BHAT

• Took several steps in 2020 to strengthen the business on four pillars: interactive toys and games, interactive education, mobile games, and information services/communication services (IDC).
• Remained profitable despite global pandemic challenges. New business establishment/expansion impacted 2020 bottom line but expected to support other pillars.
• Solid financial position with $15.8 million in cash and cash equivalents at year-end 2020. Completed a registered direct offering for $7.6 million to grow the business.

• No specific top/bottom line guidance provided.
• Anticipates high growth in IDC and education sectors in 2021 compared to prior year.
• Will share more growth strategy and sector revenue contribution through quarterly reports.

Total revenues increased 26.7% to 30.2 million for fiscal year 2020 from 23.8 million in the prior fiscal year. This was primarily due to increased sales in the interactive educational business and contributions from the new information services and communication services (IDC) business. The interactive educational segment contributed significantly to total revenues in 2020, and the IDC business is expected to see large growth in 2021.

• Global pandemic impacted operations of interactive applications in 2020.
• Currency fluctuation impact; in 2020, loss occurred due to U.S. dollar depreciation against renminbi, but measures taken to avoid excessive impact.

Q: How much the contribution of the operations between the Company and the Kingsoft Cloud will be expected to bring this Kingsoft company income? And what is the growth margin? And then, are there any plans to cooperate with other companies in the future?

A: The contribution of the Kingsoft Cloud relationship to the business in total and margin profile were discussed. The IDC business has good development with collaborations like Tencent, KD, and Kingsoft, and future announcements will be made.

Q: The Company has signed many cooperation agreements of the interactive education in 2020. How these agreements are being implemented? What is the biggest difficult and the problem encounter in the proceed capitalization?

A: The Company's interactive application operation was seriously affected by COVID-19 in 2020. Opened local markets in Sichuan Province. In 2021, planning more programs/co-operations in five provinces and investing more in education sector.

Q: The IDC business contributed a little over 4 million in revenue, but the margin impact was negative as a percentage of gross cost of sales. Going forward, what is the target in gross margin for the IDC business? And at what level of sales would this be achieved?

A: The IDC is part of the company's businesses. The Company will further increase the overall margin of IDC, integrating with other sectors like toys and education, and expects large growth in this sector.

Q: What is the contribution of the interactive educational sector to revenue in 2020? What is the growth prospect for 2021? What is the management strategy of interactive education?

A: The interactive education sector contributed significantly to total revenues in 2020. In 2021, planning cooperation with new provinces and running interactive education programs in 1,000 kindergartens and preschools.

Q: Should we expect a currency gain as all Blue Hat revenue is reported in RMB from 2021?

A: In 2020, there was higher fluctuation between RMB and U.S. dollar. Measures taken to use average value and reporting date value in balance sheet to avoid excessive currency fluctuation impact.

Q: Specific growth strategy and guidance for 2021 and in the first half of the year?

A: The Company has two main sectors, IDC and education, anticipating high growth in these sectors in 2021 compared to prior year. Will share more growth strategy and sector revenue contribution through quarterly reports.