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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of October, 2023.
Commission File Number 001-41774
Fitell Corporation
(Translation of registrant’s name into English)
23-25 Mangrove Lane
Taren Point, NSW 2229
Australia
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F ☒ Form 40-F ☐
| Exhibit No. | Description | |
| 99.1 | Press Release, dated October 30, 2023, announcing fiscal year 2023 financial results |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: October 30, 2023 | FITELL CORPORATION | |
| By: | /s/ Yinying Lu | |
| Yinying Lu | ||
| Chief Executive Officer and Director | ||
| (Principal Executive Officer) | ||
Exhibit 99.1
Fitell Corporation Announces Fiscal 2023 Financial Results
Taren Point, New South Wales, Australia, October 30, 2023 — Fitell Corporation (Nasdaq: FTEL) (“Fitell” or the “Company”), an online retailer of gym and fitness equipment in Australia, today announced its 2023 annual financial results for the fiscal year ended June 30, 2023.
Fitell’s Chief Executive Officer, Yinying “Sam” Lu commented, “Fitell’s mission is to build an ecosystem with a whole fitness and wellness experience powered by technology. This mission guides our strategic decisions and underscores our commitment to creating value for our shareholders.
Furthering this perspective, Jamarson Kong, Fitell’s Chief Financial Officer, noted, “Throughout fiscal year 2023, we navigated several economic headwinds, notably the challenges posed by inflation and the rise in interest rates in Australia. Consequently, our financial results for the year reflect some of these challenges. As we look to fiscal year 2024, we stand firm in our commitment to overcoming these challenges and advancing our growth trajectory. He further reported, “We’re focused on executing our long-term strategy, including expanding our business offerings and market footprint. Fitell’s successful listing on Nasdaq on August 8, 2023, instills confidence in our ability to deliver on our growth strategies.”
FY 2023 Financial Highlights
| ■ | Revenue was $4.8 million, a year-to-year decrease of $3,356,512 or 41.2%, primarily due to reduced consumer spending from inflation and raising of interest rates in Australia. | |
| ■ | Gross profit was $2.2 million, a year-to-year decrease of $1,462,255 or 40.2%. | |
| ■ | Gross margin was 45.3%, a year-to-year increase of 0.7%. | |
| ■ | Sales of consumable products was $223,343, a year-to-year increase of 11.6% or $23,239, due to efforts to diversify revenue streams. |
Revenue by Categories vs. Prior Year
| Revenue | Change from FY 2022 | |||||||||||||||
| US$ | % | US$ | % | |||||||||||||
| Merchandise revenue | 4,036,047 | 84.1 | % | (3,210,541 | ) | -44.3 | % | |||||||||
| Sales of consumable products | 223,343 | 4.7 | % | 23,239 | 11.6 | % | ||||||||||
| Revenue from licensing customers | 539,832 | 11.2 | % | (169,210 | ) | -23.9 | % | |||||||||
| ● | Merchandise revenue decreased significantly by 44.3% or $3,210,541 to $4,036,04. The decrease was primarily attributable to: (i) a 42.6% decrease in sales order, primarily due to inflation and raising of interest rates in Australia; (ii) a decrease of 3.0% in the average revenue per order. Despite the consumer confidences in Australia is week recently, but the management has devoted a lot of marketing efforts in promoting our products and have successfully retained many loyal customers. |
| ● | Sales of consumable products represents the revenue generated by selling various lifestyle products. The sales of consumable products have increased 11.6% or $23,239 to $223,343 from $200,104 in FY 2022. The increase was due to our additional efforts to diversify our revenue streams, to mitigate the negative financial impact attributed to the decline in merchandise revenue. |
| ● | Revenue from licensing customers represents licensing, management consultant income, and some agency fee for distributing other miscellaneous items. Revenue from licensing customers has decreased by 23.9% or $169,216 to $539,832 in FY 2023 from $709,042 in FY 2022. The decrease was due to the temporarily suspension of the overseas expansions recently, because the market sentiments are negatively affected by the inflations and the rising in interest rate in the global market. Nevertheless, we will expand these services again, especially to the Asia market, when the time is right. |
Cost of goods sold decreased by approximately $1.9 million, or 41.9%, from $4,520,078 in FY 2022 to $2,625,821.
Gross profit was $2,173,401 for the fiscal year ended June 30, 2023 and $3,635,656 for the fiscal year ended June 30, 2022, a decrease of $1,462,255, or 40.2%. The decrease was a combined result of the decrease in merchandise revenues and service revenue.
The gross profit margin increased 0.7% from 44.6% in FY 2022, to 45.3. The slight increase is mainly due to the change in revenue mix, as we have generated relatively more services revenue.
The IPO related expenses were $662,418 for consulting fee which is related to the Initial Public Offering project.
Subsequent Events
| ● | On August 8, 2023, the Company has successfully listed on Nasdaq and has raised a net proceed of approximately $13.6 million for the issuance of 3,000,000 shares of common stock. | |
| ● | Subsequent to June 30, 2023, the Company has entered into a consulting agreement with a third party, for future capital market and fund-raising consulting services. The consideration of the contract is $1.8 million. | |
| ● | On October 23, 2023, at the recommendation of the Nominating Committee, the Board appointed Yinying “Sam” Lu, a member of the Board, to serve as Chief Executive Officer beginning as of October 23, 2023. |
Investor Conference Call and Webcast
The company will host an investor conference call and webcast to discuss the results at 8:30 a.m. (Eastern Time) on Tuesday, October 31, 2023, before the market opens.
A live webcast of the conference call will be available on the company’s investor relations website at https://www.fitellcorp.com/investorrelations-ep, along with the company’s earnings press release and slide presentation. To access the call by phone, dial in at 1-877-270-2148 (U.S. Toll Free) or 1-412-902-6510 (International Toll). The webcast also can be accessed by using the direct link: https://event.choruscall.com/mediaframe/webcast.html?webcastid=Cxjh7jDl.
If you are unable to participate during the live webcast, the webcast of this call will also be archived and available for three months at the company’s investor relations website.
About Fitell Corporation
Fitell Corporation, through GD Wellness Pty Ltd (“GD”), its wholly owned subsidiary, is an online retailer of gym and fitness equipment both under its proprietary brands and other brand names in Australia. The company’s mission is to build an ecosystem with a whole fitness and wellness experience powered by technology to our customers. GD has served over 100,000 customers with large portions of sales from repeat customers over the years. The Company’s brand portfolio can be categorized into three proprietary brands under its Gym Direct brand: Muscle Motion, Rapid Motion, and FleetX, in over 2,000 stock-keeping units (SKUs). For additional information, please visit the Company’s website at www.fitellcorp.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 SEC.
For more information, please contact:
Chief Financial Officer
Jamarson Kong
jamarson@gymdirect.com.au
Investor Relations
ir@fitellcorp.com
FITELL CORPORATION
CONSOLIDATED BALANCE SHEETS AT JUNE 30, 2023 AND 2022
| June 30, | June 30, | |||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 236,821 | $ | 716,052 | ||||
| Investment in marketable securities | 494,275 | 1,023,763 | ||||||
| Accounts net receivable | 174,341 | 41,097 | ||||||
| Inventory, at cost | 525,786 | 919,422 | ||||||
| Deposits and prepaids | 13,412 | 6,872 | ||||||
| Prepaid IPO costs | 5,317,866 | 223,229 | ||||||
| Total current assets | 6,762,501 | 2,930,435 | ||||||
| Property and equipment, net | 38,743 | 51,011 | ||||||
| Operating right of use asset | 605,794 | 840,123 | ||||||
| Deferred tax asset | 132,354 | 111,595 | ||||||
| Brand names | 337,504 | 337,504 | ||||||
| Goodwill | 1,161,052 | 1,161,052 | ||||||
| Total assets | $ | 9,037,948 | $ | 5,431,720 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 1,168,723 | $ | 805,029 | ||||
| Deferred revenue | 238,351 | 501,976 | ||||||
| Income tax payable | 486,058 | 655,673 | ||||||
| Due to related parties | 24,386 | 103,450 | ||||||
| Current portion of operating lease liability | 212,062 | 206,690 | ||||||
| Total current liabilities | 2,129,580 | 2,272,818 | ||||||
| Accrued employee benefits, non-current | 18,430 | 5,283 | ||||||
| Operating lease liability, less current portion | 473,015 | 716,239 | ||||||
| Total liabilities | 2,621,025 | 2,994,340 | ||||||
| Commitments and contingencies (Note 6) | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock, $0.0001 par value; 500,000,000 shares authorized, 8,120,000 and 7,000,000 shares issued and outstanding at June 30, 2023 and 2022, respectively | 812 | 700 | ||||||
| Subscription receivable | - | (56 | ) | |||||
| Additional paid-in capital | 7,097,822 | 1,497,990 | ||||||
| Accumulated other comprehensive income (loss) | (64 | ) | 26,999 | |||||
| Retained earnings (accumulated deficit) | (681,647 | ) | 911,747 | |||||
| Total stockholders’ equity | 6,416,923 | 2,437,380 | ||||||
| Total liabilities and stockholders’ equity | $ | 9,037,948 | $ | 5,431,720 | ||||
FITELL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE YEARS ENDED JUNE 30, 2023 AND 2022
| For the years ended | ||||||||
| June 30, | ||||||||
| 2023 | 2022 | |||||||
| Revenues: | ||||||||
| Merchandise revenue | $ | 4,036,047 | $ | 7,246,588 | ||||
| Sales of consumable products | 223,343 | 200,104 | ||||||
| Revenue from licensing customers | 539,832 | 709,042 | ||||||
| Total revenues | 4,799,222 | 8,155,734 | ||||||
| Cost of goods sold | (2,625,821 | ) | (4,520,078 | ) | ||||
| Gross profit | 2,173,401 | 3,635,656 | ||||||
| Operating expenses: | ||||||||
| Personnel expenses | 965,395 | 981,711 | ||||||
| General and administrative expenses | 888,141 | 503,269 | ||||||
| Sales and marketing expenses | 454,995 | 604,200 | ||||||
| Operating lease expense | 198,914 | 213,490 | ||||||
| Depreciation expense | 12,268 | 730 | ||||||
| Total operating expenses | 2,519,713 | 2,303,400 | ||||||
| Income from operations | (346,312 | ) | 1,332,256 | |||||
| Other income (expenses): | ||||||||
| IPO related expenses | (662,418 | ) | (605,950 | ) | ||||
| Unrealized loss on investments | (529,488 | ) | (466,478 | ) | ||||
| Other income (expenses) | 9,885 | (54 | ) | |||||
| Interest income | 1,978 | 99 | ||||||
| Interest expense | (92,800 | ) | (27,419 | ) | ||||
| Total other income (expenses) | (1,272,843 | ) | (1,099,802 | ) | ||||
| Income (loss) before taxes | (1,619,155 | ) | 232,454 | |||||
| Income tax expense (benefit) | (25,761 | ) | 219,852 | |||||
| Net income (loss) | (1,593,394 | ) | 12,602 | |||||
| Foreign currency translation adjustment | (27,063 | ) | (66,949 | ) | ||||
| Comprehensive loss | $ | (1,620,457 | ) | $ | (54,347 | ) | ||
| Basic and diluted earnings (loss) per share on net income (loss) | $ | (0.21 | ) | $ | 0.00 | |||
| Weighted average shares outstanding - basic and diluted | 7,714,959 | 7,000,000 | ||||||
FITELL CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED JUNE 30, 2023 AND 2022
| Common Stock | Subscription Receivable | Additional Paid-in | Accumulated Other Comprehensive | Retained Earnings (Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Income (Loss) | Deficit) | Total | |||||||||||||||||||||||||
| Balance July 1, 2021 | 7,000,000 | $ | 700 | - | $ | (56 | ) | $ | 1,497,990 | $ | 93,948 | $ | 899,145 | $ | 2,491,727 | |||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | (66,949 | ) | - | (66,949 | ) | ||||||||||||||||||||||
| Net income | - | - | - | - | - | - | 12,602 | 12,602 | ||||||||||||||||||||||||
| Balance June 30, 2022 | 7,000,000 | $ | 700 | - | $ | (56 | ) | $ | 1,497,990 | $ | 26,999 | $ | 911,747 | $ | 2,437,380 | |||||||||||||||||
| Stock issued for services | 1,120,000 | 112 | - | - | 5,599,888 | - | - | 5,600,000 | ||||||||||||||||||||||||
| Settlement of stock subscription | - | - | - | 56 | (56 | ) | - | - | - | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | (27,063 | ) | - | (27,063 | ) | ||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | (1,593,394 | ) | (1,593,394 | ) | ||||||||||||||||||||||
| Balance June 30, 2023 | 8,120,000 | $ | 812 | - | - | $ | 7,097,822 | $ | (64 | ) | $ | (681,647 | ) | $ | 6,416,923 | |||||||||||||||||
FITELL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the years ended | ||||||||
| June 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net income (loss) | $ | (1,593,394 | ) | $ | 12,602 | |||
| Adjustments to reconcile net income (loss) to net cash from operating activities: | ||||||||
| Depreciation | 12,268 | 730 | ||||||
| Bad debt provision | 426,971 | - | ||||||
| Unrealized loss on investments | 529,488 | 466,478 | ||||||
| Stock issued for services | 560,000 | - | ||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable, net | (560,215 | ) | (27,996 | ) | ||||
| Inventory, at cost | 393,636 | (4,352 | ) | |||||
| Deposits and prepaids | (61,177 | ) | 74,394 | |||||
| Right of use activity | (3,523 | ) | (4,454 | ) | ||||
| Deferred tax asset | (20,759 | ) | (61,533 | ) | ||||
| Other non-current assets | - | 42,010 | ||||||
| Accounts payable and accrued expenses | 363,694 | (198,755 | ) | |||||
| Deferred revenue | (263,625 | ) | (662,743 | ) | ||||
| Income tax payable | (169,615 | ) | 235,920 | |||||
| Accrued employee benefits, non-current | 13,147 | (4,082 | ) | |||||
| Net cash from activities | (373,104 | ) | (131,781 | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Purchase of investments | - | (1,490,241 | ) | |||||
| Purchase of property and equipment | - | (51,741 | ) | |||||
| Net activity on amount due from related party | - | 1,076,687 | ||||||
| Net cash from investing activities | - | (465,295 | ) | |||||
| Cash Flows from Financing Activities | ||||||||
| Net activity on due to related parties | (79,064 | ) | 93,915 | |||||
| Net cash from financing activities | (79,064 | ) | 93,915 | |||||
| Foreign currency translation adjustment | (27,063 | ) | (66,949 | ) | ||||
| Change in cash and cash equivalents | (479,231 | ) | (570,110 | ) | ||||
| Cash and cash equivalents at beginning of period | 716,052 | 1,286,162 | ||||||
| Cash and cash equivalents at end of period | $ | 236,821 | $ | 716,052 | ||||
| Supplemental Cash Flow Information | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for income taxes | $ | 80,375 | $ | 547,118 | ||||
| Non-Cash Investing and Financing Activities | ||||||||
| Stock issued for prepaid IPO services | $ | 5,040,000 | $ | - | ||||