UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

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.

Indicate 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.

 

 

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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

 


 

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SIGNATURES

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.

Date: March 23, 2020

 

BLUE HAT INTERACTIVE

ENTERTAINMENT TECHNOLOGY

   
  By: /s/ Xiaodong Chen
    Name: Xiaodong Chen
    Title: Chief Executive Officer and Director

  

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Blue 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.”

 

Recent Developments

 

 

 

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Fourth Quarter 2019 Results

Comparison of Three Months Ended December 31, 2019 and December 31, 2018

 

   For the Three Months Ended December 31,
            Percentage
   2019  2018  Change  Change
   (Unaudited)  (Unaudited)      
Revenues  $11,773,962   $9,952,293   $1,821,669    18.3%
Cost of revenues   (3,826,027)   (3,051,651)   (774,376)   25.4%
Gross profit   7,947,935    6,900,642    1,047,293    15.2%
Selling expenses   (263,611)   (198,979)   (64,632)   32.5%
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)%
Net income  $6,189,130    4,903,843    1,285,287    26.2%

 

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.

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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”.

 

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Company Forecast

 

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.

 

Conference Call

 

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:

 

U.S./International: +1-845-675-0437

 

Hong Kong: +852-3018-6771

 

Mainland China: 400-620-8038

 

Passcode: 4375563

 

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:

 

U.S./International: +1-855-452-5696

 

Hong Kong: 800-963-117

 

Mainland China: 400-632-2162

 

Passcode: 4375563

 

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.

 

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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

 

Sam Martin

The Foote Group

Phone: +86 187-0160-0950

Email: sam@thefootegroup.com

 

 

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BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
 
    December 31,    December 31, 
ASSETS   2019    2018 
CURRENT ASSETS          
Cash and cash equivalents  $10,478,587   $11,829,509 
Restricted cash   5,000,000    —   
Accounts receivable, net   14,164,697    11,890,146 
Other receivables, net   13,182,529    232,318 
Other receivables - related party   —      12,036 
Inventories   125,264    273,271 
Prepayments, net   291,270    1,332,532 
Prepaid IPO Costs   —      89,367 
Total current assets   43,242,347    25,659,179 
PROPERTY AND EQUIPMENT, NET   2,324,824    208,869 
OTHER ASSETS          
Prepayments   4,425,849    3,449,445 
Operating lease, right-of-use asset   734,885    4,265,537 
Intangible assets, net   6,758,316    1,751,835 
Long-term investments   1,727,301    135,999 
Deferred tax assets   130,592    —   
Total other assets   13,776,943    9,602,816 
Total assets  $59,344,113   $35,470,864 
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
CURRENT LIABILITIES          
Short-term loans - banks   5,819,787    3,125,681 
Current maturities of long-term loans - third party   77,493    75,469 
Accounts payable   293,988    1,402,972 
Other payables and accrued liabilities   3,487,531    438,299 
Other payables - related party   21,341    62,368 
Customer deposits   —      76,274 
Taxes payable   3,508,087    1,941,770 
Total current liabilities   13,208,227    7,122,833 
           
OTHER LIABILITIES          
Operating lease liability   728,585      
Long-term loans - third party   13,328    91,986 
Total other liabilities   741,913    91,986 
Total liabilities   13,950,140    7,214,819 
           
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 
Statutory reserves   1,321,101    1,178,432 
Retained earnings   24,128,114    15,169,573 
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 

 

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BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 
   For the Years Ended December 31
   2019  2018
REVENUES  $23,834,129   $18,531,178 
Interactive toys - animation series   160,672    522,638 
Interactive toys - game series   21,152,258    16,896,943 
Mobile games   2,521,199    1,111,597 
COST OF REVENUES   (7,531,800)   (6,108,676)
GROSS PROFIT   16,302,329    12,422,502 
OPERATING EXPENSES          
Selling   (922,196)   (759,647)
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)          
Interest income   629    219,001 
Interest expense   (171,938)   (142,641)
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)
NET INCOME   9,101,210    7,919,408 
OTHER COMPREHENSIVE INCOME (LOSS)          
Foreign currency translation adjustment   (527,738)   (1,474,126)
COMPREHENSIVE INCOME  $8,573,472   $6,445,282)
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 

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BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
       
       
   For the Years Ended December 31,
   2019  2018
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net income  $9,101,210   $7,919,408 
Adjustments to reconcile net income to net cash (used in) provided by          
operating activities:          
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          
Accounts receivable   (2,772,546)   (6,588,070)
Other receivables   (13,113,715)   (28,615)
Other receivables - related party   12,008    (12,506)
Inventories   145,890    304,072 
Prepayments   963,524    829,573 
Operating lease assets   (6,375)   —   
Prepaid expense   (13,580)   50,233 
Accounts payable   (1,102,256)   (4,151,400)
Other payables and accrued liabilities   3,074,629    161,038 
Customer deposits   (76,098)   (29,714)
Taxes payable   1,612,416    278,941 
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:          
Capital contributions   8,564,456    —   
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, 
    2019    2018 
           
Cash and cash equivalents  $10,478,587   $11,829,509 
Restricted cash   5,000,000    —   
Total cash, cash equivalents, and restricted cash shown in the Consolidated statements of cash flows  $15,478,587   $11,829,509 

 

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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.

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