Core Insights - Color Star Technology Co., Ltd. has made a significant entry into the cryptocurrency mining sector, deploying 10,000 Bitmain Antminer T21 rigs in Kazakhstan, marking its emergence as a notable player in the Bitcoin mining industry [1][2] - In its first month of operation in April, the cryptocurrency mining farm generated approximately 29 Bitcoins (BTC) [2] - The company is committed to monitoring its mining operations and the broader cryptocurrency market to inform strategic decisions, aiming to maximize returns on investment and deliver long-term value to shareholders [3] Company Overview - Color Star Technology Co., Ltd. operates in the entertainment and education sectors, providing online entertainment performances and music education services through its subsidiaries [4] - The company has recently expanded its operations to include cryptocurrency mining, alongside its existing online education platform, Color World [4]

Core Insights - Color Star Technology Co., Ltd. is participating in a prestigious boxing event, highlighting its integration of artificial intelligence and technology in the entertainment industry [1][5] - The company was invited to the World Boxing Council (WBC) Championship Match, featuring a rematch between top light heavyweight champions Artur Beterbiev and Dmitry Bivol [2][3] - The event attracted significant attention and influential figures in boxing, enhancing Color Star's reputation and partnerships within the sports sector [3][5] Company Overview - Color Star Technology Co., Ltd. operates in the entertainment and education sectors, providing online entertainment performances and music education services [7] - The company conducts its business through subsidiaries, including Color Metaverse Pte. Ltd. and CACM Group NY, Inc., and offers services via its Color World platform [7] Industry Engagement - The invitation to the WBC event signifies Color Star's deepening involvement in the boxing world and its commitment to organizing world-class sporting events [5][6] - The company aims to bridge sports, technology, and entertainment, with plans to deliver more premier boxing events globally [6]

Core Insights - The 2025 Davos World Economic Forum highlighted artificial intelligence (AI), financial investments, and social ventures as key discussion topics among global leaders [1][2] - Ren Pelosi, Vice President of Color Technology, emphasized the transformative potential of AI in driving economic growth and societal change during her interview [1][2] Company Insights - Color Technology has successfully transitioned from traditional offline entertainment to online platforms, particularly during the pandemic, and is now focusing on AI-powered entertainment innovations [2][6] - The company aims to enhance content production efficiency and optimize user experiences through AI, creating a more interactive and immersive entertainment ecosystem [3][6] - Color Star Technology Co., Ltd. operates in the entertainment and education sectors, providing online entertainment performances and music education services [7] Industry Insights - The entertainment industry is undergoing rapid evolution, with AI redefining audience interactions and enhancing personalized recommendations [3][4] - There is a growing trend of capital flowing towards ESG-friendly enterprises, with investors increasingly focusing on long-term societal impacts rather than just short-term financial returns [2][3] - The future market will favor businesses that create both commercial value and social impact, particularly those leveraging AI and blockchain technologies [3][6]

Company Overview - Color Star Technology Co Ltd is an entertainment and education company providing online entertainment performances and online music education services [5] - The company operates through its wholly-owned subsidiaries Color Metaverse Pte Ltd and CACM Group NY Inc [5] - Its online education services are delivered through the Color World music and entertainment education platform [5] Leadership Appointment - His Highness Shaikh Humaid Abdulla Rashed Ahmed Almualla, a prominent member of the UAE royal family, has joined Color Star as an independent director [1] - This appointment strengthens the company's ties with the Middle East, particularly the UAE [1] - His Highness Shaikh Humaid is a distinguished figure in UAE politics and a core member of the ruling family of the Umm Al-Quwain Emirate [7] Strategic Implications - The appointment is expected to unlock new investment opportunities and project support for Color Star [8] - It will accelerate the company's planned investment and innovation in AI entertainment and related technologies [8] - His Highness Shaikh Humaid's extensive network will energize Color Star's globalization strategy [8] Background Information - The Al Mualla family is one of the oldest royal lineages in the Middle East, historically governing the Umm Al-Quwain Emirate [4] - In June 2023, His Highness Shaikh Humaid spearheaded the launch of the UAE Royal HH Investment Fund, which received support from royal families and government officials in Saudi Arabia, Oman, Kuwait, and Qatar [4]

PART I [Item 1. Identity of Directors, Senior Management and Advisers](index=7&type=section&id=Item%201.%20Identity%20of%20Directors%2C%20Senior%20Management%20and%20Advisers) This section is not applicable as per the report - The company has indicated that this section is not applicable[13](index=13&type=chunk) [Item 2. Offer Statistics and Expected Timetable](index=7&type=section&id=Item%202.%20Offer%20Statistics%20and%20Expected%20Timetable) This section is not applicable as per the report - The company has indicated that this section is not applicable[13](index=13&type=chunk) [Item 3. Key Information](index=7&type=section&id=Item%203.%20Key%20Information) This section details significant investment risks related to the company's business model, financial condition, and platform reliance [Risk Factors](index=7&type=section&id=3.D.%20Risk%20Factors) The company faces business risks from its limited operating history and platform dependency, alongside ownership risks like potential delisting - The company has a **limited operating history** with its current metaverse business model, having entered the industry in January 2022[14](index=14&type=chunk)[15](index=15&type=chunk) - Business success is **heavily dependent on the 'Color World' metaverse platform**, and failure to achieve market acceptance could materially harm the business[23](index=23&type=chunk)[25](index=25&type=chunk)[27](index=27&type=chunk) - The company faces significant **cybersecurity and data privacy risks**, requiring compliance with Singapore's PDPA and evolving PRC data laws[37](index=37&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) - The company faces **intense competition** from established online entertainment and metaverse companies with greater resources[55](index=55&type=chunk)[130](index=130&type=chunk) - The company previously failed to meet Nasdaq's minimum bid price requirement but regained compliance, though **delisting risk remains**[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) - As a **foreign private issuer**, the company is exempt from certain SEC rules, potentially offering less protection for investors[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) [Item 4. Information on The Company](index=22&type=section&id=Item%204.%20Information%20on%20The%20Company) This section provides an overview of the company's history, business evolution, metaverse platform, and operational segments [History and Development of the Company](index=22&type=section&id=4.A.%20History%20and%20Development%20of%20the%20Company) The company transformed from a concrete business to an entertainment technology firm focused on its 'Color World' metaverse platform - The company **transitioned from a concrete business** to its current entertainment technology focus, completing the disposition in May 2020[113](index=113&type=chunk)[115](index=115&type=chunk) - The 'Color World' online platform launched in 2020 and **transformed into a metaverse platform** in January 2022[118](index=118&type=chunk)[128](index=128&type=chunk) - On March 24, 2023, the company created **Class A (700M) and Class B (100M) Ordinary Shares** with a par value of $0.04[123](index=123&type=chunk) - The company engaged in significant non-cash transactions, issuing **30.4 million Class A shares** for concert rights and copyright acquisition in 2023[124](index=124&type=chunk)[125](index=125&type=chunk) [Business Overview](index=25&type=section&id=4.B.%20Business%20Overview) The company operates as an entertainment technology firm centered on its 'Color World' metaverse platform integrating AI and celebrity content - The core business is the **'Color World' metaverse platform**, focusing on 'artificial intelligence + celebrity entertainment'[127](index=127&type=chunk)[128](index=128&type=chunk) - The Color World platform generates revenue from paid fees for star teachers' video classes and had **over 300,000 registered users**[136](index=136&type=chunk) - The company has expanded into offline events, including organizing **World Boxing Association (WBA) approved competitions**[142](index=142&type=chunk) Customer and Supplier Concentration (FY 2024) | Category | Concentration | Source | | :--- | :--- | :--- | | **Customer** | One customer accounted for 94% of total sales | For the fiscal year ended June 30, 2024 | | **Supplier** | One vendor accounted for 90% of total purchases | For the fiscal year ended June 30, 2024 | [Organizational Structure](index=32&type=section&id=4.C.%20Organizational%20structure) This section contains a chart illustrating the company's organizational structure - The report includes an organizational structure chart showing the parent company and its subsidiaries[178](index=178&type=chunk) [Property, Plants and Equipment](index=33&type=section&id=4.D.%20Property%2C%20Plants%20and%20Equipment) The company's principal U.S. executive office is located in a leased shared office space in New York, NY - The company leases a shared office for its U.S. executive offices at 80 Broad Street, 5th Floor, New York, NY 10005[179](index=179&type=chunk) [Item 5. Operating and Financial Review and Prospects](index=33&type=section&id=Item%205.%20Operating%20and%20Financial%20Review%20and%20Prospects) The company's financial review shows a shift in revenue, a reduced net loss, and substantial liquidity challenges and going concern uncertainty [Operating Results](index=33&type=section&id=5A.%20Operating%20Results) The company generated $2.8 million in revenue in FY2024 and reduced its net loss to $26.9 million from $37.8 million in FY2023 Consolidated Results of Operations (in USD) | Metric | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | **Revenue** | $2,830,442 | $0 | $16,519,081 | | **Gross Profit** | $837,042 | $0 | $7,972,241 | | **Loss from operations** | $(27,007,555) | $(37,840,548) | $(78,898,070) | | **Net loss** | $(26,864,340) | $(37,849,665) | $(77,208,118) | - In FY2024, **revenue of approximately $2.8 million** was generated from concerts and consulting services, compared to no revenue in FY2023[192](index=192&type=chunk) - **Net loss decreased by 29%** to $26.9 million in FY2024, primarily due to lower Selling, General and Administrative expenses[192](index=192&type=chunk)[199](index=199&type=chunk)[202](index=202&type=chunk) - **Provision for expected credit losses increased by 72%** to $16.9 million in FY2024 due to provisions on aged receivables[197](index=197&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is critical with minimal cash, and it faces a going concern uncertainty reliant on future financing - As of June 30, 2024, the company had **cash and cash equivalents of approximately $20,000**[213](index=213&type=chunk) - The company's financial statements have been prepared with a **going concern uncertainty** due to recurring losses and negative cash flows[216](index=216&type=chunk)[398](index=398&type=chunk)[435](index=435&type=chunk) Summary of Net Cash Flow (in USD) | Activity | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | **Net cash used in operating activities** | $(2,780,452) | $(7,878,729) | $(29,403,078) | | **Net cash used in investing activities** | $0 | $0 | $(14,219,652) | | **Net cash provided by financing activities** | $2,561,197 | $7,245,889 | $44,320,854 | - In FY2024, the company raised approximately **$2.6 million from financing activities**, including a private placement and a convertible note[215](index=215&type=chunk)[224](index=224&type=chunk) [Research and Development, Patents and Licenses, etc.](index=41&type=section&id=5.C.%20Research%20and%20Development%2C%20Patents%20and%20Licenses%2C%20etc.) R&D expenses were zero in FY2024, and the company holds significant intangible assets, primarily copyrights valued at $17.0 million - **Research and development expenses were $0** in FY2024, down from $0.1 million in FY2023 and $68.3 million in FY2022[230](index=230&type=chunk) - As of June 30, 2024, the company held **copyrights valued at approximately $17.0 million**, net of amortization[231](index=231&type=chunk) [Critical Accounting Estimates](index=41&type=section&id=5.E.%20Critical%20Accounting%20Estimates) Critical accounting policies involve management estimates for long-lived asset impairment, stock-based compensation, and income taxes - Critical accounting estimates include accounting for **long-lived assets, stock-based compensation, and income taxes**[233](index=233&type=chunk)[235](index=235&type=chunk)[238](index=238&type=chunk)[239](index=239&type=chunk) [Item 6. Directors, Senior Management and Employees](index=43&type=section&id=Item%206.%20Directors%2C%20Senior%20Management%20and%20Employees) This section details the company's leadership, compensation, board committee structure, and share ownership information [Directors and Senior Management](index=43&type=section&id=6.A.%20Directors%20and%20Senior%20Management) The report identifies the key executive officers and the board of directors, which includes five independent directors Executive Officers and Directors | Name | Position/Title | | :--- | :--- | | Wei Zhang | Chairman of the Board and Director | | Louis Luo | Director and Chief Executive Officer | | Lili Jiang | Chief Financial Officer | | Ahmed Essa Mohammad Saleh | Independent Director | | Muhammad Irfan | Independent Director | | Ahmad Khalfan Ahmad Saeed Almansoori | Independent Director | | Hung-Jen Kuo | Independent Director | | Honglei Jiang | Independent Director | [Compensation](index=45&type=section&id=6.B.%20Compensation) This subsection details executive and non-executive director compensation for fiscal years 2024 and 2023 Named Executive Officer Compensation (Total) | Name and Principal Position | Year | Total Compensation ($) | | :--- | :--- | :--- | | Wei Zhang, Chairman | 2024 | 195,696 | | | 2023 | 449,450 | | Louis Luo, CEO | 2024 | 116,937 | | | 2023 | 53,175 | | Lili Jiang, CFO | 2024 | 124,283 | | | 2023 | 300,663 | - Each of the five non-executive directors earned **$36,000 in cash fees** for their service in the fiscal year ended June 30, 2024[257](index=257&type=chunk) [Board Practices](index=46&type=section&id=6.C.%20Board%20Practices) The company has established three fully independent board committees: Audit, Compensation, and Corporate Governance and Nominating - The company has three board committees: **Audit, Compensation, and Corporate Governance and Nominating**, all composed of independent directors[261](index=261&type=chunk) - The Audit Committee members are Ahmad Khalfan Ahmad Saeed Almansoori, Hung-Jen Kuo, and **Honglei Jiang (Chairman)**[262](index=262&type=chunk) [Share Ownership](index=47&type=section&id=6.E.%20Share%20Ownership) No director or executive officer beneficially owns 1% or more of the company's shares as of October 14, 2024 - As of October 14, 2024, there were **60,263,696 Class A and 1,200,000 Class B Ordinary Shares outstanding**[269](index=269&type=chunk) - **No director or executive officer beneficially owns 1% or more** of the company's shares; the largest shareholder listed is Vast Ocean, Inc. at 3.85%[269](index=269&type=chunk) [Item 7. Major Shareholders and Related Party Transactions](index=48&type=section&id=Item%207.%20Major%20Shareholders%20and%20Related%20Party%20Transactions) This section discloses related party transactions, primarily consisting of outstanding loans from company executives totaling $761,197 Other Payables - Related Parties (as of June 30) | Name of Related Party | Relationship | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Wei Zhang | Chairman of the Board | $198,110 | $0 | | Hui Xu | General Manager of CACM | $560,000 | $580,000 | | Louis Luo | CEO | $3,087 | $0 | | **Total** | | **$761,197** | **$580,000** | [Item 8. Financial Information](index=49&type=section&id=Item%208.%20Financial%20Information) The company has no material legal proceedings and does not plan to pay dividends, retaining earnings for business expansion - The company has **never declared or paid any dividends** and does not anticipate doing so, intending to retain all future earnings[274](index=274&type=chunk) - There are **no material legal proceedings** against the company as of the report date[273](index=273&type=chunk) [Item 9. The Offer and Listing](index=49&type=section&id=Item%209.%20The%20Offer%20and%20Listing) The company's Class A ordinary shares are listed on the Nasdaq Capital Market under the ticker symbol 'ADD' - The company's Class A ordinary shares are traded on the **Nasdaq Capital Market under the symbol 'ADD'**[276](index=276&type=chunk) [Item 10. Additional Information](index=50&type=section&id=Item%2010.%20Additional%20Information) This section details the company's corporate governance as a Cayman Islands entity and outlines material tax consequences for investors [Memorandum and Articles of Association](index=50&type=section&id=10.B.%20Memorandum%20and%20Articles%20of%20Association) The company is a Cayman Islands entity with Class A (1 vote) and Class B (10 votes) shares and anti-takeover provisions - The company is a Cayman Islands exempted company with authorized share capital of $32,000,000, divided into **700,000,000 Class A and 100,000,000 Class B shares**[278](index=278&type=chunk)[279](index=279&type=chunk) - Class A ordinary shares have one vote per share, while **Class B ordinary shares have ten votes per share** and are convertible into Class A shares[514](index=514&type=chunk) - **Anti-takeover provisions** include the Board's authority to issue preferred shares without shareholder vote[296](index=296&type=chunk) [Taxation](index=57&type=section&id=10.E.%20Taxation) This subsection details tax implications, including a significant risk of the company being classified as a Passive Foreign Investment Company (PFIC) - The **Cayman Islands does not levy taxes** on profits, income, gains, or appreciation[332](index=332&type=chunk) - There is a risk the company could be classified as a **PRC resident enterprise**, subjecting non-PRC shareholders to withholding taxes[333](index=333&type=chunk) - The company may be classified as a **Passive Foreign Investment Company (PFIC)** for U.S. tax purposes, which could result in adverse tax rules for U.S. Holders[350](index=350&type=chunk)[351](index=351&type=chunk)[356](index=356&type=chunk) [Item 11. Quantitative and Qualitative Disclosures About Market Risk](index=64&type=section&id=Item%2011.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are liquidity risk, inflation risk, and interest rate risk - The company is exposed to **liquidity risk**, which is the risk of being unable to provide sufficient capital to meet its commitments[365](index=365&type=chunk) - Other identified market risks include **inflation and interest rate risk** related to cash deposits and future debt[365](index=365&type=chunk)[366](index=366&type=chunk) [Item 12. Description of Securities Other than Equity Securities](index=64&type=section&id=Item%2012.%20Description%20of%20Securities%20Other%20than%20Equity%20Securities) This section is not applicable as per the report - The company has indicated that this section is not applicable[366](index=366&type=chunk) PART II [Item 13. Defaults, Dividend Arrearages and Delinquencies](index=65&type=section&id=Item%2013.%20Defaults%2C%20Dividend%20Arrearages%20and%20Delinquencies) This section is not applicable as per the report - The company has indicated that this section is not applicable[367](index=367&type=chunk) [Item 14. Material Modifications to the Rights of Security Holders and Use Of Proceeds](index=65&type=section&id=Item%2014.%20Material%20Modifications%20to%20the%20Rights%20of%20Security%20Holders%20and%20Use%20Of%20Proceeds) No material modifications to security holder rights were reported for the year ended June 30, 2022 - The company re-domiciled from Nevada to the Cayman Islands in 2018 but reported **no material modifications to security holder rights** for the year ended June 30, 2022[368](index=368&type=chunk) [Item 15. Controls And Procedures](index=65&type=section&id=Item%2015.%20Controls%20And%20Procedures) Management concluded that disclosure controls and procedures were not effective due to material weaknesses in internal control - Management concluded that **disclosure controls and procedures were not effective** as of June 30, 2024, due to material weaknesses[369](index=369&type=chunk) - Identified material weaknesses include a **lack of personnel with U.S. GAAP expertise** and ineffective supervision of controls[369](index=369&type=chunk) - The remediation plan includes **establishing an internal audit function** or engaging an external consulting firm[371](index=371&type=chunk) [Item 16A. Audit Committee Financial Expert](index=66&type=section&id=Item%2016A.%20Audit%20Committee%20Financial%20Expert) The board has determined that Honglei Jiang, an independent director, qualifies as an 'audit committee financial expert' - The board has identified **Honglei Jiang as the audit committee financial expert**[372](index=372&type=chunk) [Item 16B. Code Of Ethics](index=66&type=section&id=Item%2016B.%20Code%20Of%20Ethics) The company has adopted a Code of Conduct and Ethics that applies to all directors, officers, and employees - A **Code of Conduct and Ethics** has been adopted and applies to all directors, officers, and employees[373](index=373&type=chunk) [Item 16C. Principal Accountant Fees and Services](index=66&type=section&id=Item%2016C.%20Principal%20Accountant%20Fees%20and%20Services) This section details fees paid to external auditors, which totaled $148,110 in 2024 and $293,230 in 2023 Principal Accountant Fees (in USD) | Fee Category | Year Ended June 30, 2024 | Year Ended June 30, 2023 | | :--- | :--- | :--- | | Audit fees | $148,110 | $279,000 | | Audit related fees | $0 | $0 | | Tax fees | $0 | $0 | | All other fees | $0 | $14,230 | | **Total** | **$148,110** | **$293,230** | [Item 16G. Corporate Governance](index=68&type=section&id=Item%2016G.%20Corporate%20Governance) As a foreign private issuer, the company follows home country practices in lieu of certain Nasdaq corporate governance rules - The company, as a foreign private issuer, follows its home country practice instead of **Nasdaq's shareholder approval requirements** for certain share issuances[380](index=380&type=chunk) [Item 16K. Cybersecurity](index=68&type=section&id=Item%2016K.%20Cybersecurity) The board oversees cybersecurity risk, and no material incidents occurred in FY2024, though formal policies are not yet implemented - The **Board of Directors oversees cybersecurity risk**, while the R&D team handles day-to-day management[385](index=385&type=chunk) - In fiscal year 2024, the company **did not encounter any material cybersecurity incidents** and intends to adopt formal policies[383](index=383&type=chunk) PART III [Item 17. Financial Statements](index=70&type=section&id=Item%2017.%20Financial%20Statements) The company has elected to provide financial statements pursuant to Item 18 - The company has elected to provide financial statements as required by Item 18, rather than Item 17[387](index=387&type=chunk) [Item 18. Financial Statements](index=70&type=section&id=Item%2018.%20Financial%20Statements) This section contains the company's audited consolidated financial statements, which include a going concern uncertainty warning [Report of Independent Registered Public Accounting Firm](index=74&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The auditor's report expresses substantial doubt about the company's ability to continue as a going concern - The auditor's report includes an explanatory paragraph raising **substantial doubt about the Company's ability to continue as a going concern**[398](index=398&type=chunk)[403](index=403&type=chunk) - The audit identified two critical audit matters: the **going concern evaluation** and the **impairment assessment on intangible assets**[403](index=403&type=chunk)[404](index=404&type=chunk)[405](index=405&type=chunk) [Consolidated Balance Sheets](index=76&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet shows total assets of $27.6 million, total liabilities of $9.1 million, and shareholders' equity of $18.5 million Consolidated Balance Sheet Highlights (as of June 30, in USD) | Account | 2024 | 2023 | | :--- | :--- | :--- | | **Total current assets** | $10,473,112 | $16,047,031 | | **Intangible assets, net** | $17,006,083 | $13,966,083 | | **Total assets** | $27,591,648 | $30,042,203 | | **Total current liabilities** | $9,057,321 | $5,325,768 | | **Total liabilities** | $9,065,904 | $5,325,768 | | **Total shareholders' equity** | $18,525,744 | $24,716,435 | [Consolidated Statements of Operations](index=77&type=section&id=Consolidated%20Statements%20of%20Operations) For FY2024, the company reported revenues of $2.8 million and a net loss of $26.9 million, or $(0.71) per share Consolidated Statement of Operations (for the year ended June 30, in USD) | Metric | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | **Revenue** | $2,830,442 | $0 | $16,519,081 | | **Gross Profit** | $837,042 | $0 | $7,972,241 | | **Loss from Operations** | $(27,007,555) | $(37,840,548) | $(78,898,070) | | **Net Loss** | $(26,864,340) | $(37,849,665) | $(77,208,118) | | **Loss per share (basic and diluted)** | $(0.71) | $(4.13) | $(19.90) | [Consolidated Statements of Cash Flows](index=80&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operations was $2.8 million, while financing activities provided $2.6 million, ending the year with $20,218 in cash Consolidated Statement of Cash Flows (for the year ended June 30, in USD) | Cash Flow Category | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | **Net cash used in operating activities** | $(2,780,452) | $(7,878,729) | $(29,403,078) | | **Net cash used in investing activities** | $0 | $0 | $(14,219,652) | | **Net cash provided by financing activities** | $2,561,197 | $7,245,889 | $44,320,854 | | **Net change in cash and cash equivalents** | $(219,255) | $(632,840) | $698,124 | | **Cash and cash equivalents, end of year** | $20,218 | $239,473 | $872,313 | [Notes to Consolidated Financial Statements](index=82&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, going concern uncertainty, significant risk concentrations, and subsequent financing events - A **going concern uncertainty** is disclosed, citing recurring losses and an accumulated deficit of approximately $212.1 million[435](index=435&type=chunk) - For FY2024, **one customer accounted for 94% of sales** and one vendor accounted for 90% of purchases, indicating significant concentration risk[538](index=538&type=chunk)[539](index=539&type=chunk) - In July 2023, the company issued a **convertible promissory note for gross proceeds of $1.0 million**[495](index=495&type=chunk) - Subsequent to the fiscal year-end, the company raised **approximately $8.0 million** through additional convertible note financing[540](index=540&type=chunk)[542](index=542&type=chunk) [Item 19. Exhibits](index=70&type=section&id=Item%2019.%20Exhibits) This section lists all exhibits filed with the annual report, including articles of association, material contracts, and required certifications - The report includes a list of all filed exhibits, such as the **Fifth Amended and Restated Memorandum and Articles of Association** and required CEO/CFO certifications[389](index=389&type=chunk)

[Financial Statements](index=1&type=section&id=Financial%20Statements) [Condensed Consolidated Balance Sheets](index=1&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly increased to **$30.2 million** as of December 31, 2023, driven by non-current asset growth, while total liabilities rose to **$7.8 million**, resulting in a decline in shareholders' equity to **$22.4 million** Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | December 31, 2023 ($) | June 30, 2023 ($) | | :--- | :--- | :--- | | **Total Current Assets** | $10,629,169 | $16,047,031 | | **Total Non-Current Assets** | $19,556,485 | $13,995,172 | | **Total Assets** | **$30,185,654** | **$30,042,203** | | **Total Current Liabilities** | $7,761,515 | $5,325,768 | | **Total Liabilities** | **$7,821,035** | **$5,325,768** | | **Total Shareholders' Equity** | **$22,364,619** | **$24,716,435** | [Condensed Consolidated Statements of Operations](index=2&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the six months ended December 31, 2023, revenue reached **$1.06 million**, but net loss significantly increased to **$21.1 million** due to a substantial provision for expected credit losses and stock compensation expense Statement of Operations Summary (Unaudited) | Metric | Six Months Ended Dec 31, 2023 ($) | Six Months Ended Dec 31, 2022 ($) | | :--- | :--- | :--- | | Revenue | $1,060,442 | $0 | | Gross Profit | $267,042 | $0 | | Loss from Operations | $(21,338,732) | $(12,175,092) | | Provision for Expected Credit Losses | $(15,786,550) | $(1,880,986) | | Net Loss | $(21,124,253) | $(12,177,212) | | Loss per Share (Basic and Diluted) | $(0.86) | $(81.10) | [Consolidated Statements of Change in Shareholders' Equity](index=3&type=section&id=Consolidated%20Statements%20of%20Change%20in%20Shareholders'%20Equity) Shareholders' equity decreased to **$22.4 million** by December 31, 2023, primarily due to a **$21.1 million** net loss, partially offset by capital raises from share issuances for cash and acquisitions Reconciliation of Shareholders' Equity (For the Six Months Ended December 31, 2023) | Description | Amount ($) | | :--- | :--- | | **Balance, June 30, 2023** | **$24,716,435** | | Sale of ordinary shares | $1,380,000 | | Ordinary shares issued for acquisition of intangible assets | $7,200,000 | | Ordinary shares issued for acquisition of concert cooperation rights | $8,000,000 | | Stock compensation expense | $2,192,437 | | Net loss | $(21,124,253) | | **Balance, December 31, 2023** | **$22,364,619** | [Condensed Consolidated Statements of Cash Flows](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities improved to **$2.5 million** for the six months ended December 31, 2023, with financing activities providing **$2.5 million**, and significant non-cash share issuances for acquisitions occurred Cash Flow Summary (Unaudited) | Cash Flow Activity | Six Months Ended Dec 31, 2023 ($) | Six Months Ended Dec 31, 2022 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,511,361) | $(6,414,815) | | Net cash provided by financing activities | $2,531,216 | $6,836,101 | | **Net change in cash and cash equivalents** | **$19,855** | **$421,286** | | **Cash and cash equivalents, end of period** | **$259,328** | **$1,293,599** | - The company conducted significant non-cash investing and financing activities, including issuing **$8.0 million** in ordinary shares for concert cooperation rights and **$7.2 million** in shares for the acquisition of intangible assets[12](index=12&type=chunk) [Notes to the Unaudited Condensed Consolidated Financial Statements](index=5&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [Note 1 – Organization and description of business](index=5&type=section&id=Note%201%20%E2%80%93%20Organization%20and%20description%20of%20business) Color Star Technology Co., Ltd. operates in online entertainment and education, undergoing restructuring by moving operations to the UAE and diversifying into construction management consulting via a new US subsidiary - The company's core business is providing online entertainment performances and online music education services through its subsidiary Color Star DMCC[15](index=15&type=chunk) - A key strategic shift occurred in February 2023 with the disposition of the Hong Kong-based Color Sky and the transfer of its music industry business to the newly established Color Star DMCC in the United Arab Emirates[21](index=21&type=chunk)[25](index=25&type=chunk) - The company diversified its services, with subsidiary CACM Group NY, Inc. starting to provide construction management consulting services in September 2023[18](index=18&type=chunk) - The company has established several new subsidiaries in Singapore, Ohio (USA), Hong Kong, and Hainan (PRC), which had not commenced operations as of the report date[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) [Note 2 – Summary of significant accounting policies](index=7&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20significant%20accounting%20policies) The financial statements, prepared under U.S. GAAP, highlight substantial doubt about the company's going concern ability due to significant accumulated deficits and recurring losses, while detailing revenue recognition policies for various services [Going concern uncertainty](index=7&type=section&id=Going%20concern%20uncertainty) Management identified substantial doubt about the company's going concern ability due to a **$206.3 million** accumulated deficit, **$21.1 million** net loss, and recurring negative operating cash flows - The company faces a going concern risk due to a **$206.3 million** accumulated deficit, a **$21.1 million** net loss for the six months ended December 31, 2023, and recurring operating losses and negative cash flows[28](index=28&type=chunk) - Management's plan to alleviate the going concern risk involves obtaining additional equity financing, but there is no assurance of success[28](index=28&type=chunk) [Revenue recognition](index=8&type=section&id=Revenue%20recognition) Total revenue for the six months ended December 31, 2023, was **$1,060,442**, primarily from concerts and entertainment events, with revenue recognized at a point in time under ASC 606 Revenue by Service Type (Unaudited) | Service Type | Six Months Ended Dec 31, 2023 ($) | Six Months Ended Dec 31, 2022 ($) | | :--- | :--- | :--- | | Concerts and entertainment events | $952,642 | $0 | | Construction management consulting services | $107,800 | $0 | | **Total revenue** | **$1,060,442** | **$0** | [Note 3 – Other receivables, net](index=13&type=section&id=Note%203%20%E2%80%93%20Other%20receivables%2C%20net) Net other receivables were **$1.5 million** as of December 31, 2023, after a **$23.3 million** allowance for credit losses, with a **$15.8 million** provision recorded during the period, primarily for cancelled concert receivables Other Receivables and Allowance for Credit Losses (December 31, 2023) | Item | Amount ($) | | :--- | :--- | | Gross Other Receivables | $24,786,882 | | Allowance for credit losses | $(23,286,550) | | **Other receivables, net** | **$1,500,332** | - The company recognized a **$15,786,550** provision for allowance on credit losses for the six months ended December 31, 2023, compared to **$0** in the same period of 2022[68](index=68&type=chunk) [Note 4 – Prepayments](index=14&type=section&id=Note%204%20%E2%80%93%20Prepayments) Current prepayments decreased to **$8.9 million** as of December 31, 2023, with the majority, **$8.8 million**, allocated to live concert productions Prepayments Breakdown | Prepayment Type | December 31, 2023 ($) | June 30, 2023 ($) | | :--- | :--- | :--- | | **Current Prepayments** | | | | For live concert productions | $8,848,833 | $10,286,550 | | **Total Current Prepayments** | **$8,869,509** | **$10,307,226** | [Note 5 – Property, plant and equipment, net](index=14&type=section&id=Note%205%20%E2%80%93%20Property%2C%20plant%20and%20equipment%2C%20net) Net property, plant, and equipment, consisting solely of office equipment, decreased to **$10,428** as of December 31, 2023, due to **$6,600** in depreciation expense Property, Plant and Equipment, Net | Account | December 31, 2023 ($) | June 30, 2023 ($) | | :--- | :--- | :--- | | Office equipment | $39,602 | $39,602 | | Less: Accumulated depreciation | $(29,174) | $(22,574) | | **Property, plant and equipment, net** | **$10,428** | **$17,028** | [Note 6 – Intangible assets, net](index=14&type=section&id=Note%206%20%E2%80%93%20Intangible%20assets%2C%20net) Net intangible assets, primarily online education copyrights, substantially increased to **$19.4 million** as of December 31, 2023, driven by **$7.2 million** in new acquisitions, partially offset by amortization Intangible Assets, Net | Account | December 31, 2023 ($) | June 30, 2023 ($) | | :--- | :--- | :--- | | Copyrights of online education academy courses | $23,800,000 | $16,600,000 | | Less: Accumulated amortization | $(4,413,917) | $(2,633,917) | | **Intangible assets, net** | **$19,386,083** | **$13,966,083** | - Amortization expense for intangible assets was **$1,780,000** for the six months ended December 31, 2023, compared to **$2,707,364** in the prior-year period[75](index=75&type=chunk) [Note 7 – Related party transactions](index=15&type=section&id=Note%207%20%E2%80%93%20Related%20party%20transactions) Outstanding payables to related parties, primarily interest-free, due-on-demand loans from key company figures, increased to **$731,216** as of December 31, 2023 Other Payables – Related Parties | Related Party | Relationship | December 31, 2023 ($) | June 30, 2023 ($) | | :--- | :--- | :--- | :--- | | Wei Zhang | Chairman of the Board | $198,110 | $0 | | Hui Xu | General Manager of CACM | $530,000 | $580,000 | | Louis Luo | Director and CEO | $3,106 | $0 | | **Total** | | **$731,216** | **$580,000** | [Note 9 – Leases](index=15&type=section&id=Note%209%20%E2%80%93%20Leases) A new two-year office lease in Dubai, effective August 2023, led to the recognition of an operating lease right-of-use asset and liabilities, with minimum lease payments totaling **$201,358** as of December 31, 2023 - In July 2023, the company entered a new two-year office lease in Dubai, running from August 4, 2023, to August 3, 2025, with a monthly rent of **$8,621**[80](index=80&type=chunk) Lease Commitments as of December 31, 2023 | Period | Lease Amount ($) | | :--- | :--- | | Twelve months Ending December 31, 2024 | $146,564 | | Thereafter | $60,350 | | **Total minimum lease payments** | **$206,914** | [Note 10 – Convertible notes payable](index=16&type=section&id=Note%2010%20%E2%80%93%20Convertible%20notes%20payable) In July 2023, the company issued an **$1.1 million** convertible promissory note with an 8% interest rate, maturing in twelve months and convertible at **$2.00** per Class A share, resulting in **$1.0 million** gross proceeds - On July 11, 2023, the company issued a convertible note with a principal of **$1,100,000**, an **8%** interest rate, and a 12-month maturity, convertible at **$2.00** per Class A ordinary share[86](index=86&type=chunk) - The note included an original issue discount of **$80,000** and **$20,000** for investor fees, resulting in gross proceeds of **$1,000,000**[86](index=86&type=chunk) [Note 11 – Income taxes](index=16&type=section&id=Note%2011%20%E2%80%93%20Income%20taxes) The company reported a **$21.1 million** pre-tax loss for the six months ended December 31, 2023, with no income tax provision, holding significant NOL carryforwards but with a full valuation allowance against deferred tax assets Loss Before Income Taxes by Jurisdiction (Unaudited) | Jurisdiction | Six Months Ended Dec 31, 2023 ($) | | :--- | :--- | | Cayman | $(3,370,210) | | United States | $(237,063) | | Dubai | $(17,516,926) | | PRC | $(54) | | **Total Loss** | **$(21,124,253)** | - As of December 31, 2023, the company had net operating loss carryforwards of approximately **$2.3 million** in the U.S. and **$38.5 million** in the United Arab Emirates[97](index=97&type=chunk)[98](index=98&type=chunk) - A **100%** valuation allowance of **$4,097,908** was recorded against net deferred tax assets due to uncertainty about their future realization[97](index=97&type=chunk)[98](index=98&type=chunk)[100](index=100&type=chunk) [Note 12 – Shareholders' equity](index=18&type=section&id=Note%2012%20%E2%80%93%20Shareholders'%20equity) Significant corporate actions affecting shareholders' equity include a 40-for-1 reverse stock split, creation of Class A and B shares, capital raises through share sales, and substantial share issuances for acquisitions, with over **3.2 million** warrants outstanding [Share Structure Changes](index=18&type=section&id=Share%20Structure%20Changes) A **40-for-1** reverse stock split was effective September 26, 2022, followed by the creation of Class A (one vote) and Class B (ten votes) ordinary shares on March 24, 2023 - A **40-for-1** reverse share split became effective on September 26, 2022[102](index=102&type=chunk) - On March 24, 2023, the company created Class A (1 vote/share) and Class B (10 votes/share) ordinary shares[103](index=103&type=chunk)[104](index=104&type=chunk) [Sale of Class A Ordinary Shares](index=19&type=section&id=Sale%20of%20Class%20A%20Ordinary%20Shares) During the six months ended December 31, 2023, the company sold **3,120,000** Class A shares to its largest shareholder, Vast Ocean Inc., for a total of **$780,000** in two private placements - On November 8, 2023, the company sold **1,120,000** Class A shares to Vast Ocean Inc. for **$280,000**[107](index=107&type=chunk) - On November 20, 2023, the company sold an additional **2,000,000** Class A shares to Vast Ocean Inc. for **$500,000**[109](index=109&type=chunk) [Shares Issued for Acquisitions](index=21&type=section&id=Shares%20Issued%20for%20Acquisitions) The company issued **6.4 million** restricted Class A shares valued at **$8.0 million** for concert performances and **24 million** restricted Class A shares valued at **$7.2 million** for music work rights - In December 2023, the company issued **24,000,000** restricted Class A ordinary shares valued at **$7,200,000** to acquire rights to 24 music works[121](index=121&type=chunk) - In May 2023, the company agreed to issue **6,400,000** restricted Class A shares valued at **$8,000,000** as consideration for nine concert events[120](index=120&type=chunk) [Warrants](index=22&type=section&id=Warrants) As of December 31, 2023, **3,224,983** warrants remained outstanding with a weighted average exercise price of **$16.75** and a remaining contractual life of **2.8 years**, with no activity during the period Warrant Activity Summary | Date | Warrants Outstanding | Weighted Average Exercise Price ($) | Average Remaining Contractual Life (Years) | | :--- | :--- | :--- | :--- | | June 30, 2023 | 3,224,983 | $16.75 | 3.30 | | **December 31, 2023** | **3,224,983** | **$16.75** | **2.8** | [Note 13 – Loss per shares](index=22&type=section&id=Note%2013%20%E2%80%93%20Loss%20per%20shares) Basic and diluted loss per share for the six months ended December 31, 2023, was **$0.86**, a substantial decrease from **$81.10** in the prior year, primarily due to a significant increase in weighted average shares outstanding Loss Per Share Calculation (Unaudited) | Item | Six Months Ended Dec 31, 2023 ($) | Six Months Ended Dec 31, 2022 ($) | | :--- | :--- | :--- | | **Class A Shares** | | | | Allocated undistributed loss | $(20,089,014) | $(12,177,212) | | Weighted average shares | 23,286,243 | 150,146 | | **Basic and diluted loss per share** | **$(0.86)** | **$(81.10)** | | **Class B Shares** | | | | Allocated undistributed loss | $(1,035,239) | N/A | | Weighted average shares | 1,200,000 | N/A | | **Basic and diluted loss per share** | **$(0.86)** | **N/A** | [Note 14 – Commitments and contingencies](index=23&type=section&id=Note%2014%20%E2%80%93%20Commitments%20and%20contingencies) Management does not anticipate a material adverse impact on the company's financial position, results of operations, or cash flows from various legal actions arising in the ordinary course of business - Management does not expect any material adverse impact from the disposition of various legal actions arising in the ordinary course of business[127](index=127&type=chunk) [Note 15 – Concentrations of risk](index=23&type=section&id=Note%2015%20%E2%80%93%20Concentrations%20of%20risk) The company faces significant vendor concentration risk, with a single vendor accounting for **100%** of accounts payable and two vendors for **99%** of total purchases, while customer concentration remains low - A single vendor accounted for **100%** of the Company's accounts payable as of December 31, 2023[128](index=128&type=chunk) - For the six months ended December 31, 2023, two vendors accounted for **76%** and **23%** of the Company's total purchases[128](index=128&type=chunk) - No customer accounted for more than **10%** of the Company's total revenue for the six months ended December 31, 2023[129](index=129&type=chunk) [Note 16 – Subsequent events](index=23&type=section&id=Note%2016%20%E2%80%93%20Subsequent%20events) On January 26, 2024, the company closed a securities purchase agreement, selling **1,500,000** Class A ordinary shares for approximately **$600,000** in gross proceeds - On January 26, 2024, the company closed a securities purchase agreement, selling **1,500,000** Class A ordinary shares for gross proceeds of approximately **$600,000**[130](index=130&type=chunk)

Acquisitions and Disposals - Color Star Technology Co., Ltd. completed the acquisition of Sunway Kids on February 14, 2020, issuing 1,989,262 ordinary shares and $2 million in cash, payable in five installments over five years[112] - The company disposed of Xin Ao Construction Materials, Inc. on May 6, 2020, receiving $600,000 in proceeds for working capital and general corporate purposes[115] - On June 3, 2020, Color Star acquired 100% of Color China Entertainment Limited by issuing 4,633,333 ordinary shares, aiming to develop it into an online performance and education provider[116] - The company sold Sunway Kids on June 25, 2020, for $2.4 million, with $400,000 paid upfront and $2 million in monthly installments over 10 months[117] Fundraising Activities - On September 24, 2021, Color Star raised approximately $21.5 million by selling 22,137,448 ordinary shares and warrants to institutional investors[120] - On February 21, 2022, the company raised approximately $10 million by selling 25,000,000 ordinary shares and warrants to institutional investors[122] - On September 14, 2022, Color Star raised approximately $5.6 million by selling 70,000,000 ordinary shares and warrants to institutional investors[124] - On December 20, 2022, Color Star raised approximately $1.5 million by selling 1,200,000 ordinary shares at $1.25 per share[127] - The company sold 1,120,000 Class A ordinary shares at $0.25 per share in the November Offering, generating $280,000 in gross proceeds[131] Share Structure and Capital - The company completed a 40-for-1 reverse share split on September 26, 2022, reducing outstanding ordinary shares from approximately 261,757,531 to 6,543,938[126] - On March 24, 2023, shareholders approved an amendment to the authorized share capital, introducing Class A and Class B Ordinary Shares[128] - The company's authorized share capital is USD$32,000,000, divided into 700,000,000 Class A Ordinary shares and 100,000,000 Class B Ordinary shares, with 22,511,012 Class A and 1,200,000 Class B shares issued and outstanding as of November 13, 2023[288] - The company's 2023 Amended and Restated Memorandum and Articles authorize the Board of Directors to issue additional Ordinary Shares and establish preferred shares with specific rights and terms[302] - The company's Board of Directors may decline to register any transfer of Ordinary Shares if the transfer instrument is not accompanied by the required documentation or if it involves more than one class of shares[295] - The company's 2023 Amended and Restated Memorandum and Articles include anti-takeover provisions that may discourage, delay, or prevent a change of control, such as the issuance of preferred shares without shareholder approval[304] Financial Performance - Revenue for the year ended June 30, 2023 was $0, compared to $16.5 million in 2022, a 100% decrease[202][203] - Cost of revenue for 2023 was $0, compared to $8.5 million in 2022, a 100% decrease[203][204] - Gross profit for 2023 was $0, compared to $8.0 million in 2022[204] - Selling, general and administrative expenses increased by $1.1 million (8%) to $15.0 million in 2023[205] - Provision for expected credit losses increased by $9.9 million (100%) to $9.9 million in 2023[208] - Research and development expenses decreased by $68.2 million (100%) to $0.1 million in 2023[209] - Stock compensation expenses decreased by $1.2 million (26%) to $3.5 million in 2023[209] - Loss from operations decreased by $41.1 million (52%) to $37.8 million in 2023[210] - Net loss decreased by $39.4 million (51%) to $37.9 million in 2023[200][211] - Revenue increased by 144% to $16.5 million in FY 2022 compared to $6.8 million in FY 2021[212][213] - Online music education academy subscription revenue grew by 271% to $16.5 million in FY 2022 from $4.5 million in FY 2021[213] - Cost of revenue for the online music education academy increased by 288% to $8.5 million in FY 2022 from $2.2 million in FY 2021[215][216] - Gross profit for the online education academy App was $8.0 million in FY 2022, with a gross profit percentage of 48.3%[216] - Selling, general and administrative expenses increased by 145% to $13.9 million in FY 2022 from $5.7 million in FY 2021[217][218] - Research and development expenses surged to $68.3 million in FY 2022, primarily for augmented reality functions in the Color World App[219] - Net loss increased to $77.2 million in FY 2022 from $8.2 million in FY 2021[221][223] Cash Flow and Financing - Cash and cash equivalents were $0.2 million as of June 30, 2023, with working capital at $10.7 million[224] - Net cash used in operating activities from continuing operations was $7.9 million in FY 2023[229] - Net cash used in operating activities for the year ended June 30, 2023 totaled $7.9 million, primarily due to a net loss of $37.8 million and non-cash adjustments including $9.9 million for expected credit losses and $9.4 million for impairment loss of long-lived assets[230] - Net cash used in operating activities for the year ended June 30, 2022 totaled $29.4 million, primarily due to a net loss of $77.2 million and non-cash adjustments including $4.7 million for stock compensation expense[231] - Net cash used in operating activities for the year ended June 30, 2021 totaled $2.8 million, primarily due to a net loss of $9.6 million and non-cash adjustments including $5.7 million for stock compensation expense[232] - Net cash used in investing activities for the year ended June 30, 2022 totaled $14.2 million, primarily due to the purchase of intangible assets of $15.1 million[234] - Net cash used in investing activities for the year ended June 30, 2021 totaled $66.9 million, primarily due to a $52.0 million prepayment to a software development vendor for augmented reality functions in the Color World App[234] - Net cash provided by financing activities for the year ended June 30, 2023 totaled $7.2 million, primarily due to the sale of units through private placement offerings totaling $6.5 million[235] - Net cash provided by financing activities for the year ended June 30, 2022 totaled $44.3 million, primarily due to the sale of ordinary shares of $43.9 million[235] - Net cash provided by financing activities for the year ended June 30, 2021 totaled $67.5 million, primarily due to the sale of ordinary shares of $62.3 million[236] Platform and User Engagement - The Color World platform has over 300,000 registered users and generates revenue through paid fees priced at $9.90 per user per view of star teachers' video classes[143] - The company has signed contracts with over 50 global artists and professionals for their services as instructors on the Color World platform[144] - The company's Color World Online Concert in September 2020 attracted over 500,000 viewers and reached over 10 million hits on global social media networks[145] - The company partnered with the WBA to organize boxing competitions, with the first match in August 2023 garnering over 4 million viewers[148] - The company's proprietary live broadcasting technology allows up to 200,000 people to join live broadcasting activities simultaneously[152] - The company's Color World platform, launched globally in September 2020, has transformed into a metaverse platform with "artificial intelligence + celebrity entertainment" as its core features, featuring over 50 celebrity teachers and global superstar collaborations[189] Legal and Regulatory Compliance - The company operates under Singapore's Broadcasting Act 1994, which mandates automatic class licensing for internet content providers without specific applications, and requires compliance with the Internet Code of Practice[164] - The company is subject to the Protection from Online Falsehoods and Manipulation Act (POFMA) in Singapore, which allows government ministers to issue directions to internet intermediaries for correcting or disabling false statements of fact[165] - Online games offered by the company are generally exempt from Singapore's video game classification system under the Films Act 1981, as they are only available via internet download[166] - The company does not anticipate Singapore's online gambling laws, including the Remote Gambling Act 2014 and the Gambling Control Bill, to apply to its gaming business due to the absence of in-game facilities for converting virtual rewards to real-world money or merchandise[168] - The company is subject to Singapore's Consumer Protection (Fair Trading) Act 2003, which prohibits unfair practices such as misleading consumers or making false claims in e-commerce transactions[171] - The company must comply with Singapore's Consumer Protection (Trade Descriptions and Safety Requirements) Act 1975, which prohibits false trade descriptions on goods and imposes criminal liability for violations[172] - The company's online games and computer programs qualify for copyright protection under Singapore's Copyright Act 2021, which grants exclusive rights to authors of protected works[176] - The company is subject to Singapore's Competition Act 2004, which prohibits anti-competitive practices and imposes financial penalties of up to 10% of turnover for infringements[181] Corporate Governance and Compensation - The company had 47 full-time employees as of June 30, 2023[154] - Total compensation for Wei Zhang, Chairman of the Board, increased from $196,291 in 2022 to $449,450 in 2023, driven by a significant rise in stock awards from $26,700 to $277,450[265] - Louis Lou, Chief Executive Officer, received total compensation of $53,175 in 2023, primarily from stock awards of $30,675[265] - Farhan Qadir, Former Chief Executive Officer, earned $383,361 in 2023, with $320,100 from stock awards[265] - Lili Jiang, Chief Financial Officer, saw a decrease in total compensation from $418,140 in 2022 to $300,663 in 2023, with stock awards dropping from $238,140 to $175,163[265] - Non-executive directors, including Hung-Jen Kuo and Honglei Jiang, each earned $36,000 and $18,000 respectively in fees for fiscal year 2023[266] - The company's Audit Committee, chaired by Honglei Jiang, is responsible for selecting independent auditors and reviewing related-party transactions[271] - The Compensation Committee, chaired by Ahmad Khalfan Ahmad Saeed Almansoori, oversees executive compensation and long-term incentive plans[273] - The Corporate Governance and Nominating Committee, chaired by Hung-Jen Kuo, identifies qualified individuals for board membership and develops corporate governance guidelines[274] - The company has no related party transactions exceeding $120,000 since the beginning of fiscal year 2021[280] Intellectual Property and Assets - The company has one copyright and one domain name: www.colorstarinternational.com[153] - As of June 30, 2023, the company held $14.0 million in copyrights, net of accumulated amortization, compared to $25.6 million as of June 30, 2022[241] Shareholder Information - Vast Ocean, Inc. is the largest shareholder with 9.78% ownership of the company's ordinary shares[278] - The company's shareholders holding at least 25% of the paid-up share capital can requisition an extraordinary general meeting, but the company's articles do not provide shareholders with the right to propose resolutions at general meetings[307] Business Strategy and Future Plans - The company plans to transform the Color World App into a paid subscription model, expected to resume revenue generation in November 2023[226] - The company has never declared or paid any dividends on its ordinary shares and does not anticipate doing so in the future, as it plans to retain all future earnings for operations and business expansion[285] - The company's Class A ordinary shares are listed on the Nasdaq Capital Market under the symbol "ADD" and have been trading since February 25, 2013[286] - The company is an exempted company under Cayman Islands law, which allows it to conduct business mainly outside the Cayman Islands and exempts it from certain regulatory requirements, such as filing annual returns or holding annual general meetings[309]

[PART I](index=7&type=section&id=PART%20I) [Key Information](index=7&type=section&id=Item%203.%20Key%20Information) The company faces significant risks from its new metaverse business model, operational execution, and historical stock volatility [Risk Factors](index=7&type=section&id=3.D.%20Risk%20Factors) Key risks include challenges with the new metaverse business model, reliance on the 'Color World' platform, and historical Nasdaq non-compliance - The company has a **limited operating history** with its current business model, having transitioned from a concrete business in 2020 and pivoting to a **metaverse focus in January 2022**, making future prospects difficult to predict[25](index=25&type=chunk) - The success of the business is **heavily dependent on the 'Color World' metaverse platform**, and failure to operate it as planned, gain user acceptance, or compete effectively could materially harm the business[32](index=32&type=chunk) - The company has a **history of non-compliance with Nasdaq's listing requirements**, including the minimum bid price and stockholders' equity rules, and failure to maintain compliance could lead to delisting[82](index=82&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) - The company's operations in China expose it to **significant regulatory risks**, including complex and evolving licensing for online audio-visual programs and data protection laws[50](index=50&type=chunk)[52](index=52&type=chunk)[54](index=54&type=chunk) - As a foreign private issuer, the company is **exempt from certain SEC reporting and governance requirements** applicable to U.S. domestic companies, which may result in less information for investors[104](index=104&type=chunk)[105](index=105&type=chunk) [Information on The Company](index=24&type=section&id=Item%204.%20Information%20on%20The%20Company) The company has transformed from a concrete business into an entertainment technology firm centered on its 'Color World' metaverse platform [History and Development of the Company](index=24&type=section&id=4.A.%20History%20and%20Development%20of%20the%20Company) The company's history details its pivot from concrete to entertainment tech, including name changes and a reverse stock split - The company **transitioned from a concrete business to an entertainment technology company**, marked by the disposition of its concrete subsidiary in May 2020 and the acquisition of Color China Entertainment in June 2020[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - In January 2022, the 'Color World' platform was **transformed into a metaverse** with 'artificial intelligence + celebrity entertainment' as its core features[138](index=138&type=chunk) - The company completed a **40-for-1 reverse share split** on September 26, 2022, to regain compliance with Nasdaq's minimum bid price requirement[135](index=135&type=chunk) - The company changed its stock ticker symbol from **'CSCW' to 'ADD'** effective November 1, 2022[136](index=136&type=chunk) [Business Overview](index=28&type=section&id=4.B.%20Business%20Overview) The business centers on the 'Color World' metaverse platform, which generates revenue from user fees amid intense market competition - The core business is the 'Color World' online platform, which transformed in January 2022 into a **metaverse centered on 'artificial intelligence + celebrity entertainment'**[138](index=138&type=chunk) - Revenue is generated primarily through **paid fees on the Color World platform**, which had over 300,000 registered users as of the report date[146](index=146&type=chunk) - The company faces **significant competition** in the highly fragmented entertainment industry and the rapidly evolving metaverse market from established players with greater resources[140](index=140&type=chunk)[141](index=141&type=chunk) - Operations are subject to **extensive regulations in China and Singapore**, covering areas like online audio-visual program transmission, data privacy, and internet content[161](index=161&type=chunk)[165](index=165&type=chunk)[204](index=204&type=chunk) [Organizational Structure](index=44&type=section&id=4.C.%20Organizational%20structure) The company's corporate structure consists of the parent entity and its wholly-owned subsidiaries - The company's organizational structure is presented in a chart within the report[232](index=232&type=chunk) [Property, Plants and Equipment](index=44&type=section&id=4.D.%20Property%2C%20Plants%20and%20Equipment) The company's principal executive offices are located in leased space in New York City - The company's principal executive offices are leased in New York at 7 World Trade Center under a **one-year lease ending June 30, 2023**[233](index=233&type=chunk) [Operating and Financial Review and Prospects](index=44&type=section&id=Item%205.%20Operating%20and%20Financial%20Review%20and%20Prospects) A surge in R&D spending drove a significant net loss in FY2022, raising substantial doubt about its going concern status [Operating Results](index=44&type=section&id=5.A.%20Operating%20Results) Revenue grew significantly in FY2022, but a massive increase in R&D expenses led to a substantially wider net loss **Fiscal Year 2022 vs 2021 Operating Results** | | 2022 | 2021 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $16,519,081 | $6,783,957 | $9,735,124 | 144% | | **Gross Profit** | $7,972,241 | $2,644,706 | $5,327,535 | 201% | | **Research and development expenses** | ($68,275,869) | ($817,794) | $67,458,075 | 8,249% | | **Loss from operations** | ($78,898,070) | ($9,655,606) | $69,242,464 | 717% | | **Net loss** | ($77,208,118) | ($8,238,513) | $68,969,605 | 837% | - Revenue from the online music education academy subscription **increased by 271% to $16.5 million** in FY2022, up from $4.5 million in FY2021[247](index=247&type=chunk) - Research and development expenses **skyrocketed to $68.3 million** in FY2022 from $0.8 million in FY2021, primarily for the development of augmented reality functions in the Color World App[251](index=251&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=5.B.%20Liquidity%20and%20Capital%20Resources) The company has a precarious liquidity position and is highly dependent on equity financing to fund its significant operating losses - Management has determined that recurring operating losses, negative cash flows, and an **accumulated deficit of $147.4 million** raise **substantial doubt about the company's ability to continue as a going concern**[278](index=278&type=chunk)[535](index=535&type=chunk) - The company is **heavily reliant on external funding**, having raised net proceeds of approximately **$43.9 million from equity financing in FY2022** and an additional $5.6 million in September 2022[277](index=277&type=chunk)[279](index=279&type=chunk) **Summary of Cash Flows** | | For the Year Ended June 30, 2022 | For the Year Ended June 30, 2021 | | :--- | :--- | :--- | | **Net cash used in operating activities** | ($29,403,078) | ($2,803,980) | | **Net cash used in investing activities** | ($14,219,652) | ($66,923,243) | | **Net cash provided by financing activities** | $44,320,854 | $67,512,616 | [Research and Development, Patents and Licenses, etc.](index=56&type=section&id=5.C.%20Research%20and%20Development%2C%20Patents%20and%20Licenses%2C%20etc.) R&D spending increased dramatically in FY2022 to develop augmented reality functions for the Color World App - **R&D spending was approximately $68.3 million** for the year ended June 30, 2022, focused on developing augmented reality functions in the Color World App[293](index=293&type=chunk) - As of June 30, 2022, the company held **copyrights with a net book value of approximately $25.6 million**[294](index=294&type=chunk) [Critical Accounting Estimates](index=58&type=section&id=5.E.%20Critical%20Accounting%20Estimates) Critical accounting estimates involve the valuation of long-lived assets, stock-based compensation, and deferred tax assets - Key critical accounting estimates include the **impairment of long-lived assets, fair value of stock-based compensation, and valuation of deferred tax assets**[297](index=297&type=chunk) - Long-lived assets are reviewed for impairment when events indicate their carrying value may not be recoverable, based on **undiscounted cash flow analysis**[299](index=299&type=chunk) - Stock-based compensation is measured at fair value on the grant date, requiring management to make **assumptions about stock volatility, expected life, and interest rates**[302](index=302&type=chunk) [Directors, Senior Management and Employees](index=59&type=section&id=Item%206.%20Directors%2C%20Senior%20Management%20and%20Employees) This section details executive leadership, compensation, board committee structure, and minimal insider share ownership [Compensation](index=61&type=section&id=6.B.%20Compensation) Executive compensation in FY2022 comprised salaries and significant stock awards for key officers and fees for directors **Executive Compensation for Fiscal Year Ended June 30, 2022** | Name and Principal Position | Salary ($) | Stock Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | | Wei Zhang, Chairman | 169,591 | 26,700 | 196,291 | | Lili Jiang, CFO | 180,000 | 238,140 | 418,140 | | Lucas Capetian, Former CEO | 61,905 | 45,900 | 107,805 | | Biao Lu, Chief Artistic Officer | 120,000 | 209,183 | 329,183 | [Board Practices](index=62&type=section&id=6.C.%20Board%20Practices) The board's three independent committees—Audit, Compensation, and Governance—are all composed of the same three directors - The company has an Audit Committee, a Compensation Committee, and a Corporate Governance and Nominating Committee[323](index=323&type=chunk) - **All three board committees consist of the same three independent directors**: Ahmad Khalfan Ahmad Saeed Almansoori, Hung-Jen Kuo, and Long Yi[324](index=324&type=chunk)[327](index=327&type=chunk) [Share Ownership](index=64&type=section&id=6.E.%20Share%20Ownership) Share ownership by directors and executives is minimal, with one principal shareholder holding over 9% of shares - As of November 11, 2022, all directors and officers as a group beneficially owned **0.26% of the company's ordinary shares**[333](index=333&type=chunk) - **Hou Sing International Business Limited is the largest shareholder**, with 9.13% beneficial ownership[333](index=333&type=chunk) [Major Shareholders and Related Party Transactions](index=65&type=section&id=Item%207.%20Major%20Shareholders%20and%20Related%20Party%20Transactions) The company's primary major shareholder is Hou Sing International, with related party transactions consisting mainly of interest-free loans **Other Payables – Related Parties as of June 30, 2022** | Name of Related Party | Relationship | Nature | Amount ($) | | :--- | :--- | :--- | :--- | | Weili He | Former CFO | Salary Payable | 10,711 | | Hui Xu | General Manager of CACM | Interest-free loan, due on demand | 350,000 | | Jehan Zeb Khan | Director and Former Co-Acting CEO | Interest-free loan, due on demand | 2,173 | | **Total** | | | **362,884** | [Financial Information](index=66&type=section&id=Item%208.%20Financial%20Information) The company has never paid dividends and intends to retain all future earnings to finance operations - The company has **never declared or paid dividends** and does not anticipate paying any in the foreseeable future[339](index=339&type=chunk) [Additional Information](index=67&type=section&id=Item%2010.%20Additional%20Information) The company is governed by Cayman Islands law and warns U.S. investors of potential adverse tax consequences from its PFIC status - The company is a **Cayman Islands exempted company**, governed by its Memorandum and Articles of Association and Cayman Islands law, which differs from U.S. corporate law[349](index=349&type=chunk)[381](index=381&type=chunk) - As of November 11, 2022, the authorized share capital is **US$32,000,000 divided into 800,000,000 ordinary shares** with a par value of US$0.04 each[350](index=350&type=chunk) - The company warns that it may be classified as a **Passive Foreign Investment Company (PFIC)** for U.S. federal income tax purposes, which could result in adverse tax consequences for U.S. Holders of its shares[425](index=425&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=81&type=section&id=Item%2011.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks include significant liquidity risk, inflation risk, and interest rate risk - The company is exposed to **significant liquidity risk**, defined as the risk of being unable to provide sufficient capital to meet commitments and business needs[441](index=441&type=chunk) [PART II](index=83&type=section&id=PART%20II) [Controls And Procedures](index=83&type=section&id=Item%2015.%20Controls%20And%20Procedures) Management concluded that disclosure controls and procedures were ineffective due to material weaknesses in internal control - Management concluded that as of June 30, 2022, the company's **disclosure controls and procedures were not effective**[454](index=454&type=chunk) - **Material weaknesses were identified** in internal control over financial reporting, including: (1) personnel lacking requisite knowledge of U.S. GAAP, and (2) ineffective supervision of controls[456](index=456&type=chunk) [Other Information (Items 16A-16I)](index=84&type=section&id=Item%2016.%20Other%20Information) This section covers governance topics including the audit committee financial expert, accountant fees, and a change in auditors - The board has identified **Long Yi as the audit committee financial expert**[458](index=458&type=chunk) **Principal Accountant Fees** | Fee Category | Year Ended June 30, 2022 | Year Ended June 30, 2021 | | :--- | :--- | :--- | | Audit fees | $205,700 | $155,000 | | All other fees | $18,760 | $20,279 | | **Total** | **$224,460** | **$175,279** | - On April 7, 2021, the company **dismissed Wei, Wei & Co., LLP and appointed Audit Alliance LLP** as its new independent registered public accounting firm[465](index=465&type=chunk)[468](index=468&type=chunk) [PART III](index=87&type=section&id=PART%20III) [Financial Statements](index=87&type=section&id=Item%2018.%20Financial%20Statements) The audited financial statements include a going concern uncertainty warning from the auditor due to recurring losses - The independent auditor's report expresses **substantial doubt about the Company's ability to continue as a going concern** due to recurring operating losses, negative cash flows, and an accumulated deficit[493](index=493&type=chunk)[499](index=499&type=chunk) - **Critical Audit Matters** identified by the auditor include the going concern evaluation and the impairment assessment on intangible assets, which were valued at $25.6 million[497](index=497&type=chunk)[501](index=501&type=chunk) **Consolidated Balance Sheet Highlights (as of June 30)** | | 2022 | 2021 | | :--- | :--- | :--- | | **Total current assets** | $27,866,008 | $7,642,627 | | **Total assets** | $53,463,194 | $81,075,167 | | **Total current liabilities** | $5,019,430 | $4,124,666 | | **Total shareholders' equity** | $48,443,764 | $76,950,501 | **Consolidated Statement of Operations Highlights (Year Ended June 30)** | | 2022 | 2021 | | :--- | :--- | :--- | | **Revenue** | $16,519,081 | $6,783,957 | | **Gross Profit** | $7,972,241 | $2,644,706 | | **Loss from Operations** | ($78,898,070) | ($9,655,606) | | **Net Loss** | ($77,208,118) | ($8,238,513) | | **Loss per share (basic & diluted)** | ($19.90) | ($4.84) | [Exhibits](index=87&type=section&id=Item%2019.%20Exhibits) This section lists all exhibits filed with the report, including governance documents and material contracts

Part I [Key Information](index=5&type=section&id=Item%203.%20Key%20Information) This section presents selected financial data for fiscal years 2019-2021, showing significant FY2021 revenue growth alongside persistent net losses, and outlines substantial risks from limited operating history, platform reliance, regulatory uncertainties, and NASDAQ compliance challenges [Selected Financial Data](index=5&type=section&id=3.A.%20Selected%20Financial%20Data) The company reported **$6.78 million** revenue in FY2021 after a business model shift, yet incurred **$9.66 million** operating losses, while total assets dramatically increased to **$81.08 million** Summary Consolidated Statements of Operations Data (in USD) | Indicator | 2021 (USD) | 2020 (USD) | 2019 (USD) | | :--- | :--- | :--- | :--- | | Revenue | 6,783,957 | - | - | | Gross Profit | 2,644,706 | - | - | | Loss from operations | (9,655,606) | (5,163,601) | (6,658,029) | | Net loss | (8,238,513) | (11,626,597) | (14,388,530) | Summary Consolidated Balance Sheet Data (as of June 30, in USD) | Indicator | 2021 (USD) | 2020 (USD) | | :--- | :--- | :--- | | Total current assets | 7,642,627 | 3,160,996 | | Total assets | 81,075,167 | 7,119,331 | | Total liabilities | 4,124,666 | 528,833 | | Total shareholders' equity | 76,950,501 | 6,590,498 | [Risk Factors](index=6&type=section&id=3.D.%20Risk%20Factors) The company faces substantial risks from its recent business model transition, including limited operating history, 'Color World' platform success, regulatory uncertainties in China, and NASDAQ listing non-compliance - The company transitioned from a concrete business to its current online entertainment and education model in 2020, creating a limited operating history which makes future prospects difficult to evaluate[20](index=20&type=chunk) - The success of the 'Color World' platform, launched in October 2020, is critical. Failure to innovate, attract 'Star Teachers' and subscribers, or compete effectively could adversely affect results[29](index=29&type=chunk)[34](index=34&type=chunk)[37](index=37&type=chunk) - The company faces significant regulatory risks in China, including the requirement for a License for Online Transmission of Audio-Visual Programs, for which it is not eligible as a non-state-controlled entity. It also faces evolving cybersecurity laws, such as the PRC Data Security Law and draft amendments to Cybersecurity Review Measures, which could impose new compliance burdens and penalties[48](index=48&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - The company has faced non-compliance with NASDAQ's minimum bid price and stockholder equity requirements, receiving multiple notices. Failure to maintain compliance could lead to delisting, which would impair liquidity and the ability to raise capital[96](index=96&type=chunk)[99](index=99&type=chunk)[102](index=102&type=chunk) - As a foreign private issuer, the company is exempt from certain SEC reporting and governance rules applicable to U.S. domestic companies, such as filing quarterly reports on Form 10-Q and certain proxy solicitation rules, resulting in less information and protection for investors[117](index=117&type=chunk)[118](index=118&type=chunk) [Information On The Company](index=23&type=section&id=Item%204.%20Information%20On%20The%20Company) Color Star Technology transformed by divesting its concrete business and acquiring Color China, pivoting to online entertainment and education via its 'Color World' platform, facing intense competition and complex PRC regulations [History and Development of the Company](index=23&type=section&id=4.1%20History%20and%20Development%20of%20the%20Company) The company significantly evolved from a concrete business, redomiciling to Cayman Islands, disposing of legacy operations, acquiring Color China for online entertainment, and changing its stock ticker to 'CSCW' - The company completed the disposition of its legacy concrete business, BVI-ACM (and its VIE, Xin Ao), on May 6, 2020, due to deteriorating performance and market conditions in China[127](index=127&type=chunk)[128](index=128&type=chunk) - Acquired Color China Entertainment Limited on June 3, 2020, to become an online performance and music education provider, issuing **4,633,333 ordinary shares** and agreeing to pay **$2 million**[129](index=129&type=chunk) - Acquired Sunway Kids in February 2020 but disposed of it in June 2020 due to operational difficulties caused by the COVID-19 pandemic[124](index=124&type=chunk)[130](index=130&type=chunk) - Changed its stock ticker to 'CSCW' on October 1, 2020, to represent 'Color Star Color World,' its new business focus[132](index=132&type=chunk) [Business Overview](index=25&type=section&id=4.2%20Business%20Overview) Color Star operates the 'Color World' online platform, offering celebrity-led courses, concerts, and NFT products, competing in online education by focusing on 'star online + entertainment teaching' and live interaction - The company's primary business is the 'Color World' online cultural entertainment platform, which offers celebrity-led courses, concert videos, and merchandise[134](index=134&type=chunk) - The company plans to create and sell digital arts (NFT) products from artists, offering them exclusively on the Color World platform[135](index=135&type=chunk) - The company's competitive strategy focuses on 'star online + entertainment teaching' with live interaction, aiming to connect Western and Asian artists with a global student base[141](index=141&type=chunk) - Growth strategy targets the expanding online education market and the 'fan economy' in Asia, leveraging an experienced management team and all-star instructor lineup[142](index=142&type=chunk) [Operations](index=28&type=section&id=4.3%20Operations) The company's 'Color World' platform generates revenue from **$9.90/month** subscriptions with over **500,000** users, hosts online concerts, plans merchandise sales, and relies heavily on a single vendor for **89%** of purchases - The 'Color World' platform generates revenue from a **$9.90/month** subscription fee and had over **500,000 registered users** as of the report date[148](index=148&type=chunk) - The company has held successful online concerts, including one that attracted over **500,000 viewers** and another featuring DJ Steve Aoki[151](index=151&type=chunk) - A single vendor accounted for **89%** of the company's total purchases for the fiscal year ended June 30, 2021[154](index=154&type=chunk) - As of the report date, the company employed **55 full-time** and **2 part-time employees**[159](index=159&type=chunk) [Regulations](index=30&type=section&id=4.4%20Regulations) The company's China operations are subject to complex and evolving regulations, including VATS, audio-visual program licensing (for which it is ineligible), internet culture, and stringent data security laws, with potential cybersecurity review for foreign listings - The company's online services may require a Value-added Telecommunications Business Operating License (VATS License) and an ICP License for commercial internet information services in the PRC[161](index=161&type=chunk)[162](index=162&type=chunk) - Providing online audio-visual programs in China requires a specific license that is generally only available to state-owned or state-controlled entities, which the company is not. This poses a significant compliance risk[165](index=165&type=chunk) - The company is subject to strict PRC laws on data security and privacy, including the PRC Cyber Security Law and the PRC Data Security Law, which impose obligations on collecting, using, and protecting personal information[51](index=51&type=chunk)[184](index=184&type=chunk) - Draft amendments to the Cybersecurity Review Measures propose that companies holding personal information of more than **one million users** must file for a cybersecurity review before listing outside China. The company believes it does not currently meet this threshold but acknowledges the uncertainty[48](index=48&type=chunk)[188](index=188&type=chunk) [Operating And Financial Review And Prospects](index=35&type=section&id=Item%205.%20Operating%20And%20Financial%20Review%20And%20Prospects) FY2021 saw Color Star generate **$6.78 million** revenue from its new online business, but operating loss widened to **$9.66 million** due to increased expenses, with liquidity heavily reliant on **$67.5 million** in equity financing and a **$52 million** software development prepayment [Operating Results](index=36&type=section&id=5.A.%20Operating%20Results) FY2021 revenue reached **$6.78 million** from online subscriptions and concerts, yielding **$2.64 million** gross profit, but operating loss increased to **$9.66 million** due to significant increases in SG&A, R&D, and stock compensation expenses FY2021 vs. FY2020 Operating Results (in USD) | Item | FY 2021 (USD) | FY 2020 (USD) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **6,783,957** | **-** | **6,783,957** | **100%** | | Gross Profit | 2,644,706 | - | 2,644,706 | 100% | | SG&A Expenses | (5,664,675) | (1,598,984) | 4,065,691 | 254% | | R&D Expenses | (817,794) | (120,000) | 697,794 | 582% | | Stock Comp. Expense | (5,717,900) | (3,444,617) | 2,273,283 | 66% | | Loss from Operations | (9,655,606) | (5,163,601) | 4,492,005 | 87% | | Net Loss | (8,238,513) | (11,626,597) | (3,388,084) | (29)% | FY2021 Revenue Breakdown (in USD) | Revenue Source | Amount (USD) | | :--- | :--- | | Online music education academy subscription | 4,453,957 | | Online concert subscription | 2,330,000 | | **Total Revenue** | **6,783,957** | - The increase in SG&A expenses in FY2021 was primarily due to higher salary expenses (**$1.3 million**), depreciation (**$1.5 million**), and professional fees (**$0.6 million**) as the company expanded its new online business[205](index=205&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=5.B.%20Liquidity%20and%20Capital%20Resources) As of June 30, 2021, the company held **$0.2 million** cash, relying on **$67.5 million** in FY2021 equity financing, with a major **$52.0 million** prepayment for software development impacting investing activities - As of June 30, 2021, the company had cash and cash equivalents of approximately **$0.2 million**[220](index=220&type=chunk) Summary of Cash Flows (in USD) | Cash Flow Activity | FY 2021 (USD) | FY 2020 (USD) | FY 2019 (USD) | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | (2,803,980) | (2,738,989) | (1,002,383) | | Net cash used in investing activities | (66,923,243) | (1,394,728) | - | | Net cash provided by financing activities | 67,512,616 | 4,802,901 | 950,000 | - In FY2021, the company raised net proceeds of approximately **$62.3 million** from sales of ordinary shares and **$5.2 million** from the exercise of warrants[221](index=221&type=chunk) - A major cash outflow in FY2021 was a **$52.0 million** prepayment to a vendor for the development of augmented reality functions in the Color World App[228](index=228&type=chunk) [Directors, Senior Management And Employees](index=43&type=section&id=Item%206.%20Directors%2C%20Senior%20Management%20And%20Employees) This section outlines the company's leadership, including CEO Basil Wilson, executive compensation with significant stock awards, the independent board committees, and major shareholder Hou Sing International Business Limited - Key leadership includes Basil Wilson (CEO and Chairman), Lili Jiang (CFO), and Biao Lu (Chief Artistic Officer)[240](index=240&type=chunk) FY2021 Compensation for Named Executive Officers (in USD) | Name and Principal Position | Salary (USD) | Stock Awards (USD) | Total (USD) | | :--- | :--- | :--- | :--- | | Basil Wilson, Chairman and CEO | 15,000 | 14,000 | 29,000 | | Lili Jiang, CFO | 180,000 | 308,400 | 488,400 | | Biao Lu, Chief Artistic Officer | 198,000 | 509,917 | 707,917 | - The Board's Audit, Compensation, and Nominating committees are each composed of the three independent directors: Long Yi, Hung-Jen Kuo, and Yingxian Xiang[259](index=259&type=chunk)[262](index=262&type=chunk) - As of October 27, 2021, Hou Sing International Business Limited was the only major shareholder with **5.47%** ownership. All directors and officers as a group beneficially owned less than **1%** of outstanding shares[265](index=265&type=chunk)[266](index=266&type=chunk) [Major Shareholders And Related Party Transactions](index=48&type=section&id=Item%207.%20Major%20Shareholders%20And%20Related%20Party%20Transactions) Major shareholder information is in Item 6.E; significant related party transactions include the **$600,000** disposition of BVI-ACM to former officers and Hou Sing's **$300,000** loan and **$4.3 million** debt settlement for shares - The company sold its subsidiary BVI-ACM to two former officers, Xianfu Han and Weili He, for **$600,000**. The transaction was completed on May 6, 2020[269](index=269&type=chunk) - During FY2020, shareholder Hou Sing lent the company **$300,000** for operating expenses, which was subsequently repaid with ordinary shares[272](index=272&type=chunk) - Shareholder Hou Sing settled a debt of approximately **$4.3 million** owed by the company's former entity to employees and received **2,911,000 ordinary shares** in exchange[273](index=273&type=chunk) [Additional Information](index=50&type=section&id=Item%2010.%20Additional%20Information) This section details the company's Cayman Islands corporate structure, including **200 million** authorized shares and anti-takeover provisions, outlines differences in corporate law, and addresses PRC exchange controls and U.S. tax risks like PRC resident enterprise and PFIC classification - The company is a Cayman Islands exempted company. Its authorized share capital is **$200,000** divided into **200,000,000 ordinary shares** with a par value of **$0.001** each[280](index=280&type=chunk) - The company's articles contain anti-takeover provisions, such as authorizing the Board to issue preferred shares without shareholder approval[295](index=295&type=chunk) - There is a risk that the company could be classified as a 'PRC resident enterprise' for tax purposes, which could subject it to a **25%** tax on worldwide income and impose withholding taxes on dividends paid to non-PRC shareholders[335](index=335&type=chunk) - The company may be considered a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, which would result in adverse tax consequences for U.S. Holders of its shares, such as special tax rules on 'excess distributions' and gains from sale[349](index=349&type=chunk)[352](index=352&type=chunk) Part II [Controls and Procedures](index=65&type=section&id=Item%2015.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of June 30, 2021, due to material weaknesses in internal control over financial reporting, including insufficient U.S. GAAP knowledge and ineffective supervision, with remediation plans underway - Management concluded that disclosure controls and procedures were not effective as of June 30, 2021[368](index=368&type=chunk) - Material weaknesses in internal control over financial reporting were identified, including: - Personnel lacking requisite knowledge and training in U.S. GAAP - Ineffective supervision of the company's internal and disclosure controls[368](index=368&type=chunk) - Remediation plans include establishing an internal audit function or engaging an external consulting firm to assist with Sarbanes-Oxley compliance and improve internal controls[368](index=368&type=chunk) [Corporate Governance and Other Matters](index=67&type=section&id=Item%2016.%20Corporate%20Governance%20and%20Other%20Matters) This section details corporate governance, including Long Yi's qualification as an audit committee financial expert, the adoption of a Code of Conduct, the auditor change to Audit Alliance LLP, and the company's adherence to Cayman Islands home country practice as a foreign private issuer - The board has determined that Long Yi is an 'audit committee financial expert' as defined by SEC rules[371](index=371&type=chunk) Principal Accountant Fees (in USD) | Fee Category | Year Ended June 30, 2021 (USD) | Year Ended June 30, 2020 (USD) | | :--- | :--- | :--- | | Audit fees | 155,000 | 165,000 | | All other fees | 20,279 | 14,500 | | **TOTAL** | **175,279** | **179,500** | - On April 7, 2021, the company dismissed its independent registered public accounting firm, Wei, Wei & Co., LLP, and engaged Audit Alliance LLP[377](index=377&type=chunk)[379](index=379&type=chunk) - As a foreign private issuer, the company follows Cayman Islands home country practice, which exempts it from certain NASDAQ shareholder approval rules for equity issuances, such as those involving **20%** or more of the company's stock[381](index=381&type=chunk) Part III [Financial Statements](index=70&type=section&id=Item%2018.%20Financial%20Statements) This section presents audited consolidated financial statements for FY2019-2021, with Audit Alliance LLP identifying long-lived asset valuation as a critical audit matter, detailing the company's transition, significant asset growth to **$81.1 million**, reliance on equity financing, and material internal control weaknesses [Report of Independent Registered Public Accounting Firm](index=78&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Audit Alliance LLP issued an unqualified opinion on FY2021 financial statements, identifying 'Valuation of long-lived assets' (**$9 million** PPE, **$12 million** intangibles) as a Critical Audit Matter due to estimation complexity from the new business model - The auditor, Audit Alliance LLP, issued an unqualified opinion on the FY2021 financial statements[399](index=399&type=chunk) - A Critical Audit Matter was identified regarding the valuation of long-lived assets (property, plant, and equipment of **$9 million** and intangible assets of **$12 million**), due to significant management judgment and estimation uncertainty in forecasting future revenues and discount rates for the new business model[402](index=402&type=chunk) [Consolidated Financial Statements](index=81&type=section&id=Consolidated%20Financial%20Statements) The June 30, 2021, consolidated balance sheet shows total assets surged to **$81.1 million** from **$7.1 million** in 2020, driven by a **$52 million** prepayment, while FY2021 operations reported **$6.8 million** revenue and an **$8.2 million** net loss Consolidated Balance Sheet Highlights (as of June 30, in USD) | Account | 2021 (USD) | 2020 (USD) | | :--- | :--- | :--- | | Cash and cash equivalents | 174,189 | 988,696 | | Total current assets | 7,642,627 | 3,160,996 | | Prepayments, non-current | 52,000,000 | - | | Property, plant and equipment, net | 9,160,214 | 3,958,335 | | Intangible assets, net | 12,272,326 | - | | **Total assets** | **81,075,167** | **7,119,331** | | Total liabilities | 4,124,666 | 528,833 | | **Total shareholders' equity** | **76,950,501** | **6,590,498** | Consolidated Statement of Operations Highlights (Year ended June 30, in USD) | Account | 2021 (USD) | 2020 (USD) | 2019 (USD) | | :--- | :--- | :--- | :--- | | Revenue | 6,783,957 | - | - | | Gross Profit | 2,644,706 | - | - | | Loss from Continuing Operations | (9,638,613) | (5,168,642) | (6,659,422) | | Gain/(Loss) from Discontinued Operations | 1,400,100 | (6,457,955) | (7,729,108) | | **Net Loss** | **(8,238,513)** | **(11,626,597)** | **(14,388,530)** | [Notes to the Consolidated Financial Statements](index=86&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes detail the company's transformation, including discontinued operations, new revenue recognition from online services, reliance on **$67 million** in equity financing, a **$76.5 million** software development commitment with **$52 million** prepaid, and significant NOLs with full valuation allowances - The company's business now consists of online entertainment and education services through its subsidiary Color China, following the disposition of its legacy concrete business (BVI-ACM) and the Sunway Kids education unit in 2020[427](index=427&type=chunk)[438](index=438&type=chunk)[439](index=439&type=chunk) - Revenue is generated from online education academy subscriptions (recognized ratably over the membership period) and online concerts (recognized at a point in time on the day of the event)[457](index=457&type=chunk)[460](index=460&type=chunk) - The company entered into a software development agreement for its Color World platform for a total consideration of **$76.5 million** and has made prepayments of **$52 million** as of the report date[444](index=444&type=chunk) - In FY2021, the company raised approximately **$62.3 million** from the sale of **57.3 million ordinary shares** and approximately **$5.2 million** from the exercise of **13.7 million warrants**[443](index=443&type=chunk)[564](index=564&type=chunk) - The company has significant net operating loss carryforwards in the U.S. (~**$0.9 million**) and Hong Kong (~**$0.6 million**) but has recorded a full valuation allowance against the related deferred tax assets due to uncertainty of realization[530](index=530&type=chunk)[531](index=531&type=chunk)

PART I [Item 1. Identity of Directors, Senior Management and Advisers](index=3&type=section&id=Item%201.%20Identity%20of%20Directors%2C%20Senior%20Management%20and%20Advisers) This section is not applicable as per the report - The report states that Item 1, concerning the identity of directors, senior management, and advisers, is not applicable[12](index=12&type=chunk) [Item 2. Offer Statistics and Expected Timetable](index=3&type=section&id=Item%202.%20Offer%20Statistics%20and%20Expected%20Timetable) This section is not applicable as per the report - The report states that Item 2, concerning offer statistics and the expected timetable, is not applicable[12](index=12&type=chunk) [Item 3. Key Information](index=6&type=section&id=Item%203.%20Key%20Information) This section provides selected financial data and outlines significant risks to the company. Financially, the company reported a net loss of $11.6 million for the fiscal year ended June 30, 2020. Key risks include those related to its new business model in online entertainment and education, the impact of COVID-19, regulatory uncertainties in China, and challenges in maintaining its NASDAQ listing [Selected Financial Data](index=6&type=section&id=3.A.%20Selected%20Financial%20Data) The company reported a net loss of $11.6 million in fiscal 2020, an improvement from a $14.4 million net loss in 2019. Total assets decreased significantly to $7.1 million in 2020 from $54.2 million in 2019, primarily due to the disposal of discontinued operations. Total shareholders' equity increased to $6.6 million from $0.5 million over the same period Summary Consolidated Statements of Operations Data (in $) | Indicator | For the Year Ended June 30, 2020 | For the Year Ended June 30, 2019 | For the Year Ended June 30, 2018 | | :--- | :--- | :--- | :--- | | Loss from operations | (5,163,601) | (6,658,029) | (2,307,106) | | Loss from continuing operations | (5,168,642) | (6,659,422) | (2,307,119) | | Loss from discontinued operations | (6,457,955) | (7,729,108) | (5,092,846) | | **Net loss** | **(11,626,597)** | **(14,388,530)** | **(7,399,965)** | Summary Consolidated Balance Sheet Data (in $) | Indicator | As of June 30, 2020 | As of June 30, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | 988,696 | 319,514 | | Total assets | 7,119,331 | 54,165,033 | | Total liabilities | (528,833) | (53,644,235) | | **Total shareholders' equity** | **6,590,498** | **520,798** | [Risk Factors](index=7&type=section&id=3.D.%20Risk%20Factors) The company faces significant risks, including a limited operating history with its new online entertainment and education business model, potential need for additional capital, and adverse effects from the COVID-19 pandemic. It also highlights operational risks such as reliance on the 'Color World' platform, competition, and cybersecurity threats. Regulatory risks in China, particularly concerning licenses for online audio-visual programs, are substantial. Furthermore, ownership risks include potential NASDAQ delisting for failing to meet minimum bid price and stockholder equity requirements, stock price volatility, and implications of being a foreign private issuer - The company transitioned from a concrete business to its current online entertainment and music education model in 2020, resulting in a limited operating history which makes future prospects difficult to evaluate[20](index=20&type=chunk) - The COVID-19 pandemic has materially affected operations in both the U.S. and China, causing disruptions and uncertainties that could adversely impact business, financial condition, and results of operations[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) - The company faces regulatory uncertainty in China regarding the need for a License for Online Transmission of Audio-Visual Programs. As a non-state-owned entity, it is ineligible to apply for such a license, which could lead to penalties if its services are deemed to require one[50](index=50&type=chunk)[52](index=52&type=chunk) - The company has faced non-compliance issues with NASDAQ's minimum bid price and stockholder equity requirements, leading to delisting notices. While compliance was regained at times, the company was under a Panel Monitor and received another non-compliance notice for the bid price requirement in October 2020[93](index=93&type=chunk)[95](index=95&type=chunk)[98](index=98&type=chunk) - As a foreign private issuer, the company is exempt from certain SEC reporting and governance requirements applicable to U.S. domestic companies, such as filing quarterly reports on Form 10-Q and certain proxy solicitation rules, which may result in less information and protection for investors[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) [Item 4. Information On The Company](index=24&type=section&id=Item%204.%20Information%20On%20The%20Company) This section details the company's transformation from a concrete manufacturer to an entertainment and education company. It outlines its history, including key acquisitions and disposals, and describes its current business model centered on the 'Color World' online platform. The company's competitive landscape, growth strategies, operational structure, and the complex regulatory environment in China are also discussed [History and Development of the Company](index=24&type=section&id=4.1%20History%20and%20Development%20of%20the%20Company) Color Star Technology, formerly a concrete business (China Advanced Construction Materials Group), underwent a significant transformation. In 2020, it acquired and then disposed of Sunway Kids (preschool education) and its legacy concrete business (Xin Ao). It then acquired Color China Entertainment in June 2020, pivoting to its current focus on online entertainment and education. The company also changed its name to Color Star Technology and its ticker to 'CSCW' to reflect this new direction - The company disposed of its legacy concrete business, BVI-ACM (and its VIE, Xin Ao), on May 6, 2020, due to deteriorating performance and adverse market conditions in China[130](index=130&type=chunk)[131](index=131&type=chunk) - Acquired Color China Entertainment Limited on June 3, 2020, for 4,633,333 ordinary shares and **$2 million**, shifting its business focus to online performance and music education[133](index=133&type=chunk) - Acquired Sunway Kids in February 2020 but disposed of it on June 25, 2020, as the COVID-19 pandemic prevented normal operations[134](index=134&type=chunk) - Changed its name to Color Star Technology Co., Ltd. on April 27, 2020, and its NASDAQ ticker symbol to 'CSCW' on October 1, 2020, to align with its new business focus on the 'Color Star Color World' platform[132](index=132&type=chunk)[135](index=135&type=chunk) [Business Overview](index=26&type=section&id=4.2%20Business%20Overview) The company operates as an entertainment and education provider through its 'Color World' online platform, launched in September 2020. This platform offers celebrity-taught courses in music, sports, and culture, along with concert videos and merchandise. It aims to build an entertainment industry chain combining online and offline elements, though offline plans are delayed by COVID-19. The company leverages its management's industry connections to attract international artists and students, positioning itself in the growing online education and 'fan economy' markets - The company launched its online platform 'Color World' on September 10, 2020, which operates in China and features curriculum in music, sports, animation, and more, taught by over **50 contracted celebrity teachers**[138](index=138&type=chunk) - The 'Color World' platform includes celebrity lectures, concert videos, branded merchandise, and interactive communication, aiming to build a comprehensive cultural and entertainment industry chain[138](index=138&type=chunk) - The business model relies on a 'star online + entertainment teaching' concept, differentiating itself from competitors like MasterClass through live interaction and a focus on bridging Asian and Western entertainment markets[146](index=146&type=chunk) - The company's growth strategy targets the rapidly expanding online education market (projected to reach over **$319 billion by 2025**) and the rise of 'fan economies' in Asia[148](index=148&type=chunk) [Regulations](index=31&type=section&id=4.3%20Regulations) The company's operations in China are subject to a complex web of regulations. Key areas include value-added telecommunications services, which may require an ICP License, and the online transmission of audio-visual programs, which has stringent licensing requirements under SAPPRFT rules that the company may not meet. The company also faces regulations for internet live streaming, production of radio/TV programs, internet culture activities, and online publishing. Furthermore, it must comply with strict laws on internet information security and privacy protection, including the PRC Cyber Security Law - Operations may require a Value-added Telecommunications Business Operating License (VATS License) and an ICP License for commercial internet information services in the PRC[172](index=172&type=chunk)[173](index=173&type=chunk) - The company faces significant regulatory risk regarding the License for Online Transmission of Audio-Visual Programs, as it is generally restricted to state-owned or state-controlled entities. The company believes its educational content does not fall under this requirement but acknowledges the uncertainty[175](index=175&type=chunk)[52](index=52&type=chunk) - Internet live streaming services are regulated by the CAC and SAPPRFT, requiring providers to verify user identities, file with local authorities, and potentially obtain specific licenses for broadcasting certain types of events[180](index=180&type=chunk)[181](index=181&type=chunk) - The company is subject to comprehensive PRC laws on internet security and privacy protection, such as the Cyber Security Law, which mandates user consent for data collection and imposes strict obligations on handling personal information[190](index=190&type=chunk)[191](index=191&type=chunk)[194](index=194&type=chunk) [Item 5. Operating and Financial Review and Prospects](index=38&type=section&id=Item%205.%20Operating%20And%20Financial%20Review%20And%20Prospects) This section analyzes the company's financial performance and condition, reflecting its strategic shift to an online entertainment and education business. For fiscal 2020, the company reported a net loss of $11.6 million, a decrease from $14.4 million in 2019, largely due to a gain on the sale of discontinued operations. The company's liquidity has been supported by several equity financings. Management expresses confidence in having sufficient funds for the next twelve months despite the capital-intensive nature of its new business [Operating Results](index=38&type=section&id=5.A.%20Operating%20Results) For the fiscal year ended June 30, 2020, the company's net loss decreased to $11.6 million from $14.4 million in 2019. The loss from continuing operations was $5.2 million, down from $6.7 million, due to lower SG&A and stock compensation expenses. The loss from discontinued operations decreased to $6.4 million from $7.7 million, primarily because of a $6.6 million gain on the sale of the BVI-ACM concrete business, which offset operational losses and a loss on the sale of Sunway Kids Comparison of Operating Results (FY2020 vs. FY2019) | Item | 2020 ($) | 2019 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Selling, general and administrative expenses | (1,598,984) | (2,065,829) | (466,845) | (23)% | | Stock compensation expense | (3,444,617) | (4,592,200) | (1,147,583) | (25)% | | Loss from continuing operations | (5,168,642) | (6,659,422) | (1,490,780) | (22)% | | Loss from discontinued operations | (6,457,955) | (7,729,108) | (1,271,153) | (16)% | | **Net loss** | **(11,626,597)** | **(14,388,530)** | **(2,761,933)** | **(19)%** | - The decrease in loss from discontinued operations was mainly due to a gain on the sale of BVI-ACM of approximately **$6.6 million**, which was partially offset by a loss on the sale of Sunway Kids of approximately **$0.8 million**[217](index=217&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=5.B.%20Liquidity%20and%20Capital%20Resources) As of June 30, 2020, the company had approximately $1.0 million in cash and cash equivalents and working capital of $2.6 million. Its liquidity has been significantly bolstered by equity financing, raising $4.5 million during fiscal 2020 and an additional $11.8 million subsequent to the fiscal year-end. Net cash used in continuing operating activities was $2.7 million. Management believes these funds are sufficient to meet working capital requirements for the next twelve months - As of June 30, 2020, the company had cash and cash equivalents of approximately **$1.0 million** and working capital of approximately **$2.6 million**[226](index=226&type=chunk)[227](index=227&type=chunk) - The company raised approximately **$4.5 million** from the sale of ordinary shares during the year ended June 30, 2020, and an additional **$11.8 million** through three more equity financing rounds subsequent to the fiscal year-end[228](index=228&type=chunk) Summary of Net Cash Flow (in $) | Activity | For the Year Ended June 30, 2020 | For the Year Ended June 30, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities from continuing operations | (2,738,989) | (1,002,383) | | Net cash used in investing activities from continuing operations | (1,394,728) | - | | Net cash provided by financing activities from continuing operations | 4,802,901 | 950,000 | [Item 6. Directors, Senior Management and Employees](index=44&type=section&id=Item%206.%20Directors%2C%20Senior%20Management%20And%20Employees) This section provides details on the company's leadership and governance. As of the report date, Biao (Luke) Lu served as CEO and Chairman. Compensation for executives includes both salary and significant stock-based awards. The board consists of five members, with three independent directors forming the Audit, Compensation, and Nominating Committees. Share ownership information reveals several major shareholders holding over 5% of ordinary shares - Biao (Luke) Lu, an experienced veteran in the Chinese entertainment industry, was appointed CEO and Chairman on July 17, 2020[243](index=243&type=chunk)[244](index=244&type=chunk) Executive Compensation for Fiscal Year 2020 | Name and Principal Position | Salary ($) | Stock Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | | Yang (Sean) Liu, VP of Technology (former CEO) | 30,000 | 329,550 | 359,550 | | Lili Jiang, Director and CFO | 30,000 | 308,400 | 338,400 | Major Shareholders (as of Nov 11, 2020) | Name of Beneficial Owners | Shares Beneficially Owned | % Ownership | | :--- | :--- | :--- | | Jie Yang | 3,000,000 | 5.54% | | Hou Sing International Business Limited | 3,825,395 | 7.06% | | Liang Li | 4,170,000 | 7.70% | [Item 7. Major Shareholders and Related Party Transactions](index=50&type=section&id=Item%207.%20Major%20Shareholders%20And%20Related%20Party%20Transactions) This section details transactions with related parties. The most significant transaction was the sale of the company's former subsidiary, BVI-ACM, to two former officers, Mr. Xianfu Han and Mr. Weili He, for $600,000 in May 2020. Other transactions include outstanding salary payables to these former officers and loans from a major shareholder, Hou Sing, which were subsequently converted into equity - On May 6, 2020, the Company completed the disposition of its subsidiary BVI-ACM to two former officers, Xianfu Han and Weili He, for cash consideration of **$600,000**[274](index=274&type=chunk) - During fiscal 2020, shareholder Hou Sing lent the company **$300,000** for operating expenses, which was later repaid through the issuance of ordinary shares[278](index=278&type=chunk) - Debts owed to employees Na Wang and Wei Zhang, totaling approximately **$4.3 million**, were assumed by shareholder Hou Sing and converted into **2,911,000 ordinary shares** in March 2020[523](index=523&type=chunk)[280](index=280&type=chunk) [Item 10. Additional Information](index=53&type=section&id=Item%2010.%20Additional%20Information) This section covers corporate and legal matters. As a Cayman Islands exempted company, its governance is dictated by its Memorandum and Articles, which differ from U.S. corporate law, particularly in areas like shareholder rights and merger approvals. The company is not subject to exchange controls in the Cayman Islands but faces significant currency controls in the PRC. Tax considerations highlight the risk of being classified as a PRC resident enterprise and a Passive Foreign Investment Company (PFIC) for U.S. tax purposes, both of which could have adverse consequences for shareholders - The company is a Cayman Islands exempted company, which provides for different corporate governance and shareholder rights compared to a U.S. (Delaware) corporation, particularly regarding shareholder proposals, mergers, and director duties[284](index=284&type=chunk)[319](index=319&type=chunk) - The company is at risk of being classified as a PRC resident enterprise for tax purposes, which could subject its global income to a **25% PRC enterprise income tax** and impose withholding taxes on dividends paid to non-PRC shareholders[351](index=351&type=chunk) - For U.S. federal income tax purposes, the company may be classified as a Passive Foreign Investment Company (PFIC), which could result in adverse tax consequences for U.S. Holders, including punitive tax rates on certain distributions and gains[365](index=365&type=chunk)[368](index=368&type=chunk)[369](index=369&type=chunk) PART II [Item 15. Controls and Procedures](index=68&type=section&id=Item%2015.%20Controls%20And%20Procedures) Management concluded that as of June 30, 2020, the company's disclosure controls and procedures were not effective. This was due to material weaknesses in internal control over financial reporting, specifically a lack of personnel with sufficient knowledge of U.S. GAAP and ineffective supervision. The company is developing a remediation plan, which includes establishing an internal audit function or engaging an external firm - Management concluded that disclosure controls and procedures were not effective as of June 30, 2020, due to material weaknesses in internal control over financial reporting[387](index=387&type=chunk) - Identified material weaknesses include: (1) personnel lacking requisite knowledge and training in U.S. GAAP, and (2) ineffective supervision of internal and disclosure controls[387](index=387&type=chunk) - Remedial measures being considered include establishing an internal audit function or engaging an external consulting firm to assist with Sarbanes-Oxley compliance and improve internal controls[389](index=389&type=chunk) [Item 16. Other Information](index=69&type=section&id=Item%2016.%20Other%20Information) This section covers various governance and compliance topics. The audit committee is composed of three independent directors, with Xiaoyuan Zhang identified as the financial expert. The company has adopted a code of ethics. A change in certifying accountant occurred in October 2018, with Wei, Wei & Co., LLP replacing Friedman LLP. The company also notes it follows its home country (Cayman Islands) corporate governance practices for certain security issuances, which differ from NASDAQ standards for domestic companies - The Board has determined that Xiaoyuan Zhang qualifies as an 'audit committee financial expert' under SEC rules[391](index=391&type=chunk) Principal Accountant Fees ($) | Fee Category | Year Ended June 30, 2020 | Year Ended June 30, 2019 | | :--- | :--- | :--- | | Audit fees | 165,000 | 387,529 | | All other fees | 14,500 | 6,000 | | **TOTAL** | **179,500** | **393,529** | - In October 2018, the company's independent registered public accounting firm, Friedman LLP, resigned and was replaced by Wei, Wei & Co., LLP[397](index=397&type=chunk)[402](index=402&type=chunk) - The company follows its home country (Cayman Islands) practice regarding shareholder approval for certain equity issuances, which is an exemption from NASDAQ Listing Rule 5635 applicable to domestic issuers[404](index=404&type=chunk) PART III [Item 18. Financial Statements](index=72&type=section&id=Item%2018.%20Financial%20Statements) This section contains the audited consolidated financial statements for the fiscal years ended June 30, 2020, 2019, and 2018, and the accompanying notes. Key notes detail the significant business transformation through acquisitions and disposals, including the asset acquisition of Color China and the disposal of the legacy concrete business (BVI-ACM) and the short-lived Sunway Kids venture. The notes also highlight significant subsequent events, including multiple large equity financings and asset purchases after the fiscal year-end, which have substantially impacted the company's capital structure and liquidity - The acquisition of Color China in June 2020 was accounted for as an asset acquisition, as it did not meet the definition of a business. The total consideration was approximately **$4.0 million**, consisting of shares and cash[439](index=439&type=chunk)[503](index=503&type=chunk) - The disposal of the legacy concrete business (BVI-ACM) on May 6, 2020, resulted in a recognized gain on sale of approximately **$6.6 million**[446](index=446&type=chunk)[513](index=513&type=chunk) - The disposal of Sunway Kids on June 25, 2020, resulted in a recognized loss on sale of approximately **$0.8 million**[442](index=442&type=chunk)[515](index=515&type=chunk)[516](index=516&type=chunk) - Subsequent to June 30, 2020, the company raised significant capital through multiple offerings, including approximately **$4.2 million** in July 2020 and **$6.6 million** in September 2020[448](index=448&type=chunk)[449](index=449&type=chunk)[577](index=577&type=chunk)[579](index=579&type=chunk) - On August 21, 2020, the company acquired stage performance machinery and equipment for a total price of **$6.8 million**, paid with **$3.0 million** in cash and **6,060,318 ordinary shares**[450](index=450&type=chunk)[580](index=580&type=chunk)