-owned or state-controlled entity, we are not eligible to apply for such license. If the PRC government
determines that our content should be considered as “internet audio- visual programs” for the purpose of the Audio-Visual
Program Provisions, we may be required to obtain a License for Online Transmission of Audio Visual Programs. We are, however,
not eligible apply for such license since we are not a state-owned or state-controlled entity. If this were to occur, we may be
subject to penalties, fines, legal sanctions or an order to suspend the provision of our live streaming courses. As of the date
of this annual report, we have not received any notice of warning or been subject to penalties or other disciplinary action from
the relevant governmental authorities regarding the lack of a License for Online Transmission of Audio Visual Programs in conducting
of our business.
Our
failure to obtain and maintain approvals, licenses or permits applicable to our business could have a material adverse impact
on our business, financial conditions and results of operations.
A
number of PRC regulatory authorities, such as the SAIC, the Cyberspace Administration of China, the MITT, the National Radio and
Television Administration, and the State Council Information Office, the Ministry of Civil Affairs, and the Ministry of Human
Resources and Social Welfare, oversee different aspects of our business operations. We may be required in the future to obtain
additional government approvals, licenses and permits in connection with our operations.
By
way of example, depending upon regulatory interpretation, under the current PRC laws and regulations, the provision of our educational
content through our electronic platform may be considered “online publishing” and may require us to obtain an Internet
Publishing License, which we currently do not have.
As
of the date of this prospectus, we have not received any notice of warning or been subject to penalties or other disciplinary
action from the relevant governmental authorities regarding the lack of any the above-mentioned approvals, licenses or permits.
However, we cannot guarantee that the government authorities will not impose any penalties or sanctions on us in the future,
which may include warnings, fines, mandates to remedy any violations, confiscation of the gains derived from the services for
which approvals, licenses or permits are required, and/or an order to cease to provide such services. In addition, we cannot guarantee
that the government will not promulgate new laws and regulations that require additional licenses, permits and/or approvals for
the operation of any of our existing or future business. If we are unable to obtain such licenses, permits, or approvals in a
timely fashion, we could be subject to penalties and operational disruption and our financial condition and results of operations
could be adversely affected.
We
face intense competition which could adversely affect our results of operations and market share.
We
operate in a highly competitive and fragmented industry that is sensitive to price, content (i.e. curriculum) and quality of service.
Some of our competitors may have more financial resources, longer operating histories, larger customer bases and greater brand
recognition than we do, or they are controlled or subsidized by foreign governments, which enables them to obtain or raise capital
and enter into strategic relationships more easily. We also compete with leading domestic supplier companies based on a number
of factors including business model, operational capabilities, cost control and service quality, as well as in-house delivery
capabilities to serve their logistics needs and compete with us.
We
are also subject to other risks and uncertainties that affect many other businesses, including but not limited to:
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(1)
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Increasing
costs, the volatility of costs and funding requirements and other legal mandates for employee benefits, especially pension
and healthcare benefits;
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(2)
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The
increasing costs of compliance with federal, state and foreign governmental agency mandates;
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(3)
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Any
impacts on our business resulting from new domestic and international government laws and regulation;
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(4)
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Market
conditions in the AI childhood education industry or the economy as a whole;
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(5)
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Market
acceptance of our new service and growth initiatives;
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(6)
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Announcements
of the introduction of new products and services by our competitors;
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(7)
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The
impact of technology developments on our operations and on demand for our products and services;
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(8)
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Developments
concerning current or future strategic collaborations;
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(9)
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Widespread
outbreak of an illness or any other communicable disease, or any other public health crisis such as we are currently experiencing
with the COVID 19 pandemic.
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If
we are unable to respond to these changing market conditions, our business and financial results may be materially affected.
Risks
Related 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
November 18, 2019, we received a notification letter from the Nasdaq Listing Qualifications Staff of The NASDAQ Stock Market LLC
(“Nasdaq”) notifying us that we are no longer in compliance with the minimum stockholders’ equity requirement
for continued listing on the Nasdaq Capital Market set forth in Nasdaq Listing Rule 5550(b)(1) (the “Stockholder Equity
Requirement”).The notification received had no immediate effect on the listing of the Company’s ordinary shares on
Nasdaq. Nasdaq has provided us with 45 calendar days, or until January 2, 2020, to submit a plan to regain compliance with the
minimum stockholders’ equity standard. If our plan to regain compliance is accepted, Nasdaq may grant an extension of up
to 180 calendar days from the date of the notification letter, or until May 16, 2019, to evidence compliance. On January 2, 2020,
we submitted our plan of compliance to Nasdaq.
On
January 24, 2020, we received a notice (the “Notice”) from Nasdaq stating that we were not able to regain compliance
with the Stockholder Equity Requirement or the alternative criteria set forth in Nasdaq Listing Rule 5550(b) and that the Staff
had determined to seek to delist the Company’s securities from Nasdaq unless the Company requests a hearing before the Nasdaq
Hearings Panel (the “Panel”). On January 28, 2020 we requested a hearing before the Panel. Such request will stay
any suspension or delisting action by Nasdaq pending the completion of the hearing process. On January 30, 2020, we received a
hearing instruction letter from Nasdaq stating that the delisting action referenced in the Notice has been stayed, pending a final
written decision by the Panel.
On
March 12, 2020, the Company appeared before the Panel to demonstrate its ability to regain compliance with the Stockholder Equity
Requirement and subsequently submitted supplemental information to the Panel on March 23, 2020 pursuant to the Panel’s request.
By a letter dated April 16, 2020, the Company was notified by Nasdaq that the Panel had determined to continue the listing of
the Company’s ordinary shares based upon the Company’s compliance with the Stockholder Equity Requirement. Additionally,
the Panel advised in such letter that is has placed the Company under a Panel Monitor (the “Monitor”) that shall last
through April 15, 2021. Pursuant to that Monitor and as provided in the Nasdaq Rules, if at any time during the monitor period
the Company fails to maintain compliance with any listing standard, Nasdaq will issue a Staff Delisting Determination and the
Hearings Department will promptly schedule a new hearing.
Separately,
on March 7, 2020, we received a notification letter from Nasdaq notifying us that we are no longer in compliance with the minimum
bid price requirement for continued listing on the Nasdaq Capital Market set forth in Nasdaq Listing Rule 5550(a)(2) (the “Bid
Price Requirement”). The notification received has no immediate effect on the listing of the Company’s ordinary shares
on Nasdaq. Under the Nasdaq Listing Rules, the Company has until September 1, 2020 to regain compliance. If at any time during
such 180-day period the closing bid price of the Company’s ordinary shares is at least $1 for a minimum of 10 consecutive
business days, Nasdaq will provide the Company written confirmation of compliance.
On
April 16, 2020, Nasdaq filed an immediately effective rule change with the SEC to toll the compliance periods for bid price and
market value of publicly held shares requirements (collectively, the “Price-based Requirements”) through June 30,
2020. As a result, companies presently in compliance periods for Price-based Requirements will remain at that same stage of the
process and will not be subject to being delisted for these concerns. The Company can regain compliance, either during the suspension
or during the compliance period resuming after the suspension, by evidencing compliance with the Price-based Requirements for
a minimum of 10 consecutive trading days.
If
the Company continues to be in non-compliance with the Bid Price Requirement during the suspension or the compliance period resuming
on July 1, 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 we fail to regain compliance with the Bid Price Requirement
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.
SELLING
SHAREHOLDERS
The
table below lists the Selling Shareholders and other information regarding the “beneficial ownership” of the Ordinary
Shares by the Selling Shareholders. In accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), “beneficial ownership” includes any Ordinary Shares as to which the Selling Shareholders have sole or
shared voting power or investment power and any Ordinary Shares that the Selling Shareholders have the right to acquire within
sixty (60) days (including Ordinary Shares issuable upon exercise of warrants to purchase Ordinary Shares that are currently exercisable
or exercisable within sixty (60) days).
The
second column indicates the number of Ordinary Shares beneficially owned by the Selling Shareholders, based on their respective
ownership as of May 19, 2020. The second column also assumes the exercise of all of the Warrants held by the Selling Shareholders
as of May 19, 2020, without regard to any limitations on exercise described in this prospectus or in the Warrants.
The
third column lists the Ordinary Shares being offered by this prospectus by the Selling Shareholders.
This
prospectus covers the resale of all of the Ordinary Shares issuable upon exercise of the Warrants that are held by the Selling
Shareholders. The Selling Shareholders can offer all, some or none of their Ordinary Shares, thus we have no way of determining
the number of the Ordinary Shares underlying Warrants that will be held after this offering. Therefore, the fourth and fifth columns
assume that the Selling Shareholders will sell all of the Ordinary Shares issuable upon exercise of the Warrants which are covered
by this prospectus. See “Plan of Distribution.”
|
|
Number
of
Ordinary Shares Owned Prior to
Offering(1)
|
|
|
Maximum
Number of
Ordinary Shares
to be Sold
Pursuant to
this
Prospectus
|
|
|
Number
of
Ordinary Shares
Owned After
Offering(1)
|
|
|
Percentage
Beneficially
Owned
After
Offering(1)
|
|
Hudson
Bay Master Fund Ltd.(2)
|
|
|
1,331,819
|
|
|
|
1,331,819
|
|
|
|
0
|
|
|
|
*
|
%
|
Anson
Investments Master Fund LP(3)
|
|
|
1,331,818
|
|
|
|
1,331,818
|
|
|
|
0
|
|
|
|
*
|
|
Intracoastal
Capital LLC(4)
|
|
|
1,331,819
|
|
|
|
1,331,819
|
|
|
|
0
|
|
|
|
*
|
|
L1
Capital Global Opportunities Master Fund(5)
|
|
|
1,331,818
|
|
|
|
1,331,818
|
|
|
|
0
|
|
|
|
*
|
|
TOTAL
|
|
|
5,327,274
|
|
|
|
5,327,274
|
|
|
|
0
|
|
|
|
*
|
%
|
(1)
|
Includes Ordinary Shares owned by the Selling Shareholders upon full exercise of all Warrants to purchase Ordinary Shares that are held by the Selling Shareholders. The Warrants are each exercisable for one Ordinary Share at an exercise price of $0.55 per share.
|
|
|
(2)
|
Hudson Bay Capital Management LP, the investment manager of Hudson Bay Master Fund Ltd., has voting and investment power over these securities. Sander Gerber is the managing member of Hudson Bay Capital GP LLC, which is the general partner of Hudson Bay Capital Management LP. Each of Hudson Bay Master Fund Ltd. and Sander Gerber disclaims beneficial ownership over these securities.
|
|
|
(3)
|
Anson Advisors Inc and Anson Funds Management LP, the Co-Investment Advisers of Anson Investments Master Fund LP (“Anson”), hold voting and dispositive power over the Ordinary Shares held by Anson. Bruce Winson is the managing member of Anson Management GP LLC, which is the general partner of Anson Funds Management LP. Moez Kassam and Amin Nathoo are directors of Anson Advisors Inc. Mr. Winson, Mr. Kassam and Mr. Nathoo each disclaim beneficial ownership of these Common Shares except to the extent of their pecuniary interest therein. The principal business address of Anson is Walkers Corporate Limited, Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands.
|
|
|
(4)
|
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.
|
|
|
(5)
|
David Feldman has voting and dispositive power over the securities owned by L1 Capital Global Opportunities Master Fund. The address of L1 Capital Global Opportunities Master Fund is 161A Shedden Road, 1 Artillery Court, PO Box 10085, Grand Cayman KY1-1001, Cayman Islands.
|
Material
Relationships with Selling Shareholders
We
have had the following material relationships with the Selling Shareholders in the last three (3) years:
Registered
Direct Offering
On
March 31, 2020, the Company and the Selling Shareholders entered into certain securities purchase agreement, pursuant to which
the Company agreed to sell to the Selling Shareholders an aggregate of 2,727,274 ordinary shares, par value $0.001 per share in
a registered direct offering and the April Warrants to purchase up to 2,727,274 ordinary shares in a concurrent private placement,
for gross proceeds of approximately $1.5 million (the “April Offering”). The April Offering closed on April 2, 2020,
upon the satisfaction of all closing conditions.
On
May 11, 2020, the Company and the Selling Shareholders entered into certain securities purchase agreement, pursuant to which the
Company agreed to sell to the Selling Shareholders an aggregate of 2,600,000 ordinary shares, par value $0.001 per share in a
registered direct offering and the May Warrants to purchase up to 2,600,000 ordinary shares in a concurrent private placement,
for gross proceeds of approximately $1.43 million (the “May Offering”). The May Offering closed on May 13, 2020, upon
the satisfaction of all closing conditions.
USE
OF PROCEEDS
The
Selling Shareholders will receive all of the proceeds from the sale of Ordinary Shares under this prospectus. We will not receive
any proceeds from these sales. To the extent that we receive proceeds from the exercise of the Warrants, we will use those proceeds
to pay for the expenses of this offering and for working capital and other general corporate purposes. The Selling Shareholders
will pay any agent’s commissions and expenses they incur for brokerage, accounting, tax or legal services or any other expenses
that they incur in disposing of the Ordinary Shares. We will bear all other costs, fees and expenses incurred in effecting the
registration of the Ordinary Shares covered by this prospectus and any prospectus supplement. These may include, without limitation,
all registration and filing fees, SEC filing fees and expenses of compliance with state securities or “blue sky” laws.
See
“Plan of Distribution” elsewhere in this prospectus for more information.
PLAN
OF DISTRIBUTION
The
Selling Shareholders and any of their respective pledgees, assignees and successors-in-interest may, from time to time, sell any
or all of their securities covered hereby on any trading market, stock exchange or other trading facility on which the securities
are traded or in private transactions. These sales may be at fixed 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 securities 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;
|
|
|
|
|
●
|
settlement
of short sales;
|
|
|
|
|
●
|
in
transactions through broker-dealers that agree with the Selling Shareholders to sell a specified number of such securities
at a stipulated price per security;
|
|
|
|
|
●
|
through
the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
|
|
|
|
|
●
|
a
combination of any such methods of sale; or
|
|
|
|
|
●
|
any
other method permitted pursuant to applicable law.
|
The
Selling Shareholders may also sell securities 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 brokers-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 securities,
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 securities covered hereby, 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 securities in the course of hedging the positions
they assume. The Selling Shareholders may also sell securities short and deliver these securities to close out their short positions,
or loan or pledge the securities 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 create one or more derivative securities
which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which
securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction).
The
Selling Shareholders and any broker-dealers or agents that are involved in selling the securities 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 securities purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. We are requesting that each Selling Stockholder inform us that it does not have any written or oral
agreement or understanding, directly or indirectly, with any person to distribute the securities. We will pay certain fees and
expenses incurred by us incident to the registration of the securities.
Because
the Selling Shareholders may be deemed to be an “underwriter” within the meaning of the Securities Act, they will
be subject to the prospectus delivery requirements of the Securities Act, including Rule 172 thereunder. In addition, any securities
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 are requesting that each Selling Stockholder confirm that there is no underwriter or coordinating
broker acting in connection with the proposed sale of the resale securities by the Selling Stockholder.
We
intend to keep this prospectus effective until the earlier of (i) the date on which the securities 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 us to be in compliance with the current public information requirement under Rule 144 under the Securities
Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under
the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed
brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities 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 securities may not
simultaneously engage in market making activities with respect to the Common Stock 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 the Common Stock by the Selling Shareholders or any other person. We will make copies of this prospectus
available to the Selling Shareholders and are informing the Selling Shareholders 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).
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 Conyers Dill & Pearman to the extent governed by the laws of the Cayman Islands. If legal
matters in connection with offerings made pursuant to this prospectus are passed upon by counsel to underwriters, dealers or agents,
such counsel will be named in the applicable prospectus supplement relating to any such offering.
EXPERTS
The
financial statements incorporated by reference in this prospectus for the year ended June 30, 2019 have been audited by Wei, Wei
& Co., LLP, an independent registered public accounting firm, as set forth in their report thereon included therein, and incorporated
herein by reference, and are included in reliance upon such report given on the authority of such firm as experts in accounting
and auditing.
FINANCIAL
INFORMATION
The
financial statements for the year ended June 30, 2019 and 2018 are included in our Annual Report on Form 20-F, which are incorporated
by reference into this prospectus.
INFORMATION
INCORPORATED BY REFERENCE
The
SEC allows us to “incorporate by reference” into this prospectus the information we file with the SEC. This means
that we can disclose important information to you by referring you to those documents. Any statement contained in a document incorporated
by reference in this prospectus shall be deemed to be modified or superseded for purposes of this prospectus to the extent that
a statement contained herein, or in any subsequently filed document, which also is incorporated by reference herein, modifies
or supersedes such earlier statement. Any such statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus.
We
hereby incorporate by reference into this prospectus the following documents that we have filed with the SEC under the Exchange
Act:
|
(1)
|
the
Company’s Annual Report on Form 20-F for the fiscal year ended June 30, 2019, filed with the SEC on November 15, 2019;
|
|
|
|
|
(2)
|
the
Company’s Current Reports on Form 6-K, filed with the SEC on January 3, 2020, January 23, 2020, February 14, 2020, March 9, 2020, March 16, 2020, April 2, 2020, April 8, 2020, April 20, 2020, April 27, 2020, May 5, 2020, May 6, 2020, May 11, 2020,
May 13, 2020 and May 15, 2020;
|
|
|
|
|
(3)
|
our
Registration Statement on Form F-4, as amended, filed with the Commission on September 20, 2018; and
|
|
|
|
|
(4)
|
the
description of our Ordinary Shares incorporated by reference in our registration statement on Form 8-A, as amended (File No.
001-34515) filed with the Commission on October 30, 2009, including any amendment and report subsequently filed for the purpose
of updating that description; and
|
All
documents that we file with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (and in the case of a Current
Report on Form 6-K, so long as they state that they are incorporated by reference into this
prospectus, and other than Current Reports on Form 6-K, or portions thereof, furnished under Form 6-K) (i) after the initial
filing date of the registration statement of which this prospectus forms a part and prior to the effectiveness of such registration
statement and (ii) after the date of this prospectus and prior to the termination of the offering shall be deemed to be incorporated
by reference in this prospectus from the date of filing of the documents, unless we specifically provide otherwise. Information
that we file with the SEC will automatically update and may replace information previously filed with the SEC. To the extent that
any information contained in any Current Report on Form 6-K or any exhibit thereto, was or is furnished to, rather than filed
with the SEC, such information or exhibit is specifically not incorporated by reference.
Upon
request, we will provide, without charge, to each person who receives this prospectus, a copy of any or all of the documents incorporated
by reference (other than exhibits to the documents that are not specifically incorporated by reference in the documents). Please
direct written or oral requests for copies to us at 800 3rd Ave, Suite 2800, New York, NY 10022, Attention: Yang (Sean) Liu, +1
(212) 220-3967
WHERE
YOU CAN FIND MORE INFORMATION
As
permitted by SEC rules, this prospectus omits certain information and exhibits that are included in the registration statement
of which this prospectus forms a part. Since this prospectus may not contain all of the information that you may find important,
you should review the full text of these documents. If we have filed a contract, agreement or other document as an exhibit to
the registration statement of which this prospectus forms a part, you should read the exhibit for a more complete understanding
of the document or matter involved. Each statement in this prospectus, including statements incorporated by reference as discussed
above, regarding a contract, agreement or other document is qualified in its entirety by reference to the actual document.
We
are subject to the information reporting requirements of the Exchange Act that are applicable to foreign private issuers,
and, in accordance with these requirements, we file annual and current reports and other information with the SEC. You may inspect,
read (without charge) and copy the reports and other information we file with the SEC at the SEC’s Public Reference Room
located at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet website at www.sec.gov that contains
our filed reports and other information that we file electronically with the SEC.
We
maintain a corporate website at http://www.china-acm.com . Information contained on, or that can be accessed through, our
website does not constitute a part of this prospectus.
ENFORCEABILITY
OF CIVIL LIABILITIES
We
are incorporated under the laws of the Cayman Islands as an exempted company with limited liability. We incorporated in the Cayman
Islands because of certain benefits associated with being a Cayman Islands exempted company, such as political and economic stability,
an effective judicial system, a favorable tax system, the absence of foreign exchange control or currency restrictions and the
availability of professional and support services. However, the Cayman Islands have a less developed body of securities laws that
provide significantly less protection to investors as compared to the securities laws of the United States. In addition, Cayman
Islands companies may not have standing to sue before the federal courts of the United States.
All
of our assets are located in China. In addition, some of our directors and officers are residents of jurisdictions other than
the United States and all or a substantial portion of their assets are located outside the United States. As a result, it may
be difficult for investors to effect service of process within the United States upon us or our directors and officers, or to
enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability
provisions of the securities laws of the United States or any state in the United States.
According
to our local Cayman Islands’ counsel, there is uncertainty with regard to Cayman Islands law relating to whether a judgment
obtained from the United States or Hong Kong courts under civil liability provisions of the securities laws will be determined
by the courts of the Cayman Islands as penal or punitive in nature. If such a determination is made, the courts of the Cayman
Islands will not recognize or enforce the judgment against a Cayman Islands’ company. The courts of the Cayman Islands in
the past determined that disgorgement proceedings brought at the instance of the Securities and Exchange Commission are penal
or punitive in nature and such judgments would not be enforceable in the Cayman Islands. Other civil liability provisions of the
securities laws may be characterized as remedial, and therefore enforceable but the Cayman Islands’ Courts have not yet
ruled in this regard. Our Cayman Islands’ counsel has further advised us that a final and conclusive judgment in the federal
or state courts of the United States under which a sum of money is payable other than a sum payable in respect of taxes, fines,
penalties or similar charges, may be subject to enforcement proceedings as a debt in the courts of the Cayman Islands.
As
of the date hereof, no treaty or other form of reciprocity exists between the Cayman Islands and Hong Kong governing the recognition
and enforcement of judgments.
Cayman
Islands’ counsel further advised that although there is no statutory enforcement in the Cayman Islands of judgments obtained
in the United States or Hong Kong, a judgment obtained in such jurisdictions will be recognized and enforced in the courts of
the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on
the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment (1) is given by a foreign court of
competent jurisdiction, (2) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been
given, (3) is final, (4) is not in respect of taxes, a fine or a penalty, and (5) was not obtained in a manner and is of a kind
the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands.
INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and
controlling persons pursuant to the foregoing provisions, or otherwise, we have been informed that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
COLOR
STAR TECHNOLOGY CO., LTD.
5,327,274
Ordinary Shares underlying Warrants
PROSPECTUS
May
19, 2020
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
8. Indemnification of Directors and Officers
Cayman
Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification
of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to
public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our M&A requires
us to indemnify our officers and directors for actions, proceedings, claims, losses, damages, costs, liabilities and expenses
(“Indemnified Losses”) incurred in their capacities as such unless such Indemnified Losses arise from dishonesty of
such directors or officers. This standard of conduct is generally the same as permitted under the Delaware General Corporation
Law for a Delaware corporation.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling
us under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
Item
9. Exhibits
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 securities offered (if the
total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration
statement.
|
|
(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 Securities
and Exchange Commission by the registrant pursuant to Section 13 or 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).
|
(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 securities offered therein, and the offering of such securities
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 securities being registered which remain unsold at the
termination of the offering.
|
|
(4)
|
That,
for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
|
|
(i)
|
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
|
|
(ii)
|
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 securities 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 securities 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.
|
|
(5)
|
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 securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned
registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the
purchaser, if the securities 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 securities 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 securities 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)
|
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 section 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 securities offered
therein, and the offering of such securities 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 Act 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 securities 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 Act and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, as amended, 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 the City of New York, State of New York, on May 19, 2020.
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COLOR STAR TECHNOLOGY CO., LTD.
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|
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By:
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/s/
Yang (Sean) Liu
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Name:
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Yang (Sean) Liu
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|
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Title:
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Chief Executive Officer
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POWER
OF ATTORNEY
Each
person whose signature appears below hereby constitutes and appoints Yang (Sean) Liu and Lili Jiang, and each of them, individually,
his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, in his or her name,
place and stead, in any and all capacities (including his capacity as a director and/or officer of the registrant), to sign any
and all amendments and post-effective amendments and supplements to this registration statement, and including any registration
statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the U.S. Securities Act of 1933,
as amended, and to file the same, with all exhibits thereto and other documents in connection therewith, with the SEC, 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 he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his substitute, may lawfully
do or cause to be done by virtue hereof.
Pursuant
to the requirements of the U.S. Securities Act of 1933, as amended, this Form F-3 registration statement has been signed by the
following persons in the capacities and on the date indicated.
Name
|
|
Position
|
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Date
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|
|
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/s/
Yang (Sean) Liu
|
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Chief Executive Officer and Chairman of the
Board
|
|
May 19, 2020
|
Yang (Sean) Liu
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|
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|
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|
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/s/
Lili Jiang
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Chief Financial
Officer and Director
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|
May
19, 2020
|
Lili Jiang
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|
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|
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|
|
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/s/
Wei Fang
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Director
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|
May 19, 2020
|
Wei Fang
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|
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|
|
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/s/
Wei Pei
|
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Director
|
|
May 19, 2020
|
Wei Pei
|
|
|
|
|
|
|
|
|
|
/s/
Xiaoyuan Zhang
|
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Director
|
|
May 19, 2020
|
Xiaoyuan Zhang
|
|
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II-3
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