Blue Hat(BHAT) - 2023 Q1 - Quarterly Report

Securities Purchase Agreement Recitals This section outlines the agreement's background, signed on March 27, 2023, for Blue Hat to sell up to 4,000,000 common shares at $0.50 to F&P Capital under Securities Act exemptions - The agreement was signed on March 27, 2023, between Blue Hat Interactive Entertainment Technology (the Company) and F&P Capital Management Company Limited (the Purchaser)[3] Share Issuance Details | Item | Content | | :--- | :--- | | Shares Issued | Common Stock | | Quantity Issued | Up to 4,000,000 shares | | Price Per Share | $0.50 | | Price Basis | 90% discount to 20-day VWAP | | Legal Basis | Registration exemption under Section 4(a)(2) and/or Regulation S of the 1933 Securities Act | - The Purchaser is defined as a 'non-U.S. person' under Regulation S, acquiring shares solely for personal investment purposes[5] Article I Purchase and Sale of the Shares This article details the purchase and sale terms, where the Purchaser agrees to buy 4,000,000 common shares at $0.50 each for a total of $2,000,000, with closing contingent on full payment receipt and share delivery Transaction Terms | Item | Amount/Quantity | | :--- | :--- | | Shares Purchased | 4,000,000 shares | | Price Per Share | $0.50 | | Total Purchase Price | $2,000,000 | - The transaction's closing is contingent upon the Company's receipt of the full purchase price[8][9] - The agreement provides specific bank account details for the Company to receive payments in both RMB and USD[10][11] Article II Representations and Warranties This article details mutual representations and warranties, with the Company affirming its legal standing, authority, and SEC compliance, while the Purchaser confirms its non-U.S. person status, investment intent, and understanding of resale restrictions Section 2.1 Representations and Warranties of the Company and its Subsidiaries The Company provides extensive representations and warranties regarding its legal status, authority, capital structure, SEC filings accuracy, absence of material adverse events, asset ownership, legal compliance, and non-investment company status - The Company warrants its legal formation, valid existence, and full authority to enter into and perform this agreement[12][14] - The Company confirms all required SEC filings (Commission Documents) were submitted without material misstatements or omissions at the time of filing[20][21] - The Company guarantees its operations comply with U.S. federal and state laws, and this agreement's execution will not materially conflict with its charter, material contracts, or applicable laws[28][30][31] - The Company affirms it is not an 'investment company' as defined by the 1940 Investment Company Act and will conduct business to avoid such classification[39][40] - The Company confirms its accounting firm, Audit Alliance LLP, is a public accounting firm registered as required by the Exchange Act[46] Section 2.2 Representations and Warranties of the Purchaser The Purchaser provides representations and warranties, confirming its non-U.S. person status, investment intent, understanding of unregistered stock resale restrictions, independent risk assessment, and absence of public solicitation - The Purchaser declares itself a 'non-U.S. person' under Regulation S, acquiring shares solely for investment, not for distribution[49][63] - The Purchaser understands the shares are unregistered under the Securities Act and subject to resale restrictions, requiring a valid registration statement or exemption (e.g., Rule 144 or Regulation S)[51][55][61] - The Purchaser confirms its investment decision is based on independent evaluation, with opportunities to obtain information and ask questions of Company management[53][64] - The Purchaser acknowledges no public solicitation or advertising was used in connection with this offering[59][60] Article III Covenants This article outlines the Company's post-agreement covenants, including SEC notification, price non-manipulation, use of proceeds for working capital, maintaining reporting status, and timely Form 6-K filing - The Company commits to undertaking all necessary actions and filings for this transaction as required by securities regulations[68][69] - The Company pledges not to directly or indirectly engage in any actions intended to stabilize or manipulate its securities price[74] - Net proceeds from the share sale will be used for working capital and general corporate purposes, explicitly prohibiting use for stock redemption, pending litigation, or FCPA violations[76][77] - The Company will maintain its reporting issuer status under the Exchange Act and timely file all required reports until the Purchaser sells all shares[78][79] - If required, the Company will file a Form 6-K with the SEC within four business days of the agreement, disclosing the transaction's terms[80] Article IV Conditions This article specifies closing conditions for both parties, including accurate representations, fulfilled obligations, receipt of payment, board resolutions, Nasdaq listing, and absence of prohibitive injunctions - The Company's obligation to sell shares is conditional on the Purchaser's accurate representations, fulfillment of obligations, receipt of purchase price, and absence of prohibitive court or governmental injunctions[81][82][84][85] - The Purchaser's obligation to buy shares is conditional on the Company's accurate representations, fulfillment of obligations, board resolutions, Nasdaq Capital Market listing, and absence of prohibitive injunctions[87][89][90][91][92][93] Article V Stock Certificate Legend This article mandates a restrictive legend on stock certificates, warning that the securities are unregistered under the 1933 Securities Act and issued via Regulation S exemption, thus limiting U.S. resale without registration or an exemption opinion - Stock certificates must bear a restrictive legend explicitly stating the securities are unregistered under the 1933 Securities Act[95][96] - The legend emphasizes that securities are issued under a Regulation S exemption, restricting U.S. transfers unless registered or an exemption opinion is obtained[96][97] Article VI Indemnification This article defines mutual indemnification for losses arising from material misrepresentations or breaches, capping total liability at the purchase price and detailing claim procedures - Both parties agree to indemnify the other for losses resulting from material misrepresentations, warranties, or covenants breaches by the indemnifying party[99][100] - The maximum aggregate liability for any indemnifying party is capped at the Purchaser's total purchase price ($2,000,000)[101] - The agreement details specific indemnification procedures, including notice to the indemnifying party, defense participation, and settlement processes[102][103] Article VII Miscellaneous This article covers general provisions, including cost allocation, New York jurisdiction for disputes, governing law, entire agreement clause, notice delivery, assignment restrictions, termination by mutual consent, and English version precedence - Parties agree to the exclusive jurisdiction of U.S. federal courts in the Southern District of New York and New York State courts in New York County for dispute resolution[110][111] - This agreement is governed by and construed under the internal laws of the State of New York, without regard to conflict of laws principles[123] - The agreement may be terminated prior to closing by mutual written consent of the Purchaser and the Company[127] - The agreement is executed in English and Chinese, both equally binding, with the English version prevailing in case of conflict[127] Exhibit A Non-U.S. Person Representations This exhibit details the Purchaser's representations as a non-U.S. person, confirming offshore status during the offering, investment intent, and commitment to comply with Regulation S or U.S. securities laws for future resales - The Purchaser declares that both it and its beneficial owners were outside the United States at the time of the offer and acceptance[134] - The Purchaser commits that all subsequent offers and sales of shares will occur outside the U.S. (under Regulation S), pursuant to an effective registration statement, or under an available registration exemption[136][137] - The Purchaser confirms sufficient financial and investment knowledge to evaluate and bear the investment risks, including the potential loss of the entire investment[141][142][143] Exhibit B List of Purchasers This exhibit identifies the sole purchaser, F&P Capital Management Company Limited of Shenzhen, China, and details its purchase of 4,000,000 common shares Purchaser Information | Purchaser Name | Shares Purchased | Address | | :--- | :--- | :--- | | F&P Capital Management Company Limited | 4,000,000 shares | 25th Floor, Block A, Shenye Tairan Building, Futian Districts, Shenzhen, China |