UTime Announces Financial Results for The First Six Months of Fiscal Year 2023


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