PR Newswire | Dec 6, 2021 11:40AM EST

a 235.6% Increase in Total Revenues to US $13.3 Million

12/06 10:39 CST

Blue Hat Announces Financial Results for Third Quarter of 2021, Highlighted by a 235.6% Increase in Total Revenues to US $13.3 Million XIAMEN, China, Dec. 6, 2021

XIAMEN, China, Dec. 6, 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 and nine months ended September 30, 2021 ("Third Quarter 2021" and "Nine Months 2021", respectively).

Third Quarter 2021 and Nine Months 2021 Financial Highlights

* Total revenues of US $13.3 million, up 235.6% from US $4.0 million in the prior-year period, driven primarily by increased sales from the IDC business with support from the mobile gaming and information technology services businesses * Gross profit of US $5.4 million, up 94.3% from US $2.8 million in the prior-year period * Income from operations of US $2.0 million, unchanged from US $2.0 million in the prior-year period * Net income of US $2.0 million, up 21.5% from US $1.7 million in the prior-year period * Nine Months 2021 total revenues of US $31.3 million, up 254.3% from US $8.8 million in the prior-year period * Nine Months 2021 gross profit of US $14.2 million, up 120.7% from US $6.4 million in the prior-year period * Nine Months 2021 income from operations of US $5.6 million, up 55.3% from US $3.6 million in the prior-year period * Nine Months 2021 net income of US $3.4 million, up 16.4% from US $2.9 million in the prior-year period * US $11.9 million in cash and cash equivalents at September 30, 2021

Management Commentary

Mr. Xiaodong Chen, CEO of Blue Hat, stated, "2021 has been a monumental year for Blue Hat, with significant gains generated due to a proactive acquisition strategy across our integrated businesses. The Company achieved record revenues of US $31.3 million in the first nine months of 2021, more than tripling our top line from the prior-year period with the launch of our communication services/IDC business with the acquisition of Xunpusen Technology Co., Ltd. ("Xunpusen") in late 2020. In addition, we continue to build an interactive entertainment platform including mobile games, augmented reality toys, and a fully immersive education curriculum. We are pleased with the improved results on the bottom line during Third Quarter 2021 as we have continued to integrate these businesses into Blue Hat's operations, and we remain confident in our ability to continue executing on our growth strategy to conclude the year on a strong note. We look forward to making continued investments in our various lines of business, including technology development and partnership expansions, which we believe will establish a firm foundation for long-term growth."

Third Quarter 2021 Results

Total revenues were US $13.3 million for Third Quarter 2021, an increase of US $9.3 million, or 235.6%, compared to US $4.0 million in the prior-year period. The revenue growth was primarily attributable to increased sales from the mobile games and communication services businesses, as well as contributions from the information technology services business, which launched in the fourth quarter of 2020.

Revenues from communication services were US $5.8 million for Third 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.

Revenues from mobile games increased to US $3.4 million for Third Quarter 2021, from US $0.6 million in the prior-year period, following the acquisition of Fuzhou Csfctech Co., Ltd. ("Csfctech") in January 2021.

Revenues from information technology services were US $1.6 million for Third Quarter 2021, compared to nil in the prior-year period. This is a new line of business that the Company launched in late 2020, whereby Blue Hat provides products and technical services that enable users to access technical service platforms to utilize products and services from third-party platforms and medial channels (such as WeChat Official Account, Mini Program, APP, Tik Tok, Toutiao, Quick Worker, etc.).

Revenues from sales of interactive toys (game series) were US $1.5 million for the Third Quarter 2021, compared to US $3.3 million in the prior-year period. The decrease was due to the Company's focus on developing other areas of business during the period.

Revenues from sales of interactive toys (animation series) were US $1.0 million for Third Quarter 2021, compared to US $0.02 million in the prior-year period.

Revenues from AR education, previously included under interactive toys (animation series), were US $0.04 million for Third 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.

Gross profit increased 94.3% to US $5.4 million for Third Quarter 2021, from US $2.8 million in the prior-year period. Gross margin was 40.7% for Third Quarter 2021, compared to 70.2% in the prior-year period. The decrease in gross margin 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 $3.4 million for Third Quarter 2021, from US $0.8 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 was US $2.0 million for Third Quarter 2021, unchanged from US $2.0 million in the prior-year period.

Net income increased 21.5% to US $2.0 million for Third Quarter 2021, from US $1.7 million in the prior-year period. The increase in net income is mainly attributable to the increase in total revenues.

Basic and diluted earnings per share were US $0.04 for Third Quarter 2021, compared to US $0.05 for the prior-year period.

Nine Months 2021 Results

Total revenues were US $31.3 million for Nine Months 2021, an increase of US $22.4 million, or 254.3%, compared to US $8.8 million in the prior-year period. The revenue growth was largely attributable to increased revenue contributions from the Company's IDC and mobile games businesses, following the acquisitions of Xunpusen in late 2020 and Csfctech in January 2021.

Revenues from communication services were US $12.9 million for Nine Months 2021, compared to nil in the prior-year period.

Revenues from mobile games increased to US $9.2 million for Nine Months 2021, from US $1.8 million in the prior-year period.

Revenues from information technology services were US $1.6 million for Nine Months 2021, compared to nil in the prior-year period.

Revenues from sales of interactive toys (game series) were US $5.9 million for Nine Months 2021, compared to US $7.0 million in the prior-year period.

Revenues from sales of interactive toys (animation series) were US $1.4 million for Nine Months 2021, compared to US $0.02 million in the prior-year period.

Revenues from AR education, previously included under interactive toys (animation series), were US $0.2 million for Nine Months 2021.

Gross profit increased 120.7% to US $14.2 million for Nine Months 2021, from US $6.4 million in the prior-year period.

* Interactive toys (animation series): 3.2%, or US $0.05 million * Interactive toys (game series): 58.3%, or US $3.4 million * Mobile games: 82.6%, or US $7.6 million * AR education: 88.5%, or US $0.2 million * Communication services: 20.3%, or US $2.6 million * Information technology services: 18.8%, or US $0.3 million

Total gross margin was 45.5% for Nine Months 2021, compared to 73.0% in the prior-year period.

Total operating expenses increased to US $8.6 million for Nine Months 2021, from US $2.8 million in the prior-year period, primarily as a result of increased expenses as described above under "Third Quarter 2021 Results."

Income from operations increased 55.3% to US $5.6 million for Nine Months 2021, from US $3.6 million in the prior-year period.

Net income increased 16.4% to US $3.4 million for Nine Months 2021, from US $2.9 million in the prior-year period.

Basic and diluted earnings per share were US $0.07 and US $0.06, respectively, for Nine Months 2021, compared to US $0.08 in the prior-year period.

Balance Sheet Highlights

As of September 30, 2021, Blue Hat had cash and cash equivalents of US $11.9 million, working capital of US $37.4 million and total shareholders' equity of US $83.5 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.

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 TechnologyPhone: +86 (592) 228-0010Email: ir@bluehatgroup.net

Investor Relations:

The Equity Group Inc. In China

Carolyne Sohn, Vice President Lucy Ma, Associate

(415) 568-2255 +86 10 5661 7012

csohn@equityny.com lma@equityny.com

BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

For the Three Months Ended September 30,

2021 2020

$ $ Revenues 13,316,780 3,967,824

Cost of revenue 7,903,014 1,181,586

Gross profit 5,413,766 2,786,238

Operating expenses:

Selling 1,432,284 120,574

General and administrative 898,529 593,077

Research and development 1,077,914 55,097

Total operating expenses 3,408,727 768,748

Income from operations 2,005,039 2,017,490

Other income (expense)

Interest income 16,770 38,937

Interest expense (28,026) (31,615)

Other finance expenses (3,109) (5,227)

Other (expense) income, net 894,465 (41,628)

Total other (expense) income, net 870,100 (39,533)

Income before income taxes 2,875,139 1,977,957

Provision for income taxes 859,354 319,285

Net income 2,015,785 1,658,672

Other comprehensive income (loss)

Foreign currency translation adjustment (315,989) 1,467,387

$ $ Comprehensive income 1,699,796 3,126,059

Less: Comprehensive income attributable to non-controlling 735,923 -interests

Comprehensive income attributable to Blue Hat Interactive 963,873 3,126,059Entertainment shareholders

Weighted average number of ordinary shares

Basic 49,432,007 35,141,114

Diluted 56,159,502 35,141,114

Earnings per share

Basic $0.04 $0.05

Diluted $0.04 $0.05

BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

For the Nine Months Ended September 30,

2021 2020

$ $ Revenues 31,259,344 8,822,686

Cost of revenue 17,051,940 2,385,548

Gross profit 14,207,404 6,437,138

Operating expenses:

Selling 3,081,032 411,273

General and administrative 3,026,529 2,189,895

Research and development 2,455,231 200,276

Total operating expenses 8,562,792 2,801,444

Income from operations 5,644,612 3,635,694

Other income (expense)

Interest income 151,655 146,821

Interest expense (263,427) (155,275)

Other finance expenses (84,772) (15,395)

Other (expense) income, net (198,101) (20,766)

Total other (expense) income, net (394,645) (44,615)

Income before income taxes 5,249,967 3,591,079

Provision for income taxes 1,853,066 672,644

Net income 3,396,901 2,918,435

Other comprehensive income (loss)

Foreign currency translation adjustment 994,794 887,995

$ $ Comprehensive income 4,391,695 3,806,430

Less: Comprehensive income attributable to non-controlling 1,484,518interests

Comprehensive income attributable to Blue Hat Interactive 2,907,177 3,806,430Entertainment shareholders

Weighted average number of ordinary shares

Basic 49,432,007 35,141,114

Diluted 56,159,502 35,141,114

Earnings per share

Basic $0.07 $0.08

Diluted $0.06 $0.08

BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

September December 30, 31,

ASSETS 2021 2020

Current assets:

$ $ Cash and cash equivalents 11,887,108 15,800,563

Restricted cash

Short-term investments

Accounts receivable, net 32,333,303 16,594,533

Accounts receivable - related party 1,906,101

Other receivables, net 16,225,702 14,350,223

Other receivables - related party 33,381

Inventories 244,302 117,075

Prepayments, net 3,134,782 1,917,780

Total current assets 63,858,858 50,686,275

Property and equipment, net 4,232,119 4,258,121

Other assets:

Prepayments 11,784,577 4,164,274

Operating lease, right-of-use asset 199,061 290,410

Intangible assets, net 27,089,943 14,252,575

Long-term investments 1,850,310 1,914,668

Deferred tax assets 255,335 119,127

Goodwill accounting 787,047

Total other assets 41,966,273 20,741,054

$ $ Total assets 110,056,970 75,685,450

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

$ $ Short-term loans - banks 1,355,188 5,129,295

Current maturities of long-term loans - third party 0 14,117

Accounts payable 3,813,233 935,588

Convertible bonds payable 60,681 739,189

Other payables and accrued liabilities 11,202,630 1,846,917

Other payables - related party 216,885 25,837

Operating lease liabilities - current 146,693 300,468

Customer deposits 1,862,236 941,877

Accrual interest payable

Taxes payable 7,843,132 6,802,454

Total current liabilities 26,500,678 16,735,742

Other liabilities:

Operating lease liability 59,731

Long-term loans - third party

Total other liabilities 59,731

Total liabilities 26,560,409 16,735,742

COMMITMENTS AND CONTINGENCIES

Shareholders' equity

Ordinary shares, $0.001 par value, 100,000,000 sharesauthorized, 53,417,200 shares issued and outstanding as of June 53,667 38,55430, 2021, and 38,553,694 shares issued and outstanding as ofDecember 31, 2020

Additional paid-in capital 35,861,782 23,466,482

Statutory reserves 2,204,174 2,204,174

Retained earnings 33,299,781 31,387,398

Accumulated other comprehensive income (loss) 2,736,490 1,741,696

Total Blue Hat Interactive Entertainment Technology 74,155,894 58,838,304shareholders' equity

Non-controlling interests 9,340,667 111,404

Total equity 83,496,561 58,949,708

$ $ Total liabilities and shareholders' equity 110,056,970 75,685,450

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SOURCE Blue Hat Interactive Entertainment Technology