NEW YORK, Feb. 3, 2021 /PRNewswire/ -- Recently, Luke Lu, CEO of Color Star Technology Co., Ltd. (Nasdaq: CSCW) (hereinafter referred to as "CSCW"), accepted an interview with the HK Finet Group. Mr. Lu provided the following responses regarding CSCW's corporate breakthroughs and development in response to the COVID-19 pandemic:
Journalist: Thank you Mr. Lu for your precious time. I know you are a busy man and on behalf of my audience, I've prepared the following list of questions that everyone is interested in. First of all, I congratulate you on successfully completing the business' transformation and converting it to its current name in June of last year: Color Star Technology Co., Ltd. (Nasdaq: CSCW).
CEO: Thank you and your audience for your interest in us. I will do my best to answer your questions.
Journalist: After the company's successful business transformation, CSCW is unfortunately facing the difficulties of the Covid-19 pandemic, with the Nasdaq market suffering as much casualty as other stock markets in the world. The global economy was shrinking at an unprecedented rate when the pandemic began and the entertainment sector has been one of the most adversely affected.
CEO: Yes. For most companies, obtaining a listing in the NASDAQ market is already full of challenges. The companies are under tremendous pressure, especially their management teams, and are tested beyond their normal capabilities. Throughout CSCW's transformation, I established a strong collaboration with the company's management team, which is the reason for our success today. This is not just my personal praise of the company and management team, but also the collective comments of American investment companies and professionals. Any company that is listed on a major U.S. stock exchange must go through painful processes to test that company's overall strength, competitiveness, value, growth prospects, and high standards of return on investment. We have passed the tests conducted by professional institutions, successfully transformed our business in the Nasdaq market, and survived amid the pandemic and severe global economic contraction.
Journalist: Mr. Lu, you explained the intrinsic power of CSCW, and I have no doubt about it. Every company on Nasdaq must be a quality company. It is common for listed companies to have good sales performance and a strong management team. But for a company to achieve sustained success, intrinsic reasons alone are not enough. It still needs a favorable external environment, right?
CEO: 2020 is the most challenging year for us and our situation is not unique. Many large Nasdaq companies have suffered greatly due to the pandemic, and the situation is still ongoing. Therefore, what you said was correct, that the external environment is very important to the survival and development of the enterprise.
Journalist: It is understood that many companies have almost no net income, and paid a lot of fees and consumed substantial amounts of cash due to the impact of the pandemic. While large companies may have money to burn, I can't imagine how small companies can survive in such a hostile environment. Did you do the same?
CEO: I think the current risks from the pandemic have provided opportunities to us. What we are doing is establishing a sustainable platform of celebrity traffic, artists, online education and peripheral merchandising. Therefore, we consider our online education and video streaming services to represent substantial business opportunities. Our star teachers on the platform have their own fans and traffic, which is a very good opportunity for us to gain enormous market traction.
Journalist: For most small businesses, 2020 was an unforgettable memory, and the pain is not over yet. I want to know how CSCW is doing, how it has survived during the pandemic, and what the plans are for the company's future? You said that your company must find other means of survival. Can you explain that?
CEO: Regardless of the pandemic, we have been constantly making breakthroughs to find paths that suit us. I am very happy now that we have found a good sector in breakthrough development. We are expanding our scale, copying recent achievements and have great expectations for our future success. Let me explain in detail – Before the pandemic, our business model was for us to organize events, live performances and concerts. After much brainstorming and debate, the company decided to start an online platform to develop a new business model. Although it was a brand-new attempt, we were very confident in our efforts. The team built an online system and platform in record time with the most efficient execution, and premiered the first online concert in September 2020. The concert was an instant success and made $2.2 million USD in sales during the online premiere event. The overwhelming response from fans exceeded our expectations, and we immediately realized that we did it right and found a way to survive. I thank our fans for their strong endorsement and making us feel both humility and gratitude, which I cherish. From that moment, I knew we would be okay. The $2.2 million in sales revenue, plus some online membership income, has reduced financial pressure on us during the fiscal year from July 2020 to December 2020. More importantly, I knew what to do in the second half of the year and found ways to make a profit.
Journalist: Wow, that's really good news. I hear every day about companies facing bankruptcy and layoffs. Hearing your story and such positive news about your company is indeed refreshing. CSCW has found a way to survive. Have you carried out more online activities since the first online concert?
CEO: The success of our first online concert dispelled our doubts about the platform, convincing us that this is the correct decision for our business and that our fans have a strong desire for online entertainment. We are thus reinvesting resources to improve the online system and make it more powerful. Initially, there were some doubts about the first online system, since at that time, it was completed with fewer funds and executed as a small trial. But it ultimately proved successful and now, to meet the expectations of our fans, we are willing to invest money to improve the online business and platform. Our company also needs this online business. Though we succeeded in the first online concert, we also identified shortcomings and problems in the system platform that need to be resolved. If not for the minor problems in the system, we could have generated even more sales revenue. Therefore, we are spending time and expanding efforts to solve these problems and improve the system. From now until the end of the fiscal year in June 2021, we will be busy executing an expansive business plan. Equally as important, we hope to provide fans with good experiences though our content during the pandemic to help them relieve their daily stress.
Journalist: Mr. Lu, let me see if I understand your meaning correctly. Before the COVID-19 pandemic, the company was operating a physical business and was doing well as a NASDAQ-listed company. After the pandemic began, however, the company's physical operations ceased (at least temporarily) and the company then created an online business, hosting a successful first virtual event. Currently, CSCW has two businesses – the physical business you still intend to conduct after the COVID-19 pandemic is over and a new online virtual business. This online business seems to be growing and is welcomed by targeted consumers. Am I right?
CEO: Right. I know it's hard to believe that when many companies are on the verge of collapse, not only have we survived, but we have benefited from the pandemic. Our breakthroughs and innovations have opened up a new world and our online business will carry on after the pandemic, due to consumer demand. For these reasons, you are right. We have developed a new online business, expanded sales channels and will have two business divisions after the pandemic. If some consider CSCW's value to have now doubled, I wouldn't object to that view, though I dare not say exactly how much CSCW's value has increased by.
Journalist: The stock market has not yet realized that CSCW's overall business has grown and that the company's value has increased. I once read a report about CSCW written by an analyst from a Wall Street company which valued CSCW's price at $1.6. Given that CSCW is better than its peers and is still developing, is now a good time to buy the company's stock?
CEO: My background is in running companies and developing business, and everything I do is tangible. I admit that capital markets are foreign to me, and that I am still learning and have a long way to go. Some people have advised me to communicate more with the markets and maybe they are right. But the reality is that I have almost no time to complete the things I need to do every day, manage the business, and run the company. Since I don't have enough knowledge about capital markets, I don't comment on the value of the company, whether it is growing, what the stock price should be, etc. I leave that to the professionals. My time should be spent on running the company and solving the daily matters. I treat company management equally, whether it is a listed company or a non-listed company. My productivity and time are placed on business, sales, and cash flow. I must have a profit to maintain the steady development of the company, which is very important to me. As far as the capital markets are concerned, I trust in and defer to others. Maybe I am too passive on this, but I would rather spend my time and energy in the field I am proficient in, namely business, rather than the capital markets.
Company background: CSCW runs an entertainment business and offers educational services to its members who desire to learn from stars and celebrities. The company has traditionally operated as a brick-and-mortar company, organizing events, shows and concerts for known stars. In 2020, when the COVID-19 pandemic broke out, CSCW built a new online platform and broadcasted its first online concert there – "Color World Online Concert" – featuring many popular stars, including Grammy-award-winning jazz guitarist Larry Carlton and R&B singer and songwriter Ashanti. The event attracted over half a million viewers from all over the world and, according to reports, CSCW is quoted to have made over $2 million in sales from the event. CSCW's online membership has grown at an astonishing speed, now totaling 1 million members, and serves as a new income source for CSCW in the form of subscription fees.
Since the "Color World Online Concert", CSCW has been busy upgrading its online system, enriching its functionality and expanding its online business. In addition to broadcasting online concerts and shows, the platform now offers online services such as celebrity teaching courses, merchandise sales and opportunities for celebrities and fans to directly interact. CSCW claims to have contracts in place with many popular stars/artists and through its online system, members can obtain copyrighted content directly from their selected stars/artists. This move seems to have greatly benefited CSCW, evidenced by the rapid growth in its online membership (which continues to increase).
This new online business may prove to be much more valuable than CSCW's original brick-and-mortar business if the company decides to pursue a full-scale e-commerce and APP model. But whether that is what the company is ultimately pursuing and if it will be successful remains to be seen. There is no doubt that there will be many hurdles to clear in CSCW's pursuit for success, but with CSCW's current story of transforming its business and entering the internet entertainment arena, who knows what surprises the future will bring.
Forward-Looking Statement
This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as "may," "will," "intend," "should," "believe," "expect," "anticipate," "project," "estimate" or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Forward-looking statements are not guarantee of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company's expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company's goals and strategies; the Company's future business development; product and service demand and acceptance; changes in technology; economic conditions; the growth of the educational and training services market in China and other countries where CSCW conducts its business; reputation and brand; the impact of competition and pricing; government regulations; fluctuations in general economic and business conditions and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company with the Securities and Exchange Commission. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company's filings with the U.S. Securities and Exchange Commission, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward–looking statements to reflect events or circumstances that arise after the date hereof unless required by applicable laws, regulations or rules.
For more information, please contact:
William Tu
Skyline Corporate Communications Group, LLC
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New York, NY 10020
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Email: william@skylineccg.com
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