Ebang International Reports Financial Results for Fiscal Year 2020

Rhea-AI Summary

Ebang International Holdings Inc. (Nasdaq: EBON) reported significant declines in its financial performance for the fiscal year 2020. Total net revenues fell to US$19 million, an 82.57% decrease from US$109.06 million in 2019. The company faced a gross loss of US$2.90 million, down from US$30.56 million the previous year. Despite these challenges, including supply chain disruptions due to COVID-19, Ebang is committed to expanding its operations and investing in high-performance ASIC chips. The net loss narrowed to US$32.11 million from US$41.07 million in 2019, and cash reserves improved to US$13.67 million.

Positive

• Narrowed net loss from US$41.07 million (2019) to US$32.11 million (2020)
• Increased cash reserves from US$3.46 million (2019) to US$13.67 million (2020)
• Commitment to invest in high-performance ASIC chips and expand revenue sources

Negative

• Total net revenues decreased by 82.57% year-over-year to US$19 million
• Gross loss of US$2.90 million, down from US$30.56 million in 2019
• Total computing power sold dropped by 91.64% from 5.97 million TH/s in 2019

HANGZHOU, China, April 30, 2021 (GLOBE NEWSWIRE) -- Ebang International Holdings Inc. (Nasdaq: EBON, the “Company,” “we” or “our”), a blockchain technology company in the global market, today announced its financial results for the fiscal year ended December 31, 2020.

Operational and Financial Highlights for Fiscal Year 2020

Total computing power sold in fiscal year 2020 was 0.50 million TH/s, representing a year-over-year decrease of 91.64% from 5.97 million TH/s in fiscal year 2019.

Total net revenues in fiscal year 2020 were US$19.00 million representing an 82.57% year-over-year decrease from US$109.06 million in fiscal year 2019.

Gross loss in fiscal year 2020 was US$2.90 million representing a 90.51% year-over-year decrease from US$30.56 million in fiscal year 2019.

Net loss in fiscal year 2020 was US$32.11 million compared to US$41.07 million in fiscal year 2019.

Mr. Dong Hu, Chairman and Chief Executive Officer of the Company, commented, “The negative impact and unprecedented challenges caused by COVID-19 on businesses around the world is well documented, and we are not immune to them. Our chip suppliers have reduced their production capacity, resulting in our shortage of raw materials during the fiscal year of 2020. To ensure the resilience of our business operations and deliver solid performance after the market condition resumes normal, we have been actively optimizing our revenue structure based on the productivity ratio and strategically exploring expansion into blockchain-enabled financial services. For example, we positioned our overseas expansion by establishing subsidiaries globally and acquiring relevant licenses or authorizations for our cryptocurrency exchange business.”

Continued Hu, “We are committed to our mission in strengthening the technological innovation in our products and services to ensure their competitiveness in the global cryptocurrency market. As previously noted, in 2021, we will increase investments in high performance ASIC chips and mining machines. Our abundant cash reserve allows us to expand the revenue sources from our current business and optimize the development of our blockchain industry chain. We believe our current businesses have solid potential and we are working hard to deliver results going forward that will demonstrate sequential improvement in operating and financial metrics.”

Financial Results for Fiscal Year 2020

Total net revenues in fiscal year 2020 were US$19.00 million representing an 82.57% year-over-year decrease from US$109.06 million in fiscal year 2019. The year-over-year decrease in total net revenues was primarily due to the combined impact of COVID-19 such as travel restrictions, mandatory quarantines and suspension of business activities, which have caused severe disruptions and uncertainties to the Company’s business operations and adversely affected the Company’s results of operations and financial condition. For instance, the Company’s chip suppliers have reduced their production capacity due to the impact of the COVID-19, resulting in the Company’s shortage of raw materials during the first half of 2020. And together with the Bitcoin halving event, which significantly affected the expected returns on Bitcoin related activities such as mining, and in turn resulted in a much lower demand and average selling price of the Company’s Bitcoin mining machines.

Cost of revenues in fiscal year 2020 was US$21.90 million compared to US$139.62 million in fiscal year 2019. The year-over-year decrease in cost of revenues was in line with the changes in the Company’s sales and the decrease in inventory write-down.

Gross loss in fiscal year 2020 were US$2.90 million representing a 90.51% year-over-year decrease from US$30.56 million in fiscal year 2019.

Total operating expenses in fiscal year 2020 were US$23.75 million compared to US$20.08 million in fiscal year 2019.

• Selling expenses in fiscal year 2020 were US$0.93 million compared to US$1.21 million in fiscal year 2019. The year-over-year decrease in selling expenses was in line with the decrease in the Company’s sales as well as reduced salary and bonus expenses relating to selling activities.
• General and administrative expenses in fiscal year 2020 were US$22.82 million compared to US$18.87 million in fiscal year 2019. The year-over-year increase in general and administrative expenses was primarily due to increase in professional fee related to the IPO process.

Loss from operations in fiscal year 2020 was US$26.65 million compared to US$50.65 million in fiscal year 2019.

Interest income in fiscal year 2020 was US$0.82 million compared to US$0.22 million in fiscal year 2019. The year-over-year increase in interest income was primarily due to the increase in the interest income from our investments in bonds after our IPO in 2020 and there was no bond investment in 2019.

Government grants in fiscal year 2020 were US$4.01 million compared to US$6.30 million in fiscal year 2019. The year-over-year decrease in government grants was primarily due to the decrease of non-recurring rebates from local government.

Net loss in fiscal year 2020 was US$32.11 million compared to US$41.07 million in fiscal year 2019.

Net loss attributable to Ebang International Holdings Inc. in fiscal year 2020 was US$30.67 million compared to US$42.40 million in fiscal year 2019.

Basic and diluted net loss per shares in fiscal year 2020 were both US$0.25 compared to US$0.38 in fiscal year 2019.

Cash and cash equivalents were US$13.67 million as of December 31, 2020, compared with US$3.46 million as of December 31, 2019.

About Ebang International Holdings Inc.

Ebang International Holdings Inc. is a blockchain technology company with strong application-specific integrated circuit (ASIC) chip design capability. With years of industry experience and expertise in ASIC chip design, it has become a leading bitcoin mining machine producer in the global market with steady access to wafer foundry capacity. With its licensed or registered entities in various jurisdictions, the Company seeks to launch a professional, convenient and innovative digital asset financial service platform to expand into the upstream and the downstream of blockchain and cryptocurrency industry value chain. For more information, please visit https://ir.ebang.com.cn/.

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. These forward-looking statements are made only as of the date indicated, and 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.
CONSOLIDATED BALANCE SHEETS
(Stated in US dollars)

	December 31, 2020				December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	13,669,439			$	3,464,262
Restricted cash, current		406,857				2,270,588
Debt investments		40,835,000				-
Accounts receivable, net		7,205,113				8,128,178
Notes receivable		765,967				-
Advances to suppliers		221,186				1,062,049
Inventories, net		3,845,091				13,088,542
Prepayments		522,808				591,031
Other current assets, net		1,128,599				224,452
Total current assets		68,600,060				28,829,102
Non-current assets:
Property, plant and equipment, net		29,123,243				13,224,761
Intangible assets, net		23,077,435				3,784,153
Operating lease right-of-use assets		898,335				1,280,076
Operating lease right-of-use assets - related party		17,701				37,266
Restricted cash, non-current		47,455				43,317
Deferred tax assets		-				8,542,715
VAT recoverable		21,897,063				21,954,169
Other assets		538,934				4,915,487
Total non-current assets		75,600,166				53,781,944
Total assets	$	144,200,226			$	82,611,046
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	2,762,187			$	11,832,003
Notes payable		1,087,673				-
Accrued liabilities and other payables		21,921,614				13,739,041
Loans due within one year, less unamortized debt issuance costs		765,967				4,864,697
Operating lease liabilities, current		659,807				793,521
Operating lease liabilities – related party, current		17,701				37,266
Income taxes payable		556,137				521,648
Due to related party		5,652,833				6,242,824
Advances from customers		832,842				1,015,675
Total current liabilities		34,256,761				39,046,675
Non-current liabilities:
Long-term loans – related party		-				17,632,000
Deferred tax liabilities		872				-
Operating lease liabilities, non-current		118,827				361,747
Total non-current liabilities		119,699				17,993,747
Total liabilities		34,376,460				57,040,422
Equity:
Ordinary share, HKD0.001 par value, 380,000,000 shares authorized, nil and 111,771,000 shares issued and outstanding at December 31, 2020 and 2019, respectively		-				14,330
Class A ordinary share, HKD0.001 par value, 333,374,217 shares authorized, 89,009,554 and nil shares issued and outstanding as of December 31, 2020 and 2019, respectively		11,411				-
Class B ordinary share, HKD0.001 par value, 46,625,783 shares authorized, 46,625,783 and nil shares issued and outstanding as of December 31, 2020 and 2019, respectively		5,978				-
Additional paid-in capital		138,288,921				23,888,023
Statutory reserves		11,049,847				11,049,847
Accumulated deficit		(38,581,419	)			(7,905,999	)
Accumulated other comprehensive loss		(7,648,332	)			(9,066,842	)
Total Ebang International Holdings Inc. shareholders’ equity		103,126,406				17,979,359
Non-controlling interest		6,697,360				7,591,265
Total equity		109,823,766				25,570,624
Total liabilities and equity	$	144,200,226			$	82,611,046

EBANG INTERNATIONAL HOLDINGS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Stated in US dollars)

	For the year ended December 31, 2020				For the year ended December 31, 2019				For the year ended December 31, 2018
Product revenue	$	9,677,278			$	93,255,813			$	310,856,407
Service revenue		9,327,023				15,804,253				8,185,386
Total revenues		19,004,301				109,060,066				319,041,793
Cost of revenues		21,903,644				139,623,799				294,596,001
Gross profit (loss)		(2,899,343	)			(30,563,733	)			24,445,792
Operating expenses:
Selling expenses		925,373				1,213,294				4,095,835
General and administrative expenses		22,822,085				18,870,794				51,410,864
Total operating expenses		23,747,458				20,084,088				55,506,699
Loss from operations		(26,646,801	)			(50,647,821	)			(31,060,907	)
Other income (expenses):
Interest income		824,435				217,200				453,991
Interest expenses		(728,346	)			(2,041,491	)			(921,047	)
Other income		81,733				84,992				1,139,514
Exchange gain (loss)		(288,346	)			5,693,798				(403,544	)
Government grants		4,006,567				6,298,893				798,680
VAT refund		-				9,138				27,368,030
Other expenses		(108,624	)			(287,530	)			(8,289,391	)
Total other income		3,787,419				9,975,000				20,146,233
Loss before income taxes provision		(22,859,382	)			(40,672,821	)			(10,914,674	)
Income taxes provision		9,251,542				400,311				899,586
Net Loss		(32,110,924	)			(41,073,132	)			(11,814,260	)
Less: net income (loss) attributable to non-controlling interest		(1,435,504	)			1,330,237				494,234
Net loss attributable to Ebang International Holdings Inc.	$	(30,675,420	)		$	(42,403,369	)		$	(12,308,494	)
Comprehensive loss
Net loss	$	(32,110,924	)		$	(41,073,132	)		$	(11,814,260	)
Other comprehensive income (loss):
Foreign currency translation adjustment		1,960,109				(1,188,488	)			(11,363,682	)
Total comprehensive loss		(30,150,815	)			(42,261,620	)			(23,177,942	)
Less: comprehensive income (loss) attributable to non- controlling interest		(893,905	)			1,330,237				494,234
Comprehensive loss attributable to Ebang International Holdings Inc.	$	(29,256,910	)		$	(43,591,857	)		$	(23,672,176	)
Net loss per ordinary share attributable to Ebang International Holdings Inc.
Basic	$	(0.25	)		$	(0.38	)		$	(0.36	)
Diluted	$	(0.25	)		$	(0.38	)		$	(0.36	)
Weighted average ordinary shares outstanding
Basic		121,941,226				111,771,000				33,808,506
Diluted		121,941,226				111,771,000				33,808,506

FAQ

What were Ebang's total net revenues for the fiscal year 2020?

Ebang's total net revenues for the fiscal year 2020 were US$19 million, an 82.57% decrease from US$109.06 million in 2019.

How did COVID-19 impact Ebang's financial performance?

COVID-19 caused significant operational disruptions, leading to a shortage of raw materials and a decrease in demand for Ebang's products.

What was Ebang's net loss for the fiscal year 2020?

Ebang reported a net loss of US$32.11 million for the fiscal year 2020, compared to a net loss of US$41.07 million in 2019.

What is the growth outlook for Ebang following the fiscal year 2020 results?

Ebang aims to optimize its revenue structure and increase investments in ASIC chips, signaling potential growth as market conditions improve.

Where does Ebang stand on cash reserves as of December 31, 2020?

As of December 31, 2020, Ebang had cash and cash equivalents of US$13.67 million, up from US$3.46 million in 2019.