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Ebang International Holdings Inc. Reports Unaudited Financial Results for The First Six Months of Fiscal Year 2020

EBANG INTERNATIONAL HOLDINGS INC.
·11 mins read

HANGZHOU, China, Sept. 25, 2020 (GLOBE NEWSWIRE) -- Ebang International Holdings Inc. (Nasdaq: EBON, the “Company,” “we” or “our”), a leading application-specific integrated circuit (“ASIC”) chip design company and a leading manufacturer of high-performance Bitcoin mining machines, today announced its unaudited financial results for the first six months of fiscal year 2020.

Operational and Financial Highlights for the First Six Months of Fiscal Year 2020

Total computing power sold in the first six months of 2020 was 0.25 million Thash/s, representing a year-over-year decrease of 86.02% from 1.82 million Thash/s in the same period of 2019.

Total net revenues in the first six months of 2020 were US$11.04 million, representing a 50.60% year-over-year decrease from US$22.35 million in the same period of 2019.

Gross loss in the first six months of 2020 was US$0.97 million, representing a 94.59% year-over-year decrease from US$17.87 million in the same period of 2019.

Net loss in the first six months of 2020 was US$6.96 million compared to US$19.07 million in the same period of 2019.

Mr. Dong Hu, Chairman and Chief Executive Officer of the Company, commented, “The outbreak of the COVID-19 has significantly affected business and manufacturing activities worldwide. Measures to contain COVID-19, such as travel restrictions, mandatory quarantines and suspension of business activities have caused severe disruptions and uncertainties to our business operations and adversely affected our results of operations and financial condition. Our chip suppliers have reduced their production capacity due to the impact of the COVID-19, resulting in our shortage of raw materials during the first six months of 2020. Faced with the turbulent social and industrial environment, we have taken timely and proactive measures to ensure the resilience of our business operations and allow us to deliver solid performance after the market condition resumes normal. In light of this, our management has been actively optimizing our revenue structure based on the productivity ratio and strategically exploring expansion into blockchain-enabled financial services.”

Mr. Hu continued, “With the preparatory work we have initiated in Singapore and Canada, we are at an initial preparatory stage of executing our plan to launch blockchain-enabled financial business by establishing cryptocurrency exchange(s) and online brokerage(s) and by combining the blockchain-enabled financial businesses with the traditional ones to capture the entire value chain of the blockchain industry. Marching into these new fields, we are staying true to our mission in strengthening the technological innovation in our products and services to ensure their competitiveness in the market.”

Unaudited Financial Results for the First Six Months of Fiscal Year 2020

Total net revenues in the first six months of 2020 were US$11.04 million, representing a 50.60% year-over-year decrease from US$22.35 million in the same period of 2019. The year-over-year decrease in total net revenues were mainly due to the combined impact of COVID-19 and Bitcoin halving event, which significantly affect the expected returns on Bitcoin related activities such as mining, and in turn resulted in a much lower demand and average selling price of our Bitcoin mining machines.

Cost of revenues in the first six months of 2020 was US$12.01 million compared to US$40.21 million in the same period of 2019. The year-over-year decrease in cost of revenues were in line with the changes in the Company’s sales and the decrease in inventory write-down.

Gross loss in the first six months of 2020 was US$0.97 million, representing a 94.59% year-over-year decrease from US$17.87 million in the same period of 2019.

Total operating expenses in the first six months of 2020 were US$7.71 million compared to US$9.60 million in the same period of 2019.

  • Selling expenses in the first six months of 2020 were US$0.45 million compared to US$0.49 in the same period of 2019. The year-over-year decrease in selling expenses was mainly caused by reduced salary and bonus expenses relating to selling activities.

  • General and administrative expenses in the first six months of 2020 were US$7.26 million compared to US$9.10 million in the same period of 2019. The year-over-year decrease in general and administrative expenses was mainly caused by a decrease in research and development expenses due to decreased purchase in materials used for research and development purposes in the six months ended June 30, 2020 compared to the same period of 2019.

Loss from operations in the first six months of 2020 was US$8.68 million compared to US$27.47 million in the same period of 2019.

Other income in the first six months of 2020 was US$0.02 million compared to US$0.03 million in the same period of 2019. The year-over-year decrease in other income was mainly caused by the decrease in investment income from wealth management products purchased from the banks in the six months ended June 30, 2020.

Government grants in the first six months of 2020 were US$2.54 million compared to US$6.18 million in the same period of 2019. The year-over-year decrease in government grants was mainly caused by the decrease of tax rewards from government.

Net loss in the first six months of 2020 was US$6.96 million compared to US$19.07 million in the same period of 2019.

Net loss attributable to Ebang International Holdings Inc. in the first six months of 2020 was US$6.21 million compared to US$18.11 million in the same period of 2019.

Basic and diluted net loss per shares in the first six months of 2020 were both US$0.06 compared to US$0.16 in the same period of 2019.

About Ebang International Holdings Inc.

Ebang International Holdings Inc. is a leading application-specific integrated circuit ASIC chip design company and a leading manufacturer of high-performance Bitcoin mining machines. The Company has strong ASIC chip design capability underpinned by nearly a decade of industry experience and expertise in the telecommunications business. The Company is one of the few fabless integrated circuit design companies with the advanced technology to independently design ASIC chips, established access to third-party wafer foundry capacity and a proven in-house capability to produce blockchain products*. The Company was also a leading Bitcoin mining machine producer in the global market in terms of computing power sold in 2019*. For more information, please visit https://ir.ebang.com.cn/.

*

According to an industry report prepared by Frost & Sullivan in 2019

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, the Company’s development plans and business outlook, which can be identified by terminology such as “may,” “will,” “expects,” “anticipates,” “aims,” “potential,” “future,” “intends,” “plans,” “believes,” “estimates,” “continue,” “likely to” and other similar expressions. Such statements are not historical facts, and are based upon the Company’s current beliefs, plans and expectations, and the current market and operating conditions. Forward-looking statements involve inherent known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company’s control, which may cause the Company’s actual results, performance and achievements to differ materially from those contained in any forward-looking statement. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the U.S. Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement. The Company undertakes no obligation to update or revise the information contained in any forward-looking statements as a result of new information, future events or otherwise, except as required under applicable law.

Investor Relations Contact

For investor and media inquiries, please contact:

Ebang International Holdings Inc.
Email: ir@ebang.com.cn

Ascent Investor Relations LLC
Ms. Tina Xiao
Tel: (917) 609-0333
Email: tina.xiao@ascent-ir.com

EBANG INTERNATIONAL HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Stated in US dollars)

June 30,
2020

December 31,
2019

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

1,089,933

$

3,464,262

Restricted cash, current

824,291

2,270,588

Accounts receivable, net

7,546,319

8,128,178

Bank acceptance notes from customers

707,394

-

Advances to suppliers

1,191,368

1,062,049

Inventories, net

8,822,464

13,088,542

VAT recoverables

19,859,583

21,954,169

Prepayments

8,493,421

13,272,775

Other current assets, net

219,270

224,452

Total current assets

48,754,043

63,465,015

Non-current assets:

Property, plant and equipment, net

20,904,153

13,224,761

Intangible assets, net

3,418,247

3,784,153

Operating lease right-of-use assets

1,125,288

1,280,076

Operating lease right-of-use assets - related party

23,016

37,266

Restricted cash, non-current

21,182

43,317

Other assets

830,338

776,458

Total non-current assets

26,322,224

19,146,031

Total assets

$

75,076,267

$

82,611,046

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

7,173,801

$

11,832,003

Bank acceptance notes to vendors

1,431,765

-

Accrued liabilities and other payables

14,346,108

13,739,041

Loans due within one year, less unamortized debt issuance costs

-

4,864,697

Operating lease liabilities, current

687,107

793,521

Operating lease liabilities – related party, current

32,732

37,266

Income taxes payable

841,725

521,648

Due to related parties

6,908,102

6,242,824

Advances from customers

1,662,352

1,015,675

Total current liabilities

33,083,692

39,046,675

Non-current liabilities:

Long-term loans – related party

24,113,700

17,632,000

Operating lease liabilities, non-current

461,236

361,747

Total non-current liabilities

24,574,936

17,993,747

Total liabilities

57,658,628

57,040,422

Shareholders’ equity:

Common share, HKD0.001 par value, 380,000,000 shares authorized, 111,771,000 shares issued and outstanding as of December 31, 2019

-

14,330

Class A common share, HKD0.001 par value, 333,374,217 shares authorized, 84,409,554 shares issued and outstanding as of June 30, 2020

10,822

-

Class B common share, HKD0.001 par value, 46,625,783 shares authorized, 46,625,783 shares issued and outstanding as of June 30, 2020

5,978

-

Additional paid-in capital

115,570,313

23,888,023

Subscription receivable

(91,684,760

)

-

Statutory reserves

11,483,844

11,049,847

Accumulated deficit

(14,552,283

)

(7,905,999

)

Accumulated other comprehensive loss

(10,131,056

)

(9,066,842

)

Total Ebang International Holdings Inc. shareholder’s equity

10,702,858

17,979,359

Non-controlling interest

6,714,781

7,591,265

Total shareholders’ equity

17,417,639

25,570,624

Total liabilities and shareholders’ equity

$

75,076,267

$

82,611,046



EBANG INTERNATIONAL HOLDINGS INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Stated in US dollars)

For the six
months ended
June 30,
2020

For the six
months ended
June 30,
2019

Product revenue

$

4,954,499

$

15,111,199

Service revenue

6,087,856

7,240,536

Total revenues

11,042,355

22,351,735

Cost of revenues

12,009,303

40,219,588

Gross loss

(966,948

)

(17,867,853

)

Operating expenses:

Selling expenses

452,608

494,792

General and administrative expenses

7,257,855

9,102,696

Total operating expenses

7,710,463

9,597,488

Loss from operations

(8,677,411

)

(27,465,341

)

Other income (expenses):

Interest income

12,714

32,111

Interest expenses

(579,486

)

(1,315,770

)

Other income

16,080

29,240

Exchange gain

474,488

3,986,019

Government grants

2,541,708

6,184,035

VAT refund

-

9,306

Other expenses

(16,436

)

(101,999

)

Total other income

2,449,068

8,822,942

Loss before income taxes provision

(6,228,343

)

(18,642,399

)

Income taxes provision

735,048

428,596

Net loss

(6,963,391

)

(19,070,995

)

Less: net income attributable to non-controlling interest

(751,104

)

(959,154

)

Net loss attributable to Ebang International Holdings Inc.

$

(6,212,287

)

$

(18,111,841

)

Comprehensive loss

Net loss

$

(6,963,391

)

$

(19,070,995

)

Other comprehensive loss:

Foreign currency translation adjustment

(1,189,594

)

536,529

Total comprehensive loss

(8,152,985

)

(18,534,466

)

Less: comprehensive loss attributable to non-controlling interest

(125,380

)

-

Comprehensive loss attributable to Ebang International Holdings Inc.

$

(7,276,501

)

$

(17,575,312

)

Net loss per common share attributable to Ebang International Holdings Inc.

Basic

$

(0.06

)

$

(0.16

)

Diluted

$

(0.06

)

$

(0.16

)

Weighted average common shares outstanding

Basic

111,876,848

111,771,000

Diluted

111,876,848

111,771,000