BHAT Blue Hat Interactive Entertainment Technology

Blue Hat Interactive Entertainment Technology (“Blue Hat” or the “Company”) (NASDAQ: BHAT), primarily a company of commodity trading in China, today announced its audited financial results for the fiscal year ended December 31, 2023 (“Fiscal Year 2023”), reflecting a remarkable surge in the revenue.

Fiscal Year 2023 Financial Highlights

Blue Hat achieved a revenue of $73.68 million in 2023, increasing 33 times than the previous year. This extraordinary achievement is credited to the company's robust expansion of its commodity trading business, particularly in the realms of jewelry and gold trading, since the fourth quarter of 2022. However, despite the substantial revenue growth, the company incurred a net loss of $21.72 million for the Fiscal Year 2023. The primary reasons for the loss include bad debts and asset impairment resulting from divested businesses. Notably, the Company’s new business line, commodity trading, contributed a profit of nearly $1.2 million to the company for the Fiscal Year 2023.

Management Commentary

Mr. Chen Xiaodong, CEO of Blue Hat, stated at the Company's annual summary meeting: "Our achievements in 2023 represent not only a breakthrough in financial data, but also a resounding affirmation of Blue Hat's business strategy transition. In 2024, we will continue leveraging on the technology and experience we have accumulated in past few years. We will deepen our commodity trading in jewelry, especially the diamond and gold trading, and meanwhile expanding online gold derivatives trading, which aim to deliver excellent performance and reward our investors. Furthermore, we are committed to embracing the era of artificial intelligence and inspired to set a new benchmark as a 'smart' gold trader."

Fiscal Year 2023 Financial Results

Please refer to Blue Hat’s annual report on Form 20-F for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission on April 30, 2024 for a detailed analysis of Blue Hat’s financial results.

About Blue Hat

Blue Hat was formerly a provider of communication services and IDC business, as well as a producer, developer, and operator of AR interactive entertainment games, toys, and educational materials in China. Leveraging years of technological accumulation and unique patented technology, Blue Hat is expanding its business to commodity trading, aiming to become a leading intelligent commodity trader worldwide. 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

CONSOLIDATED BALANCE SHEETS
		December 31,				December 31,
		2023				2022
						(Restated)
ASSETS
Current assets:
Cash and cash equivalents		$	407,588			$	69,273
Restricted cash			1,587				1,129
Inventories			17,545,153				—
Accounts receivable, net			15,157,384				9,170,996
Accounts receivable, related party			9,571				—
Other receivables, net			4,182,706				4,704,455
Other receivables, related party			1,941,723				1,427,829
Prepayments, net			36,588				80,834
Assets related to discontinued operation			—				6,077,554
Total current assets			39,282,300				21,532,070
Non-current assets:
Operating lease, right-of-use asset			2,353,083				40,596
Prepayments			2,388,435				2,495,570
Property, plant and equipment, net			3,544,751				3,817,015
Intangible assets, net			—				1,368,424
Long-term investments			1,694,269				1,722,999
Assets related to discontinued operation			—				3,300,184
Total non-current assets			9,980,538				12,744,788
Total assets		$	49,262,838			$	34,276,858
LIABILITIES AND EQUITY
Current liabilities:
Short-term loans - banks		$	273,713			$	473,825
Taxes payable			805,577				841,334
Accounts payable			318,729				324,991
Other payables and accrued liabilities			4,027,883				9,014,057
Other payables - related party			—				22,643
Operating lease liabilities - current			235,470				11,261
Customer deposits			3,020				19,629
Liability related to discontinued operation			—				6,700,468
Total current liabilities			5,664,392				17,408,208
Non-current liabilities:
Operating lease liability			2,141,421				31,041
Long-term loans banks			—				—
Long-term loans – related party			834,950				914,771
Convertible notes payable			—				1,393,499
Total other liabilities			2,976,371				2,339,311
Total liabilities			8,640,763				19,747,519
Shareholder’s equity
Ordinary shares, $0.01 par value, 500,000,000 shares authorized, 58,398,281 shares issued and outstanding as of December 31, 2023, 9,894,734 shares issued and outstanding as of December 31, 2022			583,982				98,947
Additional paid-in capital			93,828,090				44,145,826
Statutory reserves			2,143,252				2,143,252
Retained earnings			(56,832,015	)			(35,113,598	)
Accumulated other comprehensive loss			898,766				834,513
Total Blue Hat Interactive Entertainment Technology shareholders’ equity			40,622,075				12,108,940
Non-controlling interests			—				2,420,399
Total Equity			40,622,075				14,529,339
Total liabilities and shareholders’ equity		$	49,262,838			$	34,276,858

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
		Year ended				Year ended				Year ended
		December 31,				December 31,				December 31,
		2023				2022				2021
						(Restated)				(Restated)
Revenues		$	73,686,733			$	2,195,954			$	12,139,500
Cost of revenue			(72,532,882	)			(958,438	)			(5,782,664	)
Gross profit			1,153,851				1,237,516				6,356,836
Operating expenses:
Selling			(7,677	)			(159,937	)			(315,600	)
Research and development			(2,570,158	)			(2,734,982	)			(11,233,806	)
General and administrative expenses			(13,766,487	)			(6,224,674	)			(31,335,421	)
Impairment loss			(13,693,305	)			(33,397	)			(14,632,931	)
Total operating expenses			(30,037,627	)			(9,152,990	)			(57,517,758	)
(Loss)/Income from operations			(28,883,776	)			(7,915,474	)			(51,160,922	)
Other income (expense)
Interest income			7				374				156,038
Interest expense			(222,057	)			(133,882	)			(229,985	)
Other finance expenses			(62,025	)			(15,264	)			(65,344	)
Other income (expense), net			66,205				39,080				(191,499	)
Total other expense, net			(217,870	)			(109,692	)			(330,790	)
(Loss)/ income from Continuing Operations before income taxes			(29,101,646	)			(8,025,166	)			(51,491,712	)
Provision for income taxes			(6,081	)			(1,097,888	)			(1,104	)
(Loss)/ income from continuing operations			(29,107,727	)			(9,123,054	)			(51,492,816	)
Discontinued Operations (Note 19)
Gain on disposal of discontinued operations			7,389,310				—				1,493,945
(Loss) from discontinued operations			—				(282,027	)			(10,055,749	)
Net Income (Loss)			(21,718,417	)			(9,405,081	)			(60,054,620	)
Less: Net (loss) income attributable to non-controlling interest			(2,420,399	)			(40,025	)			(2,918,680	)
Net (Loss) Income attributable to Blue Hat Interactive Entertainment Technology			(19,298,018	)			(9,365,056	)			(57,135,940	)
Other comprehensive (loss) income
Net (loss)/ Income from continued operations			(29,107,727	)			(9,123,054	)			(51,492,816	)
Foreign currency translation adjustment continued operation			(199,032	)			(1,883,571	)			651,272
Comprehensive (loss) income - continued operation		$	(29,306,759	)		$	(11,006,625	)		$	(50,841,544	)
Income (loss) from discontinued operation			7,389,310				(282,027	)			(8,561,804	)
Foreign currency translation adjustment - discontinued operation			263,285				258,828				66,288
Comprehensive income (Loss) - discontinued operation		$	7,652,595			$	(23,199	)		$	(8,495,516	)
Comprehensive (loss) income		$	(21,654,164	)		$	(11,029,824	)		$	(59,337,060	)
Less: Net (loss) income attributable to non-controlling interest			(2,420,399	)			(40,025	)			(2,918,680	)
Comprehensive income (loss) attributable to Blue Hat Interactive Entertainment shareholders			(19,233,765	)			(10,989,799	)			(56,418,380	)
Weighted average number of ordinary shares
Basic			29,722,950				7,639,482				5,053,727
Diluted			30,975,275				8,565,163				5,800,048
Earnings per share
Basic (loss) earnings per share from continued operation		$	(0.98	)		$	(1.19	)		$	(10.19	)
Basic earnings per share from discontinued operation			0.33				(0.04	)			(1.12	)
Diluted Earnings per share:
Diluted (loss) earnings per share from continued operation		$	(0.98	)		$	(1.19	)		$	(10.19	)
Diluted earnings per share from discontinued operation			0.33				(0.04	)			(1.12	)

 

CONSOLIDATED STATEMENTS OF CASH FLOW
		Year ended				Year ended				Year ended
		December 31,				December 31,				December 31,
		2023				2022				2021
						(Restated)				(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income		$	(21,718,417	)		$	(9,405,081	)		$	(60,054,620	)
Net income (loss) from discontinued operation			7,389,310				(282,027	)			(8,561,804	)
Net (loss) from continuing operation			(29,107,727	)			(9,123,054	)			(51,492,816	)
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation of property, plant and equipment			260,883				185,083				241,265
Amortization of intangible assets			159,579				169,149				1,557,016
Impairment of goodwill			—				3,681				14,537
Impairment of intangible assets			1,075,997				—				14,632,931
Impairment of Property, plant and equipment			17,308				29,716				—
Impairment of inventory			12,600,000
Interest expenses related to convertible note			146,322				100,314				—
Share-based payments			3,659,080				4,043,550				—
Issuance of common stock to pay for goods			42,420,000				—				—
Provision for doubtful accounts			10,246,270				(1,060,782	)			(29,661,273	)
Deferred income taxes			—				—				119,127
Changes in operating assets and liabilities:
Accounts receivable			(14,915,499	)			4,762,503				9,091,390
Accounts receivables related party			—				—				1,906,101
Other receivables			(1,208,861	)			385,779				24,850,497
Inventories			(17,545,153	)			116,115				(41,460	)
Prepayments			41,367				(773,671	)			14,189,940
Operating lease assets			22,102				276				(13,025	)
Accounts payable			(6,260	)			(21,891	)			134,526
Other payables and accrued liabilities			(4,986,175	)			92,607				5,179,130
Customer deposits			(16,609	)			12,549				5,532
Taxes payable			(35,756	)			(395,191	)			(5,337,785	)
Net cash (used in) generated from operating activities - continued operation			(9,773,132	)			(1,473,267	)			(14,624,367	)
Net cash (used in) generated from operating activities - discontinued operation			7,661,561				281,780				(5,488,297	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment			—				(3,429	)			(140,962	)
Proceeds from disposal of equipment			—				9,760				52,799
Purchase of intangible assets			—				—				(16,385,451	)
Proceeds from disposal of intangible assets			—				—				12,985,106
Disposal of a subsidiary			(15,380	)			—				(866,075	)
Acquisition of subsidiaries, net of cash received			—				5				(162,326	)
Net cash from investing activities – continued operation			(15,380	)			6,336				(4,516,909	)
Net cash from investing activities  – discontinued operation			—				—				(1,952	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of new shares			2,998,397				88,592				12,830,780
Gross proceeds from issuance of convertible note			—				1,550,000				—
Repayment of convertible note			(449,999	)			—				(739,189	)
Proceeds (Repayment) from other payables - related party			—				905,171				6,406
(Repayment) from loan payables - related party			(102,464	)			—				(14,117	)
Change in restricted cash			(1,587	)			(1,129	)			—
Repayments of short-term loans - banks			(138,393	)			—				(4,663,292	)
Net cash generated from financing activities – continued operation			2,305,954				2,542,634				7,420,588
Net cash generated from financing activities – discontinued operation			(52,322	)			(11,960	)			154,260
EFFECT OF EXCHANGE RATES ON CASH			210,505				(1,319,437	)			1,439,535
NET CHANGES IN CASH AND CASH EQUIVALENTS			337,186				26,086				(15,617,142	)
CASH AND CASH EQUIVALENTS, beginning of year			70,402				50,449				15,752,704
CASH AND CASH EQUIVALENTS, end of year		$	407,588			$	76,535			$	135,562
Less: cash and cash equivalents from the discontinued operations, end of year			—				(7,262	)			(85,113	)
CASH AND CASH EQUIVALENT, FROM THE CONTINUING OPERATIONS, end of year		$	407,588			$	69,273			$	50,449
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash and cash equivalents		$	407,588			$	76,535			$	135,562
CASH AND CASH EQUIVALENTS, end of year		$	407,588			$	76,535			$	135,562
Provision for doubtful trade receivables		$	(8,929,110	)		$	(1,035,345	)		$	(6,037,274	)
Provision for doubtful other receivables			(1,207,145	)			(22,869	)			(13,484,319	)
Reversal for doubtful prepayments			(110,014	)			4,925				(10,166,240	)
Allowance for inventory			—				(7,492	)			26,561
(Reversal)/Provision for doubtful accounts		$	(10,246,269	)		$	(1,060,781	)		$	(29,661,272	)
Cash paid for income tax		$	6,081			$	1,097,888			$	1,529,850
Cash paid for interest		$	222,057			$	133,882			$	229,985
SUPPLEMENTAL NON-CASH INVESTING INFORMATION:
Additional of operating lease, right-of-use asset		$	2,353,083			$	40,596			$	118,272
SUPPLEMENTAL NON-CASH FINANCING INFORMATION:
Operating lease liabilities		$	235,470			$	11,261			$	57,645