Blue Hat Interactive Entertainment Technology Announces First Half Year of 2020 Unaudited Financial Results
XIAMEN, China, Aug. 14, 2020 /PRNewswire/ -- Blue Hat Interactive Entertainment Technology ("Blue Hat" or the "Company") (NASDAQ: BHAT), a producer, developer and operator of augmented reality ("AR") interactive entertainment games, toys and educational materials in China, today announced its unaudited financial results for the six months ended June 30, 2020.
First Half Year of 2020 Financial Highlights
-- Total revenues decreased by 34.9% for the six months ended June 30, 2020
to US$4.9 million.
-- Gross profit decreased by 30.8% for the six months ended June 30, 2020
to US$3.7 million.
-- Income from operations decreased by 50.8% for the six months ended June
30, 2020 to US$1.6 million.
-- Net income decreased by 58.8% for the six months ended June 30, 2020 to
US$1.3 million.
"The outbreak of COVID-19 since the beginning of 2020 has adversely impacted the global economy and our financial performance in the first half year was negatively affected as a result of the suspension of the entire industry. With daily life in China gradually returning to normal since April, our business related to education industry ramped up during the period," said Mr. Xiaodong Chen, Chief Executive Officer of Blue Hat, "I'm pleased that our thriving smart education business line made a significant addition to our portfolio. 'AR Immersive Classes' ('ARIC'), integrated with physical exercises in terms of AR-based educational content and products, targets children between three and six years old. Interactive education combines teaching with entertainment, inspiring kids with imagination and critical thinking. We build Direct-to-Consumer social content marketing channels via short videos and live streaming to increase our brand awareness, and broaden our market reach. Looking forward, we intend to continue to explore both in-house development and strategic investment opportunities to strengthen our pipeline of toy and game content and maximize shareholder value."
Recent Developments
-- Blue Hat announced in January 2020 that its AR child abuse prevention
course would be introduced in 25 preschools in Tong'an District, Xiamen
City as a compulsory part of the curriculum for children before they
graduate from kindergarten.
-- In February 2020, Blue Hat announced a new suite of smart educational
products "AR Immersive Classes" ("ARIC"), which includes "Smart Screen
Immersive Education Classes", "Smart Immersive Cognitive Education
Classes" and "Smart Immersive Physical Education Classes.", and upgrades
System for Evaluating Developmental Progress of Preschool Students in
China.
-- In March 2020, Blue Hat's "Interactive System Based on Light Intensity
Recognition" received U.S. patent with the number US 10,512,836 B2 from
the United States Patent and Trademark Office.
-- In May 2020, Blue Hat announced that it has signed a three-year
partnership with smart education service provider, Sutesen Information
Technology Ltd., to expand Blue Hat's Smart Immersive Education Classes,
or ARIC, in Guangxi province, China. The partnership aims to
commercially launch ARIC in up to 1,000 Guangxi preschools in three
years.
-- In June 2020, Blue Hat announced that it has partnered with Xiamen Xing
Meng Wei Lai Culture Media Co. LTD, a leading Chinese multi-channel
network and internet content development agency, to build
Direct-to-Consumer social content marketing channels via short videos
and live streaming.
-- In July 2020, Blue Hat entered into a Securities Purchase Agreement with
two accredited institutional investors to sell senior secured
convertible notes of the Company in a private placement to the
investors, in the aggregate principal amount of $3,262,000, together
with the issuance of warrants to acquire up to 784,000 ordinary shares
of the Company for an aggregate cash purchase price of $2,800,000
(reflecting an original issue discount of $462,000).
First Half 2020 Results
Total revenues were $4.9 million for the six months ended June 30, 2020, a decrease of $2.6 million, or 34.9%, from $7.5 million for the same period ended June 30, 2019. The overall decrease was primarily attributed to the fewer sales of interactive toys (game series) during the period, partially offset by revenue from ARIC, which was launched to the market this year.
Gross profit was $3.7 million for the six months ended June 30, 2020, a decline of $1.6 million, or 30.8%, from $5.3 million for the same period ended June 30, 2019. Gross profit margin was 75.2% for the six months ended June 30, 2020, compared to 70.8% for the same period of 2019. Research and development expenses of mobile games recorded in Cost of Sales are fully amortized this February, consequently, gross profit ratio increased by 4.4%.
Operating expenses were $ 2,032,696 for the six months ended June 30, 2020, an increase of $47,752, or 2.4%, from $1,984,944 for the same period ended June 30, 2019. This increase was mainly due to the increase of general and administrative expenses amounted to $221,638, offset by the decrease of selling expense of around $119,705. Fixed cost increased during the first half of 2020 mainly due to the amortization of newly incurred rental cost and software patents. Legal expenses accounted for an obvious growth of general and administrative expenses in connection with our recent financing.
Income from operations was $1.6 million for the six months ended June 30, 2020, a decrease of $1.7 million, or 50.8%, from $3.3 million for the same period ended June 30, 2019.
Net income attributable to ordinary shareholders was $1.3 million for the six months ended June 30, 2020, compared with $3.1 million for the same period ended June 30, 2019. or $0.04 and $0.09 per basic and diluted share respectively.
Cash and Cash Equivalents
As of June 30, 2020, BHAT maintained strong cash resources of cash and cash equivalents totaling $11.4 million, compared with $10.5 million by the ended of December 31, 2019.
About Blue Hat
Blue Hat Interactive Entertainment Technology is a producer, developer and operator of AR interactive entertainment games and toys in China, including interactive educational materials, mobile games, and toys with mobile game features. The Company's interactive entertainment platform creates unique user experiences by connecting physical items to mobile devices, which creates a rich visual and interactive environment for users through the integration of real objects and virtual scenery. Distinguished by its own proprietary technology, Blue Hat aims to create an engaging, interactive and immersive community for its users. For more information, please visit the Company's investor relations website at http://ir.bluehatgroup.com. The Company routinely provides important information on its website.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. In evaluating such statements, prospective investors should review carefully various risks and uncertainties identified in this release and matters set in the Company's SEC filings. These risks and uncertainties could cause the Company's actual results to differ materially from those indicated in the forward-looking statements.
Contacts:
Lexie Zhang
Blue Hat Interactive Entertainment Technology
Phone: +86 (592) 228-0010
Email: ir@bluehatgroup.net
BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
ASSETS 2020 2019
CURRENT ASSETS
Cash and cash equivalents
US $
11,372,626
US $
10,478,587
Accounts receivable, net 14,420,292 13,631,359
Other receivables, net 12,972,825 13,182,529
Prepayments, net 277,376 299,577
Inventories 249,563 125,264
Restricted cash 5,000,000
Total current assets 39,292,682 42,717,316
PROPERTY AND EQUIPMENT, NET 4,417,195 2,324,823
OTHER ASSETS
Prepayments 4,660,489 4,425,849
Operating lease, right-of-use asset 501,136 679,850
Intangible assets, net 6,423,487 6,758,316
Long-term investments 1,702,098 1,727,301
Deferred tax assets 188,872 182,234
Total other assets 13,476,082 13,773,550
Total assets US $
57,185,959 US $
58,815,689
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term loans - banks 1,963,415 5,819,787
Current maturities of long-term loans
- third 51,915 77,493
party
Accounts payable 1,420,706 293,985
Other payables and accrued liabilities 3,278,340 3,628,809
Other payables - related party 252,989 21,341
Operating lease liabilities-current 264,903 313,460
Customer deposits 3,573
Taxes payable 4,264,275 3,525,153
Total current liabilities 11,500,116 13,680,028
OTHER LIABILITIES
Operating lease liability 255,190 372,051
Long-term loans - third party 13,328
Total other liabilities 255,190 385,379
Total liabilities 11,755,306 14,065,407
COMMITMENTS AND CONTINGENCIES
Total shareholders' equity
Ordinary shares, US$0.001 par value,
50,000,000 35,141
shares authorized, 35,141,114 shares
issued and
outstanding as of June 30, 2020,
35,141,114 shares 35,141
issued and outstanding as of December
31, 2019
Additional paid-in capital 20,771,849 20,771,849
Statutory reserves 1,289,765 1,289,765
Retained earnings 25,391,957 24,132,194
Accumulated other comprehensive income (2,058,059) (1,478,667)
(loss)
Total shareholders' equity 45,430,653 44,750,282
Total liabilities and shareholders'
equity US $
57,185,959 US $
58,815,689
BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the Three Months ended June 30,
---
2020 2019
REVENUES US $
2,611,204 US $
3,176,566
Interactive toys -animation series (148) 11,248
Interactive toys -game series 2,046,625 2,251,849
Mobile games 564,727 913,469
COST OF REVENUES (634,473) (953,732)
GROSS PROFIT 1,976,731 2,222,834
OPERATING EXPENSES
Selling (117,549) (207,263)
General and administrative (1,057,108) (650,605)
Research and development (69,128) (96,148)
Total operating expenses (1,243,785) (954,016)
INCOME FROM OPERATIONS 732,946 1,268,818
OTHER INCOME (EXPENSE)
Interest income 107,507 32
Interest expense (51,053) (18,759)
Other finance expenses 47,581 (724)
Other (expense) income, net 2,328 (105,621)
Total other income, net 106,363 (125,072)
INCOME BEFORE INCOME TAXES 839,309 1,143,746
PROVISION FOR INCOME TAXES (338,919) (55,447)
NET INCOME 500,390 1,088,299
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment 25,968 31,760
COMPREHENSIVE INCOME US $
526,358 US $
1,120,059
WEIGHTED AVERAGE NUMBER OF
ORDINARY SHARES
Basic and diluted 35,141,114 33,000,000
EARNINGS PER SHARE
Basic and diluted
US $
0.01
US $
0.03
BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the Six Months ended June 30,
---
2020 2019
REVENUES US $
4,854,862 US $
7,453,379
Interactive toys -animation series 54 89,391
Interactive toys - game series 3,701,861 6,116,883
Mobile games 1,152,947 1,247,105
COST OF REVENUES (1,203,962) (2,176,756)
GROSS PROFIT 3,650,900 5,276,623
OPERATING EXPENSES
Selling (290,699) (410,404)
General and administrative (1,596,818) (1,375,180)
Research and development (145,179) (199,360)
Total operating expenses (2,032,696) (1,984,944)
INCOME FROM OPERATIONS 1,618,204 3,291,679
OTHER INCOME (EXPENSE)
Interest income 107,884 502
Interest expense (123,660) (65,507)
Other finance expenses (10,168) (1,881)
Other (expense) income, net 20,862 (3,230)
Total other income, net (5,082) (70,116)
INCOME BEFORE INCOME TAXES 1,613,122 3,221,563
PROVISION FOR INCOME TAXES (353,359) (161,346)
NET INCOME 1,259,763 3,060,217
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment (579,392) 12,269
COMPREHENSIVE INCOME US $
680,371 US $
3,072,486
WEIGHTED AVERAGE NUMBER OF
ORDINARY SHARES
Basic and diluted 35,141,114 33,000,000
EARNINGS PER SHARE
Basic and diluted
US $
0.04
US $
0.09
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SOURCE Blue Hat Interactive Entertainment Technology
