Blue Hat(US:BHAT)2020-05-11 20:07Revenue Growth - Total revenues increased by $5,302,951, or 28.6%, to $23,834,129 for the year ended December 31, 2019, compared to $18,531,178 for the year ended December 31, 2018[326]. - Total revenues increased by $4.4 million, or 31.0%, to $18.5 million for the year ended December 31, 2018, compared to $14.1 million for 2017[347]. - Revenue from interactive toys - game series increased by $4.3 million or 25.2% to $21.2 million, while revenue from interactive toys - animation series decreased by $361,966 or 69.3% to $160,672[329][331]. - Revenues from interactive toys - game series increased by $3.9 million, or 30.4%, from $13.0 million in 2017 to $16.9 million in 2018[349]. - Revenues from mobile games increased by $1.0 million, or 765.5%, from $128,000 in 2017 to $1.1 million in 2018[352]. - Mobile games revenue increased by $1.4 million or 126.8% to $2.5 million, driven by the popularity of the mobile game "Quan Min Dou Yu"[332]. Profitability - Gross profit increased by $3,879,827, or 31.2%, to $16,302,329, with a gross margin of 68.4% for the year ended December 31, 2019[337][338]. - The overall gross profit percentage increased from 67.0% in 2018 to 68.4% in 2019, attributed to higher revenues from interactive toys - game series[338]. - Net income increased by $1.2 million, or 14.6%, to $9.1 million for the year ended December 31, 2019, compared to $7.9 million for 2018[346]. - Gross profit increased by $3.6 million, or 40.5%, to $12.4 million for the year ended December 31, 2018, from $8.8 million for 2017[357]. - Gross profit margin for the year ended December 31, 2018, was 67.0%, compared to 62.5% for 2017[358]. - Net income rose by $2.8 million, or 54.5%, to $7.9 million in 2018 from $5.1 million in 2017[367]. Operating Expenses - Total operating expenses increased by $2.71 million or 66.1% to $6.82 million, primarily due to increases in general and administrative expenses and research and development expenses[341]. - Total operating expenses increased by $1.2 million, or 41.5%, from $2.9 million in 2017 to $4.1 million in 2018, driven by a $1.1 million rise in general and administrative expenses[361]. Research and Development - Research and development expenses increased by $744,362 or 259.5% to $1,031,204, focusing on developing a smart preschool platform and AR interactive toys[343]. - The company has invested significantly in research and development, maintaining two teams of 45 AR specialists focused on hardware and software design[388]. - The research and development process involves collaboration between the R&D team and the marketing team to identify market demands and product feasibility[389]. - The company plans to outsource external R&D teams to develop cutting-edge technologies to keep pace with industry growth[343]. - The standard research and development cycle for a new product is approximately eight months, with initial development taking two to three months for quality samples[390]. Tax and Income - Income tax expense decreased by $151,704 to $453,724 for the year ended December 31, 2019, due to a reduction in the statutory income tax rate from 25% to 15%[345]. - Income tax expense decreased by $350,000 from $955,000 in 2017 to $605,000 in 2018 due to a favorable income tax rate[366]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was $12.3 million in 2019, primarily due to a net income of $9.1 million and various non-cash items totaling $1.8 million[377]. - Net cash used in investing activities was $19.1 million in 2019, mainly for business acquisitions and intangible assets[380]. - Net cash provided by financing activities was $10.6 million in 2019, primarily from $7.4 million in proceeds from the initial public offering[384]. - The company plans to continue capital expenditures to support expected business growth, focusing on working capital requirements[387]. Intellectual Property and Competitive Advantage - As of December 31, 2019, the company held 199 authorized patents, 37 patents pending, and 645 copyrights, contributing to its competitive advantages[392]. - The company is committed to aggressive protection of its intellectual property through patents, trademarks, and copyrights[392]. Future Outlook and Collaborations - The company collaborates with Fujian Normal University for the development of its Qi Platform, providing funding and utilizing university facilities[388]. - The company is currently advancing technologies such as photosensitive induction, gesture-sensor, infrared induction, and AR identification technologies[391]. - There are no known trends or uncertainties that could materially affect the company's revenue or profitability[393]. - The company has no off-balance sheet arrangements that would impact liquidity or capital resources[394]. Contractual Obligations - Future minimum payments under contractual obligations total $6,700,788, with $5,819,788 due within one year[395].