Blue Hat Raises $8 Million in New York IPO; Stock Surges 15% on Debut

The Xiamen-based provider of AR toys and games enjoyed a solid debut on the Nasdaq Friday.
Belinda ZhouJul 27,2019,06:55

Blue Hat Interactive Entertainment Technology (Nasdaq: BHAT) went public Friday, seeing its stock price close at $4.58 per America depositary share with 15 percent above its issue price.

Founded in 2010, the Xiamen-based company produces augmented reality interactive entertainment games and toys, including interactive educational materials, mobile games, and toys with mobile game features. It currently offers four primary AR interactive product lines of AR Racer of car-racing mobile game, AR Need a Spanking of a combat game, AR 3D Magic Box to transport children’s drawings into diverse backgrounds and AR Picture Book for education.

The company reported a revenue of $9.6 million in the first nine months through September in 2018, up 52 percent from that period of 2017. It net income in the first three quarters through September reached $3.3 million, or 10 cents per American depositary share, down 14 percent from that of $2.3 million in 2017.

In March, the company said in its preliminary prospectus filed with the U.S. Securities and Exchange Commission that it planned to sell 4.5 million shares at $4 apiece, then it downsized the proposed deal size to 1.8 million. Afterwards it raised the proposed deal size from 1.8 million shares to 2 million shares.

“Also, the firm's choice of selling ordinary shares is unusual for a foreign firm going public on U.S. markets. Typically, the company would sell ADSs through a U.S.-domiciled bank. ADSs provide investors with far fewer administrative issues than with ordinary shares,” Donovan Jones, the founder of VentureDeal, said at CapitalWatch.com.

“Our goal is to create a rich visual and interactive environment for users through the integration of real objects and virtual scenery. We believe this combination provides users with a more natural form of human-computer interaction and enhances users’ perception of reality, thus providing a more diversified entertainment experience,” Blue Hats said in its prospectus.

As of Jan. 31, its intellectual property (IP) portfolio included "161 authorized patents, 40 patents in various stages of the patent application process, 14 applications for Patent Cooperation Treaty, or PCT, international patents, 56 registered trademarks, 645 copyrights for art work and 25 software copyrights," it said.

The company also said that this year, it plans to expand its e-commerce sales team and to operate flagship stores via large online retailers, such as Amazon.com Inc. (Nasdaq: AMZN), Alibaba Group Holding Ltd.'s (NYSE: BABA) Tmall.com and Taobao.com, and JD.com Inc. (Nasdaq: JD), to further penetrate the market.

Blue Hats expects to use 40 percent of proceeds for research and development, 40 percent for selling and marketing of strengthening our sales channels and establishing physical experience stores and the remainder for working capital and general corporate purposes.

Listed underwriters on the deal is ViewTrade Securities Inc. Its shares were trading on Nasdaq Capital Market under the ticker symbol “BHAT.”


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