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Puhui Wealth Investment Management Co., Ltd. Announces Financial Results for the Fiscal Year Ended June 30, 2021


BEIJING, Oct. 29, 2021 /PRNewswire/ — Puhui Wealth Investment Management Co., Ltd. (Nasdaq: PHCF) (“Puhui” or the “Company”), a third-party wealth management service provider with a focus on wealth management services for high net worth (“HNW”) individuals and corporate clients, today announced its financial results for the year ended June 30, 2021. The Company also filed these results on Form 20-F with the Securities and Exchange Commission, which can be viewed at www.sec.gov. All amounts in this press release are in USD unless otherwise noted.

Financial and Operating Highlights

  • Revenues for the year ended June 30, 2021 were approximately $2.0 million, compared to approximately $2.2 million in the prior year.



  • The Company had 138 clients for the year ended June 30, 2021.



  • As of June 30, 2021, the Company’s subsidiary served as manager or general partner of five funds with an aggregate of approximately $16.7 million under management.



  • As of June 30, 2021, the Company maintained 5 offices based in Beijing, Shanghai, Suzhou, Qingdao and Hong Kong, respectively.



  • Puhui had approximately $0.6 million of cash and approximately $0.5 million of working capital deficit as of June 30, 2021, as compared to approximately $0.7 million of cash and approximately $2.3 million of working capital as of June 30, 2020.

Mr. Zhe Ji, the Chairman and CEO of the Company, stated, “While COVID-19 pandemic impacted our business during fiscal year 2021, our team has done an outstanding job providing high quality wealth management service to our high net worth individuals and corporate clients. With the rapid recovery of the COVID-19 pandemic and resumption of business activities in China, our business that has been adversely affected by the pandemic is on the right track to return to normal operations. However, we will continue to monitor the potential impact by any regional resurgence of the pandemic on our business activities. In the meantime, we aim to focus on expanding our wealth and asset management services globally. The acquisition of Granville Financial Services Company Limited (“Granville”), has enriched our existing investment portfolios and allows us to assist our clients with more diversified investment products from international market. Granville is a registered exchange participant of The Stock Exchange of Hong Kong Ltd and a licensed corporation of The Securities and Futures Commission with Type 1 (Dealing in Securities), Type 2 (Dealing in Futures), and Type 9 (Asset Management), Granville’s financial qualifications and licenses gives us confidence in our ability to achieve an accelerated business growth.”

Mr. Ji continued, “In addition to our expansion strategy, we expect to manage our costs through implementing effective measures. The cost optimization will be an integral aspect of the Company’s broad strategy to improve operating efficiency. We aim to continuing to provide high levels of services to our clients and invest in our business to capture the significant opportunities ahead of us. Looking forward, we will strive to increase our product offerings to our clients, create additional revenue sources, gain market share and provide higher returns to our shareholders.” 

Financial Review for the Fiscal Year Ended June 30, 2021

Wealth Management

  • Since fiscal year ended June 30, 2017, Puhui’s core business has been the marketing of financial products to HNW clients and small and medium enterprises in China. As a growing independent wealth management service provider, the Company maintains a sizable client base, consisting of 138 clients as of June 30, 2021 (54 of which have purchased products the Company markets more than once). This compares to 1,106 clients as of June 30, 2020, with 495 purchasing products more than once.

Asset Management

  • Starting in June 2017, Puhui also launched its in-house asset management business. As of June 30, 2021, the Company’s subsidiaries served as manager or general partner of five funds with an aggregate of approximately $16.7 million under management, compared to approximately $21.6 million under management as of June 30, 2020.

Revenues

  • The Company categorizes revenues into third-party revenues and related-party revenues. Revenues mainly include one-time commissions, recurring services fees and recurring management fees. Related party revenues consist primarily of one-time commission fees charged for affiliates or recurring management fees received from fund/limited partnership where the Company’s subsidiaries serve as manager or general partner.



  • Total revenues were approximately $2.0 million for the year ended June 30, 2021, compared to approximately $2.2 million in the prior year, a decrease of approximately $0.2 million. The overall decline was mainly due to the decrease in one-time commissions as a result of the decrease in the aggregate value of wealth management products distributed. Puhui’s customers were negatively impacted by the COVID-19 pandemic, which reduced their budgets for investment in 2021.

Cost of Revenues

  • Puhui’s cost of revenues consists of compensation paid to financial product development team members along with benefits. The Company’s cost of revenues were $260,358 and $202,637 for the years ended June 30, 2021 and 2020, respectively, an increase of $57,721. The increase was mainly due to the increase in salary of product development team.

Operating Expense

  • The Company’s operating expenses decreased to approximately $6.0 million from approximately $6.7 million in the prior year, a decrease of approximately $0.7 million, largely due to a decrease in selling expenses. The decrease in selling expenses was mainly due to the decrease in salaries and rent as the Company closed several of its sales offices in fiscal year 2021 which reduced headcount in selling department due to inability to carry out marketing functions during the pandemic.

Net Loss Attributable to Puhui Wealth

  • Net loss attributable to Puhui Wealth for the year ended June 30, 2021 was approximately $4.7 million, or $(0.41) per basic and diluted share based on 11.5 million weighted average number of ordinary shares, as compared to net loss of approximately $4.0 million, or $(0.35) per basic and diluted share based on 11.5 million weighted average number of ordinary shares for the year ended June 30, 2020.

Liquidity and Capital Resources

  • The Company historically financed its operations primarily through cash flows from operations, capital contributions from shareholders, long term debt, and initial public offering. Based on its current revenue and expense projection, the Company believes it will generate approximately the same or similar amount of revenue in the coming year as compared to the current year as the Company and China are both recovering from the impact of the pandemic. If the Company’s revenue does not achieve its expected level, management plans to implement cost saving measures to reduce operating cash outflow.



  • As of June 30, 2021, the Company had cash of approximately $0.6 million, as compared to approximately $0.7 million as of June 30, 2020.



  • As of June 30, 2021, the Company had approximately $0.5 million in working capital deficit.

About Puhui Wealth Investment Management Co., Ltd.

Headquartered in Beijing, China and founded in 2013, Puhui is a third-party wealth management service provider focusing on marketing financial products (including private equity and other diversified products and services) to, and managing funds for, individuals and corporate clients in the PRC. On December 27, 2018, the Company’s ordinary shares were listed and began trading listed on the Nasdaq Capital Market (ticker: PHCF).

Additional information about Puhui can be found at the Company’s corporate website: www.puhuiwealth.com.

Additional Disclosure Concerning COVID-19

The impacts of COVID-19 on Puhui’s business, financial condition, and results of operations include, but are not limited to, the following:

  • The Company closed its offices and implemented work from-home policy beginning in February 2020, as required by relevant PRC regulatory authorities. The Company reopened its offices in June 2020 as COVID-19 got under control in China.



  • The Company’s customers have been negatively impacted by the outbreak, which reduced their budgets for investment in 2021. As a result, the Company’s revenue and income has been negatively impacted in 2021 and the Company expects the result of operations for the fiscal year 2022 to improve but there is no guarantee that its total revenue or profitability will remain at a similar level compared to fiscal year 2021.



  • The economy may worsen if the COVID-19 outbreak continues. The Company’s

    product provider may be negatively impacted by the outbreak and resurgence, however the Company has not seen any significant disruption of its product supply to date.

Forward Looking Statement

This news release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “anticipate”, “believe”, “expect”, “estimate”, “plan”, “outlook”, and “project” and other similar expressions that indicate future events or trends or are not statements of historical matters. These statements are based on our management’s current expectations and beliefs, as well as a number of assumptions concerning future events.

Such forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside of our control and all of which could cause actual results to differ materially from the results discussed in the forward-looking statements. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements can be found in our reports filed with the Securities and Exchange Commission, which are available, free of charge, on the SEC’s website at www.sec.gov.

For more information, please contact Investor Relations:

Ascent Investor Relations LLC

Tina Xiao

Tel: +1 917-609-0333

Email: tina.xiao@ascent-ir.com

 

PUHUI WEALTH INVESTMENT MANAGEMENT CO., LTD AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS




June 30,



June 30,




2021



2020









ASSETS


CURRENT ASSETS







Cash


$

581,289



$

744,436


Short-term investments



394,767




515,729


Accounts receivables






454,411


Accounts receivables – related parties



222,907




1,138,498


Other receivables



117,848




100,302


Other receivables – related parties



887,955




1,284,676


Prepaid expenses



1,047,712




1,122,164


Total current assets



3,252,478




5,360,216











PROPERTY AND EQUIPMENT, NET



190,895




436,325











OTHER ASSETS









Long-term security deposits



234,819




422,783


Right-of-use assets, net



1,049,069




1,285,145


Long-term prepaid expenses



837,829




1,599,647


Deferred tax assets, net



179,310




159,720


Intangible asset, net



821,012




918,787


Goodwill



1,864,053




1,864,053


Total other assets



4,986,092




6,250,135











Total assets


$

8,429,465



$

12,046,676











LIABILITIES AND EQUITY


















CURRENT LIABILITIES









Acquisition payable


$

368,439



$

368,439


Deferred revenue



377,161




1,061,162


Other payables and accrued liabilities



1,133,895




630,457


Other payables – related party






6,334


Operating lease liabilities – current



508,501




841,041


Financing lease liabilities – current



52,492




44,791


Taxes payable



25,097




86,656


Current portion of long-term debt



1,255,687




25,835


Total current liabilities



3,721,272




3,064,715











NON-CURRENT LIABILITIES









Operating lease liabilities – noncurrent



516,262




486,970


Financing lease liabilities – noncurrent



22,933




68,826


Other payable – related parties



909,382





Long-term debt






1,145,825


Total non-current liabilities



1,448,577




1,701,621











Total liabilities



5,169,849




4,766,336











COMMITMENTS AND CONTINGENCIES


















EQUITY









Preferred shares, $0.001 par value, 1,000,000 shares authorized, 0 shares issued and

outstanding as of June 30, 2021 and June 30, 2020







Ordinary shares, $0.001 par value, 49,000,000 shares authorized, 11,507,558 shares

issued and outstanding  as of June 30, 2021 and June 30, 2020



11,508




11,508


Additional paid-in capital



21,911,045




21,911,045


Accumulated deficit



(18,321,053)




(13,267,289)


Accumulated other comprehensive loss



289,443




(83,012)


Total equity attributable to controlling shareholders



3,890,943




8,572,252











Noncontrolling interest



(631,327)




(1,291,912)











Total equity



3,259,616




7,280,340











Total liabilities and equity


$

8,429,465



$

12,046,676


 

 

PUHUI WEALTH INVESTMENT MANAGEMENT CO., LTD AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS




For the Years Ended

June 30,




2021



2020



2019












REVENUES










Revenues


$

1,006,000



$

1,481,980



$

3,052,371


Revenues – related parties



1,025,016




697,500




128,263


Total revenues



2,031,016




2,179,480




3,180,634















OPERATING EXPENSES













Cost of revenues



(260,358)




(202,637)




(316,718)


Selling expenses



(735,402)




(1,517,968)




(2,005,367)


General and administrative expenses



(4,962,114)




(4,977,537)




(3,427,040)


Total operating expenses



(5,957,874)




(6,698,142)




(5,749,125)















LOSS FROM OPERATIONS



(3,926,858)




(4,518,662)




(2,568,491)















OTHER INCOME (EXPENSES)













Interest income



219




74,824




62,967


Other finance expenses



(181,276)




(191,238)




(206,081)


Loss from disposal of subsidiaries



(953,959)







(32,641)


Other income (expenses), net



(67,830)




126,858




33,449


Total other income (expenses), net



(1,202,846)




10,444




(142,306)















LOSS BEFORE INCOME TAXES



(5,129,704)




(4,508,218)




(2,710,797)















PROVISION FOR INCOME TAXES













Current









11,803


Deferred



(11,065)




179,449




380,302


Total income tax provision



(11,065)




179,449




392,105















NET LOSS



(5,118,639)




(4,687,667)




(3,102,902)















Less: Net loss attributable to noncontrolling interest



(382,839)




(641,719)




(645,716)















NET LOSS ATTRIBUTABLE TO PUHUI WEALTH


$

(4,735,800)



$

(4,045,948)



$

(2,457,186)















NET LOSS


$

(5,118,639)



$

(4,687,667)



$

(3,102,902)















OTHER COMPREHENSIVE INCOME (LOSS)













Foreign currency translation adjustment



408,485




159,935




(271,194)















COMPREHENSIVE LOSS


$

(4,710,154)



$

(4,527,732)



$

(3,374,096)















Less: Comprehensive loss attributable to noncontrolling interest



(346,809)




(650,730)




(672,272)















COMPREHENSIVE LOSS ATTRIBUTABLE TO PUHUI WELATH


$

(4,363,345)



$

(3,877,002)



$

(2,701,824)















WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES













Basic and diluted



11,507,558




11,507,558




10,793,017















EARNINGS PER SHARE













Basic and diluted


$

(0.41)



$

(0.35)



$

(0.23)


 

 

PUHUI WEALTH INVESTMENT MANAGEMENT CO., LTD AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS




For the Years Ended

June 30,




2021



2020



2019












CASH FLOWS FROM OPERATING ACTIVITIES:










Net loss


$

(5,118,639)



$

(4,687,667)



$

(3,102,902)


Adjustments to reconcile net loss to net cash used in operating activities:













Depreciation and amortization



375,947




269,812




135,939


Amortization of operating lease right-of-use assets



690,749




795,912





Loss on disposal of property and equipment









78


Impairment loss on equity securities









5,628


Loss from disposal of subsidiaries



956,371







32,641


Gain from disposal of marketable securities






(5,271)





Loss from equity method investment



7,513




3,547





Deferred tax provision (benefits)



(11,065)




179,449




380,302


Change in operating assets and liabilities













Accounts receivables



485,416




1,356,454




(242,674)


Accounts receivables – related parties



998,897




(155,986)





Other receivables



211,321




93,383




(402,174)


Prepaid expenses



102,575




60,961




(932,928)


Long-term prepaid expenses



771,510




644,554




(2,248,912)


Accounts payable






(1,413)





Deferred revenue



(765,922)




847,265




(298,954)


Other payables and accrued liabilities



453,020




41,609




156,724


Other payables – related parties






6,384




(190,666)


Operating lease liabilities



(760,233)




(752,682)





Taxes payable



(68,106)




165,353




(426,597)


Net cash used in operating activities



(1,670,646)




(1,138,336)




(7,134,495)















CASH FLOWS FROM INVESTING ACTIVITIES:













Proceeds from sales of short-term investments



150,900




178,237




365,462


Purchases of short-term investments






(1,425)




(24,347)


Loans receivable to related party









(1,661,514)


Repayment from related parties



506,779




318,194





Acquisition prepayment









(2,042,460)


Purchases of property and equipment






(288,372)




(159,514)


Proceeds from sale of property and equipment









990


Cash acquired from Granville, net of purchase price paid






125,365





Purchase of intangible asset









(12,644)


Net cash provided by (used in) investing activities



657,679




331,999




(3,534,027)















CASH FLOWS FROM FINANCING ACTIVITIES:













Proceeds from issuance of ordinary shares through IPO, net









8,032,912


Payments of financing lease liabilities



(47,847)




(24,984)





Principal payments of long-term debt



(27,598)




(309,450)





Proceeds from other payable related parties



884,290








Net cash  provided by (used in) financing activities



808,845




(334,434)




8,032,912















EFFECT OF EXCHANGE RATE ON CASH



40,975




(119,418)




(168,805)















DECREASE IN CASH



(163,147)




(1,260,189)




(2,804,415)















CASH, beginning of year



744,436




2,004,625




4,809,040















CASH, end of year


$

581,289



$

744,436



$

2,004,625















SUPPLEMENTAL CASH FLOW INFORMATION:













Cash paid for income tax


$



$



$

240,508


Cash paid for interest


$



$

192,312



$

197,999















NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES













Prepaid IPO costs to be net against IPO proceeds


$



$



$

733,478


Initial recognition of right-of-use assets and lease liabilities, net of

disposal


$

340,518



$

2,091,977



$


Acquisition of Granville offset with prepayment


$



$

2,447,259



$


Acquisition of Granville with payables


$



$

368,439



$



Purchase of fixed asset with financing lease


$



$

139,566



$


 

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