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Blue Hat Interactive Entertainment Technology

Blue Hat Interactive Entertainment TechnologyBHAT财报

Nasdaq · Communication Services

Blue Hat Interactive Entertainment Technology develops and produces interactive entertainment products including AR games, smart interactive toys, and immersive leisure content. It primarily serves mainland China's consumer market, with expanding distribution across Southeast Asia, focusing on family and youth entertainment segments.

What changed in Blue Hat Interactive Entertainment Technology's 20-F — 2023 vs 2024

Top changes in Blue Hat Interactive Entertainment Technology's 2024 20-F

378 paragraphs added · 337 removed · 164 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

67 edited+142 added−89 removed310 unchanged
This growth has slowed in the recent years, and if the growth of the economy continues to slow or if the economy contracts, our financial condition may be materially and adversely affected. ● A severe or prolonged downturn in the Chinese and/or global economy could materially and adversely affect our business, financial condition and operating results. ● 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. ● Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business. ● You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management named in the annual report based on foreign laws. ● We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business. ● Fluctuations in exchange rates could have a material and adverse effect on our operations. ● Governmental control of currency conversion may limit our ability to utilize our net revenues effectively. ● PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us. ● Failure to comply with PRC regulations regarding the registration requirements for employee equity incentive plans may subject our PRC citizen employees or us to fines and other legal or administrative sanctions. ● PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us from using the proceeds of offerings from the U.S. to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business. 4 ● We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies. ● Our use of third parties manufacturers to produce our products presents risks to our business. ● The Holding Foreign Companies Accountable Act, or the HFCAA, and the related regulations continue to evolve.
This growth has slowed in the recent years, and if the growth of the economy continues to slow or if the economy contracts, our financial condition may be materially and adversely affected. ● A severe or prolonged downturn in the Chinese and/or global economy could materially and adversely affect our business, financial condition and operating results. ● 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. ● Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business. ● You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management named in the annual report based on foreign laws. ● We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business. ● Fluctuations in exchange rates could have a material and adverse effect on our operations. ● Governmental control of currency conversion may limit our ability to utilize our net revenues effectively. ● PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us. ● Failure to comply with PRC regulations regarding the registration requirements for employee equity incentive plans may subject our PRC citizen employees or us to fines and other legal or administrative sanctions. ● PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us from using the proceeds of offerings from the U.S. to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business. 10 ● We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies. ● Our use of third parties manufacturers to produce our products presents risks to our business. ● The Holding Foreign Companies Accountable Act, or the HFCAA, and the related regulations continue to evolve.
On November 30, 2015, the Executive Board of the International Monetary Fund (IMF) completed the regular five-year review of the basket of currencies that make up the Special Drawing Right, 22 or the SDR, and decided that with effect from October 1, 2016, Renminbi is determined to be a freely usable currency and will be included in the SDR basket as a fifth currency, along with the U.S. dollar, the Euro, the Japanese yen and the British pound.
On November 30, 2015, the Executive Board of the International Monetary Fund (IMF) completed the regular five-year review of the basket of currencies that make up the Special Drawing Right, or the SDR, and decided that with effect from October 1, 2016, Renminbi is determined to be a freely usable currency and will be included in the SDR basket as a fifth currency, along with the U.S. dollar, the Euro, the Japanese yen and the British pound.
Any potential intellectual property litigation also could force us to do one or more of the following: ● stop making, selling or using products or technologies that allegedly infringe the asserted intellectual property; ● lose the opportunity to license our technology to others or to collect royalty payments based upon successful protection and assertion of our intellectual property rights against others; incur significant legal expenses; ● pay substantial damages or royalties to the party whose intellectual property rights we may be found to be infringing; ● pay the attorney’s fees and costs of litigation to the party whose intellectual property rights we may be found to be infringing; ● redesign those products that contain the allegedly infringing intellectual property, which could be costly, disruptive and infeasible; and ● attempt to obtain a license to the relevant intellectual property from third parties, which may not be available on reasonable terms or at all, or from third parties who may attempt to license rights that they do not have. 15 Any litigation or claim against us, even those without merit, may cause us to incur substantial costs, and could place a significant strain on our financial resources, divert the attention of management from our core business and harm our reputation.
Any potential intellectual property litigation also could force us to do one or more of the following: ● stop making, selling or using products or technologies that allegedly infringe the asserted intellectual property; ● lose the opportunity to license our technology to others or to collect royalty payments based upon successful protection and assertion of our intellectual property rights against others; incur significant legal expenses; ● pay substantial damages or royalties to the party whose intellectual property rights we may be found to be infringing; ● pay the attorney’s fees and costs of litigation to the party whose intellectual property rights we may be found to be infringing; ● redesign those products that contain the allegedly infringing intellectual property, which could be costly, disruptive and infeasible; and ● attempt to obtain a license to the relevant intellectual property from third parties, which may not be available on reasonable terms or at all, or from third parties who may attempt to license rights that they do not have. 20 Any litigation or claim against us, even those without merit, may cause us to incur substantial costs, and could place a significant strain on our financial resources, divert the attention of management from our core business and harm our reputation.
Such regulation requires, among other things, that the MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor acquires control of a PRC domestic enterprise or a foreign company with substantial PRC operations, 23 if certain thresholds under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, issued by the State Council in 2008, are triggered.
Such regulation requires, among other things, that the MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor acquires control of a PRC domestic enterprise or a foreign company with substantial PRC operations, if certain thresholds under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, issued by the State Council in 2008, are triggered.
We believe that any disclosure controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.
We believe that any disclosure controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. 36 These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.
These rules and regulations could also make it more difficult for us to attract and retain qualified members of our board of directors. 34 As a foreign private issuer, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from Nasdaq corporate governance listing standards.
These rules and regulations could also make it more difficult for us to attract and retain qualified members of our board of directors. As a foreign private issuer, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from Nasdaq corporate governance listing standards.
Under the Share Option Rule, PRC citizens who are granted stock options or other employee equity incentive awards by an overseas publicly-listed company are required, through a PRC agent who may be a PRC subsidiary of such overseas publicly-listed company, 26 to register with the SAFE and complete certain other procedures related to the share options or other employee equity incentive plans.
Under the Share Option Rule, PRC citizens who are granted stock options or other employee equity incentive awards by an overseas publicly-listed company are required, through a PRC agent who may be a PRC subsidiary of such overseas publicly-listed company, to register with the SAFE and complete certain other procedures related to the share options or other employee equity incentive plans.
Such a delisting would substantially impair your ability to sell or purchase our ordinary shares when you wish to do so, and would have a negative impact on the price of our ordinary shares. 29 Additional factors outside of our control related to doing business in China could negatively affect our business.
Such a delisting would substantially impair your ability to sell or purchase our ordinary shares when you wish to do so, and would have a negative impact on the price of our ordinary shares. Additional factors outside of our control related to doing business in China could negatively affect our business.
This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects. Failure to comply with PRC regulations regarding the registration requirements for employee equity incentive plans may subject our PRC citizen employees or us to fines and other legal or administrative sanctions.
This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects. 31 Failure to comply with PRC regulations regarding the registration requirements for employee equity incentive plans may subject our PRC citizen employees or us to fines and other legal or administrative sanctions.
Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D. Risk Factors Risks Related to Our Business Risk Factor Summary The following summary highlights some of the principal risks that could adversely affect our business, financial condition or results of operations.
Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. 8 D. Risk Factors Risks Related to Our Business Risk Factor Summary The following summary highlights some of the principal risks that could adversely affect our business, financial condition or results of operations.
The term “control” under Circular 37 is broadly defined as the operation rights, 25 beneficiary rights or decision-making rights acquired by the PRC residents in the offshore SPVs by such means as acquisition, trust, proxy, voting rights, repurchase, convertible notes or other arrangements.
The term “control” under Circular 37 is broadly defined as the operation rights, beneficiary rights or decision-making rights acquired by the PRC residents in the offshore SPVs by such means as acquisition, trust, proxy, voting rights, repurchase, convertible notes or other arrangements.
Cybersecurity review and network data security review could also result in negative publicity with respect to our Company and diversion of our managerial and financial resources, which could materially and adversely affect our business, financial conditions, and results of operations. 20 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.
Cybersecurity review and network data security review could also result in negative publicity with respect to our Company and diversion of our managerial and financial resources, which could materially and adversely affect our business, financial conditions, and results of operations. 25 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.
Until January 2023, mainland China ceased implementing isolation measures for COVID-19 patients, and the market gradually recovered. 12 In general, our business could be adversely affected by the effects of epidemics, including, but not limited to, COVID-19, avian influenza, severe acute respiratory syndrome (SARS), the influenza A virus, Ebola virus, severe weather conditions such as a snowstorm, flood or hazardous air pollution, or other outbreaks.
Until January 2023, mainland China ceased implementing isolation measures for COVID-19 patients, and the market gradually recovered. 17 In general, our business could be adversely affected by the effects of epidemics, including, but not limited to, COVID-19, avian influenza, severe acute respiratory syndrome (SARS), the influenza A virus, Ebola virus, severe weather conditions such as a snowstorm, flood or hazardous air pollution, or other outbreaks.
Furthermore, an adverse decision in an interference proceeding can result in a third party receiving the patent right sought by us, which in turn could affect our ability to commercialize our products. 13 Though an issued patent is presumed valid and enforceable, its issuance is not conclusive as to its validity or its enforceability and it may not provide us with adequate proprietary protection or competitive advantages against competitors with similar products.
Furthermore, an adverse decision in an interference proceeding can result in a third party receiving the patent right sought by us, which in turn could affect our ability to commercialize our products. 18 Though an issued patent is presumed valid and enforceable, its issuance is not conclusive as to its validity or its enforceability and it may not provide us with adequate proprietary protection or competitive advantages against competitors with similar products.
Although the PRC government has been pursuing economic reform policies for more than two decades, 17 the PRC government continues to exercise significant control over economic growth in the PRC through the allocation of resources, controlling payments of foreign currency, setting monetary policy and imposing policies that impact particular industries in different ways.
Although the PRC government has been pursuing economic reform policies for more than two decades, 22 the PRC government continues to exercise significant control over economic growth in the PRC through the allocation of resources, controlling payments of foreign currency, setting monetary policy and imposing policies that impact particular industries in different ways.
Further, our trade secrets could otherwise become known or be independently discovered by our competitors. 14 Litigation or other proceedings or third party claims of intellectual property infringement could require us to spend significant time and money and could prevent us from selling our products or affect our stock price.
Further, our trade secrets could otherwise become known or be independently discovered by our competitors. 19 Litigation or other proceedings or third party claims of intellectual property infringement could require us to spend significant time and money and could prevent us from selling our products or affect our stock price.
The following data for the years ended December 31, 2021, 2022 and 2023 and as of December 31, 2021, 2022 and 2023 have been derived from our audited consolidated financial statements for those years, which were prepared in accordance with accounting principles generally accepted in the United States, or U.S.
The following data for the years ended December 31, 2022, 2023 and 2024 and as of December 31, 2022, 2023 and 2024 have been derived from our audited consolidated financial statements for those years, which were prepared in accordance with accounting principles generally accepted in the United States, or U.S.
Congress and interpretations and rulemaking by the SEC. 28 On June 22, 2021, the U.S. Senate passed a bill which, if passed by the U.S.
Congress and interpretations and rulemaking by the SEC. On June 22, 2021, the U.S. Senate passed a bill which, if passed by the U.S.
As a U.S. listed public company that is not a foreign private issuer, we will incur significant additional legal, accounting and other expenses that we will not incur as a foreign private issuer, and accounting, reporting and other expenses in order to maintain a listing on a U.S. securities exchange. 35
As a U.S. listed public company that is not a foreign private issuer, we will incur significant additional legal, accounting and other expenses that we will not incur as a foreign private issuer, and accounting, reporting and other expenses in order to maintain a listing on a U.S. securities exchange. 40
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. 16 Our computer systems and operations may be vulnerable to security breaches .
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. 21 Our computer systems and operations may be vulnerable to security breaches .
Such disruption or failures may materially adversely affect our ability to sell products and therefore materially adversely affect our financial condition, competitiveness and growth prospects. Our business d epends in large part on the success of our vendors and outsourcers, and our brand and reputation may be harmed by actions taken by third parties that are outside of our control.
Such disruption or failures may materially adversely affect our ability to sell products and therefore materially adversely affect our financial condition, competitiveness and growth prospects. Our business depends in large part on the success of our vendors and outsourcers, and our brand and reputation may be harmed by actions taken by third parties that are outside of our control.
The occurrence of any of the following risks could have a material adverse effect on our business, financial condition, results of operations and future growth prospects. In these circumstances, the market price of our ordinary shares could decline, and you may lose all or part of your investment. We have a limited operating history.
The occurrence of any of the following risks could have a material adverse effect on our business, financial condition, results of operations and future growth prospects. In these circumstances, the market price of our ordinary shares could decline, and you may lose all or part of your investment.
The market price of our ordinary shares is likely to be highly volatile and may fluctuate substantially due to many factors, including: ● the volume and timing of sales of our products; ● the introduction of new products or product enhancements by us or others in our industry; ● disputes or other developments with respect to our or others’ intellectual property rights; ● our ability to develop, obtain regulatory clearance or approval for, and market new and enhanced products on a timely basis; ● product liability claims or other litigation; ● quarterly variations in our results of operations or those of others in our industry; ● media exposure of our products or of those of others in our industry; ● changes in governmental regulations or in reimbursement; ● changes in earnings estimates or recommendations by securities analysts; and ● general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors. 30 In recent years, the stock markets generally have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies.
The market price of our ordinary shares is likely to be highly volatile and may fluctuate substantially due to many factors, including: 35 ● the volume and timing of sales of our products; ● the introduction of new products or product enhancements by us or others in our industry; ● disputes or other developments with respect to our or others’ intellectual property rights; ● our ability to develop, obtain regulatory clearance or approval for, and market new and enhanced products on a timely basis; ● product liability claims or other litigation; ● quarterly variations in our results of operations or those of others in our industry; ● media exposure of our products or of those of others in our industry; ● changes in governmental regulations or in reimbursement; ● changes in earnings estimates or recommendations by securities analysts; and ● general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
Currently, we do not plan to rely on home country practice with respect to any corporate governance matter. To the extent we choose to follow home country practice with respect to corporate governance matters, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.
To the extent we choose to follow home country practice with respect to corporate governance matters, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.
In addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC resident enterprises are incorporated.
In addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC resident enterprises are incorporated. 27 Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.
We are highly dependent on the principal members of our executive team listed in the section entitled “Directors, Senior Management and Employees” located elsewhere in this annual report, the loss of whose services may adversely impact the achievement of our objectives.
Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel. We are highly dependent on the principal members of our executive team listed in the section entitled “Directors, Senior Management and Employees” located elsewhere in this annual report, the loss of whose services may adversely impact the achievement of our objectives.
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. 24 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.
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.
SAFE Circular 19 and SAFE Circular 16 may significantly limit our ability to use Renminbi converted from the net proceeds of this offering to fund our PRC operating subsidiaries, to invest in or acquire any other PRC companies through our PRC Subsidiaries, which may adversely affect our business, financial condition and results of operations.
SAFE Circular 19 and SAFE Circular 16 may significantly limit our ability to use Renminbi converted from the net proceeds of this offering to fund our PRC operating subsidiaries, to invest in or acquire any other PRC companies through our PRC Subsidiaries, which may adversely affect our business, financial condition and results of operations. 32 We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.
If we lose our status as a foreign private issuer, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers.
As a result of the above, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers. 39 If we lose our status as a foreign private issuer, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers.
Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain. We have never declared or paid cash dividends. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business.
We have never declared or paid cash dividends. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. As a result, capital appreciation, if any, of our ordinary shares will be your sole source of gain for the foreseeable future.
We face uncertainties as to the reporting and other implications of certain past and future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our offshore subsidiaries and investments.
The SAT Bulletin 37 further clarifies the practice and procedure of withholding of non-resident enterprise income tax. We face uncertainties as to the reporting and other implications of certain past and future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our offshore subsidiaries and investments.
Issues with products may lead to product liability, personal injury or property damage claims, recalls, withdrawals, replacements of products, or regulatory actions by governmental authorities that could divert resources, affect business operations, decrease sales, increase costs, and put us at a competitive disadvantage, any of which could have a significant adverse effect on our financial condition.
In addition, problems with transitioning these services and systems to or operating failures with these vendors and outsourcers could cause delays in product sales, and reduce efficiency of our operations, and significant capital investments could be required to remediate the problem. 12 Issues with products may lead to product liability, personal injury or property damage claims, recalls, withdrawals, replacements of products, or regulatory actions by governmental authorities that could divert resources, affect business operations, decrease sales, increase costs, and put us at a competitive disadvantage, any of which could have a significant adverse effect on our financial condition.
Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment. The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions in China and by China’s foreign exchange policies.
The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions in China and by China’s foreign exchange policies.
Selected Consolidated Balance Sheet Data: December 31, December 31, December 31, 2023 2022 2021 Total current assets $ 39,282,300 $ 21,532,070 $ 21,704,144 Total assets 49,262,838 34,276,858 36,511,577 Total current liabilities 5,664,392 17,408,208 18,281,724 Total liabilities 8,640,763 19,747,519 18,861,371 Total shareholders’ equity 40,622,075 12,108,940 15,189,782 Total liabilities and shareholders’ equity $ 49,262,838 $ 34,276,858 36,511,577 Selected Consolidated Statements of Operations Data: For the Years Ended December 31, 2023 2022 2021 REVENUES $ 73,686,733 $ 2,195,954 $ 12,139,500 COST OF REVENUES (72,532,882 ) (958,438 ) (5,782,664 ) GROSS PROFIT 1,153,851 1,237,516 6,356,836 OPERATING EXPENSES: Selling (7,677 ) (159,937 ) (315,600 ) Research and development (2,570,158 ) (2,734,982 ) (11,233,806 ) General and administrative (13,766,487 ) (6,224,674 ) (31,335,421 ) Impairment Losses (13,693,305 ) (33,397 ) (14,632,931 ) Total operating expenses (30,037,627 ) (9,152,990 ) (57,517,758 ) INCOME FROM OPERATIONS OTHER EXPENSE (28,883,776 ) (7,915,474 ) (51,160,922 ) Interest income 7 374 156,038 Interest expense (222,057 ) (133,882 ) (229,985 ) Other finance expenses (62,025 ) (15,264 ) (65,344 ) Other (expense) income, net 66,205 39,080 (191,499 ) Total other expense, net (217,870 ) (109,692 ) (330,790 ) LOSS BEFORE INCOME TAXES (29,101,646 ) (8,025,166 ) (51,491,712 ) PROVISION FOR INCOME TAXES (6,081 ) (1,097,888 ) (1,104 ) LOSS FROM CONTINUING OPERATION (29,107,727 ) (9,123,054 ) (51,492,816 ) DISCONTINUED OPERATIONS Gain on disposal of discontinued operations 7,389,310 — 1,493,945 Loss from discontinued operations — (282,027 ) (10,055,749 ) NET LOSS (21,718,417 ) (9,405,081 ) (60,054,620 ) Less: Net loss attributable to non-controlling interest (2,420,399 ) (40,025 ) (2,918,680 ) Net Loss attributable to Blue Hat Interactive Entertainment Technology (19,298,018 ) (9,365,056 ) (57,135,940 ) OTHER COMPREHENSIVE LOSS Net loss from continued operations (29,107,727 ) (9,123,054 ) (51,492,816 ) Foreign currency translation adjustment - continued operation (199,032 ) (1,883,571 ) 651,272 COMPREHENSIVE LOSS - CONTINUED OPERATION $ (29,306,759 ) $ (11,006,625 ) $ (50,841,544 ) Income (loss) from discontinued operation 7,389,310 (282,027 ) (8,561,804 ) Foreign currency translation adjustment – discontinued operation 263,285 258,828 66,288 COMPREHENSIVE INCOME (LOSS) - DISCONTINUED OPERATION $ 7,652,595 $ (23,199 ) $ (8,495,516 ) COMPREHENSIVE LOSS $ (21,654,164 ) $ (11,029,824 ) $ (59,337,060 ) Less: Net loss attributable to non-controlling interests (2,420,399 ) (40,025 ) (2,918,680 ) Comprehensive loss attributable to Blue Hat Interactive Entertainment shareholders (19,233,765 ) (10,989,799 ) (56,418,380 ) Basic 29,722,950 7,639,482 5,053,727 Diluted 30,975,275 8,565,163 5,800,048 Earnings per share Basic earnings per share from continued operation $ (0.98 ) $ (1.19 ) $ (10.19 ) Basic earnings per share from discontinued operation 0.33 (0.04 ) (1.12 ) Diluted Earnings per share Diluted earnings per share from continued operation $ (0.98 ) $ (1.19 ) $ (10.19 ) Diluted earnings per share from discontinued operation 0.33 (0.04 ) (1.12 ) 1 Selected Consolidated Cash Flow Data: For the Years Ended December 31, 2023 2022 2021 Net cash used in operating activities - continued operation $ (9,773,132 ) $ (1,473,267 ) $ (14,624,367 ) Net cash (used in) generated from operating activities -discontinued operation 7,661,561 281,780 (5,488,297 ) Net cash (used in) generated from investing activities (15,380 ) 6,336 (4,516,909 ) Net cash used in investing activities – discontinued operation — — (1,952 ) Net cash generated from financing activities 2,305,954 2,542,634 7,420,588 Net cash (used in) generated from financing activities – discontinued operation (52,322 ) (11,960 ) 154,260 EFFECT OF EXCHANGE RATE ON CASH 210,505 (1,319,437 ) 1,439,535 NET CHANGE IN CASH AND CASH EQUIVALENTS 337,186 26,086 (15,617,142 ) Cash paid for income tax 6,081 1,097,888 1,529,850 Cash paid for interest 222,057 133,882 229,985 Cash and cash equivalents 407,588 76,535 135,562 Restricted cash 1,587 1,129 — Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows $ 409,175 $ 77,664 $ 135,562 Less: cash and cash equivalents from the discontinued operations, end of year — (7,262 ) (85,113 ) CASH AND CASH EQUIVALENT, FROM THE CONTINUING OPERATIONS, end of year $ 409,175 $ 70,402 $ 50,449 B.
Selected Consolidated Balance Sheet Data: December 31, December 31, December 31, 2024 2023 2022 Total current assets $ 70,064,559 $ 39,282,300 $ 21,532,070 Total assets 75,232,436 49,262,838 34,276,858 Total current liabilities 40,648,112 5,664,392 17,408,208 Total liabilities 43,089,618 8,640,763 19,747,519 Total shareholders’ equity 32,142,818 40,622,075 12,108,940 Total liabilities and shareholders’ equity $ 75,232,436 $ 49,262,838 34,276,858 6 Selected Consolidated Statements of Operations Data: For the Years Ended December 31, 2024 2023 2022 REVENUES $ 18,724,190 $ 73,686,733 $ 2,195,954 COST OF REVENUES (17,178,241 ) (72,532,882 ) (958,438 ) GROSS PROFIT 1,545,949 1,153,851 1,237,516 OPERATING EXPENSES: Selling — (7,677 ) (159,937 ) Research and development (3,168,397 ) (2,570,158 ) (2,734,982 ) General and administrative (2,834,635 ) (13,766,487 ) (6,224,674 ) Impairment Losses — (13,693,305 ) (33,397 ) Total operating expenses (6,003,032 ) (30,037,627 ) (9,152,990 ) INCOME FROM OPERATIONS (4,457,083 ) (28,883,776 ) (7,915,474 ) OTHER EXPENSE Interest income 18 7 374 Interest expense (183,956 ) (222,057 ) (133,882 ) Other finance expenses (3,198,292 ) (62,025 ) (15,264 ) Loss on investment write-off (1,685,322 ) — — Other (expense) income, net (148 ) 66,205 39,080 Total other expense, net (5,067,700 ) (217,870 ) (109,692 ) LOSS BEFORE INCOME TAXES (9,524,783 ) (29,101,646 ) (8,025,166 ) PROVISION FOR INCOME TAXES — (6,081 ) (1,097,888 ) LOSS FROM CONTINUING OPERATION (9,524,783 ) (29,107,727 ) (9,123,054 ) DISCONTINUED OPERATIONS Gain on disposal of discontinued operations — 7,389,310 — Loss from discontinued operations — — (282,027 ) NET LOSS (9,524,783 ) (21,718,417 ) (9,405,081 ) Less: Net loss attributable to non-controlling interest — (2,420,399 ) (40,025 ) Net Loss attributable to Blue Hat Interactive Entertainment Technology (9,524,783 ) (19,298,018 ) (9,365,056 ) OTHER COMPREHENSIVE LOSS Net loss from continued operations (9,524,783 ) (29,107,727 ) (9,123,054 ) Foreign currency translation adjustment - continued operation 9,316 (199,032 ) (1,883,571 ) COMPREHENSIVE LOSS - CONTINUED OPERATION $ (9,515,467 ) $ (29,306,759 ) $ (11,006,625 ) Income (loss) from discontinued operation — 7,389,310 (282,027 ) Foreign currency translation adjustment – discontinued operation — 263,285 258,828 COMPREHENSIVE INCOME (LOSS) - DISCONTINUED OPERATION $ — $ 7,652,595 $ (23,199 ) COMPREHENSIVE LOSS $ (9,515,467 ) $ (21,654,164 ) $ (11,029,824 ) Less: Net loss attributable to non-controlling interests — (2,420,399 ) (40,025 ) Comprehensive loss attributable to Blue Hat Interactive Entertainment shareholders (9,515,467 ) (19,233,765 ) (10,989,799 ) Basic 584,806 297,230 76,395 Diluted 597,229 309,753 85,652 Earnings per share Basic earnings per share from continued operation $ (16.29 ) $ (97.93 ) $ (119.42 ) Basic earnings per share from discontinued operation — 24.86 (3.69 ) Diluted Earnings per share Diluted earnings per share from continued operation $ (16.29 ) $ (97.93 ) $ (119.42 ) Diluted earnings per share from discontinued operation — 24.86 (3.69 ) 7 Selected Consolidated Cash Flow Data: For the Years Ended December 31, 2024 2023 2022 Net cash used in operating activities - continued operation $ (884,952 ) $ (9,773,132 ) $ (1,473,267 ) Net cash (used in) generated from operating activities -discontinued operation — 7,661,561 281,780 Net cash (used in) generated from investing activities — (15,380 ) 6,336 Net cash (used in) generated from financing activities 484,860 2,305,954 2,542,634 Net cash used in financing activities – discontinued operation — (52,322 ) (11,960 ) EFFECT OF EXCHANGE RATE ON CASH 5,217 210,505 (1,319,437 ) NET CHANGE IN CASH AND CASH EQUIVALENTS (394,875 ) 337,186 26,086 Cash paid for income tax — 6,081 1,097,888 Cash paid for interest 183,956 222,057 133,882 Cash and cash equivalents 14,300 407,588 76,535 Restricted cash 1,470 1,587 1,129 Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows $ 15,770 $ 409,175 $ 77,664 Less: cash and cash equivalents from the discontinued operations, end of year — — (7,262 ) CASH AND CASH EQUIVALENT, FROM THE CONTINUING OPERATIONS, end of year $ 15,770 $ 409,175 $ 70,402 B.
Further implementations and interpretations of or amendments to the HFCAA or the related regulations, or a PCAOB determination of its lack of sufficient access to inspect our auditor, might pose regulatory risks to and impose restrictions on us because of our operations in mainland China.
Further implementations and interpretations of or amendments to the HFCAA or the related regulations, or a PCAOB determination of its lack of sufficient access to inspect our auditor, might pose regulatory risks to and impose restrictions on us because of our operations in mainland China. 33 On April 21, 2020, SEC released a joint statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including China.
The Foreign Investment Law does not explicitly classify whether variable interest entities that are controlled through contractual arrangements would be deemed as foreign-invested enterprises if they are ultimately “controlled” by foreign investors.
Since it is relatively new, uncertainties exist in relation to its interpretation and its implementation rules that are yet to be issued. The Foreign Investment Law does not explicitly classify whether variable interest entities that are controlled through contractual arrangements would be deemed as foreign-invested enterprises if they are ultimately “controlled” by foreign investors.
In the event our distributors fail to sell our products in sufficient amounts, such failure could have a material adverse effect on our revenue. We intend to expand our distribution network; however, we cannot make any assurances that we will be successful in doing so or if such relationships will be on favorable terms.
We intend to expand our distribution network; however, we cannot make any assurances that we will be successful in doing so or if such relationships will be on favorable terms.
Broad market and industry factors may significantly affect the market price of our ordinary shares, regardless of our actual operating performance. In addition, in the past, class action litigation has often been instituted against companies whose securities have experienced periods of volatility in market price.
In addition, in the past, class action litigation has often been instituted against companies whose securities have experienced periods of volatility in market price.
On April 21, 2020, SEC released a joint statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets.
The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets.
ITEM 3. KEY INFORMATION A . Selected Financial Data The following table presents the selected consolidated financial information for our business. You should read the following information in conjunction with Item 5 “Operating and Financial Review and Prospects” below.
You should read the following information in conjunction with Item 5 “Operating and Financial Review and Prospects” below.
The Cybersecurity Review Measures provide that, net platform operators engaging in data processing activities that affect or may affect national security must be subject to cybersecurity review by the Cybersecurity Review Office of the PRC.
On December 28, 2021, the CAC and other relevant PRC governmental authorities jointly promulgated the Cybersecurity Review Measures, which took effect on February 15, 2022. The Cybersecurity Review Measures provide that, net platform operators engaging in data processing activities that affect or may affect national security must be subject to cybersecurity review by the Cybersecurity Review Office of the PRC.
This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest. 33 Certain corporate governance practices in the Cayman Islands, where the Company is registered, differ significantly from requirements for companies incorporated in other jurisdictions such as the United States.
This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.
Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.
Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands.
This could in turn limits our access to capital markets, and harm our results of operations. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions.
Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. 37 Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain.
The trading market for our ordinary shares is influenced to some extent by the research and reports that industry or financial analysts publish about us and our business. We do not control these analysts.
Securities analysts may not publish favorable research or reports about our business or may publish no information at all, which could cause our stock price or trading volume to decline. The trading market for our ordinary shares is influenced to some extent by the research and reports that industry or financial analysts publish about us and our business.
Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies.
In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. 38 Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies.
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.
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. 28 Certain PRC regulations may make it more difficult for us to pursue growth through acquisitions.
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.
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. 30 PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.
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.
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. 29 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 Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (the “Confidentiality and Archives Provisions”), which took effect from March 31, 2023.
Foreign private issuers also are exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. As a result of the above, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers.
Foreign private issuers also are exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information.
SAT Bulletin 7 also brings challenges to both foreign transferor and transferee (or other person who is obligated to pay for the transfer) of taxable assets. 27 On October 17, 2017, the SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or SAT Bulletin 37, which was partially revised.
On October 17, 2017, the SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or SAT Bulletin 37, which was partially revised. SAT Bulletin 37 came into effect on December 1, 2017.
Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls.
Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.
Our success depends on our ability to maintain efficient distribution methods for our products. We primarily sell our products in China through local China-based distributors. In 2023, we primarily relied on five Chinese distributors for the sale of our products, which accounted for 53.6% of our total revenue.
In 2023, we primarily relied on five Chinese distributors for the sale of our products, which accounted for 53.6% of our total revenue. In 2023, 80% of our products were sold in China and, 20% of its products are sold outside China.
If we fail to implement and maintain an effective system of internal control, we may be unable to accurately report our operating results, meet our reporting obligations or prevent fraud. Prior to our initial public offering, we were a private company with limited accounting personnel and other resources with which to address our internal controls and procedures.
We have identified material weaknesses in our internal control over financial reporting. If we fail to implement and maintain an effective system of internal control, we may be unable to accurately report our operating results, meet our reporting obligations or prevent fraud.
BHAT Diamond may not be able to obtain sufficient raw materials or supplied components that meet BHAT Diamond’s operating needs and standards, or obtain such materials on favorable terms or at all, which could impair BHAT Diamond’s ability to fulfill orders in a timely manner. ● BHAT Diamond maintains a relatively large inventory of jewelry products to support customer delivery requirements, and if this inventory is lost due to theft, BHAT Diamond’s results of operations would be negatively impacted. ● The market for high value commodities is inherently unpredictable. ● We may not be able to consolidate the financial results of some of our affiliated companies or such consolidation could materially adversely affect our operating results and financial condition. ● Our current corporate structure and business operations may be affected by the Foreign Investment Law. ● We face risks related to health epidemics, severe weather conditions and other outbreaks, including COVID-19. 3 ● We may not be able to adequately protect our proprietary intellectual property and information, and protect against third party claims that we are infringing on their intellectual property rights. ● We may be unable to adequately protect our intellectual property rights, or we may be accused of infringing on the intellectual property rights of others. ● Litigation or other proceedings or third parties claims of intellectual property infringement could require us to spend significant time and money and could prevent us from selling our products or affect our stock price. ● Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets. ● Changes in China’s economic, political or legal system or social conditions or government policies could have a material adverse effect on our business and operations. ● The economy of China had experienced unprecedented growth.
These risks are discussed more fully further below in this section entitled “Risk Factors.” These risks include, but are not limited to, the following: ● Our recent transition to the gold and diamond trading business presents operational and financial risks. ● We operate in the highly competitive gold and diamond trading markets where established competitors may outperform us. ● Our business depends significantly on our ability to maintain an efficient distribution network for our products and our failure to do so could adversely affect our financial condition, competitiveness and growth prospects. ● We will need to expand our organization, and we may experience difficulties in realizing or managing this growth. ● Failure to adequately contribute to employee benefits plans required by PRC regulations. ● Gold price volatility may adversely impact our trading operations, inventory valuations, and financial performance. ● Diamond price volatility and changing consumer preferences may adversely impact our diamond trading operations, inventory valuations, and financial performance. ● Inflationary pressures on operational costs may adversely affect our gold trading margins and profitability. ● Evolving regulatory requirements for gold trading and cross-border transactions may increase compliance costs and restrict our operations. ● Our gold and diamond trading operations depend on reliable supply chains and accurate market assessments, which involve risks beyond our control.. ● The storage and transportation of our physical gold and diamond holdings present significant security and insurance challenges. ● The market for high value commodities is inherently unpredictable. ● Liquidity constraints in the gold and diamond markets could impair our trading operations. ● We may not be able to consolidate the financial results of some of our affiliated companies or such consolidation could materially adversely affect our operating results and financial condition. ● Our current corporate structure and business operations may be affected by the Foreign Investment Law. ● We face risks related to health epidemics, severe weather conditions and other outbreaks, including COVID-19. 9 ● We may not be able to adequately protect our proprietary intellectual property and information, and protect against third party claims that we are infringing on their intellectual property rights. ● We may be unable to adequately protect our intellectual property rights, or we may be accused of infringing on the intellectual property rights of others. ● Litigation or other proceedings or third parties claims of intellectual property infringement could require us to spend significant time and money and could prevent us from selling our products or affect our stock price. ● Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets. ● Changes in China’s economic, political or legal system or social conditions or government policies could have a material adverse effect on our business and operations. ● The economy of China had experienced unprecedented growth.
The Draft Administrative Provisions and the Draft Filing Measures lay out requirements for filing and include unified regulation management, strengthening regulatory coordination, and cross-border regulatory cooperation. On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”), which took effect on March 31, 2023.
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.
If we are subject to late fees or fines in relation to the underpaid employee benefits, our financial condition and results of operations may be adversely affected. 8 A decline in discretionary consumer spending on jewelry may unfavorably impact BHAT Diamond’s future sales and earnings, particularly if such decline occurs during the holiday shopping season.
If we are subject to late fees or fines in relation to the underpaid employee benefits, our financial condition and results of operations may be adversely affected. 13 Gold price volatility may adversely impact our trading operations, inventory valuations, and financial performance.
On December 15, 2022, the PCAOB announced in its 2022 HFCAA Determination Report (the “2022 Report”) its determination that the PCAOB was able to secure complete access to inspect and investigate audit firms in the People’s Republic of China (PRC), and the PCAOB Board voted to vacate previous determinations to the contrary.
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. 34 On December 15, 2022, the PCAOB announced in its 2022 HFCAA Determination Report (the “2022 Report”) its determination that the PCAOB was able to secure complete access to inspect and investigate audit firms in the People’s Republic of China (PRC), and the PCAOB Board voted to vacate previous determinations to the contrary.
Our competitors’ products may achieve greater market acceptance than our products and potentially reduce demand for our products, lower our revenues and lower our profitability. Our bus iness depends significantly on our ability to maintain an efficient distribution network for our products. Failure by us to maintain such distribution network could adversely affect our financial condition, competitiveness and growth prospects.
Failure by us to maintain such distribution network could adversely affect our financial condition, competitiveness and growth prospects. Our success depends on our ability to maintain efficient distribution methods for our products. We primarily sell our products in China through local China-based distributors.
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. 21 You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management named in the annual report based on foreign laws.
While we have implemented compliance measures and believe our activities don’t involve sensitive information, these newly promulgated regulations contain uncertainties,and non-compliance could result in fines or other penalties. You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management named in the annual report based on foreign laws.
In 2023, 80% of our products were sold in China and, 20% of its products are sold outside China. 6 The impact of economic conditions on any of our distributors, such as bankruptcy, could result in sales channel disruption.
The impact of economic conditions on any of our distributors, such as bankruptcy, could result in sales channel disruption. In the event our distributors fail to sell our products in sufficient amounts, such failure could have a material adverse effect on our revenue.
Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering. On December 28, 2021, the CAC and other relevant PRC governmental authorities jointly promulgated the Cybersecurity Review Measures, which took effect on February 15, 2022.
Thus, it is still uncertain how PRC governmental authorities will regulate overseas listing in general and whether we are required to obtain any specific regulatory approvals. Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering.
Factors that may impact commodities prices include the policies of the U.S. Federal Reserve, inflation rates, global economic uncertainty and governmental and supplies. If there are significant shifts in the commodity markets that we are not properly hedged against, BHAT Diamond’s business could suffer adverse consequences.
Therefore, our inventories are subject to market-value changes driven by the commodities markets. We may periodically enter into futures contracts to hedge our exposure against market-price changes. Factors that may impact commodities prices include the policies of the U.S. Federal Reserve, inflation rates, global economic uncertainty and governmental and supplies.
On March 15, 2019, the National People’s Congress, or the NPC, approved the Foreign Investment Law, which took effect on January 1, 2020. Since it is relatively new, uncertainties exist in relation to its interpretation and its implementation rules that are yet to be issued.
Risks Relating to Our Corporate Structure Our current corporate structure and business operations may be affected by the newly enacted Foreign Investment Law. 16 On March 15, 2019, the National People’s Congress, or the NPC, approved the Foreign Investment Law, which took effect on January 1, 2020.
This summary is not complete and the risks summarized below are not the only risks we face. These risks are discussed more fully further below in this section entitled “Risk Factors.” These risks include, but are not limited to, the following: 2 ● We have a limited operating history.
This summary is not complete and the risks summarized below are not the only risks we face.
To the extent that we cannot achieve our plans and generate revenues which exceed expenses on a consistent basis, our business, results of operations, financial condition and prospects will be materially adversely affected. Our management team has limited public company experience.
If we cannot effectively implement our strategic plans and generate revenues that exceed expenses on a consistent basis in these new business areas, our financial condition and prospects will be materially adversely affected. 11 We operate in the highly competitive gold and diamond trading markets where established competitors may outperform us.
Substantial changes in prices could affect BHAT Diamond’s ability to continue purchasing sufficient volumes of inventory to support BHAT Diamond’s business, which could negatively affect BHAT Diamond’s profitability. Risks Relating to Our Corporate Structure 11 Our current corporate structure and business operations may be affected by the newly enacted Foreign Investment Law.
If there are significant shifts in the commodity markets that we are not properly hedged against, our business could suffer adverse consequences. Substantial changes in prices could affect our ability to continue purchasing sufficient volumes of inventory to support our business, which could negatively affect our profitability. Liquidity constraints in the gold and diamond markets could impair our trading operations.
Removed
There is no assurance that our future operations will result in profitable revenues.
Added
ITEM 3. KEY INFORMATION Blue Hat Interactive Entertainment Technology (“Blue Hat”, “Blue Hat Cayman”, the “Company”, “we”, “our”, or “us”) is a holding company incorporated in the Cayman Islands and are not a Chinese operating company. This holding company structure involves unique risks to investors.
Removed
If we cannot generate sufficient revenues to operate profitably, we may suspend or cease operations. ● We operate in a highly competitive market and the size and resources of many of our competitors may allow them to compete more effectively than we can, preventing us from achieving profitability. ● Our business depends significantly on our ability to maintain an efficient distribution network for our products and our failure to do so could adversely affect our financial condition, competitiveness and growth prospects. ● Our business is seasonal and therefore our annual operating results will depend, in large part, on our sales during the relatively brief holiday shopping season. ● We will need to expand our organization, and we may experience difficulties in realizing or managing this growth. ● Failure to adequately contribute to employee benefits plans required by PRC regulations. ● A decline in discretionary consumer spending on jewelry may unfavorably impact BHAT Diamond’s future sales and earnings, particularly if such decline occurs during the holiday shopping season. ● BHAT Diamond’s future results of operations may be adversely affected by input cost inflation. ● The conflict mineral diligence process, the results from that process and the related reporting obligations could increase costs, adversely affect BHAT Diamond’s reputation and adversely affect BHAT Diamond’s ability to obtain merchandise. ● If BHAT Diamond misjudges the demand for BHAT Diamond’s products and fail to manage inventory levels, it could have a materially adverse impact on BHAT Diamond’s business and results of operations. ● BHAT Diamond relies on a limited number of suppliers for certain raw materials and supplied components, which may cause supply chain disruptions.
Added
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.
Removed
There is no assurance that our future operations will result in profitable revenues. If we cannot generate sufficient revenues to operate profitably, we may suspend or cease operations. Given our limited operating history, there can be no assurance that we can build our business such that we can earn a significant profit or any profit at all.
Added
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.
Removed
The future of our business will depend upon our ability to obtain and retain customers and when needed, obtain sufficient financing and support from creditors, while we strive to achieve and maintain profitable operations.
Added
(“Fresh Joy”) through this termination. As of the date of this annual report, 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.
Removed
The likelihood of success must be considered in light of the problems, 5 expenses, difficulties, complications and delays encountered in connection with the operations that we undertake.
Added
(“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.
Removed
There is no history upon which to base any assumption that our business will prove to be successful, and there is significant risk that we will not be able to generate the sales volumes and revenues necessary to achieve profitable operations.
Added
(“Golden Alpha”); 10) Guangzhou Huangxin Enterprise Management Co., Ltd. (“Huangxin”); and 11) Blue Hat Technology LLC. (“BH Technology”). As an investor to us, you will only hold equity interest of us and will never directly hold equity interests in our Chinese operating entities.
Removed
Several of our senior management positions are currently held by employees who have been with us for a short period of time. Our entire management team, as well as other company personnel, will need to devote substantial time to compliance, and may not effectively or efficiently manage a public company.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

33 edited+31 added−53 removed150 unchanged
In addition, the Foreign Investment Law also provides several protective rules and principles for foreign investors and their investments in the PRC, including, among others, that a foreign investor may freely transfer into or out of China, in Renminbi or a foreign currency, its contributions, profits, capital gains, income from disposition of assets, royalties of intellectual property rights, indemnity or compensation lawfully acquired, and income from liquidation, among others, within China; local governments shall abide by their commitments to the foreign investors; governments at all levels and their departments shall enact local normative documents concerning foreign investment in compliance with laws and regulations and shall not impair legitimate rights and interests, impose additional obligations onto FIEs, set market access restrictions and exit conditions, or intervene with the normal production and operation activities of FIEs; except for special circumstances, in which case statutory procedures shall be followed and fair and reasonable compensation shall be made in a timely manner, expropriation or requisition of the investment of foreign investors is prohibited; and mandatory technology transfer is prohibited. 53 The Guidance Catalogue of Industries for Foreign Investment Investment activities in the PRC by foreign investors are governed by the Guidance Catalogue of Industries for Foreign Investment, or the Catalogue, which was promulgated and is amended from time to time by the MOFCOM and the NDRC.
In addition, the Foreign Investment Law also provides several protective rules and principles for foreign investors and their investments in the PRC, including, among others, that a foreign investor may freely transfer into or out of China, in Renminbi or a foreign currency, its contributions, profits, capital gains, income from disposition of assets, royalties of intellectual property rights, indemnity or compensation lawfully acquired, and income from liquidation, among others, within China; local governments shall abide by their commitments to the foreign investors; governments at all levels and their departments shall enact local normative documents concerning foreign investment in compliance with laws and regulations and shall not impair legitimate rights and interests, impose additional obligations onto FIEs, set market access restrictions and exit conditions, or intervene with the normal production and operation activities of FIEs; except for special circumstances, in which case statutory procedures shall be followed and fair and reasonable compensation shall be made in a timely manner, expropriation or requisition of the investment of foreign investors is prohibited; and mandatory technology transfer is prohibited. 56 The Guidance Catalogue of Industries for Foreign Investment Investment activities in the PRC by foreign investors are governed by the Guidance Catalogue of Industries for Foreign Investment, or the Catalogue, which was promulgated and is amended from time to time by the MOFCOM and the NDRC.
Under the Cybersecurity Law, network operators are subject to various security protection-related obligations, including: (i) network operators shall comply with certain obligations regarding maintenance of the security of internet systems; (ii) network operators shall verify users’ identities before signing agreements or providing certain services such as information publishing or real-time communication services; (iii) when collecting or using personal information, network operators shall clearly indicate the purposes, 50 methods and scope of the information collection, the use of information collection, and obtain the consent of those from whom the information is collected; (iv) network operators shall strictly preserve the privacy of user information they collect, and establish and maintain systems to protect user privacy; (v) network operators shall strengthen management of information published by users, and when they discover information prohibited by laws and regulations from publication or dissemination, they shall immediately stop dissemination of that information, including taking measures such as deleting the information, preventing the information from spreading, saving relevant records, and reporting to the relevant governmental agencies.
Under the Cybersecurity Law, network operators are subject to various security protection-related obligations, including: (i) network operators shall comply with certain obligations regarding maintenance of the security of internet systems; (ii) network operators shall verify users’ identities before signing agreements or providing certain services such as information publishing or real-time communication services; (iii) when collecting or using personal information, network operators shall clearly indicate the purposes, 53 methods and scope of the information collection, the use of information collection, and obtain the consent of those from whom the information is collected; (iv) network operators shall strictly preserve the privacy of user information they collect, and establish and maintain systems to protect user privacy; (v) network operators shall strengthen management of information published by users, and when they discover information prohibited by laws and regulations from publication or dissemination, they shall immediately stop dissemination of that information, including taking measures such as deleting the information, preventing the information from spreading, saving relevant records, and reporting to the relevant governmental agencies.
If non-resident investors were involved in our private equity financing, if such transactions were determined by the tax authorities to lack reasonable commercial purpose, we and our non-resident investors may be at risk of being required to file a return and be taxed under SAT Bulletin 7 and we may be required to expend valuable resources to comply with SAT Bulletin 7 or to establish that we should not be held liable for any obligations under SAT Bulletin 7. 48 Value-Added Tax According to the Temporary Regulations on Value-added Tax, which was most recently amended on November 19, 2017, and the Detailed Implementing Rules of the Temporary Regulations on Value-added Tax, which was amended on October 28, 2011, and became effective on November 1, 2011, all taxpayers selling goods, providing processing, repair or replacement services or importing goods within the PRC shall pay Value-Added Tax.
If non-resident investors were involved in our private equity financing, if such transactions were determined by the tax authorities to lack reasonable commercial purpose, we and our non-resident investors may be at risk of being required to file a return and be taxed under SAT Bulletin 7 and we may be required to expend valuable resources to comply with SAT Bulletin 7 or to establish that we should not be held liable for any obligations under SAT Bulletin 7. 51 Value-Added Tax According to the Temporary Regulations on Value-added Tax, which was most recently amended on November 19, 2017, and the Detailed Implementing Rules of the Temporary Regulations on Value-added Tax, which was amended on October 28, 2011, and became effective on November 1, 2011, all taxpayers selling goods, providing processing, repair or replacement services or importing goods within the PRC shall pay Value-Added Tax.
Organizational Structure The charts below summarize our corporate legal structure and identify our subsidiaries and their subsidiaries: Blue Hat Interactive Entertainment Technology Corporate Structure 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 Xiamen Duwei Consulting Management Co., Ltd. ● A PRC limited liability company and deemed a wholly foreign owned enterprise, or WFOE ● Incorporated on July 26, 2018 ● Registered capital of $20,000,000 ● A holding company 100% owned by Blue Hat Interactive Entertainment Technology Limited 56 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.
Organizational Structure The charts below summarize our corporate legal structure and identify our subsidiaries and their subsidiaries: Blue Hat Interactive Entertainment Technology Corporate Structure 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 Xiamen Duwei Consulting Management Co., Ltd. ● A PRC limited liability company and deemed a wholly foreign owned enterprise, or WFOE ● Incorporated on July 26, 2018 ● Registered capital of $20,000,000 ● A holding company 100% owned by Blue Hat Interactive Entertainment Technology Limited 59 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.
Vocational training funds shall be set aside and used in accordance with national regulations and vocational training for workers shall be carried out systematically based on the actual conditions of the Company. 46 The Labor Contract Law of the PRC, which was promulgated by the SCNPC on June 29, 2007, came into effect on January 1, 2008, and was amended on December 28, 2012 and became effective as of July 1, 2013, and the Implementation Regulations on Labor Contract Law, which was promulgated on September 18, 2008, and became effective since the same day, regulate both parties through a labor contract, namely the employer and the employee, and contain specific provisions involving the terms of the labor contract.
Vocational training funds shall be set aside and used in accordance with national regulations and vocational training for workers shall be carried out systematically based on the actual conditions of the Company. 49 The Labor Contract Law of the PRC, which was promulgated by the SCNPC on June 29, 2007, came into effect on January 1, 2008, and was amended on December 28, 2012 and became effective as of July 1, 2013, and the Implementation Regulations on Labor Contract Law, which was promulgated on September 18, 2008, and became effective since the same day, regulate both parties through a labor contract, namely the employer and the employee, and contain specific provisions involving the terms of the labor contract.
When companies breach these regulations and fail to pay up housing provident fund contributions in full amount as due, the housing provident fund administration center shall order such companies to pay up within a designated period, and may further apply to the People’s Court for mandatory enforcement against those who still fail to comply after the expiry of such period. 47 Legal Regulations on Tax in the PRC Income Tax In January 2008, the PRC Enterprise Income Tax Law took effect, which was last amended by the Standing Committee of the National People’s Congress on December 29, 2018.
When companies breach these regulations and fail to pay up housing provident fund contributions in full amount as due, the housing provident fund administration center shall order such companies to pay up within a designated period, and may further apply to the People’s Court for mandatory enforcement against those who still fail to comply after the expiry of such period. 50 Legal Regulations on Tax in the PRC Income Tax In January 2008, the PRC Enterprise Income Tax Law took effect, which was last amended by the Standing Committee of the National People’s Congress on December 29, 2018.
Failure to comply with the registration procedures set forth in Circular 37, or making misrepresentation on or failure to disclose controllers of a FIE that is established through round-trip investment, may result in restrictions on the foreign exchange activities of the relevant FIEs, including payment of dividends and other distributions, such as proceeds from any reduction in capital, share transfer or liquidation, to its offshore parent or affiliate, and the capital inflow from the offshore parent, 51 and may also subject relevant PRC residents or entities to penalties under PRC foreign exchange administration regulations.
Failure to comply with the registration procedures set forth in Circular 37, or making misrepresentation on or failure to disclose controllers of a FIE that is established through round-trip investment, may result in restrictions on the foreign exchange activities of the relevant FIEs, including payment of dividends and other distributions, such as proceeds from any reduction in capital, share transfer or liquidation, to its offshore parent or affiliate, and the capital inflow from the offshore parent, 54 and may also subject relevant PRC residents or entities to penalties under PRC foreign exchange administration regulations.
A contracting party who failed to perform or failed to fulfill its contractual obligation shall bear the responsibility of a continued duty to perform or to provide remedies and compensation as provided by PRC laws. 54 Product Quality Law Pursuant to Product Quality Law of the PRC, promulgated on September 1, 1993 and amended in 2000, 2009 and 2018 respectively, producing or selling products that do not meet the standards or requirements for safeguarding human health or that constitute unreasonable threats to the safety of human life or property is prohibited.
A contracting party who failed to perform or failed to fulfill its contractual obligation shall bear the responsibility of a continued duty to perform or to provide remedies and compensation as provided by PRC laws. 57 Product Quality Law Pursuant to Product Quality Law of the PRC, promulgated on September 1, 1993 and amended in 2000, 2009 and 2018 respectively, producing or selling products that do not meet the standards or requirements for safeguarding human health or that constitute unreasonable threats to the safety of human life or property is prohibited.
For the year ended December 31, 2023 Transfer from Transfer to Approximate value ($) Note Blue Hat Interactive Entertainment Technology Blue Hat Interactive Entertainment Technology Limited 2,800,000.00 Loan 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.
For the year ended December 31, 2024 Transfer from Transfer to Approximate value ($) Note Blue Hat Interactive Entertainment Technology Blue Hat Interactive Entertainment Technology Limited 2,800,000.00 Loan Blue Hat Interactive Entertainment Technology Limited Fujian Blue Hat Group Co, Ltd 2,800,000.00 Investment For the year ended December 31, 2023 Transfer from Transfer to Approximate value ($) Note Blue Hat Interactive Entertainment Technology Blue Hat Interactive Entertainment Technology Limited 2,800,000.00 Loan 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.
After the end of the transition period, the cross-border financing management mode for FIEs will be determined by the People’s Bank of China and SAFE after assessment based on the overall implementation of this PBOC Circular 9. 52 According to applicable PRC regulations on FIEs, capital contributions from a foreign holding company to its PRC subsidiaries, which are considered FIEs, may only be made when approval by or registration with the MOFCOM or its local counterpart is obtained.
After the end of the transition period, the cross-border financing management mode for FIEs will be determined by the People’s Bank of China and SAFE after assessment based on the overall implementation of this PBOC Circular 9. 55 According to applicable PRC regulations on FIEs, capital contributions from a foreign holding company to its PRC subsidiaries, which are considered FIEs, may only be made when approval by or registration with the MOFCOM or its local counterpart is obtained.
(“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.
(“Blue Hat Fujian”) and certain individuals were terminated and therefore Blue Hat Fujian is no longer a VIE. The Company also deconsolidated Fresh Joy Entertainment Ltd. (“Fresh Joy”) through this termination.
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. 57 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.
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. 60 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.
If the domain name holder fails to pay the corresponding fees as required, the original domain name registrar shall write it off and notify the holder of the domain name in written form. 45 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 annual report: No.
If the domain name holder fails to pay the corresponding fees as required, the original domain name registrar shall write it off and notify the holder of the domain name in written form. 48 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 annual report: No.
These reserves are not distributable as cash dividends. 49 Regulations on the Filing requirements for mainland China domestic companies listed overseas On December 24, 2021, the CSRC published the Administration of Overseas Securities Offering and Listing by Domestic Companies (the “Draft Administrative Provisions”) and the Administration Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies (the “Draft Filing Measures”).
These reserves are not distributable as cash dividends. 52 Regulations on the Filing requirements for mainland China domestic companies listed overseas On December 24, 2021, the CSRC published the Administration of Overseas Securities Offering and Listing by Domestic Companies (the “Draft Administrative Provisions”) and the Administration Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies (the “Draft Filing Measures”).
The business license of an advertising company is valid for the duration of its existence, unless the license is suspended or revoked due to a violation of any relevant laws or regulations. Foreign investors are permitted to own all equity interests in PRC advertising companies. 55 C.
The business license of an advertising company is valid for the duration of its existence, unless the license is suspended or revoked due to a violation of any relevant laws or regulations. Foreign investors are permitted to own all equity interests in PRC advertising companies. 58 C.
License/Permission Established Date Validity 1 Blue Hat Interactive Entertainment Technology WC-338512 Business License 6/13/2018 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 14 Chongqing Duwei Chuangda Electronic Technology Co., Ltd 91500103MACMEAMG3Y Business License 6/13/2023 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.
License/Permission Established Date Validity 1 Blue Hat Interactive Entertainment Technology WC-338512 Business License 6/13/2018 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 14 Chongqing Duwei Chuangda Electronic Technology Co., Ltd 91500103MACMEAMG3Y Business License 6/13/2023 Long-term 15 Guangzhou Huangxin Enterprise Management Co., Ltd. 91440106MACPKAYJXM Business License Record Registration Form for Foreign 7/5/2023 Long-term 16 Fuzhou Blue Financial Investment Co.,Ltd 91350111MADKTE9B27 Business License 5/8/2024 Long-term 17 Fuzhou Po Teishin Supply Chain Co., Ltd 91350111MADP37HFX2 Business License 6/11/2024 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 tables below show the cash transfer between the Company and its subsidiaries for the fiscal years ended December 31, 2023, 2022 and 2021.
The tables below show the cash transfer between the Company and its subsidiaries for the fiscal years ended December 31, 2024, 2023 and 2022.
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 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.
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 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.
Transfer from Transfer to Approximate value ($) Note 1 Blue Hat Interactive Entertainment Technology Blue Hat Interactive Entertainment Technology Limited 7,150,000.00 Loan 2 Blue Hat Interactive Entertainment Technology Limited Xiamen Duwei Consulting Management Co., Ltd. 7,150,000.00 Investment 44 Legal Regulations on Intellectual Property in the PRC Copyright Pursuant to the Copyright Law of the PRC, which was first promulgated by the Standing Committee of the National People’s Congress on September 7, 1990 and became effective from June 1, 1991, and was last amended on November 11, 2020 and became effective as of June 1, 2021, copyrights include personal rights such as the right of publication and that of attribution as well as property rights such as the right of production and that of distribution.
Transfer from Transfer to Approximate value ($) 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 47 Legal Regulations on Intellectual Property in the PRC Copyright Pursuant to the Copyright Law of the PRC, which was first promulgated by the Standing Committee of the National People’s Congress on September 7, 1990 and became effective from June 1, 1991, and was last amended on November 11, 2020 and became effective as of June 1, 2021, copyrights include personal rights such as the right of publication and that of attribution as well as property rights such as the right of production and that of distribution.
Property, Plant and Equipment Our principal executive office is located at 7th Floor, Building C, No. 1010 Anling Road, Huli District, Xiamen, China 361009, where we lease 15,336 square feet of office space. We lease this space under a lease that has been externed till January 8, 2028. The monthly rent of this property is around $18,630.
Property, Plant and Equipment Our principal executive office is located at 7th Floor, Building C, No. 1010 Anling Road, Huli District, Xiamen, China 361009, where we lease 7,668 square feet of office space. We lease this space under a lease that has been externed till January 8, 2028. The monthly rent of this property is around $9,480.
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.
Operating Results.” Cash Transfers with Subsidiaries 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 2024 through various financings.
On January 22, 2021, Xiamen Youth Education Development Co., Ltd and Youying Wang transferred all their equity interests to Blue Hat WOFE. Therefore, combining Blue Hat Fujian, and Blue Hat WOFE, right now they own all the equity interests of Fujian Youth. October 19, 2017, Blue Hat Fujian established its wholly owned subsidiary, Shenyang Qimengxing Trading Co.
On January 22, 2021, Xiamen Youth Education Development Co., Ltd and Youying Wang transferred all their equity interests to Blue Hat WOFE. Therefore, combining Blue Hat Fujian, and Blue Hat WOFE, right now they own all the equity interests of Fujian Youth. On September 10, 2018, Blue Hat Fujian established its wholly owned subsidiary, Pingxiang Blue Hat Technology Co.
(“Huangxin”); and 11) Blue Hat Technology LLC. (“BH Technology”). 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.
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 86-592-228-0081.
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. 40 The core of our business lies in our proprietary technology.
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. For information on our financial performance, see “Item 5.A.
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. 58 D.
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. Fuzhou Blue Financial Investment Co.,Ltd ● A PRC limited liability company ● Incorporated on May 8, 2024 100% owned by Blue Hat Interactive Entertainment Technology Limited.
Blue Hat WFOE is the primary beneficiary of Blue Hat Fujian and its subsidiaries, and all of these entities included in Blue Hat are under common control. 36 On March 31, 2020, the Company established its wholly owned subsidiary, Xiamen Jiuqiao Technology Co., Ltd. (“Jiuqiao”), a PRC company.
Blue Hat WFOE is the primary beneficiary of Blue Hat Fujian and its subsidiaries, and all of these entities included in Blue Hat are under common control. 41 On February 20, 2021, the Company established a wholly owned subsidiary, Xiamen Bluehat Research Institution of Education Co., Ltd.
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 annual report. We have not had any material commitments for capital expenditures for the last three financial years. B.
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 annual report. B. Business Overview We, through the operations of our subsidiaries, primarily operate a gold and diamond trading and supply chain business.
Blue Hat Pingxiang also engages in designing, producing, promoting and selling interactive toys with mobile games features, original intellectual property and peripheral derivatives features worldwide. On November 13, 2018, Blue Hat 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 prior to the reorganization.
On November 13, 2018, Blue Hat 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 prior to the reorganization. Blue Hat, Blue Hat BVI, and Blue Hat HK were established as the holding companies of Blue Hat WFOE.
As of the date of this annual report, 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.
As of the date of this annual report, the Company has no VIEs, and the Company, as a holding company without operations, is conducting business through its wholly owned operating subsidiaries. See Item 4.C. Organizational Structure below for more details regarding these operating subsidiaries.
Accordingly, the Company consolidates the accounts of Blue Hat Fujian and Fujian Roar Game for the periods presented herein, in accordance with Regulation S-X-3A-02 promulgated by the Securities Exchange Commission (“SEC”), and Accounting Standards Codification (“ASC”) 810-10, Consolidation. 39 Termination Agreement On June 8, 2023, contractual agreements mentioned above by and among Xiamen Duwei Consulting Management Co., Ltd., our indirectly wholly owned subsidiary (“Blue Hat WOFE”), Fujian Blue Hat Interactive Entertainment Technology Ltd.
These arrangements were terminated on June 8, 2023. 42 Termination of VIE Structure On June 8, 2023, all 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.
Jiuqiao engages in designing, producing, producing, promoting and selling interactive toys with mobile games features, original intellectual property, peripheral derivatives features worldwide and also providing consultation service. On December 20, 2021, the Company transferred out all its equity interests in Jiuqiao for $922,468. On August 3, 2020, the Company acquired 60% of Xunpusen (Xiamen) Technology Co., Ltd.
Ltd., or Blue Hat Pingxiang, a PRC company. Blue Hat Pingxiang also engages in designing, producing, promoting and selling interactive toys with mobile games features, original intellectual property and peripheral derivatives features worldwide.
BH Technology will handle the business operations in the United States in future. 37 Contractual Arrangements Due to legal restrictions on foreign ownership and investment in, among other areas, the production, development and operation of AR interactive entertainment games and toys in China, including interactive educational materials, mobile games, and toys with mobile game features, the Company operates its businesses in which foreign investment is restricted or prohibited in the PRC through certain PRC domestic companies.
Former Contractual Arrangements Due to legal restrictions on foreign ownership and investment in, certain areas of operation in China, including interactive, entertainment and toys , the Company previously operated through contractual arrangements with certain PRC domestic companies. Such contractual arrangements consisted of a series of agreements, along with shareholders’ powers of attorney and irrevocable commitment letters.
Business Overview 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.
Concurrently, we have established a significant diamond trading operation that generated $18.72 million in revenue for the year ended December 31, 2024. Prior to our strategic shift, we were an advanced high-tech solutions provider focusing on the production, development, and operation of augmented reality (AR) interactive entertainment games and toys.
Removed
Ltd., or Blue Hat Shenyang, a PRC company. On November 15, 2021, it deregistered Shenyang Qimengxing Trading Co. Ltd. On September 10, 2018, Blue Hat Fujian established its wholly owned subsidiary, Pingxiang Blue Hat Technology Co. Ltd., or Blue Hat Pingxiang, a PRC company.
Added
BH Technology will handle the business operations in the United States in future. On May 2024, Fuzhou Blue Financial Investment Co.,Ltd which was the subsidiary of Blue Hat Cayman was established under the laws of PRC, and on June 2024, it established a wholly owned subsidiary Fuzhou Po Teishin Supply Chain Co., Ltd under the laws of PRC.
Removed
Blue Hat, Blue Hat BVI, and Blue Hat HK were established as the holding companies of Blue Hat WFOE.
Added
In March 2024, the Company announced a strategic shift to become an AI-driven financial services enterprise, focusing on the development of gold trading and commodity-related businesses.
Removed
(“Xunpusen”) which providing telecommunication service and internet access. On September 20, 2021, the Company transferred out all its equity interests in Xunpusen for $1,333,023.33 (RMB 8,600,000). 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”).
Added
In May 2024, the Company entered into a Letter of Intent to acquire GTC Multi Trading DMCC, a financial technology company registered in the United Arab Emirates, with plans to acquire an aggregate of 60% of the shares through multiple rounds via the issuance of ordinary shares.
Removed
On August 8, 2022, Blue Hat Cayman transferred all the equity interests of Fresh Joy to Fujian Lanyun. 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. (“Fuzhou CSFC”) and 100% equity of Fuzhou UC71 Co., Ltd. (“Fuzhou UC71”).
Added
On June 5, 2024, Golden Alpha Strategy Ltd., a wholly-owned Hong Kong subsidiary of the Company, was granted Category A Registration for dealing in precious metals from the Hong Kong Customs and Excise Department.
Removed
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.
Added
On June 12, 2024, the Company entered into a framework cooperation agreement with Sichuan Jinyinghe Industrial Co., Ltd. to jointly establish a gold supply chain company to develop business in the Shenzhen Shuibei market, one of China’s largest gold trading centers with annual transaction volumes exceeding RMB 1 trillion.
Removed
(“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.
Added
On August 28, 2024, the Company entered into a purchase agreement with Macau Rongxin Precious Metals Technology Co., Ltd. for the purchase of 1,000 kilograms (approximately 2,204.62 pounds) of gold for a total purchase price of approximately $64.56 million, following the framework agreement signed on October 26, 2023. This marks the Company’s entry into large-scale gold trading.
Removed
As such, Blue Hat Fujian and Fujian Roar Game are controlled through contractual arrangements in lieu of direct equity ownership by the Company or any of its subsidiaries.
Added
Our business model encompasses physical gold trading, diamond 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 $64.56 million from Macau Rongxin Precious Metals Technology Co., Ltd., marking our entry into large-scale gold trading.
Removed
Such contractual arrangements consist of a series of three agreements, along with shareholders’ powers of attorney (“POAs”) and irrevocable commitment letters (collectively the “Contractual Arrangements”) until June 8, 2023, when the termination agreement was signed.
Added
Operating Results.” Our Business Operations 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.
Removed
The significant terms of the Contractual Arrangements are as follows: Exclusive Business Cooperation Agreements Pursuant to the exclusive business cooperation agreement between variables interest entities, including Blue Hat WFOE and Blue Hat Fujian, Fresh Joy and Fujian Roar Game, variable interest entities equity holders has the exclusive right to provide our wholly owned entities with technical support services, consulting services and other services, including technical support, technical assistance, technical consulting, and professional training necessary for our wholly owned entities’ operation, network support, database support, software services, business management consulting, grant use rights of intellectual property rights, lease hardware and device, provide system integration service, research and development of software and system maintenance, provide labor support and to develop the related technologies based on wholly owned entities’ needs.
Added
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.
Removed
In exchange, variable interest entities equity holders are entitled to a service fee that equals to all of the consolidated net income after offsetting previous year’s loss (if any) of wholly owned entity.
Added
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.
Removed
The service fee may be adjusted by variable interest entity equity holders based on the actual scope of services rendered by variable interest entities equity holders and the operational needs and expanding demands of our wholly owned entities.
Added
In addition to our gold trading operations, we maintain a robust diamond trading business that began in the third quarter of 2023. Our diamond trading operations have quickly grown to become a significant revenue contributor, generating $18.72 million in revenue for the year ended December 31, 2024.
Removed
Pursuant to the exclusive business cooperation agreement, variable interest entities equity holders have the unilateral right to adjust the service fee at any time, and our wholly owned entities have no right to adjust the service fee.
Added
We maintain relationships with diamond suppliers and have established sales channels to jewelry manufacturers and retailers.
Removed
We believe that such conditions under which the service fee may be adjusted will be primarily based on the needs of our wholly owned entities to operate and develop its business in the augmented reality market.
Added
Unlike our gold business which is affected by macroeconomic factors like central bank policy and inflation expectations, our diamond trading business is more closely tied to consumer luxury spending and jewelry industry trends. 43 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.
Removed
For example, if wholly owned entities need to expand its business, increase research input or consummate mergers or acquisitions in the future, variable interest entities equity holders have the right to decrease the amount of the service fee, which would allow our wholly owned entities to have additional capital to operate and develop its business in the augmented reality market.
Added
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.
Removed
The exclusive business cooperation agreement remains effective for 10 years, and shall be automatically renewed for one year at the expiration date of the validity term. However, variable interest entity equity holders have the right to terminate this agreement upon giving 30 days’ prior written notice to wholly owned entity at any time.
Added
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.
Removed
Call Option Agreements Pursuant to the call option agreements, among variable interest entities equity holders, our wholly owned entities and the shareholders who collectively owned all of the wholly owned subsidiaries, such shareholders jointly and severally grant variable interest entities equity holders an option to purchase their equity interests in our wholly owned entities.
Added
Our Products and Services As of the date of this report, our business focuses primarily on gold and diamond trading and related services. In the third quarter of 2023, we expanded into the diamond trading business, which has become a significant revenue contributor.
Removed
The purchase price shall be the lowest price then permitted under applicable PRC laws.
Added
For the year ended December 31, 2024, our diamond trading operations generated $18.72 million in revenue with a gross profit margin of 8.26%. We source and supply diamonds to wholesalers and retailers in the jewelry industry. In August 2024, we acquired 1,000 kilograms of gold at a price of approximately $64.56 per gram.
Removed
Variable interest entities equity holders or the designated person may exercise such option at any time to purchase all or part of the equity interests in wholly owned entity until they have acquired all equity interests of our wholly owned entity, which is irrevocable during the term of the agreements.
Added
With the rise in international gold prices, the value of our gold holdings has seen significant appreciation, reaching approximately $3,000 per ounce by March 2025. This acquisition has not only strengthened our financial position but also provided a solid foundation for our planned expansion in the gold industry chain.
Removed
The call option agreements remain in effect until November 13, 2028 and December 2030 for Blue Hat Fujian and Fujian Roar Game respectively, and shall be automatically renewed for one year at the expiration date of the validity term.
Added
In addition, we are developing: ● Gold Supply Chain Services: We provide financing, logistics, and connection services to participants across the gold supply chain, from refineries to wholesalers and retailers. ● Intelligent Trading Platforms: We are developing AI-enabled platforms to enhance the efficiency and transparency of gold trading. ● Gold Derivatives Trading: Through our partnership with GTC GROUP LLC in Dubai, we are expanding into the derivatives market to offer more sophisticated trading options. ● Gold RWA (Real World Assets) Tokenization: In March 2025, we partnered with Axis Capital Group to develop a project that digitizes gold assets through blockchain technology, enhancing their liquidity, transparency, and accessibility.
Removed
However, variable interest entity equities holders have the right to terminate these agreements upon giving 30 days’ prior written notice to our wholly owned entities at any time. 38 Equity Pledge Agreements Pursuant to the equity pledge agreement, among variable interest entities equity holders, our wholly owned entities, and the shareholders who collectively owned all of our wholly owned entities, such shareholders pledge all of the equity interests in our wholly owned entities to variable interest entities equity holders as collateral to secure the obligations of our wholly owned entities under the exclusive business cooperation agreements and call option agreements.
Added
Prior to our business transition in 2022-2023, the Company’s product portfolio included interactive educational materials, mobile games, toys with mobile game features, and immersive educational courses, as well as Internet Data Center services. We have since divested these previous business lines to focus on our gold trading and supply chain operations.
Removed
These shareholders are prohibited from transferring the pledged equity interests without the prior consent of variable interest entities equity holders unless transferring the equity interests to Blue Hat WFOE, Fresh Joy or its designated person in accordance to the call option agreements.
Added
Technology and Intellectual Property While our business focus has shifted to gold trading, we continue to leverage our technological capabilities to enhance our current operations. We are applying artificial intelligence and blockchain technologies to develop innovative solutions for the gold industry, including intelligent gold supply chain systems and gold derivatives trading platforms.
Removed
The equity pledge agreements shall come into force the date on which the pledged interests is recorded, under our wholly owned entity register of shareholders and is registered with competent administration for industry and commerce of our wholly owned subsidiary until all of the liabilities and debts to variable interest entities equity holders have been fulfilled completely by our wholly owned entity.
Added
Our intellectual property portfolio developed during our previous operations, including 224 authorized patents, 14 applications for international patents under the Patent Cooperation Treaty (PCT), 794 artistic copyrights, 94 registered trademarks, and 134 software copyrights as of April 22, 2025. 44 We are now adapting and applying these technological capabilities to enhance our gold trading business and empower industry participants with AI technology, including providing efficient marketing content creation services for jewelers and data analysis services for gold derivatives traders.
Removed
Our wholly owned entities and the shareholders who collectively owned all of our wholly owned entities shall not terminate these agreements in any circumstance for any reason. However, variable interest entities equity holders have the right to terminate these agreements upon giving 30 days’ prior written notice to our wholly owned entities at any time.
Added
Sales and Marketing We operate our gold trading business through our subsidiaries headquartered in Xiamen, China. Our primary market for physical gold trading is currently in China, particularly in the Shenzhen Shuibei market, one of the country’s largest gold trading centers with annual transaction volumes exceeding RMB 1 trillion according to industry statistics.
Removed
Shareholders’ Powers of Attorney (“POAs”) Pursuant to the shareholders’ POAs, the shareholders of our wholly owned entity give variable interest entities equity holders an irrevocable proxy to act on their behalf on all matters pertaining to our wholly owned entities and to exercise all of their rights as shareholders of our wholly owned entities, including the right to attend shareholders meeting, to exercise voting rights and all of the other rights, and to sign transfer documents and any other documents in relation to the fulfillment of the obligations under the call option agreements and the equity pledge agreements.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

34 edited+39 added−31 removed33 unchanged
Net cash used in operating activities from continued operation was $1.47 million for the year ended December 31, 2022 and was primarily attributable to (i) net loss from continued operation of $9.12 million, (ii) various non-cash items of $3.47 million, such as depreciation of property and equipment, amortization of intangible assets, impairment of long term investment, share-based payments, etc., (iii) a $4.76 million increase in account receivables, (iv) $0.02 million decrease in account payables, and (v) a $0.01 million increase in customer deposits.
Net cash used in operating activities from continued operation was $1.47 million for the year ended December 31, 2022 and was primarily attributable to (i) net loss from continued operation of $9.12 million, (ii) various non-cash items of $3.47 million, such as depreciation of property, plant and equipment, amortization of intangible assets, impairment of long term investment, share-based payments, etc., (iii) a $4.76 million increase in account receivables, (iv) $0.02 million decrease in account payables, and (v) a $0.01 million increase in customer deposits.
Trend information Other than as described elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material adverse effect on our revenue, income from continuing operations, profitability, liquidity or capital resources, or that would cause our reported financial information not necessarily to be indicative of future operation results or financial condition.
Other than as described elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material adverse effect on our revenue, income from continuing operations, profitability, liquidity or capital resources, or that would cause our reported financial information not necessarily to be indicative of future operation results or financial condition.
Our revenue from each of our revenue categories is as follows: For the Year For the Year ended ended December 31, December 31, Change 2023 2022 Change (%) Revenues Diamond trading $ 15,152,777 $ — 15,152,777 — Interactive toys - animation series — 6,903 (6,903 ) (100.00 )% Interactive toys - game series — 155,559 (155,559 ) (100.00 )% Information service 415,955 884,329 (468,374 ) (52.96 )% Commodity Trading 58,118,001 1,149,163 56,968,838 4957.42 % Total revenues $ 73,686,733 $ 2,195,954 71,490,779 3255.57 % 61 Interactive Toys - Game Series and Animation Series Revenues from sales of interactive toys – game series and animation series decreased by $162,462 or 100% from $162,462 for the year ended December 31, 2022 to nil for the year ended December 31, 2023.
Our revenue from each of our revenue categories is as follows: For the Year For the Year ended ended December 31, December 31, Change 2023 2022 Change (%) Revenues Diamond trading $ 15,152,777 $ — 15,152,777 — Interactive toys - animation series — 6,903 (6,903 ) (100.00 )% Interactive toys - game series — 155,559 (155,559 ) (100.00 )% Information service 415,955 884,329 (468,374 ) (52.96 )% Commodity Trading 58,118,001 1,149,163 56,968,838 4957.42 % Total revenues $ 73,686,733 $ 2,195,954 71,490,779 3255.57 % 69 Interactive Toys - Game Series and Animation Series Revenues from sales of interactive toys – game series and animation series decreased by $162,462 or 100% from $162,462 for the year ended December 31, 2022 to nil for the year ended December 31, 2023.
A further slowdown in overall economic growth, an economic downturn, a recession or other adverse economic development in the PRC may materially reduce the purchasing power of Chinese consumers and thus lead to decreased demand for our products. Such a decrease in demand may have a materially adverse effect on our business. Impact of Foreign Currency Fluctuation See “Item 3.
A further uncertainty in overall economic growth, an economic downturn, a recession or other adverse economic development in the PRC may materially reduce the purchasing power of Chinese consumers and thus lead to decreased demand for our products. Such a decrease in demand may have a materially adverse effect on our business. Impact of Foreign Currency Fluctuation See “Item 3.
It was because the Company started to sell the bulk by itself. 63 Gross profit percentage for diamonds trading business was 8.26% and nil for the year ended December 31, 2023 and 2022, respectively. This is a new business we started during the third quarter this year which did not exist last year.
It was because the Company started to sell the bulk by itself. 71 Gross profit percentage for diamonds trading business was 8.26% and nil for the year ended December 31, 2023 and 2022, respectively. This is a new business we started during the third quarter this year which did not exist last year.
("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. In September 2022, the Company acquired 100% of the equity shares of Xiamen Shengruihao Technology Co., Ltd., which mainly provides product supply chain services and comprehensive enterprise services.
(“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. In September 2022, the Company acquired 100% of the equity shares of Xiamen Shengruihao Technology Co., Ltd., which mainly provides product supply chain services and comprehensive enterprise services.
It was due to the company started to sell the bulk by itself. 62 Diamonds trading business increased by $13.90 million to $13.90 million for the year ended December 31, 2023. This is a new business we started during the third quarter this year which did not exist last year.
It was due to the company started to sell the bulk by itself. 70 Diamonds trading business increased by $13.90 million to $13.90 million for the year ended December 31, 2023. This is a new business we started during the third quarter this year which did not exist last year.
Cash flows from financing activities Net cash provided by financing activities from continued operation was $2.31 million for the year ended December 31, 2023 and was primarily attributable to $ proceeds of $3.00 million from issuance of ordinary shares, $0.45 million in convertible payable, $0.10 million in repayment to related party loan, and $0.14 million in repayment to short-term loans and change in restricted cash of $1,587. 70 Net cash provided by financing activities from continued operation was $2.54 million for the year ended December 31, 2022 and was primarily attributable to $0.09 million in proceeds of issuance of ordinary shares, $0.91 million in proceeds from related party loan, and $1.55 from proceeds from convertible payable and change in restricted cash $1,129.
Net cash provided by financing activities from continued operation was $2.31 million for the year ended December 31, 2023 and was primarily attributable to proceeds of $3.00 million from issuance of ordinary shares, $0.45 million in convertible payable, $0.10 million in repayment to related party loan, and $0.14 million in repayment to short-term loans and change in restricted cash of $1,587. 74 Net cash provided by financing activities from continued operation was $2.54 million for the year ended December 31, 2022 and was primarily attributable to $0.09 million in proceeds of issuance of ordinary shares, $0.91 million in proceeds from related party loan, and $1.55 from proceeds from convertible payable and change in restricted cash $1,129.
Capital Expenditures In the years ended December 31, 2023, 2022 and 2021, our capital expenditures were mainly used for our working capital requirements such as staff costs, sales and marketing expenses and research and development costs, and costs incurred for the lease of our offices in Xiamen and Fuzhou in China.
Capital Expenditures In the years ended December 31, 2024, 2023 and 2022, our capital expenditures were mainly used for our working capital requirements such as staff costs, sales and marketing expenses and research and development costs, and costs incurred for the lease of our offices in Xiamen and Fuzhou in China.
G. Safe harbor See “Forward-Looking Statements” on page iii of this annual report.
G. Safe harbor See “Forward-Looking Statements” on page iii of this annual report. 76
E. Off-balance sheet arrangements We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits. 71 F.
E. Off-balance sheet arrangements We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits. 75 F.
Cash flows from investing activities Net cash used in investing activities from continued operation was $15,380 for the year ended December 31, 2023. Net cash used in investing activities from continued operation was $6,336 for the year ended December 31, 2022.
Cash flows from investing activities Net cash used in investing activities from continued operation was nil for the year ended December 31, 2024. Net cash used in investing activities from continued operation was $15,380 for the year ended December 31, 2023. Net cash used in investing activities from continued operation was $6,336 for the year ended December 31, 2022.
Key Information-D. Risk Factors-Risks Related to Doing Business in China-Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk-Foreign Exchange Risk.” Recent Developments In late 2019, the "COVID-19" virus began spreading in Wuhan, China.
Key Information-D. Risk Factors-Risks Related to Doing Business in China-Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk-Foreign Exchange Risk.” 63 Recent Developments In late 2019, the “COVID-19” virus began spreading in Wuhan, China.
As of December 31, 2022, the following were outstanding balances on our short-term bank loans: Interest December 31, Bank Name Maturities Rate Collateral/Guarantee 2022 Xiamen Rural Commercial Bank February 2023 6.58 % Guarantee by 14 property rights 473,825 As of December 31, 2023, the following were outstanding balances on our short-term bank loans: Interest December 31, Bank Name Maturities Rate Collateral/Guarantee 2023 Xiamen Rural Commercial Bank February 2023 6.58 % Guarantee by 14 property rights 273,713 The short term loan with Xiamen Rural Commercial bank which should be repaid in 2023 was overdue.
As of December 31, 2023, the following were outstanding balances on our short-term bank loans: Interest December 31, Bank Name Maturities Rate Collateral/Guarantee 2023 Xiamen Rural Commercial Bank February 2023 6.58 % Guarantee by 14 property rights 273,713 As of December 31, 2024, the following were outstanding balances on our short-term bank loans: Interest December 31, Bank Name Maturities Rate Collateral/Guarantee 2024 Xiamen Rural Commercial Bank January 2025 6.58 % Guarantee by 14 property rights 146,341 The short term loan with Xiamen Rural Commercial bank which should be repaid in 2023 was overdue.
We generated net loss of $9.12 million and $9.41 million from our operations for the year ended December 31, 2023 and 2022 respectively. We believe our revenues and operations will continue to grow and our current working capital is sufficient to support our operations for the next twelve months.
We generated net loss of $9.52 million and $21.72 million from our operations for the year ended December 31, 2024 and 2023 respectively. We believe our revenues and operations will continue to grow and our current working capital is sufficient to support our operations for the next twelve months.
("Golden Strategy"), a BVI company, Golden Alpha Strategy Ltd., a Hong Kong company, and Guangzhou Huangxin Enterprise Management Co., Ltd., which are primarily engaged in bulk jewelry trading-related businesses. 60 Results of Operations Comparison of Years Ended December 31, 2023 and December 31, 2022 For the Years ended December 31, Percentage 2023 2022 Change Change Revenues $ 73,686,733 $ 2,195,954 $ 71,490,779 3,255.57 % Cost of revenues (72,532,882 ) (958,438 ) (71,574,444 ) 7,467.82 % Gross profit 1,153,851 1,237,516 (83,665 ) (6.76 )% Selling expenses (7,677 ) (159,937 ) 152,260 (95.20 )% Research and development (2,570,158 ) (2,734,982 ) 164,824 (6.03 )% General and administrative expenses (13,766,487 ) (6,224,674 ) (7,541,813 ) 121.16 % Impairment Loss (13,693,305 ) (33,397 ) (13,659,908 ) 40,901.60 % Loss from operations (28,883,776 ) (7,915,474 ) (20,968,302 ) 264.9012 % Other expense, net (217,870 ) (109,692 ) (108,178 ) 98.62 % Provision for income taxes (6,081 ) (1,097,888 ) 1,091,807 (99.45 )% Income from discontinued operations — (282,027 ) 282,027 (100.00 )% Gain on disposal of discontinued operations 7,389,310 7,389,310 — Net loss (21,718,417 ) (9,405,081 ) (12, 313,336 ) 130.92 % Revenues Our revenues are derived from sales of diamonds trading, glycol trading and information services.
Gain (loss) on disposal of discontinued operations Gain on disposal of discontinued operation was nil and $7.39 million for the years ended December 31, 2024 and 2023, which was related to the dissolution and deregistration of Fujian Xinyou Technology Co., Ltd (“Xinyou Technology”), Fresh Joy Entertainment Limited (“Fresh Joy”), Hong Kong Xinyou Entertainment Company (“Xinyou Entertainment”), Fujian Roar Game Technology Co., Ltd (“Fujian Roar Game”) Fuzhou Csfctech Co., Ltd (“Fuzhou CSFC”) and Fuzhou UC71 Co., Ltd (“Fuzhou UC71”) on June 8, 2023. 68 Results of Operations Comparison of Years Ended December 31, 2023 and December 31, 2022 For the Years ended December 31, Percentage 2023 2022 Change Change Revenues $ 73,686,733 $ 2,195,954 $ 71,490,779 3,255.57 % Cost of revenues (72,532,882 ) (958,438 ) (71,574,444 ) 7,467.82 % Gross profit 1,153,851 1,237,516 (83,665 ) (6.76 )% Selling expenses (7,677 ) (159,937 ) 152,260 (95.20 )% Research and development (2,570,158 ) (2,734,982 ) 164,824 (6.03 )% General and administrative expenses (13,766,487 ) (6,224,674 ) (7,541,813 ) 121.16 % Impairment Loss (13,693,305 ) (33,397 ) (13,659,908 ) 40,901.60 % Loss from operations (28,883,776 ) (7,915,474 ) (20,968,302 ) 264.9012 % Other expense, net (217,870 ) (109,692 ) (108,178 ) 98.62 % Provision for income taxes (6,081 ) (1,097,888 ) 1,091,807 (99.45 )% Income from discontinued operations — (282,027 ) 282,027 (100.00 )% Gain on disposal of discontinued operations 7,389,310 7,389,310 — Net loss (21,718,417 ) (9,405,081 ) (12, 313,336 ) 130.92 % Revenues Our revenues are derived from sales of diamonds trading, glycol trading and information services.
Net cash used in operating activities from continue operation was $14.62 million for the year ended December 31, 2021 and was primarily attributable to (i) net loss from continue operation of $51.49 million, (ii) various non-cash items of $13.10 million, such as depreciation of property and equipment, amortization of intangible assets, impairment of long term investment, share-based payments, etc., (iii) a $9.09 million increase in account receivables, (iv) $0.13 million increase in account payables, and (v) a $0.006 million increase in customer deposits.
Net cash used in operating activities from continued operation was $9.77 million for the year ended December 31, 2023 and was primarily attributable to (i) net loss from continued operation of $29.11 million, (ii) various non-cash items of $70.59 million, such as depreciation of property, plant and equipment, amortization of intangible assets, impairment loss, share-based payments, issuance of common stock to pay for goods etc., (iii) a $14.92 million decrease in account receivables, (iv) $0.006 million decrease in account payables, and (v) a $0.02 million decrease in customer deposits.
The following summarizes the key components of our cash flows for the years ended December 31, 2023, 2022 and 2021: Years Ended December 31 Years Ended December 31 Years Ended December 31, 2023 2022 2021 Net cash used in operating activities - continued operation $ (9,773,132 ) $ (1,473,267 ) $ (14,624,367 ) Net cash generated from operating activities - discontinued operation 7,661,561 281,780 (5,488,297 ) Net cash from investing activities – continued operation (15,380 ) 6,336 (4,516,909 ) Net cash from investing activities – discontinued operation — — (1,952 ) Net cash generated from financing activities – continued operation 2,305,954 2,542,634 7,420,588 Net cash used in financing activities – discontinued operation (52,322 ) (11,960 ) 154,260 Effect of exchange rate change on cash, cash equivalents and restricted cash 210,505 (1,319,437 ) 1,439,535 Net change in cash, cash equivalents $ 337,186 $ 26,086 $ (15,617,142 ) 69 Cash flows from operating activities Net cash used in operating activities from continued operation was $9.77 million for the year ended December 31, 2023 and was primarily attributable to (i) net loss from continued operation of $29.11 million, (ii) various non-cash items of $70.59 million, such as depreciation of property and equipment, amortization of intangible assets, impairment loss, share-based payments, issuance of common stock to pay for goods etc., (iii) a $14.92 million decrease in account receivables, (iv) $0.006 million decrease in account payables, and (v) a $0.02 million decrease in customer deposits.
The following summarizes the key components of our cash flows for the years ended December 31, 2024, 2023 and 2022: Years Ended December 31 Years Ended December 31 Years Ended December 31, 2024 2023 2022 Net cash used in operating activities - continued operation $ (884,952 ) $ (9,773,132 ) $ (1,473,267 ) Net cash generated from operating activities - discontinued operation — 7,661,561 281,780 Net cash from investing activities – continued operation — (15,380 ) 6,336 Net cash from investing activities – discontinued operation — — — Net cash generated from financing activities – continued operation 484,860 2,305,954 2,542,634 Net cash used in financing activities – discontinued operation — (52,322 ) (11,960 ) Effect of exchange rate change on cash, cash equivalents and restricted cash 5,217 210,505 (1,319,437 ) Net change in cash, cash equivalents $ (394,875 ) $ 337,186 $ 26,086 73 Cash flows from operating activities Net cash used in operating activities from continued operation was $0.88 million for the year ended December 31, 2024 and was primarily attributable to (i) net loss from continued operation of $9.5 million, (ii) various non-cash items of $3.49 million, such as depreciation of property, plant and equipment, share-based payments, provision for doubtful accounts and loss on investment write-off, (iii) a $15.11 million decrease in account receivables, (iv) $33.84 million increase in account payables, and (v) a $44 increase in customer deposits.
This cash outflow was offset by (i) a $5.18 million increase in other payables and accrued liabilities, (ii) a $5.34 million decrease in taxes payable, (iii) a $24.85 million increase in other receivables, and (iv) a $14.19 million increase in prepayments.
This cash outflow was offset by (i) a $0.75 million increase in other payables and accrued liabilities, (ii) a $0.01 million decrease in taxes payable, (iii) a $0.10 million increase in other receivables, (iv) a $2.41 million decrease in prepayments and (v) a $47.01million decrease in inventory.
The decrease is mainly attributable to a $25.11 million decrease in general and administrative (“G&A”) expenses, and a $8.50 million decrease in research and development (“R&D”) expenses for the year ended December 31, 2022 as compared to the year ended December 31, 2021.The impairment loss also decreased to $33,397 for the year ended December 31, 2022 from $14.63 million for the year ended December 31, 2021.
The decrease is mainly attributable to a $10.93 million increase in general and administrative (“G&A”) expenses, and an $0.60 million increase in research and development (“R&D”) expenses for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
We need to establish a more comprehensive set of security measures to protect raw materials and jewelry, including deploying appropriate security personnel and purchasing corresponding property insurance. PRC Economy Although the PRC economy has grown in recent years, the pace of growth has slowed, and growth rates may continue to decline.
We need to establish a more comprehensive set of security measures to protect inventory, including deploying appropriate security personnel and purchasing corresponding property insurance.
Tabular disclosure of contractual obligations As of December 31, 2023, the future minimum payments under certain of our contractual obligations were as follows: Payments Due by Period Less than More than Contractual obligations Total 1 year 1 3 years 3 5 years 5 years Loan obligations $ 273,713 $ 273,713 $ — $ — $ — Operating lease obligations 2,376,891 235,470 516,569 393,974 1,230,878 Long-term loans - related party 831,155 — 831,155 — — Convertible notes payable — — — — — Total $ 3,481,759 $ 509,183 $ 1,347,724 $ 393,974 $ 1,230,878 * Represent future value of long-term debt obligations.
Tabular disclosure of contractual obligations As of December 31, 2024, the future minimum payments under certain of our contractual obligations were as follows: Payments Due by Period Less than More than Contractual obligations Total 1 year 1 3 years 3 5 years 5 years Loan obligations $ 146,341 $ 146,341 $ — $ — $ — Operating lease obligations 1,833,678 166,122 349,982 226,977 1,090,597 Long-term loans - related party 773,950 — 773,950 — — Convertible notes payable — — — — — Total $ 2,753,969 $ 312,463 $ 1,123,932 $ 226,977 $ 1,090,597 * Represent future value of long-term debt obligations.
Our ability to expand our portfolio of products and business We intend to pursue strategic acquisitions and investments in selective technologies and businesses that will enhance our technology capabilities, expand our offerings and increase our market penetration. We believe our strategic acquisition and investment strategy is critical for us to accelerate our growth and strengthen our competitive position.
As a result, revenue decreased by $54.96 million. 62 Key Factors that Affect Operating Results Our ability to expand our portfolio of products and business We intend to pursue strategic acquisitions and investments in selective technologies and businesses that will enhance our technology capabilities, expand our offerings and increase our market penetration.
Net cash provided by financing activities from continued operation was $7.42 million for the year ended December 31, 2021 and was a result of $12.8 million in proceeds from issuance of new shares and $4.66 million in repayment to short-term loans.
Cash flows from financing activities Net cash used in financing activities from continued operation was $0.48 million for the year ended December 31, 2024 and was primarily attributable to proceeds of $0.07 million from issuance of ordinary shares, $0.06 million in repayment to related party loan, $0.12 million in repayment to short-term loans, change in restricted cash of $1,470 and $0.60 million in proceeds from other payables - related party.
Net income Our net loss decreased by 84.34% or $50.65 million from net loss of $60.05 million for the year ended December 31, 2021 to a net loss of $9.41 million for the year ended December 31, 2022.
Net loss from continue operation Our net loss decreased by 67.28% or $19.58 million from net loss of $29.11 million for the year ended December 31, 2023 to a net loss of $9.52 million for the year ended December 31, 2024.
The decrease is mainly attributable to the significant increase of income from operations in the year ended December 31, 2022 as compared with the year 2021. 68 B. Liquidity and capital resources In assessing our liquidity, we monitor and analyze our cash on-hand and our operating expenditure commitments. Our liquidity needs meet our working capital requirements and operating expenses obligations.
Liquidity and capital resources In assessing our liquidity, we monitor and analyze our cash on-hand and our operating expenditure commitments. Our liquidity needs meet our working capital requirements and operating expenses obligations. To date, we have financed our operations primarily through cash flows from operations and short-term borrowing from banks.
Gross profit percentage for information service was 6.58% and 19.09% for the year ended December 31, 2022 and 2021, respectively. The decrease was the result of lower cost of revenue from information service. Gross profit percentage for commodity trading business was 95.58% and nil for the year ended December 31, 2022 and 2021, respectively.
Gross profit percentage for commodity trading business was nil and 0.06% for the year ended December 31, 2024 and 2023, respectively.
To enhance our operational efficiency, we need to develop an intelligent inventory management system based on accurate market forecasts and close tracking of downstream customers. Our Inventory Security Management Capability BHAT Diamond maintains a substantial inventory of jewelry products to meet customer delivery demands. Any loss of this inventory due to theft could negatively affect BHAT Diamond's operations.
Our Inventory Management Capability If we misjudge product demand and fail to manage inventory levels effectively, it could significantly impact business operations. Maintaining appropriate inventory is crucial. To enhance our operational efficiency, we need to develop an intelligent inventory management system based on accurate market forecasts and close tracking of downstream customers.
Xiamen Rural Commercial bank has the right to receive the unpaid loan amount from the auction of the 14 properties and a penalty in the principle and interest amount to $40,906. Interest expense pertaining to the above short-term and long-term loans for the years ended December 31, 2023, 2022 and 2021 amounted to $26,530, $33,569 and $52,452, respectively.
The loan will repayment in January 2025. Interest expense pertaining to the above short-term and long-term loans for the years ended December 31, 2024, 2023 and 2022 amounted to $33,327, $30,897 and $33,569, respectively.
To date, we have financed our operations primarily through cash flows from operations and short-term borrowing from banks. As of December 31, 2023, our working capital was $33.62 million and cash equivalents amounted to $407,588. Our current assets were $39.28 million and our current liabilities were $5.66 million with shareholders’ equity of $40.62 million as of December 31, 2023.
As of December 31, 2024, our working capital was $29.42 million and cash equivalents amounted to $14,300. Our current assets were $70.06 million and our current liabilities were $40.65 million with shareholders’ equity of $32.14 million as of December 31, 2024.
Information service Revenue from information service decreased by $0.72 million or 45.02% from $1.61 million for the year ended December 31, 2021 to $0.88 million for the year ended December 31, 2022. Commodity Trading Commodity Trading business increased from $0 for the year ended December 31, 2021 to $1.15 million for the year ended December 31, 2022.
Commodity Trading Commodity Trading business decreased by $58.12 million from $58.12 million for the year ended December 31, 2023 to nil for the year ended December 31, 2024.
This is a new business we started during the fourth quarter 2022 which did not exist in 2021. Cost of Revenues Total cost of revenues decreased by $4.82 million, or 83.43%, to $0.96 million for the year ended December 31, 2022 as compared to $5.78 million for the year ended December 31, 2021.
This is a new business we started during the third quarter of 2023. Operating Expenses Total operating expenses decreased by $24.03 million or 80.01% from $30.04 million for the year ended December 31, 2023 to $6.00 million for the year ended December 31, 2024.
The decrease in cost of revenues from interactive toys–- animation series is also due to the revenue decrease resulting from the decrease in purchasing due to COVID-19. Our cost of revenues from information service decreased by $0.48 million or 36.52% for the year ended December 31, 2022 as compared with the year ended December 31, 2021.
Cost of Revenues Total cost of revenues decreased by $55.35 million, or 76.32%, to $17.18 million for the year ended December 31, 2024 as compared to $72.53 million for the year ended December 31, 2023. The decrease in cost of revenues is a direct result of our decrease of revenues.
We expect this new business line to grow substantially in 2024. Our revenue are primarily from sales of our commodity trading and diamonds. We have grown rapidly since 2023, our total revenues increased by $71.49 million (or 3,255.57%), reaching $73.69 million for the year ended December 31, 2023 as compared to $2.20 million for the year ended December 31, 2022.
Since 2024, our total revenues decreased by $54.96 million (or 74.59%), reaching $18.72 million for the year ended December 31, 2024 as compared to $73.69 million for the year ended December 31, 2023.
Removed
Beginning from the fourth quarter of 2022, our company expanded the business on commodity trading, from the third quarter of 2023, our company started the business on sales of diamonds, which became our development priorities. Benefited from commodity trading and diamonds business line, which increased revenue by $71.49 million during the year end of 2023.
Added
Beginning from the fourth quarter of 2022, we strategically expanded into commodity trading, initially focusing on chemical products (e.g., ethanol) through the first half of 2023. In Q3 2023, we pivoted to bulk loose diamond trading as our primary commodity offering.
Removed
It was mainly due to our company expanding the business on commodity trading and diamonds. As a result, revenue generated from commodity trading and diamonds increased by $72.12 million. 59 Key Factors that Affect Operating Results Our ability to build our brand and expand our sales distribution channel Our distribution channels include domestic distributors, e-commerce platforms, supermarkets and export distributors.
Added
In the second half of 2024, we prioritized gold as our core bulk commodity trading focus and completed the acquisition of 1 ton of physical gold for approximately $64.56 million from Macau Rongxin Precious Metals Technology Co., Ltd. This strategic acquisition represents a significant milestone in our business transformation and marks our entry into large-scale gold trading.
Removed
We are in the process of expanding our e-commerce sales team, and we are transitioning from single, offline promotional activities to diversified, online interactive marketing and digital marketing. We intend to increase our branding and advertising activities via online communities, social media and television.
Added
Due to the impact of the environment and the adjustment of the corporate business structure, the Company discontinued its information services business, gaming sales and commodity trading business in 2023, which decreased revenue by $54.96 million during the year end of 2023.
Removed
Our revenue growth will be affected by our ability to effectively execute our shifting marketing strategies and expand our sales distribution channel through e-commerce.
Added
While our gold inventory remained unsold as of December 31, 2024, we have seen significant appreciation in its value as gold prices reached over $3,000 per ounce by March 2025, which represents an unrealized gain of approximately $25 million compared to our acquisition price.
Removed
Our ability to identify and execute strategic acquisitions and investments will have an effect on our operating results. Our Inventory Management Capability If BHAT Diamond misjudges product demand and fails to manage inventory levels effectively, it could significantly impact business operations. Maintaining appropriate inventory is crucial.
Added
We anticipate this new vertical to drive substantial revenue growth in 2025 through structured physical gold trading and derivative financing arrangements. Our revenue is primarily from sales of our gold and diamonds.
Removed
According to the PRC National Bureau of Statistics of China, the annual rate of growth in the PRC declined 2.3% in 2020 and 8.1% in 2021, 3.0% in 2022, 5.2% in 2023.
Added
It was mainly due to the impact of the environment and the adjustment of the corporate business structure in the current period, as the Company discontinued its information services business, gaming sales and commodity trading business during the year.
Removed
During April to July 2023, the Company established several subsidiaries, including Golden Strategy Ltd.
Added
We believe our strategic acquisition and investment strategy is critical for us to accelerate our growth and strengthen our competitive position. Our ability to identify and execute strategic acquisitions and investments will have an effect on our operating results.
Removed
Gain (loss) on disposal of discontinued operations Gain on disposal of discontinued operation was $7.39 million for the years ended December 31, 2023, which was related to the dissolution and deregistration of Fujian Xinyou Technology Co., Ltd (“Xinyou Technology”), Fresh Joy Entertainment Limited (“Fresh Joy”), Hong Kong Xinyou Entertainment Company (“Xinyou Entertainment”), Fujian Roar Game Technology Co., Ltd (“Fujian Roar Game”) Fuzhou Csfctech Co., Ltd (“Fuzhou CSFC”) and Fuzhou UC71 Co., Ltd (“Fuzhou UC71”) on June 8, 2023. 64 Results of Operations Comparison of Years Ended December 31, 2022 and December 31, 2021 For the Years ended December 31, Percentage 2022 2021 Change Change Revenues $ 2,195,954 $ 12,139,500 $ (9,943,546 ) (81.91 )% Cost of revenues (958,438 ) (5,782,664 ) 4,824,226 (83.43 )% Gross profit 1,237,516 6,356,836 (5,119,320 ) (80.53 )% Selling expenses (159,937 ) (315,600 ) 155,663 (49.32 )% Research and development (2,734,982 ) (11,233,806 ) 8,498,824 (75.65 )% General and administrative expenses (6,224,674 ) (31,335,421 ) 25,110,747 (80.14 )% Impairment Loss (33,397 ) (14,632,931 ) 14,599,534 (99.77 )% Loss from operations (9,152,990 ) (57,517,758 ) 48,364,768 (84.09 )% Other loss, net (109,692 ) (330,790 ) 221,098 (66.84 )% Provision for income taxes (1,097,888 ) (1,104 ) (1,096,784 ) 99346.38 % Loss from discontinued operations (282,027 ) (10,055,749 ) 9,773,722 (97.20 )% Gain on disposal of discontinued operations — 1,493,945 (1,493,945 ) (100.00 )% Net loss (9,405,081 ) (60,054,620 ) 50,649,539 (84.34 )% Revenues Our revenues are derived from sales of interactive toys, animation and game series and information services.
Added
Gold Price Volatility and Market Timing Our gold trading business is directly impacted by fluctuations in global gold prices. In 2024-2025, gold prices have demonstrated significant volatility and upward momentum, reaching historical highs above $3,000 per ounce.
Removed
Total revenues decreased by $9,943,546, or 81.91%, to $2,195,954 for the year ended December 31, 2022 as compared to $12,139,500 for the year ended December 31, 2021. The overall decrease is mainly due to the influence of Covid-19 on our business of interactive toy series in 2022, with a decrease of $9,218,637.
Added
This price volatility represents both opportunity and risk - while our 1-ton gold acquisition has appreciated significantly in value since purchase, the timing of our sales and additional acquisitions will materially impact our financial performance.
Removed
There are new revenues in the categories of commodity trading and kindergarten sales, which are $1,151,142 and $2,159 for the year ended December 31, 2022, respectively.
Added
Our ability to effectively analyze market trends, manage gold inventory positions, and execute strategic trades in favorable price environments will be critical to our success in this sector. Our Inventory Security Management Capability We maintain a substantial inventory to meet customer delivery demands. Any loss of this inventory due to theft could negatively affect our operations.
Removed
Our revenue from each of our revenue categories is as follows: For the Year For the Year ended ended December 31, December 31, Change 2022 2021 Change (%) Revenues Interactive toys–- animation series $ 6,903 $ 657,619 (650,716 ) (98.95 )% Interactive toys –-game series 155,559 8,723,480 (8,567,921 ) (98.22 )% Mobile games — 1,149,882 (1,149,882 ) (100.00 )% Information service 884,329 1,608,519 (724,190 ) (45.02 )% Commodity Trading 1,149,163 — 1,149,163 — Total revenues $ 2,195,95 4 $ 12,139,500 (9,943,546 ) (81.91 )% 65 Interactive Toys–- Game Series Revenues from sales of interactive toys–- game series decreased by $8.57 million or 98.22% from $8.72 million for the year ended December 31, 2021 to $0.16 million for the year ended December 31, 2022.
Added
PRC Economy Although the PRC economy has maintained growth momentum in recent years, the pace has moderated with annual GDP growth rates fluctuating as follows: -2.3% in 2020 (pandemic shock), 8.1% in 2021 (post-lockdown rebound), 3.0% in 2022, 5.2% in 2023, and 5.0% in 2024.
Removed
Our business strategy still focuses on higher profit products such as interactive toys–- game series, which had a gross profit percentage of 49.78% in 2022. However, the revenues of interactive toys–- game series were continuously negatively affected by the COVID -19 in 2022.
Added
While the 2024 growth rate aligned with government targets and outperformed major developed economies (e.g., U.S. 2.4%, EU 1.1%), structural challenges persist: weak consumer demand (retail sales up 3.5%, real disposable income growth slowing to 5.1%), persistent deflationary pressures (CPI +0.2%, PPI -2.2%), and geopolitical trade uncertainties threaten to exacerbate industrial overcapacity and suppress discretionary spending.
Removed
The travel and consumer demand in some of the epidemic areas was restricted to a certain extent due to the epidemic control policy and the logistics efficiency of goods were also negatively affected. Interactive toys–- game series focus on children, and children typically purchase the product when they are able to physically touch and play with the products.
Added
During April to July 2023, the Company established several subsidiaries, including Golden Strategy Ltd. (“Golden Strategy”), a BVI company, Golden Alpha Strategy Ltd., a Hong Kong company, and Guangzhou Huangxin Enterprise Management Co., Ltd., which are primarily engaged in bulk jewelry trading-related businesses. We underwent a restructuring of our company’s operations in 2023.
Removed
Due to COVID-19, offline shopping has decreased significantly, which resulted in a decline in revenue. Interactive Toys – Animation Series Revenues from sales of interactive toys – animation series decreased by $650,716 or 98.95% from $657,619 for the year ended December 31, 2021 to $6,903 for the year ended December 31, 2022.
Added
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. We, through the operations of our subsidiaries, primarily operate a gold trading and supply chain business.
Removed
The decrease in revenues from sales of interactive toy-animation series were also caused by influence of Covid-19 in 2022. Mobile Games Revenues from mobile games decreased by $1.15 million or 100% from $1.15 million for the year ended December 31, 2021 to nil for the year ended December 31, 2022.
Added
Our business model encompasses physical gold trading, gold derivatives trading, and the development of AI-enabled trading platforms. 64 Results of Operations Comparison of Years Ended December 31, 2024 and December 31, 2023 For the Years ended December 31, Percentage 2024 2023 Change Change Revenues $ 18,724,190 $ 73,686,733 $ (54,962,543 ) (74.59 )% Cost of revenues (17,178,241 ) (72,532,882 ) 55,354,641 (76.32 )% Gross profit 1,545,949 1,153,851 392,098 33.98 % Selling expenses — (7,677 ) 7,677 (100.00 )% Research and development (3,168,397 ) (2,570,158 ) (598,239 ) 23.28 % General and administrative expenses (2,834,635 ) (13,766,487 ) 10,931,852 (79.41 )% Impairment Loss — (13,693,305 ) 13,693,305 (100.00 )% Total operating expenses (6,003,032 ) (30,037,627 ) 24,034,595 (80.01 )% Loss from operations (4,457,083 ) (28,883,776 ) 24,426,693 (84.57 )% Other expense, net (5,067,700 ) (217,870 ) (4,849,830 ) 2226.02 % Provision for income taxes — (6,081 ) 6,081 (100.00 )% Gain on disposal of discontinued operations — 7,389,310 (7,389,310 ) (100.00 )% Net loss (9,524,783 ) (21,718,417 ) 12,193,634 ( 56.14 )% Revenues Our revenues are derived from sales of diamonds trading, glycol trading and information services.
Removed
Mobile games is highly cyclical-each game has a limited time to attract players to play, and when the game reaches a certain stage, players typically decrease play time, and eventually will cease playing.
Added
Total revenues decreased by $54,962,543, or 74.59%, to $18,724,190 for the year ended December 31, 2024 as compared to $73,686,733 for the year ended December 31, 2023.
Removed
The decrease in cost of revenues is a direct result of our decrease of revenues.
Added
The overall decrease is mainly due to the impact of the environment and the adjustment of the corporate business structure in the current period, as the Company discontinued its information services business, gaming sales and commodity trading business during the year.
Removed
Our cost of revenues from each of our revenue categories is as follows: For the Year ended December 31, For the Year ended December 31, Change 2022 2021 Change (%) Cost of revenues Interactive toys –- animation series $ 3,420 $ 140,450 $ (137,030 ) (97.56 )% Interactive toys –- game series 78,118 4,340,776 (4,262,658 ) (98.20 )% Mobile games — — — — Information service 826,096 1,301,438 (475,342 ) (36.52 )% Commodity Trading 50,804 — 50,804 — Total cost of revenues $ 958,438 $ 5,782,664 $ (4,824,226 ) (83.43 )% 66 Our cost of revenues from interactive toys–- game series decreased by $4.26 million or 98.20% from $4.34 million for the year ended December 31, 2021 to $0.078 million for the year ended December 31, 2022.
Added
Our revenue from each of our revenue categories is as follows: For the Year For the Year ended ended December 31, December 31, Change 2024 2023 Change (%) Revenues Diamond trading $ 18,724,190 $ 15,152,777 3,571,413 23.57 % Information service — 415,955 (415,955 ) (100.00 )% Commodity Trading — 58,118,001 (58,118,001 ) (100.00 )% Total revenues $ 18,724,190 $ 73,686,733 (54,962,543 ) (74.59 )% 65 Information service Revenue from information service decreased by $0.42 million or 100.00% from $0.42 million for the year ended December 31, 2023 to nil for the year ended December 31, 2024.
Removed
The decrease in cost of revenues from interactive toys–- game series is due to the revenue decrease resulting from the decrease in purchasing due to COVID-19. Our cost of revenues from interactive toys–- animation series decreased by $0.14 million or 97.56% from $0.14 million for the year ended December 31, 2021 to $3,420 for the year ended December 31, 2022.
Added
The decrease is mainly due to the impact of the environment and the adjustment of the corporate business structure in the current period, as the Company discontinued its information service during the year.
Removed
Gross Profit Our gross profit from each of our revenue categories is as follows: For the Year ended December 31, For the Year ended December 31, Change 2022 2021 Change (%) Interactive toys–- animation series Gross profit $ 3,483 $ 517,169 $ (513,686 ) (99.33 )% Gross margin 50.46 % 78.64 % (28.18 )% Interactive toys–- game series Gross profit $ 77,441 $ 4,382,704 $ (4,305,263 ) (98.23 )% Gross margin 49.78 % 50.24 % (0.46 )% Mobile games Gross profit $ — $ 1,149,882 $ (1,149,882 ) (100.00 )% Gross margin — 100.00 % (100.00 )% Information services Gross profit $ 58,233 $ 307,081 $ (248,848 ) (81.04 )% Gross margin 6.58 % 19.09 % (12.51 )% Commodity Trading Gross profit $ 1,098,359 — $ 1,098,359 — Gross margin 95.58 % — 95.58 % Total Gross profit $ 1,237,516 $ 6,356,836 $ (5,119,320 ) (80.53 )% Gross margin 56.35 % 52.36 % 3.99 % Our overall gross profit decreased by $5.12 million, or 80.53%, to $1.24 million for the year ended December 31, 2022 from $6.36 million for the year ended December 31, 2021, which the gross profit percentage were 56.35% and 52.36%, respectively.
Added
The decrease is mainly due to the impact of the environment and the adjustment of the corporate business structure in the current period, as the Company discontinued its commodity trading business during the year. Diamonds Trading Diamonds Trading business increased from $15.15 million for the year ended December 31, 2023 to $18.72 million for the year ended December 31, 2024.
Removed
Gross profit percentage for our interactive toys - game series was 49.78% and 50.24% for the year ended December 31, 2022 and 2021, respectively.
Added
This is a new business we started during the third quarter of 2023. Gold Trading While our 1-ton gold acquisition ($64.56 million) represents a significant asset on our balance sheet, we did not generate revenue from gold trading during the year ended December 31, 2024, as we strategically held our position to benefit from price appreciation.
Removed
The decrease in gross profit was mainly due to the significant decline in revenue as a result of decreased sales of the interactive toys - game series business line, which contributed 7.08% of our total revenues for the year ended December 31, 2022 as compared to71.86% in the year ended December 31, 2021.
Added
As gold prices reached over $3,000 per ounce by March 2025, our gold holdings have appreciated by approximately $25 million in value. We expect to begin monetizing this position through strategic sales and various financing arrangements in 2025, which we anticipate will contribute significantly to our revenue going forward.
Removed
Since this series of products is mainly sold offline by distributors, COVID -19 led to a decline in sales in 2022, and ultimately to a decrease in the gross profit of interactive toys - game series. 67 Gross profit percentage for our interactive toys - animation series was 50.46% and 78.64% for the year ended December 31, 2022 and 2021, The gross profit ratio has decreased because in our interactive toys - animation series sales channel, the gross profit ratio of e-commerce channels is higher than that of distribution channels.
Added
Our cost of revenues from each of our revenue categories is as follows: For the Year ended December 31, For the Year ended December 31, Change 2024 2023 Change (%) Cost of revenues Information service — 549,242 (549,242 ) (100.00 )% Diamond trading 17,178,241 13,901,688 3,276,553 23.57 % Commodity Trading — 58,081,952 (58,081,952 ) (100.00 )% Total cost of revenues $ 17,178,241 $ 72,532,882 $ (55,354,641 ) ( 76.32 )% Our cost of revenues from information service decreased by $0.55 million or 100.00% for the year ended December 31, 2024 as compared with the year ended December 31, 2023.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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The audit committee is responsible for, among other things: 77 ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
The audit committee is responsible for, among other things: 82 ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
Each executive officer has also agreed to disclose in confidence to us all inventions, designs and trade secrets which he conceives, develops or reduces to practice during his employment with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets. 74 In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his employment and for one year following the last date of employment.
Each executive officer has also agreed to disclose in confidence to us all inventions, designs and trade secrets which he conceives, develops or reduces to practice during his employment with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets. 79 In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his employment and for one year following the last date of employment.
Our subsidiaries are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund. Equity Awards We did not grant any equity awards to our executive officers or directors during the fiscal year ended December 31, 2023.
Our subsidiaries are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund. Equity Awards We did not grant any equity awards to our executive officers or directors during the fiscal year ended December 31, 2024.
(3) Member of nomination and governance committee. 72 Xiaodong Chen has served as chief executive officer of Blue Hat since December 2018, as a member of the board of directors of Blue Hat since its incorporation in June 2018 and as the chairman of the board of directors and general manager of Blue Hat Fujian since August 2015. Mr.
(3) Member of nomination and governance committee. 77 Xiaodong Chen has served as chief executive officer of Blue Hat since December 2018, as a member of the board of directors of Blue Hat since its incorporation in June 2018 and as the chairman of the board of directors and general manager of Blue Hat Fujian since August 2015. Mr.
Ouyang received a Bachelor’s Degree in Computer Science and Engineering from Xi’an University of Finance and Economics and a Master’s Degree in Management Science and Engineering from Fuzhou University. 73 Huibin Shen has served as a member of the board of directors of Blue Hat since December 2018. Mr.
Ouyang received a Bachelor’s Degree in Computer Science and Engineering from Xi’an University of Finance and Economics and a Master’s Degree in Management Science and Engineering from Fuzhou University. 78 Huibin Shen has served as a member of the board of directors of Blue Hat since December 2018. Mr.
Percentage ownership calculations are based on 58,398,281 ordinary shares outstanding as of December 31, 2023. Except as otherwise indicated, all of the shares reflected in the table are ordinary shares and all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws.
Percentage ownership calculations are based on 58,498,281 ordinary shares outstanding as of December 31, 2024. Except as otherwise indicated, all of the shares reflected in the table are ordinary shares and all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws.
Share ownership The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of December 31, 2023 for: ● each beneficial owner of 5% or more of our outstanding ordinary shares; ● each of our directors and executive officers; and ● all of our directors and executive officers as a group. 78 Beneficial ownership is determined in accordance with the rules of the SEC.
Share ownership The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of December 31, 2024 for: ● each beneficial owner of 5% or more of our outstanding ordinary shares; ● each of our directors and executive officers; and ● all of our directors and executive officers as a group. 83 Beneficial ownership is determined in accordance with the rules of the SEC.
The nomination and governance committee is responsible for identifying and proposing new potential director nominees to the board of directors for consideration and for reviewing our corporate governance policies. D. Employees As of December 31, 2023, we had 16 employees, all of which were full-time employees located in China.
The nomination and governance committee is responsible for identifying and proposing new potential director nominees to the board of directors for consideration and for reviewing our corporate governance policies. D. Employees As of December 31, 2024, we had 14 employees, all of which were full-time employees located in China.
(3) Represents the 100,495 ordinary shares held by Celebrate Hat Limited, a British Virgin Islands company with a registered address at Vistra (BVI) Limited of Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands.
(3) Represents the 1,005 ordinary shares held by Celebrate Hat Limited, a British Virgin Islands company with a registered address at Vistra (BVI) Limited of Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands.
A copy of the Clawback Policy has been filed herewith as Exhibit 97.1. In the year ended December 31, 2023, there is no outstanding balance as of December 31, 2023 of erroneously awarded compensation to be recovered. 79
A copy of the Clawback Policy has been filed herewith as Exhibit 97.1. In the year ended December 31, 2024, there is no outstanding balance as of December 31, 2024 of erroneously awarded compensation to be recovered. 84
After the Share Consolidation, the maximum number of ordinary shares in respect of which any awards may be granted or paid out under the 2020 Plan is 600,000 ordinary shares of par value of US$0.01 per share and it has be executed in July 2022. 2023 Director and Executive Officer Compensation Table The following table sets forth information regarding the compensation paid to our directors and our executive officers for service on our board of directors or as an executive officer during the year ended December 31, 2023.
After the Share Consolidation, the maximum number of ordinary shares in respect of which any awards may be granted or paid out under the 2020 Plan is 6,000 ordinary shares of par value of US$1 per share and it has be executed in March 2025. 2024 Director and Executive Officer Compensation Table The following table sets forth information regarding the compensation paid to our directors and our executive officers for service on our board of directors or as an executive officer during the year ended December 31, 2024.
Xiaodong Chen, our chief executive officer and director, is the owner of Victory Hat Limited and holds the voting and dispositive power over the ordinary shares held by Victory Hat Limited. (2) Includes 1,308,916 ordinary shares held by Victory Hat Limited.
Xiaodong Chen, our chief executive officer and director, is the owner of Victory Hat Limited and holds the voting and dispositive power over the ordinary shares held by Victory Hat Limited. (2) Includes 13,089 ordinary shares held by Victory Hat Limited.
Fu received a Bachelor’s Degree in International Economics and Trade and a Master’s Degree in International Economics from Xiamen University. Jun Ouyang has served as a member of the board of directors of Blue Hat since December 2018. Mrs.
Fu has served as a partner of Dahua Certified Public Accountants since June 2018. Mr. Fu received a Bachelor’s Degree in International Economics and Trade and a Master’s Degree in International Economics from Xiamen University. Jun Ouyang has served as a member of the board of directors of Blue Hat since December 2018. Mrs.
Name Age Position Xiaodong Chen 56 Chief Executive Officer and Director Caifan He 51 Chief Financial Officer and Director Jianyong Cai 62 Chief Technology Officer and Director Weicheng Pan 48 Chief Strategy Officer Qinyi Fu(1) 38 Independent Director Jun Ouyang(1)(2)(3) 41 Independent Director Huibin Shen(3) 51 Independent Director Can Su(1)(2) 35 Independent Director Zhiyong Gong 41 Independent Director Fan Guo 47 Joint Chief Executive Officer and Director (1) Member of audit committee.
Name Age Position Xiaodong Chen 57 Chief Executive Officer and Director Caifan He 52 Chief Financial Officer and Director Jianyong Cai 63 Chief Technology Officer and Director Weicheng Pan 49 Chief Strategy Officer Qinyi Fu(1) 39 Independent Director Jun Ouyang(1)(2)(3) 42 Independent Director Huibin Shen(3) 52 Independent Director Can Su(1)(2) 36 Independent Director Zhiyong Gong 42 Independent Director Fan Guo 48 Joint Chief Executive Officer and Director (1) Member of audit committee.
There are no other family relationships between any of Blue Hat’s executive officers and directors. B . Compensation Employment Agreements, Director Agreements and Indemnification Agreements In December 2018, we entered into employment agreements with each of Xiaodong Chen, Caifan He and Jianyong Cai, pursuant to which such individuals agreed to serve as our executive officers until December 2023.
Compensation Employment Agreements, Director Agreements and Indemnification Agreements In December 2018, we entered into employment agreements with each of Xiaodong Chen, Caifan He and Jianyong Cai, pursuant to which such individuals agreed to serve as our executive officers until December 2023.
Name of Beneficial Owner Number of Shares Beneficially Owned Percentage of Shares Beneficially Owned 5% or Greater Shareholders : CEDE&CO 12,577,701 21.54 % Directors and Executive Officers: Xiaodong Chen(1)(2) 3,808,916 6.52 % Caifan He(3) 100,495 0.17 % Jianyong Cai(4) 0 0 Weicheng Pan 0 0 Qinyi Fu 0 0 Jun Ouyang 0 0 Huibin Shen 0 0 Can Su 0 0 Zhiyong Gong 1,000,000 1.71 % Fan Guo 0 0 All current directors and executive officers as a group (9 persons) 4,909,411 8.40 % (1) The registered address of Victory Hat Limited, a British Virgin Islands company, is Vistra (BVI) Limited of Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands.
Name of Beneficial Owner Number of Shares Beneficially Owned Percentage of Shares Beneficially Owned 5% or Greater Shareholders : CEDE&CO 367,847 62.88 % Directors and Executive Officers: Xiaodong Chen(1)(2) 38,089 6.51 % Caifan He(3) 1,005 0.17 % Jianyong Cai(4) 0 0 Weicheng Pan 0 0 Qinyi Fu 0 0 Jun Ouyang 0 0 Huibin Shen 0 0 Can Su 0 0 Zhiyong Gong 0 0 Fan Guo 0 0 All current directors and executive officers as a group (9 persons) 39,094 6.68 % (1) The registered address of Victory Hat Limited, a British Virgin Islands company, is Vistra (BVI) Limited of Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands.
Fu served as a senior auditor of Deloitte China Certified Public Accountants from January 2012 to December 2015. Mr. Fu served as a partner of Ruihua Certified Public Accountants from December 2015 to May 2018. Mr. Fu has served as a partner of Dahua Certified Public Accountants since June 2018. Mr.
Fu served as an auditor of Ernst & Young China Certified Public Accountants from October 2010 to January 2012. Mr. Fu served as a senior auditor of Deloitte China Certified Public Accountants from January 2012 to December 2015. Mr. Fu served as a partner of Ruihua Certified Public Accountants from December 2015 to May 2018. Mr.
Cai received a Bachelor’s Degree in Data Communication Principles, Communication Network Foundation and Software Engineering from University of Science and Technology of China. Weicheng Pan , aged 48, is the founder of Cheng Ji Group of Companies and Jewish Mindset Business School. He has experience in business investment and consultation. From August 2018 to September 2018, Mr.
Cai received a Bachelor’s Degree in Data Communication Principles, Communication Network Foundation and Software Engineering from University of Science and Technology of China. Weicheng Pan , has served as chief strategy officer since May 2023. He is the founder of Cheng Ji Group of Companies and Jewish Mindset Business School. He has experience in business investment and consultation.
Pan worked as the general consultant of Sen Yue Holdings Limited, a Singapore company, for an investment worthy around US$0.9 million. Starting from November 2019, Mr. Pan has been the independent director of TD Holdings Inc. (Nasdaq ticker: GLG). From October 1, 2020 to January 6, 2022, he had been the Chief Strategy Officer of Future Fintech Group Inc.
From August 2018 to September 2018, Mr. Pan worked as the general consultant of Sen Yue Holdings Limited, a Singapore company, for an investment worthy around US$0.9 million. Starting from November 2019, Mr. Pan has been the independent director of TD Holdings Inc. (Nasdaq ticker: GLG).
Formerly, he was chief executive officer of Pay88, Inc., a Nasdaq-listed developer of internet-based money transfer services between the United States and China. Mr. Fan has co-founded and managed Fluency Capital Co. LLC, a private fund headquartered in New Hampshire, United States, specializing in investments in high tech businesses.
He has over 20 years of experience in business investment and transactions. Formerly, he was chief executive officer of Pay88, Inc., a Nasdaq-listed developer of internet-based money transfer services between the United States and China. Mr. Fan has co-founded and managed Fluency Capital Co.
(Nasdaq ticker: FTFT). He holds a Bachelor’s Degree in Business Administration from Wuhan Science and Technology University. Qinyi Fu has served as a member of the board of directors of Blue Hat since December 2018. Mr. Fu served as an auditor of Ernst & Young China Certified Public Accountants from October 2010 to January 2012. Mr.
From October 1, 2020 to January 6, 2022, he had been the Chief Strategy Officer of Future Fintech Group Inc. (Nasdaq ticker: FTFT). He holds a Bachelor’s Degree in Business Administration from Wuhan Science and Technology University. Qinyi Fu has served as a member of the board of directors of Blue Hat since December 2018. Mr.
Su received a Bachelor’s Degree in Logistics Management from Xiamen University Tan Kah Kee College and a MBA from High Point University. Zhiyong Gong , male, born in November 1982, graduated from Nankai University with a major in Business Administration and Marketing.
Su received a Bachelor’s Degree in Logistics Management from Xiamen University Tan Kah Kee College and a MBA from High Point University. Zhiyong Gong serves as a member of the board of directors of the Company.
He holds a Bachelor’s Degree in Hospitality Management from NHTI – Concord's Community College. Family Relationships Jianyong Cai, our chief technology officer and director, is the brother of Juanjuan Cai, a director and shareholder of Blue Hat Fujian and the wife of Xiaodong Chen, our chief executive officer and director.
Family Relationships Jianyong Cai, our chief technology officer and director, is the brother of Juanjuan Cai, a director and shareholder of Blue Hat Fujian and the wife of Xiaodong Chen, our chief executive officer and director. There are no other family relationships between any of Blue Hat’s executive officers and directors. B .
Gong excels in enterprise marketing and investment attraction, having organized over 1500 consulting and training sessions domestically and internationally, benefiting more than 3000 companies. Guo Fan , aged 47, has over 20 years of experience in business investment and transactions.
Gong excels in enterprise marketing and investment attraction, having organized over 1500 consulting and training sessions domestically and internationally, benefiting more than 3000 companies. He graduated from Nankai University with a major in Business Administration and Marketing. Guo Fan serves as the joint chief executive officer of the Company.
Name Fees Earned in Cash All Other Compensation Total Xiaodong Chen $94,231 (RMB 663,600) — $94,231 (RMB 663,600) Caifan He $66,456(RMB 468,000) — $66,456 (RMB 468,000) Qinyi Fu $10,000 (RMB 70,423) — $10,000 (RMB 70,423) Jun Ouyang $10,000 (RMB 70,423) — $10,000 (RMB 70,423) Huibin Shen $10,000 (RMB 70,423) — $10,000 (RMB 70,423) Can Su $10,000 (RMB 70,423) — $10,000 (RMB 70,423) Weicheng Pan $13,333 (RMB236,138) — $13,333(RMB236,138) Fan Guo $33,333(RMB 234,743) — $33,333(RMB 234,743) 76 During the year ended December 31, 2023, Jianyong Cai did not receive any compensation.
All Other Name Fees Earned in Cash Compensation Total Xiaodong Chen $ 99,589 (RMB 709,104 ) — $ 99,589 (RMB 709,104 ) Caifan He $ 72,118 (RMB 513,504 ) — $ 72,118 (RMB513,504 ) Qinyi Fu $ 10,000 (RMB 71,203 ) — $ 10,000 (RMB 71,203 ) Jun Ouyang $ 10,000 (RMB 71,203 ) — $ 10,000 (RMB 71,203 ) Huibin Shen $ 10,000 (RMB 71,203 ) — $ 10,000 (RMB 71,203 ) Can Su $ 10,000 (RMB 71,203 ) — $ 10,000 (RMB 71,203 ) Weicheng Pan $ 20,000 (RMB142,406 ) — $ 20,000 (RMB142,406 ) Fan Guo $200,000 (RMB1,424.060 ) — $200,000 (RMB1,424.060 ) 81 During the year ended December 31, 2024, Jianyong Cai did not receive any compensation.
Compensation of Director and Executive Officers Board Diversity Matrix (As of Dec 31, 2023) Country of Principal Executive Offices People's Republic of China Foreign Private Issuer Yes Disclosure Prohibited under Home Country Law No Total Number of Directors 9 Female Male Non-Binary Did Not Disclose Gender Part I: Gender Identity Directors 1 8 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 0 LGBTQ+ 0 Did Not Disclose Demographic Background 0 For the year ended December 31, 2023, we paid an aggregate of approximately RMB1,743,884 ($247,353) in cash to our directors and executive officers. 75 We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our director and executive officers.
Compensation of Director and Executive Officers For the year ended December 31, 2024, we paid an aggregate of approximately RMB3,073,886 ($431,707) in cash to our directors and executive officers. 80 We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our director and executive officers.
Added
LLC, a private fund headquartered in New Hampshire, United States, specializing in investments in high tech businesses. He holds a Bachelor’s Degree in Hospitality Management from NHTI – Concord’s Community College.
Added
Pursuant to the resolutions of the shareholders of the Company passed on February 28, 2025, every 100 ordinary shares of a par value of US$0.01 each in the authorized share capital of the Company (including issued and unissued share capital) were consolidated into 1 ordinary share of a par value of US$1 each (the “Share Consolidation”).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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As of December 31, 2023 and December 31, 2022, we owed $3,795 and $3,795, respectively, to Beautiful Jade Ltd, our shareholders’ investment company. It was attorney fee. These amounts are included in the consolidated financial statements as related party payables. See Note 15 of the notes to the consolidated financial statements included elsewhere in this annual report.
As of December 31, 2024 and December 31, 2023, we owed $3,795 and $3,795, respectively, to Beautiful Jade Ltd, our shareholders’ investment company. It was attorney fee. These amounts are included in the consolidated financial statements as related party payables. See Note 15 of the notes to the consolidated financial statements included elsewhere in this annual report.
We have also entered into director agreements with each of our directors which agreements set forth the terms and provisions of their engagement. 80 C. Interests of Experts and Counsel Not applicable.
We have also entered into director agreements with each of our directors which agreements set forth the terms and provisions of their engagement. 85 C. Interests of Experts and Counsel Not applicable.
Related Party Transactions During the last three years, we have engaged in the following transactions with our directors, executive officers or holders of more than 5% of our outstanding share capital and their affiliates, which we refer to as our related parties: As of December 31, 2023 and December 31, 2022, we owed $831,155 and $933,619, respectively, to Xiaodong Chen, our chief executive officer, director and a shareholder of Blue Hat Fujian, as a result of a loan from Xiaodong Chen.
Related Party Transactions During the last three years, we have engaged in the following transactions with our directors, executive officers or holders of more than 5% of our outstanding share capital and their affiliates, which we refer to as our related parties: As of December 31, 2024 and December 31, 2023, we owed $770,155 and $831,155, respectively, to Xiaodong Chen, our chief executive officer, director and a shareholder of Blue Hat Fujian, as a result of a loan from Xiaodong Chen.
The loan from Xiaodong Chen of $18,848 was paid for certain leases on our behalf. These loans are unwritten, interest free and due on demand. $831,155 was for borrowing, the loans are unsecured, interest free and due on 31 January, 2026.
The loan from Xiaodong Chen of $971 was paid for certain leases on our behalf. These loans are unwritten, interest free and due on demand. $770,155 was for borrowing, the loans are unsecured, interest free and due on 31 January, 2026. As of December 31, 2024, the company has a payable to Fan Tao in the amount of $600,885.

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