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Blue Hat Announces Financial Results for Second Quarter and First Half of 2022, Highlighted by 78.2% Decrease in Revenues to $2.0 Million for First Half 2022

Blue Hat Interactive Entertainment Technology
Blue Hat Interactive Entertainment Technology

XIAMEN, China, Dec. 30, 2022 (GLOBE NEWSWIRE) -- 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, 2022 (“Second Quarter 2022”) and six months ended June 30, 2022 (“First Half 2022”).

Second Quarter 2022 and First Half 2022 Financial Highlights

  • Second Quarter 2022 total revenues of US $1.7 million, compared to US $5.9 million in the prior-year period, decreased due to that overall economic environment has worsened in China with Covid-19 outbreak and related lockdown in various cities in China in 2022.

  • Second Quarter 2022 gross profit of US $1.0 million, a decrease of 76.5% from US $4.3 million in the prior-year period.

  • Second Quarter 2022 loss from operations of US $3.3 million, a decrease of 295.0% from income from operations of US $1.7 million in the prior-year period.

  • Second Quarter 2022 net loss from continuing operations of US $3.4 million, compared to net income from continuing operations of US $0.7 million in the prior-year period, as a result of increased expenses and decreased revenue.

  • First Half 2022 total revenues of US $2.0 million, compared to US $9.2 million in the prior-year period.

  • First Half 2022 gross profit of US $1.2 million, a decrease of 81.4% from US $6.3 million in the prior-year period.

  • First Half 2022 loss from operations of US $6.0 million, a decrease of 483.3% from income from operations of US $1.6 million in the prior-year period.

  • First Half 2022 net loss from continuing operations of US $6.2 million, a decrease of US $6.24 million from net income from continuing operations of US $0.04 million in the prior-year period.

  • US $0.3 million in cash and cash equivalents as of June 30, 2022.

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Management Commentary

The COVID-19 outbreak since early 2020 has had a negative impact on the global economy and our financial performance has been negatively impacted. In particular, the impact on the Company’s operations in first half of fiscal year 2022 has been considerable. Mr. Xiaodong Chen, CEO of Blue Hat, stated, “In order to cope with the current situation of the economy environment, some adjustments have been made to the Company’s business, and the Company has suspended or reduced the AR Immersive Course (ARIC), game and communication business, which were severely affected by the COVID-19 pandemic. The Company has increased the commodity supply chain commodity trading platform project and increased the breadth of the Company’s business. At the same time, the Company has increased the investment and development of some new projects such as new energy graphene, which will provide some foundation for the future development of the Company, to grow the Company steadily and maximize shareholder value.”

Recent Operating Highlights

  • On July 12, 2022, Blue Hat was offering 1,000,000 ordinary shares, par value $0.01 per share (referred to hereinafter as the “ordinary shares”) in this offering at a price of $3.60 per share directly to certain investors, under the Company’s effective shelf registration statement. Blue Hat has not retained a broker, dealer, underwriter or placement agent with respect to this offering and therefore are not paying any underwriting discounts or commissions. The total expenses of this offering is approximately $3.6 million.

  • On August 30, 2022, Fujian Blue Hat Interactive Entertainment Technology Ltd. (“Fujian Blue Hat”), a wholly-owned subsidiary of the Company, entered into an agreement with Xiamen Traveler Network Technology Co., LTD. (“Traveler Network”), a leading game distributor, to distribute the Company’s proprietary games “Cute Monopoly” and “Cute Game Box” worldwide. Fujian Blue Hat. signed a joint operating agreement with the Travelers Network.

  • On September 20, 2022, Fujian Blue Hat signed a Memorandum of Understanding with Bigg World Pet Ltd. (“Bigg”), a Singapore company, on September 20, 2022. It reached an agreement on becoming the general agent for the development and operation of business strategy games such as Monopoly and Game Box in Southeast Asia.

  • On November 25, 2022, Blue Hat acquired 100% equity interest of Xiamen Shengruihao Technology Co., Ltd which mainly provides product supply chain services and integrated enterprise services.

Second Quarter 2022 Results

Total revenues were US $1.7 million for the Second Quarter of 2022, a decrease of US $4.2 million, or 71.1%, compared to US $5.9 million in the prior-year period. It was due to the worsened overall economic environment in China with Covid-19 outbreak and related lockdown in various cities in China in 2022.

Revenues from sales of interactive toys (animation series) were nil for the Second Quarter of 2022, compared to US $16,061 in the prior-year period.

Revenues from sales of interactive toys (game series) were US $18,283 for the Second Quarter of 2022, a decrease of 99.2% from US $2.4 million in the prior-year period.

Revenues from mobile games decreased to US $1.0 million for the Second Quarter of 2022, from US $3.4 million in the prior-year period.

Revenues from AR education, previously included under interactive toys (animation series), were nil in Second Quarter of 2022, which was due to Covid-19 outbreak.

Revenues from information service were US $0.7 million for the Second Quarter of 2022, compared to nil in the prior-year period. This is new business in the Third Quarter of 2021.

Gross profit decreased 76.5% to US $1.0 million for the Second Quarter of 2022 from US $4.3 million in the prior-year period. Gross margin was 59.1% for the Second Quarter of 2022 compared to 72.7% in the prior-year period. The decrease was due to the fact that promotion reduced product price and reduced mobile game revenue.

Total operating expenses increased by US $1.7 million for the Second Quarter of 2022, from US $2.6 million in the prior-year period, to US $4.3 million, as a result of increased expenses related to bad debt provision, rental fee and increased R&D expenses related to the development of new mobile games.

Loss/Income from operations decreased 295.0% to loss from operations of US $3.3 million for the Second Quarter of 2022, from income from operations of US $1.7 million in the prior-year period.

Net loss/income was US $3.4 million for the Second Quarter of 2022, compared to net income US $0.7 million in the prior-year period. The decrease was primarily driven by the increase in operating expenses described above and a decrease in revenue.

Basic loss per share from continuing operations were US $0.51 for the Second Quarter of 2022, compared to basic earnings per share from continuing operations of US $0.01 for the prior-year period.

Diluted loss per share from continuing operations were US $0.44 for the Second Quarter of 2022, compared to diluted earnings per share from continuing operations of US $0.01 for the prior-year period.

First Half 2022 Results

Total revenues were US $2.0 million for the First Half of 2022, a decrease of US $7.2 million, or 78.2%, compared to US $9.2 million in the prior-year period. It was due to the worsened overall economic environment in China with Covid-19 outbreak and related lockdown in various cities in China in 2022.

Revenues from sales of interactive toys (animation series) were US $7,146 for the First Half of 2022, compared to US $16,441 in the prior-year period.

Revenues from sales of interactive toys (game series) were US $0.1 million for the First Half of 2022, compared to US $3.1 million in the prior-year period.

Revenues from mobile games were US $1.2 million for the First Half of 2022, compared to US $5.8 million in the prior-year period.

Revenues from AR education, were US $498 for the First Half of 2022, compared to US $0.2 million in the prior-year period.

Gross profit decreased 81.4% to US $1.2 million for the First Half of 2022, from US $6.3 million in the prior-year period.

Total gross margin was 58.9% for the First Half of 2022, compared to 69.1% in the prior-year period.

Total operating expenses increased to US $7.2 million for the First Half of 2022, from US $4.8 million in the prior-year period, primarily as a result of increased expenses as described above in the Second Quarter 2022 Results.

Loss/Income from operations decreased 483.3% to loss from operations US $7.6 million for the First Half of 2022, from income from operations US $1.6 million in the prior-year period.

Net loss/income decreased US $6.24 million to net loss US $6.2 million for the First Half of 2022, from US $43,382 in the prior-year period.

Basic loss per share from continuing operation were US $0.87 for the First Half of 2022, compared to Basic earnings per share from continuing operations of US $0.01 in the prior-year period.

Diluted loss per share from continuing operations were US $0.75 for the First Half of 2022, compared to diluted earnings per share from continuing operations of US $0.01 in the prior-year period.

Balance Sheet Highlights

As of June 30, 2022, Blue Hat had cash and cash equivalents of US $0.3 million, working capital of negative US $0.63 million and total shareholders’ equity (excluding the non controlling interest) of US $10.2 million, compared to cash and cash equivalents of US $0.14 million, working capital of US $3.4 million and total shareholders’ equity (excluding the non controlling interest) of US $15.2 million, respectively, as of December 31, 2021. It was due to decreased revenues.

During the First Half of 2022, the Company completed private placements primarily with five companies to pay for technical and consulting services by 21.4 million restrictive ordinary shares.

The Company announced effect its 1-for-10 Reverse Stock Split on May 26, 2022.

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


BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

 

 

For the Three Months Ended June 30,

 

 

2022

 

2021

Revenues

 

$

1,690,838

 

 

$

5,855,329

 

Cost of revenue

 

 

690,962

 

 

 

1,597,044

 

Gross profit

 

 

999,876

 

 

 

4,258,285

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling

 

 

303,969

 

 

 

910,382

 

General and administrative

 

 

2,287,602

 

 

 

724,439

 

Research and development

 

 

1,701,532

 

 

 

934,412

 

Total operating expenses

 

 

4,293,103

 

 

 

2,569,233

 

 

 

 

 

 

 

 

 

 

(Loss) Income from operations

 

 

(3,293,227

)

 

 

1,689,052

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

Interest income

 

 

191

 

 

 

134,612

 

Interest expense

 

 

(92,005

)

 

 

(97,799

)

Other finance expenses

 

 

(1,306

)

 

 

(38,061

)

Other expense, net

 

 

(6,763

)

 

 

(585,768

)

Total other (expense), net

 

 

(99,883

)

 

 

(587,016

)

 

 

 

 

 

 

 

 

 

Income (loss) before from Continuing Operations before income taxes

 

 

(3,393,110

)

 

 

1,102,036

 

Provision for income taxes

 

 

45,289

 

 

 

412,349

 

Net (loss) income from Continuing Operations

 

 

(3,438,399

)

 

 

689,687

 

 

 

 

 

 

 

 

 

 

Discontinued Operations

 

 

 

 

 

 

 

 

Loss from discontinued operations

 

 

 

 

 

(539,069

)

 

 

 

 

 

 

 

 

 

NET (LOSS) INCOME

 

 

(3,438,399

)

 

 

150,618

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

Net (loss) income from continued operations

 

 

(3,438,399

)

 

 

689,687

 

Foreign currency translation adjustment - continued operations

 

 

(1,077,468

)

 

 

1,667,618

 

Comprehensive (loss) income - continued operations

 

$

(4,515,867

)

 

$

2,357,305

 

 

 

 

 

 

 

 

 

 

Net (loss) from discontinued operations

 

 

 

 

 

(539,069

)

Foreign currency translation adjustment - discontinued operations

 

 

 

 

 

9,341

 

Comprehensive (loss) income - discontinued operations

 

 

 

 

 

(529,728

)

Comprehensive (Loss) Income

 

 

(4,515,867

)

 

 

1,827,577

 

Less: Comprehensive (loss) income attributable to non-controlling interests

 

 

(372,736

)

 

 

221,402

 

Comprehensive (loss) income attributable to Blue Hat Interactive Entertainment shareholders

 

 

(4,143,131

)

 

 

1,606,175

 

 

 

 

 

 

 

 

 

 

Weighted average number of ordinary shares

 

 

 

 

 

 

 

 

Basic

 

 

6,021,612

 

 

 

47,384,286

 

Diluted

 

 

6,947,050

 

 

 

52,628,146

 

 

 

 

 

 

 

 

 

 

Basic (Loss) Earnings per share

 

 

 

 

 

 

 

 

Basic (loss) earnings per share from continuing operation

 

$

(0.51

)

 

$

0.01

 

Basic loss per share from discontinued operation

 

 

 

 

$

(0.01

)

Diluted (Loss) Earnings per share

 

 

 

 

 

 

 

 

Diluted (loss) earnings per share from continuing operation

 

$

(0.44

)

 

$

0.01

 

Diluted loss per share from discontinued operation

 

 

 

 

$

(0.01

)

                                                                                           

BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

 

 

For the Six Months Ended June 30,

 

 

2022

 

2021

Revenues

 

$

1,992,950

 

 

$

9,150,319

 

Cost of revenue

 

 

818,444

 

 

 

2,826,266

 

Gross profit

 

 

1,174,506

 

 

 

6,324,053

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling

 

 

441,198

 

 

 

1,422,075

 

General and administrative

 

 

4,393,581

 

 

 

1,965,577

 

Research and development

 

 

2,342,426

 

 

 

1,370,358

 

Total operating expenses

 

 

7,177,205

 

 

 

4,758,010

 

 

 

 

 

 

 

 

 

 

(Loss) Income from operations

 

 

(6,002,699

)

 

 

1,566,043

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

Interest income

 

 

200

 

 

 

134,703

 

Interest expense

 

 

(116,989

)

 

 

(235,416

)

Other finance expenses

 

 

(6,409

)

 

 

(70,828

)

Other income (expense), net

 

 

5,723

 

 

 

(604,562

)

Total other (expense), net

 

 

(117,475

)

 

 

(776,103

)

 

 

 

 

 

 

 

 

 

Income before (loss) income taxes

 

 

(6,120,174

)

 

 

789,940

 

Provision for income taxes

 

 

45,289

 

 

 

746,558

 

Net (loss) income from Continuing Operations

 

 

(6,165,463

)

 

 

43,382

 

 

 

 

 

 

 

 

 

 

Discontinued Operations

 

 

 

 

 

 

 

 

Income from discontinued operations

 

 

 

 

 

 

1,337,734

 

 

 

 

 

 

 

 

 

 

NET (LOSS) INCOME

 

 

(6,165,463

)

 

 

1,381,116

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

Net (loss) income from continued operations

 

 

(6,165,463

)

 

 

43,382

 

Foreign currency translation adjustment - continued operations

 

 

(967,968

)

 

 

1,562,700

 

Comprehensive (loss) income - continued operations

 

$

(7,133,431

)

 

$

1,606,082

 

 

 

 

 

 

 

 

 

 

Net income from discontinued operations

 

 

 

 

 

1,337,734

 

Foreign currency translation adjustment - discontinued operations

 

 

 

 

 

(251,917

)

Comprehensive income - discontinued operations

 

 

 

 

 

1,085,817

 

Comprehensive (Loss) Income

 

 

(7,133,431

)

 

 

2,691,899

 

Less: Comprehensive (loss) income attributable to non-controlling interests

 

 

(922,670

)

 

 

748,596

 

Comprehensive (loss) income attributable to Blue Hat Interactive Entertainment shareholders

 

 

(6,210,761

)

 

 

1,943,303

 

 

 

 

 

 

 

 

 

 

Weighted average number of ordinary shares

 

 

 

 

 

 

 

 

Basic

 

 

6,021,612

 

 

 

47,384,286

 

Diluted

 

 

6,947,050

 

 

 

52,628,146

 

 

 

 

 

 

 

 

 

 

Basic (Loss) Earnings per share

 

 

 

 

 

 

 

 

Basic loss per share from continuing operation

 

$

(0.87

)

 

$

(0.01

)

Basic earnings per share from discontinued operation

 

 

 

 

$

0.03

 

Diluted Earnings (Loss) per share

 

 

 

 

 

 

 

 

Diluted loss per share from continuing operation

 

$

(0.75

)

 

$

(0.01

)

Diluted earnings per share from discontinued operation

 

 

 

 

$

0.03

 


BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS

 

 

June 30,

 

December 31,

ASSETS

 

2022

 

2021

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

343,832

 

 

$

135,562

 

Accounts receivable, net

 

 

13,943,929

 

 

 

16,679,694

 

Other receivables, net

 

 

1,233,575

 

 

 

2,976,482

 

Other receivables - related party

 

 

1,484,039

 

 

 

 

Inventories

 

 

25,441

 

 

 

108,623

 

Prepayments, net

 

 

1,267,261

 

 

 

1,803,783

 

Total current assets

 

 

18,298,077

 

 

 

21,704,144

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

4,001,152

 

 

 

4,149,145

 

 

 

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

 

 

 

Prepayments

 

 

1,723,221

 

 

 

1,704,812

 

Operating lease, right-of-use asset

 

 

89,930

 

 

 

155,223

 

Intangible assets, net

 

 

5,698,303

 

 

 

6,916,107

 

Long-term investments

 

 

1,788,003

 

 

 

1,882,146

 

Total other assets

 

 

9,299,457

 

 

 

10,658,288

 

Total assets

 

$

31,598,686

 

 

$

36,511,577

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Short-term loans - banks

 

$

1,309,553

 

 

$

860,915

 

Accounts payable

 

 

1,153,160

 

 

 

959,198

 

Other payables and accrued liabilities

 

 

11,759,511

 

 

 

11,389,737

 

Other payables - related party

 

 

172,239

 

 

 

186,503

 

Operating lease liabilities - current

 

 

50,316

 

 

 

97,054

 

Customer deposits

 

 

2,691,914

 

 

 

1,500,677

 

Taxes payable

 

 

1,789,883

 

 

 

3,287,640

 

Total current liabilities

 

 

18,926,576

 

 

 

18,281,724

 

 

 

 

 

 

 

 

 

 

Other liabilities:

 

 

 

 

 

 

 

 

Operating lease liability

 

 

42,040

 

 

 

62,057

 

Long term payable -related party

 

 

857,788

 

 

 

 

Long-term loans - third party

 

 

 

 

 

517,590

 

Total other liabilities

 

 

899,828

 

 

 

579,647

 

Total liabilities

 

 

19,826,404

 

 

 

18,861,371

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

 

Ordinary shares, $0.01 par value, 500,000,000 shares
authorized, 7,570,256 shares issued and outstanding as of June30, 2022, and 5,382,383 shares issued and outstanding as of December 31, 2021

 

 

75,703

 

 

 

53,824

 

Additional paid-in capital

 

 

37,515,619

 

 

 

36,281,992

 

Statutory reserves

 

 

2,143,252

 

 

 

2,143,252

 

Retained earnings

 

 

(30,991,334

)

 

 

(25,748,542

)

Accumulated other comprehensive income

 

 

1,491,288

 

 

 

2,459,256

 

Total Blue Hat Interactive Entertainment Technology shareholders’ equity

 

 

10,234,528

 

 

 

15,189,782

 

Non-controlling interests

 

 

1,537,754

 

 

 

2,460,424

 

Total equity

 

 

11,772,282

 

 

 

17,650,206

 

Total liabilities and shareholders’ equity

 

$

31,598,686

 

 

$

36,511,577