Blue Hat Announces Financial Results for Second Quarter and First Half of 2021, Highlighted by 269.6% Increase in Revenues to $17.9 Million for First Half 2021 – PRNewswire

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XIAMEN, China, Oct. 25, 2021 /PRNewswire/ — Blue Hat Interactive Entertainment Technology ("Blue Hat" or the "Company") (NASDAQ: BHAT), a leading communication services and Internet Data Center ("IDC") business provider and developer, and an operator of mobile games and augmented reality ("AR") education curricula and products in China, today announced its unaudited  financial results for the three months ended June 30, 2021 ("Second Quarter 2021") and six months ended June 30, 2021 ("First Half 2021").
Second Quarter 2021 and First Half 2021 Financial Highlights
Management Commentary
Mr. Xiaodong Chen, CEO of Blue Hat, stated, "We continued to see strong growth across all our lines of business in Second Quarter 2021, which resulted in strong top line growth during the Second Quarter 2021 and First Half 2021. We more than tripled growth on the top line in First Half 2021, achieving US $17.9 million in total revenues, largely driven by US $7.1 million in contributions from our new IDC business and an additional US $4.7 million in contributions from mobile games following the integration of recent acquisitions and ongoing development of these businesses in First Half 2021. We remain optimistic about the ongoing growth potential of all of our business segments and were pleased to announce earlier this month that our operating subsidiary Xunpusen Technology Co., Ltd. ("Xunpusen") was engaged as the provider of SMS channel services for JD Cloud, a leading cloud computing brand under tech company JD Technology Group. We believe this new client win further solidifies our position as a leader in communication services and look forward to building upon the positive momentum the Company has established with these results in First Half 2021."
Recent Operating Highlights
Second Quarter 2021 Results
Total revenues were US $8.0 million for the Second Quarter 2021, an increase of US $5.4 million, or 206.4%, compared to US $2.6 million in the prior-year period. While COVID-19 posed negative impact on revenues in the prior-year period, the significant revenue growth was primarily attributable to increased contributions from the mobile games and communication services businesses, as well as the acquisitions of Xunpusen and Fuzhou Csfctech Co., Ltd. And its two subsidiaries ("Csfctech") in the Second Quarter 2021.
Revenues from sales of interactive toys (animation series) were US $0.4 million for the Second Quarter 2021, compared to US $148 in the prior-year period.
Revenues from sales of interactive toys (game series) were US $2.4 million for the Second Quarter 2021, up 17.8% from US $2.0 million in the prior-year period.
Revenues from mobile games increased to US $3.4 million for the Second Quarter 2021, from US $0.6 million in the prior-year period, following the acquisition of Csfctech in January 2021.
Revenues from AR education, previously included under interactive toys (animation series), were US $850 in Second Quarter 2021. Growth in the AR education business has been primarily driven by the roll-out and implementation of Blue Hat’s ARIC system to various schools. This business may be subject to seasonality as the Company anticipates higher revenues from AR education in the first and third quarters of a year, coinciding with the beginning of school terms in February and September.
Revenues from communication services were US $1.8 million for the Second Quarter 2021, compared to nil in the prior-year period. The gain was due to the acquisition of Xunpusen in the second half of 2020.
Gross profit increased 138.4% to US $4.7 million for the Second Quarter 2021 from US $2.0 million in the prior-year period. Gross margin was 58.9% for the Second Quarter 2021compared to 75.7% in the prior-year period. The decrease was due to higher initial costs associated with establishing the new businesses and integrating acquisitions into the Company’s operations.
Total operating expenses increased to US $2.8 million for the Second Quarter 2021, from US $1.2 million in the prior-year period, as a result of increased selling expenses related to marketing the Company’s new businesses and promoting newly launched mobile games following the acquisition of Csfctech, as well as increased R&D expenses related to the development of new mobile games.
Income from operations increased 159.0% to US $1.9 million for the Second Quarter 2021, from US $0.7 million in the prior-year period.
Net income was US $0.2 million for the Second Quarter 2021, compared to US $0.5 million in the prior-year period. The decrease was primarily driven by the increase in operating expenses described above and an increase in other expenses related to bad debt provision in the Company’s AR toys business.  The Company counts accounts receivable within 3 to 12 months as bad debt, and currently expects to collect such debts. 
Basic and diluted earnings per share were US $0.003 for the Second Quarter 2021, compared to US $0.014 for the prior-year period.
First Half 2021 Results
Total revenues were US $17.9 million for the First Half 2021, an increase of US $13.1 million, or 269.6%, compared to US $4.9 million in the prior-year period. While COVID-19 had a negative impact on revenues in the prior-year period, revenue growth was primarily attributable to increased contributions from the Csfctech mobile games business acquired in the First Half 2021 and the Xunpusen communication services business acquired in the First Half 2021.
Revenues from sales of interactive toys (animation series) were US $0.5 million for the six months ended June 30, 2021, compared to US $54 in the prior-year period.
Revenues from sales of interactive toys (game series) were US $4.3 million for the First Half 2021, compared to US $3.7 million in the prior-year period.
Revenues from mobile games were US $5.8 million for the First Half 2021, compared to US $1.2 million in the prior-year period.
Revenues from AR education, previously included under interactive toys (animation series), were US $0.2 million for the First Half 2021.
Revenues from communication services were US $7.1 million for the First Half 2021, compared to nil in the prior-year period.
Gross profit increased 140.9% to US $8.8 million for the First Half 2021, from US $3.7 million in the prior-year period.
Total gross margin was 49.0% for the First Half 2021, compared to 75.2% in the prior-year period.
Total operating expenses increased to US $5.2 million for the First Half 2021, from US $2.0 million in the prior-year period, primarily as a result of increased expenses as described above in the Second Quarter 2021 Results.
Income from operations increased 124.9% to US $3.6 million for the First Half 2021, from US $1.6 million in the prior-year period.
Net income increased 9.6% to US $1.4 million for the First Half 2021, from US $1.3 million in the prior-year period. 
Basic and diluted earnings per share were US $0.03 for the First Half 2021, compared to US $0.04 in the prior-year period.
Balance Sheet Highlights
As of June 30, 2021, Blue Hat had cash and cash equivalents of US $11.5 million, working capital of US $35.9 million and total shareholders’ equity of US $81.6 million, compared to cash and cash equivalents of US $15.8 million, working capital of US $34.0 million and total shareholders’ equity of US $58.9 million, respectively, at December 31, 2020.
During the Second Quarter 2021, the Company completed a registered direct offering with two institutional investors for the purchase and sale of 6.29 million ordinary shares at a price of $0.90 per share, resulting in total gross proceeds of approximately $5.66 million before deducting the placement agent’s fees and other offering expenses. The net proceeds were approximately $5.23 million.
About Blue Hat
Blue Hat is a leading communication services and IDC business provider as well as a producer, developer and operator of AR interactive entertainment games, toys and educational materials in China. Distinguished by its own proprietary technology, Blue Hat aims to create an engaging, interactive and immersive community for its users. For more information, please visit the Company’s investor relations website at http://ir.bluehatgroup.com. The Company routinely provides important information on its website.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. In evaluating such statements, prospective investors should review carefully various risks and uncertainties identified in this release and matters set in the Company’s SEC filings. These risks and uncertainties could cause the Company’s actual results to differ materially from those indicated in its forward-looking statements.
Contacts:
Blue Hat Interactive Entertainment Technology
Phone: +86 (592) 228-0010
Email: [email protected]
Investor Relations:
The Equity Group Inc.
In China
Carolyne Sohn, Vice President
Lucy Ma, Associate
(415) 568-2255
+86 10 5661 7012
[email protected]
[email protected]
BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

For the Three Months Ended June 30,
2021
2020
Revenues
$                        8,001,157
$                   2,611,204
Cost of revenue
3,289,079
634,473
Gross profit
4,712,078
1,976,731
Operating expenses:
Selling
1,068,702
117,549
General and administrative
812,223
1,057,108
Research and development
933,106
69,128
Total operating expenses
2,814,031
1,243,785
Income from operations
1,898,047
732,946
Other income (expense)
Interest income
134,691
107,507
Interest expense
(97,786)
(51,053)
Other finance expenses
(40,693)
47,581
Other (expense) income, net
(1,113,075)
2,328
Total other (expense) income, net
(1,116,863)
106,363
Income before income taxes
781,184
839,309
Provision for income taxes
630,566
338,919
Net income
150,618
500,390
Other comprehensive income (loss)
Foreign currency translation adjustment
1,676,959
25,968
Comprehensive income
$                        1,827,577
$                      526,358
Less: Comprehensive income attributable to non-controlling
interests

221,402

Comprehensive income attributable to Blue Hat Interactive
Entertainment shareholders

1,606,175
526,358
Weighted average number of ordinary shares
Basic
47,384,286
35,141,114
Diluted
52,628,146
35,141,114
Earnings per share
Basic
$0.003
$0.014
Diluted
$0.003
$0.014
BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

For the Six Months Ended June 30,
2021
2020
Revenues
$                      17,942,564
$                   4,854,862
Cost of revenue
9,148,926
1,203,962
Gross profit
8,793,638
3,650,900
Operating expenses:
Selling
1,648,748
290,699
General and administrative
2,128,000
1,596,818
Research and development
1,377,317
145,179
Total operating expenses
5,154,065
2,032,696
Income from operations
3,639,573
1,618,204
Other income (expense)
Interest income
134,885
107,884
Interest expense
(235,401)
(123,660)
Other finance expenses
(81,663)
(10,168)
Other (expense) income, net
(1,082,566)
20,862
Total other (expense) income, net
(1,264,745)
(5,082)
Income before income taxes
2,374,828
1,613,122
Provision for income taxes
993,712
353,359
Net income
1,381,116
1,259,763
Other comprehensive income (loss)
Foreign currency translation adjustment
1,310,783
(579,392)
Comprehensive income
$                        2,691,899
$                      680,371
Less: Comprehensive income attributable to non-controlling
interests

748,596
Comprehensive income attributable to Blue Hat Interactive
Entertainment shareholders

1,943,303
680,371
Weighted average number of ordinary shares
Basic
47,384,286
35,141,114
Diluted
52,628,146
35,141,114
Earnings per share
Basic
$0.03
$0.04
Diluted
$0.03
$0.04
BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS

June 30,
December 31,
ASSETS
2021
2020
Current assets:
Cash and cash equivalents
$                      11,503,578
$                 15,800,563
Restricted cash
Short-term investments
Accounts receivable, net
31,165,800
16,594,533
Accounts receivable – related party
1,906,101
Other receivables, net
14,733,377
14,350,223
Other receivables – related party
33,512
Inventories
200,279
117,075
Prepayments, net
2,403,234
1,917,780
Total current assets
60,039,780
50,686,275
Property and equipment, net
4,261,011
4,258,121
Other assets:
Prepayments
12,544,199
4,164,274
Operating lease, right-of-use asset
278,528
290,410
Intangible assets, net
25,849,682
14,252,575
Long-term investments
1,857,556
1,914,668
Deferred tax assets
256,460
119,127
Goodwill accounting
787,047
Total other assets
41,573,472
20,741,054
Total assets
$                 105,874,263
$             75,685,450
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term loans – banks
$                        1,360,495
$                   5,129,295
Current maturities of long-term loans – third party
14,117
Accounts payable
3,571,783
935,588
Convertible bonds payable
57,336
739,189
Other payables and accrued liabilities
11,179,429
1,846,917
Other payables – related party
211,818
25,837
Operating lease liabilities – current
229,521
300,468
Customer deposits
789,117
941,877
Accrual interest payable
Taxes payable
6,786,743
6,802,454
Total current liabilities
24,186,242
16,735,742
Other liabilities:
Operating lease liability
59,965
Long-term loans – third party
Total other liabilities
59,965
Total liabilities
24,246,207
16,735,742
COMMITMENTS AND CONTINGENCIES
Shareholders’ equity
Ordinary shares, $0.001 par value, 100,000,000 shares
authorized, 53,417,200 shares issued and outstanding as of
June 30, 2021, and 38,553,694 shares issued and outstanding
as of December 31, 2020

53,417
38,554
Additional paid-in capital
35,693,329
23,466,482
Statutory reserves
2,204,174
2,204,174
Retained earnings
32,019,919
31,387,398
Accumulated other comprehensive income (loss)
3,052,478
1,741,696
Total Blue Hat Interactive Entertainment Technology
shareholders’ equity

73,023,317
58,838,304
Non-controlling interests
8,604,739
111,404
Total equity
81,628,056
58,949,708
Total liabilities and shareholders’ equity
$             105,874,263
$             75,685,450
SOURCE Blue Hat Interactive Entertainment Technology
www.bluehatgroup.net

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