Blue Hat Interactive Entertainment Technology 6-K, filed Dec 30, 2022
Blue Hat Interactive Entertainment Technology (BHATF)
About this 6-K
Blue Hat Interactive Entertainment Technology filed this 6-K on December 30, 2022.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of December 2022
Commission File Number 001-39001
Blue Hat Interactive Entertainment Technology
(Translation of registrant’s name into English)
7th Floor, Building C, No. 1010 Anling Road
Huli District, Xiamen, China 361009
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F ☒ Form 40-F ☐
Blue Hat interactive Entertainment Technology, a Cayman Islands company, (the “Company”) furnishes under the cover of Form 6-K the following:
Exhibit.
| Exhibit No. | Description of Exhibit |
| 99.1 | Press Release dated December 30, 2022, announcing its unaudited financial results for the quarter and six months ended June 30, 2022. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: December 30, 2022
| BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY | ||
| By: | /s/ Xiaodong Chen | |
| Name: Xiaodong Chen | ||
| Title: Chief Executive Officer | ||
EXHIBIT 99.1
Blue Hat Announces Financial Results for Second Quarter and First Half of 2022, Highlighted by 78.2% Decrease in Revenues to $2.0 Million for First Half 2022
Xiamen, China – December 30, 2022: 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, 2022 (“Second Quarter 2022”) and six months ended June 30, 2022 (“First Half 2022”).
Second Quarter 2022 and First Half 2022 Financial Highlights
| ● | Second Quarter 2022 total revenues of US $1.7 million, compared to US $5.9 million in the prior-year period, decreased due to that overall economic environment has worsened in China with Covid-19 outbreak and related lockdown in various cities in China in 2022. |
| ● | Second Quarter 2022 gross profit of US $1.0 million, a decrease of 76.5% from US $4.3 million in the prior-year period. |
| ● | Second Quarter 2022 loss from operations of US $3.3 million, a decrease of 295.0% from income from operations of US $1.7 million in the prior-year period. |
| ● | Second Quarter 2022 net loss from continuing operations of US $3.4 million, compared to net income from continuing operations of US $0.7 million in the prior-year period, as a result of increased expenses and decreased revenue. |
| ● | First Half 2022 total revenues of US $2.0 million, compared to US $9.2 million in the prior-year period. |
| ● | First Half 2022 gross profit of US $1.2 million, a decrease of 81.4% from US $6.3 million in the prior-year period. |
| ● | First Half 2022 loss from operations of US $6.0 million, a decrease of 483.3% from income from operations of US $1.6 million in the prior-year period. |
| ● | First Half 2022 net loss from continuing operations of US $6.2 million, a decrease of US $6.24 million from net income from continuing operations of US $0.04 million in the prior-year period. |
| ● | US $0.3 million in cash and cash equivalents as of June 30, 2022. |
Management Commentary
The COVID-19 outbreak since early 2020 has had a negative impact on the global economy and our financial performance has been negatively impacted. In particular, the impact on the Company’s operations in first half of fiscal year 2022 has been considerable. Mr. Xiaodong Chen, CEO of Blue Hat, stated, “In order to cope with the current situation of the economy environment, some adjustments have been made to the Company’s business, and the Company has suspended or reduced the AR Immersive Course (ARIC), game and communication business, which were severely affected by the COVID-19 pandemic. The Company has increased the commodity supply chain commodity trading platform project and increased the breadth of the Company’s business. At the same time, the Company has increased the investment and development of some new projects such as new energy graphene, which will provide some foundation for the future development of the Company, to grow the Company steadily and maximize shareholder value.”
Recent Operating Highlights
| · | On July 12, 2022, Blue Hat was offering 1,000,000 ordinary shares, par value $0.01 per share (referred to hereinafter as the “ordinary shares”) in this offering at a price of $3.60 per share directly to certain investors, under the Company’s effective shelf registration statement. Blue Hat has not retained a broker, dealer, underwriter or placement agent with respect to this offering and therefore are not paying any underwriting discounts or commissions. The total expenses of this offering is approximately $3.6 million. |
| · | On August 30, 2022, Fujian Blue Hat Interactive Entertainment Technology Ltd. (“Fujian Blue Hat”), a wholly-owned subsidiary of the Company, entered into an agreement with Xiamen Traveler Network Technology Co., LTD. (“Traveler Network”), a leading game distributor, to distribute the Company’s proprietary games “Cute Monopoly” and “Cute Game Box” worldwide. Fujian Blue Hat. signed a joint operating agreement with the Travelers Network. |
| · | On September 20, 2022, Fujian Blue Hat signed a Memorandum of Understanding with Bigg World Pet Ltd. (“Bigg”), a Singapore company, on September 20, 2022. It reached an agreement on becoming the general agent for the development and operation of business strategy games such as Monopoly and Game Box in Southeast Asia. |
| · | On November 25, 2022, Blue Hat acquired 100% equity interest of Xiamen Shengruihao Technology Co., Ltd which mainly provides product supply chain services and integrated enterprise services. |
Second Quarter 2022 Results
Total revenues were US $1.7 million for the Second Quarter of 2022, a decrease of US $4.2 million, or 71.1%, compared to US $5.9 million in the prior-year period. It was due to the worsened overall economic environment in China with Covid-19 outbreak and related lockdown in various cities in China in 2022.
Revenues from sales of interactive toys (animation series) were nil for the Second Quarter of 2022, compared to US $16,061 in the prior-year period.
Revenues from sales of interactive toys (game series) were US $18,283 for the Second Quarter of 2022, a decrease of 99.2% from US $2.4 million in the prior-year period.
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Revenues from mobile games decreased to US $1.0 million for the Second Quarter of 2022, from US $3.4 million in the prior-year period.
Revenues from AR education, previously included under interactive toys (animation series), were nil in Second Quarter of 2022, which was due to Covid-19 outbreak.
Revenues from information service were US $0.7 million for the Second Quarter of 2022, compared to nil in the prior-year period. This is new business in the Third Quarter of 2021.
Gross profit decreased 76.5% to US $1.0 million for the Second Quarter of 2022 from US $4.3 million in the prior-year period. Gross margin was 59.1% for the Second Quarter of 2022 compared to 72.7% in the prior-year period. The decrease was due to the fact that promotion reduced product price and reduced mobile game revenue.
Total operating expenses increased by US $1.7 million for the Second Quarter of 2022, from US $2.6 million in the prior-year period, to US $4.3 million, as a result of increased expenses related to bad debt provision, rental fee and increased R&D expenses related to the development of new mobile games.
Loss/Income from operations decreased 295.0% to loss from operations of US $3.3 million for the Second Quarter of 2022, from income from operations of US $1.7 million in the prior-year period.
Net loss/income was US $3.4 million for the Second Quarter of 2022, compared to net income US $0.7 million in the prior-year period. The decrease was primarily driven by the increase in operating expenses described above and a decrease in revenue.
Basic loss per share from continuing operations were US $0.51 for the Second Quarter of 2022, compared to basic earnings per share from continuing operations of US $0.01 for the prior-year period.
Diluted loss per share from continuing operations were US $0.44 for the Second Quarter of 2022, compared to diluted earnings per share from continuing operations of US $0.01 for the prior-year period.
First Half 2022 Results
Total revenues were US $2.0 million for the First Half of 2022, a decrease of US $7.2 million, or 78.2%, compared to US $9.2 million in the prior-year period. It was due to the worsened overall economic environment in China with Covid-19 outbreak and related lockdown in various cities in China in 2022.
Revenues from sales of interactive toys (animation series) were US $7,146 for the First Half of 2022, compared to US $16,441 in the prior-year period.
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Revenues from sales of interactive toys (game series) were US $0.1 million for the First Half of 2022, compared to US $3.1 million in the prior-year period.
Revenues from mobile games were US $1.2 million for the First Half of 2022, compared to US $5.8 million in the prior-year period.
Revenues from AR education, were US $498 for the First Half of 2022, compared to US $0.2 million in the prior-year period.
Gross profit decreased 81.4% to US $1.2 million for the First Half of 2022, from US $6.3 million in the prior-year period.
Total gross margin was 58.9% for the First Half of 2022, compared to 69.1% in the prior-year period.
Total operating expenses increased to US $7.2 million for the First Half of 2022, from US $4.8 million in the prior-year period, primarily as a result of increased expenses as described above in the Second Quarter 2022 Results.
Loss/Income from operations decreased 483.3% to loss from operations US $7.6 million for the First Half of 2022, from income from operations US $1.6 million in the prior-year period.
Net loss/income decreased US $6.24 million to net loss US $6.2 million for the First Half of 2022, from US $43,382 in the prior-year period.
Basic loss per share from continuing operation were US $0.87 for the First Half of 2022, compared to Basic earnings per share from continuing operations of US $0.01 in the prior-year period.
Diluted loss per share from continuing operations were US $0.75 for the First Half of 2022, compared to diluted earnings per share from continuing operations of US $0.01 in the prior-year period.
Balance Sheet Highlights
As of June 30, 2022, Blue Hat had cash and cash equivalents of US $0.3 million, working capital of negative US $0.63 million and total shareholders’ equity (excluding the non controlling interest) of US $10.2 million, compared to cash and cash equivalents of US $0.14 million, working capital of US $3.4 million and total shareholders’ equity (excluding the non controlling interest) of US $15.2 million, respectively, as of December 31, 2021. It was due to decreased revenues.
During the First Half of 2022, the Company completed private placements primarily with five companies to pay for technical and consulting services by 21.4 million restrictive ordinary shares.
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The Company announced effect its 1-for-10 Reverse Stock Split on May 26, 2022.
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: ir@bluehatgroup.net
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BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
| For the Three Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Revenues | $ | 1,690,838 | $ | 5,855,329 | ||||
| Cost of revenue | 690,962 | 1,597,044 | ||||||
| Gross profit | 999,876 | 4,258,285 | ||||||
| Operating expenses: | ||||||||
| Selling | 303,969 | 910,382 | ||||||
| General and administrative | 2,287,602 | 724,439 | ||||||
| Research and development | 1,701,532 | 934,412 | ||||||
| Total operating expenses | 4,293,103 | 2,569,233 | ||||||
| (Loss) Income from operations | (3,293,227 | ) | 1,689,052 | |||||
| Other income (expense) | ||||||||
| Interest income | 191 | 134,612 | ||||||
| Interest expense | (92,005 | ) | (97,799 | ) | ||||
| Other finance expenses | (1,306 | ) | (38,061 | ) | ||||
| Other expense, net | (6,763 | ) | (585,768 | ) | ||||
| Total other (expense), net | (99,883 | ) | (587,016 | ) | ||||
| Income (loss) before from Continuing Operations before income taxes | (3,393,110 | ) | 1,102,036 | |||||
| Provision for income taxes | 45,289 | 412,349 | ||||||
| Net (loss) income from Continuing Operations | (3,438,399 | ) | 689,687 | |||||
| Discontinued Operations | ||||||||
| Loss from discontinued operations | — | (539,069 | ) | |||||
| NET (LOSS) INCOME | (3,438,399 | ) | 150,618 | |||||
| Other comprehensive income (loss) | ||||||||
| Net (loss) income from continued operations | (3,438,399 | ) | 689,687 | |||||
| Foreign currency translation adjustment - continued operations | (1,077,468 | ) | 1,667,618 | |||||
| Comprehensive (loss) income - continued operations | $ | (4,515,867 | ) | $ | 2,357,305 | |||
| Net (loss) from discontinued operations | — | (539,069 | ) | |||||
| Foreign currency translation adjustment - discontinued operations | — | 9,341 | ||||||
| Comprehensive (loss) income - discontinued operations | — | (529,728 | ) | |||||
| Comprehensive (Loss) Income | (4,515,867 | ) | 1,827,577 | |||||
| Less: Comprehensive (loss) income attributable to non-controlling interests | (372,736 | ) | 221,402 | |||||
| Comprehensive (loss) income attributable to Blue Hat Interactive Entertainment shareholders | (4,143,131 | ) | 1,606,175 | |||||
| Weighted average number of ordinary shares | ||||||||
| Basic | 6,021,612 | 47,384,286 | ||||||
| Diluted | 6,947,050 | 52,628,146 | ||||||
| Basic (Loss) Earnings per share | ||||||||
| Basic (loss) earnings per share from continuing operation | $ | (0.51 | ) | $ | 0.01 | |||
| Basic loss per share from discontinued operation | — | $ | (0.01 | ) | ||||
| Diluted (Loss) Earnings per share | ||||||||
| Diluted (loss) earnings per share from continuing operation | $ | (0.44 | ) | $ | 0.01 | |||
| Diluted loss per share from discontinued operation | — | $ | (0.01 | ) | ||||
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BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
| For the Six Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Revenues | $ | 1,992,950 | $ | 9,150,319 | ||||
| Cost of revenue | 818,444 | 2,826,266 | ||||||
| Gross profit | 1,174,506 | 6,324,053 | ||||||
| Operating expenses: | ||||||||
| Selling | 441,198 | 1,422,075 | ||||||
| General and administrative | 4,393,581 | 1,965,577 | ||||||
| Research and development | 2,342,426 | 1,370,358 | ||||||
| Total operating expenses | 7,177,205 | 4,758,010 | ||||||
| (Loss) Income from operations | (6,002,699 | ) | 1,566,043 | |||||
| Other income (expense) | ||||||||
| Interest income | 200 | 134,703 | ||||||
| Interest expense | (116,989 | ) | (235,416 | ) | ||||
| Other finance expenses | (6,409 | ) | (70,828 | ) | ||||
| Other income (expense), net | 5,723 | (604,562 | ) | |||||
| Total other (expense), net | (117,475 | ) | (776,103 | ) | ||||
| Income before (loss) income taxes | (6,120,174 | ) | 789,940 | |||||
| Provision for income taxes | 45,289 | 746,558 | ||||||
| Net (loss) income from Continuing Operations | (6,165,463 | ) | 43,382 | |||||
| Discontinued Operations | ||||||||
| Income from discontinued operations | 1,337,734 | |||||||
| NET (LOSS) INCOME | (6,165,463 | ) | 1,381,116 | |||||
| Other comprehensive income (loss) | ||||||||
| Net (loss) income from continued operations | (6,165,463 | ) | 43,382 | |||||
| Foreign currency translation adjustment - continued operations | (967,968 | ) | 1,562,700 | |||||
| Comprehensive (loss) income - continued operations | $ | (7,133,431 | ) | $ | 1,606,082 | |||
| Net income from discontinued operations | — | 1,337,734 | ||||||
| Foreign currency translation adjustment - discontinued operations | — | (251,917 | ) | |||||
| Comprehensive income - discontinued operations | — | 1,085,817 | ||||||
| Comprehensive (Loss) Income | (7,133,431 | ) | 2,691,899 | |||||
| Less: Comprehensive (loss) income attributable to non-controlling interests | (922,670 | ) | 748,596 | |||||
| Comprehensive (loss) income attributable to Blue Hat Interactive Entertainment shareholders | (6,210,761 | ) | 1,943,303 | |||||
| Weighted average number of ordinary shares | ||||||||
| Basic | 6,021,612 | 47,384,286 | ||||||
| Diluted | 6,947,050 | 52,628,146 | ||||||
| Basic (Loss) Earnings per share | ||||||||
| Basic loss per share from continuing operation | $ | (0.87 | ) | $ | (0.01 | ) | ||
| Basic earnings per share from discontinued operation | — | $ | 0.03 | |||||
| Diluted Earnings (Loss) per share | ||||||||
| Diluted loss per share from continuing operation | $ | (0.75 | ) | $ | (0.01 | ) | ||
| Diluted earnings per share from discontinued operation | — | $ | 0.03 | |||||
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BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY
AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
| June 30, | December 31, | |||||||
| ASSETS | 2022 | 2021 | ||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 343,832 | $ | 135,562 | ||||
| Accounts receivable, net | 13,943,929 | 16,679,694 | ||||||
| Other receivables, net | 1,233,575 | 2,976,482 | ||||||
| Other receivables - related party | 1,484,039 | — | ||||||
| Inventories | 25,441 | 108,623 | ||||||
| Prepayments, net | 1,267,261 | 1,803,783 | ||||||
| Total current assets | 18,298,077 | 21,704,144 | ||||||
| Property and equipment, net | 4,001,152 | 4,149,145 | ||||||
| Other assets: | ||||||||
| Prepayments | 1,723,221 | 1,704,812 | ||||||
| Operating lease, right-of-use asset | 89,930 | 155,223 | ||||||
| Intangible assets, net | 5,698,303 | 6,916,107 | ||||||
| Long-term investments | 1,788,003 | 1,882,146 | ||||||
| Total other assets | 9,299,457 | 10,658,288 | ||||||
| Total assets | $ | 31,598,686 | $ | 36,511,577 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Short-term loans - banks | $ | 1,309,553 | $ | 860,915 | ||||
| Accounts payable | 1,153,160 | 959,198 | ||||||
| Other payables and accrued liabilities | 11,759,511 | 11,389,737 | ||||||
| Other payables - related party | 172,239 | 186,503 | ||||||
| Operating lease liabilities - current | 50,316 | 97,054 | ||||||
| Customer deposits | 2,691,914 | 1,500,677 | ||||||
| Taxes payable | 1,789,883 | 3,287,640 | ||||||
| Total current liabilities | 18,926,576 | 18,281,724 | ||||||
| Other liabilities: | ||||||||
| Operating lease liability | 42,040 | 62,057 | ||||||
| Long term payable -related party | 857,788 | — | ||||||
| Long-term loans - third party | — | 517,590 | ||||||
| Total other liabilities | 899,828 | 579,647 | ||||||
| Total liabilities | 19,826,404 | 18,861,371 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| Shareholders’ equity | ||||||||
| Ordinary shares, $0.01 par value, 500,000,000 shares authorized, 7,570,256 shares issued and outstanding as of June30, 2022, and 5,382,383 shares issued and outstanding as of December 31, 2021 | 75,703 | 53,824 | ||||||
| Additional paid-in capital | 37,515,619 | 36,281,992 | ||||||
| Statutory reserves | 2,143,252 | 2,143,252 | ||||||
| Retained earnings | (30,991,334 | ) | (25,748,542 | ) | ||||
| Accumulated other comprehensive income | 1,491,288 | 2,459,256 | ||||||
| Total Blue Hat Interactive Entertainment Technology shareholders’ equity | 10,234,528 | 15,189,782 | ||||||
| Non-controlling interests | 1,537,754 | 2,460,424 | ||||||
| Total equity | 11,772,282 | 17,650,206 | ||||||
| Total liabilities and shareholders’ equity | $ | 31,598,686 | $ | 36,511,577 | ||||
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