SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For the month of March, 2020
Commission File Number 001-39001
Blue Hat Interactive Entertainment Technology
(Translation of registrant’s name into English)
7th Floor, Building C, No. 1010 Anling Road
Huli District, Xiamen, China 361009
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):☐
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
On March 23, 2020, Blue Hat Interactive Entertainment Technology issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
|Exhibit No.||Description of Exhibit|
|99.1||Press Release dated March 23, 2020|
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
March 23, 2020
BLUE HAT INTERACTIVE
|By:||/s/ Xiaodong Chen|
|Name: Xiaodong Chen|
|Title: Chief Executive Officer and Director|
Hat Interactive Entertainment Technology Announces
Fourth Quarter 2019 and Fiscal Year 2019 Financial Results
XIAMEN, China, March 23, 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 fourth quarter and fiscal year ended December 31, 2019.
Fourth Quarter 2019 Financial Highlights1
|·||Total revenues increased by 18.3% year-over-year to US$11.8 million.|
|·||Gross profit increased by 15.2% year-over-year to US$7.9 million.|
|·||Income from operations increased by 24.4% year-over-year to US$6.2 million.|
|·||Net income increased by 26.2% year-over-year to US$6.2 million.|
Fiscal Year 2019 Financial Highlights
|·||Total revenues increased by 28.6% year-over-year to US$23.8 million.|
|·||Gross profit increased by 31.2% year-over-year to US$16.3 million.|
|·||Income from operations increased by 14.8% year-over-year to US$9.5 million.|
|·||Net income increased by 14.9% year-over-year to US$9.1 million.|
“We are pleased to report another quarter of healthy revenue growth and increased profitability in the fourth quarter, concluding a strong 2019 that saw Blue Hat become a U.S. listed public company while making progress in sales, business development and research and development,” said Mr. Xiaodong Chen, Chief Executive Officer of Blue Hat. “A particular highlight during the fourth quarter of 2019 was our thriving smart education business line which launched a range of exciting new AR immersive educational products for children between the ages of three and six years old. Our products are being embraced by consumers both in China and international markets, demonstrated by the popularity of ‘AR Dinosaur’ which helped Blue Hat attract a large number of visitors to our booth at the China Toy Expo in October 2019, as well as the buzz generated by our ‘AR Glow’ Interactive Glowstick product among international buyers at the 126th China Import and Export Fair. 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, although no definitive agreements have been executed.”
Fourth Quarter 2019 Results
Comparison of Three Months Ended December 31, 2019 and December 31, 2018
|For the Three Months Ended December 31,|
|Cost of revenues||(3,826,027||)||(3,051,651||)||(774,376||)||25.4||%|
|General and administrative expenses||(1,323,190||)||(1,566,451||)||243,261||(15.5||)%|
|Research and development||(127,457||)||(125,245||)||(2,212||)||1.8||%|
|Income from operations||6,233,677||5,009,967||1,223,710||24.4||%|
|Other (expense) income, net||145,450||148,454||(3,004||)||(2.0||)%|
|Provision for income taxes||(189,997||)||(254,578||)||64,581||(25.4||)%|
Fiscal Year 2019 Results
Total revenues were US$23.8 million for the fiscal year 2019, an increase of US$5.3 million, or 28.6%, from US$18.5 million for the same period ended December 31, 2018. The overall increase was primarily attributable to the increased sales of interactive toys (game series) and mobile games.
Revenues from sales of interactive toys (game series) were US$21.2 million for the fiscal year 2019, an increase of US$4.3 million, or 25.2%, from US$16.9 million for the same period ended December 31, 2018. Interactive toys (game series) are a range of toys enhanced with AR technology, which we believe make them easier to play, more interactive and more instructive than traditional toys. The increase was primarily the result of the improvement of market recognition.
Revenues from sales of interactive toys (animation series) were US$160,672 for the fiscal year 2019, a decrease of US$361,966, or 69.3% from US$522,638 for the same period ended December 31, 2018. This decrease was a result of our business strategy to shift away from interactive toys (animation series) and towards interactive toys (games series).
Revenues from mobile games were US$2.5 million for the fiscal year 2019, an increase of US$1.4 million, or 126.8%, from US$1.1 million for the same period ended December 31, 2018. This increase was a result of the popularity of our first mobile game “Quan Min Dou Yu”, which was launched in the fourth quarter of 2018 and received positive feedback from the market.
Gross profit was US$16.3 million for the fiscal year 2019, an increase of US$3.9 million, or 31.2%, from US$12.4 million for the same period ended December 31, 2018. Gross margin of the three different segments were as follows: interactive toys (game series) increased 24%, amounting to US$2.7 million; interactive toys (animation series) decreased 43.7%, amounting to US$62,805; and mobile games increased 124.3%, amounting to US$1.2 million.
Gross profit margin was 68.4% for the fiscal year 2019, compared to 67% for the same period of 2018.
Total operating expenses were US$6.8 million for the fiscal year 2019, an increase of US$2.7 million, or 64.6%, from US$4.1 million for the same period ended December 31, 2018. This increase was mainly attributable to the US$162,549 increase in selling expenses, the US$1.7 million increase in general and administrative expenses, and the US$743,657 increase in research and development expenses for the fiscal year 2019, compared to the same period of 2018.
Research and development expenses were US$1,030,499 for the fiscal year 2019, an increase of US$743,657, or 259.3%, from US$286,842 for the same period ended December 31, 2018. This increase was primarily a result of research and development to develop a smart preschool platform, including a range of immersive educational products and AR interactive toys (game series).
Income from operations was US$9.5 million for the fiscal year 2019, an increase of US$1.2 million, or 14.8%, from US$8.3 million for the same period ended December 31, 2018.
Total other income, net was US$45,422 for the fiscal year 2019, compared to total other income, net of US$207,371 for the same period ended December 31, 2018. The decrease in total other income, net was due to the decrease in interest income from short term deposits.
Income taxes were US$488,710 for the fiscal year 2019, compared to provision for income taxes of US$605,428 for the same period ended December 31, 2018. The decrease was due to tax deduction provided by the local government.
Net income was US$9.1 million for the fiscal year 2019, an increase of US$1.2 million, or 14.9%, from US$7.9 million for the same period ended December 31, 2018.
Basic and diluted earnings per share were US$0.26 for the fiscal year 2019, compared to US$0.24 for the same period ended December 31, 2018.
Cash, Cash Equivalents and Restricted Cash
As of December 31, 2019, the Company's cash, cash equivalents and restricted cash totaled to US$15.5 million, including net proceeds of approximately US$6.4 million to the Company from the IPO, which closed in July 2019. In connection with the IPO, the Company’s ordinary shares began trading on The Nasdaq Capital Market on July 26, 2019 under the symbol “BHAT”.
Blue Hat expects revenue in the first quarter of 2020 to decrease 20% to 25% due to the adverse impact of the COVID-19 outbreak on the Company’s sales and operations.
The above outlook is based on information available as of the date of this press release and reflects the Company’s current and preliminary expectations and estimates, which are all subject to change.
Unaudited Financial Information
The unaudited financial information disclosed in this press release is preliminary. The audit of the financial statements and related notes to be included in the Company's annual report on Form 20-F for the year ended December 31, 2019 is still in progress.
Blue Hat's management will host an earnings conference call on Monday, March 23, 2020 at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Beijing/Hong Kong Time).
Dial-in details for the earnings conference call are as follows:
Hong Kong: +852-3018-6771
Mainland China: 400-620-8038
Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call.
A replay of the conference call may be accessed by phone at the following number until Tuesday, March 31, 2020:
Hong Kong: 800-963-117
Mainland China: 400-632-2162
Additionally, a live and archived webcast will be available at http://ir.bluehatgroup.com.
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.
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.
Hat Interactive Entertainment Technology
Phone: +86 (592) 228-0010
The Foote Group
Phone: +86 187-0160-0950
|BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES|
|UNAUDITED CONSOLIDATED BALANCE SHEETS|
|December 31,||December 31,|
|Cash and cash equivalents||$||10,478,587||$||11,829,509|
|Accounts receivable, net||14,164,697||11,890,146|
|Other receivables, net||13,182,529||232,318|
|Other receivables - related party||—||12,036|
|Prepaid IPO Costs||—||89,367|
|Total current assets||43,242,347||25,659,179|
|PROPERTY AND EQUIPMENT, NET||2,324,824||208,869|
|Operating lease, right-of-use asset||734,885||4,265,537|
|Intangible assets, net||6,758,316||1,751,835|
|Deferred tax assets||130,592||—|
|Total other assets||13,776,943||9,602,816|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
|Short-term loans - banks||5,819,787||3,125,681|
|Current maturities of long-term loans - third party||77,493||75,469|
|Other payables and accrued liabilities||3,487,531||438,299|
|Other payables - related party||21,341||62,368|
|Total current liabilities||13,208,227||7,122,833|
|Operating lease liability||728,585|
|Long-term loans - third party||13,328||91,986|
|Total other liabilities||741,913||91,986|
|COMMITMENTS AND CONTINGENCIES|
|Total shareholders' equity|
|Ordinary shares, $0.001 par value, 50,000,000 shares authorized, 35,141,114 shares issued and outstanding as of December 31, 2019, and 33,000,000 shares issued and outstanding as of December 31, 2018||35,141||33,000|
|Additional paid-in capital||21,394,284||12,831,969|
|Accumulated other comprehensive income (loss)||(1,484,667||)||(956,929||)|
|Total shareholders' equity||45,393,973||28,256,045|
|Total liabilities and shareholders' equity||$||59,344,113||$||35,470,864|
HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES|
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|For the Years Ended December 31|
|Interactive toys - animation series||160,672||522,638|
|Interactive toys - game series||21,152,258||16,896,943|
|COST OF REVENUES||(7,531,800||)||(6,108,676||)|
|General and administrative||(4,805,136||)||(3,058,548||)|
|Research and development||(1,030,499||)||(286,842||)|
|Total operating expenses||(6,757,831||)||(4,105,037||)|
|INCOME FROM OPERATIONS||9,544,498||8,317,465|
|OTHER INCOME (EXPENSE)|
|Other finance expenses||(4,415||)||(3,656||)|
|Other (expense) income, net||221,146||134,667|
|Total other income, net||45,422||207,371|
|INCOME BEFORE INCOME TAXES||9,589,920||8,524,836||)|
|PROVISION FOR INCOME TAXES||(488,710||)||(605,428||)|
|OTHER COMPREHENSIVE INCOME (LOSS)|
|Foreign currency translation adjustment||(527,738||)||(1,474,126||)|
|WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES|
|Basic and diluted||35,141,114||33,000,000|
|EARNINGS PER SHARE|
|Basic and diluted||$||0.26||$||0.24|
HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES|
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
|For the Years Ended December 31,|
|CASH FLOWS FROM OPERATING ACTIVITIES:|
|Adjustments to reconcile net income to net cash (used in) provided by|
|Depreciation of property and equipment||100,474||101,183|
|Amortization of intangible assets||821,203||362,355|
|Provision for doubtful accounts||382,239||495,528|
|Deferred income taxes||3,544||(107,401||)|
|Loss on disposal of equipment||—||771|
|Change in operating assets and liabilities|
|Other receivables - related party||12,008||(12,506||)|
|Operating lease assets||(6,375||)||—|
|Other payables and accrued liabilities||3,074,629||161,038|
|Net cash (used in) provided by operating activities||(867,433||)||(414,604||)|
|CASH FLOWS FROM INVESTING ACTIVITIES:|
|Prepayments for intangible assets||(1,018,127||)||(3,574,784||)|
|Purchases of property and equipment||(2,218,838||)||(44,905||)|
|Proceeds from disposal of equipment||—||76|
|Purchase of intangible assets||(3,404,004||)||(859,841||)|
|Proceeds from short-term investments||—||19,485,793|
|Purchase of short-term investments||—||(2,391,721||)|
|Payments on long-term investments||—||(1,812,632||)|
|Net cash provided by (used in) investing activities||(6,640,969||)||10,801,986|
|CASH FLOWS FROM FINANCING ACTIVITIES:|
|Prepaid IPO costs||89,161||(92,854||)|
|Proceeds from other payables - related party||(40,634||)||31,721|
|Repayments of short-term loans - banks||(3,118,473||)||(3,549,737||)|
|Proceeds from short-term loans - banks||5,888,837||3,247,632|
|Change in restricted cash||(5,000,000||)|
|Repayments of long-term loans - third party||(75,170||)||(62,983||)|
|Net cash (used in) provided by financing activities||6,308,177||(426,221||)|
|EFFECT OF EXCHANGE RATE ON CASH||(150,697||)||(501,935||)|
|NET CHANGE IN CASH AND CASH EQUIVALENTS||(1,350,922||)||9,459,226|
|CASH AND CASH EQUIVALENTS, beginning of year||11,829,509||2,370,283|
|CASH AND CASH EQUIVALENTS, end of year||$||10,478,587||$||11,829,509|
|SUPPLEMENTAL CASH FLOW INFORMATION:|
|Cash paid for income tax||$||119,243||$||1,713,763|
|Cash paid for interest||$||171,938||$||142,641|
|SUPPLEMENTAL NON-CASH INVESTING AND FINANCING INFORMATION:|
|Equipment acquired through long-term loans - third party||$||—||$||—|
|The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same amounts shown in the statement of cash flows:|
|December 31,||December 31,|
|Cash and cash equivalents||$||10,478,587||$||11,829,509|
|Total cash, cash equivalents, and restricted cash shown in the Consolidated statements of cash flows||$||15,478,587||$||11,829,509|
1 The average translation rates applied to statement of income accounts for the periods ended December 31, 2019 and 2018 were RMB6.88 and RMB6.62 to US$1.00, respectively. The balance sheet amounts as of December 31, 2019 and 2018 were translated at RMB6.98 and RMB6.88, respectively.