U Power Limited Reports First Half of Fiscal Year 2023 Financial Results

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Oct 10, 2023, 16:30 ET

SHANGHAI, Oct. 10, 2023 /PRNewswire/ -- U Power Limited (Nasdaq: UCAR) (the "Company" or "U Power"), a vehicle sourcing services provider with a vision to becoming a comprehensive EV battery power solution provider in China, today announced its unaudited financial results for the six months ended June 30, 2023.

Mr. Jia Li, Chief Executive Officer and Chairman of the Board of Directors of the Company, commented, "In the first half of fiscal 2023, we made considerable progress on the key objective of promoting the sales of commercial electric vehicles and the development of battery-swapping business models through the communication of industry insights with numerous domestic and international partners. This move helps us to customize a clearer growth plan for scaling our core business. We devoted ourselves to completing our U.S. initial public offering in a timely manner, which caused certain impacts on our financial performance. So, we actively expanded the export business of new energy vehicles with overseas partners following our listing on the Nasdaq in April 2023. We established a strategic partnership with Quantum Solutions Co., Ltd. in Japan and will provide battery-swapping vehicles for the Japanese urban express transportation market. We also entered into business cooperation with SCR Asset Management Group in Portugal, jointly exploring the sales of battery-swapping electric vehicles and two-wheeled electric motorcycles in Portuguese-speaking countries. Additionally, we partnered with Zhongneng Lithium Battery Technology Taizhou Co., Ltd, a Chinese company engaging in the research and application of lithium energy storage products, to jointly promote energy storage business based on the battery-swapping model worldwide. To strengthen our market position and enhance our competitiveness, we are committed to technological innovations to continuously develop and improve our proprietary UOTTA technology. As such, investment in research and development remains our top priority. Our UOTTA technology is currently undergoing adaptation for use in commercial electric vehicles through collaborations with major auto manufacturers in China, and we have entered into cooperative agreements with two car manufacturers to jointly develop UOTTA-powered EV models by adapting selected EV models with our UOTTA technology."

Mr. Li continued, "We continue optimizing our business structure and have made profound improvement to our internal management system. We focus on our research and development as well as sales centered around our well-tailored business direction. Looking forward, we will work closely with overseas partners to drive the customized export business of four-wheeled electric vehicles and two-wheeled electric motorcycles using the UOTTA battery-swapping model. We will target the markets of the United States, Southern Europe, Southeast Asia, and South America with continued opportunities for further progress in the second half of this fiscal year and beyond. We are always committed to growing our business to create long term value for our shareholders."

First Half 2023 Financial Results

Revenues

Total revenues were RMB1.9 million (US$0.3 million) for the six months ended June 30, 2023, compared to RMB4.3 million for the same period of last year.

Revenues generated from sourcing services were RMB1.4 million (US$0.2 million) for the six months ended June 30, 2023, increased by 11.4% from RMB1.3 million for the same period of last year.
The Company didn't generate revenue from product sales for the six months ended June 30, 2023, because the Company could not secure sales of battery swapping stations in the new market regions due to insufficient business development in those regions, while the sales in the established market regions had been completed. Revenues generated from product sales were RMB2.6 million for the same period of last year,
Revenues generated from battery-swapping services were RMB461,000 (US$64,000) for the six months ended June 30, 2023, increased by 34.4% from RMB343,000 for the same period of last year.

Cost of Revenues

Total cost of revenues was RMB597,000 (US$82,000) for the six months ended June 30, 2023, compared to RMB2,748,000 for the same period of last year.

Gross Profit

Gross profit was RMB1.3 million (US$0.2 million) for the six months ended June 30, 2023, compared to RMB1.5 million for the same period of last year. The decrease was mainly due to the decrease in product sales of swapping-stations for the six months ended June 30, 2023.

Operating Loss

Total operating loss was RMB20.5 million (US$2.8 million) for the six months ended June 30, 2023, compared to RMB13.7 million for the same period of last year.

General and administrative expenses were RMB16.8 million (US$2.3 million) for the six months ended June 30, 2023, increased slightly from RMB11.5 million for the same period of last year. The increase was primarily due to the increase in audit and other professional service costs for the six months ended June 30, 2023.
Sales and marketing expenses were RMB1.0 million (US$0.1 million) for the six months ended June 30, 2023, increased by 16.9% from RMB0.9 million for the same period of last year. The increase was primarily due to the bidding costs for selling battery swapping stations for the six months ended June 30, 2023.
Research and development expenses were RMB1.9 million (US$0.3 million) for the six months ended June 30, 2023, decreased by approximately 30.9% from RMB2.8 million for the same period of last year. The decrease was primarily due to the decrease of certain performance-related expenses for the six months ended June 30, 2023.
Expected credit losses were RMB2.1 million (US$0.3 million) for the six months ended June 30, 2023, the Company didn't have expected credit lossess for the same period of last year. The increase was primarily due to the provision of expected credit losses of accounts receivable, advance to suppliers and other current assets for the six months ended June 30, 2023.

Interest Income and Expenses

Interest income was RMB31,000 (US$4,000) for the six months ended June 30, 2023, decreased from RMB1,196,000 for the same period of last year, primarily due to the decrease of bank interest income.
Interest expenses were RMB497,000 (US$69,000) for the six months ended June 30, 2023, increased from RMB239,000 for the same period of last year, primarily due to the increase of loan interest and bank interest.

Other Income and Expenses

Other income was RMB16,145,000 (US$2,226,000) for the six months ended June 30, 2023, compared to RMB10,000 for the same period of last year. The increase was primarily due to the government grant recognized for the six months ended June 30, 2023.
Other expenses were RMB1.0 million (US$0.1 million) for the six months ended June 30, 2023, compared to RMB0.3 million for the same period of last year. The increase was primarily due to the investment loss recognized for the six months ended June 30, 2023.

Net Loss

Net loss was RMB7.2 million (US$1.0 million) for the six months ended June 30, 2023, compared to RMB13.0 million for the same period of last year. Basic and diluted loss per share were RMB0.07 (US$0.01) for the six months ended June 30, 2023, compared to RMB0.22 for the same period of last year.

Financial Condition

As of June 30, 2023, the Company had cash and cash equivalents of RMB107.8 million (US$14.9 million), compared to RMB4.9 million as of December 31, 2022.

Net cash used in operating activities were RMB6.0 million (US$0.8 million) for the six months year ended June 30, 2023, compared to RMB12.1 million for the same period of last year.

Net cash provided by investing activities were RMB6.3 million (US$0.9 million) for the six months ended June 30, 2023, compared to net cash used in financing activities of RMB1.9 million for the same period of last year.

Net cash provided by financing activities were RMB102.7 million (US$14.1 million) for six months ended June 30, 2023, compared to RMB1.1 million for the same period of last year.

Exchange Rate Information

This press release contains translations of certain Renminbi ("RMB") amounts into U.S. dollars ("US$") solely for the convenience of the reader. Unless otherwise specified, all translations from RMB into US$ amounts in this press release were calculated at the rate of US$1.00 to RMB7.2513, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York on June 30, 2023.

About U Power Limited

U Power Limited is a vehicle sourcing services provider, with a vision to becoming an EV market player primarily focused on its proprietary battery-swapping technology, or UOTTA technology, which is an intelligent modular battery-swapping technology designed to provide a comprehensive battery power solution for EVs. Since its operation in 2013, the Company has established a vehicle sourcing network in China's lower-tier cities. The Company has developed two types of battery-swapping stations for compatible EVs and is operating one manufacturing factory in Zibo City, Shandong Province, China. For more information, please visit the Company's website: http://ir.upincar.com/.

Forward-Looking Statements

This press release contains "forward-looking statements". Forward-looking statements reflect our current view about future events. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company's current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as "may," "will," "could," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "is/are likely to," "propose," "potential," "continue" or similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and other filings with the U.S. Securities and Exchange Commission.

For investor and media inquiries, please contact:

U Power Limited

Investor Relations Department

Email: [email protected]

Ascent Investor Relations LLC

Tina Xiao

Phone: +1-646-932-7242

Email: [email protected]

U POWER LIMITED UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands of RMB and US$, except for number of shares)

		As of
		December 31,		June 30,		June 30,
	Notes	2022		2023		2023
		RMB		RMB		US$
ASSETS
Current assets:
Cash and cash equivalents			4,881		107,830		14,870
Restricted cash			1,027		1,027		142
Accounts receivable	5		1,617		655		90
Inventories	6		5,457		6,605		911
Advance to suppliers	7		6,993		17,413		2,401
Other current assets	8		33,917		37,744		5,205
Amount due from related parties	17		120		175		24
Total current assets			54,012		171,449		23,643

Non-current assets:
Property, plant and equipment, net	9		16,282		14,046		1,937
Intangible assets, net	10		286		236		33
Operating lease right-of-use assets, net	15		19,250		16,819		2,319
Long-term investments	11		111,811		111,791		15,417
Refundable deposit for investment	12		80,183		74,877		10,326
Other non-current assets			30		24		3
Total non-current assets			227,842		217,793		30,035
Total assets			281,854		389,242		53,678

LIABILITIES AND EQUITY
Current liabilities:
Current portion of loan payables	16		6,500		6,500		896
Accounts payable			11,130		13,182		1,818
Accrued expenses and other liabilities	14		33,735		30,430		4,196
Income tax payables	19		2,580		3,932		542
Advances from customers			3,258		4,913		678
Operating lease liabilities – current	15		1,696		1,271		175
Amount due to related parties	17		251		11,263		1,553
Total current liabilities			59,150		71,491		9,858

Non-current liabilities:
Operating lease liabilities – non-current	15		4,789		4,361		601
Non-current portion of long-term borrowing	13		10,000		10,000		1,379
Non-current portion of loan payables	16		-		-		-
Total non-current liabilities			14,789		14,361		1,980
Total liabilities			73,939		85,852		11,838

Commitments and contingencies	22		2,900		2,900		400

Shareholders' equity:
Ordinary shares (US$0.0000001 par value; 500,000,000,000 shares authorized; 50,000,000 and 52,500,000 issued and outstanding as of December 31, 2022 and June 30, 2023, respectively)			-		-		-
Additional paid-in capital			319,775		417,428		57,566
Accumulated deficit			(153,838)		(157,305)		(21,693)
Total U POWER LIMITED's shareholders' equity			165,937		260,123		35,873
Non-controlling interests			39,078		40,367		5,567
Total equity			205,015		300,490		41,440
Total liabilities and equity			281,854		389,242		53,678

*	The shares and per share data are presented on a retroactive basis to reflect the reorganization (Note 1).

U POWER LIMITED UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Amounts in thousands of RMB and US$, except for number of shares and per share data)

		For the six months ended June 30,
	Notes	2022		2023		2023
		RMB		RMB		US$

Net revenues
Product sales			2,634		-		-
Sourcing services			1,300		1,435		198
Battery-swapping services			343		461		64
Total net revenues			4,277		1,896		262
Cost of revenues			(2,748)		(597)		(82)
Gross profit			1,529		1,299		180

Operating expenses:
Sales and marketing expenses			(866)		(1,012)		(140)
General and administrative expenses			(11,525)		(16,792)		(2,316)
Research and development expenses			(2,810)		(1,941)		(268)
Expected credit losses			-		(2,086)		(288)
Total operating expenses			(15,201)		(21,831)		(3,012)
Operating loss			(13,672)		(20,532)		(2,832)
Interest income			1,196		31		4
Interest expenses			(239)		(497)		(69)
Other income			10		16,145		2,226
Other expenses			(276)		(981)		(135)
Loss before income taxes			(12,981)		(5,834)		(806)
Income tax expenses	19		(5)		(1,344)		(185)
Net loss			(12,986)		(7,178)		(991)
Less: Net loss attributable to non-controlling interests			(2,029)		(3,711)		(512)
Net loss attributable to the Company's shareholders and total comprehensive loss			(10,957)		(3,467)		(479)

Loss per share attributable to ordinary shareholders of the Company's shareholders *
Basic and diluted	21		(0.22)		(0.07)		(0.01)

Weighted average shares used in calculating basic and diluted loss per share *
Basic and diluted			50,000,000		50,416,667		50,416,667

*	The shares and per share data are presented on a retroactive basis to reflect the reorganization (Note 1).

U POWER LIMITED UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands of RMB and US$, except for number of shares)

	For the six months ended June 30,
	2022		2023		2023
	RMB		RMB		US$
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		(12,986)		(7,178)		(991)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		850		1,320		182
Amortization of right-of-use assets		6,521		2,762		381
Loss on termination of right-of-use assets		-		-		-
Expected credit losses		-		2086		288
Impairment of inventory		-		-		-
Share of loss in equity method investee		-		-		-

Changes in operating assets and liabilities:
Accounts receivables		(2,913)		933		129
Inventories		(1,513)		(1,149)		(158)
Advance to suppliers		36,101		(10,853)		(1,497)
Other current assets		(3,392)		(5,452)		(752)
Amount due from related parties		139		(55)		(8)
Other non-current assets		45		-		-
Accounts payables		2,220		2,053		283
Accrued expenses and other payables		2,104		(3,304)		(456)
Income tax payables		-		1,351		186
Advance from customers		(34,291)		1,655		228
Amount due to related parties		1,021		11,012		1,519
Operating lease liabilities		(6,049)		(1,184)		(163)
Net cash used in operating activities		(12,143)		(6,003)		(829)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(862)		972		134
Purchases of intangible assets		(12)		-		-
Loans provided to third parties		(914)		-		-
Loans repayments from third parties		1,653		5,307		732
Loans provided to related parties		(1)		-		-
Loans repayments from related parties		-		-		-
(Payment for) Return of long-term investments		(1,750)		20		3
Net cash used in (provided by) investing activities		(1,886)		6,299		869

CASH FLOWS FROM FINANCING ACTIVITIES
Capital contribution by non-controlling shareholders		1		5,000		690
Loans received from a third party		1,101		-		-
Loans received from long-term bank borrowing		-		-		-
Proceeds from issuance of loan payable		-		-		-
Capital contribution from issurance of ordinary shares		-		97,653		13,467
Repayments of long-term bank borrowing		-		-		-
Repayments of loan payable		-		-		-
Net cash provided by financing activities		1,102		102,653		14,157

Net increase (decrease) in cash and cash equivalents and restricted cash		(12,927)		102,949		14,197
Cash and cash equivalents and restricted cash at beginning of year		25,687		5,908		815
Cash and cash equivalents and restricted cash at end of period		12,760		108,857		15,012

Supplemental disclosures of non-cash activities:
Right-of-use assets obtained in exchange for new operating lease liabilities		-		331		46
Derecognition of right-of use-assets		-		-		-
Derecognition of lease liabilities		-		-		-