Blue Hat Announces Financial Results for Second Quarter and First Half of 2021, Highlighted by 269.6% Increase in Revenues to $17.9 Million for First Half 2021


    XIAMEN, China, Oct. 25, 2021 /PRNewswire/ -- Blue Hat Interactive Entertainment Technology ("Blue Hat" or the "Company") (NASDAQ: BHAT), a leading communication services and Internet Data Center ("IDC") business provider and developer, and an operator of mobile games and augmented reality ("AR") education curricula and products in China, today announced its unaudited  financial results for the three months ended June 30, 2021 ("Second Quarter 2021") and six months ended June 30, 2021 ("First Half 2021").

    Second Quarter 2021 and First Half 2021 Financial Highlights

    • Second Quarter 2021 total revenues of US $8.0 million, compared to US $2.6 million in the prior-year period, driven by increased sales across all major business lines, particularly mobile games and communication services.
    • Second Quarter 2021 gross profit of US $4.7 million, up 138.4% from US $2.0 million in the prior-year period
    • Second Quarter 2021 income from operations of US $1.9 million, up 159.0% from US $0.7 million in the prior-year period
    • Second Quarter 2021 net income of US $0.2 million, compared to US $0.5 million in the prior-year period, as a result of increased expenses related to bad debt provision.
    • First Half 2021 total revenues of US $17.9 million, compared to US $4.9 million in the prior-year period
    • First Half 2021 gross profit of US $8.8 million, up 140.9% from US $3.7 million in the prior-year period
    • First Half 2021 income from operations of US $3.6 million, up 124.9% from US $1.6 million in the prior-year period
    • First Half 2021 net income of US $1.4 million, up 9.6% from US $1.3 million in the prior-year period
    • US $11.5 million in cash and cash equivalents at June 30, 2021

    Management Commentary

    Mr. Xiaodong Chen, CEO of Blue Hat, stated, "We continued to see strong growth across all our lines of business in Second Quarter 2021, which resulted in strong top line growth during the Second Quarter 2021 and First Half 2021. We more than tripled growth on the top line in First Half 2021, achieving US $17.9 million in total revenues, largely driven by US $7.1 million in contributions from our new IDC business and an additional US $4.7 million in contributions from mobile games following the integration of recent acquisitions and ongoing development of these businesses in First Half 2021. We remain optimistic about the ongoing growth potential of all of our business segments and were pleased to announce earlier this month that our operating subsidiary Xunpusen Technology Co., Ltd. ("Xunpusen") was engaged as the provider of SMS channel services for JD Cloud, a leading cloud computing brand under tech company JD Technology Group. We believe this new client win further solidifies our position as a leader in communication services and look forward to building upon the positive momentum the Company has established with these results in First Half 2021."

    Recent Operating Highlights

    • In October 2021, Blue Hat announced that Xunpusen signed an agreement to provide SMS channel services for JD Cloud. Xunpusen has been engaged as the channel and port provider for JD Cloud's SMS channels services. The agreement is in effect through May 25, 2022.

    Second Quarter 2021 Results

    Total revenues were US $8.0 million for the Second Quarter 2021, an increase of US $5.4 million, or 206.4%, compared to US $2.6 million in the prior-year period. While COVID-19 posed negative impact on revenues in the prior-year period, the significant revenue growth was primarily attributable to increased contributions from the mobile games and communication services businesses, as well as the acquisitions of Xunpusen and Fuzhou Csfctech Co., Ltd. And its two subsidiaries ("Csfctech") in the Second Quarter 2021.

    Revenues from sales of interactive toys (animation series) were US $0.4 million for the Second Quarter 2021, compared to US $148 in the prior-year period.

    Revenues from sales of interactive toys (game series) were US $2.4 million for the Second Quarter 2021, up 17.8% from US $2.0 million in the prior-year period.

    Revenues from mobile games increased to US $3.4 million for the Second Quarter 2021, from US $0.6 million in the prior-year period, following the acquisition of Csfctech in January 2021.

    Revenues from AR education, previously included under interactive toys (animation series), were US $850 in Second Quarter 2021. Growth in the AR education business has been primarily driven by the roll-out and implementation of Blue Hat's ARIC system to various schools. This business may be subject to seasonality as the Company anticipates higher revenues from AR education in the first and third quarters of a year, coinciding with the beginning of school terms in February and September.

    Revenues from communication services were US $1.8 million for the Second Quarter 2021, compared to nil in the prior-year period. The gain was due to the acquisition of Xunpusen in the second half of 2020.

    Gross profit increased 138.4% to US $4.7 million for the Second Quarter 2021 from US $2.0 million in the prior-year period. Gross margin was 58.9% for the Second Quarter 2021compared to 75.7% in the prior-year period. The decrease was due to higher initial costs associated with establishing the new businesses and integrating acquisitions into the Company's operations.

    Total operating expenses increased to US $2.8 million for the Second Quarter 2021, from US $1.2 million in the prior-year period, as a result of increased selling expenses related to marketing the Company's new businesses and promoting newly launched mobile games following the acquisition of Csfctech, as well as increased R&D expenses related to the development of new mobile games.

    Income from operations increased 159.0% to US $1.9 million for the Second Quarter 2021, from US $0.7 million in the prior-year period.

    Net income was US $0.2 million for the Second Quarter 2021, compared to US $0.5 million in the prior-year period. The decrease was primarily driven by the increase in operating expenses described above and an increase in other expenses related to bad debt provision in the Company's AR toys business.  The Company counts accounts receivable within 3 to 12 months as bad debt, and currently expects to collect such debts. 

    Basic and diluted earnings per share were US $0.003 for the Second Quarter 2021, compared to US $0.014 for the prior-year period.

    First Half 2021 Results

    Total revenues were US $17.9 million for the First Half 2021, an increase of US $13.1 million, or 269.6%, compared to US $4.9 million in the prior-year period. While COVID-19 had a negative impact on revenues in the prior-year period, revenue growth was primarily attributable to increased contributions from the Csfctech mobile games business acquired in the First Half 2021 and the Xunpusen communication services business acquired in the First Half 2021.

    Revenues from sales of interactive toys (animation series) were US $0.5 million for the six months ended June 30, 2021, compared to US $54 in the prior-year period.

    Revenues from sales of interactive toys (game series) were US $4.3 million for the First Half 2021, compared to US $3.7 million in the prior-year period.

    Revenues from mobile games were US $5.8 million for the First Half 2021, compared to US $1.2 million in the prior-year period.

    Revenues from AR education, previously included under interactive toys (animation series), were US $0.2 million for the First Half 2021.

    Revenues from communication services were US $7.1 million for the First Half 2021, compared to nil in the prior-year period.

    Gross profit increased 140.9% to US $8.8 million for the First Half 2021, from US $3.7 million in the prior-year period.

    • Interactive toys (animation series): 10.7%, or US $0.05 million
    • Interactive toys (game series): 57.6%, or US $2.5 million
    • Mobile games: 83.5%, or US $4.9 million
    • AR education: 93.8%, or US $0.2 million
    • Communication services: 16.5%, or US $1.2 million

    Total gross margin was 49.0% for the First Half 2021, compared to 75.2% in the prior-year period.

    Total operating expenses increased to US $5.2 million for the First Half 2021, from US $2.0 million in the prior-year period, primarily as a result of increased expenses as described above in the Second Quarter 2021 Results.

    Income from operations increased 124.9% to US $3.6 million for the First Half 2021, from US $1.6 million in the prior-year period.

    Net income increased 9.6% to US $1.4 million for the First Half 2021, from US $1.3 million in the prior-year period. 

    Basic and diluted earnings per share were US $0.03 for the First Half 2021, compared to US $0.04 in the prior-year period.

    Balance Sheet Highlights

    As of June 30, 2021, Blue Hat had cash and cash equivalents of US $11.5 million, working capital of US $35.9 million and total shareholders' equity of US $81.6 million, compared to cash and cash equivalents of US $15.8 million, working capital of US $34.0 million and total shareholders' equity of US $58.9 million, respectively, at December 31, 2020.

    During the Second Quarter 2021, the Company completed a registered direct offering with two institutional investors for the purchase and sale of 6.29 million ordinary shares at a price of $0.90 per share, resulting in total gross proceeds of approximately $5.66 million before deducting the placement agent's fees and other offering expenses. The net proceeds were approximately $5.23 million.

    About Blue Hat

    Blue Hat is a leading communication services and IDC business provider as well as a producer, developer and operator of AR interactive entertainment games, toys and educational materials in China. 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 its forward-looking statements.

    Contacts:

    Blue Hat Interactive Entertainment Technology
    Phone: +86 (592) 228-0010
    Email: ir@bluehatgroup.net

    Investor Relations:

    The Equity Group Inc.




    In China

    Carolyne Sohn, Vice President




    Lucy Ma, Associate

    (415) 568-2255




    +86 10 5661 7012

    csohn@equityny.com




    lma@equityny.com

     


    BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES
    UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME



    For the Three Months Ended June 30,


    2021


    2020

    Revenues

    $                        8,001,157


    $                   2,611,204

    Cost of revenue

    3,289,079


    634,473

    Gross profit

    4,712,078


    1,976,731





    Operating expenses:




    Selling

    1,068,702


    117,549

    General and administrative

    812,223


    1,057,108

    Research and development

    933,106


    69,128

    Total operating expenses

    2,814,031


    1,243,785





    Income from operations

    1,898,047


    732,946





    Other income (expense)




    Interest income

    134,691


    107,507

    Interest expense

    (97,786)


    (51,053)

    Other finance expenses

    (40,693)


    47,581

    Other (expense) income, net

    (1,113,075)


    2,328

    Total other (expense) income, net

    (1,116,863)


    106,363





    Income before income taxes

    781,184


    839,309

    Provision for income taxes

    630,566


    338,919

    Net income

    150,618


    500,390





    Other comprehensive income (loss)




    Foreign currency translation adjustment

    1,676,959


    25,968

    Comprehensive income

    $                        1,827,577


    $                      526,358

    Less: Comprehensive income attributable to non-controlling
    interests

    221,402


    -

    Comprehensive income attributable to Blue Hat Interactive
    Entertainment shareholders

    1,606,175


    526,358





    Weighted average number of ordinary shares




    Basic

    47,384,286


    35,141,114

    Diluted

    52,628,146


    35,141,114





    Earnings per share




    Basic

    $0.003


    $0.014

    Diluted

    $0.003


    $0.014

     


    BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES
    UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME



    For the Six Months Ended June 30,


    2021


    2020

    Revenues

    $                      17,942,564


    $                   4,854,862

    Cost of revenue

    9,148,926


    1,203,962

    Gross profit

    8,793,638


    3,650,900





    Operating expenses:




    Selling

    1,648,748


    290,699

    General and administrative

    2,128,000


    1,596,818

    Research and development

    1,377,317


    145,179

    Total operating expenses

    5,154,065


    2,032,696





    Income from operations

    3,639,573


    1,618,204





    Other income (expense)




    Interest income

    134,885


    107,884

    Interest expense

    (235,401)


    (123,660)

    Other finance expenses

    (81,663)


    (10,168)

    Other (expense) income, net

    (1,082,566)


    20,862

    Total other (expense) income, net

    (1,264,745)


    (5,082)





    Income before income taxes

    2,374,828


    1,613,122

    Provision for income taxes

    993,712


    353,359

    Net income

    1,381,116


    1,259,763





    Other comprehensive income (loss)




    Foreign currency translation adjustment

    1,310,783


    (579,392)

    Comprehensive income

    $                        2,691,899


    $                      680,371

    Less: Comprehensive income attributable to non-controlling
    interests

    748,596



    Comprehensive income attributable to Blue Hat Interactive
    Entertainment shareholders

    1,943,303


    680,371





    Weighted average number of ordinary shares




    Basic

    47,384,286


    35,141,114

    Diluted

    52,628,146


    35,141,114





    Earnings per share




    Basic

    $0.03


    $0.04

    Diluted

    $0.03


    $0.04

     


    BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES
    UNAUDITED CONSOLIDATED BALANCE SHEETS



    June 30,


    December 31,

    ASSETS

    2021


    2020

    Current assets:




    Cash and cash equivalents

    $                      11,503,578


    $                 15,800,563

    Restricted cash




    Short-term investments




    Accounts receivable, net

    31,165,800


    16,594,533

    Accounts receivable - related party



    1,906,101

    Other receivables, net

    14,733,377


    14,350,223

    Other receivables - related party

    33,512



    Inventories

    200,279


    117,075

    Prepayments, net

    2,403,234


    1,917,780

    Total current assets

    60,039,780


    50,686,275





    Property and equipment, net

    4,261,011


    4,258,121





    Other assets:




    Prepayments

    12,544,199


    4,164,274

    Operating lease, right-of-use asset

    278,528


    290,410

    Intangible assets, net

    25,849,682


    14,252,575

    Long-term investments

    1,857,556


    1,914,668

    Deferred tax assets

    256,460


    119,127

    Goodwill accounting

    787,047



    Total other assets

    41,573,472


    20,741,054

    Total assets

    $                 105,874,263


    $             75,685,450





    LIABILITIES AND SHAREHOLDERS' EQUITY




    Current liabilities:




    Short-term loans - banks

    $                        1,360,495


    $                   5,129,295

    Current maturities of long-term loans - third party



    14,117

    Accounts payable

    3,571,783


    935,588

    Convertible bonds payable

    57,336


    739,189

    Other payables and accrued liabilities

    11,179,429


    1,846,917

    Other payables - related party

    211,818


    25,837

    Operating lease liabilities - current

    229,521


    300,468

    Customer deposits

    789,117


    941,877

    Accrual interest payable




    Taxes payable

    6,786,743


    6,802,454

    Total current liabilities

    24,186,242


    16,735,742





    Other liabilities:




    Operating lease liability

    59,965



    Long-term loans - third party




    Total other liabilities

    59,965



    Total liabilities

    24,246,207


    16,735,742





    COMMITMENTS AND CONTINGENCIES




    Shareholders' equity




    Ordinary shares, $0.001 par value, 100,000,000 shares
    authorized, 53,417,200 shares issued and outstanding as of
    June 30, 2021, and 38,553,694 shares issued and outstanding
    as of December 31, 2020

    53,417


    38,554

    Additional paid-in capital

    35,693,329


    23,466,482

    Statutory reserves

    2,204,174


    2,204,174

    Retained earnings

    32,019,919


    31,387,398

    Accumulated other comprehensive income (loss)

    3,052,478


    1,741,696

    Total Blue Hat Interactive Entertainment Technology
    shareholders' equity

    73,023,317


    58,838,304

    Non-controlling interests

    8,604,739


    111,404

    Total equity

    81,628,056


    58,949,708

    Total liabilities and shareholders' equity

    $             105,874,263


    $             75,685,450






     

    Related Links :

    http://www.bluehatgroup.net

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