Filed Pursuant to Rule 424(b)(5)
File No. 333-274893
PROSPECTUS SUPPLEMENT
(To Prospectus dated January 26, 2024)
BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY
55,200,000 Ordinary Shares
We are
offering directly to certain institutional investors pursuant to this prospectus supplement, the accompanying prospectus, and those certain
Securities Purchase Agreements, dated January 5, 2025, by and among Blue Hat Interactive Entertainment Technology (the “Company”)
and the institutional investors signatories thereto 55,200,000 (the “Shares”, or “Securities”) of our ordinary
shares, par value $0.01 per share (the “Ordinary Shares”). We are offering the Ordinary Shares in this offering at a price
per share of $0.08.
Our Ordinary
Shares trade on the NASDAQ Capital Market under the symbol “BHAT.” The last reported sale price of our Ordinary Shares on
the NASDAQ Capital Market on January 3, 2025 was $0.1478 per share. For a more detailed description of the Ordinary Shares, see the section
entitled “Description of the Securities We are Offering” beginning on page S-11 of this prospectus supplement.
The aggregate
market value of our outstanding Ordinary Shares held by non-affiliates was $13,254,541.99 based on 58,398,281 Ordinary Shares outstanding,
of which 53,488,870 shares are held by non-affiliates, and a per share price of $0.2478, which was the last reported price on the NASDAQ
Capital Market of our Ordinary Shares on November 7, 2024. During the prior 12 calendar month period that ends on and includes the date
of this prospectus supplement, we did not issue or sell any of securities pursuant to General Instruction I.B.5. of Form F-3 and accordingly
we may sell up to $4,418,180.66 of our Ordinary Shares hereunder.
We intend
to use the net proceeds received from the offering for working capital and other general corporate purposes. Additional information regarding
our intended use of the proceeds of the offering is set forth in the section entitled “Use of Proceeds” beginning on
page S-9 of this prospectus supplement.
We have
retained Maxim Group LLC to act as exclusive placement agent (the “Placement Agent”) in connection with this offering. The
Placement Agent has agreed to use its reasonable best efforts to sell the securities offered by this prospectus supplement and the accompanying
prospectus. The Placement Agent has no obligation to buy any of the securities from us or to arrange for the purchase or sale of any specific
number or dollar amount of securities. We have agreed to pay the Placement Agent the Placement Agent fees set forth in the table below.
There is no arrangement for funds to be received in escrow, trust, or similar arrangement. We will bear all costs associated with the
offering. See “Plan of Distribution” beginning on page S-14 of this prospectus supplement for more information regarding
these arrangements.
| | |
Per Share | |
Total |
| Offering price | |
$ | 0.08 | | |
$ | 4,416,000 | |
| Placement Agent’s fees | |
$ | 0.0056 | | |
$ | 309,120 | |
| Proceeds, before other expenses, to us(1) | |
$ | 0.0744 | | |
$ | 4,106,880 | |
| (1) | We agreed to pay the Placement Agent a cash fee equal to 7.0% of the aggregate gross proceeds raised in
this offering. In addition, we have agreed to reimburse the Placement Agent for certain out-of-pocket expenses up to $50,000. See “Plan
of Distribution” beginning on page S-14 of this prospectus supplement for additional information with respect to the compensation
we will pay and expenses we will reimburse to the Placement Agent in connection with this offering. |
Investing
in our securities involves a high degree of risk. See the section entitled “Risk Factors” beginning on page S-8
of this prospectus supplement and in the documents we incorporate by reference in this prospectus supplement and the accompanying prospectus.
In addition, see “Risk Factors” in our Annual Report on Form 20-F/A for the year ended December 31, 2023, which has
been filed with the Securities and Exchange Commission and is incorporated by reference into this prospectus supplement and the accompanying
prospectus. You should carefully consider these risk factors, as well as the information contained in this prospectus supplement and the
accompanying prospectus, before you invest.
Neither
the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this prospectus supplement or the accompanying prospectus. Any representation to
the contrary is a criminal offense.
We estimate the total expenses of this offering, excluding the placement agency
fees, will be approximately 65,000. Because there is no minimum offering amount required in this offering, the actual offering amount,
the Placement Agent fees and net proceeds to us, if any, in this offering may be substantially less than the total offering amounts set
forth above. We are not required to sell any specific number or dollar amount of the securities offered in this offering, but the Placement
Agent will use its reasonable efforts to arrange for the sale of all of the securities offered.
We expect
to deliver the securities offered pursuant to this prospectus supplement on or about January 7, 2025.
MAXIM GROUP LLC
The date of this prospectus
supplement is January 5, 2025
TABLE OF CONTENTS
Prospectus Supplement
Base Prospectus
ABOUT THIS PROSPECTUS SUPPLEMENT
This
prospectus supplement is a supplement to the accompanying prospectus that is also a part of this document. This prospectus supplement
and the accompanying prospectus, dated January 26, 2024, are part of a registration statement on Form F-3 (File No. 333-274893) that we
filed with the Securities and Exchange Commission, or the SEC, utilizing a “shelf” registration process. Under this shelf
registration process, we may offer and sell from time to time in one or more offerings the securities described in the accompanying prospectus.
This
document is in two parts. The first part is this prospectus supplement, which describes the securities we are offering and the terms of
the offering and also adds to and updates information contained in the accompanying prospectus and the documents incorporated by reference
into the accompanying prospectus. The second part is the accompanying prospectus, which provides more general information, some of which
may not apply to the securities offered by this prospectus supplement. Generally, when we refer to this “prospectus,” we are
referring to both documents combined. To the extent there is a conflict between the information contained in this prospectus supplement,
on the one hand, and the information contained in the accompanying prospectus or any document incorporated by reference therein, on the
other hand, you should rely on the information in this prospectus supplement. We urge you to carefully read this prospectus supplement
and the accompanying prospectus and any related free writing prospectus, together with the information incorporated herein and therein
by reference as described under the heading “Where You Can Find Additional Information,” before buying any of the securities
being offered.
You should
rely only on the information that we have provided or incorporated by reference in this prospectus supplement and the accompanying prospectus
and any related free writing prospectus that we may authorize to be provided to you. We have not, and the Placement Agent has not, authorized
anyone to provide you with different information. No other dealer, salesperson or other person is authorized to give any information or
to represent anything not contained in this prospectus supplement and the accompanying prospectus or any related free writing prospectus
that we may authorize to be provided to you. You must not rely on any unauthorized information or representation. This prospectus supplement
is an offer to sell only the securities offered hereby, and only under circumstances and in jurisdictions where it is lawful to do so.
You should assume that the information in this prospectus supplement and the accompanying prospectus or any related free writing prospectus
is accurate only as of the date on the front of the document and that any information we have incorporated by reference is accurate only
as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus supplement and the accompanying
prospectus or any related free writing prospectus, or any sale of a security.
This
prospectus supplement contains summaries of certain provisions contained in some of the documents described herein, but reference is made
to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies
of some of the documents referred to herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration
statement of which this prospectus supplement is a part, and you may obtain copies of those documents as described below under the heading
“Where You Can Find More Information.”
Unless otherwise mentioned or
unless the context requires otherwise, all references in this prospectus to the “Company,” “we,” “us,”
“our” refer to Blue Hat Interactive Entertainment Technology, a Cayman Islands company, its subsidiaries, and our consolidated
entities; all references to “$,” “dollars” or “U.S. dollars” refer to the legal currency of the United
States; all references to “PRC” refer to the People’s Republic of China; all references to “RMB” refer to
the legal currency of People’s Republic of China; and all references to “shares” or “Ordinary Shares” refers
to the authorized Ordinary Shares of Blue Hat Interactive Entertainment Technology, par value $0.01 per share. This prospectus supplement
and the information incorporated by reference herein and therein include trademarks, service marks and trade names owned by us or other
companies. All trademarks, service marks and trade names included or incorporated by reference into this prospectus are the property of
their respective owners.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This
prospectus supplement, accompanying prospectus and the documents that we have filed with the SEC that are incorporated by reference in
this prospectus supplement contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of
1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act and may involve material risks, assumptions and
uncertainties. Forward-looking statements typically are identified by the use of terms such as “may,” “will,”
“should,” “believe,” “might,” “expect,” “anticipate,” “intend,”
“plan,” “estimate,” and similar words, although some forward-looking statements are expressed differently.
Any forward
looking statements contained in this prospectus supplement, accompanying prospectus and the documents that we have filed with the SEC
that are incorporated by reference in this prospectus supplement are only estimates or predictions of future events based on information
currently available to our management and management’s current beliefs about the potential outcome of future events. Whether these
future events will occur as management anticipates, whether we will achieve our business objectives, and whether our revenues, operating
results, or financial condition will improve in future periods are subject to numerous risks. There are a number of important factors
that could cause actual results to differ materially from the results anticipated by these forward-looking statements. These important
factors include those that we discuss under the heading “Risk Factors” and in other sections of our Annual Report on Form
20-F/A for the fiscal year ended December 31, 2023 (the “Form 20-F/A”), as well as in our other reports filed from time to
time with the SEC that are incorporated by reference into this prospectus supplement and the accompanying prospectus. You should read
these factors and the other cautionary statements made in this prospectus supplement, the accompanying prospectus and in the documents
we incorporate by reference into this prospectus supplement and the accompanying prospectus as being applicable to all related forward-looking
statements wherever they appear in this prospectus supplement or the documents we incorporate by reference into this prospectus supplement
and the accompanying prospectus. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, our actual
results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by
these forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required by law.
PROSPECTUS SUPPLEMENT SUMMARY
This summary is not complete
and does not contain all of the information that you should consider before investing in the securities offered by this prospectus supplement.
You should read this summary together with the entire prospectus supplement and accompanying prospectus, including our risk factors (as
provided for herein and incorporated by reference), financial statements, the notes to those financial statements and the other documents
that are incorporated by reference in this prospectus supplement, before making an investment decision. You should carefully read the
information described under the heading “Where You Can Find More Information.” We have not authorized anyone to provide you
with information different from that contained in this prospectus supplement. The information contained in this prospectus supplement
is accurate only as of the date of this prospectus supplement, regardless of the time of delivery of this prospectus supplement or of
any sale of our securities.
We were
an advanced high-tech solutions provider focusing on the production, development, and operation of augmented reality (AR) interactive
entertainment games and toys. Our product portfolio included interactive educational materials, mobile games, toys with mobile game features,
and immersive educational courses. In addition, we have previously ventured into the Internet Data Center (IDC) business. Impacted by
the pandemic, we underwent a restructuring of our company’s operations in 2023. By dismantling the VIE structure and divesting from
unprofitable segments, starting from the fourth quarter of 2022, we shifted our business focus towards commodity trading, including chemicals,
jewelry, and precious metals such as gold.
The core
of our business lies in our proprietary technology. Our patents, trademarks, copyrights, and other intellectual property rights serve
to distinguish our products, protect them from infringement, and foster our competitive advantages. To ensure the value of our technology
and developments, we actively seek patent, trademark, and copyright protections. As of January 3, 2025, our intellectual property portfolio
includes 224 authorized patents, 14 applications for international patents under the Patent Cooperation Treaty (PCT), 794 artistic copyrights,
94 registered trademarks, and 134 software copyrights. Our mobile-connected entertainment platform enables us to connect physical items
to mobile devices through wireless technologies, creating a unique interactive user experience. Our goal is to create a rich visual and
interactive environment for users through the integration of real objects and virtual scenery. We believe this combination provides users
with a more natural form of human-computer interaction and enhances users’ perception of reality, thus providing a more diversified
entertainment experience.
Our proprietary
technology, product research and development, marketing channels, and brand operation are the cornerstones of our business. Building upon
these accumulated technological capabilities, we have expanded and will continue to operate in bulk commodity trading related fields such
as jewelry and gold, and empower industry participants with AI technology. This includes, but is not limited to, providing efficient and
intelligent marketing content creation services for jewelers and offering data analysis services for gold derivatives traders.
Our Business Operations
We,
through the operations of our subsidiaries headquartered in Xiamen, China, primarily operate a gold trading and supply chain business
through our subsidiaries. Our business model encompasses physical gold trading, gold derivatives trading, and the development of AI-enabled
trading platforms. In August 2024, we completed our first major gold acquisition of 1,000 kilograms for approximately $66.49 million from
Macau Rongxin Precious Metals Technology Co., Ltd., marking our entry into large-scale gold trading.
Our
operations are supported by key licenses and strategic partnerships. Our Hong Kong subsidiary, Golden Alpha Strategy Ltd., holds a Category
A Registration for dealing in precious metals from the Hong Kong Customs and Excise Department. We have established partnerships with
GTC GROUP LLC in Dubai for derivatives trading and Sichuan Jinyinghe Industrial Co., Ltd. for developing our gold supply chain business
in the Shenzhen Shuibei market, one of China's largest gold trading centers with annual transaction volumes exceeding RMB 1 trillion.
We
create value by providing capital, technology, and connections across the gold supply chain. Our target customers include gold refineries,
wholesalers, and retailers. We aim to address industry challenges such as fragmented markets, limited financing channels, and operational
inefficiencies through our AI-enabled trading platforms and supply chain solutions. Our management team believes the gold industry is
transitioning from rapid growth to high-quality development, presenting strategic opportunities for market consolidation and technological
innovation.
The
growth of our business is driven by several key market factors. We are seeing increased institutional demand, particularly from central
banks expanding their gold reserves. The gold market is also transitioning from a fragmented structure to a more consolidated one, creating
opportunities for well-positioned companies. Additionally, there is rising demand for efficient trading solutions powered by advanced
technology.
Looking
ahead, we plan to expand our business beyond physical gold trading into derivatives trading. This expansion includes the development of
sophisticated online trading platforms and enhancement of our AI-enabled services. Geographically, we aim to extend our presence into
European and North American markets. Unlike traditional retail-focused precious metals businesses, our operations are not significantly
affected by seasonal factors as gold trading occurs continuously throughout the year in both institutional and retail markets.
Our business
is not significantly affected by seasonal factors as gold trading occurs year-round in both institutional and retail markets.
Intellectual Property
The core
of our business is our proprietary technology. As a result, we strive to maintain a robust intellectual property portfolio. Our patents,
trademarks, copyrights, and other intellectual property rights serve to distinguish and protect our products from infringement and contribute
to our competitive advantages. To secure the value of our technology and developments, we are aggressive in pursuing a combination of
patent, trademark, and copyright protection for our proprietary technologies.
Competition
We compete with existing gold traders and suppliers around the world, and
we may also face competition from new and emerging companies. We consider our principal competitors to be those companies that provide
gold to the market, including De Beer, Barrick Gold Corporation, etc.
Compared
to our company, our current and potential competitors may have:
| ● |
better established credibility and market reputations, longer operating histories, and broader product offerings; |
| |
|
| ● |
significantly greater financial, technical, marketing and other resources, |
| |
|
| ● |
multiple product offerings, which may enable them to offer bundled discounts for customers purchasing multiple products or other incentives that we cannot match or offer. |
The principal
competitive factors in our market include:
| ● |
brand recognition and reputation; |
| |
|
| ● |
flexible purchasing and payment methods; |
| |
|
| ● |
efficient operational process and services; and |
| |
|
| ● |
the performance and reliability of products and platforms. |
Blue
Hat Cayman and its subsidiaries usually operate independently and transfer funds through loans and intercompany transactions. We raised
capital for a total amount of $25.182 million from 2020 to 2023 through various financings. Blue Hat Interactive Entertainment Technology
Limited (“Blue Hat HK”), our wholly-owned Hong Kong intermediary holding subsidiary, passed the funds from the investors in
these financings to Blue Hat Fujian, through loans regulated under contract agreements, and Blue Hat WOFE, through intercompany transactions.
As of the date of this annual report, the total amount that Blue Hat Cayman has invested in and lent to Blue Hat Fujian and Blue Hat WOFE
are approximately $1.77 million and $14.81 million, respectively.
As of
the date of this prospectus supplement, the Company has not distributed any dividends to the investors, nor does the Company intend to
distribute any dividends in any form in the near future. The Company currently intends to retain the earnings to re-invest into the daily
operations.
The tables
below show the cash transfer between the Company and its subsidiaries for the fiscal years ended December 31, 2023, 2022 and 2021.
| For the year ended December 31, 2023 |
| No. |
|
Transfer From |
|
Transfer to |
|
Approximate Value ($) |
|
Note |
| 1 |
|
Blue Hat Interactive Entertainment Technology |
|
Blue Hat Interactive Entertainment Technology Limited |
|
2,800,000.00 |
|
Loan |
| 2 |
|
Blue Hat Interactive Entertainment Technology Limited |
|
Fujian Blue Hat Group Co, Ltd |
|
2,800,000.00 |
|
Investment |
| |
|
|
|
|
|
|
|
|
| For the year ended December 31, 2022 |
| No. |
|
Transfer From |
|
Transfer to |
|
Approximate Value ($) |
|
Note |
| 1 |
|
Blue Hat Interactive Entertainment Technology |
|
Blue Hat Interactive Entertainment Technology Limited |
|
1,768,000.00 |
|
Loan |
| 2 |
|
Blue Hat Interactive Entertainment Technology Limited |
|
Fujian Blue Hat Group Co, Ltd |
|
1,768,000.00 |
|
Investment |
| |
|
|
|
|
|
|
|
|
| For the year ended December 31, 2021 |
| No. |
|
Transfer From |
|
Transfer to |
|
Approximate Value ($) |
|
Note |
| 1 |
|
Blue Hat Interactive Entertainment Technology |
|
Blue Hat Interactive Entertainment Technology Limited |
|
7,150,000.00 |
|
Loan |
| 2 |
|
Blue Hat Interactive Entertainment Technology Limited |
|
Xiamen Duwei Consulting Management Co., Ltd. |
|
7,150,000.00 |
|
Investment |
We
are a holding company incorporated in the Cayman Islands and are not a Chinese operating company. This holding company structure involves
unique risks to investors. As a holding company with no material operations of our own, we conduct a substantial majority of our operations
through our subsidiaries in the People’s Republic of China (“China” or the “PRC”). The charts
below summarize our corporate legal structure and identify our subsidiaries:
Corporate Information
Our principal
executive office is located at 7th Floor, Building C, No. 1010 Anling Road, Huli District, Xiamen, China 361009. Our telephone number
is 86-592-228-0081. Our registered office in the Cayman Islands is located at the offices of Walkers Corporate Limited, Cayman Corporate
Centre, 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands.
THE OFFERING
| Ordinary Shares outstanding prior to this offering |
58,398,281 Ordinary Shares. |
| |
|
| Ordinary Shares offered by us |
55,200,000 Ordinary Shares |
| |
|
| Offering price per share |
$0.08 |
| |
|
| Ordinary Shares to be outstanding after this offering |
113,598,281 Ordinary Shares. |
| |
|
| Use of proceeds |
We estimate that the net proceeds of this offering, after deducting Placement Agent fees and estimated offering expenses, will be approximately $4.0 million. We intend to use any proceeds from the offering for working capital and other general corporate purposes. For additional information, refer to the section entitled “Use of Proceeds” beginning on page S-9 of this prospectus supplement. |
| |
|
| Risk factors |
Investing in our Ordinary Shares involves a high degree of risk. You should carefully consider the information set forth in the section entitled “Risk Factors” beginning on page S-8 of this prospectus supplement; beginning on page 11 of the accompanying base prospectus, and beginning on page 8 of the Form 20-F/A, for a discussion of information that should be considered in connection with an investment in our Ordinary Shares. |
| |
|
| Nasdaq symbol |
Our Ordinary Shares are listed on Nasdaq under the symbol “BHAT.” |
The number of Ordinary Shares
to be outstanding after this offering is based on 58,398,281 Ordinary Shares outstanding at January 3, 2025.
RISK FACTORS
Investment in any securities
offered pursuant to this prospectus supplement and the accompanying prospectus involves risks. You should carefully consider the risk
factors described below, in the accompany base prospectus, and in our 20-F/A incorporated by reference in this prospectus supplement and
the accompanying prospectus, any amendment or update thereto reflected in subsequent filings with the SEC, including in our annual reports
on Form 20-F/A, and all other information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus,
as updated by our subsequent filings under the Exchange Act. The risks and uncertainties we have described are not the only ones
we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our operations.
The occurrence of any of these risks might cause you to lose all or part of your investment in the offered securities.
The Chinese government may intervene with or
influence our business at any time. That may negatively influence our operation, our ability to continue listing on U.S. exchange and
the value of our shares may significantly decline or be worthless, which would materially affect the interest of our shareholders.
The Chinese central or local governments
may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts
on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including
any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local
variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions
thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties.
As such, our business segments
may be subject to various government and regulatory interference in the provinces in which they operate. The Company could be subject
to regulation by various political and regulatory entities, including various local and municipal agencies and government sub-divisions.
The Company may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure
to comply. The Chinese government may intervene with or influence our operations at any time with little advance notice, which could result
in a material change in our operations and in the value of our shares.
Future sales or the
potential for future sales of our securities may cause the trading price of our Ordinary Shares to decline and could impair our ability
to raise capital through subsequent equity offerings.
Sales
of a substantial number of Ordinary Shares or other securities in the public markets, or the perception that these sales may occur, could
cause the market price of our Ordinary Shares or other securities to decline and could materially impair our ability to raise capital
through the sale of additional securities.
We have broad discretion
over the use of the net proceeds from this offering and may not use them effectively.
Our management will have broad
discretion in the application of the net proceeds from this offering, including for any of the purposes described in “Use of Proceeds,”
and you will not have the opportunity as part of your investment decision to assess whether the net proceeds are being used appropriately.
Because of the number and variability of factors that will determine our use of the net proceeds from this offering, their ultimate use
may vary substantially from their currently intended use. Our management might not apply our net proceeds in ways that ultimately increase
the value of your investment. The failure by our management to apply the net proceeds from this offering effectively could harm our business.
If we do not invest or apply the net proceeds from this offering in ways that enhance shareholder value, we may fail to achieve expected
financial results, which could cause the price of our Ordinary Shares to decline.
Raising additional
capital, including as a result of this offering, and the sale of additional Ordinary Shares or other equity securities could result in
dilution to our shareholders, while the incurrence of debt may impose restrictions on our operations.
We may require additional cash
resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to
pursue. If our cash resources are insufficient to satisfy our cash requirements, we may seek to sell equity or debt securities or obtain
a credit facility. The sale of equity securities would result in dilution to our shareholders. The incurrence of indebtedness would result
in increased debt service obligations and could require us to agree to operating and financing covenants that would restrict our operations.
Furthermore, the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the
market price of our Ordinary Shares to decline and existing shareholders may not agree with our financing plans or the terms of such financings.
DIVIDEND POLICY
Our board
of directors has discretion on whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our
shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors.
In either case, all dividends are subject to certain restrictions under Cayman Islands law, namely that our company may only pay dividends
out of profits or share premium account, and provided always that in no circumstances may a dividend be paid if this would result in our
company being unable to pay its debts as they fall due in the ordinary course of business. Even if we decide to pay dividends, the form,
frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition,
contractual restrictions and other factors that the board of directors may deem relevant.
We do
not have any present plan to pay any cash dividends on our Ordinary Shares in the foreseeable future after this offering. We currently
intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.
We are
a holding company incorporated in the Cayman Islands. We rely on dividends from our subsidiaries in China for our cash requirements, including
any payment of dividends to our shareholders. PRC regulations may restrict the ability of our PRC subsidiaries to pay dividends to us.
See “Item 4. Information on the Company—B. Business Overview—Regulation on Foreign Exchange—Dividend Distribution”
in our Form 20-F/A, which is incorporated by reference in this prospectus supplement and the accompanying prospectus.
USE OF PROCEEDS
We estimate that the net proceeds
of this offering, after deducting Placement Agent fees and estimated offering expenses, will be approximately $4.0 million. We intend
to use any proceeds from the offering for working capital and other general corporate purposes.
CAPITALIZATION
The following table sets forth
our capitalization as of December 31, 2023 presented on:
| |
● |
on an as adjusted basis to give effect to the sale of the Ordinary Shares, after deducting the estimated offering expenses payable by us. |
You should read this table together
with Item 5. Operating and Financial Review and Prospects” and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” of the Form 20-F/A, and our consolidated financial statements and note included in the information incorporated
by reference into this prospectus supplement and the accompanying prospectus.
| | |
As
of
December
31, 2023 | |
|
| (in US$
millions) | |
Actual | |
As
adjusted |
| Cash
and Cash Equivalents | |
$ | 0.41 | | |
$ | 0.41 | |
| Shareholders’
Equity: | |
| | | |
| | |
| Ordinary
Shares, par value $0.01, 500,000,000 Ordinary Shares authorized, 58,398,281 shares issued and outstanding as of December 31, 2023 | |
| 0.58 | | |
| 1.13 | |
| Additional
paid-in capital | |
| 93.83 | | |
| 97.38 | |
| Statutory
Reserves | |
| 2.14 | | |
| 2.14 | |
| Retained
Earnings | |
| (56.83 | ) | |
| (56,83 | ) |
| Accumulated
other comprehensive loss | |
| 0.90 | | |
| 0.90 | |
| Total
Shareholders’ Equity | |
| 40.62 | | |
| 44.72 | |
| Total
Capitalization(1) | |
$ | 41.03 | | |
$ | 45.13 | |
Note:
| (1) | Total capitalization equals the sum of convertible note and total shareholders’ equity. |
DESCRIPTION OF THE SECURITIES WE ARE OFFERING
Ordinary Shares
The following is a summary of
our share capital and certain provisions of our Second Amended and Restated Memorandum and Articles of Association. This summary does
not purport to be complete and is qualified in its entirety by the provisions of our Second Amended and Restated Memorandum and Articles
of Association and applicable provisions of the laws of the Cayman Islands.
See “Where You Can Find
More Information” elsewhere in this prospectus for information on where you can obtain copies of our articles of incorporation and
our bylaws, which have been filed with and are publicly available from the SEC.
The authorized share capital of
the Company is $5,000,000 divided into 500,000,000 Ordinary Shares of $0.01 par value each with power for the Company, subject to the
provisions of the Companies Act (as revised) and the Second Amended and Restated Articles of Association.
As of January 3, 2025, there were
58,398,281 Ordinary Shares issued and outstanding.
Our Ordinary Shares are currently
traded on the NASDAQ Capital Market under the symbol “BHAT.”
Voting and Meetings
As a condition of admission to
a shareholders’ meeting, a shareholder must be duly registered as our shareholder at the applicable record date for that meeting
and all calls or installments then payable by such shareholder to us in respect of our Ordinary Shares must have been paid. Subject to
any special rights or restrictions as to voting then attached to any shares, at any general meeting every shareholder who is present in
person or by proxy (or, in the case of a shareholder being a corporation, by its duly authorized representative not being himself or herself
a shareholder entitled to vote) shall have one vote per share.
As a Cayman Islands exempted company,
we are not obliged by the Companies Act to call annual general meetings; however, our Second Amended and Restated Memorandum and
Articles of Association provide that in each year we will hold an annual general meeting of shareholders at a time determined by our board
of directors. Also, we may, but are not required to (unless required by the Companies Act), in each year hold any other extraordinary
general meeting.
The Companies Act of the Cayman
Islands provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right
to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our Second
Amended and Restated Memorandum and Articles of Association provide that upon the requisition of shareholders representing not less than
two-thirds of the voting rights entitled to vote at general meetings, our board will convene an extraordinary general meeting and put
the resolutions so requisitioned to a vote at such meeting. However, shareholders may propose only ordinary resolutions to be put to a
vote at such meeting and shall have no right to propose resolutions with respect to the election, appointment or removal of directors
or with respect to the size of the board. Our Second Amended and Restated Memorandum and Articles of Association provide no other
right to put any proposals before annual general meetings or extraordinary general meetings. Subject to regulatory requirements, our annual
general meeting and any extraordinary general meetings must be called by not less than ten (10) clear days’ notice prior to the
relevant shareholders meeting and convened by a notice discussed below. Alternatively, upon the prior consent of all holders entitled
to attend and vote (with regards to an annual general meeting), and the holders of 95% in par value of the shares entitled to attend and
vote (with regard to an extraordinary general meeting), that meeting may be convened by a shorter notice and in a manner deemed appropriate
by those holders.
We will give notice of each general
meeting of shareholders by publication on our website and in any other manner that we may be required to follow in order to comply with
Cayman Islands law, Nasdaq and SEC requirements. The holders of registered shares may be convened for a shareholders’ meeting by
means of letters sent to the addresses of those shareholders as registered in our shareholders’ register, or, subject to certain
statutory requirements, by electronic means. We will observe the statutory minimum convening notice period for a general meeting of shareholders.
A quorum for a general meeting
consists of any one or more persons holding or representing by proxy not less than one-third of our issued voting shares entitled to vote
upon the business to be transacted.
A resolution put to the vote of
the meeting shall be decided on a poll. An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple
majority of the votes cast by, or on behalf of, the shareholders entitled to vote present in person or by proxy and voting at the meeting.
A special resolution requires the affirmative vote of no less than two-thirds of the votes cast by the shareholders entitled to vote who
are present in person or by proxy at a general meeting (except for certain matters described below which require an affirmative vote of
two-thirds). Both ordinary resolutions and special resolutions may also be passed by a unanimous written resolution signed by all the
shareholders of our company, as permitted by the Companies Act and our Second Amended and Restated Memorandum and Articles of Association.
Our Second Amended and Restated
Memorandum and Articles of Association provide that the affirmative vote of no less than two-thirds of votes cast by the shareholders
entitled to vote who are present in person or by proxy at a general meeting shall be required to approve any amendments to any provisions
of our Second Amended and Restated Memorandum and Articles of Association that relate to or have an impact upon the procedures regarding
the election, appointment, removal of directors and size of the board.
Dividends
Subject to the Companies Act,
our shareholders may, by resolution passed by a simple majority of the voting rights entitled to vote at the general meeting, declare
dividends (including interim dividends) to be paid to our shareholders but no dividend shall be declared in excess of the amount recommended
by our board of directors. Dividends may be declared and paid out of funds lawfully available to us. Except as otherwise provided by the
rights attached to shares, all dividends shall be declared and paid according to the amounts paid up on the shares on which the dividend
is paid. All dividends shall be paid in proportion to the number of Ordinary Shares a shareholder holds during any portion or portions
of the period in respect of which the dividend is paid; but, if any share is issued on terms providing that it shall rank for dividend
as from a particular date, that share shall rank for dividend accordingly. Our board of directors may also declare and pay dividends out
of the share premium account or any other fund or account which can be authorized for this purpose in accordance with the Companies Act.
In addition, our board of directors
may resolve to capitalize any undivided profits not required for paying any preferential dividend (whether or not they are available for
distribution) or any sum standing to the credit of the our share premium account or capital redemption reserve; appropriate the sum resolved
to be capitalized to the shareholders who would have been entitled to it if it were distributed by way of dividend and in the same proportions
and apply such sum on their behalf either in or towards paying up the amounts, if any, for the time being unpaid on any shares held by
them respectively, or in paying up in full unissued shares or debentures of a nominal amount equal to such sum, and allot the shares or
debentures credited as fully paid to those shareholders, or as they may direct, in those proportions, or partly in one way and partly
in the other; resolve that any shares so allotted to any shareholder in respect of a holding by him/her of any partly-paid shares rank
for dividend, so long as such shares remain partly paid, only to the extent that such partly paid shares rank for dividend; make such
provision by the issue of fractional certificates or by payment in cash or otherwise as they determine in the case of shares or debentures
becoming distributable in fractions; and authorize any person to enter on behalf of all our shareholders concerned in an agreement with
us providing for the allotment of them respectively, credited as fully paid, of any shares or debentures to which they may be entitled
upon such capitalization, any agreement made under such authority being binding on all such shareholders.
Transfers of Shares
Subject to any applicable restrictions
set forth in our Second Amended and Restated Memorandum and Articles of Association, any of our shareholders may transfer all or a portion
of their Ordinary Shares by an instrument of transfer in the usual or common form or in the form prescribed by Nasdaq or in any other
form which our board of directors may approve. Our board of directors may, in its absolute discretion, refuse to register a transfer of
any common share that is not a fully paid up share to a person of whom it does not approve, or any common share issued under any share
incentive scheme for employees upon which a restriction on transfer imposed thereby still subsists, and it may also, without prejudice
to the foregoing generality, refuse to register a transfer of any common share to more than four joint holders or a transfer of any share
that is not a fully paid up share on which we have a lien. Our board of directors may also decline to register any transfer of any registered
common share unless: a fee of such maximum sum as Nasdaq may determine to be payable or such lesser sum as the board of directors may
from time to time require is paid to us in respect thereof; the instrument of transfer is in respect of only one class of shares; the
Ordinary Shares transferred are fully paid and free of any lien; the instrument of transfer is lodged at the registered office or such
other place (i.e., our transfer agent) at which the register of shareholders is kept, accompanied by any relevant share certificate(s)
and/or such other evidence as the board of directors may reasonably require to show the right of the transferor to make the transfer;
and if applicable, the instrument of transfer is duly and properly stamped.
If our board of directors refuses
to register a transfer, they are required, within one month after the date on which the instrument of transfer was lodged, to send to
each of the transferor and the transferee notice of such refusal.
Liquidation
Subject to any special rights,
privileges or restrictions as to the distribution of available surplus assets on liquidation applicable to any class or classes of shares
(1) if we are wound up and the assets available for distribution among our shareholders are more than sufficient to repay the whole of
the capital paid up at the commencement of the winding up, the excess shall be distributed pari passu among our shareholders in proportion
to the amount paid up at the commencement of the winding up on the shares held by them, respectively, and (2) if we are wound up and the
assets available for distribution among our shareholders as such are insufficient to repay the whole of the paid-up capital, those assets
shall be distributed so that, as nearly as may be, the losses shall be borne by our shareholders in proportion to the capital paid up,
or which ought to have been paid up, at the commencement of the winding up on the shares held by them, respectively.
If we are wound up, the liquidator
may with the sanction of a special resolution and any other sanction required by the Companies Act, divide among our shareholders in specie
the whole or any part of our assets and may, for such purpose, value any assets and determine how such division shall be carried out as
between the shareholders or different classes of shareholders. The liquidator may also, with the sanction of a special resolution, vest
any part of these assets in trustees upon such trusts for the benefit of our shareholders as the liquidator shall think fit, but so that
no shareholder will be compelled to accept any assets, shares or other securities upon which there is a liability.
Anti-Takeover Provisions
Some provisions of our Second
Amended and Restated Memorandum and Articles of Association may discourage, delay or prevent a change of control of our company or management
that shareholders may consider favorable, including provisions that authorize our board of directors to issue preferred shares in one
or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further
vote or action by our shareholders.
Inspection of Books and Records
Holders of Ordinary Shares will
have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records. However,
our board of directors may determine from time to time whether our accounting records and books shall be open to the inspection of our
shareholders not members of our board of directors. Notwithstanding the above, our Second Amended and Restated Memorandum and Articles
of Association provide our shareholders with the right to receive annual audited financial statements. Such right to receive annual audited
financial statements may be satisfied by filing such annual reports as we are required to file with the SEC.
Register of Shareholders
Under Cayman Islands law, we must
keep a register of shareholders that includes: the names and addresses of the shareholders, a statement of the shares held by each member,
and of the amount paid or agreed to be considered as paid, on the shares of each member; the date on which the name of any person was
entered on the register as a member; and the date on which any person ceased to be a member.
PLAN OF DISTRIBUTION
Maxim Group LLC, which we refer
to as the Placement Agent, has agreed to act as the exclusive Placement Agent in connection with this offering subject to the terms and
conditions of a placement agency agreement dated as of January 5, 2025. The Placement Agent is not purchasing or selling any securities
offered by this prospectus supplement, nor is it obligated to arrange the purchase or sale of any specific number or dollar amount of
securities, but it has agreed to use its reasonable efforts to arrange for the sale of all of the securities offered hereby.
We have entered into certain
Securities Purchase Agreements with certain accredited investors (the “Investors”) thereto on January 5, 2025 (collectively,
the “SPA”). Pursuant to the SPA, we will sell to the Investors an aggregate of 55,200,000 Ordinary Shares at a per share
price of $0.08. The SPA contains customary representations, warranties and covenants for transactions. We have also agreed to indemnify
the Investors against certain losses resulting from our breach of any of our representations, warranties, or covenants under agreements
with the Investors as well as under certain other circumstances described in the SPA.
We expect that delivery of the
Ordinary Shares being offered pursuant to this prospectus supplement and the accompanying prospectus will be made on or about January
7, 2025, subject to customary closing conditions.
Fees and Expenses
We have
agreed to pay the Placement Agent a total cash fee equal to seven percent (7.0%) of the aggregate gross proceeds raised in this offering.
In addition, we have agreed to reimburse the Placement Agent for certain out-of-pocket expenses up to $50,000.
The table below reflects the
total offering proceeds, before deducting the estimated offering expenses.
| | |
Per Share | |
Total |
| Offering price | |
$ | 0.08 | | |
$ | 4,416,000 | |
| Placement Agent’s fees | |
$ | 0.0056 | | |
$ | 309,120 | |
| Proceeds, before other expenses, to us(2) | |
$ | 0.0744 | | |
$ | 4,106,880 | |
We estimate expenses payable
by us in connection with this offering, other than the Placement Agent’s fees and expenses referred to above, will be approximately
$65,000.
After deducting certain fees
and expenses due to the Placement Agent and our estimated offering expenses, we expect the net proceeds from this offering to be approximately
$3,991,880.
Indemnification
We have agreed to indemnify the
Placement Agent against certain liabilities, including certain liabilities arising under the Securities Act, or to contribute to payments
that the Placement Agent may be required to make for these liabilities.
Lock-up Restrictions
Pursuant to the SPA, we have agreed
for a period of 60 days following the closing date of this offering not to issue, enter into an agreement to issue or announce the issuance
or proposed issuance of Ordinary Shares or any other securities convertible into, or exercisable or exchangeable for, Ordinary Shares
or file any registration statement or amendment or supplement thereto, subject to certain conditions and limited exceptions. We have also
agreed for a period of 60 days following the closing date of this offering not to (i) issue or agree to issue equity or debt securities
convertible into, or exercisable or exchangeable for, shares at a conversion price, exercise price or exchange price which floats with
the trading price of our shares or which may be adjusted after issuance upon the occurrence of certain events or (ii) enter into any agreement,
including an equity line of credit or at-the-market offering, whereby we may issue securities at a future-determined price.
Relationships
The Placement Agent and its affiliates
may provide from time to time in the future certain commercial banking, financial advisory, investment banking and other services for
us in the ordinary course of their business, for which they may receive customary fees and commissions. In addition, from time to time,
the Placement Agent and its affiliates may effect transactions for their own account or the account of customers, and hold on behalf of
themselves or their customers, long or short positions in our debt or equity securities or loans, and may do so in the future. However,
except as disclosed in this prospectus supplement, we have no present arrangements with the Placement Agent for any further services.
Right of First Refusal
For a
period of six (6) months from the closing of the offering, we have granted the Placement Agent the right of first refusal to act as to
act as sole managing underwriter and sole book runner, sole Placement Agent, or sole sales agent, for any and all such future public or
private equity, equity-linked or debt (excluding commercial bank debt) offerings for which the Company retains the service of an underwriter,
agent, advisor, finder or other person or entity in connection with such offering.
Listing
Our Ordinary Shares is listed
on the Nasdaq Capital Market under the symbol “BHAT.”
Regulation M
The Placement Agent may be deemed
to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act, and any commissions received by it and any profit realized
on the resale of the securities sold by it while acting as principal might be deemed to be underwriting discounts or commissions under
the Securities Act. As an underwriter, the Placement Agent would be required to comply with the requirements of the Securities Act and
the Exchange Act, including, without limitation, Rule 415(a)(4) under the Securities Act and Rule 10b-5 and Regulation M under the Exchange
Act. These rules and regulations may limit the timing of purchases and sales of our securities by the Placement Agent acting as principal.
Under these rules and regulations, the Placement Agent:
| |
● |
may not engage in any stabilization activity in connection with our securities; and |
| |
|
|
| |
● |
may not bid for or purchase any of our securities
or attempt to induce any person to purchase any of our securities, other
than as permitted under the Exchange Act, until it
has completed its participation in the distribution. |
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary of the
material Cayman Islands, PRC and U.S. federal income tax consequences of an investment in our Ordinary Shares is based upon laws and relevant
interpretations thereof in effect as of the date of this prospectus supplement, all of which are subject to change. This summary does
not deal with all possible tax consequences relating to an investment in our Ordinary Shares, such as the tax consequences under U.S.
state and local tax laws or under the tax laws of jurisdictions other than the Cayman Islands, the People’s Republic of China and
the United States.
Material U.S. Federal Income Tax Considerations
for U.S. Holders
The following discussion describes
the material U.S. federal income tax consequences relating to the ownership and disposition of our Ordinary Shares by U.S. Holders (as
defined below). This discussion applies to U.S. Holders that purchase our Ordinary Shares and hold such Ordinary Shares as capital assets.
This discussion is based on the U.S. Internal Revenue Code of 1986, as amended, U.S. Treasury regulations promulgated thereunder and administrative
and judicial interpretations thereof, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive
effect. This discussion does not address all of the U.S. federal income tax consequences that may be relevant to specific U.S. Holders
in light of their particular circumstances or to U.S. Holders subject to special treatment under U.S. federal income tax law (such as
certain financial institutions, insurance companies, dealers or traders in securities or other persons that generally mark their securities
to market for U.S. federal income tax purposes, tax-exempt entities or governmental organizations, retirement plans, regulated investment
companies, real estate investment trusts, grantor trusts, brokers, dealers or traders in securities, commodities, currencies or notional
principal contracts, certain former citizens or long-term residents of the United States, persons who hold our Ordinary Shares as part
of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or integrated
investment, persons that have a “functional currency” other than the U.S. dollar, persons that own directly, indirectly or
through attribution 10% or more of the voting power of our Ordinary Shares, corporations that accumulate earnings to avoid U.S. federal
income tax, partnerships and other pass-through entities, and investors in such pass-through entities). This discussion does not address
any U.S. state or local or non-U.S. tax consequences or any U.S. federal estate, gift or alternative minimum tax consequences.
As used in this discussion, the
term “U.S. Holder” means a beneficial owner of our Ordinary Shares who is, for U.S. federal income tax purposes, (1) an individual
who is a citizen or resident of the United States, (2) a corporation (or entity treated as a corporation for U.S. federal income tax purposes)
created or organized in or under the laws of the United States, any state thereof, or the District of Columbia, (3) an estate the income
of which is subject to U.S. federal income tax regardless of its source or (4) a trust (x) with respect to which a court within the United
States is able to exercise primary supervision over its administration and one or more United States persons have the authority to control
all of its substantial decisions or (y) that has elected under applicable U.S. Treasury regulations to be treated as a domestic trust
for U.S. federal income tax purposes.
If an entity treated as a partnership
for U.S. federal income tax purposes holds our Ordinary Shares, the U.S. federal income tax consequences relating to an investment in
such Ordinary Shares will depend in part upon the status and activities of such entity and the particular partner. Any such entity should
consult its own tax advisor regarding the U.S. federal income tax consequences applicable to it and its partners of the purchase, ownership
and disposition of our Ordinary Shares.
Persons considering an investment
in our Ordinary Shares should consult their own tax advisors as to the particular tax consequences applicable to them relating to the
purchase, ownership and disposition of our Ordinary Shares including the applicability of U.S. federal, state and local tax laws and non-U.S.
tax laws.
Passive Foreign Investment Company Consequences
In general, a corporation organized
outside the United States will be treated as a PFIC for any taxable year in which either (1) at least 75% of its gross income is “passive
income” (the “PFIC income test”), or (2) on average at least 50% of its assets, determined on a quarterly basis, are
assets that produce passive income or are held for the production of passive income (the “PFIC asset test”). Passive income
for this purpose generally includes, among other things, dividends, interest, royalties, rents, and gains from the sale or exchange of
property that gives rise to passive income. Assets that produce or are held for the production of passive income generally include cash,
even if held as working capital or raised in a public offering, marketable securities, and other assets that may produce passive income.
Generally, in determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation
in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account.
Although PFIC status is determined
on an annual basis and generally cannot be determined until the end of a taxable year, based on the nature of our current and expected
income and the current and expected value and composition of our assets, we do not presently expect to be a PFIC for our current taxable
year or the foreseeable future. However, there can be no assurance given in this regard because the determination of whether we are or
will become a PFIC is a fact-intensive inquiry made on an annual basis that depends, in part, upon the composition of our income and assets.
In addition, there can be no assurance that the IRS will agree with our conclusion or that the IRS would not successfully challenge our
position.
If we are a PFIC in any taxable
year during which a U.S. Holder owns our Ordinary Shares, the U.S. Holder could be liable for additional taxes and interest charges under
the “PFIC excess distribution regime” upon (1) a distribution paid during a taxable year that is greater than 125% of the
average annual distributions paid in the three preceding taxable years, or, if shorter, the U.S. Holder’s holding period for our
Ordinary Shares , and (2) any gain recognized on a sale, exchange or other disposition, including a pledge, of our Ordinary Shares, whether
or not we continue to be a PFIC. Under the PFIC excess distribution regime, the tax on such distribution or gain would be determined by
allocating the distribution or gain ratably over the U.S. Holder’s holding period for our Ordinary Shares. The amount allocated
to the current taxable year (i.e., the year in which the distribution occurs or the gain is recognized) and any year prior to the first
taxable year in which we are a PFIC will be taxed as ordinary income earned in the current taxable year. The amount allocated to other
taxable years will be taxed at the highest marginal rates in effect for individuals or corporations, as applicable, to ordinary income
for each such taxable year, and an interest charge, generally applicable to underpayments of tax, will be added to the tax.
If we are a PFIC for any year
during which a U.S. Holder holds our Ordinary Shares, we must generally continue to be treated as a PFIC by that holder for all succeeding
years during which the U.S. Holder holds such Ordinary Shares, unless we cease to meet the requirements for PFIC status and the U.S. Holder
makes a “deemed sale” election with respect to our Ordinary Shares. If the election is made, the U.S. Holder will be deemed
to sell our Ordinary Shares it holds at their fair market value on the last day of the last taxable year in which we qualified as a PFIC,
and any gain recognized from such deemed sale would be taxed under the PFIC excess distribution regime. After the deemed sale election,
the U.S. Holder’s Ordinary Shares would not be treated as shares of a PFIC unless we subsequently become a PFIC.
If we are a PFIC for any taxable
year during which a U.S. Holder holds our Ordinary Shares and one of our non-United States subsidiaries is also a PFIC (i.e., a lower-tier
PFIC), such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC and would be
taxed under the PFIC excess distribution regime on distributions by the lower-tier PFIC and on gain from the disposition of shares of
the lower- tier PFIC even though such U.S. Holder would not receive the proceeds of those distributions or dispositions. Any of our non-United
States subsidiaries that have elected to be disregarded as entities separate from us or as partnerships for U.S. federal income tax purposes
would not be corporations under
U.S. federal income tax law and
accordingly, cannot be classified as lower-tier PFICs. However, non-United States subsidiaries that have not made the election may be
classified as a lower-tier PFIC if we are a PFIC during your holding period and the subsidiary meets the PFIC income test or PFIC asset
test. Each U.S. Holder is advised to consult its tax advisors regarding the application of the PFIC rules to any of our non-United States
subsidiaries.
If we are a PFIC, a U.S. Holder
will not be subject to tax under the PFIC excess distribution regime on distributions or gain recognized on our Ordinary Shares if a valid
“mark-to-market” election is made by the U.S. Holder for our Ordinary Shares. An electing U.S. Holder generally would take
into account as ordinary income each year, the excess of the fair market value of our Ordinary Shares held at the end of such taxable
year over the adjusted tax basis of such Ordinary Shares. The U.S. Holder would also take into account, as an ordinary loss each year,
the excess of the adjusted tax basis of such Ordinary Shares over their fair market value at the end of the taxable year, but only to
the extent of the excess of amounts previously included in income over ordinary losses deducted as a result of the mark-to-market election.
The U.S. Holder’s tax basis in our Ordinary Shares would be adjusted to reflect any income or loss recognized as a result of the
mark-to-market election. Any gain from a sale, exchange or other disposition of our Ordinary Shares in any taxable year in which we are
a PFIC would be treated as ordinary income and any loss from such sale, exchange or other disposition would be treated first as ordinary
loss (to the extent of any net mark-to-market gains previously included in income) and thereafter as capital loss. If, after having been
a PFIC for a taxable year, we cease to be classified as a PFIC because we no longer meet the PFIC income or PFIC asset test, the U.S.
Holder would not be required to take into account any latent gain or loss in the manner described above and any gain or loss recognized
on the sale or exchange of the Ordinary Shares would be classified as a capital gain or loss.
A mark-to-market election is available
to a U.S. Holder only for “marketable stock.” Generally, stock will be considered marketable stock if it is “regularly
traded” on a “qualified exchange” within the meaning of applicable U.S. Treasury regulations. A class of stock is regularly
traded during any calendar year during which such class of stock is traded, other than in de minimis quantities, on at least 15 days during
each calendar quarter.
Our Ordinary Shares are marketable
stock as long as they remain listed on the Nasdaq Capital Market and are regularly traded. A mark-to-market election will not apply to
the Ordinary Shares for any taxable year during which we are not a PFIC, but will remain in effect with respect to any subsequent taxable
year in which we become a PFIC. Such election will not apply to any of our non-U.S. subsidiaries. Accordingly, a U.S. Holder may continue
to be subject to tax under the PFIC excess distribution regime with respect to any lower-tier PFICs notwithstanding the U.S. Holder’s
mark-to-market election for the Ordinary Shares.
Except for stamp duties which
may be applicable on instruments executed in or brought within the jurisdiction of the Cayman Islands, no stamp duty, capital duty, registration
or other issue or documentary taxes are payable in the Cayman Islands on the creation, issuance or delivery of the Ordinary Shares. The
Cayman Islands currently have no form of income, corporate or capital gains tax and no estate duty, inheritance tax or gift tax. There
are currently no Cayman Islands’ taxes or duties of any nature on gains realized on a sale, exchange, conversion, transfer or redemption
of the Ordinary Shares. Payments of dividends and capital in respect of the Ordinary Shares will not be subject to taxation in the Cayman
Islands and no withholding will be required on the payment of interest and principal or a dividend or capital to any holder of the Ordinary
Shares, nor will gains derived from the disposal of the Ordinary Shares be subject to Cayman Islands income or corporation tax as the
Cayman Islands currently have no form of income or corporation taxes.
The tax consequences that would
apply if we are a PFIC would also be different from those described above if a U.S. Holder were able to make a valid qualified electing
fund, or “QEF”, election. As we do not expect to provide U.S. Holders with the information necessary for a U.S. Holder to
make a QEF election, prospective investors should assume that a QEF election will not be available.
The U.S. federal income tax rules
relating to PFICs are very complex. U.S. Holders and prospective U.S. investors are strongly urged to consult their own tax advisors with
respect to the impact of PFIC status on the purchase, ownership and disposition of our Ordinary Shares, the consequences to them of an
investment in a PFIC, any elections available with respect to the Ordinary Shares and the IRS information reporting obligations with respect
to the purchase, ownership and disposition of Ordinary Shares of a PFIC.
Distributions
Subject to the discussion above
under “Passive Foreign Investment Company Consequences,” a U.S. Holder that receives a distribution with respect to our Ordinary
Shares generally will be required to include the gross amount of such distribution in gross income as a dividend when actually or constructively
received to the extent of the U.S. Holder’s pro rata share of our current and/or accumulated earnings and profits (as determined
under U.S. federal income tax principles). To the extent a distribution received by a U.S. Holder is not a dividend because it exceeds
the U.S. Holder’s pro rata share of our current and accumulated earnings and profits, it will be treated first as a tax-free return
of capital and reduce (but not below zero) the adjusted tax basis of the U.S. Holder’s Ordinary Shares. To the extent the distribution
exceeds the adjusted tax basis of the U.S. Holder’s Ordinary Shares, the remainder will be taxed as capital gain. Because we may
not account for our earnings and profits in accordance with U.S. federal income tax principles, U.S. Holders should expect all distributions
to be reported to them as dividends.
Distributions on our Ordinary
Shares that are treated as dividends generally will constitute income from sources outside the United States for foreign tax credit purposes
and generally will constitute passive category income. Such dividends will not be eligible for the “dividends received’’
deduction generally allowed to corporate shareholders with respect to dividends received from U.S. corporations. Dividends paid by a “qualified
foreign corporation’’ to certain non-corporate U.S. Holders may be are eligible for taxation at a reduced capital gains rate
rather than the marginal tax rates generally applicable to ordinary income provided that a holding period requirement (more than 60 days
of ownership, without protection from the risk of loss, during the 121- day period beginning 60 days before the ex-dividend date) and
certain other requirements are met. Each U.S. Holder is advised to consult its tax advisors regarding the availability of the reduced
tax rate on dividends to its particular circumstances. However, if we are a PFIC for the taxable year in which the dividend is paid or
the preceding taxable year (see discussion above under “- Passive Foreign Investment Company Consequences’’), we will
not be treated as a qualified foreign corporation, and therefore the reduced capital gains tax rate described above will not apply.
Dividends will be included in
a U.S. Holder’s income on the date of the depositary’s receipt of the dividend. The amount of any dividend income paid in
Cayman Islands dollars will be the U.S. dollar amount calculated by reference to the exchange rate in effect on the date of receipt, regardless
of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt,
a U.S. Holder should not be required to recognize foreign currency gain or loss in respect to the dividend income. A U.S. Holder may have
foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of receipt.
A non-United States corporation
(other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year)
generally will be considered to be a qualified foreign corporation with respect to any dividend it pays on Ordinary Shares that are readily
tradable on an established securities market in the United States.
Sale, Exchange or Other Disposition of Our
Ordinary Shares
Subject to the discussion above
under “- Passive Foreign Investment Company Consequences,’’ a U.S. Holder generally will recognize capital gain or loss
for U.S. federal income tax purposes upon the sale, exchange or other disposition of our Ordinary Shares in an amount equal to the difference,
if any, between the amount realized (i.e., the amount of cash plus the fair market value of any property received) on the sale, exchange
or other disposition and such U.S. Holder’s adjusted tax basis in the Ordinary Shares. Such capital gain or loss generally will
be long-term capital gain taxable at a reduced rate for non-corporate U.S. Holders or long-term capital loss if, on the date of sale,
exchange or other disposition, the Ordinary Shares were held by the U.S. Holder for more than one year. Any capital gain of a non-corporate
U.S. Holder that is not long-term capital gain is taxed at ordinary income rates. The deductibility of capital losses is subject to limitations.
Any gain or loss recognized from the sale or other disposition of our Ordinary Shares will generally be gain or loss from sources within
the United States for U.S. foreign tax credit purposes.
Medicare Tax
Certain U.S. Holders that are
individuals, estates or trusts and whose income exceeds certain thresholds generally are subject to a 3.8% tax on all or a portion of
their net investment income, which may include their gross dividend income and net gains from the disposition of our Ordinary Shares.
U.S. Holders that are individuals, estates or trusts are encouraged to consult their tax advisors regarding the applicability of this
Medicare tax to income and gains with respect to their investment in our Ordinary Shares.
Information Reporting and Backup Withholding
U.S. Holders may be required to
file certain U.S. information reporting returns with the IRS with respect to an investment in our Ordinary Shares, including, among others,
IRS Form 8938 (Statement of Specified Foreign Financial Assets). As described above under “Passive Foreign Investment Company Consequences”,
each U.S. Holder who is a shareholder of a PFIC must file an annual report containing certain information. U.S. Holders paying more than
$100,000 for our Ordinary Shares may be required to file IRS Form 926 (Return by a U.S. Transferor of Property to a Foreign Corporation)
reporting this payment. Substantial penalties may be imposed upon a U.S. Holder that fails to comply with the required information reporting.
Dividends on and proceeds from
the sale or other disposition of our Ordinary Shares may be reported to the IRS unless the U.S. Holder establishes a basis for exemption.
Backup withholding may apply to amounts subject to reporting if the holder (1) fails to provide an accurate U.S. taxpayer identification
number or otherwise establish a basis for exemption, or (2) is described in certain other categories of persons. However, U.S. Holders
that are corporations generally are excluded from these information reporting and backup withholding tax rules.
Backup withholding is not an additional
tax. Any amounts withheld under the backup withholding rules generally will be allowed as a refund or a credit against a U.S. Holder’s
U.S. federal income tax liability if the required information is furnished by the U.S. Holder on a timely basis to the IRS.
U.S. Holders and prospective investors
should consult their own tax advisors regarding the backup withholding tax and information reporting rules.
U.S. HOLDERS AND PROSPECTIVE
INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS ABOUT THE TAX CONSEQUENCES TO THEM OF AN INVESTMENT IN OUR ORDINARY SHARES IN LIGHT
OF THEIR INDIVIDUAL CIRCUMSTANCES.
Cayman Taxation
Holders and prospective investors
should consult their professional advisers on the possible tax consequences of buying, holding or selling any Ordinary Shares under the
laws of their country of citizenship, residence or domicile.
The following is a discussion
on certain Cayman Islands income tax consequences of an investment in our Ordinary Shares. The discussion is a general summary of present
law, which is subject to prospective and retroactive change. It is not intended as tax advice, does not consider any investor’s
particular circumstances, and does not consider tax consequences other than those arising under Cayman Islands law.
Cayman Islands Taxation
The Cayman Islands currently levies
no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance
tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp
duties which may be applicable on instruments executed in, or brought within the jurisdiction of the Cayman Islands. The Cayman Islands
is not party to any double tax treaties that are applicable to any payments made to or by our company. There are no exchange control regulations
or currency restrictions in the Cayman Islands.
We are incorporated under the laws
of the Cayman Islands as an exempted company with limited liability and, as such, we have obtained an undertaking from the Governor of
the Cayman Islands that no law enacted in the Cayman Islands during the period of 30 years from November 16, 2018 imposing any tax to
be levied on profits, income, gains or appreciations shall apply to us or our operations and no such tax or any tax in the nature of estate
duty or inheritance tax shall be payable (directly or by way of withholding) on the Ordinary Shares, debentures or other obligations of
ours.
PRC
Under the Enterprise Income Tax
Law, an enterprise established outside the PRC with a “de facto management body” within the PRC is considered a PRC resident
enterprise for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide
income as well as tax reporting obligations, if the company obtains a “high-tech enterprise” tax status, then its statutory
income tax rate will be lowered to 15%. Under the Implementation Rules, a “de facto management body” is defined as a body
that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances
and properties of an enterprise.
Under the PRC Enterprise Income
Tax Law and its implementation rules, an enterprise established outside China with “de facto management body” within China
is considered a resident enterprise. The implementation rules define the term “de facto management body” as the body that
exercises full and substantial control and overall management over the business, productions, personnel, accounts and properties of an
enterprise. In April 2009, the State Administration of Taxation issued a circular, known as Circular 82, which provides certain specific
criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore
is located in China. Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups,
not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the State Administration of
Taxation’s general position on how the “de facto management body” text should be applied in determining the tax resident
status of all offshore enterprises. According to Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a
PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China only
if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in China; (ii) decisions
relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel
in China; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions,
are located or maintained in China; and (iv) at least 50% of voting board members or senior executives habitually reside in China.
LEGAL MATTERS
The validity of the Ordinary Shares offered hereby will be passed upon for
us by Campbells, our Cayman Islands counsel. Certain legal matters relating to this offering will be passed upon for us by Pryor Cashman
LLP, New York, New York. The Placement Agent is being represented by Ellenoff, Grossman & Schole LLP, New York, New York.
EXPERTS
The consolidated financial statements
of Blue Hat Interactive Entertainment Technology and its consolidated subsidiaries as of December 31, 2023 and 2022, and for the years
then ended, incorporated by reference in this prospectus and elsewhere in the registration statement of which this prospectus forms a
part, have been audited by OneStop Assurance PAC and Audit Alliance LLP, respectively, each an independent registered public accounting
firm, in reliance upon such reports given on the authority of such firms as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration
statement we filed with the SEC. This prospectus does not contain all of the information set forth in the registration statement and the
exhibits to the registration statement. For further information with respect to us and the securities we are offering under this prospectus,
we refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement. Neither we nor
any underwriter, agent or dealer has authorized any person to provide you with different information. We are not making an offer of these
securities in any state where the offer is not permitted. You should not assume that the information in this prospectus is accurate as
of any date other than the date on the front page of this prospectus, regardless of the time of delivery of this prospectus or any sale
of the securities offered by this prospectus.
We file annual and current reports
and other information with the SEC. Our SEC filings are available to the public at the SEC’s website at www.sec.gov.
Additional information about us is contained at our website, https://www.bluehatgroup.net. Information on our website is not
incorporated by reference into this prospectus. We make available through our website our SEC filings as soon as reasonably practicable
after those reports are filed with the SEC.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to “incorporate
by reference” the information that we have filed with it, meaning we can disclose important information to you by referring you
to those documents already on file with the SEC. The information incorporated by reference is considered to be part of this prospectus
and the accompanying base prospectus except for any information that is superseded by other information that is included in this prospectus
or the accompanying base prospectus. This filing incorporates by reference the following documents, which we have previously filed with
the SEC pursuant to the Exchange Act:
| |
● |
our Annual Report on Form 20-F/A for the fiscal year ended December 31, 2023, filed with the SEC on August 8, 2024; |
| |
● |
our Reports on Form 6-K filed with the SEC on September 11, 2024, September
11, 2024 and December 23, 2024; and |
| |
● |
the description of our Ordinary Shares contained in the registration statement on Form 8-A, dated July 24, 2019, File No. 001-39001, and any other amendment or report filed for the purpose of updating such description. |
We also incorporate by reference
into this prospectus all documents that are filed by us with the SEC pursuant to Sections 13(a), 13(c) or 15(d) of the Exchange Act on
or after the date of this prospectus but prior to the termination of this offering.
These documents include periodic reports, such as Annual Reports on Form 20-F and Reports of Foreign Private Issuers on Form 6-K. As a
foreign private issuer, we are exempt from the rules under Section 14 of the Exchange Act prescribing the furnishing and content of proxy
statements, and our officers, directors and principal shareholders are exempt from the reporting and other provisions in Section 16 of
the Exchange Act.
We will provide, without charge,
to each person, including any beneficial owner, to whom this prospectus and the accompanying base prospectus are delivered, on the written
or oral request of such person, a copy of any or all of the reports or documents incorporated by reference in this prospectus and the
accompanying base prospectus, but not delivered with this prospectus and the accompanying base prospectus. Any request may be made by
writing or telephoning us at the following address or telephone number:
Blue Hat Interactive Entertainment Technology
7th Floor, Building C, No. 1010 Anling Road
Huli District, Xiamen, China 361009
Attn: Xiaodong Chen, Chief Executive Officer
+ 86-592-228-0081
Any statement contained in this
prospectus or contained in a document incorporated or deemed to be incorporated by reference into this prospectus will be deemed to be
modified or superseded to the extent that a statement contained in this prospectus or any subsequently filed supplement to this prospectus,
or document deemed to be incorporated by reference into this prospectus, modifies or supersedes such statement.
PROSPECTUS
$150,000,000
Ordinary Shares
Preferred Shares
Warrants
Subscription Rights
Debt Securities
Units
Blue Hat Interactive
Entertainment Technology (“Blue Hat Cayman”, the “Company”, “our” or “we”) is
not a Chinese operating company but a Cayman Islands holding company with operations conducted by our subsidiaries based in China.
Blue Hat Cayman may offer ordinary shares, par value $0.01 per share, preferred shares, warrants, subscription rights, debt securities
and/or units from time to time. When we decide to sell securities, we will provide specific terms of the offered securities, including
the offering prices of the securities, in a prospectus supplement. The securities offered by us pursuant to this prospectus will
have an aggregate public offering price of up to $150,000,000. By purchasing the securities offered hereby, you are only investing
in the holding company and will not directly hold equity interests in its subsidiaries.
The securities covered
by this prospectus may be offered and sold from time to time in one or more offerings, which may be through one or more underwriters,
dealers and agents, or directly to the purchasers. The names of any underwriters, dealers or agents, if any, will be included in
a supplement to this prospectus.
This prospectus describes
some of the general terms that may apply to these securities and the general manner in which they may be offered. The specific
terms of any securities to be offered, and the specific manner in which they may be offered, will be described in one or more supplements
to this prospectus. A prospectus supplement may also add, update or change information contained in this prospectus.
Our ordinary shares
are traded on the Nasdaq Capital Market under the symbol “BHAT”. As of January 18, 2024, the last reported sale price
for our ordinary shares was $0.99 per share. As of that date, the aggregate market value of our outstanding voting and non-voting
common equity held by non-affiliates was approximately $54,043,471.4 based on 58,398,281 of its outstanding ordinary shares, of
which approximately 54,589,365 shares were held by non-affiliates.
We
are a holding
company incorporated
in the Cayman
Islands and
are not a
Chinese operating
company. This
holding company
structure
involves unique
risks to investors.
As a holding
company with
no material
operations
of our own,
we conduct
a substantial
majority of
our operations
through our
subsidiaries
in the People’s
Republic of
China (“China”
or the “PRC”).
We used to
have variable
interest entities
(“VIEs”)
through a
“VIE
structure,”
to replicate
foreign investment
in China-based
companies
where Chinese
law prohibits
direct foreign
investment.
On June 8,
2023, contractual
agreements
by and among
Xiamen Duwei
Consulting
Management
Co., Ltd.,
our indirectly
wholly owned
subsidiary
(“Blue
Hat WOFE”),
Fujian Blue
Hat Interactive
Entertainment
Technology
Ltd. (“Blue
Hat Fujian”)
and certain
individuals
were terminated
and therefore
Blue Hat Fujian
is no longer
a VIE. The
Company also
has deconsolidated
Fresh Joy
Entertainment
Ltd. (“Fresh
Joy”)
through this
termination.
As of the
date of this
prospectus,
the Company
has no VIEs,
and the Company,
as a holding
company without
operations,
is conducting
business through
its wholly
owned operating
subsidiaries
including
1) Blue Hat
Fujian; 2)
Xiamen Shengruihao
Technology
Co., Ltd.
(“Shengruihao”);
3) Blue Hat
WOFE; 4) Xiamen
Bluehat Research
Institution
of Education
Co., Ltd.
(“Bluehat
Research”);
5) Hunan Engaomei
Anination
Culture Development
Co., Ltd.
(“Engaomei”);
6) Fujian
Youth Hand
in Hand Educational
Technology
Co., Ltd.
(“Fujian
Youth”);
7) Fuzhou
Qiande Educational
Technology
Co., Ltd.
(“Qiande”);
8) Chongqing
Duwei Chuanghua
Electronic
Technology
Co., Ltd.
(“Duwei
Chuanghua”);
9) Golden
Alpha Strategy
Ltd. (“Golden
Alpha”);
10) Guangzhou
Huangxin Enterprise
Management
Co., Ltd.
(“Huangxin”);
and 11) Blue
Hat Technology
LLC. (“BH
Technology”).
For a detailed
description
of risks related
to doing business
in China,
see “Risk
Factors —
Risk Factors
Relating to
Doing Business
in China”
in our Annual
Report of
Foreign Private
Issuer on
Form 20-F
for our fiscal
year ended
December 31,
2022, filed
with Securities
and Exchange
Commission
on May 8,
2023, which
is incorporated
by reference
into this
prospectus,
and “Risk
Factors —
Risk Factors
Relating to
Doing Business
in China”
in this prospectus.
Blue Hat Cayman and
its subsidiaries usually operate independently and transfer funds through loans and intercompany transactions. We raised capital
for a total amount of $25.182 million from 2020 to 2023 through various financings. Blue Hat Interactive Entertainment Technology
Limited (“Blue Hat HK”), our wholly-owned Hong Kong intermediary holding subsidiary, passed the funds from the investors
in these financings to Blue Hat Fujian, through loans regulated under contract agreements, and Blue Hat WOFE, through intercompany
transactions. As of the date of this prospectus, the total amount that Blue Hat Cayman has invested in and lent to Blue Hat Fujian
and Blue Hat WOFE are approximately $1.77 million and $14.81 million, respectively.
As of the date of this prospectus,
the Company has not distributed any dividends to the investors, nor does the Company intend to distribute any dividends in any form in
the near future. The Company currently intends to retain the earnings to re-invest into the daily operations.
The
tables below show the cash transfer between the Company and its subsidiaries for the fiscal years ended December 31, 2022 and
2021.
| For
the year ended December 31, 2022 |
| No. |
|
Transfer
from |
|
Transfer
to |
|
Approximate
value ($) |
|
Note |
| |
1 |
|
|
Blue
Hat Interactive Entertainment Technology |
|
Blue
Hat Interactive Entertainment Technology Limited |
|
|
1,768,000.00 |
|
|
|
Loan |
|
| |
2 |
|
|
Blue
Hat Interactive Entertainment Technology Limited |
|
Fujian Blue
Hat Group Co, Ltd |
|
|
1,768,000.00 |
|
|
|
Investment |
|
| For
the year ended December 31, 2021 |
| No. |
|
Transfer
from |
|
Transfer
to |
|
Approximate
value ($) |
|
Note |
| |
1 |
|
|
Blue
Hat Interactive Entertainment Technology |
|
Blue
Hat Interactive Entertainment Technology Limited |
|
|
7,150,000.00 |
|
|
|
Loan |
|
| |
2 |
|
|
Blue Hat Interactive
Entertainment Technology Limited |
|
Xiamen Duwei
Consulting Management Co., Ltd. |
|
|
7,150,000.00 |
|
|
|
Investment |
|
We are subject
to certain legal and operational risks associated with being based in China. PRC laws and regulations governing our current business
operations are developing, and as a result these risks may result in material changes in the operations, significant depreciation
of the value of our ordinary shares, or a complete hindrance of our ability to offer or continue to offer our securities to investors.
Recently, the PRC government adopted a series of regulatory actions and issued statements to regulate business operations in China,
including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed
overseas using VIE structures, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in
anti-monopoly enforcement. As of the date of this prospectus, our Company, its former VIEs and their subsidiaries have not been
involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor have any of them received
any inquiry, notice or sanction, and there are currently no relevant laws or regulations in the PRC that prohibit companies whose
entity interests are within the PRC from listing on overseas stock exchanges. However, since these regulatory actions and statements
are newly published, official guidance and related implementation rules have not been issued. It is highly uncertain what the
potential impact such modified or new laws and regulations will have on our daily business operations, our ability to accept foreign
investments and our ability to continue listing on a U.S. stock exchange.
On February 17,
2023, the China Securities Regulatory Commission, or the “CSRC”, promulgated the Trial Administrative Measures of
Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”), which became effective on March
31, 2023. The Trial Measures lay out specific filing requirements for overseas listing and offering by PRC domestic companies
and include unified regulation management and strengthening regulatory coordination. Because we are already publicly listed in
the U.S., the Trial Measures do not impose additional regulatory burden on us beyond the obligation to report to the CSRC and
comply with the filing requirements on any future offerings of our securities, or material events such as a change of control
or delisting. As the Trial Measures are newly issued, there remains uncertainty as to how it will be interpreted or implemented.
Therefore, we are subject to such filing requirements under the Trial Measures upon future subsequent offerings, and may be subject
to additional filing requirements if there are any changes on the Trial Measures, at which time we may not be able to obtain clearance
from the CSRC in a timely fashion.
On May 20, 2020,
the U.S. Senate passed the Holding Foreign Companies Accountable Act (the “HFCAA”) requiring foreign companies to
certify that they are not owned or controlled by a foreign government if the PCAOB is unable to audit specified reports because
the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the Company’s auditors
for three consecutive years, the issuer’s securities are prohibited from trading on a U.S. stock exchange. On December 2,
2020, the U.S. House of Representatives approved the HFCAA and on December 18, 2020, the HFCAA was signed into law. Pursuant to
the HFCAA, the PCAOB issued a Determination Report on December 16, 2021 which found that the PCAOB is unable to inspect or investigate
completely registered public accounting firms headquartered in: (1) mainland China of the PRC because of a position taken by one
or more authorities in mainland China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of
a position taken by one or more authorities in Hong Kong. On August 26, 2022, the PCAOB announced and signed a Statement of Protocol
(the “Protocol”) with the China Securities Regulatory Commission and the Ministry of Finance of the People’s
Republic of China. The Protocol provides the PCAOB with: (1) sole discretion to select the firms, audit engagements and potential
violations it inspects and investigates, without any involvement of Chinese authorities; (2) procedures for PCAOB inspectors and
investigators to view complete audit work papers with all information included and for the PCAOB to retain information as needed;
(3) direct access to interview and take testimony from all personnel associated with the audits the PCAOB inspects or investigates.
Our auditors are headquartered in Singapore, and are inspected by the PCAOB on a regular basis. They are not subject to the Determination
Report. Our auditors are subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess
our auditor’s compliance with the applicable professional standards. On June 22, 2021, the U.S. Senate passed the Accelerating
Holding Foreign Companies Accountable Act which, proposed to reduce the number of consecutive non-inspection years required
for triggering the prohibitions under the HFCAA from three years to two. On December 29, 2022, the Consolidated Appropriations
Act, 2023 (the “CAA”) was signed into law, which officially reduced the number of consecutive non-inspection years
required for triggering the prohibitions under the HFCAA from three years to two, thus, reduce the time before an applicable issuer’s
securities may be prohibited from trading or delisted. On December 15, 2022, the PCAOB issued a new Determination Report which
concluded that it was able to inspect and investigate completely PCAOB-registered accounting firms headquartered in mainland China
and Hong Kong in 2022, and the PCAOB vacated the December 16, 2021 Determination Report. Should the PCAOB again encounter impediments
to inspections and investigations in mainland China or Hong Kong as a result of positions taken by any authority in either jurisdiction,
including by the CSRC or the MOF, the PCAOB will make determinations under the HFCAA as and when appropriate. However, whether
the PCAOB will continue to conduct inspections and investigations completely to its satisfaction of PCAOB-registered public accounting
firms headquartered in mainland China and Hong Kong is subject to uncertainty and depends on a number of factors out of our, and
our auditor’s, control, including positions taken by authorities of the PRC. The PCAOB is expected to continue to demand
complete access to inspections and investigations against accounting firms headquartered in mainland China and Hong Kong in the
future and states that it has already made plans to resume regular inspections in early 2023 and beyond. The PCAOB is required
under the HFCAA to make its determination on an annual basis with regards to its ability to inspect and investigate completely
accounting firms based in the mainland China and Hong Kong. Should the PCAOB again encounter impediments to inspections and investigations
in mainland China or Hong Kong as a result of positions taken by any foreign authority including but is not limited to mainland
China or Hong Kong jurisdiction, the PCAOB will act expeditiously to consider whether it should issue a new determination.
Investing
in these securities involves certain risks. Please carefully consider the section entitled “Risk Factors” in Item
3(D) of our most recent Annual Report of Foreign Private Issuer on Form 20-F incorporated by reference in this prospectus, the
section entitled “Risk Factors” beginning on page 9 of this prospectus, and any risk factors included in any applicable
prospectus supplement, for a discussion of the factors you should consider carefully before deciding to purchase the securities
offered herein.
Neither the Securities
and Exchange Commission nor any state or other 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.
Prospectus
dated January 26, 2024
TABLE
OF CONTENTS
PROSPECTUS SUMMARY
The following summary highlights
information contained elsewhere in this prospectus and does not contain all of the information you should consider before investing
in our ordinary shares. You should read the entire prospectus carefully, including “Risk Factors,” “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements and
the related notes thereto, in each case included in this prospectus. You should carefully consider, among other things, the matters
discussed in the section of this prospectus titled “Business” before making an investment decision.
Overview
We,
through the operations of our subsidiaries headquartered in Xiamen, China, primarily operate a gold trading and supply chain business
through our subsidiaries. Our business model encompasses physical gold trading, gold derivatives trading, and the development of AI-enabled
trading platforms. In August 2024, we completed our first major gold acquisition of 1,000 kilograms for approximately $66.49 million from
Macau Rongxin Precious Metals Technology Co., Ltd., marking our entry into large-scale gold trading.
Our
operations are supported by key licenses and strategic partnerships. Our Hong Kong subsidiary, Golden Alpha Strategy Ltd., holds a Category
A Registration for dealing in precious metals from the Hong Kong Customs and Excise Department. We have established partnerships with
GTC GROUP LLC in Dubai for derivatives trading and Sichuan Jinyinghe Industrial Co., Ltd. for developing our gold supply chain business
in the Shenzhen Shuibei market, one of China's largest gold trading centers with annual transaction volumes exceeding RMB 1 trillion.
We
create value by providing capital, technology, and connections across the gold supply chain. Our target customers include gold refineries,
wholesalers, and retailers. We aim to address industry challenges such as fragmented markets, limited financing channels, and operational
inefficiencies through our AI-enabled trading platforms and supply chain solutions. Our management team believes the gold industry is
transitioning from rapid growth to high-quality development, presenting strategic opportunities for market consolidation and technological
innovation.
Corporate
History and Structure
Blue
Hat Cayman is a holding company incorporated on June 13, 2018 under the laws of the Cayman Islands. Blue Hat Cayman has no substantive
operations other than holding all of the issued and outstanding shares of Brilliant Hat Limited (“Blue Hat BVI”), a company
established under the laws of the British Virgin Islands on June 26, 2018, which in turn holds all of the outstanding equity of Blue Hat
Interactive Entertainment Technology Limited (“Blue Hat HK”), which was established in Hong Kong on June 26, 2018. Blue Hat
HK is a holding company holding all of the outstanding equity of Blue Hat WOFE, which was established on July 26, 2018 under the laws
of the PRC.
On
September 18, 2017, Blue Hat Fujian formed a joint venture with Xiamen Youth Education Development
Co., Ltd. and Youying Wang, contributing a 48.5% equity interest in Fujian Youth Hand in
Hand Educational Technology Co., Ltd. (“Fujian Youth”), a PRC company. On January
22, 2021, Xiamen Youth Education Development Co., Ltd and Youying Wang transferred all their
equity interests to Blue Hat WOFE. On January 6, 2023, the equity interest of Fujian Youth
owned by Blue Hat Fujian was transferred to Blue Hat WOFE. Therefore, we, through Blue Hat
WOFE, indirectly own all the equity interests of Fujian Youth. As of December 31, 2022, Fujian
Youth had normal operations.
On
November 13, 2018, Blue Hat Cayman completed a reorganization of entities under common control of its then existing shareholders,
who collectively owned a majority of the equity interests of Blue Hat Cayman prior to the reorganization. Blue Hat Cayman, Blue
Hat BVI, and Blue Hat HK were established as the holding companies of Blue Hat WOFE. Blue Hat WOFE is the primary beneficiary
of Blue Hat Fujian and its subsidiaries, and all of these entities included in Blue Hat Cayman are under common control which
results in the consolidation of Blue Hat Fujian and subsidiaries which have been accounted for as a reorganization of entities
under common control at carrying value. The consolidated financial statements are prepared as if the reorganization became effective
as of the beginning of the first period presented in the consolidated financial statements.
On
January 25, 2021, Blue Hat Cayman closed an acquisition pursuant to which it acquired 100% equity
interests of Fresh Joy Entertainment Ltd. (“Fresh Joy”). On August 8, 2022, Blue Hat Cayman transferred all the equity
interests of Fresh Joy to Fujian Lanyun Canghai Technology Co., Ltd., a wholly owned subsidiary of Blue Hat Fujian. Fresh Joy
signed a series of VIE agreements with Fujian Roar Game Technology Co., Ltd. (“Fujian Roar Game”). Fujian Roar Game
holds 51% equity of Fuzhou CSFCTECH Co., Ltd. and 100% equity of Fuzhou UC71 Co., Ltd. On June
8, 2023, contractual agreements by and among Blue Hat WOFE, Blue Hat Fujian and certain individuals were terminated and therefore
Blue Hat Fujian is no longer a VIE. Blue Hat Fujian, and its subsidiaries were not consolidated thereafter. Blue Hat Fujian transferred
all the equity interests of Hunan Engaomei Animation Culture Development Co., Ltd. (“Blue
Hat Hunan”) and Fujian Youth it owned to Blue Hat WOFE.
Blue Hat Hunan and Fujian Youth are now wholly-owned subsidiaries of Blue Hat WOFE.
On
February 20, 2021, the Company established a wholly owned subsidiary, Xiamen Bluehat Research Institution of Education Co., Ltd.
On
March 24, 2021, Qiande was incorporated and was 100% owned by Fujian Youth.
On
August 23, 2021, Fujian Blue Hat Group Co. Ltd. (“Blue Hat Group”) was incorporated
and was 100% owned by Blue Hat Interactive Entertainment Technology Limited.
On
September 30, 2022, Blue Hat Group acquired 100% of Xiamen Shengruihao Technology Co., Ltd (“Shengruihao”), a PRC
company established on June 30, 2021.
On
May 10, 2022, the Company has authorized and approved a 1-for-10 reverse stock split of the Company’s authorized (issued and unissued)
shares of ordinary shares, effective May 27, 2022. The reverse stock split was reflected in the audited financial statements for the
fiscal year ended December 31, 2022, and retrospectively in the audited financial statements for the fiscal year ended December 31, 2021.
On
April 3, 2023, Golden Strategy Ltd. (“Golden Strategy”), a BVI company, was incorporated and is wholly owned by the Company.
On
April 18, 2023, Golden Alpha, a Hong Kong company, was incorporated and is wholly owned by
Golden Strategy. Golden Alpha’s main business operation is the international jewelry
trading business.
On
June 13, 2023, Duwei Chuangda was established in Chongqing, China, and is wholly owned by
Blue Hat WOFE.
On
July 5, 2023, Huangxin was established in Guangzhou, China, and is wholly owned by Golden
Alpha. Guangzhou Huangxin’s main business operation is the jewelry trading business
in mainland China.
On
July 21, 2023, BH Technology, a wholly owned subsidiary of Golden Strategy, was incorporated in New Hampshire, USA. BH Technology will
handle the business operations in the United States in future.
In 2024, we entered into significant
partnerships and agreements in the gold trading sector, including: A strategic cooperation agreement with Dubai's GTC GROUP LLC in March
2024; A framework agreement with Sichuan Jinyinghe Industrial Co., Ltd. in June 2024 to establish a gold supply chain company; A Letter
of Intent in May 2024 to acquire 60% of GTC Multi Trading DMCC through share issuance.
The charts below summarize
our corporate legal structure and identify our subsidiaries:
| Name |
|
Background |
|
Ownership |
| Brilliant
Hat Limited |
|
● A British Virgin Islands company
●
Incorporated on June 26, 2018
● A holding company |
|
100%
owned by Blue Hat Interactive Entertainment Technology |
| |
|
|
|
|
| Blue Hat
Interactive Entertainment Technology Limited |
|
● A Hong Kong company
● Incorporated
on June 26, 2018
● A holding company |
|
100%
owned by Brilliant Hat Limited |
| |
|
|
|
|
| Fujian
Blue Hat Group Co., Ltd. |
|
● A PRC limited liability
company
● Incorporated on August 23, 2021 |
|
100%
owned by Blue Hat Interactive Entertainment Technology Limited. |
| |
|
|
|
|
| Golden
Strategy Ltd. |
|
● A British Virgin Islands company
●
Incorporated on April 3, 2023 |
|
100%
owned by Blue Hat Interactive Entertainment Technology |
| |
|
|
|
|
| Golden
Alpha Strategy Ltd. |
|
● A Hong Kong company
● Incorporated
on April 18, 2023
● Responsible for the international jewelry trading business. |
|
100%
owned by Golden Strategy Ltd. |
| |
|
|
|
|
| Blue Hat
Technology LLC. |
|
● A US company incorporated in New Hampshire
● Incorporated on July 21, 2023
● handle upcoming business in the United States in future. |
|
100%
owned by Golden Strategy Ltd. |
| |
|
|
|
|
| Xiamen
Duwei Consulting Management Co., Ltd. |
|
● A PRC limited liability company and deemed a
wholly foreign owned enterprise, or WOFE
● Incorporated on July 26, 2018
● Registered capital of $20,000,000
● A holding company |
|
100%
owned by Blue Hat Interactive Entertainment Technology Limited |
| |
|
|
|
|
| Guangzhou
Huangxin Enterprise Management Co., Ltd. |
|
●A PRC limited liability company and deemed a
wholly foreign owned enterprise, or WOFE
● Incorporated on July 5, 2023 |
|
100%
owned by Golden Alpha Strategy Ltd. |
| |
|
|
|
|
| Hunan Engaomei
Animation Culture Development Co., Ltd. |
|
● A PRC limited liability company
● Incorporated on October 19, 2017
● Registered capital of $302,540 (RMB 2,000,000)
● Designing, producing,
promoting and selling animated toys with mobile games features, original intellectual property and peripheral derivatives features. |
|
100%
owned by Xiamen Duwei Consulting Management Co., Ltd. |
| |
|
|
|
|
| Fujian
Youth Hand in Hand Educational Technology Co., Ltd |
|
● A PRC limited liability company
●
Incorporated on September 18, 2017
● Registered capital of $3,106,214 (RMB 20,100,000)
● Educational consulting
service and sports related. |
|
100%
owned by Xiamen Duwei Consulting Management Co., Ltd. |
| |
|
|
|
|
| Fuzhou
Qiande Educational Technology Co., Ltd |
|
● A PRC limited liability company
●
Incorporated on March 24, 2021
● Information Technology consulting service |
|
100%
owned by Fujian Youth Hand in Hand Educational Technology Co., Ltd |
| |
|
|
|
|
| Chongqing
Duwei Chuangda Electronic Technology Co., Ltd. |
|
● A PRC limited liability company
●
Incorporated on June 13, 2023
● Responsible for the jewelry trading business in mainland China. |
|
100%
owned by Xiamen Duwei Consulting Management Co., Ltd. |
| |
|
|
|
|
| Xiamen
Bluehat Research Institution of Education Co., Ltd. |
|
● A PRC limited liability company
●
Incorporated on February 20, 2021
● Information Technology consulting service |
|
100%
owned by Xiamen Duwei Consulting Management Co., Ltd. |
| |
|
|
|
|
| Xiamen
Shengruihao Technology Co., Ltd |
|
● A PRC limited liability company, acquired on
September 30, 2022
● Incorporated on June 30, 2021
● Registered capital of $ 4,463,754 (RMB 30,000,000)
●
Software development, animation design and web design |
|
100%
owned by Fujian Blue Hat Group Co., Ltd. |
Permissions and Approvals
The table below lists all the permissions
and approvals the Company and its subsidiaries have obtained as of the date of the prospectus:
| No. |
Name
of the Company |
License
No. |
License/Permission |
Established
Date |
Validity |
| 1 |
Blue
Hat Interactive Entertainment Technology |
WC-338512 |
Business
License |
3/14/2019 |
Long-term |
| 2 |
Brilliant
Hat Limited |
1983687 |
Business
License |
6/26/2018 |
Long-term |
| 3 |
Golden
Strategy Ltd |
2121323 |
Business
License |
4/3/2023 |
Long-term |
| 4 |
Blue
Hat Interactive Entertainment Technology Limited |
2714615 |
Business
License |
6/26/2018 |
Long-term |
| 5 |
Golden
Alpha Strategy Limited |
3271611 |
Business
License |
4/18/2023 |
Long-term |
| 6 |
BLUE
HAT TECHNOLOGY LLC |
937615 |
Business
License |
7/21/2023 |
Long-term |
| 7 |
Fujian
Blue Hat Group Co., Ltd. |
91350100MA8TTRRQ4A |
Business
License
Record Registration Form for Foreign |
8/23/2021 |
8/22/2051 |
| 8 |
Xiamen
Shengruihao Technology Co., Ltd |
91350200MA8TGQ815M |
Business
License |
6/30/2021 |
6/29/2071 |
| 9 |
Xiamen
Duwei Consulting Management Co., Ltd. |
91350200MA31XW6W0Q |
Business
License
Record Registration Form for Foreign |
7/26/2018 |
7/25/2048 |
| 10 |
Xiamen
Bluehat Research Institution of Education Co., Ltd. |
91350200MA8RFNMY91 |
Business
License |
2/20/2021 |
2/19/2071 |
| 11 |
Hunan
Engaomei Animation Culture Development Co., Ltd. |
91430111MA4M6YX69X |
Business
License |
10/19/2017 |
10/18/2067 |
| 12 |
Fujian
Youth Hand in Hand Educational Technology Co., Ltd |
91350200MA2YKHW78G |
Business
License |
9/18/2017 |
9/17/2067 |
| 13 |
Fuzhou
Qiande Educational Technology Co., Ltd |
91350102MA8RQTEH5R |
Business
License |
3/24/2021 |
Long-term |
| 15 |
Guangzhou
Huangxin Enterprise Management Co., Ltd. |
91440106MACPKAYJXM |
Business
License
Record Registration Form for Foreign |
7/5/2023 |
Long-term |
In the view of the management team of the
Company, those listed above constitute all the permissions and approvals the Company and
its subsidiaries require to hold to operate business. The Company and its subsidiaries have never been denied any applications
concerning any permissions or approvals. If the Company or its subsidiaries do not receive or maintain such permissions or approvals,
or mistakenly conclude that such permissions or approvals are not required, our business may be adversely affected. In the scenario
when the Company is denied such permissions, the Company would be required to either avoid such field of business, or to collaborate
with parties that can obtain such permissions. Currently the PRC legal system is under constant development and applicable laws,
regulations, or interpretations are subject to substantial uncertainties. If relevant rules suddenly change, we will have to obtain
such permissions or approvals, which may be costly, and may temporarily halt our operation of business, negatively affecting our
revenues and our securities’ value.
Cash Transfer
As of the date of this prospectus,
the total amount invested in and lent to Blue Hat Fujian, and Blue Hat WOFE are approximately $1.77 million and $14.81 million, respectively.
The
tables below show the cash transfer between the Company and its subsidiaries for the fiscal years ended December 31, 2022 and
2021.
| For
the year ended December 31, 2022 |
| No. |
|
Transfer
from |
|
Transfer
to |
|
Approximate
value ($) |
|
Note |
| |
1 |
|
|
Blue
Hat Interactive Entertainment Technology |
|
Blue
Hat Interactive Entertainment Technology Limited |
|
|
1,768,000.00 |
|
|
|
Loan |
|
| |
2 |
|
|
Blue
Hat Interactive Entertainment Technology Limited |
|
Fujian
Blue Hat Group Co, Ltd |
|
|
1,768,000.00 |
|
|
|
Investment |
|
| For
the year ended December 31, 2021 |
| No. |
|
Transfer
from |
|
Transfer
to |
|
Approximate
value ($) |
|
Note |
| |
1 |
|
|
Blue
Hat Interactive Entertainment Technology |
|
Blue
Hat Interactive Entertainment Technology Limited |
|
|
7,150,000.00 |
|
|
|
Loan |
|
| |
2 |
|
|
Blue
Hat Interactive Entertainment Technology Limited |
|
Xiamen
Duwei Consulting Management Co., Ltd. |
|
|
7,150,000.00 |
|
|
|
Investment |
|
Cash dividends, if
any, on our ordinary shares will be paid in U.S. dollars. Our ability to pay dividends depends on the distribution from the operating
entities to the Company. As of the date of this prospectus, the Company has not distributed any dividends to its investors, nor
does the Company intend to distribute any dividends in any form in the near future. The Company currently intends to retain the
earnings to re-invest into the daily operations. See “Risk Factor - The PRC government imposes controls on the convertibility
of RMB into foreign currencies and, in certain cases, the remittance of currency out of China, and PRC also has regulations limiting
our PRC subsidiaries’ ability to distribute dividends. Both of these restrictions may affect our ability to distribute earning
from our subsidiaries to us and to the U.S. investors” for more detailed discussion of the restrictions and limitations
of the dividends distributions.
Corporate Information
On July 30, 2019,
we completed our initial public offering, and since July 26, 2019, our ordinary shares have been listed on the Nasdaq Capital Market
under the symbol “BHAT”.
Our principal executive office is
located at 7th Floor, Building C, No. 1010 Anling Road, Huli District, Xiamen, China 361009. Our telephone number is
86-592-2280081. Our registered office in the Cayman Islands is located at the office of Campbells Corporate
Services Limited, Floor 4, Willow House, Cricket Square, Grand Cayman KY1-9010, Cayman Islands.
Our agent for service of process in the United States is Pryor Cashman LLP,
located at 7 Times Square, New York, NY, 10036. Our website is located at http://www.bluehatgroup.net. Information contained
on, or that can be accessed through, our website is not a part of, and shall not be incorporated by reference into, this prospectus.
The SEC maintains
a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically
with the SEC on www.sec.gov. You can also find information on our website located at http://www.irbluehatgroup.com. Information
contained on, or that can be accessed through, our website is not a part of, and shall not be incorporated by reference into, this
prospectus.
Summary of Risk Factors
We
face various legal and operational risks and uncertainties related to doing business in China. Our business operations are primarily
conducted in China, and we are subject to complex and evolving PRC laws and regulations. The PRC government has recently issued
statements and regulatory actions relating to areas such as approvals on offshore offerings, and oversight on cybersecurity and
data privacy. Please refer to “Risk Factors - Risks Related to Doing Business in China - A severe
or prolonged downturn in the Chinese and/or global economy could materially and adversely affect our business, financial condition
and operating results” in this prospectus for more details. For example, on February 17, 2023, the
China Securities Regulatory Commission, or the CSRC, promulgated Trial Administrative Measures of the Overseas Securities Offering
and Listing by Domestic Companies, and relevant five supporting guidelines (collectively, the “Trial Measures”), which
became effective on March 31, 2023. According to the Trial Measures, PRC domestic companies that seek to offer and list securities
in overseas markets, either in direct or indirect means, are required to complete the filing procedure with the CSRC and report
relevant information within certain timeframe. Please refer to “Risk Factors - Risks Related to Doing Business
in China - Adverse regulatory developments in China may subject us to additional regulatory review, and additional disclosure
requirements and regulatory scrutiny to be adopted by the SEC in response to risks related to recent regulatory developments in
China may impose additional compliance requirements for companies like us with significant China-based operations, all of which
could increase our compliance costs, subject us to additional disclosure requirements” enclosed in the Company’s most
recent annual report of Foreign Private Issuer on Form 20-F, which is incorporated herein by reference. The Provisions on Strengthening
Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, or the Confidentiality
and Archives Provisions was promulgated and became effective on March 31, 2023 and posed additional requirements for overseas-listed
companies to preserve work papers and to follow certain procedures before transferring certain work papers outside of the PRC.
Please refer to “Risk Factors - Risks Related to Doing Business in China - Recent statements
by the Chinese government indicate an intent to exert more oversight and more control over offerings conducted overseas and/or
foreign investment in China-based issuers. Any such actions by the Chinese government could significantly limit or completely
hinder our ability to conduct our business, accept foreign investments, or list on a U.S. or other foreign exchange, including
our ability to offer or continue to offer its securities to investors and cause the value of the securities being registered hereby
to significantly decline or become worthless” in this prospectus.
Due
to the restrictions imposed by Article 177 of the PRC Securities Law (“Article 177”), the SEC, U.S. Department of
Justice, and other U.S. authorities face substantial challenges in bringing and enforcing actions against us and officers and
directors. Article 177 forbids overseas securities regulator from directly conducting investigations or evidence collection
activities within the PRC and no entity or individual in China may provide documents and information relating to securities business
activities to overseas regulators without Chinese government approval. Therefore, our investors may not benefit from a regulatory
environment that fosters effective enforcement of U.S. federal securities laws. Please refer to “Risk Factors - Risks
Related to Doing Business in China - Restrictions contained in Chinese law on the ability of overseas securities
regulators to collect information in China may deny investors in our Company the benefits of U.S. securities regulation”
in this prospectus for more details.
PRC government’s significant authority in regulating our operations and its oversight over offerings
conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability
to offer or continue to offer securities to investors. Implementation of industry-wide regulations in this nature may cause the
value of such securities to significantly decline or be of little or no value. Please refer to “Risk Factors - Risks
Related to Doing Business in China - Uncertainties
with respect to the PRC legal system, including uncertainties regarding the enforcement of laws, and sudden or unexpected changes
in laws and regulations in China could adversely affect us and limit the legal protections available to you and us”
in this prospectus for more details. In addition, please also refer to the risk factors section in the Company’s most recent
annual report of the foreign private issuer on Form 20-F, which is incorporated by reference in this prospectus and other risks
related to the industry and the Company’s ordinary shares for more detailed discussion.
The Securities We May Offer
We may use this prospectus to offer up
to $150,000,000 of:
| |
● |
units, which may consist of any combination of the above securities. |
We may also offer securities of
the types listed above that are convertible or exchangeable into one or more of the securities listed above.
RISK FACTORS
An investment in
our securities involves risk. Before you invest in securities issued by us, you should carefully consider the risks involved. Accordingly,
you should carefully consider:
| |
● |
the information contained in or incorporated by reference into this prospectus; |
| |
● |
the information contained in or incorporated by reference into any prospectus supplement relating to specific offerings of securities; |
| |
● |
the risks described in our Annual Report on Form 20-F for our fiscal year ended December 31, 2022, on file with Securities and Exchange Commission, which is incorporated by reference into this prospectus; and |
| |
● |
other risks and other information that may be contained in, or incorporated by reference from, other filings we make with the SEC, including in any prospectus supplement relating to specific offerings of securities. |
The discussion of
risks related to our business contained in or incorporated by reference into this prospectus or into any prospectus supplement
comprises material risks of which we are aware. If any of the events or developments described actually occurs, our business, financial
condition or results of operations would likely suffer.
Risks Related to Doing Business in China
A severe or prolonged downturn
in the Chinese and/or global economy could materially and adversely affect our business, financial condition and operating results.
While
the Chinese economy has experienced significant growth in the past 30 years, the growth has been uneven across different periods,
regions and among various economic sectors of China, and the rate of growth has slowed down since 2012. In addition, economic
conditions in China are also sensitive to global economic conditions. There is considerable uncertainty over the long-term effects
of the expansionary monetary and fiscal policies that had been adopted by the central banks and financial authorities of some
of the world’s leading economies, including the United States and China. There is also significant uncertainty about the
future relationship among the United States, Europe and China with respect to trade policies, treaties, government regulations
and tariffs. Moreover, there have been the increasing tension between the United States and China, and concerns over unrest, terrorist
threats and the potential wars in the Middle East, Europe and elsewhere, as well as over the conflicts involving Ukraine, Syria
and North Korea, all creating significant uncertainty for the Chinese and global economy. For example, the military conflict between
Russia and Ukraine has resulted in an escalated regional instability, amplified the existing geopolitical tension among Russia
and other countries in the region and in the west, as well as adversely affected commodity and other financial markets or economic
conditions. The United States, European Union, the United Kingdom, Switzerland and other countries have imposed, and may further
impose, financial and economic sanctions and export controls targeting certain Russian entities and/or individuals, which could
adversely affect the global economy and financial markets. The duration of such military conflict and the related sanctions, as
well as their impact on the global financial markets, cannot be predicted. There have also been concerns on the relationship between
China and other countries, including the surrounding Asian countries, which may potentially have economic effects. Any prolonged
slowdown in the Chinese or global economy may materially and adversely affect our business, results of operations and financial
condition.
Recent statements
by the Chinese government indicate an intent to exert more oversight and more control over offerings conducted overseas and/or
foreign investment in China-based issuers. Any such actions by the Chinese government could significantly limit or completely
hinder our ability to conduct our business, accept foreign investments, or list on a U.S. or other foreign exchange, including
our ability to offer or continue to offer its securities to investors and cause the value of the securities being registered hereby
to significantly decline or become worthless.
The
Chinese government recently has published new policies that significantly affected certain industries such as the education and
internet industries, and we cannot rule out the possibility that it will in the future release regulations or policies regarding
our industry that could require us to seek permissions from Chinese authorities to continue to operate our business, which may
adversely affect our business, financial condition and results of operations. Furthermore, recent statements made by the Chinese
government have indicated an intent to increase the government’s oversight and control over offerings of companies with
significant operations in China that are to be conducted in foreign markets, as well as foreign investment in China-based issuers
like us. Any such action, once taken by the Chinese government, could significantly limit or completely hinder our ability to
offer or continue to offer the securities to investors, and could cause the value of such securities to significantly decline
or become worthless.
In
July 2021, the Chinese government provided new guidance on China-based companies raising capital outside of China, including through
arrangements via VIEs. In light of such developments, the SEC has imposed enhanced disclosure requirements on China-based companies
seeking to register securities with the SEC. As substantially all of our operations are based in jurisdictions under the Chinese
government, any future Chinese, U.S. or other rules and regulations that place restrictions on capital raising or other activities
by companies with extensive operations in China could adversely affect our business and results of operations. If the business
environment in China deteriorates from the perspective of domestic or international investment, or if relations between China
and the United States or other governments deteriorate, the Chinese government may intervene with our operations and our business
in China, as well as the value of the securities being offered, may also be adversely affected.
On
February 24, 2023, the CSRC, the Ministry of Finance, the National Administration of State Secrets Protection and the National
Archives Administration jointly issued the Confidentiality and Archives Provisions, which took effect from March 31, 2023. The
Confidentiality and Archives Provisions specify that during the overseas securities offering and listing activities of domestic
companies, domestic companies and securities companies and securities service institutions that provide relevant securities business
shall, by strictly abiding by the relevant laws and regulations of the PRC and this Confidentiality and Archives Provisions, institute
a sound confidentiality and archives administration systems, take necessary measures to fulfill confidentiality and archives administration
obligations, and shall not divulge any national secrets, work secrets of governmental agencies and harm national and public interests.
Confidentiality and Archives Provisions provides that it is applicable to initial public offerings as well as other types of securities
listing of PRC domestic enterprises, and any future issuance of securities and listing activities after the initial listing. Working
papers generated in the PRC by securities companies and securities service providers that provide relevant securities services
for overseas issuance and listing of securities by domestic companies shall be kept in the PRC. Confidentiality and Archives Provisions
provide no explicit definition of working papers. In practice, the securities companies’ working papers usually refer to
various important information and work records related to the securities business obtained and prepared by the securities companies
and securities service providers and their representatives in the whole process of the securities businesses, such as due diligence
work. Without the approval of relevant competent authorities, such as CSRC, MOF PRC National Administration of State Secrets Protection,
and National Archives Administration of China, depending on the nature and transmission method of secrets, it shall not be transferred
overseas. Where documents or materials need to be transferred outside of the PRC, it shall be subject to the approval procedures
in accordance with relevant PRC regulations. The relevant competent authorities, such as, CSRC, MOF, PRC National Administration
of State Secrets Protection, and National Archives Administration of China will regulate, supervise and inspect pursuant to their
respective statutory mandates over matters of Confidentiality and Archives Administration concerning overseas offering and listing
by domestic companies. As Confidentiality and Archives Administration is newly promulgated, there is substantial uncertainty regarding
their specific requirements. We believe our operations and future offerings will not involve in national secrets, work secrets
of governmental agencies and undermine national and public interests, but there is no assurance that we will be able to meet all
applicable regulatory requirements and guidelines. If we fail to comply with related laws and regulation, we may be subject to
fine, confiscation, blocking transmission or criminal offense, which may in turn negatively affect our business operations, hinder
our ability to offer or continue to offer securities to investors, or cause the value of such securities to significantly decline
or be worthless.
Uncertainties
with respect to the PRC legal system, including uncertainties regarding the enforcement of laws, and sudden or unexpected changes
in laws and regulations in China could adversely affect us and limit the legal protections available to you and us.
Our
operating subsidiaries are incorporated under and governed by the laws of the PRC. The PRC legal system is based on written statutes.
Prior court decisions may be cited for reference but have limited precedential value. In 1979, the PRC government began to promulgate
a comprehensive system of laws and regulations governing economic matters in general, such as foreign investment, corporate organization
and governance, commerce, taxation and trade. As a significant part of our business is conducted in China, our operations are
principally governed by PRC laws and regulations. However, since the PRC legal system continues to evolve rapidly, the interpretations
of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties,
which may limit legal protections available to us. Uncertainties due to evolving laws and regulations could also impede the ability
of a China-based company, such as our company, to obtain or maintain permits or licenses required to conduct business in China.
In the absence of required permits or licenses, governmental authorities could impose material sanctions or penalties on us. In
addition, some regulatory requirements issued by certain PRC government authorities may not be consistently applied by other PRC
government authorities (including local government authorities), thus making strict compliance with all regulatory requirements
impractical, or in some circumstances impossible. For example, our PRC subsidiary may have to resort to administrative and court
proceedings to enforce the legal protection that we enjoy either by law or contract. However, since PRC administrative and court
authorities have discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to predict
the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems.
Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published
on a timely basis or at all and may have retroactive effect. As a result, we may not be aware of our violation of these policies
and rules until sometime after the violation. Such uncertainties, including uncertainty over the scope and effect of our contractual,
property (including intellectual property) and procedural rights, could materially and adversely affect our business and impede
our ability to continue our operations.
Intellectual
property rights and confidentiality protections in China may also not be as effective as in the United States or other countries.
In addition, we cannot predict the effects of future developments in the PRC legal system on our business operations, including
the promulgation of new laws, or changes to existing laws or the interpretation or enforcement thereof. These uncertainties could
limit the legal protections available to us and our investors, including you. Moreover, any litigation in China may be protracted
and result in substantial costs and diversion of our resources and management attention.
The
PRC government has significant oversight and discretion over the conduct of our business and may intervene or influence our operations
as the government deems appropriate to further regulatory, political and societal goals. The PRC government has recently published
new policies that significantly affected certain industries such as the education and internet industries, and we cannot rule
out the possibility that it will in the future release regulations or policies regarding our industry that could adversely affect
our business, financial condition and results of operations. Furthermore, the PRC government has recently indicated an intent
to exert more oversight and control over securities offerings and other capital markets activities that are conducted overseas
and foreign investment in China-based companies. Any such intervention in or influence on our business operations or action to
exert more oversight and control over securities offerings and other capital markets activities, once taken by the PRC government,
could adversely affect the business, financial condition and results of operations and the value of China-based companies, or
significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value
of such securities to significantly decline or in extreme cases, become worthless.
Restrictions
contained in Chinese law on the ability of overseas securities regulators to collect information in China may deny investors in
our Company the benefits of U.S. securities regulation.
China
has often restricted U.S. regulators’ access to information and limited regulators’ ability to investigate or pursue
remedies with respect to China-based issuers, generally citing to state secrecy and national security laws, blocking statutes,
or other laws or regulations. In addition, according to Article 177 of the PRC Securities Law (“Article 177”),
which became effective in March 2020, no overseas securities regulator can directly conduct investigations or evidence collection
activities within the PRC and no entity or individual in China may provide documents and information relating to securities business
activities to overseas regulators without Chinese government approval. The SEC, U.S. Department of Justice, and other U.S. authorities
face substantial challenges in bringing and enforcing actions against China-based issuers and their officers and directors. As
a result, investors in our Company may not benefit from a regulatory environment that fosters effective enforcement of U.S. federal
securities laws.
As Article 177 and the PRC Securities Law are newly promulgated, there are uncertainties as to the procedures
and requisite timing for the U.S. securities regulatory agencies to conduct investigations and collect evidence within the territory
of the PRC. If the U.S. securities regulatory agencies are unable to conduct such investigations, there exists a risk that they
may determine to suspend or de-register our registration with the SEC and may also delist our securities from Nasdaq Capital Market
or other applicable trading market within the US.
Compliance with
China’s new Data Security Law, Measures on Cybersecurity Review (revised draft for public consultation), Personal Information Protection
Law (second draft for consultation), regulations and guidelines relating to the multi-level protection scheme and any other future laws
and regulations may entail significant expenses and could materially affect our business.
China has implemented
or will implement rules and is considering a number of additional proposals relating to data protection. China’s new Data Security
Law promulgated by the Standing Committee of the National People’s Congress of China in June 2021, or the Data Security Law, took
effect in September 2021. The Data Security Law provides that the data processing activities must be conducted based on “data classification
and hierarchical protection system” for the purpose of data protection and prohibits entities in China from transferring data stored
in China to foreign law enforcement agencies or judicial authorities without prior approval by the Chinese government.
Additionally, China’s
Cyber Security Law, requires companies to take certain organizational, technical and administrative measures and other necessary measures
to ensure the security of their networks and data stored on their networks. Specifically, the Cyber Security Law provides that China
adopt a multi-level protection scheme (MLPS), under which network operators are required to perform obligations of security protection
to ensure that the network is free from interference, disruption or unauthorized access, and prevent network data from being disclosed,
stolen or tampered. Under the MLPS, entities operating information systems must have a thorough assessment of the risks and the conditions
of their information and network systems to determine the level to which the entity’s information and network systems belong-from
the lowest Level 1 to the highest Level 5 pursuant to the Measures for the Graded Protection and the Guidelines for Grading of Classified
Protection of Cyber Security. The grading result will determine the set of security protection obligations that entities must comply
with. Entities classified as Level 2 or above should report the grade to the relevant government authority for examination and approval.
Recently, the Cyberspace
Administration of China (the “CAC”) has taken action against several Chinese internet companies in connection with their
initial public offerings on U.S. securities exchanges, for alleged national security risks and improper collection and use of the personal
information of Chinese data subjects. According to the official announcement, the action was initiated based on the National Security
Law, the Cyber Security Law and the Measures on Cybersecurity Review, which are aimed at “preventing national data security risks,
maintaining national security and safeguarding public interests.” On July 10, 2021, the CAC published a revised draft of the Measures
on Cybersecurity Review, expanding the cybersecurity review to data processing operators in possession of personal information of over
1 million users if the operators intend to list their securities in a foreign country.
On December 28, 2021,
the Cyberspace Administration of China, or the “CAC”, and other PRC authorities promulgated the Cybersecurity Review Measures,
which took effect on February 15, 2022. The Cybersecurity Review Measures further restate and expand the applicable scope of the cybersecurity
review in effect. Pursuant to the Cybersecurity Review Measures, critical information infrastructure operators that procure internet
products and services and network platform operators engaging in data processing activities must be subject to the cybersecurity review
if their activities affect or may affect national security. The Cybersecurity Review Measures further stipulate that network platform
operators holding personal information of over one million users must apply to the Cybersecurity Review Office for a cybersecurity review
before a foreign listing. Based on a set of Q&As published on the official website of the State Cipher Code Administration in connection
with the issuance of the Cybersecurity Review Measures, an official of the said administration indicated that a network platform operator
should apply for a cybersecurity review prior to the submission of its listing application with non-PRC securities regulators. Given
the recency of the issuance of the Cybersecurity Review Measures, there is a general lack of guidance and substantial uncertainties exist
with respect to their interpretation and implementation.
To the knowledge of the
management, as of the date of this prospectus, (i) the Company is not a critical information infrastructure operator that procure internet
products and services or a network platform operator engaging in data processing activities; and (ii) the Company’s business does
not subject to the industry that affect or may affect national security which is required to receive the cybersecurity review under the
regulation. Therefore, the Company believes it is not required to pass cybersecurity review of CAC; on the basis that the Administration
Provisions and Measures have not yet come into effect, we and our PRC subsidiaries (1) are not required to obtain permissions or approvals
from the PRC authorities to issue our Ordinary Shares to foreign investors, (2) are not subject to permission requirements of the CSRC,
the CAC or other PRC authorities that are required to approve of our PRC subsidiaries’ operations, and (3) have not received or
were denied such permissions or approvals by the PRC authorities.
However, the
PRC regulatory authorities may in the future promulgate laws, regulations, or implementing rules that require us, our subsidiaries to
obtain regulatory approval from Chinese authorities for listing in the U.S. If we do not receive or maintain the approval, or inadvertently
conclude that such approval is not required, or applicable laws, regulations, or interpretations change such that we are required to
obtain approval in the future, we may be subject to an investigation by competent regulators, fines or penalties, or an order prohibiting
us from conducting an offering, and these risks could result in a material adverse change in our operations and the value of our common
stock, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities
to significantly decline in value or become worthless.
The approval of the
China Securities Regulatory Commission (“CSRC”) may be required in connection with this offering under series of PRC regulations
adopted or to be adopted, and, if required, we cannot assure you that we will be able to obtain such approval.
Recently,
the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued
the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the Opinions, which was made
available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities,
and the need to strengthen the supervision over overseas listings by Chinese companies. Effective measures, such as promoting the construction
of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity
and data privacy protection requirements and similar matters.
On
February 17, 2023, the CSRC promulgated
the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, which took effect on March 31, 2023.
On the same date, the CSRC circulated Supporting Guidance Rules No. 1 through No. 5, Notes on the Trial Measures, Notice on Administration
Arrangements for the Filing of Overseas Listings by Domestic Enterprises and relevant CSRC Answers to Reporter Questions (collectively,
the “Trial Measures”), on CSRC’s official website. The Trial Measures reiterate the basic principles of the Draft Administrative
Provisions and Draft Filing Measures and impose substantially the same requirements for the overseas securities offering and listing by
domestic enterprises, and clarified and emphasized several aspects, which include but are not limited to: (1) criteria to determine whether
an issuer will be required to go through the filing procedures under the Trial Measures; (2) exemptions from immediate filing requirements
for issuers including those that have already been listed in foreign securities markets, including U.S. markets, prior to the effective
date of the Trial Measures, but these issuers shall still be subject to filing procedures if they conduct refinancing or are involved
in other circumstances that require filing with the CSRC; (3) a negative list of types of applicants banned from listing or offering overseas,
such as issuers whose affiliates have been recently convicted of bribery and corruption; (4) issuers’ compliance with web security,
data security, and other national security laws and regulations; (5) issuers’ filing and reporting obligations, such as obligation
to file with the CSRC after it submits an application for initial public offering to overseas regulators, and obligation after offering
or listing overseas to file with the CSRC after it completes subsequent offerings and to report to the CSRC material events including
change of control or voluntary or forced delisting of the issuer; and (6) the CSRC’s authority to fine both issuers and their relevant
shareholders for failure to comply with the Trial Measures, including failure to comply with filing obligations or committing fraud and
misrepresentation. Specifically, pursuant to the Trial Measures, our future securities offerings in the Nasdaq Capital market where we
have previously offered and listed shall also be filed with the CSRC within 3 working days after the offering is completed. As the Trial
Measures are newly issued, there remain uncertainties regarding its interpretation and implementation. Therefore, we cannot assure you
that we will be able to complete the filings for any of our future offerings and fully comply with the relevant new rules on a timely
basis, if at all. In addition, we cannot guarantee that we will not be subject to tightened regulatory review and we could be exposed
to government interference in China.
The PRC government imposes controls on the
convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency out of China, and PRC also has regulations
limiting our PRC subsidiaries’ ability to distribute dividends. Both of these restrictions may affect our ability to distribute
earning from our subsidiaries to us and to the U.S. investors.
Most of the income of our
company and its subsidiaries is received in RMB, and a shortage of foreign currency may limit our ability to pay dividends or other payments,
or to meet our obligations calculated in foreign currency, if any. Under the existing Chinese foreign exchange regulations, payments
for current account items, including profit distributions, interest payments, and expenditures from trade transactions, can be made outside
of China without prior approval from the State Administration of Foreign Exchange ("SAFE") as long as certain procedural requirements
are met. Approval from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign
currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result,
we need to obtain SAFE approval to use cash generated from the operations of our PRC subsidiaries and VIEs to pay off their respective
debt in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside China in
a currency other than Renminbi. The PRC government may at its discretion restrict access to foreign currencies for current account transactions
in the future. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign
currency demands, we may not be able to pay dividends in foreign currencies to our shareholders. Approval from relevant government authorities
is required for converting RMB into foreign currency for outward remittance from China and payment of capital expenses such as repayment
of foreign currency loans. The Chinese government may selectively impose restrictions on foreign exchange access for current account
transactions, and if such circumstances arise in the future, we may be unable to pay foreign currency dividends to shareholders. If cash
or assets in our business belong to Chinese/Hong Kong entities, due to the ability of these entities, their subsidiaries, or the Chinese
government to transfer cash or assets, these funds or assets may not be available to fund operations or for other purposes outside of
China/Hong Kong.
Chinese laws and regulations
only permit Chinese companies to pay dividends from their retained earnings. Furthermore, dividends from the Company's Chinese subsidiaries
can only be distributed after shareholder approval, provided that the dividends meet the requirements of China's statutory reserves allocation.
Due to these restrictions and other limitations under Chinese laws and regulations, our Chinese subsidiaries and entities can only transfer
a portion of their net assets to the Company in the form of dividends, loans, or prepayments. While the Company currently does not require
its Chinese subsidiaries and entities to provide any dividends, loans, or prepayments, there might be a future need for additional cash
resources from these entities to fund future acquisitions and developments or solely for declaration and payment of dividends or distributions
to company shareholders.
Risks
Related to Gold Trading Business Our gold trading business is new and may not succeed.
We
began our gold trading operations in late 2023 and have limited operating history in this industry. Our success depends on our ability
to establish and maintain relationships with gold suppliers, refineries, wholesalers, and trading partners. If we fail to execute our
business plan, maintain key relationships, or effectively manage our growth, our business could be materially affected. Our August 2024
acquisition of 1,000 kilograms of gold for approximately $66.49 million represents a significant portion of our assets, and any failure
to effectively deploy or trade this inventory could adversely impact our financial condition. Additionally, as a new entrant in the gold
trading market, we may face challenges in establishing market credibility, securing favorable trading terms, and developing efficient
operational processes.
Gold
price fluctuations could materially affect our business and results of operations.
Gold
prices are highly volatile and affected by numerous factors beyond our control. Global economic conditions, including inflation rates
and interest rate decisions by major central banks, significantly impact gold prices. International political events, conflicts, and economic
sanctions can cause rapid price movements. Central banks' gold purchasing and selling decisions can create substantial market pressure.
Currency exchange rates, particularly the U.S. dollar's strength, have historically shown strong correlation with gold prices. Physical
gold demand from jewelry and industrial users can shift significantly based on economic conditions. Investment demand, including exchange-traded
funds and speculative trading, can create price volatility. These price movements could materially affect our inventory value, trading
positions, and operating margins. While we attempt to manage price risk through hedging strategies, such strategies may not be effective
and could result in additional losses. Our hedging activities themselves carry risks, including counterparty default risk and the possibility
that hedging costs could exceed the benefits during periods of high volatility.
Our
planned expansion into derivatives trading carries substantial risks.
Our
planned derivatives trading platform with GTC GROUP LLC involves sophisticated financial instruments that expose us to multiple layers
of risk. Market volatility can lead to significant trading losses, especially in leveraged positions. Counterparty defaults could result
in substantial losses, particularly in over-the-counter transactions. We must comply with complex regulatory requirements across multiple
jurisdictions, including Dubai, Hong Kong, and mainland China. Each jurisdiction has unique compliance obligations, reporting requirements,
and operational standards. Technology infrastructure failures could disrupt trading activities and lead to financial losses. Trading errors,
whether due to human or system error, could result in significant losses. Market liquidity constraints during stressed conditions could
prevent us from closing out positions at desired prices. Our risk management models may fail to adequately capture market risks, especially
during extraordinary market conditions. The complexity of derivatives trading requires sophisticated risk management systems and experienced
personnel, which we are still developing.
Our
business is subject to complex and evolving regulatory requirements across multiple jurisdictions.
We
operate under extensive regulatory frameworks in China, Hong Kong, and Dubai. In China, we must comply with regulations from the People's
Bank of China and the State Administration of Foreign Exchange governing precious metals trading. Our Hong Kong operations through Golden
Alpha Strategy Ltd. are subject to oversight by the Hong Kong Customs and Excise Department, including anti-money laundering requirements.
Our planned Dubai operations will be regulated by the Dubai Multi Commodities Centre (DMCC) and UAE Central Bank.
These
regulatory requirements are complex and frequently changing. New regulations or changes in existing regulations could require us to modify
our operations, increase compliance costs, or restrict certain transactions. For example, changes in cross-border gold trading regulations
could affect our ability to move physical gold between jurisdictions or impact our derivatives trading platform development. Environmental
regulations, particularly those related to responsible gold sourcing, are becoming increasingly stringent.
We
must maintain various licenses and registrations, including our Category A Registration in Hong Kong for dealing in precious metals. Loss
or suspension of these licenses would severely impact our operations. The acquisition of new licenses in other jurisdictions may be time-consuming
and expensive, with no guarantee of success. Additionally, as we expand our AI-enabled trading platforms, we face regulatory scrutiny
regarding algorithmic trading and cybersecurity. Different jurisdictions have varying requirements for electronic trading systems, and
compliance may require significant technological investments.
ABOUT THIS PROSPECTUS
This prospectus is
part of a registration statement that we filed with the United States Securities and Exchange Commission (the “SEC”)
utilizing a shelf registration process. Under this shelf registration process, we may sell from time to time up to $150,000,000
of any combination of the securities described in this prospectus.
This prospectus provides
you with a general description of the securities we may offer. Each time we sell securities, we will provide a prospectus supplement
that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. If there is any inconsistency between the information contained in this prospectus and
any prospectus supplement, you should rely on the information contained in that particular prospectus supplement. You should read
both this prospectus and any prospectus supplement together with additional information described under the heading “Where
You Can Find More Information.”
You should rely only
on the information provided in this prospectus and the prospectus supplement, as well as the information incorporated by reference.
We have not authorized anyone to provide you with additional or different information. We are not making an offer of these securities
in any jurisdiction or state where the offer is not permitted. You should not assume that the information in this prospectus, any
prospectus supplement or any documents incorporated by reference herein or therein is accurate as of any date other than the date
of the applicable document.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus
and any applicable prospectus supplement, including the documents incorporated by reference herein and therein, may contain forward-looking
statements that are based on our current expectations, assumptions, estimates and projections about us and our industry. All statements
other than statements of historical fact in this prospectus are forward-looking statements. These forward-looking statements can
be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,”
“estimate,” “plan,” “believe,” “is/are likely to” or other similar expressions.
The forward-looking statements included in this prospectus relate to, among others:
| |
● |
Anticipated trends and challenges in our business and the markets in which we operate; |
| |
● |
Our ability to anticipate market needs or develop new or enhanced services and products to meet those needs; |
| |
● |
Our ability to compete in our industry and innovation by our competitors; |
| |
● |
Our ability to protect our confidential information and intellectual property rights; |
| |
● |
Risks associated with acquiring new business targets and other strategic plans; |
| |
● |
Our need to obtain additional funding and our ability to obtain funding in the future on acceptable terms; |
| |
● |
The impact on our business and results of operations arising from the global pandemic; |
| |
● |
Our ability to create and maintain our positive brand awareness and brand loyalty; |
| |
● |
Our ability to manage growth; and |
| |
● |
Economic and business conditions in China. |
The forward-looking
statements included in or incorporated by reference into this prospectus and any applicable prospectus supplement are subject to
known and unknown risks, uncertainties and assumptions about our businesses and business environments. These statements reflect
our current views with respect to future events and are not a guarantee of future performance. Actual results of our operations
may differ materially from information contained in the forward-looking statements as a result of risk factors, some of which are
described under “Risk Factors” in the documents incorporated by reference herein.
The forward-looking
statements contained in or incorporated into this prospectus and any applicable prospectus supplement speak only as of the date
of hereof or thereof or of such documents incorporated by reference or, if obtained from third-party studies or reports, the date
of the corresponding study or report, and are expressly qualified in their entirety by the cautionary statements in this prospectus,
any applicable prospectus supplement and the documents incorporated by reference herein and therein. Since we operate in an emerging
and evolving environment and new risk factors and uncertainties emerge from time to time, you should not rely upon forward-looking
statements as predictions of future events. Except as otherwise required by the securities laws of the United States, we undertake
no obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of this prospectus
or to reflect the occurrence of unanticipated events.
USE OF PROCEEDS
Unless the applicable
prospectus supplement states otherwise, the net proceeds from the sale of securities offered by the Company will be used for general
corporate purposes, which may include additions to working capital, capital expenditures, financing of acquisitions and other business
combinations, investments in or extensions of credit to our subsidiaries and the repayment of indebtedness.
CAPITALIZATION AND INDEBTEDNESS
Our capitalization
and indebtedness will be set forth in a prospectus supplement to this prospectus or in a report on Form 6-K subsequently furnished
to the SEC and specifically incorporated herein by reference.
DESCRIPTION OF SHARE CAPITAL
The following is
a summary of our share capital and certain provisions of our Second Amended and Restated Memorandum and Articles of Association.
This summary does not purport to be complete and is qualified in its entirety by the provisions of our Second Amended and Restated
Memorandum and Articles of Association and applicable provisions of the laws of the Cayman Islands.
See “Where
You Can Find More Information” elsewhere in this prospectus for information on where you can obtain copies of our articles
of incorporation and our bylaws, which have been filed with and are publicly available from the SEC.
The authorized share
capital of the Company is $5,000,000 divided into 500,000,000 ordinary shares of $0.01 par value each with power for the Company,
subject to the provisions of the Companies Act (as revised) and the Second Amended and Restated Articles of Association.
DESCRIPTION OF ORDINARY SHARES
As of January
18, 2024, there were 58,398,281 ordinary shares issued and outstanding.
Our ordinary shares
are currently traded on the NASDAQ Capital Market under the symbol “BHAT.”
Voting and Meetings
As a condition of
admission to a shareholders’ meeting, a shareholder must be duly registered as our shareholder at the applicable record date
for that meeting and all calls or installments then payable by such shareholder to us in respect of our ordinary shares must have
been paid. Subject to any special rights or restrictions as to voting then attached to any shares, at any general meeting every
shareholder who is present in person or by proxy (or, in the case of a shareholder being a corporation, by its duly authorized
representative not being himself or herself a shareholder entitled to vote) shall have one vote per share.
As a Cayman Islands
exempted company, we are not obliged by the Companies Act to call annual general meetings; however, our Second Amended and
Restated Memorandum and Articles of Association provide that in each year we will hold an annual general meeting of shareholders
at a time determined by our board of directors. Also, we may, but are not required to (unless required by the Companies Act), in
each year hold any other extraordinary general meeting.
The Companies Act
of the Cayman Islands provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders
with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles
of association. Our Second Amended and Restated Memorandum and Articles of Association provide that upon the requisition of
shareholders representing not less than two-thirds of the voting rights entitled to vote at general meetings, our board will convene
an extraordinary general meeting and put the resolutions so requisitioned to a vote at such meeting. However, shareholders may
propose only ordinary resolutions to be put to a vote at such meeting and shall have no right to propose resolutions with respect
to the election, appointment or removal of directors or with respect to the size of the board. Our Second Amended and Restated
Memorandum and Articles of Association provide no other right to put any proposals before annual general meetings or extraordinary
general meetings. Subject to regulatory requirements, our annual general meeting and any extraordinary general meetings must be
called by not less than ten (10) clear days’ notice prior to the relevant shareholders meeting and convened by a notice discussed
below. Alternatively, upon the prior consent of all holders entitled to attend and vote (with regards to an annual general meeting),
and the holders of 95% in par value of the shares entitled to attend and vote (with regard to an extraordinary general meeting),
that meeting may be convened by a shorter notice and in a manner deemed appropriate by those holders.
We will give notice
of each general meeting of shareholders by publication on our website and in any other manner that we may be required to follow
in order to comply with Cayman Islands law, Nasdaq and SEC requirements. The holders of registered shares may be convened for a
shareholders’ meeting by means of letters sent to the addresses of those shareholders as registered in our shareholders’
register, or, subject to certain statutory requirements, by electronic means. We will observe the statutory minimum convening notice
period for a general meeting of shareholders.
A quorum for a general
meeting consists of any one or more persons holding or representing by proxy not less than one-third of our issued voting shares
entitled to vote upon the business to be transacted.
A resolution put
to the vote of the meeting shall be decided on a poll. An ordinary resolution to be passed by the shareholders requires the affirmative
vote of a simple majority of the votes cast by, or on behalf of, the shareholders entitled to vote present in person or by proxy
and voting at the meeting. A special resolution requires the affirmative vote of no less than two-thirds of the votes cast by the
shareholders entitled to vote who are present in person or by proxy at a general meeting (except for certain matters described
below which require an affirmative vote of two-thirds). Both ordinary resolutions and special resolutions may also be passed by
a unanimous written resolution signed by all the shareholders of our company, as permitted by the Companies Act and our Second
Amended and Restated Memorandum and Articles of Association.
Our Second Amended
and Restated Memorandum and Articles of Association provide that the affirmative vote of no less than two-thirds of votes cast
by the shareholders entitled to vote who are present in person or by proxy at a general meeting shall be required to approve any
amendments to any provisions of our Second Amended and Restated Memorandum and Articles of Association that relate to or have
an impact upon the procedures regarding the election, appointment, removal of directors and size of the board.
Dividends
Subject to the Companies
Act, our shareholders may, by resolution passed by a simple majority of the voting rights entitled to vote at the general meeting,
declare dividends (including interim dividends) to be paid to our shareholders but no dividend shall be declared in excess of the
amount recommended by our board of directors. Dividends may be declared and paid out of funds lawfully available to us. Except
as otherwise provided by the rights attached to shares, all dividends shall be declared and paid according to the amounts paid
up on the shares on which the dividend is paid. All dividends shall be paid in proportion to the number of ordinary shares a shareholder
holds during any portion or portions of the period in respect of which the dividend is paid; but, if any share is issued on terms
providing that it shall rank for dividend as from a particular date, that share shall rank for dividend accordingly. Our board
of directors may also declare and pay dividends out of the share premium account or any other fund or account which can be authorized
for this purpose in accordance with the Companies Act.
In addition, our
board of directors may resolve to capitalize any undivided profits not required for paying any preferential dividend (whether or
not they are available for distribution) or any sum standing to the credit of the our share premium account or capital redemption
reserve; appropriate the sum resolved to be capitalized to the shareholders who would have been entitled to it if it were distributed
by way of dividend and in the same proportions and apply such sum on their behalf either in or towards paying up the amounts, if
any, for the time being unpaid on any shares held by them respectively, or in paying up in full unissued shares or debentures of
a nominal amount equal to such sum, and allot the shares or debentures credited as fully paid to those shareholders, or as they
may direct, in those proportions, or partly in one way and partly in the other; resolve that any shares so allotted to any shareholder
in respect of a holding by him/her of any partly-paid shares rank for dividend, so long as such shares remain partly paid, only
to the extent that such partly paid shares rank for dividend; make such provision by the issue of fractional certificates or by
payment in cash or otherwise as they determine in the case of shares or debentures becoming distributable in fractions; and authorize
any person to enter on behalf of all our shareholders concerned in an agreement with us providing for the allotment of them respectively,
credited as fully paid, of any shares or debentures to which they may be entitled upon such capitalization, any agreement made
under such authority being binding on all such shareholders.
Transfers of Shares
Subject to any applicable
restrictions set forth in our Second Amended and Restated Memorandum and Articles of Association, any of our shareholders may transfer
all or a portion of their ordinary shares by an instrument of transfer in the usual or common form or in the form prescribed by
Nasdaq or in any other form which our board of directors may approve. Our board of directors may, in its absolute discretion, refuse
to register a transfer of any common share that is not a fully paid up share to a person of whom it does not approve, or any common
share issued under any share incentive scheme for employees upon which a restriction on transfer imposed thereby still subsists,
and it may also, without prejudice to the foregoing generality, refuse to register a transfer of any common share to more than
four joint holders or a transfer of any share that is not a fully paid up share on which we have a lien. Our board of directors
may also decline to register any transfer of any registered common share unless: a fee of such maximum sum as Nasdaq may determine
to be payable or such lesser sum as the board of directors may from time to time require is paid to us in respect thereof; the
instrument of transfer is in respect of only one class of shares; the ordinary shares transferred are fully paid and free of any
lien; the instrument of transfer is lodged at the registered office or such other place (i.e., our transfer agent) at which the
register of shareholders is kept, accompanied by any relevant share certificate(s) and/or such other evidence as the board of directors
may reasonably require to show the right of the transferor to make the transfer; and if applicable, the instrument of transfer
is duly and properly stamped.
If our board of directors
refuses to register a transfer, they are required, within one month after the date on which the instrument of transfer was lodged,
to send to each of the transferor and the transferee notice of such refusal.
Liquidation
Subject to any special
rights, privileges or restrictions as to the distribution of available surplus assets on liquidation applicable to any class or
classes of shares (1) if we are wound up and the assets available for distribution among our shareholders are more than sufficient
to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed pari passu among
our shareholders in proportion to the amount paid up at the commencement of the winding up on the shares held by them, respectively,
and (2) if we are wound up and the assets available for distribution among our shareholders as such are insufficient to repay the
whole of the paid-up capital, those assets shall be distributed so that, as nearly as may be, the losses shall be borne by our
shareholders in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up on
the shares held by them, respectively.
If we are wound up,
the liquidator may with the sanction of a special resolution and any other sanction required by the Companies Act, divide among
our shareholders in specie the whole or any part of our assets and may, for such purpose, value any assets and determine how such
division shall be carried out as between the shareholders or different classes of shareholders. The liquidator may also, with the
sanction of a special resolution, vest any part of these assets in trustees upon such trusts for the benefit of our shareholders
as the liquidator shall think fit, but so that no shareholder will be compelled to accept any assets, shares or other securities
upon which there is a liability.
Anti-Takeover Provisions
Some provisions of
our Second Amended and Restated Memorandum and Articles of Association may discourage, delay or prevent a change of control
of our company or management that shareholders may consider favorable, including provisions that authorize our board of directors
to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of
such preferred shares without any further vote or action by our shareholders.
Inspection of Books and Records
Holders of ordinary
shares will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate
records. However, our board of directors may determine from time to time whether our accounting records and books shall be open
to the inspection of our shareholders not members of our board of directors. Notwithstanding the above, our Second Amended
and Restated Memorandum and Articles of Association provide our shareholders with the right to receive annual audited financial
statements. Such right to receive annual audited financial statements may be satisfied by filing such annual reports as we are
required to file with the SEC.
Register of Shareholders
Under Cayman Islands
law, we must keep a register of shareholders that includes: the names and addresses of the shareholders, a statement of the shares
held by each member, and of the amount paid or agreed to be considered as paid, on the shares of each member; the date on which
the name of any person was entered on the register as a member; and the date on which any person ceased to be a member.
DESCRIPTION OF PREFERRED SHARES
As all the current
authorized share capital is designated as ordinary share only, shareholders’ resolution will be needed to change the authorized
share capital if the Company decides to issue preferred shares. After such resolution and amendment, our board of directors is
empowered to designate and issue from time to time one or more classes or series of preferred shares and to fix and determine the
relative rights, preferences, designations, qualifications, privileges, options, conversion rights, limitations and other special
or relative rights of each such class or series so authorized. Such action could adversely affect the voting power and other rights
of the holders of our ordinary shares or could have the effect of discouraging any attempt by a person or group to obtain control
of us.
As of the date
of this prospectus, there are no outstanding preferred shares of any series.
The material terms
of any series of preferred shares that we offer, together with any material Cayman Islands or United States federal income tax
considerations relating to such preferred shares, will be described in a prospectus supplement.
DESCRIPTION OF WARRANTS
The following summary
of certain provisions of the warrants does not purport to be complete and is subject to, and qualified in its entirety by reference
to, the provisions of the warrant agreement that will be filed with the SEC in connection with the offering of such warrants.
General
We may issue warrants
to purchase ordinary shares or debt securities. Warrants may be issued independently or together with any other securities and
may be attached to, or separate from, such securities. Each series of warrants will be issued under a separate warrant agreement
to be entered into between us and a warrant agent. The warrant agent will act solely as our agent and will not assume any obligation
or relationship of agency for or with holders or beneficial owners of warrants. The terms of any warrants to be issued and a description
of the material provisions of the applicable warrant agreement will be set forth in the applicable prospectus supplement.
The applicable prospectus
supplement will describe the following terms of any warrants in respect of which this prospectus is being delivered:
| |
● |
the title of such warrants; |
| |
● |
the aggregate number of such warrants; |
| |
● |
the price or prices at which such warrants will be issued and exercised; |
| |
● |
the currency or currencies in which the price of such warrants will be payable; |
| |
● |
the securities purchasable upon exercise of such warrants; |
| |
● |
the date on which the right to exercise such warrants shall commence and the date on which such right shall expire; |
| |
● |
if applicable, the minimum or maximum amount of such warrants which may be exercised at any one time; |
| |
● |
if applicable, the designation and terms of the securities with which such warrants are issued and the number of such warrants issued with each such security; |
| |
● |
if applicable, the date on and after which such warrants and the related securities will be separately transferable; |
| |
● |
information with respect to book-entry procedures, if any; |
| |
● |
any material Cayman Islands or United States federal income tax consequences; |
| |
● |
the antidilution provisions of the warrants, if any; and |
| |
● |
any other terms of such warrants, including terms, procedures and limitations relating to the exchange and exercise of such warrants. |
Exercise of Warrants
Each warrant will
entitle the holder to purchase the securities that we specify in the applicable prospectus supplement at the exercise price that
we describe in the applicable prospectus supplement. Holders of the warrants may exercise the warrants at any time up to the specified
time on the expiration date that we set forth in the applicable prospectus supplement. After the close of business on the expiration
date, unexercised warrants will become void.
Holders of the warrants
may exercise the warrants by delivering the warrant certificate representing the warrants to be exercised together with specified
information, and paying the required amount to the warrant agent in immediately available funds, as provided in the applicable
prospectus supplement. We will set forth on the reverse side of the warrant certificate and in the applicable prospectus supplement
the information that the holder of the warrant will be required to deliver to the warrant agent.
If fewer than all
of the warrants represented by the warrant certificate are exercised, then we will issue a new warrant certificate for the remaining
amount of warrants. If we so indicate in the applicable prospectus supplement, holders of the warrants may surrender securities
as all or part of the exercise price for warrants.
DESCRIPTION OF SUBSCRIPTION RIGHTS
The following summary
of certain provisions of the subscription rights does not purport to be complete and is subject to, and qualified in its entirety
by reference to, the provisions of the certificate evidencing the subscription rights that will be filed with the SEC in connection
with the offering of such subscription rights.
General
We may issue subscription
rights to purchase ordinary shares or debt securities. Subscription rights may be issued independently or together with any other
offered security and may or may not be transferable by the person purchasing or receiving the subscription rights. In connection
with any subscription rights offering to our shareholders, we may enter into a standby underwriting arrangement with one or more
underwriters pursuant to which such underwriters will purchase any offered securities remaining unsubscribed for after such subscription
rights offering. In connection with a subscription rights offering to our shareholders, we will distribute certificates evidencing
the subscription rights and a prospectus supplement to our shareholders on the record date that we set for receiving subscription
rights in such subscription rights offering.
The applicable prospectus
supplement will describe the following terms of subscription rights in respect of which this prospectus is being delivered:
| |
● |
the title of such subscription rights; |
| |
● |
the securities for which such subscription rights are exercisable; |
| |
● |
the exercise price for such subscription rights; |
| |
● |
the number of such subscription rights issued to each shareholder; |
| |
● |
the extent to which such subscription rights are transferable; |
| |
● |
if applicable, a discussion of the material Cayman Islands or United States federal income tax considerations applicable to the issuance or exercise of such subscription rights; |
| |
● |
the date on which the right to exercise such subscription rights shall commence, and the date on which such rights shall expire (subject to any extension); |
| |
● |
the extent to which such subscription rights include an over-subscription privilege with respect to unsubscribed securities; |
| |
● |
if applicable, the material terms of any standby underwriting or other purchase arrangement that we may enter into in connection with the subscription rights offering; and |
| |
● |
any other terms of such subscription rights, including terms, procedures and limitations relating to the exchange and exercise of such subscription rights. |
Exercise of Subscription Rights
Each subscription
right will entitle the holder of the subscription right to purchase for cash such amount of securities at such exercise price as
shall be set forth in, or be determinable as set forth in, the prospectus supplement relating to the subscription rights offered
thereby. Subscription rights may be exercised at any time up to the close of business on the expiration date for such subscription
rights set forth in the prospectus supplement. After the close of business on the expiration date, all unexercised subscription
rights will become void.
Subscription rights
may be exercised as set forth in the prospectus supplement relating to the subscription rights offered thereby. Upon receipt of
payment and the subscription rights certificate properly completed and duly executed at the corporate trust office of the subscription
rights agent or any other office indicated in the prospectus supplement, we will forward, as soon as practicable, the ordinary
shares purchasable upon such exercise. We may determine to offer any unsubscribed offered securities directly to persons other
than shareholders, to or through agents, underwriters or dealers or through a combination of such methods, including pursuant to
standby underwriting arrangements, as set forth in the applicable prospectus supplement.
DESCRIPTION OF UNITS
The following summary
of certain provisions of the units does not purport to be complete and is subject to, and qualified in its entirety by reference
to, the provisions of the certificate evidencing the units that will be filed with the SEC in connection with the offering of such
units.
We may issue units
comprised of one or more of the other securities described in this prospectus in any combination. Each unit will be issued so that
the holder of the unit is also the holder, with the rights and obligations of a holder, of each security included in the unit.
The unit agreement under which a unit is issued may provide that the securities included in the unit may not be held or transferred
separately, at any time or at any time before a specified date or upon the occurrence of a specified event or occurrence.
The applicable prospectus
supplement will describe:
| |
● |
the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately; |
| |
● |
any unit agreement under which the units will be issued; |
| |
● |
any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units; and |
| |
● |
whether the units will be issued in fully registered or global form. |
DESCRIPTION OF DEBT SECURITIES
We may issue debt
securities from time to time in one or more series, under one or more indentures, each dated as of a date on or prior to the issuance
of the debt securities to which it relates. We may issue senior debt securities and subordinated debt securities pursuant to separate
indentures, a senior indenture and a subordinated indenture, respectively, in each case between us and the trustee named in the
indenture. We have filed forms of these documents as exhibits to the registration statement, of which this prospectus forms a part.
The senior indenture and the subordinated indenture, as amended or supplemented from time to time, are sometimes referred to individually
as an “indenture” and collectively as the “indentures.” Each indenture will be subject to and governed
by the Trust Indenture Act and will be construed in accordance with and governed by the internal laws of the State of New York.
The aggregate principal amount of debt securities which may be issued under each indenture will be unlimited and each indenture
will contain the specific terms of any series of debt securities or provide that those terms must be set forth in or determined
pursuant to, an authorizing resolution, as defined in the applicable prospectus supplement, and/or a supplemental indenture, if
any, relating to such series. Our debt securities may be convertible or exchangeable into any of our equity or other debt securities.
Our statements below
relating to the debt securities and the indentures are summaries of their anticipated provisions, are not complete and are subject
to, and are qualified in their entirety by reference to, all of the provisions of the applicable indenture and any applicable Cayman
Islands or United States federal income tax considerations as well as any applicable modifications of or additions to the general
terms described below in the applicable prospectus supplement or supplemental indenture. For a description of the terms of a particular
issue of debt securities, reference must be made to both the related prospectus supplement and to the following description.
General
Neither indenture
limits the amount of debt securities which may be issued. The debt securities may be issued in one or more series. The senior debt
securities will be unsecured and will rank on a parity with all of our other unsecured and unsubordinated indebtedness. Each series
of subordinated debt securities will be unsecured and subordinated to all present and future senior indebtedness. Any such debt
securities will be described in an accompanying prospectus supplement.
You should read the
applicable indenture and subsequent filings relating to the particular series of debt securities for the following terms of the
offered debt securities:
| |
● |
the designation, aggregate principal amount and authorized denominations; |
| |
● |
the issue price, expressed as a percentage of the aggregate principal amount; |
| |
● |
the interest rate per annum, if any; |
| |
● |
if the offered debt securities provide for interest payments, the date from which interest will accrue, the dates on which interest will be payable, the date on which payment of interest will commence and the regular record dates for interest payment dates; |
| |
● |
any optional or mandatory sinking fund provisions or exchangeability provisions; |
| |
● |
the terms and conditions upon which conversion of any convertible debt securities may be effected, including the conversion price, the conversion period and other conversion provisions; |
| |
● |
the date, if any, after which and the price or prices at which the offered debt securities may be optionally redeemed or must be mandatorily redeemed and any other terms and provisions of optional or mandatory redemptions; |
| |
● |
if other than denominations of $1,000 and any integral multiple thereof, the denominations in which offered debt securities of the series will be issuable; |
| |
● |
if other than the full principal amount, the portion of the principal amount of offered debt securities of the series which will be payable upon acceleration or provable in bankruptcy; |
| |
● |
any events of default not set forth in this prospectus; |
| |
● |
the currency or currencies, including composite currencies, in which principal, premium and interest will be payable, if other than the currency of the United States of America; |
| |
● |
if principal, premium or interest is payable, at our election or at the election of any holder, in a currency other than that in which the offered debt securities of the series are stated to be payable, the period or periods within which, and the terms and conditions upon which, the election may be made; |
| |
● |
whether interest will be payable in cash or additional securities at our or the holder’s option and the terms and conditions upon which the election may be made; |
| |
● |
if denominated in a currency or currencies other than the currency of the United States of America, the equivalent price in the currency of the United States of America for purposes of determining the voting rights of holders of those debt securities under the applicable indenture; |
| |
● |
if the amount of payments of principal, premium or interest may be determined with reference to an index, formula or other method based on a coin or currency other than that in which the offered debt securities of the series are stated to be payable, the manner in which the amounts will be determined; |
| |
● |
any restrictive covenants or other material terms relating to the offered debt securities; |
| |
● |
whether the offered debt securities will be issued in the form of global securities or certificates in registered or bearer form; |
| |
● |
any terms with respect to subordination; |
| |
● |
any listing on any securities exchange or quotation system; and |
| |
● |
additional provisions, if any, related to defeasance and discharge of the offered debt securities. |
Subsequent filings
may include additional terms not listed above. Unless otherwise indicated in subsequent filings with the Commission relating to
the indenture, principal, premium and interest will be payable and the debt securities will be transferable at the corporate trust
office of the applicable trustee. Unless other arrangements are made or set forth in subsequent filings or a supplemental indenture,
principal, premium and interest will be paid by checks mailed to the holders at their registered addresses.
Unless otherwise
indicated in subsequent filings with the Commission, the debt securities will be issued only in fully registered form without coupons,
in denominations of $1,000 or any integral multiple thereof. No service charge will be made for any transfer or exchange of the
debt securities, but we may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection
with these debt securities.
Some or all of the
debt securities may be issued as discounted debt securities to be sold at a substantial discount below the stated principal amount.
Cayman Islands or United States federal income tax consequences and other special considerations applicable to any discounted securities
will be described in subsequent filings with the Commission relating to those securities.
We refer you to applicable
subsequent filings with respect to any deletions or additions or modifications from the description contained in this prospectus.
Senior Debt
We may issue senior
debt securities under the senior debt indenture. These senior debt securities will rank on an equal basis with all our other unsecured
debt except subordinated debt.
Subordinated Debt
We may issue subordinated
debt securities under the subordinated debt indenture. Subordinated debt will rank subordinate and junior in right of payment,
to the extent set forth in the subordinated debt indenture, to all our senior debt (both secured and unsecured).
In general, the holders
of all senior debt are first entitled to receive payment of the full amount unpaid on senior debt before the holders of any of
the subordinated debt securities are entitled to receive a payment on account of the principal or interest on the indebtedness
evidenced by the subordinated debt securities in certain events.
If we default in
the payment of any principal of, or premium, if any, or interest on any senior debt when it becomes due and payable after any applicable
grace period, then, unless and until the default is cured or waived or ceases to exist, we cannot make a payment on account of
or redeem or otherwise acquire the subordinated debt securities.
If there is any insolvency,
bankruptcy, liquidation or other similar proceeding relating to us, then all senior debt must be paid in full before any payment
may be made to any holders of subordinated debt securities.
Furthermore, if we
default in the payment of the principal of and accrued interest on any subordinated debt securities that is declared due and payable
upon an event of default under the subordinated debt indenture, holders of all our senior debt will first be entitled to receive
payment in full in cash before holders of such subordinated debt can receive any payments.
Senior debt means:
| |
● |
the principal, premium, if any, interest and any other amounts owing in respect of our indebtedness for money borrowed and indebtedness evidenced by securities, notes, debentures, bonds or other similar instruments issued by us, including the senior debt securities or letters of credit; |
| |
● |
all capitalized lease obligations; |
| |
● |
all hedging obligations; |
| |
● |
all obligations representing the deferred purchase price of property; and |
| |
● |
all deferrals, renewals, extensions and refundings of obligations of the type referred to above; |
but senior debt does not
include:
| |
● |
subordinated debt securities; and |
| |
● |
any indebtedness that by its terms is subordinated to, or ranks on an equal basis with, our subordinated debt securities. |
Covenants
Under the terms of
the indenture, we covenant, among other things:
| |
● |
that we will duly and punctually pay the principal of and interest, if any, on the offered debt securities in accordance with the terms of such debt securities and the applicable indenture; |
| |
● |
that we will deliver to the trustee after the end of each fiscal year a compliance certificate as to whether we have kept, observed, performed and fulfilled our obligations and each and every covenant contained under the applicable indenture; |
Any series of offered
debt securities may have covenants in addition to or differing from those included in the applicable indenture which will be described
in subsequent filings prepared in connection with the offering of such securities, limiting or restricting, among other things:
| |
● |
the ability of us or our subsidiaries to incur either secured or unsecured debt, or both; |
| |
● |
the ability to make certain payments, dividends, redemptions or repurchases; |
| |
● |
our ability to create dividend and other payment restrictions affecting our subsidiaries; |
| |
● |
our ability to make investments; |
| |
● |
mergers and consolidations by us or our subsidiaries; |
| |
● |
our ability to enter into transactions with affiliates; |
| |
● |
our ability to incur liens; and |
| |
● |
sale and leaseback transactions. |
Modification of the Indentures
Each indenture and
the rights of the respective holders may be modified by us only with the consent of holders of not less than a majority in aggregate
principal amount of the outstanding debt securities of all series under the respective indenture affected by the modification,
taken together as a class, other than any modification to:
| |
● |
cure ambiguities, defects or inconsistencies; |
| |
● |
add to the covenants, restrictions or events of default; |
| |
● |
provide for a successor obligor under the relevant indenture; and |
| |
● |
make any other change that does not adversely affect the rights of holder. |
No modification that:
| |
● |
changes the amount of securities whose holders must consent to an amendment, supplement or waiver; |
| |
● |
extends the fixed maturity of any debt securities, or reduces the principal amount thereof, or reduces the rate or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof ; |
will be effective
against any holder without his, her or its consent.
Events of Default
Each indenture defines
an event of default for the debt securities of any series as being any one of the following events:
| |
● |
default in any payment of interest when due which continues for 90 days; |
| |
● |
default in any payment of principal or premium at maturity; |
| |
● |
default in the deposit of any sinking fund payment when due; |
| |
● |
default in the performance of any covenant in the debt securities or the applicable indenture which continues for 90 days after we receive notice of the default; |
| |
● |
events of bankruptcy, insolvency or reorganization. |
An event of default
of one series of debt securities does not necessarily constitute an event of default with respect to any other series of debt securities.
There may be such
other or different events of default as described in an applicable subsequent filing with respect to any class or series of offered
debt securities.
In case an event
of default occurs and continues for the debt securities of any series, the applicable trustee or the holders of not less than 25%
in aggregate principal amount of the debt securities then outstanding of that series may declare the principal and accrued but
unpaid interest of the debt securities of that series to be due and payable. Any event of default for the debt securities of any
series which has been cured may be waived by the holders of a majority in aggregate principal amount of the debt securities of
that series then outstanding.
Each indenture requires
us to file annually after debt securities are issued under that indenture with the applicable trustee a written statement signed
by two of our officers as to the absence of material defaults under the terms of that indenture. Each indenture provides that the
applicable trustee may withhold notice to the holders of any default if it considers it in the interest of the holders to do so,
except notice of a default in payment of principal, premium or interest.
Subject to the duties
of the trustee in case an event of default occurs and continues, each indenture provides that the trustee is under no obligation
to exercise any of its rights or powers under that indenture at the request, order or direction of holders unless the holders have
offered to the trustee reasonable indemnity. Subject to these provisions for indemnification and the rights of the trustee, each
indenture provides that the holders of a majority in principal amount of the debt securities of any series then outstanding have
the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising
any trust or power conferred on the trustee as long as the exercise of that right does not conflict with any law or the indenture.
Defeasance and Discharge
The terms of each
indenture provide us with the option to be discharged from any and all obligations in respect of the debt securities issued thereunder
upon the deposit with the trustee, in trust, of money or U.S. government obligations, or both, which through the payment of interest
and principal in accordance with their terms will provide money in an amount sufficient to pay any installment of principal, premium
and interest on, and any mandatory sinking fund payments in respect of, the debt securities on the stated maturity of the payments
in accordance with the terms of the debt securities and the indenture governing the debt securities. This right may only be exercised
if, among other things, we have received from, or there has been published by, the United States Internal Revenue Service a ruling
to the effect that such a discharge will not be deemed, or result in, a taxable event with respect to holders. This discharge would
not apply to our obligations to register the transfer or exchange of debt securities, to replace stolen, lost or mutilated debt
securities, to maintain paying agencies and hold moneys for payment in trust.
Defeasance of Certain Covenants
The terms of the
debt securities provide us with the right not to comply with specified covenants and that specified events of default described
in a subsequent filing will not apply. In order to exercise this right, we will be required to deposit with the trustee money or
U.S. government obligations, or both, which through the payment of interest and principal will provide money in an amount sufficient
to pay principal, premium, if any, and interest on, and any mandatory sinking fund payments in respect of, the debt securities
on the stated maturity of such payments in accordance with the terms of the debt securities and the indenture governing such debt
securities. We will also be required to deliver to the trustee an opinion of counsel to the effect that the deposit and related
covenant defeasance will not cause the holders of such series to recognize income, gain or loss for federal income tax purposes.
A subsequent filing
may further describe the provisions, if any, of any particular series of offered debt securities permitting a discharge defeasance.
Global Securities
The debt securities
of a series may be issued in whole or in part in the form of one or more global securities that will be deposited with, or on behalf
of, a depository identified in an applicable subsequent filing and registered in the name of the depository or a nominee for the
depository. In such a case, one or more global securities will be issued in a denomination or aggregate denominations equal to
the portion of the aggregate principal amount of outstanding debt securities of the series to be represented by the global security
or securities. Unless and until it is exchanged in whole or in part for debt securities in definitive certificated form, a global
security may not be transferred except as a whole by the depository for the global security to a nominee of the depository or by
a nominee of the depository to the depository or another nominee of the depository or by the depository or any nominee to a successor
depository for that series or a nominee of the successor depository and except in the circumstances described in an applicable
subsequent filing.
We expect that the
following provisions will apply to depository arrangements for any portion of a series of debt securities to be represented by
a global security. Any additional or different terms of the depository arrangement will be described in an applicable subsequent
filing.
Upon the issuance
of any global security, and the deposit of that global security with or on behalf of the depository for the global security, the
depository will credit, on its book-entry registration and transfer system, the principal amounts of the debt securities represented
by that global security to the accounts of institutions that have accounts with the depository or its nominee. The accounts to
be credited will be designated by the underwriters or agents engaging in the distribution of the debt securities or by us, if the
debt securities are offered and sold directly by us. Ownership of beneficial interests in a global security will be limited to
participating institutions or persons that may hold interests through such participating institutions. Ownership of beneficial
interests by participating institutions in the global security will be shown on, and the transfer of the beneficial interests will
be effected only through, records maintained by the depository for the global security or by its nominee. Ownership of beneficial
interests in the global security by persons that hold through participating institutions will be shown on, and the transfer of
the beneficial interests within the participating institutions will be effected only through, records maintained by those participating
institutions. The laws of some jurisdictions may require that purchasers of securities take physical delivery of the securities
in certificated form. The foregoing limitations and such laws may impair the ability to transfer beneficial interests in the global
securities.
So long as the depository
for a global security, or its nominee, is the registered owner of that global security, the depository or its nominee, as the case
may be, will be considered the sole owner or holder of the debt securities represented by the global security for all purposes
under the applicable indenture. Unless otherwise specified in an applicable subsequent filing and except as specified below, owners
of beneficial interests in the global security will not be entitled to have debt securities of the series represented by the global
security registered in their names, will not receive or be entitled to receive physical delivery of debt securities of the series
in certificated form and will not be considered the holders thereof for any purposes under the indenture. Accordingly, each person
owning a beneficial interest in the global security must rely on the procedures of the depository and, if such person is not a
participating institution, on the procedures of the participating institution through which the person owns its interest, to exercise
any rights of a holder under the indenture.
The depository may
grant proxies and otherwise authorize participating institutions to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action which a holder is entitled to give or take under the applicable indenture. We understand
that, under existing industry practices, if we request any action of holders or any owner of a beneficial interest in the global
security desires to give any notice or take any action a holder is entitled to give or take under the applicable indenture, the
depository would authorize the participating institutions to give the notice or take the action, and participating institutions
would authorize beneficial owners owning through such participating institutions to give the notice or take the action or would
otherwise act upon the instructions of beneficial owners owning through them.
Unless otherwise
specified in applicable subsequent filings, payments of principal, premium and interest on debt securities represented by a global
security registered in the name of a depository or its nominee will be made by us to the depository or its nominee, as the case
may be, as the registered owner of the global security.
We expect that the
depository for any debt securities represented by a global security, upon receipt of any payment of principal, premium or interest,
will credit participating institutions’ accounts with payments in amounts proportionate to their respective beneficial interests
in the principal amount of the global security as shown on the records of the depository. We also expect that payments by participating
institutions to owners of beneficial interests in the global security held through those participating institutions will be governed
by standing instructions and customary practices, as is now the case with the securities held for the accounts of customers registered
in street name, and will be the responsibility of those participating institutions. None of us, the trustees or any agent of ours
or the trustees will have any responsibility or liability for any aspect of the records relating to or payments made on account
of beneficial interests in a global security, or for maintaining, supervising or reviewing any records relating to those beneficial
interests.
Unless otherwise
specified in the applicable subsequent filings, a global security of any series will be exchangeable for certificated debt securities
of the same series only if:
| |
● |
the depository for such global securities notifies us that it is unwilling or unable to continue as depository or such depository ceases to be a clearing agency registered under the Exchange Act and, in either case, a successor depository is not appointed by us within 90 days after we receive the notice or become aware of the ineligibility; |
| |
● |
we in our sole discretion determine that the global securities shall be exchangeable for certificated debt securities; or |
| |
● |
there shall have occurred and be continuing an event of default under the applicable indenture with respect to the debt securities of that series. |
Upon any exchange,
owners of beneficial interests in the global security or securities will be entitled to physical delivery of individual debt securities
in certificated form of like tenor and terms equal in principal amount to their beneficial interests, and to have the debt securities
in certificated form registered in the names of the beneficial owners, which names are expected to be provided by the depository’s
relevant participating institutions to the applicable trustee.
In the event that
the Depository Trust Company, or DTC, acts as depository for the global securities of any series, the global securities will be
issued as fully registered securities registered in the name of Cede & Co., DTC’s partnership nominee or such other name
as may be requested by an authorized representative of DTC.
DTC, the world’s
largest securities depository, is a limited-purpose trust company under the New York Banking Law, a “banking organization”
within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within
the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to Section 17A of the Securities
Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate
and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct
Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other
securities transaction sin depositaries securities, through electronic computerized book-entry transfers and pledges between Direct
Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include
both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations.
DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Company (“DTCC”). DTCC is the holding company
for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies.
DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S.
and non-U.S. securities brokers and dealers, banks trust companies, and clearing corporations that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has
a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange
Commission. More information about DTC can be found at www.dtcc.com.
Purchases of Securities
under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s
records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded
on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their
purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well
as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into
the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct
and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their
ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.
To facilitate subsequent
transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee,
Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC
and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership.
DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct
Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect
Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices
and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants
and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the
transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and
proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee
holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial
Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to
them.
Redemption notices
shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine
by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede
& Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant
in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants
to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds,
distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested
by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s
receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective
holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions
and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street
name,” and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede
& Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or
Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments
to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue
providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent.
Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed
and delivered.
Issuer may decide
to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event,
Security certificates will be printed and delivered to DTC.
The information
in this section concerning DTC and DTC’s book-entry system has been obtained from sources that we believe to be reliable,
but we take no responsibility for its accuracy.
PLAN OF DISTRIBUTION
We may offer and
sell, from time to time, some or all of the securities covered by this prospectus up to an aggregate public offering price of $150,000,000.
We have registered the securities covered by this prospectus for offer and sale by us so that those securities may be freely sold
to the public by us. Registration of the securities covered by this prospectus does not mean, however, that those securities necessarily
will be offered or sold.
Securities covered
by this prospectus may be sold from time to time, in one or more transactions, at market prices prevailing at the time of sale,
at prices related to market prices, at a fixed price or prices subject to change, at varying prices determined at the time of sale
or at negotiated prices. The securities being offered by this prospectus may be sold:
| |
● |
to or through one or more underwriters on a firm commitment or agency basis; |
| |
● |
through put or call option transactions relating to the securities; |
| |
● |
through broker-dealers (acting as agent or principal); |
| |
● |
directly to purchasers, through a specific bidding or auction process, on a negotiated basis or otherwise; |
| |
● |
through any other method permitted pursuant to applicable law; or |
| |
● |
through a combination of any such methods of sale. |
At any time a particular
offer of the securities covered by this prospectus is made, a revised prospectus or prospectus supplement, if required, will be
distributed which will set forth the aggregate amount of securities covered by this prospectus being offered and the terms of the
offering, including the name or names of any underwriters, dealers, brokers or agents, any discounts, commissions, concessions
and other items constituting compensation from us and any discounts, commissions or concessions allowed or reallowed or paid to
dealers. Such prospectus supplement, and, if necessary, a post-effective amendment to the registration statement of which this
prospectus is a part, will be filed with the SEC to reflect the disclosure of additional information with respect to the distribution
of the securities covered by this prospectus. In order to comply with the securities laws of certain states, if applicable, the
securities sold under this prospectus may only be sold through registered or licensed broker-dealers. In addition, in some states
the securities may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from
registration or qualification requirements is available and is complied with.
Any public offering
price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time.
The distribution
of securities may be effected from time to time in one or more transactions, including block transactions and transactions on the
Nasdaq Capital Market or any other organized market where the securities may be traded. The securities may be sold at a fixed price
or prices, which may be changed, or at market prices prevailing at the time of sale, at prices relating to the prevailing market
prices or at negotiated prices. The consideration may be cash or another form negotiated by the parties. Agents, underwriters or
broker-dealers may be paid compensation for offering and selling the securities. That compensation may be in the form of discounts,
concessions or commissions to be received from us or from the purchasers of the securities. Any dealers and agents participating
in the distribution of the securities may be deemed to be underwriters, and compensation received by them on resale of the securities
may be deemed to be underwriting discounts. If any such dealers or agents were deemed to be underwriters, they may be subject to
statutory liabilities under the Securities Act.
Agents may from time
to time solicit offers to purchase the securities. If required, we will name in the applicable prospectus supplement any agent
involved in the offer or sale of the securities and set forth any compensation payable to the agent. Unless otherwise indicated
in the prospectus supplement, any agent will be acting on a best efforts basis for the period of its appointment. Any agent selling
the securities covered by this prospectus may be deemed to be an underwriter, as that term is defined in the Securities Act, of
the securities.
If underwriters are
used in a sale, securities will be acquired by the underwriters for their own account and may be resold from time to time in one
or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the
time of sale, or under delayed delivery contracts or other contractual commitments. Securities may be offered to the public either
through underwriting syndicates represented by one or more managing underwriters or directly by one or more firms acting as underwriters.
If an underwriter or underwriters are used in the sale of securities, an underwriting agreement will be executed with the underwriter
or underwriters, as well as any other underwriter or underwriters, with respect to a particular underwritten offering of securities,
and will set forth the terms of the transactions, including compensation of the underwriters and dealers and the public offering
price, if applicable. The prospectus and prospectus supplement will be used by the underwriters to resell the securities.
If a dealer is used
in the sale of the securities, we or an underwriter will sell the securities to the dealer, as principal. The dealer may then resell
the securities to the public at varying prices to be determined by the dealer at the time of resale. To the extent required, we
will set forth in the prospectus supplement the name of the dealer and the terms of the transactions.
We may directly solicit
offers to purchase the securities and may make sales of securities directly to institutional investors or others. These persons
may be deemed to be underwriters within the meaning of the Securities Act with respect to any resale of the securities. To the
extent required, the prospectus supplement will describe the terms of any such sales, including the terms of any bidding or auction
process, if used.
Agents, underwriters
and dealers may be entitled under agreements which may be entered into with us to indemnification by us against specified liabilities,
including liabilities incurred under the Securities Act, or to contribution by us to payments they may be required to make in respect
of such liabilities. If required, the prospectus supplement will describe the terms and conditions of the indemnification or contribution.
Some of the agents, underwriters or dealers, or their affiliates may be customers of, engage in transactions with or perform services
for us, our subsidiaries, the Selling Shareholders or their affiliates.
Under the securities
laws of some jurisdictions, the securities offered by this prospectus may be sold in those jurisdictions only through registered
or licensed brokers or dealers.
Any person participating
in the distribution of securities registered under the registration statement that includes this prospectus will be subject to
applicable provisions of the Exchange Act, and the applicable SEC rules and regulations, including, among others, Regulation M,
which may limit the timing of purchases and sales of any of our securities by that person. Furthermore, Regulation M may restrict
the ability of any person engaged in the distribution of our securities to engage in market-making activities with respect to our
securities. These restrictions may affect the marketability of our securities and the ability of any person or entity to engage
in market-making activities with respect to our securities.
Certain persons participating
in an offering may engage in over-allotment, stabilizing transactions, short-covering transactions and penalty bids that stabilize,
maintain or otherwise affect the price of the offered securities. These activities may maintain the price of the offered securities
at levels above those that might otherwise prevail in the open market, including by entering stabilizing bids, effecting syndicate
covering transactions or imposing penalty bids, each of which is described below.
| |
● |
A stabilizing bid means the placing of any bid, or the effecting of any purchase, for the purpose of pegging, fixing or maintaining the price of a security. |
| |
● |
A syndicate covering transaction means the placing of any bid on behalf of the underwriting syndicate or the effecting of any purchase to reduce a short position created in connection with the offering. |
| |
● |
A penalty bid means an arrangement that permits the managing underwriter to reclaim a selling concession from a syndicate member in connection with the offering when offered securities originally sold by the syndicate member are purchased in syndicate covering transactions. |
These transactions
may be effected on an exchange or automated quotation system, if the securities are listed on that exchange or admitted for trading
on that automated quotation system, or in the over-the-counter market or otherwise.
If so indicated in
the applicable prospectus supplement, we will authorize agents, underwriters or dealers to solicit offers from certain types of
institutions to purchase offered securities from us at the public offering price set forth in such prospectus supplement pursuant
to delayed delivery contracts providing for payment and delivery on a specified date in the future. Such contracts will be subject
only to those conditions set forth in the prospectus supplement and the prospectus supplement will set forth the commission payable
for solicitation of such contracts.
In addition, ordinary
shares may be issued upon conversion of or in exchange for debt securities or other securities.
Each series of offered
securities, other than the ordinary shares, will be a new issue of securities and will have no established trading market. Any
underwriters to whom offered securities are sold for public offering and sale may make a market in such offered securities, but
such underwriters will not be obligated to do so and may discontinue any market making at any time without notice. The offered
securities may or may not be listed on a national securities exchange. No assurance can be given that there will be a market for
the offered securities.
Any securities that
qualify for sale pursuant to Rule 144 or Regulation S under the Securities Act may be sold under Rule 144 or Regulation S rather
than pursuant to this prospectus.
To the extent that
we make sales to or through one or more underwriters or agents in at-the-market offerings, we will do so pursuant to the terms
of a distribution agreement between us, the Selling Shareholders and the underwriters or agents. If we engage in at-the-market
sales pursuant to a distribution agreement, we will offer and sell our ordinary shares to or through one or more underwriters or
agents, which may act on an agency basis or on a principal basis. During the term of any such agreement, we may sell ordinary shares
on a daily basis in exchange transactions or otherwise as we agree with the underwriters or agents. The distribution agreement
will provide that any ordinary shares sold will be sold at prices related to the then prevailing market prices for our ordinary
shares. Therefore, exact figures regarding proceeds that will be raised or commissions to be paid cannot be determined at this
time and will be described in a prospectus supplement. Pursuant to the terms of the distribution agreement, we also may agree to
sell, and the relevant underwriters or agents may agree to solicit offers to purchase, blocks of our ordinary shares or other securities.
The terms of each such distribution agreement will be set forth in more detail in a prospectus supplement to this prospectus.
In connection with
offerings made through underwriters or agents, we may enter into agreements with such underwriters or agents pursuant to which
we receive our outstanding securities in consideration for the securities being offered to the public for cash. In connection with
these arrangements, the underwriters or agents may also sell securities covered by this prospectus to hedge their positions in
these outstanding securities, including in short sale transactions. If so, the underwriters or agents may use the securities received
from us under these arrangements to close out any related open borrowings of securities.
One or more firms,
referred to as “remarketing firms,” may also offer or sell the securities, if the prospectus supplement so indicates,
in connection with a remarketing arrangement upon their purchase. Remarketing firms will act as principals for their own accounts
or as agents for us. These remarketing firms will offer or sell the securities in accordance with a redemption or repayment pursuant
to the terms of the securities. The prospectus supplement will identify any remarketing firm and the terms of its agreement, if
any, with us and will describe the remarketing firm’s compensation. Remarketing firms may be deemed to be underwriters in
connection with the securities they remarket. Remarketing firms may be entitled under agreements that may be entered into with
us to indemnification by us against certain civil liabilities, including liabilities under the Securities Act and may be customers
of, engage in transactions with or perform services for us in the ordinary course of business.
We may enter into
derivative transactions with third parties or sell securities not covered by this prospectus to third parties in privately negotiated
transactions. If the applicable prospectus supplement indicates, in connection with those derivatives, such third parties (or affiliates
of such third parties) may sell securities covered by this prospectus and the applicable prospectus supplement, including in short
sale transactions. If so, such third parties (or affiliates of such third parties) may use securities pledged by us or borrowed
from us or others to settle those sales or to close out any related open borrowings of shares, and may use securities received
from us in settlement of those derivatives to close out any related open borrowings of shares. The third parties (or affiliates
of such third parties) in such sale transactions will be underwriters and, if not identified in this prospectus, will be identified
in the applicable prospectus supplement (or a post-effective amendment).
We may loan or pledge
securities to a financial institution or other third party that in turn may sell the securities using this prospectus. Such financial
institution or third party may transfer its short position to investors in our securities or in connection with a simultaneous
offering of other securities offered by this prospectus or in connection with a simultaneous offering of other securities offered
by this prospectus.
EXPENSES
The following table
sets forth an estimate of the fees and expenses relating to the issuance and distribution of the securities being registered hereby,
all of which shall be borne by the Company. All of such fees and expenses, except for the SEC registration fee, are estimated.
| SEC registration fee | |
| | | |
$ | 21,580.29 | |
| | |
| | | |
| | |
| FINRA fees | |
| | | |
$ | * | |
| | |
| | | |
| | |
| Transfer agent’s fees and expenses | |
| | | |
$ | * | |
| | |
| | | |
| | |
| Legal fees and expenses | |
| | | |
$ | * | |
| | |
| | | |
| | |
| Printing fees and expenses | |
| | | |
$ | * | |
| | |
| | | |
| | |
| Accounting fees and expenses | |
| | | |
$ | * | |
| | |
| | | |
| | |
| Miscellaneous fees and expenses | |
| | | |
$ | * | |
| | |
| | | |
| | |
| Total | |
| | | |
$ | * | |
| |
* |
To be provided by a prospectus supplement or as an exhibit to a Report on Form 6-K that is incorporated by reference into this prospectus. |
INCORPORATION OF CERTAIN INFORMATION
BY REFERENCE
We incorporate by
reference the filed documents listed below, except as superseded, supplemented or modified by this prospectus:
| |
● |
our Annual Report on Form 20-F for the fiscal year ended December 31, 2022, filed with the SEC on May 8, 2023; |
| |
● |
our Reports on Form 6-K filed with the SEC on March 31, 2023, May 15, 2023, June
1, 2023, June 8, 2023, August 7, 2023, August 15, 2023, November 17, 2023 and December 22, 2023; |
| |
|
|
| |
● |
the description of the ordinary shares contained in Exhibit 2.3 of our Annual Report of Foreign Private Issuer on Form 20-F for the fiscal year ended December 31, 2022, filed on May 8, 2023, and any other amendment or report filed for the purpose of updating such description. |
We also incorporate by reference
all documents that we file with the SEC pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act (and in the case of a
Report of Foreign Private Issuer on Form 6-K, so long as they state that they are incorporated by reference into this prospectus, and
other than Report of Foreign Private Issuer 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 Report of Foreign Private Issuer 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.
Potential investors,
including any beneficial owner, may obtain a copy of any of the documents summarized herein (subject to certain restrictions because
of the confidential nature of the subject matter) or any of our SEC filings incorporated by reference herein without charge by
written request directed to 7th Floor, Building C, No. 1010 Anling Road, Huli District, Xiamen, China 361009.
You also may access these
filings on the Company’s website at http://www.bluehatgroup.net. Blue Hat does not incorporate the information on its website
into this prospectus or any supplement to this prospectus and you should not consider any information on, or that can be accessed
through, its website as part of this prospectus or any supplement to this prospectus (other than those filings with the SEC that
Blue Hat specifically incorporates by reference into this prospectus or any supplement to this prospectus).
The Company’s registration
statements, periodic reports, proxy statements and other information are available for inspection and copying at the SEC’s
public reference room and on the SEC’s website at http://www.sec.gov, where the SEC maintains a collection of registration
statements, periodic reports, proxy and information statements and other information regarding issuers like Blue Hat that file
electronically with the SEC.
You should rely only
on the information incorporated by reference or provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an offer of these securities in any state where the offer
is not permitted. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of
any date other than the date on the front of those documents.
Any statement contained
in a document incorporated by reference herein shall be deemed to be modified or superseded for purposes of this prospectus to
the extent that a statement contained herein, or in a subsequently filed document incorporated by reference herein, modifies or
supersedes that statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to
constitute part of this prospectus.
INDEMNIFICATION
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 the consequences of committing a crime, or against the indemnified person’s
own fraud or dishonesty. Our Second Amended and Restated Memorandum and Articles of Association provides for indemnification of
our officers and directors to all actions, proceedings, costs, charges, expenses, losses, damages, liabilities, judgments,
fines, settlements and other amounts (including reasonable attorneys’ fees and expenses and amounts paid in settlement and
costs of investigation (collectively “Losses”) incurred or sustained by him otherwise than by reason of his own dishonesty
in or about the conduct of the Company’s business or affairs (including as a result of any mistake of
judgment) or in the execution or discharge of his duties, powers, authorities or discretions, including without prejudice
to the generality of the foregoing, any Losses incurred by him in defending or investigating (whether successfully or otherwise)
any civil, criminal, investigative and administrative proceedings concerning or in any way related to the Company or its affairs in
any court whether in the Cayman Islands or elsewhere. Such Losses incurred in defending or investigating any such proceeding
shall be paid by the Company as they are incurred upon receipt, in each case, of an undertaking by or on behalf of the indemnified
person to repay such amounts if it is ultimately determined by a non-appealable order of a court of competent jurisdiction that
such indemnified person is not entitled to indemnification hereunder with respect thereto. However, the Company will
not indemnify its directors, officers, or persons controlling it for liabilities arising under the Securities Act, because
it is the SEC’s opinion that such indemnification is against public policy as expressed in such act and is, therefore,
unenforceable.
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to
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 theretofore unenforceable.
LEGAL MATTERS
The validity of the
debt securities, warrants, subscription rights and units and legal matters as to United States and New York law will be passed
upon for us by Pryor Cashman LLP. Campbells will pass upon certain legal matters in connection with the securities offered to the
extent governed by the laws of the Cayman Islands law.
EXPERTS
The consolidated financial
statements of Blue Hat Interactive Entertainment Technology as of December 31, 2022 and 2021 included in the Registration Statement have
been incorporated by reference herein and in the Registration Statement in reliance upon the report of Audit Alliance LLP, an independent
registered public accounting firm, and on the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with
the SEC a registration statement on Form F-3 under the Securities Act with respect to the offer and sale of securities pursuant
to this prospectus. This prospectus, filed as a part of the registration statement, does not contain all of the information set
forth in the registration statement or the exhibits and schedules thereto in accordance with the rules and regulations of the SEC
and no reference is hereby made to such omitted information. Statements made in this prospectus concerning the contents of any
contract, agreement or other document filed as an exhibit to the registration statement are summaries of all of the material terms
of such contract, agreement or document, but do not repeat all of their terms. Reference is made to each such exhibit for a more
complete description of the matters involved and such statements shall be deemed qualified in their entirety by such reference.
The registration statement and the exhibits and schedules thereto filed with the SEC may be obtained from the SEC’s website
that contains reports, proxy and information statements and other information regarding registrants that file electronically through
the SEC’s Electronic Data Gathering, Analysis and Retrieval (“EDGAR”) system, including the Company, which can
be accessed at http://www.sec.gov. For further information pertaining to the securities offered by this prospectus and Blue Hat
Interactive Entertainment Technology, reference is made to the registration statement.
We furnish reports
and other information to the SEC. You may read and copy any document we furnish at the SEC’s public reference facilities
and the website of the SEC referred to above. Our file number with the SEC is 001-39001.
55,200,000 Ordinary Shares
Blue Hat Interactive Entertainment Technology
Prospectus Supplement
MAXIM GROUP LLC
January 5, 2025
Blue Hat Interactive Ent... (NASDAQ:BHAT)
Historical Stock Chart
From Dec 2024 to Jan 2025
Blue Hat Interactive Ent... (NASDAQ:BHAT)
Historical Stock Chart
From Jan 2024 to Jan 2025
