Shares of Blue Hat Interactive Entertainment Technology (NASDAQ:BHAT) tumbled 74% in premarket trading on Friday after the company priced an underwritten public offering of 32,000,000 units at $0.20 per unit. The Cayman Islands-based issuer anticipates gross proceeds of approximately $6.4 million before underwriting discounts and offering expenses.
Each unit being offered comprises one ordinary share and one warrant initially exercisable for one ordinary share. The warrants carry an initial exercise price of $0.20 per share and will expire one year from issuance. They are exercisable immediately at that initial exercise price, subject to formulaic adjustments on the second and fifth trading days following the closing - lowering to 70% and then 50% of the initial exercise price, respectively - accompanied by proportionate increases in the number of underlying ordinary shares.
The offering documentation also describes a zero exercise price option that may be used to exercise the warrants any time within one year from issuance. Under that option, holders exercising without cash payment would receive twice the number of ordinary shares that would be issued on a cash exercise, with no additional consideration required. The units do not carry any stand-alone rights and will not be certificated or issued as separable securities.
The company expects the offering to close on February 23, 2026, subject to customary closing conditions. Blue Hat stated it intends to apply the net proceeds toward working capital and other general corporate purposes.
Under the underwriting arrangement, Maxim Group LLC was granted a 15-day option to purchase up to 4,800,000 additional units - which could include up to 4,800,000 ordinary shares and up to 4,800,000 warrants, in any combination. Legal counsel roles were disclosed: Pryor Cashman LLP is serving as U.S. securities counsel to the company, and Hunter Taubman Fischer & Li LLC is serving as U.S. securities counsel to the underwriter.
Key points
- Blue Hat priced an underwritten offering of 32 million units at $0.20 per unit, implying gross proceeds of about $6.4 million before fees.
- Each unit includes one ordinary share and a warrant exercisable immediately at $0.20, with planned adjustments to 70% and 50% of the initial exercise price on specified post-closing trading days.
- The offering carries an overallotment option for the underwriter to buy up to 4.8 million additional units; expected close date is February 23, 2026, subject to customary conditions.
Risks and uncertainties
- Premarket market reaction was severe - shares fell 74% - signaling high volatility and market sensitivity to the financing; this affects small-cap equities and capital markets participants.
- Adjustment mechanics for the warrants and the zero exercise price option could materially change the number of ordinary shares issued upon exercise, which may affect existing shareholders through dilution.
- Closing is subject to customary conditions; there is no guarantee the offering will close as expected on the stated date, which introduces execution risk for the financing plan and the companys near-term liquidity assumptions.
Investors and market participants should consider the implications of immediate exercisability, adjustment provisions and the zero exercise price option when assessing potential dilution and timing of any equity changes tied to the offering. The company has designated proceeds for working capital and general corporate purposes, but the specifics of those uses were not detailed in the offering description.