Skillful Craftsman Education Technology Ltd.
Skillful Craftsman Education Technology Ltd.
12/06/2021 | Press release | Distributed by Public on 12/06/2021 05:03
Skillful Craftsman Announces Financial Results for The First Six Months of Fiscal Year 2022 - Form 6-K
Skillful Craftsman Announces Financial Results for The First Six Months of Fiscal Year 2022
Continues to Accelerate the Deployment of New Business Strategy and Empower Training Platform with Integrated Metaverse-based Technologies
WUXI, China, December 3, 2021 /PRNewswire/ -- Skillful Craftsman Education Technology Ltd. ("the Company") (NASDAQ: EDTK), an education technology company providing interactive online learning services, today announced its financial results for the first six months of fiscal year 2022 ended September 30, 2021.
First Six Months of Fiscal Year 2022 Financial and Operational Highlights
All financial figures are in US Dollars unless otherwise noted.
| • | Revenue was $11.9 million, compared with $15.3 million for the same period of last year, representing a 23% decrease, primarily due to a decrease in the number of total fee-paying members resulting from the decline in training needs of workers from rural area as the urbanization continued. |
| • | Gross profit was $3.6 million, compared with $8.5 million for the same period of last year, representing a 58% decrease. The decrease was mainly due to the combined effect of the decrease in revenue and an increase in cost of revenue as the Company incurred increased fees in courseware, software copyrights and virtual simulation in connection with its efforts to shift target customers to students at vocational schools. |
| • | Gross profit margin was 30%, compared with 55% for the same period of last year. The main reason was the cost spent in platform upgrade and courses enrichment did not result in the expansion of customer base to the extent expected. |
| • | Net loss was $43.3 thousand, compared with net income of $4.4 million for the same period of last year. The decrease was due to the decrease in revenue, an increase in the cost of revenue and an increase in general and administrative expenses. |
| • | Basic and diluted earnings per share were $0.00, compared with $0.44 for the same period of last year. |
| • | Total fee-paying members(1) was 1.1 million, compared with 3.3 million during the same period of last year, representing a 68% decrease. The decrease was primarily due to the combined effect of (i) the shrinking training needs of workers from rural area as a result of the development of urbanization, and (ii) unsatisfactory acquisition of new customers among students at vocational schools, who nowadays tend to be more interested in mobile live streaming and short video training courses than the personal computer courses offered by the Company. |
(1) Number of fee-paying members is defined as the total number of members that are paying fees for accessing our platforms as of the end of the applicable period.
Mr. Xiaofeng Gao, Chairman and CEO of Skillful Craftsman Education Technology Ltd., commented, "To seize the market opportunities, we have accelerated the deployment of new business strategy and new technology since the first half year of 2021. With respect to business development, the Company is leveraging online cloud technology service and flexible employment service platform, to cooperate with schools and institutions to provide them with high quality vocational training. It has already landed in the two major fields of Chinese medicine basic education and hotel management. With respect to technology enhancement, the Company will integrate metaverse technology with big data, cloud technology and traditional Augmented Reality (AR) simulation teaching capabilities. Through co-constructing metaverse vocational labs with universities and ecological chain companies, the Company plans to launch multi-persons collaborative simulation skills training platform based on metaverse. We remain optimistic about the vocational education industry based on the Opinions on Promoting the High-quality Development of Modern Vocational Education (the "Opinions") issued by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council. The Opinions encourage companies to participate in and support the development of vocational education, which provides clear directions and positive incentives for the Company's future development. We believe our brand, strategic development and the supporting policy will position us well for the future and we are confident in creating long-term value and returns for our shareholders."
First Six Months of Fiscal Year 2022 Financial Results
All figures refer to the first six months of fiscal year 2022 ended September 30, 2021 unless otherwise stated
Revenue
Revenue decreased by 23% to $11.9 million, from $15.3 million for the same period of last year, primarily due to a decrease in the number of total fee-paying members resulting from the decline in training needs of workers from rural area as the urbanization continued.
Cost of Revenue
Cost of revenue increased by 21% to $8.3 million, from $6.8 million for the same period of last year. The increase of cost of revenue was mainly caused by the increase of $0.8 million amortization of the newly purchased courseware and software copyrights, and the increase of virtual simulation fee by $0.6 million, both related to the Company's efforts to shift target customers to students at vocational schools.
Gross Profit and Gross Margin
Gross profit decreased by 58% to $3.6 million, from $8.5 million for the same period of last year. The decrease was mainly due to the combined effect of increased cost of revenue in courseware, software copyrights and virtual simulation fees and decrease in revenue.
Gross margin decreased by 25 percentage points to 30%, from 55% for the same period of last year. The main reason was the cost spent in platform upgrade and courses enrichment did not result in the expansion of customer base to the extent expected.
Operating Expenses
Operating expenses increased by 27% to $3.0 million, from $2.4 million for the same period of last year.
Sales and marketing expenses decreased by 18% to $0.7 million, from $0.9 million for the same period of last year. The decrease was mainly due to the decreases in both of the promotion expenses and telecommunications service fees.
General and administrative expenses increased by 53% to $2.3 million, from $1.5 million for the same period of last year. The increase was primarily caused by the increased compensation paid to employees, audit fees, the insurance fee and consulting fees for the period ended September 30, 2021.
Income Before Tax
Income before tax expense decreased by 90% to $0.6 million, from $6.1 million for the same period of last year.
Net (loss)/Income
Net loss was $43.3 thousand, compared with net income of $4.4 million for the same period of last year.
Basic and diluted earnings per share were $0.00, compared with $0.44 for the same period of last year.
Cash and Cash Equivalents
As of September 30, 2021, the Company had cash and cash equivalents of $23.7 million, compared with $17.5 million as of March 31, 2021.
Cash Flow
Net cash generated from operating activities was $1.8 million, compared with $6.6 million for the same period of last year.
Net cash provided by investing activities was $4.4 million, compared with net cash used in investing activities $14.2 million for the same period of last year.
Net cash generated from financing activities was nil, compared with $13.24 million for the same period of last year.
About Skillful Craftsman
Skillful Craftsman is an education technology company that provides interactive online vocational training and virtual simulation experimental training courses. The Company began operations in Wuxi, China in 2013 and is a key supporter for China education reform and development for labor employment. For more information, please visit: ir.kingwayup.com
Safe Harbor Statement
This report contains "forward-looking statements" for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that represent our beliefs, projections and predictions about future events. All statements other than statements of historical fact are "forward-looking statements," including any projections of earnings, revenue or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements concerning proposed new projects or other developments, any statements regarding future economic conditions or performance, any statements of management's beliefs, goals, strategies, intentions and objectives, and any statements of assumptions underlying any of the foregoing. Words such as "may", "will", "should", "could", "would", "predicts", "potential", "continue", "expects", "anticipates", "future", "intends", "plans", "believes", "estimates" and similar expressions, as well as statements in the future tense, identify forward-looking statements.
Forward-looking statements are based on information available at the time those statements are made and management's belief as of that time with respect to future events. These statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any future results, performance or achievements described in or implied by such statements. Such risks, uncertainties, and other factors include, but are not limited to, our ability to improve launch and leverage new technologies and cooperative relationships or anticipate market demand in a timely or cost-effective manner, and those factors discussed under the headings "Risk Factors", "Operating and Financial Review and Prospects," and elsewhere in our Annual Report on Form 20-F. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of whether, or the times by which, our performance or results may be achieved. Actual results may differ materially from expected results described in our forward-looking statements, including with respect to correct measurement and identification of factors affecting our business or the extent of their likely impact, and the accuracy and completeness of the publicly available information with respect to the factors upon which our business strategy is based or the success of our business. The Company disclaims any intention to, and undertakes no obligation to, update or revise any forward-looking statement.
For investor and media enquiries, please contact:
Skillful Craftsman
Investor Relations Department
Email: [email protected]
Ascent Investor Relations LLC
Tina Xiao
Tel: +1 917-609-0333
Email: [email protected]
SKILLFUL CRAFTSMAN EDUCATION TECHNOLOGY LIMITED
CONSOLIDATED BALANCE SHEETS
(Amounts in US$, except for number of shares)
| As of | ||||||||
|
September 30, 2021 |
March 31, 2021 |
|||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 23,712,359 | $ | 17,453,360 | ||||
| Accounts receivable, net | 50,246 | 83,980 | ||||||
| Prepayments | 2,903,533 | 1,784,537 | ||||||
| Other receivables | 186,325 | 5,713,192 | ||||||
| Total current assets | 26,852,463 | 25,035,069 | ||||||
| Non-current assets | ||||||||
| Long-term investment | 306,498 | - | ||||||
| Property and equipment, net | 12,462,098 | 13,725,957 | ||||||
| Intangible assets, net | 17,144,418 | 20,416,461 | ||||||
| Goodwill | 4,581,112 | - | ||||||
| Long-term prepayments and other non-current assets | - | 28,406 | ||||||
| Total non-current assets | 34,494,126 | 34,170,824 | ||||||
| TOTAL ASSETS | $ | 61,346,589 | $ | 59,205,893 | ||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 122,119 | $ | 113,707 | ||||
| Taxes payable | 292,532 | 448,485 | ||||||
| Amounts due to a related party | 5,764 | 257,037 | ||||||
| Accrued expenses | 920,665 | 1,051,929 | ||||||
| Deferred tax liabilities | 43,234 | - | ||||||
| Deferred revenue-current | 9,270,561 | 11,456,667 | ||||||
| Total current liabilities | 10,654,875 | 13,327,825 | ||||||
| Non-current liabilities | ||||||||
| Deferred revenue-noncurrent | - | 312,896 | ||||||
| Total non-current liabilities | - | 312,896 | ||||||
| TOTAL LIABILITIES | $ | 10,654,875 | $ | 13,640,721 | ||||
| COMMITMENTS AND CONTINGENCIES | - | - | ||||||
| SHAREHOLDERS' EQUITY | ||||||||
| Ordinary shares, par value $0.0002 per share, 500,000,000 shares authorized; 14,900,000 and 12,000,000 shares issued and outstanding as of 30 September, 2021 and 31 March, 2021, respectively | 2,980 | 2,400 | ||||||
| Additional paid-in capital | 18,055,407 | 13,415,987 | ||||||
| Statutory reserve | 746,323 | 745,590 | ||||||
| Accumulated profits | 30,375,080 | 30,419,177 | ||||||
| Accumulated other comprehensive income | 1,511,924 | 982,018 | ||||||
| TOTAL SHAREHOLDERS' EQUITY | 50,691,714 | 45,565,172 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 61,346,589 | $ | 59,205,893 |
SKILLFUL CRAFTSMAN EDUCATION TECHNOLOGY LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts in US$, except for number of shares)
| For the six months ended | ||||||||
| September 30, | ||||||||
| 2021 | 2020 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Revenue | $ | 11,851,792 | $ | 15,313,780 | ||||
| Cost of revenue | (8,255,007 | ) | (6,826,879 | ) | ||||
| Gross income | 3,596,785 | 8,486,901 | ||||||
| Operating expenses: | ||||||||
| Selling and marketing expenses | (720,191 | ) | (879,812 | ) | ||||
| General and administrative expenses | (2,293,011 | ) | (1,499,774 | ) | ||||
| Total operating expenses | (3,013,202 | ) | (2,379,586 | ) | ||||
| Income from operations | 583,583 | 6,107,315 | ||||||
| Interest income | 31,237 | 30,292 | ||||||
| Investment loss | (1,897 | ) | - | |||||
| Government grant | 493 | - | ||||||
| Foreign currency exchange loss | (48,819 | ) | - | |||||
| Loss on disposals of equipment | (54,147 | ) | - | |||||
| Other expenses, net | (2,147 | ) | (909 | ) | ||||
| Income before income taxes | 508,303 | 6,136,698 | ||||||
| Income tax expense | (551,667 | ) | (1,744,005 | ) | ||||
| Net (loss)/income | $ | (43,364 | ) | $ | 4,392,693 | |||
| Other comprehensive income/(loss): | ||||||||
| Foreign currency translation adjustment | 529,906 | 1,246,805 | ||||||
| Total comprehensive income | 486,542 | 5,639,498 | ||||||
| Net earnings per ordinary share, basic and diluted | $ | 0.00 | $ | 0.44 | ||||
| Weighted average number of ordinary shares, basic and diluted | 12,475,410 | 10,000,000 |
SKILLFUL CRAFTSMAN EDUCATION TECHNOLOGY LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in US$)
| For the six months ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net (loss)/income | $ | (43,364 | ) | $ | 4,392,693 | |||
| Adjustments to reconcile net profit to net cash provided by operating activities: | ||||||||
| Depreciation of property and equipment | 2,051,081 | 1,657,961 | ||||||
| Amortization of intangible assets | 3,948,391 | 3,157,605 | ||||||
| Loss from equity-method investment | 1,897 | - | ||||||
| Loss on disposals of equipment | 54,147 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivables, net | 33,734 | (24,284 | ) | |||||
| Prepayments and other current assets | (1,118,873 | ) | (602,972 | ) | ||||
| Other receivables | (19,296 | ) | - | |||||
| Long-term prepayments and other non-current assets | 28,406 | 28,509 | ||||||
| Accounts payable | 8,412 | (149,822 | ) | |||||
| Amounts due to a related party | (251,273 | ) | 509,012 | |||||
| Deferred revenue | (2,552,387 | ) | (2,939,360 | ) | ||||
| Accrued expenses | (220,164 | ) | 768,911 | |||||
| Taxes payable | (154,248 | ) | (213,411 | ) | ||||
| Deferred tax liabilities | (730 | ) | - | |||||
| Net cash generated from operating activities | 1,765,733 | 6,584,842 | ||||||
| Cash flows from investing activities | ||||||||
| Purchase of property and equipment | (653,189 | ) | (3,988,249 | ) | ||||
| Purchase of intangible assets | (209,469 | ) | (2,254,100 | ) | ||||
| Proceed from redemption of financial assets held for trading | 5,563,191 | - | ||||||
| Investment in private held company | (308,385 | ) | - | |||||
| Purchase of Jisen Information, net of cash acquired | 50,229 | - | ||||||
| Proceed from disposal of equipment | 4,650 | - | ||||||
| Purchases of other investments | - | (8,000,000 | ) | |||||
| Net cash generated from/(used in) investing activities | $ | 4,447,027 | $ | (14,242,349 | ) | |||
| Cash flows from financing activities | ||||||||
| Proceeds from IPO net off IPO expenses | - | 13,243,554 | ||||||
| Net cash generated from financing activities | $ | - | $ | 13,243,554 | ||||
| Effects of foreign currency translation | 46,239 | (67,122 | ) | |||||
| Net increase in cash and cash equivalents | 6,258,999 | 5,518,925 | ||||||
| Cash and cash equivalents at beginning of period | 17,453,360 | 11,931,714 | ||||||
| Cash and cash equivalents at end of period | $ | 23,712,359 | $ | 17,450,639 | ||||
| Supplemental disclosures of cash flow information | ||||||||
| Cash paid for income taxes | $ | 687,877 | $ | 1,974,038 | ||||
| Non cash transactions | ||||||||
| Ordinary shares issued for Jisen Information acquisition | $ | 4,640,000 | $ | - |