[PART I](index=10&type=section&id=PART%20I) [Key Information](index=10&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section presents selected financial data showing consistent net losses and declining health, detailing significant risks including COVID-19 impact and delisting risk [Selected Financial Data](index=10&type=section&id=A.%20Selected%20Financial%20Data) The company experienced a significant five-year financial decline, with sharply falling revenues, persistent net losses, and a substantial decrease in total assets and shareholders' equity Selected Consolidated Financial Data (2018-2019) | Financial Metric | 2019 (USD) | 2018 (USD) | | :--- | :--- | :--- | | **Income Statement Data** | | | | Revenues | 383,458 | 559,386 | | Gross Loss | (360,286) | (198,515) | | Operating Loss | (3,802,375) | (9,260,817) | | Net Loss Attributable to Lianluo Smart | (4,450,994) | (8,910,002) | | Net Loss Per Share (Basic and Diluted) | (0.25) | (0.51) | | **Balance Sheet Data (End of Period)** | | | | Cash and cash equivalents | 22,834 | 477,309 | | Total Assets | 2,333,953 | 5,698,670 | | Total Lianluo Smart Limited shareholders' (deficit) equity | (1,288,789) | 3,116,620 | [Risk Factors](index=12&type=section&id=D.%20Risk%20Factors) The company faces significant business, China-related, and share-related risks, including COVID-19 impact, restructuring challenges, and NASDAQ delisting concerns - The **COVID-19 outbreak** materially and adversely affected business, causing a plunge in service and product revenue in early 2020 due to operational shutdowns, with uncertain long-term impact[23](index=23&type=chunk)[24](index=24&type=chunk)[26](index=26&type=chunk) - The company is undergoing business restructuring to overcome a downturn, focusing on brand strengthening and new product development, where failure could materially harm prospects[49](index=49&type=chunk)[50](index=50&type=chunk) - A **material weakness in internal control over financial reporting** exists due to a lack of qualified accounting personnel with U.S. GAAP and SEC reporting knowledge, potentially leading to material misstatements[82](index=82&type=chunk)[83](index=83&type=chunk)[85](index=85&type=chunk) - The company faces **Nasdaq Capital Market delisting risk** for failing to meet the **$1.00 minimum bid price**, which would limit the public market and impair future capital raising ability[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) - A **dual-class share structure** grants Hangzhou Lianluo, holding Class B shares, approximately **86.3% of voting power**, enabling control over shareholder matters and limiting Class A shareholder influence[150](index=150&type=chunk) [Information on the Company](index=36&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) Lianluo Smart Limited, a BVI holding company, operates in China, restructuring from traditional medical equipment to focus on sleep respiratory analysis and CPR devices with an outsourced manufacturing model [History and Development of the Company](index=36&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) Incorporated in BVI in 2003, the company underwent a pivotal name change and restructuring in 2016 following a **$20 million investment** from Hangzhou Lianluo, focusing on wearable medical devices and raising capital in early 2020 - In 2016, the company changed its name to Lianluo Smart Limited and ticker to LLIT following a **$20 million investment** from Hangzhou Lianluo[175](index=175&type=chunk)[178](index=178&type=chunk) - The company discontinued unprofitable businesses like X-ray and anesthesia machines to focus on wearable medical devices and mobile health products via its 2016 subsidiary, Lianluo Connection[173](index=173&type=chunk)[174](index=174&type=chunk) - In February and March 2020, the company raised capital through three registered direct offerings of Class A Common Shares and concurrent private placements of warrants[180](index=180&type=chunk) [Business Overview](index=40&type=section&id=B.%20Business%20Overview) The company focuses on developing and marketing its OSAS sleep respiratory analysis system and CPR devices, outsourcing manufacturing, with revenue from product sales and OSAS detection services, facing intense competition - The company shifted focus to developing, producing, and marketing its **sleep respiratory analysis system and CPR devices**, discontinuing unprofitable traditional medical equipment[183](index=183&type=chunk) - The company provides **OSAS examination services** to hospitals and medical centers using wearable devices and cloud-based services, charging a fixed technical service fee per user[184](index=184&type=chunk)[197](index=197&type=chunk)[199](index=199&type=chunk) - All manufacturing is **outsourced to third-party producers in China**, lowering operating costs but reducing direct control over production quality and quantity[190](index=190&type=chunk) - In 2019, **two largest customers accounted for 36% of total revenues**, and **two largest suppliers accounted for 100% of total purchases**, indicating significant concentration risk[205](index=205&type=chunk) [Property, Plant and Equipment](index=55&type=section&id=D.%20Property,%20Plant%20and%20Equipment) The company operates from leased properties in Beijing, China, including its principal executive office and storage facilities, with leases expiring in late 2020, and believes current facilities are adequate Leased Properties | Use | Lessee | Location | Expiration | Area (sq. ft) | | :--- | :--- | :--- | :--- | :--- | | Principal Executive Office | Lianluo Smart Limited | Beijing, China | Nov 30, 2020 | 1,172 | | Storage Facility | Lianluo Connection | Beijing, China | Dec 16, 2020 | 323 | | Offices | Lianluo Connection | Beijing, China | Nov 30, 2020 | 4,689 | | Storage Facility | Beijing Dehaier | Beijing, China | Nov 19, 2020 | 6,148 | [Operating and Financial Review and Prospects](index=57&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) The company's financial performance declined in 2019 with falling revenues and a net loss, impacted by COVID-19, facing significant liquidity concerns and a going concern doubt, despite recent equity financing [Operating Results](index=57&type=section&id=A.%20Operating%20Results) In 2019, total revenues decreased by **31% to $0.38 million**, resulting in a **net loss of $4.45 million**, an improvement from 2018 due to reduced expenses and no impairment, though early 2020 was impacted by COVID-19 and management changes Comparison of Operating Results (2018 vs. 2019) | Item | 2019 (USD) | 2018 (USD) | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | 383,458 | 559,386 | -31% | | Gross Loss | (360,286) | (198,515) | +81% | | Selling Expenses | (835,270) | (2,082,829) | -60% | | General & Administrative Expenses | (2,593,808) | (3,675,465) | -29% | | Impairment loss for intangible assets | - | (3,281,779) | -100% | | Operating Loss | (3,802,375) | (9,260,817) | -59% | | Net Loss Attributable to Lianluo Smart | (4,450,994) | (8,910,002) | -50% | - The **COVID-19 pandemic** caused a sharp decrease in revenue from January to February 2020 due to operational suspensions, with operations resuming below normal levels[291](index=291&type=chunk) - In April 2020, Mr. Ping Chen resigned as CEO, replaced by Mr. Zhitao He, the existing Chairman, alongside other board and committee changes[292](index=292&type=chunk)[293](index=293&type=chunk) Revenue by Category (2017-2019) | Category | 2019 (USD) | 2018 (USD) | 2017 (USD) | | :--- | :--- | :--- | :--- | | Product Sales (Medical Devices) | 58,750 | 221,414 | 827,032 | | Product Sales (Mobile Medicine) | 153,644 | 120,930 | 54,979 | | OSAS service (analysis and detection) | 171,064 | 217,042 | - | | **Total Revenues** | **383,458** | **559,386** | **882,011** | [Liquidity and Capital Resources](index=72&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) The company faces critical liquidity with a **$1.56 million working capital deficiency** and going concern doubt as of December 31, 2019, relying on related-party loans, though **$7.2 million in 2020 equity financing** is expected to provide sufficient working capital - As of December 31, 2019, the company reported a **net loss of $4.45 million**, used **$1.67 million cash in operations**, and had a **working capital deficiency of $1.56 million**, raising substantial doubt about its ability to continue as a going concern[357](index=357&type=chunk) - In February and March 2020, the company raised approximately **$7.2 million in net proceeds** from equity financings, which management believes will be sufficient for the next 12 months' working capital requirements[357](index=357&type=chunk)[732](index=732&type=chunk) Summary of Cash Flows (2018-2019) | Cash Flow Activity | 2019 (USD) | 2018 (USD) | | :--- | :--- | :--- | | Net cash used in operating activities | (1,670,903) | (3,629,567) | | Net cash provided by (used in) investing activities | 23,016 | (6,225,827) | | Net cash provided by financing activities | 1,362,681 | 3,700,493 | - Financing activities in 2019 were primarily driven by short-term loans of **$0.94 million** from controlling shareholder Hangzhou Lianluo and **$0.24 million** from former CEO Mr. Ping Chen[364](index=364&type=chunk) [Research and Development](index=76&type=section&id=C.%20Research%20and%20Development) The company significantly curtailed R&D efforts, reducing costs to **zero in 2019** from **$301,713 in 2018**, and downsizing the R&D team to a single engineer Research and Development Expenses (2017-2019) | Year | R&D Costs (USD) | | :--- | :--- | | 2019 | $0 | | 2018 | $301,713 | | 2017 | $344,575 | - As of December 31, 2019, the research and development team consisted of only **1 engineer**[370](index=370&type=chunk) [Directors, Senior Management and Employees](index=76&type=section&id=ITEM%206.%20DIRECTORS,%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) The company's leadership includes Chairman and CEO Zhitao He, with significant 2020 board changes, substantial workforce downsizing to **28 employees** by 2019-end leading to disputes, and highly concentrated share ownership by Hangzhou Lianluo - Mr. Zhitao He serves as Chairman and CEO, also chairing major shareholder Lianluo Interactive, while former CEO Mr. Ping Chen resigned in April 2020 but remains president of PRC subsidiaries[376](index=376&type=chunk)[383](index=383&type=chunk) - In 2019, the company laid off **over 50 employees** due to restructuring, resulting in **34 arbitration complaints** for unpaid salaries and compensation, leading to awards and settlements[401](index=401&type=chunk)[439](index=439&type=chunk) - As of May 14, 2020, Hangzhou Lianluo beneficially owned **100% of Class B Common Shares**, representing **86.64% of aggregate voting power**, granting concentrated control over the company[405](index=405&type=chunk)[407](index=407&type=chunk)[409](index=409&type=chunk) [Major Shareholders and Related Party Transactions](index=86&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) Controlled by Hangzhou Lianluo, the company relies on significant related-party transactions, primarily short-term, non-interest-bearing loans from its controlling shareholder and affiliates to fund operations - During fiscal year 2019, the company borrowed **$942,500** from controlling shareholder Hangzhou Lianluo and **$33,000** from affiliate DGHKT, with these non-interest bearing loans crucial for operations[430](index=430&type=chunk)[432](index=432&type=chunk) - In 2018, a **$6 million loan** to affiliate DGHKT was settled via a debt offset agreement against loans owed by the company to Hangzhou Lianluo, clearing balances between the three parties by year-end 2018[431](index=431&type=chunk)[434](index=434&type=chunk)[435](index=435&type=chunk) - The company leases office premises from its controlling shareholder, Hangzhou Lianluo, incurring **$35,892 in rental expenses** in 2019[428](index=428&type=chunk) [Financial Information](index=88&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section details legal proceedings, including **34 employee arbitration complaints** and supplier disputes, and states the company has never paid cash dividends, intending to retain earnings for business development - In 2019, the company terminated **over 50 employees**, leading to **34 arbitration complaints** and recording liabilities of approximately **$140,393 in termination compensation** and **$428,467 in unpaid salaries**[439](index=439&type=chunk) - The company was involved in supplier arbitrations, settling with Shenzhen JustDo Display Technology for approximately **$53,000** and facing an award of approximately **$18,700** against it from Tianjin Wuqing Bohai Printing[438](index=438&type=chunk)[440](index=440&type=chunk)[441](index=441&type=chunk) - The company has never paid cash dividends and does not anticipate paying any in the foreseeable future, intending to retain earnings to finance business growth[442](index=442&type=chunk) [Additional Information](index=91&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section outlines the company's BVI corporate structure, dual-class share system, significant PRC regulations impacting operations, and tax considerations for BVI, PRC, and U.S. federal income tax - The company has a **dual-class share structure** where Class A shares have one vote and Class B shares have ten votes, concentrating voting power with Class B holders[447](index=447&type=chunk)[448](index=448&type=chunk) - PRC regulations impose significant restrictions on currency conversion and capital accounts, requiring governmental approval for capital account items, which may limit funding for PRC subsidiaries[463](index=463&type=chunk)[466](index=466&type=chunk) - As a BVI entity with 'de facto management' in China, the company risks classification as a PRC resident enterprise, subjecting its worldwide income to a **25% PRC enterprise income tax** and potential withholding taxes for non-PRC shareholders[476](index=476&type=chunk)[479](index=479&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=102&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risks are foreign exchange risk due to RMB/USD fluctuations impacting reported results, with no current hedging, and minimal interest rate risk from low cash holdings and fixed-rate or non-interest-bearing related-party borrowings - The company's main market risk is **foreign exchange risk**, as RMB/USD fluctuations can affect reported net revenues, costs, and net income due to most transactions being in RMB while reporting is in USD[504](index=504&type=chunk)[506](index=506&type=chunk) - The company does not currently engage in currency hedging transactions to mitigate its exposure to foreign exchange rate fluctuations[297](index=297&type=chunk) - Interest rate risk is low, limited to interest income on small cash balances and interest expense on borrowings, which as of December 31, 2019, were primarily fixed-rate or interest-free loans from related parties[503](index=503&type=chunk) [Controls and Procedures](index=104&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) As of December 31, 2019, management concluded that disclosure controls and procedures were ineffective due to a material weakness in internal control over financial reporting, with no attestation report required as a non-accelerated filer - Management concluded that **disclosure controls and procedures were not effective** as of December 31, 2019[516](index=516&type=chunk) - A **material weakness** was identified in internal control over financial reporting due to insufficient qualified accounting personnel with U.S. GAAP and SEC reporting knowledge, and inadequate review functions[520](index=520&type=chunk) - The company plans to remediate the weakness by hiring additional staff familiar with US GAAP and providing training to existing accounting personnel[521](index=521&type=chunk) [Corporate Governance and Other Matters](index=106&type=section&id=ITEM%2016.%20Corporate%20Governance%20and%20Other%20Matters) This section covers corporate governance, including the audit committee financial expert, code of ethics, increased principal accountant fees to **$362,000 in 2019**, a change in certifying accountant to BDO China in January 2020, and adherence to BVI home country practices as a foreign private issuer Principal Accountant Fees (2018-2019) | Fee Type | 2019 (USD) | 2018 (USD) | | :--- | :--- | :--- | | Audit Fees | 362,000 | 183,200 | | Audit-related Fees | - | 55,000 | | Tax Fees | - | - | | **TOTAL** | **362,000** | **238,200** | - On January 20, 2020, the company engaged **BDO China Shu Lun Pan Certified Public Accountants LLP** as its new independent registered public accounting firm, dismissing Centurion[535](index=535&type=chunk) - As a foreign private issuer, the company follows its home country (BVI) practice and did not hold an annual shareholders' meeting in fiscal year 2019, an exemption from NASDAQ listing rules[537](index=537&type=chunk) [PART III](index=108&type=section&id=PART%20III) [Financial Statements](index=108&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) The consolidated financial statements for 2017-2019, prepared under U.S. GAAP, include a 'Going Concern' auditor's report, detailing the company's deteriorating financial position, significant related-party transactions, and material subsequent events like COVID-19 impact and 2020 equity financing - The auditor's report for the 2019 financial statements includes a **'Going Concern' paragraph**, citing negative operating cash flows and raising substantial doubt about the company's ability to continue[546](index=546&type=chunk)[577](index=577&type=chunk) Consolidated Balance Sheet Summary (As of Dec 31) | Item | 2019 (USD) | 2018 (USD) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 22,834 | 477,309 | | Total Current Assets | 1,677,113 | 2,713,362 | | Total Assets | 2,333,953 | 5,698,670 | | **Liabilities & Equity** | | | | Total Current Liabilities | 3,233,112 | 1,452,804 | | Total Liabilities | 3,622,742 | 2,582,050 | | Total Equity (Deficit) | (1,288,789) | 3,116,620 | Consolidated Statement of Operations Summary (Year Ended Dec 31) | Item | 2019 (USD) | 2018 (USD) | 2017 (USD) | | :--- | :--- | :--- | :--- | | Revenues | 383,458 | 559,386 | 882,011 | | Gross loss | (360,286) | (198,515) | (773,959) | | Operating loss | (3,802,375) | (9,260,817) | (5,058,018) | | Net loss | (4,450,994) | (8,910,002) | (5,136,434) | - Subsequent to year-end 2019, the company raised approximately **$7.2 million in net proceeds** from three equity financings in February and March 2020, significantly improving its cash position and shareholders' equity on a pro forma basis[731](index=731&type=chunk)[732](index=732&type=chunk) - The company's business was significantly impacted by the **COVID-19 outbreak** starting in January 2020, leading to service suspensions and operational downsizing to preserve cash[733](index=733&type=chunk)[734](index=734&type=chunk)[735](index=735&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2018 OR ☐ TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of e ...