NEW YORK, March 24, 2023 (GLOBE NEWSWIRE) — UTime Limited (“UTime” or the “Company”) (Nasdaq: UTME), a mobile device manufacturing company committed to providing cost effective products and solutions to consumers globally and helping low-income individuals from established and emerging markets, have better access to updated mobile technology, today announced its financial results for the first six months of fiscal year 2023 ended September 30, 2022.
First Six Months of Fiscal Year 2023 Financial and Operational Highlights
All financial figures are in US Dollars unless otherwise noted.
- Revenue from Original Equipment Manufacturer (“OEM”) and Original Design Manufacturer (“ODM”) services increased from RMB100.2 million to approximately RMB127.7 million (US$18.0 million), representing a 27.4% increase.
- Gross profit margin increased from 8.2% to 9.9%, primarily due to an increase in sales of newly introduced, higher end models of feature phones and smart phones, and a decrease in purchase price of key raw materials.
- Net loss reached approximately RMB15.6 million (US$2.2 million), compared to net loss of RMB9.3 million during the same period last year, representing a 67% increase. The increase in net loss was mainly due to an increase of selling expenses, R&D expenses and general and administration expenses, partially offset by an increase in gross profit.
- The exchange rate between the RMB and US Dollar considerably affected the Company’s financial results, as more than 50% of our products were sold to customers outside of mainland China. Consequently, our revenue was affected by fluctuations in the exchange rate between US dollar and RMB.
First Six Months of Fiscal Year 2023 Financial Results
Revenue
Revenue for the six months ended September 30, 2022 was approximately RMB127.8 million (US$18 million), an increase of RMB26.7 million, or 26.5%, from RMB101.1 million for the same period of 2021. The increase was primarily attributable to the increase in OEM/ODM sales orders from Mexico, which represented over 21% of our revenue.
Cost of sales
Cost of sales for the six months ended September 30, 2022 was approximately RMB115.2 million (US$16.2 million), an increase of RMB22.5 million, or 24.1%, from RMB92.7 million for the same period of 2021. The increase was in line with the increase in sales volume.
Gross profit for the six months ended September 30, 2022 was approximately RMB12.6 million (US$1.8 million), representing an increase of RMB4.3 million, or 52.2%, from the gross profit of RMB8.3 million for the same period of 2021, as a result of factors discussed above.
Overall gross profit margin for the six months ended September 30, 2022 was approximately 9.9%, or 1.67% higher, as compared to gross profit margin of 8.2% for the same period of 2021.
Operating Expenses
Operating expenses increased by RMB8 million, or 49%, from RMB16.3 million for the six months ended September 30, 2021 to approximately RMB24.3 million (US$3.4 million) for the six months ended September 30, 2022.
General and administrative expenses consist of salary and benefits to the Company’s accounting, human resources, design and executive office staff, rental expenses, property management and utilities, office supplies and other expenses. General and administrative expenses increased by RMB10.4 million, or 153.1%, from RMB15.9 million for the six months ended September 30, 2021 to approximately RMB26.3 million (US$4 million) for the six months ended September 30, 2022. The increase was mainly due to an increase in R&D costs and general and administration expenses incurred in rolling out operations for the Company’s new subsidiaries in Mexico and Guangxi, China.
Selling expenses increased by RMB2.5 million, or 152.5%, from RMB1.7 million for the six months ended September 30, 2021 to approximately RMB4.2 million (US$0.6 million) for the six months ended September 30, 2022. Selling expenses consist of salary and benefits, business travel, shipping expenses, entertainment, market promotion and other expenses relating to the Company’s sales and marketing activities. The increase of RMB2.5 million in selling expense was mainly due to an increase in cargo forwarding and warehousing expenses.
Other expenses (income), net for the six months ended September 30, 2022 was net income of RMB6.2 million (US$0.9 million), as compared to net income of RMB1.2 million for the same period of 2021. The increase in income was mainly attributed to increase in exchange gain of U.S. Dollar against RMB, partially offset by a decrease in government subsidy due to a policy change resulting in a budget deduction for government subsidies to high-tech companies.
Income Before Tax
Income tax provision (benefit) was nil and RMB0.1 for the six months ended September 30, 2021 and 2022.
Net Income (loss)
Net loss was approximately RMB15.6 million (US$2.2 million) for the six months ended September 30, 2022 compared to net loss of RMB9.3 million for the six months ended September 30, 2021, an increase of approximately 67%. The increase in net loss was mainly due to an increase of selling expenses, R&D expenses and general and administration expenses, partially offset by an increase in gross profit.
Cash and Cash Equivalents
As of September 30, 2022, the Company had cash and cash equivalents of US$10.5 million, compared with $10.6 million as of March 31, 2021.
Cash Flow
Net cash used in operating activities was RMB4.7 million (US$0.7 million) for the six months ended September 30, 2022 as compared with RMB19.6 million for the same period of 2021.
Net cash used in investing activities for six months ended September 30, 2022 was RMB2.2 million (US$0.3 million) as compared to net cash used in investing activities of RMB 6.6 million for the same period of 2021. Cash used in the six months ended September 30, 2022 was primarily spent to pay for property and equipment in Guangxi factory.
Net cash provided by financing activities for six months ended September 30, 2022 was approximately RMB7.0 million (US$1 million) as compared to RMB87.1 million for the same period of 2021. The cash inflow was mainly attributable to proceeds from short-term borrowings from Shenzhen Nanshan Baosheng County Bank Co., Ltd, China Resources SZITIC Trust Co., Ltd., and Jiangsu Suning Bank Co., Ltd.
Exchange rate
Our reporting currency is the Renminbi. This announcement also contains translations of certain foreign currency amounts into U.S. dollars for the convenience of the reader. Unless otherwise stated, all translations of Renminbi into U.S. dollars were made at RMB7.0998 to US$1.00 for the six months ended September 30, 2022, the exchange rates set forth in the central parity of RMB against the U.S. dollar by the People’s Bank of China on September 30, 2022.
UTIME LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data and per share data, or otherwise noted)
| As of March 31, | As of September 30, | |||||||||||
| 2022 | 2022 | |||||||||||
| RMB | RMB | USD | ||||||||||
| Assets | ||||||||||||
| Current Assets | ||||||||||||
| Cash and cash equivalents | 66,692 | 74,482 | 10,491 | |||||||||
| Restricted cash | 500 | 500 | 70 | |||||||||
| Accounts receivable, net | 22,417 | 33,887 | 4,773 | |||||||||
| Prepaid expenses and other current assets, net | 65,815 | 83,871 | 11,813 | |||||||||
| Due from related parties | 1,422 | 606 | 85 | |||||||||
| Inventories | 36,071 | 19,043 | 2,682 | |||||||||
| Total current assets | 192,917 | 212,389 | 29,914 | |||||||||
| Non-Current assets | ||||||||||||
| Property and equipment, net | 38,270 | 68,281 | 9,617 | |||||||||
| Operating lease right-of-use assets, net | 16,319 | 14,561 | 2,051 | |||||||||
| Intangible assets, net | 2,592 | 2,149 | 303 | |||||||||
| Equity method investment | – | – | – | |||||||||
| Other non-current assets | 541 | 526 | 74 | |||||||||
| Total non-current assets | 57,722 | 85,517 | 12,045 | |||||||||
| Total Assets | 250,639 | 297,906 | 41,959 | |||||||||
| Liabilities and Shareholder’s equity | ||||||||||||
| Current liabilities | ||||||||||||
| Accounts payable | 74,531 | 114,436 | 16,118 | |||||||||
| Short-term borrowings | 35,780 | 44,064 | 6,206 | |||||||||
| Current portion of long-term borrowings | 800 | 1,080 | 152 | |||||||||
| Due to related parties | 4,499 | 3,578 | 504 | |||||||||
| Lease liability | 3,360 | 4,712 | 664 | |||||||||
| Other payables and accrued liabilities | 44,148 | 51,435 | 7,245 | |||||||||
| Income tax payables | 18 | 18 | 3 | |||||||||
| Total current liabilities | 163,136 | 219,323 | 30,892 | |||||||||
| Non-current liabilities | ||||||||||||
| Long-term borrowings | 8,020 | 7,410 | 1,044 | |||||||||
| Deferred revenue | – | 6,928 | 976 | |||||||||
| Deferred tax liability | 466 | 381 | 54 | |||||||||
| Lease liability – non-current | 14,549 | 11,438 | 1,611 | |||||||||
| Total non-current liabilities | 23,035 | 26,157 | 3,685 | |||||||||
| Total liabilities (including amounts of the consolidated VIEs without recourse to the Company of RMB183,641 and RMB240,994 as of March 31, 2022 and September 30, 2022, respectively) | 186,171 | 245,480 | 34,577 | |||||||||
| Commitments and contingencies | ||||||||||||
| Shareholder’s equity | ||||||||||||
| Preferred share, par value US$0.0001; Authorized:10,000,000 shares; none issued and outstanding as at As of March 31, 2022 and As of September 30, 2022, respectively | ||||||||||||
| Ordinary shares, par value US$0.0001; Authorized:140,000,000 shares; Issued and outstanding: 8,267,793 shares as at March 31,2022 and 8,267,793 shares as at September 30, 2022 | 5 | 5 | 1 | |||||||||
| Additional paid-in capital | 152,236 | 152,236 | 21,442 | |||||||||
| Accumulated deficit | (88,277 | ) | (102,542 | ) | (14,443 | ) | ||||||
| Accumulated other comprehensive income | 1,024 | 4,793 | 673 | |||||||||
| Total UTime Limited shareholder’s equity | 64,988 | 54,492 | 7,673 | |||||||||
| Non-controlling interests | (520 | ) | (2,066 | ) | (291 | ) | ||||||
| Total shareholders’ equity | 64,468 | 52,426 | 7,382 | |||||||||
| Total liabilities and shareholders’ equity | 250,639 | 297,906 | 41,959 | |||||||||
UTIME LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Amounts in thousands, except share data and per share data, or otherwise noted)
| Six months ended September 30, | ||||||||||||
| 2021 | 2022 | |||||||||||
| RMB | RMB | USD | ||||||||||
| Net sales | 101,057 | 127,792 | 17,999 | |||||||||
| Cost of sales | 92,749 | 115,151 | 16,219 | |||||||||
| Gross profit | 8,308 | 12,641 | 1,780 | |||||||||
| Operating expenses: | ||||||||||||
| Selling expenses | 1,661 | 4,194 | 591 | |||||||||
| General and administrative expenses | 15,856 | 26,321 | 3,707 | |||||||||
| Other expenses (income), net | (1,187 | ) | (6,249 | ) | (880 | ) | ||||||
| Total operating expenses | 16,329 | 24,266 | 3,418 | |||||||||
| Loss from operations | (8,021 | ) | (11,625 | ) | (1,638 | ) | ||||||
| Interest expenses | 1,321 | 4,075 | 574 | |||||||||
| Loss before income taxes | (9,342 | ) | (15,700 | ) | (2,212 | ) | ||||||
| Income tax expenses (benefits) | – | (85 | ) | (12 | ) | |||||||
| Net loss | (9,342 | ) | (15,615 | ) | (2,200 | ) | ||||||
| Less: Net loss attributable to non-controlling interests | – | (1,350 | ) | (190 | ) | |||||||
| Net loss attributable to UTime Limited | (9,342 | ) | (14,265 | ) | (2,010 | ) | ||||||
| Comprehensive loss | ||||||||||||
| Net loss | (9,342 | ) | (15,615 | ) | (2,200 | ) | ||||||
| Foreign currency translation adjustment | 42 | 3,769 | 531 | |||||||||
| Total comprehensive loss | (9,300 | ) | (11,846 | ) | (1,669 | ) | ||||||
| Less: Comprehensive loss attributable to non-controlling interest | – | (1,350 | ) | (190 | ) | |||||||
| Comprehensive loss attributable to UTime Limited | (9,300 | ) | (10,496 | ) | (1,479 | ) | ||||||
| Loss per share attributable to UTime Limited | ||||||||||||
| Basic and diluted | (1.14 | ) | (1.75 | ) | (0.25 | ) | ||||||
| Weighted average ordinary shares outstanding | ||||||||||||
| Basic and diluted | 8,164,771 | 8,164,771 | 8,164,771 | |||||||||
UTIME LIMITED LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands or otherwise noted)
| Six months ended September 30, | ||||||||||||
| 2021 | 2022 | |||||||||||
| RMB | RMB | USD | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income (loss) | (9,342 | ) | (15,615 | ) | (2,200 | ) | ||||||
| Adjustments to reconcile net income (loss) from operations to net cash used by operating activities | ||||||||||||
| Depreciation and amortization | 2,276 | 2,602 | 366 | |||||||||
| Allowances for obsolete inventories, net | 632 | (230 | ) | (32 | ) | |||||||
| Provision for doubtful account, net | (161 | ) | – | – | ||||||||
| Loss on disposal of property and equipment | 6 | 118 | 17 | |||||||||
| Impairment of an intangible asset | 348 | – | – | |||||||||
| Net changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | (331 | ) | (6,183 | ) | (871 | ) | ||||||
| Prepaid expenses and other current assets | (943 | ) | (1,133 | ) | (160 | ) | ||||||
| Inventories | (38,601 | ) | 17,714 | 2,495 | ||||||||
| Accounts payable | 36,317 | (2,697 | ) | (380 | ) | |||||||
| Other payables and accrued liabilities | (9,781 | ) | (7,140 | ) | (1,006 | ) | ||||||
| Related parties | – | 935 | 132 | |||||||||
| Deferred revenue | – | 6,928 | 976 | |||||||||
| Other non-current assets | – | 15 | 2 | |||||||||
Net cash (used in) provided by operating activities |
(19,580) | (4,686 | ) | (661 | ) | |||||||
| Investing activities: | ||||||||||||
| Payment for property and equipment | (5,856 | ) | (2,057 | ) | (290 | ) | ||||||
| Payment for intangible assets | (777 | ) | (147 | ) | (21 | ) | ||||||
| Net cash used in investing activities | (6,633) | (2,204) | (311 | ) | ||||||||
| Financing activities: | ||||||||||||
| Proceeds from short-term borrowings | 15,500 | 19,310 | 2,720 | |||||||||
| Loan received from a shareholder | 3,000 | 2,000 | 282 | |||||||||
| Proceeds from long-term borrowings | 9,000 | – | – | |||||||||
| Repayment of loan from a shareholder | – | (3,000 | ) | (423 | ) | |||||||
| Repayment of short-term borrowings | (10,400 | ) | (11,026 | ) | (1,553 | ) | ||||||
| Repayments of long-term borrowings | (5,640 | ) | (330 | ) | (46 | ) | ||||||
| Down payment for financing services | (19,003 | ) | – | – | ||||||||
| Contribution in a subsidiary by a shareholder | 6,429 | – | – | |||||||||
| Proceeds from issuance of ordinary shares through initial public offering | 88,262 | – | – | |||||||||
| Net cash provided by financing activities | 87,148 | 6,954 | 980 | |||||||||
| Effect of exchange rate changes on cash and cash equivalent and restricted cash | (844 | ) | 7,726 | 1,089 | ||||||||
| Net increase in cash and cash equivalent and restricted cash | 60,091 | 7,790 | 1,097 | |||||||||
| Cash and cash equivalents and restricted cash at beginning of period | 9,477 | 67,192 | 9,464 | |||||||||
| Cash and cash equivalents and restricted cash at end of period | 69,568 | 74,982 | 10,561 | |||||||||
