XIAMEN, China, Jan. 31, 2020 /PRNewswire/ -- Blue Hat Interactive Entertainment Technology ("Blue Hat" or the "Company") (NASDAQ: BHAT), a producer, developer and operator of augmented reality ("AR") interactive entertainment games, toys and educational materials in China, today announced its unaudited financial results for the fiscal quarter and six months ended June 30, 2019.
Second Quarter 2019 Financial Highlights[1]
First Half 2019 Financial Highlights
"We are delighted to report strong sales momentum and healthy profitability for our first earnings since becoming a NASDAQ-listed company," said Mr. Xiaodong Chen, Chief Executive Officer of Blue Hat. "During the first half of 2019 we expanded our product portfolio and marketing reach, with particular highlights including our partnership with the 'Talking Tom and Friends' media franchise to produce new branded version of our products, the launch of an upgraded model of 'Crazy Bug'[2] and distribution agreements with leading national toy retailers. We also completed research and development on our AR Bouncing Bubble and AR Dinosaur products. Looking ahead, we intend to continue to strengthen our pipeline of innovative toys and game content through both in-house development and potential strategic acquisitions, although no definitive agreements have been executed."
Recent Developments
Second Quarter 2019 Results
Total revenues were $3.2 million for the second quarter ended June 30, 2019, an increase of $1.4 million, or 74.6%, from $1.8 million for the same period ended June 30, 2018. The overall increase was primarily attributable to the increased sales of interactive toys (game series) and mobile games.
Revenues from sales of interactive toys (game series) were $2.3 million for the second quarter ended June 30, 2019, an increase of $477,928, or 26.9%, from $1.8 million for the same period ended June 30, 2018. The increase was primarily the result of sales of our Bouncing Bubble and upgraded Crazy Bug products during the quarter.
Revenues from sales of interactive toys (animation series) were $11,248 for the second quarter ended June 30, 2019, a decrease of $30,453, or 73.0% from $41,701 for the same period ended June 30, 2018. This decrease was a result of our business strategy to shift away from interactive toys (animation series) and towards interactive toys (games series), as our game series products generate higher profit margins, with an average gross profit percentage of 61.3% for the second quarter ended June 30, 2019 as compared to interactive toys (animation series), which had an average gross profit percentage of 26.4% for the same period.
Revenues from mobile games were $913,469 for the second quarter ended June 30, 2019, an increase of $909,578 from $3,891 from the same period ended June 30, 2018. This increase is a result of the popularity of our first mobile game "Quan Min Dou Yu", which was launched in the fourth quarter of 2018.
Total cost of revenues was $953,732 for the second quarter ended June 30, 2019, an increase of $376,912, or 65.3%, from $576,820 for the same period ended June 30, 2018. This increase is a direct result of our increased revenue.
Gross profit was $2.2 million for the second quarter ended June 30, 2019, an increase of $980,142, or 78.9%, from $1.2 million for the same period ended June 30, 2018.
Gross margin was 70.0% for the second quarter ended June 30, 2019, compared to 68.3% for the same period of 2018.
Total operating expenses was $954,016 for the second quarter ended June 30, 2019, a decrease of $563,651, or 37.1%, from $1.5 million for the same period ended June 30, 2018. This decrease was mainly attributable to the $14,549 decrease in selling expenses, the $573,976 decrease in general and administrative expenses, and the $24,874 increase in research and development expenses for the second quarter ended June 30, 2019, compared to the same period of 2018.
Income from operations was $1.3 million for the second quarter ended June 30, 2019, compared to a loss from operations of $274,975 from the same period of 2018.
Total other loss, net was $125,072 for the second quarter ended June 30, 2019, compared to total other income, net of $86,794 for the same period ended June 30, 2018. This decrease was primarily attributable to an approximate $169,000 decrease in interest income as we invested in fewer short-term certificate deposits.
Provision for income taxes were $55,447 for the second quarter ended June 30, 2019, compared to provision for income taxes of $217,351 for the same period ended June 30, 2018.
Net income was $1.1 million for the second quarter ended June 30, 2019, an increase of $1.1 million, or 3,630.9%, from $29,170 for the same period ended June 30, 2018.
Basic and diluted earnings per share were $0.03 for the second quarter ended June 30, 2019, compared to $0.00 for the same period ended June 30, 2018.
First Half 2019 Results
Total revenues were $7.5 million for the six months ended June 30, 2019, an increase of $792,001, or 11.9%, from $6.7 million for the same period ended June 30, 2018. The overall increase was primarily attributable to the increase in revenues from our mobile games.
Revenues from sales of interactive toys (game series) were $6.1 million for the six months ended June 30, 2019, a decrease of $393,043, or 6.0%, from $6.5 million for the same period ended June 30, 2018. This decrease was primarily attributable to exchange rate fluctuation, as the Chinese Yuan depreciated against the U.S. dollar by approximately 6.6% during the six months ended June 30, 2019, compared to the same period in 2018.
Revenues from sales of interactive toys (animation series) were $89,391 for the six months ended June 30, 2019, compared to $131,564 for the same period ended June 30, 2018. This decrease is a result of our business strategy to shift towards products that have a higher gross margin.
Revenues from mobile games were $1.2 million for the six months ended June 30, 2019, an increase of $1.2 million, or 6,170.6%, from $19,888 from the same period ended June 30, 2018. This increase is a result of revenues generated by sales of our first mobile game "Quan Min Dou Yu", which was launched in the fourth quarter of 2018.
Total cost of revenues was $2.2 million for the six months ended June 30, 2019, a decrease of $261,692, or 10.7%, from $2.4 million for the same period ended June 30, 2018. This decrease is a result of a decrease in sales of interactive toys - animation and interactive toys - game series.
Gross profit was $5.3 million for the six months ended June 30, 2019, an increase of $1.1million, or 25.0%, from $4.2 million for the same period ended June 30, 2018.
Gross margin was 70.8% for the six months ended June 30, 2019, compared to 63.4% for the same period of 2018.
Total operating expenses were $2.0 million for the six months ended June 30, 2019, an decrease of $440,072, or 18.1%, from $2.4 million for the same period ended June 30, 2018. This increase was mainly attributable to the $90,027 decrease in selling expenses, the $418,125 decrease in general and administrative expenses, and the $68,080 increase in research and development expenses for the six months ended June 30, 2019, compared to the same period of 2018.
Income from operations was $3.3 million for the six months ended June 30, 2019, an increase of $1.5million, or 83.1%, from $1.8 million for the same period ended June 30, 2018.
Total other loss, net was $70,116 for the six months ended June 30, 2019, compared to total other income, net of $54,887 for the same period ended June 30, 2018. This decrease was primarily attributable to an approximate $169,000 decrease in interest income as we invested in less short-term investments of certificate deposits.
Provision for income taxes were $161,346 for the six months ended June 30, 2019, an increase of $70,608, or 77.8%, from $90,738 for the same period ended June 30, 2018.
Net income was $3.1 million for the six months ended June 30, 2019, an increase of $1.3million, or 73.7%, from $1.8 million for the same period ended June 30, 2018.
Basic and diluted earnings per share were $0.09 for the six months ended June 30, 2019, compared to $0.05 for the same period ended June 30, 2018.
Cash and Cash Equivalents
As of June 30, 2019, the Company's cash and cash equivalents was $81,231. In July 2019, the Company closed its IPO, resulting in net proceeds to the Company of approximately $6.4 million.
[1] The average translation rates applied to statement of income accounts for the periods ended June 30, 2019 and 2018 were 6.79 RMB and 6.37 RMB to $1.00, respectively. The balance sheet amounts as of June 30, 2019 and December 31, 2018 were translated at 6.87 RMB and 6.62 RMB, respectively. |
[2] "Crazy Bug" was the classic model of "AR Crazy Bug", which was previously named "AR Need a Spanking". |
About Blue Hat
Blue Hat Interactive Entertainment Technology is a producer, developer and operator of AR interactive entertainment games and toys in China, including interactive educational materials, mobile games, and toys with mobile game features. The Company's interactive entertainment platform creates unique user experiences by connecting physical items to mobile devices, which creates a rich visual and interactive environment for users through the integration of real objects and virtual scenery. Distinguished by its own proprietary technology, Blue Hat aims to create an engaging, interactive and immersive community for its users. For more information, please visit the Company's investor relations website at http://ir.bluehatgroup.com.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. In evaluating such statements, prospective investors should review carefully various risks and uncertainties identified in this release and matters set in the Company's SEC filings. These risks and uncertainties could cause the Company's actual results to differ materially from those indicated in the forward-looking statements.
Contacts:
Lexie Zhang
Blue Hat Interactive Entertainment Technology
Phone: +86 (592) 228-0010
Email: ir@bluehatgroup.net
Sam Martin
The Foote Group
Phone: +86 187-0160-0950
Email: sam@thefootegroup.com
BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES |
||||
UNAUDITED CONSOLIDATED BALANCE SHEETS |
||||
June 30, |
December 31, |
|||
ASSETS |
2019 |
2018 |
||
CURRENT ASSETS |
||||
Cash and cash equivalents |
$ |
81,231 |
$ |
11,829,509 |
Short-term investments |
- |
- |
||
Accounts receivable, net |
7,516,723 |
11,890,146 |
||
Other receivables, net |
306,164 |
232,318 |
||
Other receivables - related party |
12,557 |
12,036 |
||
Inventories |
381,919 |
273,271 |
||
Prepayments, net |
1,063,953 |
1,332,532 |
||
Prepaid IPO Costs |
247,739 |
89,367 |
||
Total current assets |
9,610,286 |
25,659,179 |
||
PROPERTY AND EQUIPMENT, NET |
209,342 |
208,869 |
||
OTHER ASSETS |
||||
Prepayments |
21,712,837 |
3,449,445 |
||
Intangible assets, net |
4,757,824 |
4,265,537 |
||
Long-term investments |
1,754,820 |
1,751,835 |
||
Deferred tax assets |
125,973 |
135,999 |
||
Deposit for investment |
- |
- |
||
Total other assets |
28,351,454 |
9,602,816 |
||
Total assets |
$ |
38,171,082 |
$ |
35,470,864 |
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||
CURRENT LIABILITIES |
||||
Short-term loans - banks |
1,092,212 |
3,125,681 |
||
Current maturities of long-term loans - third party |
75,598 |
75,469 |
||
Accounts payable |
1,764,012 |
1,402,972 |
||
Other payables and accrued liabilities |
948,447 |
438,299 |
||
Other payables - related party |
43,324 |
62,368 |
||
Customer deposits |
71,985 |
76,274 |
||
Taxes payable |
2,792,121 |
1,941,770 |
||
Total current liabilities |
6,787,699 |
7,122,833 |
||
OTHER LIABILITIES |
||||
Long-term loans - third party |
54,852 |
91,986 |
||
Total other liabilities |
54,852 |
91,986 |
||
Total liabilities |
6,842,551 |
7,214,819 |
||
COMMITMENTS AND CONTINGENCIES |
||||
Total shareholders' equity |
||||
Ordinary shares, $0.001 par value, 50,000,000 shares authorized, 33,000,000 shares issued and outstanding as of June 30, 2019 and December 31, 2018 |
33,000 |
33,000 |
||
Additional paid-in capital |
12,831,969 |
12,831,969 |
||
Statutory reserves |
1,178,432 |
1,178,432 |
||
Retained earnings |
18,229,790 |
15,169,573 |
||
Accumulated other comprehensive income (loss) |
-944,660 |
-956,929 |
||
Total shareholders' equity |
31,328,531 |
28,256,045 |
||
Total liabilities and shareholders' equity |
$ |
38,171,082 |
$ |
35,470,864 |
BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES |
||||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME |
||||
For the Three Months ended June 30, |
||||
2019 |
2018 |
|||
REVENUES |
$ |
3,176,565 |
1,819,512 |
|
Interactive toys - animation series |
11,248 |
41,701 |
||
Interactive toys - game series |
2,251,848 |
1,773,920 |
||
Mobile games |
913,469 |
3,891 |
||
COST OF REVENUES |
(953,732) |
(576,820) |
||
GROSS PROFIT |
2,222,834 |
1,242,692 |
||
OPERATING EXPENSES |
||||
Selling |
(207,263) |
(221,812) |
||
General and administrative |
(650,605) |
(1,224,581) |
||
Research and development |
(96,148) |
(71,274) |
||
Total operating expenses |
(954,016) |
(1,517,667) |
||
INCOME FROM OPERATIONS |
1,268,818 |
(274,975) |
||
OTHER INCOME (EXPENSE) |
||||
Interest income |
32 |
168,940 |
||
Interest expense |
(18,759) |
(44,836) |
||
Other finance expenses |
(724) |
(504) |
||
Other (expense) income, net |
(105,621) |
(36,806) |
||
Total other income, net |
(125,072) |
86,794 |
||
INCOME BEFORE INCOME TAXES |
1,143,746 |
(188,181) |
||
PROVISION FOR INCOME TAXES |
(55,447) |
217,351 |
||
NET INCOME |
1,088,299 |
29,170 |
||
OTHER COMPREHENSIVE INCOME (LOSS) |
||||
Foreign currency translation adjustment |
31,760 |
(423,638) |
||
COMPREHENSIVE INCOME |
$ |
1,120,059 |
(394,468) |
|
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES |
||||
Basic and diluted |
33,000,000 |
33,000,000 |
||
EARNINGS PER SHARE |
||||
Basic and diluted |
$ |
0.03 |
0.00 |
|
BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES |
||||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME |
||||
For the Six Months Ended June 30, |
||||
2019 |
2018 |
|||
REVENUES |
$ |
7,453,379 |
6,661,378 |
|
Interactive toys - animation series |
89,391 |
131,564 |
||
Interactive toys - game series |
6,116,883 |
6,509,926 |
||
Mobile games |
1,247,105 |
19,888 |
||
COST OF REVENUES |
(2,176,756) |
(2,438,448) |
||
GROSS PROFIT |
5,276,623 |
4,222,930 |
||
OPERATING EXPENSES |
||||
Selling |
(410,404) |
(500,431) |
||
General and administrative |
(1,375,180) |
(1,793,305) |
||
Research and development |
(199,360) |
(131,280) |
||
Total operating expenses |
(1,984,944) |
(2,425,016) |
||
INCOME FROM OPERATIONS |
3,291,679 |
1,797,914 |
||
OTHER INCOME (EXPENSE) |
||||
Interest income |
502 |
169,935 |
||
Interest expense |
(65,507) |
(79,124) |
||
Other finance expenses |
(1,881) |
(1,456) |
||
Other (expense) income, net |
(3,230) |
(34,468) |
||
Total other income, net |
(70,116) |
54,887 |
||
INCOME BEFORE INCOME TAXES |
3,221,563 |
1,852,801 |
||
PROVISION FOR INCOME TAXES |
(161,346) |
(90,738) |
||
NET INCOME |
3,060,217 |
1,762,063 |
||
OTHER COMPREHENSIVE INCOME (LOSS) |
||||
Foreign currency translation adjustment |
12,269 |
(446,273) |
||
COMPREHENSIVE INCOME |
$ |
3,072,486 |
1,315,790 |
|
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES |
||||
Basic and diluted |
33,000,000 |
33,000,000 |
||
EARNINGS PER SHARE |
||||
Basic and diluted |
$ |
0.09 |
0.05 |
|
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