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Document and Entity Information	12 Months Ended
Document and Entity Information	Dec. 31, 2019 shares
Document And Entity Information
Document Type	20-F
Amendment Flag	false
Document Period End Date	Dec. 31, 2019
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2019
Current Fiscal Year End Date	--12-31
Entity File Number	001-39001
Entity Registrant Name	Blue Hat Interactive Entertainment Technology
Entity Central Index Key	0001759136
Entity Incorporation, State or Country Code	E9
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Document Annual Report	true
Document Transition Report	false
Document Shell Company Report	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	35,141,114

CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 10,478,587	$ 11,829,509
Inventories	125,264	273,271
Accounts receivable, net	13,631,359	11,890,146
Other receivables, net	13,182,529	232,318
Other receivables - related party		12,036
Prepayments, net	299,577	1,421,899
Restricted cash	5,000,000
Total current assets	42,717,316	25,659,179
Non-current assets:
Operating lease, right-of-use asset	679,850
Prepayments	4,425,849	3,449,445
Property, plant and equipment, net	2,324,823	208,869
Intangible assets, net	6,758,316	4,265,537
Long-term investments	1,727,301	1,751,835
Deferred tax assets	182,234	135,999
Total non-current assets	16,098,373	9,811,685
Total assets	58,815,689	35,470,864
Current liabilities:
Short-term loans - banks	5,819,787	3,125,681
Current maturities of long-term loans - third party	77,493	75,469
Taxes payable	3,525,153	1,941,770
Accounts payable	293,985	1,402,972
Other payables and accrued liabilities	3,628,809	438,299
Other payables - related party	21,341	62,368
Operating lease liabilities - current	313,460
Customer deposits		76,274
Total current liabilities	13,680,028	7,122,833
Non-current liabilities:
Operating lease liability	372,051
Long-term loans - third party	13,328	91,986
Total other liabilities	385,379	91,986
Total liabilities	14,065,407	7,214,819
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, 33,000,000 shares issued and outstanding as of December 31, 2018	35,141	33,000
Additional paid-in capital	20,771,849	12,831,969
Statutory reserves	1,289,765	1,178,432
Retained earnings	24,132,194	15,169,573
Accumulated other comprehensive loss	(1,478,667)	(956,929)
Total shareholders' equity	44,750,282	28,256,045
Total liabilities and shareholders' equity	$ 58,815,689	$ 35,470,864

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Ordinary shares par value	$ 0.001	$ 0.001
Ordinary shares authorized	50,000,000	50,000,000
Ordinary shares issued	35,141,114	33,000,000
Ordinary shares outstanding	35,141,114	33,000,000

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Statement [Abstract]
Revenues	$ 23,834,129	$ 18,531,178	$ 14,144,894
Cost of revenue	(7,531,800)	(6,108,676)	(5,300,087)
Gross profit	16,302,329	12,422,502	8,844,807
Operating expenses:
Selling	(928,680)	(759,647)	(629,424)
Research and development	(1,031,204)	(286,842)	(355,730)
General and administrative expenses	(4,860,189)	(3,058,548)	(1,915,195)
Total operating expenses	(6,820,073)	(4,105,037)	(2,900,349)
Income from operations	9,482,256	8,317,465	5,944,458
Other income (expense)
Interest income	629	219,001	161,382
Interest expense	(171,938)	(142,641)	(183,291)
Other finance expenses	(4,415)	(3,656)	(3,473)
Other income, net	221,146	134,667	161,091
Total other income, net	45,422	207,371	135,709
Income before income taxes	9,527,678	8,524,836	6,080,167
Provision for income taxes	453,724	605,428	955,194
Net income	9,073,954	7,919,408	5,124,973
Other comprehensive (loss) income
Foreign currency translation adjustment	(521,738)	(1,474,126)	958,667
Comprehensive income	$ 8,552,216	$ 6,445,282	$ 6,083,640
Weighted average number of ordinary shares	35,141,114	33,000,000	33,000,000
Earnings per share	$ 0.26	$ 0.24	$ 0.16

CONSOLIDATED STATEMENTS OF EQUITY - USD ($)	Ordinary shares	Additional Paid-In Capital	Retained earnings Statutory reserve	Retained Earnings Unrestricted	Accumulated Other Comprehensive Income	Total
Balances at beginning at Dec. 31, 2016	$ 33,000	$ 4,059,614	$ 382,870	$ 2,920,754	$ (441,470)	$ 6,954,768
Balances at beginning (in shares) at Dec. 31, 2016	33,000,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Capital injection		8,772,355				8,772,355
Underwriter's partial exercise of over-allotment option, net of issuance costs
Net income				5,124,973		5,124,973
Statutory reserves			530,869	(530,869)
Foreign currency translation					958,667	958,667
Balances at ending at Dec. 31, 2017	$ 33,000	12,831,969	913,739	7,514,858	517,197	21,810,763
Balances at ending (in shares) at Dec. 31, 2017	33,000,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Capital injection
Underwriter's partial exercise of over-allotment option, net of issuance costs
Net income				7,919,408		7,919,408
Statutory reserves			264,693	(264,693)
Foreign currency translation					(1,474,126)	(1,474,126)
Balances at ending at Dec. 31, 2018	$ 33,000	12,831,969	1,178,432	15,169,573	(956,929)	28,256,045
Balances at ending (in shares) at Dec. 31, 2018	33,000,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Capital injection
Issuance of ordinary shares upon initial public offering, net of issuance costs	$ 2,000	7,415,077				7,417,077
Issuance of ordinary shares upon initial public offering, net of issuance costs (in shares)	2,000,000
Underwriter's partial exercise of over-allotment option, net of issuance costs	$ 141	524,803				524,944
Underwriter's partial exercise of over-allotment option, net of issuance costs (in shares)	141,114
Net income				9,073,954		9,073,954
Statutory reserves			111,333	(111,333)
Foreign currency translation					(521,738)	(521,738)
Balances at ending at Dec. 31, 2019	$ 35,141	$ 20,771,849	$ 1,289,765	$ 24,132,194	$ (1,478,667)	$ 44,750,282
Balances at ending (in shares) at Dec. 31, 2019	35,141,114

CONSOLIDATED STATEMENTS OF CASH FLOW - USD ($)	12 Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOW - USD ($)	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 9,073,954	$ 7,919,408	$ 5,124,973
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation of property, plant and equipment	100,474	101,183	14,702
Amortization of intangible assets	821,203	362,355	193,255
Provision for doubtful accounts	921,904	495,528	93,348
Deferred income taxes	(48,710)	(107,401)	(14,431)
Loss on disposal of equipment		771
Changes in operating assets and liabilities:
Accounts receivable	(2,772,546)	(6,588,070)	(2,299,311)
Other receivables	(642,904)	(28,615)	(73,345)
Other receivables - related party	12,008	(12,506)
Inventories	145,890	304,072	346,821
Prepayments	1,044,280	829,573	(385,782)
Prepaid expense	(13,580)	50,233	(71,639)
Accounts payable	(1,102,260)	(4,151,400)	3,122,321
Other payables and accrued liabilities	3,215,946	161,038	(39,412)
Customer deposits	(76,098)	(29,714)	19,221
Taxes payable	1,629,685	278,941	958,959
Net cash (used in) generated from operating activities	12,309,246	(414,604)	6,989,680
CASH FLOWS FROM INVESTING ACTIVITIES:
Deposits for business acquisitions	(12,470,811)
Purchases of property and equipment	(2,218,838)	(44,905)	(53,737)
Proceeds from disposal of equipment		76
Prepayments for intangible assets	(1,018,127)	(3,574,784)
Purchase of intangible assets	(3,404,004)	(859,841)	(1,967,360)
Proceeds from short-term investments		19,485,793	3,574,969
Purchase of short-term investments		(2,391,721)	(17,361,393)
Payments on long-term investments		(1,812,632)	(7,399)
Net cash (used in) generated from investing activities	(19,111,780)	10,801,986	(15,814,920)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital injection			8,772,355
Proceeds from initial public offering, net of issuance costs	7,417,077
Underwriter’s partial exercise of over-allotment option, net of issuance costs	524,944
Prepaid initial public offering costs		(92,854)
Other payables - related party	(40,634)	31,721	26,192
Repayments of short-term loans - banks	(3,118,473)	(3,549,737)	(2,108,665)
Short-term loans - banks	5,888,837	3,247,632	3,477,448
Repayments of long-term loans - third party	(75,170)	(62,983)
Net cash generated from (used in) financing activities	10,596,581	(426,221)	10,167,330
Effect of exchange rates on cash	(144,969)	(501,935)	72,267
Net changes in cash and cash equivalents	3,649,078	9,459,226	1,414,357
Cash and cash equivalents, beginning of year	11,829,509	2,370,283	955,926
Cash and cash equivalents, end of year	15,478,587	11,829,509	2,370,283
Supplemental cash flow information:
Cash and cash equivalents	10,478,587	11,829,509	2,370,283
Restricted cash	5,000,000
Cash and cash equivalents, end of year	15,478,587	11,829,509	2,370,283
Provision for doubtful trade receivables	842,179	474,087	75,398
Provision for doubtful other receivables	13,680	17,131	3,858
Provision for doubtful prepayments	66,045	4,310	14,092
Provision for doubtful accounts	921,904	495,528	93,348
Cash paid for income tax	119,243	1,713,763
Cash paid for interest	171,938	142,641	183,291
Supplemental non-cash investing information:
Additional operating lease, right-of-use asset	679,850
Equipment acquired through long-term loans – third party			198,756
Supplemental non-cash FINANCING information:
Operating lease liabilities	$ 685,511

ORGANIZATION AND PRINCIPAL ACTIVITIES

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION AND PRINCIPAL ACTIVITIES

organization and principal activities

Blue Hat Interactive Entertainment Technology (“Blue Hat Cayman” or the “Company”) is a holding company incorporated on June 13, 2018, under the laws of the Cayman Islands. The Company has no substantive operations other than holding all of the outstanding share capital of Brilliant Hat Limited (“Blue Hat BVI”) established under the laws of the British Virgin Islands on June 26, 2018.

Blue Hat BVI is also a holding company holding all of the outstanding equity of Blue Hat Interactive Entertainment Technology Limited (“Blue Hat HK”) which was established in Hong Kong on June 26, 2018. Blue Hat HK is also a holding company holding all of the outstanding equity of Xiamen Duwei Consulting Management Co., Ltd. (“Blue Hat WFOE”) which was established on July 26, 2018 under the laws of the People’s Republic of China (“PRC” or “China”).

The Company, through its variable interest entity (“VIE”), Fujian Blue Hat Interactive Entertainment Technology Ltd. (“Blue Hat Fujian”), a PRC company, and through its wholly owned subsidiaries, including Hunan Engaomei Animation Culture Development Co., Ltd. (“Blue Hat Hunan”) and Shenyang Qimengxing Trading Co., Ltd. (“Blue Hat Shenyang”), each a PRC company, engages in designing, producing, promoting and selling interactive toys with mobile games features, original intellectual property and peripheral derivatives features worldwide.

On January 25, 2018, the Company established its wholly owned subsidiary, Chongqing Lanhui Technology Co. Ltd. (“Blue Hat Chongqing”), a PRC company. Blue Hat Chongqing also engages in designing, producing, promoting and selling interactive toys with mobile games features, original intellectual property and peripheral derivatives features worldwide. As of December 31, 2019, Blue Hat Chongqing had no operations.

On September 10, 2018, the Company established its wholly owned subsidiary, Pingxiang Blue Hat Technology Co. Ltd. (“Blue Hat Pingxiang”), a PRC company. Blue Hat Pingxiang also engages in designing, producing, promoting and selling interactive toys with mobile games features, original intellectual property and peripheral derivatives features worldwide.

On November 13, 2018, Blue Hat Cayman completed a reorganization of entities under common control of its then existing shareholders, who collectively owned all of the equity interests of Blue Hat Cayman prior to the reorganization. Blue Hat Cayman, Blue Hat BVI, and Blue Hat HK were established as the holding companies of Blue Hat WFOE. Blue Hat WFOE is the primary beneficiary of Blue Hat Fujian and its subsidiaries, and all of these entities included in Blue Hat Cayman are under common control which results in the consolidation of Blue Hat Fujian and subsidiaries which have been accounted for as a reorganization of entities under common control at carrying value. The consolidated financial statements are prepared on the basis as if the reorganization became effective as of the beginning of the first period presented in the accompanying consolidated financial statements of Blue Hat Cayman.

The accompanying consolidated financial statements reflect the activities of Blue Hat Cayman and each of the following entities:

Name	Background	Ownership
Brilliant Hat Limited	A British Virgin Islands company	100% owned by Blue
	Incorporated on June 26, 2018	Hat Interactive
	A holding company	Entertainment
		Technology
Blue Hat Interactive	A Hong Kong company	100% owned by
Entertainment Technology	Incorporated on June 26, 2018	Brilliant Hat Limited
Limited	A holding company
Xiamen Duwei Consulting	A PRC limited liability company and deemed a wholly foreign owned	100% owned by Blue
Management Co., Ltd.	enterprise (“WFOE”)	Hat Interactive
	Incorporated on July 26, 2018	Entertainment
	Registered capital of $736,073 (RMB 5,000,000)	Technology Limited.
	A holding company
Fujian Blue Hat	A PRC limited liability company	VIE of Xiamen
Interactive Entertainment	Incorporated on January 7, 2010	Duwei Consulting
Technology Ltd.	Registered capital of $4,697,526 (RMB 31,054,000)	Management Co., Ltd
	Designing, producing, promoting and selling animated toys with mobile
	games features, original intellectual property and peripheral derivatives
	features.
Hunan Engaomei Animation Culture	A PRC limited liability company Incorporated on October 19, 2017	100% owned by Fujian Blue Hat
Development Co., Ltd.	Registered capital of $302,540 (RMB 2,000,000)	Interactive
	Designing, producing, promoting and selling animated toys with mobile	Entertainment
	games features, original intellectual property and peripheral derivatives features.	Technology Ltd
Shenyang Qimengxing Trading Co., Ltd.	A PRC limited liability company Incorporated on July 27, 2017	100% owned by Fujian Blue Hat
	Registered capital of $302,540 (RMB 2,000,000)	Interactive
	Designing, producing, promoting and selling animated toys with mobile	Entertainment
	games futures, original intellectual property and peripheral derivatives features.	Technology Ltd.
Chongqing Lanhui Technology Co. Ltd.	A PRC limited liability company Incorporated on January 25, 2018	100% owned by Fujian Blue Hat
	Registered capital of $302,540 (RMB 2,000,000)	Interactive
	Designing, producing, promoting and selling animated toys with mobile	Entertainment
	games features, original intellectual property and peripheral derivatives features.	Technology Ltd.
Pingxiang Blue Hat	A PRC limited liability company	100% owned by
Technology Co. Ltd.	Incorporated on September 10, 2018	Fujian Blue Hat
	Registered capital of $302,540(RMB 2,000,000)	Interactive
	Designing, producing, promoting and selling animated toys with mobile	Technology Ltd.
	games features, original intellectual property and peripheral derivatives features.

Contractual Arrangements

Due to legal restrictions on foreign ownership and investment in, among other areas, the production, development and operation of AR interactive entertainment games and toys in China, including interactive educational materials, mobile games, and toys with mobile game features, the Company operates its businesses in which foreign investment is restricted or prohibited in the PRC through certain PRC domestic companies. As such, Blue Hat Fujian is controlled through contractual arrangements in lieu of direct equity ownership by the Company or any of its subsidiaries. Such contractual arrangements consist of a series of three agreements, along with shareholders’ powers of attorney (“POAs”) and irrevocable commitment letters (collectively the “Contractual Arrangements”, which were signed on November 13, 2018).

The significant terms of the Contractual Arrangements are as follows:

Exclusive Business Cooperation Agreement

Pursuant to the exclusive business cooperation agreement between Blue Hat WFOE and Blue Hat Fujian, Blue Hat WFOE has the exclusive right to provide Blue Hat Fujian with technical support services, consulting services and other services, including technical support, technical assistance, technical consulting, and professional training necessary for Blue Hat Fujian’s operation, network support, database support, software services, business management consulting, grant use rights of intellectual property rights, lease hardware and device, provide system integration service, research and development of software and system maintenance, provide labor support and to develop the related technologies based on Blue Hat Fujian’s needs. In exchange, Blue Hat WFOE is entitled to a service fee that equals to all of the consolidated net income after offsetting previous year’s loss (if any) of Blue Hat Fujian. The service fee may be adjusted by Blue Hat WFOE based on the actual scope of services rendered by Blue Hat WFOE and the operational needs and expanding demands of Blue Hat Fujian.

Pursuant to the exclusive business cooperation agreement, Blue Hat WFOE has the unilateral right to adjust the service fee at any time, and Blue Hat Fujian has no right to adjust the service fee. We believe that such conditions under which the service fee may be adjusted will be primarily based on the needs of Blue Hat Fujian to operate and develop its business in the augmented reality market. For example, if Blue Hat Fujian needs to expand its business, increase research input or consummate mergers or acquisitions in the future, Blue Hat WFOE has the right to decrease the amount of the service fee, which would allow Blue Hat Fujian to have additional capital to operate and develop its business in the augmented reality market.

The exclusive business cooperation agreement remains in effect until November 13, 2028 and shall be automatically renewed for one year at the expiration date of the validity term. However, Blue Hat WFOE has the right to terminate this agreement upon giving 30 days’ prior written notice to Blue Hat Fujian at any time.

Call Option Agreements

Pursuant to the call option agreements, among Blue Hat WFOE, Blue Hat Fujian and the shareholders who collectively owned all of Blue Hat Fujian, such shareholders jointly and severally grant Blue Hat WFOE an option to purchase their equity interests in Blue Hat Fujian. The purchase price shall be the lowest price then permitted under applicable PRC laws. Blue Hat WFOE or its designated person may exercise such option at any time to purchase all or part of the equity interests in Blue Hat Fujian until it has acquired all equity interests of Blue Hat Fujian, which is irrevocable during the term of the agreements.

The call option agreements remain in effect until November 13, 2028 and shall be automatically renewed for one year at the expiration date of the validity term. However, Blue Hat WFOE has the right to terminate these agreements upon giving 30 days’ prior written notice to Blue Hat Fujian at any time.

Equity Pledge Agreement

Pursuant to the equity pledge agreement, among Blue Hat WFOE, Blue Hat Fujian, and the shareholders who collectively owned all of Blue Hat Fujian, such shareholders pledge all of the equity interests in Blue Hat Fujian to Blue Hat WFOE as collateral to secure the obligations of Blue Hat Fujian under the exclusive business cooperation agreement and call option agreements. These shareholders are prohibited from transferring the pledged equity interests without the prior consent of Blue Hat WFOE unless transferring the equity interests to Blue Hat WFOE or its designated person in accordance to the call option agreements.

The equity pledge agreement shall come into force the date on which the pledged interests is recorded, which is three days after signing of the Agreement on November 13, 2018, under Blue Hat Fujian’s register of shareholders and is registered with competent administration for industry and commerce of Blue Hat Fujian until all of the liabilities and debts to Blue Hat WFOE have been fulfilled completely by Blue Hat Fujian. Blue Hat Fujian and the shareholders who collectively owned all of Blue Hat Fujian shall not terminate these agreements in any circumstance for any reason. However, Blue Hat WFOE has the right to terminate these agreements upon giving 30 days’ prior written notice to Blue Hat Fujian at any time.

Shareholders’ Powers of Attorney (“POAs”)

Pursuant to the shareholders’ POAs, the shareholders of Blue Hat Fujian give Blue Hat WFOE an irrevocable proxy to act on their behalf on all matters pertaining to Blue Hat Fujian and to exercise all of their rights as shareholders of Blue Hat Fujian, including the right to attend shareholders meeting, to exercise voting rights and all of the other rights, and to sign transfer documents and any other documents in relation to the fulfillment of the obligations under the call option agreements and the equity pledge agreement. The shareholder POAs shall remain in effect while the shareholders of Blue Hat Fujian hold the equity interests in Blue Hat Fujian.

Irrevocable Commitment Letters

Pursuant to the irrevocable commitment letters, the shareholders of Blue Hat Fujian commit that their spouses or inheritors have no right to claim any rights or interest in relation to the shares that they hold in Blue Hat Fujian and have no right to impose any impact on the daily managing duties of Blue Hat Fujian, and commit that if any event which refrains them from exercising shareholders’ rights as a registered shareholder, such as death, incapacity, divorce or any other event, could happen to them, the shareholders of Blue Hat Fujian will take corresponding measures to guarantee the rights of other registered shareholders and the performance of the Contractual Arrangements. The letters are irrevocable and shall not be withdrawn without the consent of Blue Hat WFOE.

Based on the foregoing contractual arrangements, which grant Blue Hat WFOE effective control of Blue Hat Fujian and enable Blue Hat WFOE to receive all of their expected residual returns, the Company accounts for Blue Hat Fujian as a VIE. Accordingly, the Company consolidates the accounts of Blue Hat Fujian for the periods presented herein, in accordance with Regulation S-X-3A-02 promulgated by the Securities Exchange Commission (“SEC”), and Accounting Standards Codification (“ASC”) 810-10, Consolidation.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

Summary of Significant Accounting Policies and Practices

Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for information pursuant to the rules and regulations of the SEC.

Principles of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries, which include the wholly- foreign owned enterprise ("WFOE") and variable interest entities ("VIEs") over which the Company exercises control and, when applicable, entities for which the Company has a controlling financial interest or is the primary beneficiary. All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.

Use of estimates and assumptions

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company’s consolidated financial statements include the useful lives of plant and equipment and intangible assets, capitalized development costs, impairment of long-lived assets, allowance for doubtful accounts, revenue recognition, allowance for deferred tax assets and uncertain tax position, and inventory allowance. Actual results could differ from these estimates.

Foreign currency translation and transaction

The reporting currency of the Company is the U.S. dollar. The Company in China conducts its businesses in the local currency, Renminbi (RMB), as its functional currency. Assets and liabilities are translated at the unified exchange rate as quoted by the People’s Bank of China at the end of the period. The statement of income accounts is translated at the average translation rates and the equity accounts are translated at historical rates. Translation adjustments resulting from this process are included in accumulated other comprehensive income. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

Translation adjustments included in accumulated other comprehensive income (loss) amounted to $(1,478,667), $(956,929) and $517,197 as of December 31, 2019, 2018 and 2017, respectively. The balance sheet amounts, with the exception of shareholders’ equity at December 31, 2019, 2018 and 2017 were translated at 6.98 RMB, 6.88 RMB and 6.51 RMB, respectively. The shareholders’ equity accounts were stated at their historical rate. The average translation rates applied to statement of income accounts for the years ended December 31, 2019, 2018 and 2017 were 6.89 RMB, 6.62 RMB and 6.76 RMB to $1.00, respectively. Cash flows are also translated at average translation rates for the periods, therefore, amounts reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheet.

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand; demand deposits and time deposits placed with banks or other financial institutions and have original maturities of less than three months.

Restricted cash

Amount mainly includes pledged deposits for bank loans of the Company. As of December 31, 2019 and 2018, restricted cash amounted to $5,000,000 and $0, respectively.

Accounts receivable, net

Accounts receivable include trade accounts due from customers. Accounts are considered overdue after 30 days. In establishing the required allowance for doubtful accounts, management considers historical collection experience, aging of the receivables, the economic environment, industry trend analysis, and the credit history and financial conditions of the customers. Management reviews its receivables on a regular basis to determine if the bad debt allowance is adequate, and adjusts the allowance when necessary. Delinquent account balances are written-off against allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. As of December 31, 2019 and 2018, allowance for the doubtful accounts was $1,467,374 and $644,090, respectively.

Other receivables, net

Other receivables primarily include deposits for business acquisitions, setup of research center, advances to employees, and others. Management regularly reviews the aging of receivables and changes in payment trends and records allowances when management believes collection of amounts due are at risk. Accounts considered uncollectable are written off against allowances after exhaustive efforts at collection are made. As of December 31, 2019 and 2018, allowance for the doubtful accounts was $42,676 and $29,571, respectively.

Inventories

Inventories are comprised of finished goods and are stated at the lower of cost or net realizable value using the weighted average method. Management reviews inventories for obsolescence and cost in excess of net realizable value quarterly and records a reserve against the inventory when the carrying value exceeds net realizable value.

Prepayments, net

Current

Prepayments are cash deposited or advanced to suppliers for future inventory purchases. This amount is refundable and bears no interest. For any advances to suppliers determined by management that such advances will not be in receipts of inventories or refundable, the Company will recognize an allowance account to reserve such balances. Management reviews its advances to suppliers on a regular basis to determine if the allowance is adequate, and adjusts the allowance when necessary. Delinquent account balances are written-off against allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. The Company’s management continues to evaluate the reasonableness of the valuation allowance policy and update it if necessary. As of December 31, 2019 and 2018, allowance for the doubtful accounts was $188,264 and $124,740, respectively.

Non-current

Non-current prepayment represents cash deposited or advanced for software development expenditure. This amount is refundable and bears no interest.

Property and equipment, net

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows:

Category	Depreciation method	Estimated useful lives

Electronic devices	Straight-line	3 years

Office equipment, fixtures and furniture	Straight-line	3 years

Automobile	Straight-line	3 years

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the consolidated statements of income and comprehensive income. Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals and betterments, which are expected to extend the useful life of assets, are capitalized. The Company also re-evaluates the periods of depreciation to determine whether subsequent events and circumstances warrant revised estimates of useful lives.

Intangible assets

The Company’s intangible assets with definite useful lives primarily consist of software development costs, patents and licensed software. The Company amortizes its intangible assets with definite useful lives over their estimated useful lives and reviews these assets for impairment. The Company typically amortizes its intangible assets with definite useful lives on a straight-line basis over the shorter of the contractual terms or the estimated useful lives of five to ten years.

Software development costs

The Company follows the provisions of ASC 350-40, “Internal Use Software”, to capitalize certain direct development costs associated with internal- used software. ASC 350-40 provides guidance on capitalization of the costs incurred for computer software developed or obtained for internal use. The Company expenses all costs incurred during the preliminary project stage of its development, and capitalizes costs incurred during the application development stage. Costs incurred relating to upgrades and enhancements to the application are capitalized if it is determined that these upgrades or enhancements add additional functionality to the application. The capitalized development cost is amortized on a straight-line basis over the estimated useful life, which is generally five years. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

Research and development

Research and development expenses include salaries and other compensation-related expenses to the Company’s research and product development personnel, as well as office rental, depreciation and related expenses for the Company’s research and product development team. The Company expenses all costs that are incurred in connection with the planning and implementation phases of development, and costs that are associated with maintenance of the existing websites or software for internal use.

Impairment for long-lived assets

Long-lived assets, including property and equipment and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. As of December 31, 2019, 2018 and 2017, no impairment of long-lived assets was recognized.

Long-term investments

Long-term investments include cost method investment and equity method investments.

Entities in which the Company has the ability to exercise significant influence, but does not have a controlling interest, are accounted for using the equity method. Significant influence is generally considered to exist when the Company has voting shares between 20% and 50%, and other factors, such as representation on the Board of Directors, voting rights and the impact of commercial arrangements, are considered in determining whether the equity method of accounting is appropriate. Under this method of accounting, the Company records its proportionate share of the net earnings or losses of equity method investees and a corresponding increase or decrease to the investment balances. Dividends received from the equity method investments are recorded as reductions in the cost of such investments.

The Company accounts for investments with less than 20% of the voting shares and does not have the ability to exercise significant influence over operating and financial policies of the investee using the cost method. The Company records cost method investments at the historical cost in its consolidated financial statements and subsequently records any dividends received from the net accumulated earrings of the investee as income. Dividends received in excess of earnings are considered a return of investment and are recorded as reduction in the cost of the investments.

Long-term investments are evaluated for impairment when facts or circumstances indicate that the fair value of the long-term investments is less than its carrying value. Impairment is recognized when a decline in fair value is determined to be other-than- temporary. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include, but are not limited to, the: (i) nature of the investment; (ii) cause and duration of the impairment; (iii) extent to which fair value is less than cost; financial condition and near term prospects of the investments; and (v) ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value. No event had occurred and indicated that other-than-temporary impairment existed and therefore the Company did not record any impairment charges for its investments for the years ended December 31, 2019, 2018 and 2017.

Fair value measurement

The accounting standard regarding fair value of financial instruments and related fair value measurements defines financial instruments and requires disclosure of the fair value of financial instruments held by the Company.

The accounting standards define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurement and enhance disclosure requirements for fair value measures. The three levels are defined as follow:

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

Revenue recognition

The Company adopted Accounting Standards Update (“ASU”) 2014-09 Revenue from Contracts with Customers (ASC 606). The ASU requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.

Sales of interactive toys

The Company recognizes sales of interactive toys revenues upon shipment or upon receipt of products by the customer, depending on the terms, provided that: there are no uncertainties regarding customer acceptance; persuasive evidence of an agreement exists documenting the specific terms of the transaction; the sales price is fixed or determinable; and collectability is reasonably assured. Management assesses the business environment, the customer’s financial condition, historical collection experience, accounts receivable aging, and customer disputes to determine whether collectability is reasonably assured.

The Company routinely enters into arrangements with its customers to provide sales incentives, support customer promotions, and provide allowances for returns and defective merchandise. Such programs are based primarily on customer purchases, customer performance of specified promotional activities, and other specified factors such as sales to consumers. The costs of these programs are recorded as sales adjustments that reduce gross sales in the period the related sale is recognized.

The products sold in the PRC are subject to a Chinese value-added tax (“VAT”). VAT taxes are presented as a reduction of revenue.

Mobile games

Internal developed platform

The Company operates the mobile games as live services that allow players to play for free. Within these games, players can purchase virtual currency to obtain virtual goods to enhance the game-playing experience. On the platform, players purchase virtual currency and/or virtual goods through various widely accepted payment methods offered in the games, including Alipay or WeChat and online bank transfer service providers. Advance payments from customers for virtual goods that are non-refundable that specify our obligations are recorded to deferred revenue. All other advance payments that do not meet these criteria are recorded as advances from customers. For virtual goods purchases upon immediately use with no future game-playing benefits, the Company recognizes such virtual goods purchase upon receipts of payment from the paying players. For virtual goods purchases for the conversion of future game-playing benefits or throughout the players’ playing life, the Company recognizes such virtual goods purchases ratably over the estimated average playing period of paying players for the applicable game, starting from the point in time when virtual items are delivered to the players’ accounts and all other revenue recognition criteria are met. The Company records revenue generated from mobile games on a gross basis as the Company is acting as the principal to fulfill all obligations related to the game operation. Fees paid to distribution channels and payment channels are recorded as cost of revenues.

The Company considers the average period that players typically play the games and other game player behavior patterns, as well as various other factors to arrive at the best estimates for the estimated playing period of the paying players for each game. On a quarterly basis, the Company determined the estimated average playing period for paying players by analyzing paying players for that game who made their first virtual goods purchase during that period and counting their cumulative login days for each game. The Company then averages the time periods to determine the estimated paying playing period for that game. If a new game is launched and only a limited period of paying player data is available, then the Company considers other qualitative factors, such as the playing patterns for paying players for other games with similar characteristics and playing patterns of paying players, such as targeted players and purchasing frequency. While the Company believes its estimates to be reasonable based on available game player information, the Company may revise such estimates based on new information indicating a change in the game player behavior patterns and any adjustments are applied prospectively.

Based on the Company’s analysis, the estimated average playing period of paying players is approximately one to three months, and this estimate has been consistent since the Company’s initial analysis. No change has been made in such estimate during any of the periods presented. Future usage patterns may differ from historical usage patterns and therefore the estimated average playing periods may change in the future.

Third-party platform

In addition, the Company also licenses third-parties to operate the Company’s mobile games developed internally through mobile platforms and receives revenue-based royalty payments from all the third-party licensee operators on a monthly basis.

The revenue- based royalty payments are recognized when all other revenue recognition criteria are met. The Company records the mobile game royalty revenue on a net basis, as the Company does not have the primary responsibility for fulfillment and acceptability of the game services.

Shipping and handling

Shipping and handling costs amounted to $125,640, $114,558 and $150,776 for the years ended December 31, 2019, 2018 and 2017, respectively. Shipping and handling costs are expensed as incurred and included in selling expenses.

Advertising costs

Advertising costs amounted to $31,176, $87,956 and $291,782 for the years ended December 31, 2019, 2018 and 2017, respectively. Advertising costs are expensed as incurred and included in selling expenses.

Operating leases

A lease for which substantially all the benefits and risks incidental to ownership remain with the lessor is classified by the lessee as an operating lease. All leases of the Company are currently classified as operating leases. The Company records the total expenses on a straight-line basis over the lease term, and the accounting of operating lease in this report has been updated to reflect the adoption of FASB’s new guidance on the recognition and measurement of leases.

Government subsidies

Government subsidies mainly represent amounts granted by local government authorities as an incentive for companies to promote development of the local technology industry. The Company receives government subsidies related to government sponsored projects, and records such government subsidies as a liability when it is received. The Company records government subsidies as other income when there is no further performance obligation.

Total government subsidies amounted to $221,467, $94,088 and $328,346 for the years ended December 31, 2019, 2018 and 2017, respectively.

Value added taxes

Revenue represents the invoiced value of service, net of VAT. The VAT is based on gross sales price and VAT rates range up to 17%, depending on the type of service provided. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in tax payable. All of the VAT returns filed by the Company’s subsidiaries in China have been and remain subject to examination by the tax authorities for five years from the date of filing.

Income taxes

The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. The charge for taxation is based on the results for the fiscal year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred taxes are accounted for using the asset and liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

Comprehensive income

Comprehensive income consists of two components, net income and other comprehensive (loss) income. Other comprehensive (loss) income refers to revenue, expenses, gains and losses that under U.S. GAAP are recorded as an element of shareholders’ equity but are excluded from net income. Other comprehensive (loss) income consists of a foreign currency translation adjustment resulting from the Company not using the U.S. dollar as its functional currencies.

Earnings per share

The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average ordinary share outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the years ended December 31, 2019 and 2018, there were no dilutive shares.

Employee benefits

The full-time employees of the Company are entitled to staff welfare benefits including medical care, housing fund, pension benefits, unemployment insurance and other welfare, which are government mandated defined contribution plans by law. The Company is required to accrue for these benefits based on certain percentages of the employees’ respective salaries, subject to certain ceilings, in accordance with the relevant PRC regulations, and make cash contributions to the state-sponsored plans out of the amounts accrued. Total expenses for the plans were $81,118, $81,735 and $63,566 for the years ended December 31, 2019, 2018 and 2017, respectively.

Statutory reserves

Pursuant to the laws applicable to the PRC, PRC entities must make appropriations from after-tax profit to the non-distributable "statutory surplus reserve fund". Subject to certain cumulative limits, the "statutory surplus reserve fund" requires annual appropriations of 10% of after-tax profit until the aggregated appropriations reach 50% of the registered capital (as determined under accounting principles generally accepted in the PRC ("PRC GAAP") at each year-end). For foreign invested enterprises and joint ventures in the PRC, annual appropriations should be made to the "reserve fund". For foreign invested enterprises, the annual appropriation for the "reserve fund" cannot be less than 10% of after-tax profits until the aggregated appropriations reach 50% of the registered capital (as determined under PRC GAAP at each year-end). If the Company has accumulated loss from prior periods, the Company is able to use the current period net income after tax to offset against the accumulate loss.

Recently issued accounting pronouncements

In December 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers” (“ASU 2016-20”), which makes minor corrections or minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The amendments are intended to address implementation and provide additional practical expedients to reduce the cost and complexity of applying the new revenue standard. These amendments have the same effective date as the new revenue standard. In September 2017, the FASB issued ASU No. 2017-13, to clarify the effective dates that public business entities and other entities were required to adopt ASC Topic 606 for annual reporting. As an “emerging growth company,” or EGC, the Company has elected to take advantage of the extended transition period provided in the Securities Act Section 7(a)(2)(B) for complying with new or revised accounting standards applicable to private companies. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2018, including interim periods within annual reporting periods beginning after December 15, 2019. The Company adopted Topic 606 on January 1, 2019 using the modified retrospective transition method and there is no material impact as of the date of adoption of Topic 606.

In September 2017, the FASB issued ASU No. 2017-13, to clarify the effective dates that public business entities and other entities were required to adopt ASC Topic 842 for annual reporting. A public business entity that otherwise would not meet the definition of a public business entity except for a requirement to include or the inclusion of its financial statements or financial information in another entity’s filing with the SEC adopting ASC Topic 842 for annual reporting periods beginning after December 15, 2019, and interim reporting periods within annual reporting periods beginning after December 15, 2020. ASU No. 2017-13 also amended that all components of a leveraged lease be recalculated from inception of the lease based on the revised after tax cash flows arising from the change in the tax law, including revised tax rates. The difference between the amounts originally recorded and the recalculated amounts must be included in income of the year in which the tax law is enacted. The Company has not early adopted this update and it will become effective on January 1, 2020.

In August 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provide guidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs;(2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from Equity Method Investees; (8) Beneficial Interests in Securitization Transactions; and Separately Identifiable Cash Flows and Application of the Predominance Principle. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The adoption of this ASU on January 1, 2018 would not have a material effect on the Company’s consolidated financial statements.

In July 2017, the FASB Issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815). The amendments in Part I of the Update change the reclassification analysis of certain equity- lined financial instruments (or embedded features) with down round features. The amendments in Part II of this Update re-characterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments in Part II of this Update do not require any transition guidance because those amendments do not have an accounting effect. The Company does not believe the adoption of this ASU would have a material effect on the Company’s consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12 to simplify the accounting in ASC 740, Income Taxes. This guidance removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. This guidance also clarifies and simplifies other areas of ASC 740. This ASU will be effective beginning on January 1, 2021. Early adoption is permitted. Certain amendments in this update must be applied on a prospective basis, certain amendments must be applied on a retrospective basis, and certain amendments must be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings/(deficit) in the period of adoption. The Company does not believe the adoption of this ASU would have a material effect on the Company’s consolidated financial statements.

Except as mentioned above, the Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of income and comprehensive income and statements of cash flows.

VARIABLE INTEREST ENTITY (“VIE”)

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

VARIABLE INTEREST ENTITY (“VIE”)

3.	VARIABLE INTEREST ENTITY (“VIE”)

On November 13, 2018, Blue Hat WFOE entered into Contractual Arrangements with Blue Hat Fujian. The significant terms of these Contractual Arrangements are summarized in “Note 1 - Nature of business and organization” above. As a result, the Company classifies Blue Hat Fujian as a VIE which should be consolidated based on the structure as described in Note 1.

A VIE is an entity that has either a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest, such as through voting rights, right to receive the expected residual returns of the entity or obligation to absorb the expected losses of the entity. The variable interest holder, if any, that has a controlling financial interest in a VIE is deemed to be the primary beneficiary and must consolidate the VIE. Blue Hat WFOE is deemed to have a controlling financial interest and be the primary beneficiary of Blue Hat Fujian because it has both of the following characteristics:

The power to direct activities at Blue Hat Fujian that most significantly impact such entity’s economic performance, and

The right to receive benefits from Blue Hat Fujian that could potentially be significant to such entity.

Pursuant to the Contractual Arrangements, Blue Hat Fujian pays service fees equal to all of its net income to Blue Hat WFOE. The Contractual Arrangements are designed so that Blue Hat Fujian operates for the benefit of Blue Hat WFOE and ultimately, the Company.

Accordingly, the account of Blue Hat Fujian is consolidated in the accompanying financial statements. In addition, its financial positions and results of operations are included in the Company’s consolidated financial statements. The carrying amount of the VIE’s consolidated assets and liabilities are as follows:

	December 31,			December 31,
	2019			2018

Current assets	$	37,040,733		$	25,659,179
Property and equipment, net		162,374			208,869
Other non-current assets		13,773,550			9,602,816
Total assets		50,976,657			35,470,864

Total liabilities		(12,494,955	)		(7,214,819	)

Net assets	$	38,481,702		$	28,256,045

	December 31,		December 31,
	2019		2018

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		293,985		1,402,972
Other payables and accrued liabilities		2,058,626		438,299
Other payables – related party		21,072		62,368
Operating lease liability - current		313,460		-
Customer deposits		-		76,274
Taxes payable		3,525,153		1,941,770
Total current liabilities		12,109,576		7,122,833
Operating lease liabilities		372,051		-
Long-term loans – third party		13,328		91,986
Total liabilities	$	12,494,955	$	7,214,819

The summarized operating results of the VIE’s are as follows:

	Year ended		Year ended		Year ended
	December 31,		December 31,		December 31,
	2019		2018		2017

Revenues	$	23,834,129	$	18,531,178	$	14,144,894
Gross profit	$	16,302,329	$	12,422,502	$	8,844,807
Income from operations	$	11,153,956	$	8,317,465	$	5,944,458
Net income	$	10,747,395	$	7,919,408	$	5,124,973

ACCOUNTS RECEIVABLE, NET

12 Months Ended

Dec. 31, 2019

Credit Loss [Abstract]

ACCOUNTS RECEIVABLE, NET

4.	Accounts receivable, net

Accounts receivable, net consist of the following:

	December 31,			December 31,
	2019			2018

Accounts receivable	$	15,098,733		$	12,534,236
Allowance for doubtful accounts		(1,467,374	)		(644,090	)
Total accounts receivable, net	$	13,631,359		$	11,890,146

Movements of allowance for doubtful accounts are as follows:

Beginning balance	$	644,090		$	198,516
Addition		842,179			474,087
Exchange rate effect		(18,895	)		(28,513	)

Ending balance	$	1,467,374		$	644,090

OTHER RECEIVABLES, NET

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

OTHER RECEIVABLES, NET

Other receivables, net

Other receivables consist of the following:

	December 31,			December 31,
	2019			2018

Deposit for business acquisitions	$	12,324,583		$	-
Deposit for set-up of research center		86,007			-
Others		814,615			261,889
Allowance for doubtful accounts		(42,676	)		(29,571	)
Total other receivables, net	$	13,182,529		$	232,318

Movements of allowance for doubtful accounts are as follows:

Beginning balance	$	29,571		$	13,830
Addition		13,680			17,131
Exchange rate effect		(575	)		(1,390	)
Ending balance	$	42,676		$	29,571

The Company signed a non-binding letter of intent to acquire a controlling equity interest of Fuzhou Csfctech Co., Ltd (“Csfctech”), subject to customary conditions. Csfctech is a developer and distributor of mobile games in China with an international user base across Mainland China, Taiwan, the United Arab Emirates and Africa. The acquisition price is expected to be based on the valuation of the acquired entities carried out by a qualified independent third party. The Company signed a three party agreement that involves Csfctech and Quanzhou Yiang Trading Co., Ltd (“Yiang”), of which Yiang is an independent third party.

As of December 31, 2019, the Company paid a refundable deposit of $5,983,022 to Yiang as a guarantee. There is no assurance that the proposed transaction will be consummated, particularly if the financial performance of Csfctech does not meet the agreed terms.

The Company signed a non-binding letter of intent to acquire a controlling equity interest of Fuzhou Tornado Network Technology Co., Ltd (“Tornado”), subject to customary conditions. Tornado is a developer and distributor of mobile games in China with an international user base across Mainland China, South Korea, the United Arab Emirates and North America. The acquisition price is expected to be based on the valuation of the acquired entities carried out by a qualified independent third party. The Company signed a three party agreement that involves Tornado and Quanzhou Chengtai Co., Ltd (“Chengtai”), of which Chengtai is an independent third party. As of December 31, 2019 the Company paid a refundable deposit of $6,341,561 to Chengtai as a guarantee. There is no assurance that the proposed transaction will be consummated, particularly if the financial performance of Tornado does not meet the agreed terms.

In addition, the Company is aiming to establish a research center with Beijing Zhongrun Minan Intelligence Technology Co., Ltd (“Zhongrun”). The project will develop a training platform and application for kindergarten. As of December 31, 2019, the Company paid $86,007 to Zhongrun as a refundable deposit for preliminary costs.

PREPAYMENTS, NET

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

PREPAYMENTS, NET

6.	Prepayments, net

Prepayments, net consist of the following:

	December 31,			December 31,
	2019			2018

Prepayments	$	487,841		$	1,457,272
Allowance for doubtful accounts		(188,264	)		(124,740	)
Total prepayments, net	$	299,577		$	1,332,532

Movements of allowance for doubtful accounts are as follows:

Beginning balance	$	124,740		$	127,470
Addition		66,045			4,310
Exchange rate effect		(2,521	)		(7,040	)
Ending balance	$	188,264		$	124,740

LEASES

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

LEASES

Leases

The Company adopted ASU No. 2016-02 and related standards (collectively ASC 842, Leases), which replaced previous lease accounting guidance, on January 1, 2019 using the modified retrospective method of adoption. The Company elected the transition method expedient which allows entities to initially apply the requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. As a result of electing this transition method, prior periods have not been restated. In addition, adoption of the new standard resulted in the recording of right of use assets and associated lease liabilities of approximately $1 million each as of January 1, 2019.

Operating lease expense for the years ended December 31, 2019, 2018 and 2017 was $408,410, $387,191 and $314,718, respectively.

Supplemental balance sheet information related to leases is as follows:

	Location on Face of	December 31,
	Balance Sheet	2019
Operating leases:
Operating lease right of use assets	Operating lease, right-of-use assets	$	679,850

Current operating lease liabilities	Operating lease liabilities - current	$	313,460
Noncurrent operating lease liabilities	Operating lease liabilities		372,051
Total operating lease liabilities		$	685,511

Weighted average remaining lease term (in years):
Operating leases			1.9

Weighted discount rate:
Operating leases			4.72	%

Maturities of lease liabilities were as follows:

For the year ended December 31,	Operating lease

2020	$	339,136
2021		319,959
2022		51,189
2023		13,613
Total	$	723,897
Less: amount representing interest		38,386
Present value of future minimum lease payments		685,511
Less: Current obligations		313,460
Long-term obligations	$	372,051

As of December 31, 2019, the Company has additional operating lease commitments that have not yet commenced of approximately $40,681.

PROPERTY AND EQUIPMENT, NET

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT, NET

8.	Property and equipment, net

Property and equipment consist of the following:

	December 31,			December 31,
	2019			2018

Building	$	2,162,449		$	-
Electronic devices		175,249			131,406
Office equipment, fixtures and furniture		43,914			34,352
Vehicle		216,179			219,250
Subtotal		2,597,791			385,008
Less: accumulated depreciation and amortization		(272,968	)		(176,139	)
Total	$	2,324,823		$	208,869

The depreciation expenses for the years ended December 31, 2019, 2018 and 2017 was $100,474, $101,183 and $14,702, respectively.

INTANGIBLE ASSETS, NET

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS, NET

Intangible assets, net

The Company’s intangible assets with definite useful lives primarily consist of patents and licensed software. The following table summarizes the components of acquired intangible asset balances as of:

	December 31,			December 31,
	2019			2018

Patents	$	1,115,004		$	962,858
Licensed software		6,067,218			2,036,414
Software development costs		1,080,020			1,968,451
Less: accumulated amortization		(1,503,926	)		(702,186	)
Intangible assets, net	$	6,758,316		$	4,265,537

Amortization expenses for the years ended December 31, 2019, 2018 and 2017 amounted to $821,203, $362,355 and $193,255, respectively.

The estimated amortization is as follows:

For the year ended December 31	Estimated amortization expense

2019	$	1,108,675
2020		1,108,675
2021		1,108,675
2022		1,108,675
2023		1,108,675
Thereafter		1,214,937
Total	$	6,758,312

LONG-TERM INVESTMENTS

12 Months Ended

Dec. 31, 2019

Equity Method Investments and Joint Ventures [Abstract]

LONG-TERM INVESTMENTS

10.

Long-term investments

The Company’s long-term investments consist of cost method investment and equity method investments.

Cost method investment

On September 20, 2018, Blue Hat Fujian formed a joint venture with Fujian Jin Ge Tie Ma Information Technology Co., Ltd., contributing a 20.0% equity interest in Xiamen Blue Wave Technology Co. Ltd. (“Xiamen Blue Wave”), a PRC company. The ownership percentage diluted to 15.0% upon other shareholders contributed additional investment into Xiamen Blue Wave in December 2018. As the Company did not have significant influence over the investee, the investment in Xiamen Blue Wave was accounted for using the cost method. As of December 31, 2019, 2018 and 2017, the carrying value of cost method investment in Xiamen Blue Wave was $1,720,134, $1,744,566 and $0 respectively.

Equity method investments

On September 18, 2017, Blue Hat Fujian formed a joint venture with Xiamen Youth Education Development Co., Ltd. and Youying Wang, contributing a 48.5% equity interest in Fujian Youth Hand in Hand Educational Technology Co., Ltd. (“Fujian Youth”), a PRC company. As the Company has significant influence over the investee through its representation on the board, the investment in Fujian Youth was accounted for using the equity method. As of December 31, 2019, 2018 and 2017, total investment in Fujian Youth was $7,167, $7,269 and $7,684, respectively. As of December 31, 2019, 2018 and 2017, Fujian Youth had no operations and no gain or loss was recognized for the years ended December 31, 2019, 2018 and 2017.

On October 16, 2018, Blue Hat Fujian formed a joint venture with Renchao Huyu (Shanghai) Culture Development Co. Ltd., contributing a 49% ownership interest in Renchao Huyu (Shanghai) Culture Propagation Co. Ltd. (“Renchao Huyu”), with the remaining 51% ownership owned by Renchao Huyu (Shanghai) Culture Development Co. Ltd.

As the Company has significant influence over the investee through its representation on the board, the Company accounted for the investment in Renchao Huyu as equity method investment. As of December 31, 2019, no investment has been contributed in Renchao Huyu.

No impairment loss was recognized for the long-term investments for the years ended December 31, 2019, 2018 and 2017.

CREDIT FACILITIES

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

CREDIT FACILITIES

11.	Credit facilities

Short term loans — banks

Outstanding balances on short-term bank loans consisted of the following:

		Interest			Collateral/	December 31,		December 31,
Bank Name	Maturities	rate			Guarantee	2019		2018

Industrial Bank	August 2020		4.35	%	Secured by $5 million fixed deposit	$	4,300,334	$	-
Industrial Bank	December 2020		5.88	%	Guarantee by Xiaodong Chen and Juanjuan Cai		716,723		-
Industrial Bank	December 2020		5.88	%	Guarantee by PICC Property and Casualty Company Limited Xiamen Branch, Xiaodong Chen and Juanjuan Cai		430,034		-
Industrial Bank	December 2020		5.88	%	Guarantee by Xiamen Siming Technology Financing Guarantee Co. Ltd., Xiaodong Chen and Juanjuan Cai		372,696		-
China Construction Bank	March 2019		5.71	%	Guarantee by Xiamen Jingyuan Finance Guarantee Co. Ltd		-		944,973
Industrial Bank	December 2019		6.09	%	Guarantee by Xiaodong Chen, Juanjuan Cai and Yong Chen		-		436,142
China Construction Bank	March 2019		5.71	%	Guarantee by Xiamen Jingyuan Finance Guarantee Co. Ltd		-		1,090,354
Industrial Bank	December 2019		6.09	%	Guarantee by Xiamen Siming Technology Financing Guarantee Co. Ltd., Xiaodong Chen Juanjuan Cai and Yong Chen		-		654,212
Total						$	5,819,787	$	3,125,681

Loan term loans — third party

Outstanding balances on long-term third party loans consisted of the following:

		Weighted
		Average			Collateral/	December 31,			December 31,
Lender Name	Maturities	Interest Rate			Guarantee	2019			2018

Volkswagen Finance (China) Co. Ltd.	Due monthly until March 2021		4.06	%	Automobiles	$	90,821		$	167,455
Current maturities							(77,493	)		(75,469	)
Total						$	13,328		$	91,986

The maturities schedule is as follows as of December 31, 2019:

Twelve months ending December 31,	Amount

2020	$	79,750
2021		13,291
Deferred financing fees		(2,220	)
Total	$	90,821

Interest expense pertaining to the above short-term and long-term loans for the years ended December 31, 2019, 2018 and 2017 amounted to $171,938, $142,641 and $183,291, respectively.

OTHER PAYABLES AND ACCRUED LIABILITIES

12 Months Ended

Dec. 31, 2019

Payables and Accruals [Abstract]

OTHER PAYABLES AND ACCRUED LIABILITIES

12.	Other payables and accrued liabilities

Other payables and accrued liabilities consist of the following:

	December 31,		December 31,
	2019		2018

Payables to non-trade vendors and service providers	$	3,102,018	$	225,274
Salary payables		393,944		126,200
Other miscellaneous payables		132,847		86,825
Total other payables and accrued liabilities	$	3,628,809	$	438,299

RELATED PARTY BALANCES AND TRANSACTIONS

12 Months Ended

Dec. 31, 2019

RELATED PARTY BALANCES AND TRANSACTIONS

13.

Related party balances and transactions

Other receivables – related party

			December 31,		December 31,
Name of Related Party	Relationship	Nature	2019		2018

Lin Zhao	General Manager of Blue Hat Shenyang	Employee advance	$	-	$	3,419
Liang Yuan	General Manager of Blue Hat Hunan	Employee advance		-		8,617
				-	$	12,036

Other payables – related party

December 31,

Name of Related Party

Relationship

Nature

2019

2018

Xiaodong Chen

CEO

Lease payable

21,341

62,368

TAXES

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

TAXES

14.

Taxes

Income tax

Cayman Islands

Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed.

British Virgin Islands

Blue Hat BVI is incorporated in the British Virgin Islands and is not subject to tax on income or capital gains under current British Virgin Islands law. In addition, upon payments of dividends by these entities to their shareholders, no British Virgin Islands withholding tax will be imposed.

Hong Kong

Blue Hat HK is incorporated in Hong Kong and is subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate is 16.5% in Hong Kong. The Company did not make any provisions for Hong Kong profit tax as there were no assessable profits derived from or earned in Hong Kong since inception. Under Hong Kong tax law, Blue Hat HK is exempted from income tax on its foreign-derived income and there are no withholding taxes in Hong Kong on remittance of dividends.

PRC

Blue Hat WFOE, Blue Hat Fujian, Blue Hat Shenyang, Blue Hat Hunan, Blue Hat Chongqing and Blue Hat Pingxiang are governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), domestic enterprises and Foreign Investment Enterprises (the “FIE”) are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on case- by-case basis. EIT grants preferential tax treatment to certain High and New Technology Enterprises (“HNTEs”). Under this preferential tax treatment, HNTEs are entitled to an income tax rate of 15%, subject to a requirement that they re-apply for HNTE status every three years.

Blue Hat Fujian obtained the “high-tech enterprise” tax status in October 2015 and renewed it in December 2018, which reduced its statutory income tax rate to 15% from 2018 to 2019.

In addition, in 2018 and 2019, the Chinese tax authority granted Blue Hat Pingxiang their tax preference on its enterprises income tax by using 10% of gross revenue as tax basis to apply its 25% tax rate from 2018 to December 2019. The Company expects such tax preference can be renewed on an annual basis.

Tax savings for the years ended December 31, 2019, 2018 and 2017 amounted to $ 2,256,051, $1,687,004 and $636,796, respectively. The Company’s basic and diluted earnings per shares would have been lower by $0.06, $0.05 and $0.02 per share for the years ended December 31, 2019, 2018 and 2017, respectively, without the preferential tax rate reduction.

Significant components of the provision for income taxes are as follows:

	December 31,			December 31,
	2019			2018

Current	$	502,434		$	712,829
Deferred		(48,710	)		(107,401	)
The provision for income taxes	$	453,724		$	605,428

The following table reconciles China statutory rates to the Company’s effective tax rate:

	Year ended			Year ended			Year ended
	December 31,			December 31,			December 31,
	2019			2018			2017

China statutory income tax rate		25.0	%		25.0	%		25.0	%
Preferential tax rate reduction		(10.0	%)		(10.0	%)		(10.0	%)
Preferential Blue Hat Pingxiang tax rate reduction		(12.5	%)		(8.0	%)		0.0	%
Permanent difference		2.3	%		0.1	%		0.7	%
Effective tax rate		4.8	%		7.1	%		15.7	%

Deferred tax assets – China

Significant components of deferred tax assets were as follows:

	December 31,		December 31,
	2019		2018

Allowance for doubtful accounts	$	182,234	$	135,999

As of December 31, 2019, 2018 and 2017, the Company had approximately $1,300,000, $835,000 and 230,000 of allowance for doubtful accounts held at its profitable PRC VIE with deferred tax assets of approximately $182,000, $136,000 and $34,000, respectively. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are recoverable, management believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets for the profitable PRC VIE as of December 31, 2019, 2018 and 2017. Thus, there were no valuation allowances of December 31, 2019, 2018 and 2017 in respect to the deferred tax assets on allowance for doubtful accounts.

Uncertain tax positions

The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits and measures the unrecognized benefits associated with the tax positions. As of December 31, 2019, 2018 and 2017, the Company did not have any significant unrecognized uncertain tax positions.

The Company did not incur any interest and penalties tax for the years ended December 31, 2019, 2018 and 2017. The Company does not anticipate any significant increases or decreases in unrecognized tax benefits in the next twelve months from December 31, 2019.

Value added tax

All of the Company’s service revenues that are earned and received in the PRC are subject to a Chinese VAT. Before May 2018, the rate of Chinese VAT is 17%, and was changed to 16% from May 2018 to March 2019, then the Chinese VAT is at a rate of 13% starting in April 2019 of the gross proceeds or at a rate approved by the Chinese local government.

Taxes payable consisted of the following:

	December 31,		December 31,
	2019		2018

VAT taxes payable	$	2,507,683	$	1,314,320
Income taxes payable		833,476		514,349
Other taxes payable		183,994		113,101
Totals	$	3,525,153	$	1,941,770

CONCENTRATION OF RISK

12 Months Ended

Dec. 31, 2019

Risks and Uncertainties [Abstract]

CONCENTRATION OF RISK

15.

Concentration of risk

Credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash (including restricted cash and certificate deposits). As of December 31, 2019, 2018 and 2017, $15,478,337, $11,828,316 and $19,760,244 were deposited with financial institutions located in the PRC, respectively. These balances are not covered by insurance. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness.

The Company is also exposed to risk from its accounts receivable and other receivables. These assets are subjected to credit evaluations. An allowance has been made for estimated unrecoverable amounts which have been determined by reference to past default experience and the current economic environment.

A majority of the Company’s expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.

Our functional currency is the RMB, and our financial statements are presented in U.S. dollars. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. The change in the value of the RMB relative to the U.S. dollar may affect our financial results reported in the U.S. dollar terms without giving effect to any underlying changes in our business or results of operations. Currently, our assets, liabilities, revenues and costs are denominated in RMB.

To the extent that the Company needs to convert U.S. dollars into RMB for capital expenditures and working capital and other business purposes, appreciation of RMB against U.S. dollar would have an adverse effect on the RMB amount the Company would receive from the conversion. Conversely, if the Company decides to convert RMB into U.S. dollar for the purpose of making payments for dividends, strategic acquisition or investments or other business purposes, appreciation of U.S. dollar against RMB would have a negative effect on the U.S. dollar amount available to the Company.

Customer concentration risk

For the year ended December 31, 2019, two customers under the same ownership accounted for 12.1% of the Company’s total revenues. For the year ended December 31, 2018, two customers under the same ownership accounted for 10.8% of the Company’s total revenues. For the year ended December 31, 2017, no customer accounted for more than 10% of the Company’s total revenues.

As of December 31, 2019, two customers under the same ownership accounted for 15.1% of the total balance of accounts receivable. As of December 31, 2018, two customers under the same ownership accounted for 10.8% of the total balance of accounts receivable. For the year ended December 31, 2017, no customer accounted for more than 10% of the total balance of account receivable.

Vendor concentration risk

For the year ended December 31, 2019, two vendors accounted for 54.84% and 31.53% of the Company’s total purchases. For the year ended December 31, 2018, two vendors accounted for 49.2% and 43.6% of the Company’s total purchases. For the year ended December 31, 2017, three vendors accounted for 35.3%, 27.4% and 26.1% of the Company’s total purchases.

As of December 31, 2019, one vendor accounted for 14% of the total balance of accounts payable. As of December 31, 2018, two vendors accounted for 62.4% and 17.1% of the total balance of accounts payable. For the year ended December 31, 2017, three vendors accounted for 39.5%, 25.4% and 25.2% of the total balance of account payable.

SHAREHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

SHAREHOLDERS' EQUITY

16.

Shareholders' equity

Ordinary shares

Blue Hat Cayman was established under the laws of Cayman Islands on June 13, 2018. The authorized number of ordinary shares is 50,000,000 shares with a par value of $0.001 per ordinary share.

Initial public offering

On July 30, 2019, Blue Hat Interactive Entertainment Technology (the “Company”) completed the initial public offering (“Initial Public Offering”, “IPO”) of 2,000,000 ordinary shares at an initial public offering price of $4.00 per share, before underwriting discounts and commissions and offering expenses, resulting in gross proceeds of $8,000,000 before underwriting discounts and commissions and offering expenses. The net proceeds from the IPO amounted to $7,417,077 after deducting the issuance costs of $582,923 and before deducting offering expenses.

In connection with the IPO, the Company granted to ViewTrade Securities, Inc., the underwriter, a 45-day option to purchase an additional 300,000 ordinary shares at the Initial Public Offering price of $4.00, less underwriting discounts and commissions, to cover over-allotments, if any. After completion of the IPO, 141,114 ordinary shares were issued on August 8, 2019, pursuant to the underwriter’s partial exercise of its option to purchase additional ordinary shares, resulting in gross proceeds of $564,456, before underwriting discounts and commissions and offering expenses. The net proceeds from the issuance of such new shares amounted to $524,944 after deducting the issuance costs of $39,512.

The option granted to ViewTrade Securities, Inc. was expired as of December 31, 2019.

Restricted assets

The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiary. Relevant PRC statutory laws and regulations permit payments of dividends by Blue Hat WFOE, Blue Hat Fujian, Blue Hat Hunan and Blue Hat Shenyang (collectively “Blue Hat PRC entities”) only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the accompanying consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of Blue Hat PRC entities.

Blue Hat PRC entities are required to set aside at least 10% of their after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, Blue Hat PRC entities may allocate a portion of their after- tax profits based on PRC accounting standards to enterprise expansion fund and staff bonus and welfare fund at its discretion. Blue Hat PRC entities may allocate a portion of its after-tax profits based on PRC accounting standards to a discretionary surplus fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by State Administration of Foreign Exchange.

As a result of the foregoing restrictions, Blue Hat PRC entities are restricted in their ability to transfer their assets to the Company. Foreign exchange and other regulation in the PRC may further restrict Blue Hat PRC entities from transferring funds to the Company in the form of dividends, loans and advances. As of December 31, 2019, 2018 and 2017, amounts restricted are the paid-in-capital and statutory reserve of Blue Hat PRC entities, which amounted to $22,096,755, $ 14,043,402 and $13,778,708, respectively.

Statutory reserve

During the years ended December 31, 2019, 2018 and 2017, Blue Hat PRC entities collectively attributed $111,333, $264,693 and $530,869 of retained earnings for their statutory reserves, respectively.

Capital contributions

During the year ended December 31, 2019, 2018 and 2017, the Company’s shareholders contributed $7,942,021, $0, and $8,772,355 to the Company.

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

17.	Commitments and contiNgencIES

Purchase commitments

The Company has entered into eight research and development agreements for the development of certain educational platforms and application systems. As of December 31, 2019 and 2018, the Company’s commitment under these agreements amounted to $18,649,121 and $13,375,009, respectively.

The Company has entered into seven agreements for game software development and three agreements for community software development. As of December 31, 2019 and 2018, the Company’s commitment under these agreements amounted to $7,815,143 and $1,221,196, respectively.

Variable interest entity structure

In the opinion of management, (i) the corporate structure of the Company is in compliance with existing PRC laws and regulations; (ii) the Contractual Arrangements are valid and binding, and do not result in any violation of PRC laws or regulations currently in effect; and (iii) the business operations of Blue Hat WFOE and the VIEs are in compliance with existing PRC laws and regulations in all material respects.

However, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations. Accordingly, the Company cannot be assured that PRC regulatory authorities will not ultimately take a contrary view to the foregoing opinion of its management. If the current corporate structure of the Company or the Contractual Arrangements is found to be in violation of any existing or future PRC laws and regulations, the Company may be required to restructure its corporate structure and operations in the PRC to comply with changing and new PRC laws and regulations. In the opinion of management, the likelihood of loss in respect of the Company’s current corporate structure or the Contractual Arrangements is remote based on current facts and circumstances.

Risk of uncertainty

The Company expects revenue in the first quarter of 2020 to decrease 40% to 50% 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 report and reflects the Company's current and preliminary expectations and estimates, which are all subject to change. The Company does not foresee the coronavirus outbreak having a substantial impact on its business for the full year, although, given the uncertainty of the situation, the duration of the business disruption and related financial impact cannot be reasonably estimated at this time.

SEGMENT INFORMATION AND REVENUE ANALYSIS

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

SEGMENT INFORMATION AND REVENUE ANALYSIS

18.	Segment information and revenue analysis

The Company follows ASC 280, Segment Reporting, which requires that companies to disclose segment data based on how management makes decision about allocating resources to each segment and evaluating their performances. The Company has three reporting segments. The Company’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company. The Company considers itself to be operating within one reportable segment. The Company’s revenue and net income are substantially derived from interactive toys, and mobile games.

Disaggregated information of revenues by business lines are as follows:

	Year ended		Year ended		Year ended
	December 31,		December 31,		December 31,
	2019		2018		2017

Interactive toys - animation series	$	160,672	$	522,638	$	1,060,330
Interactive toys - game series		21,152,258		16,896,944		12,956,130
Mobile game		2,521,199		1,111,596		128,434
Total revenues	$	23,834,129	$	18,531,178	$	14,144,894

Disaggregated information by business lines are as follows:

Year ended December 31, 2019

	Interactive toys			Interactive toys
	animation series			game series			Mobile game

Revenue	$	160,672		$	21,152,258		$	2,521,199
Costs of revenue		(81,201	)		(7,160,508	)		(290,091	)
Gross Profit	$	79,471		$	13,991,750		$	2,231,108

Year ended December 31, 2018

	Interactive toys			Interactive toys
	animation series			game series			Mobile game

Revenue	$	522,638		$	16,896,944		$	1,111,596
Costs of revenue		(379,069	)		(5,612,915	)		(116,692	)
Gross Profit	$	143,569		$	11,284,029		$	994,904

Year ended December 31, 2017

	Interactive toys			Interactive toys
	animation series			game series			Mobile game

Revenue	$	1,060,330		$	12,956,130		$	128,434
Costs of revenue		(653,118	)		(4,627,337	)		(19,632	)
Gross Profit	$	407,212		$	8,328,793		$	108,802

The Company’s operations are primarily based in the PRC, where the Company derives a substantial portion of their revenues. Management also review consolidated financial results by business locations. Disaggregated information of revenues by geographic locations are as follows:

	Year ended		Year ended		Year ended
	December 31,		December 31,		December 31,
	2019		2018		2017

Domestic PRC revenues	$	23,834,129	$	18,407,891	$	13,549,989
Export revenues		-		123,287		594,905
Total revenues	$	23,834,129	$	18,531,178	$	14,144,894

CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY

19.	Condensed financial information of the parent company

The Company performed a test on the restricted net assets of consolidated subsidiary in accordance with Securities and Exchange Commission Regulation S-X Rule 4-08(e)(3), “General Notes to Financial Statements” and concluded that it was applicable for the Company to disclose the financial statements for the parent company.

The subsidiary did not pay any dividend to the Company for the years presented. For the purpose of presenting parent only financial information, the Company records its investment in its subsidiary under the equity method of accounting. Such investment is presented on the separate condensed balance sheets of the Company as “Investment in subsidiary” and the income of the subsidiary is presented as “share of income of subsidiary”. Certain information and footnote disclosures generally included in financial statements prepared in accordance with U.S. GAAP have been condensed and omitted.

The Company did not have significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2019 and 2018.

PARENT COMPANY BALANCE SHEETS

	December 31,			December 31,
	2019			2018

ASSETS
Current assets:
Cash and cash equivalents	$	76,583		$	-
Other receivables, net		600,000			-
Restricted cash		5,000,000			-
Total current assets		5,676,583			-
Non-current assets:
Property, plant and equipment, net		2,162,449			-
Investment in subsidiaries		38,481,702			28,256,045
Total non-current assets		40,644,151			28,256,045
Total assets	$	46,320,734		$	28,256,045

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
Other payables and accrued liabilities	$	1,570,183		$	-
Other payables - related party		269			-
Total liabilities		1,570,452			-

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
Ordinary shares, $0.001 par value, 50,000,000 shares authorized, 35,141,114 and 33,000,000 shares issued and outstanding as of December 31, 2019 and 2018, respectively		35,141			33,000
Additional paid-in capital		20,771,849			12,831,969
Statutory reserves		1,289,765			1,178,432
Retained earnings		24,132,194			15,169,573
Accumulated other comprehensive losses		(1,478,667	)		(956,929	)
Total shareholders' equity		44,750,282			28,256,045
Total liabilities and shareholders' equity	$	46,320,734		$	28,256,045

PARENT COMPANY STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

	Year ended			Year ended			Year ended
	December 31,			December 31,			December 31,
	2019			2018			2017

Operating expenses:
General and administrative expenses	$	(1,671,700	)	$	-		$	-

Other income (expenses):
Equity income of subsidiaries and VIEs		10,747,395			7,919,408			5,124,973
Interest income		21			-			-
Other finance expenses		(1,762	)		-			-

NET INCOME		9,073,954			7,919,408			5,124,973
FOREIGN CURRENCY TRANSLATION ADJUSTMENT		(521,738	)		(1,474,126	)		958,667
COMPREHENSIVE INCOME	$	8,552,216		$	6,445,282		$	6,083,640

PARENT COMPANY STATEMENTS OF CASH FLOWS

	Year ended			Year ended			Year ended
	December 31,			December 31,			December 31,
	2019			2018			2017

CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income	$	9,073,954		$	7,919,408		$	5,124,973

Adjustments to reconcile net income to cash used in operating activities:
Equity income of subsidiaries and VIEs		(10,747,395	)		(7,919,408	)		(5,124,973	)
Changes in operating assets and liabilities:
Other receivables		(600,000	)		-			-
Other payables and accrued liabilities		1,570,183			-			-
Net cash used in operating activities		(703,258	)		-			-

CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property and equipment		(2,162,449	)		-			-
Net cash used in investing activities		(2,162,449	)		-			-

CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from initial public offering, net of issuance costs		7,417,077			-			-
Underwriter’s partial exercise of over-allotment option,
net of issuance costs		524,944			-			-
Other payables – related party		269			-			-
Net cash used in investing activities		7,942,290			-			-

EFFECT OF EXCHANGE RATE ON CASH		-			-			-

NET CHANGES IN CASH AND CASH EQUIVALENTS		5,076,583			-			-

CASH AND CASH EQUIVALENTS, Beginning of year		-			-			-

CASH AND CASH EQUIVALENTS, end of year	$	5,076,583		$	-		$	-

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash and cash equivalents	$	76,583		$	-		$	-
Restricted cash		5,000,000			-			-
CASH AND CASH EQUIVALENTS, end of year	$	5,076,583		$	-		$	-

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (Policies)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Basis of presentation

Basis of presentation

Principles of consolidation

Principles of consolidation

Use of estimates and assumptions

Use of estimates and assumptions

Foreign currency translation and transaction

Foreign currency translation and transaction

Cash and cash equivalents

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand; demand deposits and time deposits placed with banks or other financial institutions and have original maturities of less than three months.

Restricted cash

Restricted cash

Amount mainly includes pledged deposits for bank loans of the Company. As of December 31, 2019 and 2018, restricted cash amounted to $5,000,000 and $0, respectively.

Accounts receivable, net

Accounts receivable, net

Other receivables, net

Other receivables, net

Inventories

Inventories

Prepayments, net

Prepayments, net

Current

Non-current

Non-current prepayment represents cash deposited or advanced for software development expenditure. This amount is refundable and bears no interest.

Property and equipment, net

Property and equipment, net

Category	Depreciation method	Estimated useful lives

Electronic devices	Straight-line	3 years

Office equipment, fixtures and furniture	Straight-line	3 years

Automobile	Straight-line	3 years

Intangible assets

Intangible assets

Software development costs

Software development costs

Research and development

Research and development

Impairment for long-lived assets

Impairment for long-lived assets

Long-term investments

Long-term investments

Long-term investments include cost method investment and equity method investments.

Fair value measurement

Fair value measurement

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

Revenue recognition

Revenue recognition

Sales of interactive toys

The products sold in the PRC are subject to a Chinese value-added tax (“VAT”). VAT taxes are presented as a reduction of revenue.

Mobile games

Internal developed platform

Third-party platform

Shipping and handling

Shipping and handling

Advertising costs

Advertising costs

Operating leases

Operating leases

Government subsidies

Government subsidies

Total government subsidies amounted to $221,467, $94,088 and $328,346 for the years ended December 31, 2019, 2018 and 2017, respectively.

Value added taxes

Value added taxes

Income taxes

Income taxes

Comprehensive income

Comprehensive income

Earnings per share

Earnings per share

Employee benefits

Employee benefits

Statutory reserves

Statutory reserves

Recently issued accounting pronouncements

Recently issued accounting pronouncements

ORGANIZATION AND PRINCIPAL ACTIVITIES (Tables)

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of business activities

The accompanying consolidated financial statements reflect the activities of Blue Hat Cayman and each of the following entities:

Name	Background	Ownership
Brilliant Hat Limited	A British Virgin Islands company	100% owned by Blue
	Incorporated on June 26, 2018	Hat Interactive
	A holding company	Entertainment
		Technology
Blue Hat Interactive	A Hong Kong company	100% owned by
Entertainment Technology	Incorporated on June 26, 2018	Brilliant Hat Limited
Limited	A holding company
Xiamen Duwei Consulting	A PRC limited liability company and deemed a wholly foreign owned	100% owned by Blue
Management Co., Ltd.	enterprise (“WFOE”)	Hat Interactive
	Incorporated on July 26, 2018	Entertainment
	Registered capital of $736,073 (RMB 5,000,000)	Technology Limited.
	A holding company
Fujian Blue Hat	A PRC limited liability company	VIE of Xiamen
Interactive Entertainment	Incorporated on January 7, 2010	Duwei Consulting
Technology Ltd.	Registered capital of $4,697,526 (RMB 31,054,000)	Management Co., Ltd
	Designing, producing, promoting and selling animated toys with mobile
	games features, original intellectual property and peripheral derivatives
	features.
Hunan Engaomei Animation Culture	A PRC limited liability company Incorporated on October 19, 2017	100% owned by Fujian Blue Hat
Development Co., Ltd.	Registered capital of $302,540 (RMB 2,000,000)	Interactive
	Designing, producing, promoting and selling animated toys with mobile	Entertainment
	games features, original intellectual property and peripheral derivatives features.	Technology Ltd
Shenyang Qimengxing Trading Co., Ltd.	A PRC limited liability company Incorporated on July 27, 2017	100% owned by Fujian Blue Hat
	Registered capital of $302,540 (RMB 2,000,000)	Interactive
	Designing, producing, promoting and selling animated toys with mobile	Entertainment
	games futures, original intellectual property and peripheral derivatives features.	Technology Ltd.
Chongqing Lanhui Technology Co. Ltd.	A PRC limited liability company Incorporated on January 25, 2018	100% owned by Fujian Blue Hat
	Registered capital of $302,540 (RMB 2,000,000)	Interactive
	Designing, producing, promoting and selling animated toys with mobile	Entertainment
	games features, original intellectual property and peripheral derivatives features.	Technology Ltd.
Pingxiang Blue Hat	A PRC limited liability company	100% owned by
Technology Co. Ltd.	Incorporated on September 10, 2018	Fujian Blue Hat
	Registered capital of $302,540(RMB 2,000,000)	Interactive
	Designing, producing, promoting and selling animated toys with mobile	Technology Ltd.
	games features, original intellectual property and peripheral derivatives features.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (Tables)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Schedule of estimated useful lives

The estimated useful lives are as follows:

Category	Depreciation method	Estimated useful lives

Electronic devices	Straight-line	3 years

Office equipment, fixtures and furniture	Straight-line	3 years

Automobile	Straight-line	3 years

VARIABLE INTEREST ENTITY (“VIE”) (Tables)

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Variable Interest Entities

The carrying amount of the VIE’s consolidated assets and liabilities are as follows:

	December 31,			December 31,
	2019			2018

Current assets	$	37,040,733		$	25,659,179
Property and equipment, net		162,374			208,869
Other non-current assets		13,773,550			9,602,816
Total assets		50,976,657			35,470,864

Total liabilities		(12,494,955	)		(7,214,819	)

Net assets	$	38,481,702		$	28,256,045

	December 31,	December 31,
	2019	2018

Current liabilities:
Short-term loans - banks