Press-Releases

Wah Fu Education Group Ltd. Announces Financial Results for







BEIJING, March 30, 2023 (GLOBE NEWSWIRE) — Wah Fu Education Group Limited (“Wah Fu” or the “Company”) (NASDAQ:WAFU), a provider of online education and exam preparation services, as well as related training materials and technology solutions for both institutions and individuals, today announced its unaudited financial results for the six months ended September 30, 2022.

Financial Highlights for the Six Months Ended September 30, 2022

    For the Six Months Ended
September 30,
 
($’000, except per share data)   2022     2021     % Change  
Revenue   $ 5,453     $ 5,805       (6.1 )%
Gross profit   $ 2,788     $ 3,406       (18.1 )%
Gross margin     51.1 %     58.7 %     (7.6 )pp
Income (loss) from operations   $ 1,117     $ 688       62.4 %
Operating profit (loss) margin     20.5 %     11.8 %     8.7 pp
Net income (loss)   $ 1,056     $ 594       77.8 %
Basic and diluted earnings (loss) per share   $ 0.19     $ 0.11       72.7 %

pp: percentage points

  • Revenue decreased by 6.1% year-over-year to $5.45 million for the six months ended September 30, 2022 from $5.81 million for the same period of the prior fiscal year. The decrease in revenue is primarily attributable to a decrease in one course offering from our online education services.
  • Gross profit decreased by 18.1% to $2.79 million for the six months ended September 30, 2022 from $3.41 million for the same period of the prior fiscal year. Gross margins were 51.1% and 58.7% for the six months ended September 30, 2022 and 2021, respectively. The decrease in gross profit of online education services is primarily due to the decrease in revenue. The minor decrease in gross margins as compared to revenue in the six months ended September 30, 2022 compared to the same period last year was due to the fact that our online education service is comprised of fixed expenses, which include salaries and related expenses for our teaching support, course and content development.
  • Incomes from operations were $1.12 million and $0.69 million for the each of six months ended September 30, 2022 and 2021. Operating profit margin was 20.5% for the six months ended September 30, 2022, compared to operating profit margin of 11.8% for the same period of the prior fiscal year.
  • Net income was $1.06 million or, income per share of $0.19 for the six months ended September 30, 2022, compared to net income of $0.59 million, or income per share of $0.11, for the same period of the prior fiscal year.

Unaudited Financial Results for the six months ended September 30, 2022

Revenue

For the six months ended September 30, 2022, revenue decreased by $0.35 million, or 6.1%, to $5.45 million from $5.81 million for the same period of the prior fiscal year. The decrease in revenue was primarily due to the decrease of revenue from a decrease in one course offering from our online education services.

For the six months ended September 30, 2022, revenue from providing online education services decreased by $0.35 million, or 6.2%, to $5.38 million from $5.73 million for the same period of the prior fiscal year. The decrease was mainly due to a decrease in one course offering our Business-to-Business-to-Customer (“B2B2C”) revenues and online training services (“B2C”). During the six months ended September 30, 2022, Hubei province cancelled one examination, thus the number of courses we can provide for self-study deceased. The decrease in revenue was offset by our new paperless examination service, which generated $9.0 million in revenue for the six months ended September 30, 2022, and is now part of our B2B2C service. With the introduction of our paperless examination platform, which integrates key aspects for testing by most universities in China, such as management of questions database, test paper, examination, grading, management of examination paper monitoring, and related technical services for educational institutions, we have several universities utilizing such platform and we expect more universities in China to adopt in the near future.

Cost of revenue

Cost of revenue increased by $0.29 million, or 12.1%, to $2.65 million for the six months ended September 30, 2022 from $2.36 million for the same period of the prior fiscal year. The increase in overall cost of revenue was mainly due to increased cost of revenue for online education services. Cost of revenue mainly comprised of salaries and related expenses for our teaching support, course and content development, website maintenance and information technology engineers and other employees, fees paid to our course lecturers, depreciation and amortization expenses, server relocation and bandwidth leasing fees paid to third-party providers and other miscellaneous expenses. During this period in order to develop new courses to expand our market and customer base, we increased the number of employees to focus on new course development.

Gross profit

Gross profit decreased by $0.62 million, or 18.1%, to $2.79 million for the six months ended September 30, 2022 from $3.41 million for the same period of the prior fiscal year. As a result, gross margin decreased by 7.6 percent to 51.1% for the six months ended September 30, 2022 from 58.7% for the same period of the prior fiscal year. The decrease of gross profit was mainly due to the decrease of on-line education service revenue from a decrease in one course offering. The minor decrease in gross margins as compared to revenue in the six months ended September 30, 2022 compared to the same period last year was due to the fact that our online education service is comprised of fixed expenses, which include salaries and related expenses for our teaching support, course and content development.

Operating expenses

Selling expenses decreased by $0.42 million, or 42.5%, to $0.57 million for the six months ended September 30, 2022 from $1.00 million for the same period of the prior fiscal year. The decrease was mainly due to the Company reducing marketing expenses for this period.

General and administrative expenses decreased by $0.62 million, or 36.2%, to $1.10 million for the six months ended September 30, 2022 from $1.72 million for the same period of the prior fiscal year. Bad debt expense decreased $0.26 million due to the Company’s enhanced collection of accounting receivable during this period. Salary expenses decreased $0.08 million due to the reduction of employees.

Total operating expenses decreased by $1.05 million, or 38.5%, to $1.67 million for the six months ended September 30, 2022 from $2.72 million for the same period of the prior fiscal year.

Income (loss) from operations

Incomes from operations were $1.12 million and $0.69 million for each of the six months ended September 30, 2022 and 2021. Please see above for a detailed description of such Income (loss) from operations.

Other income (expenses)

Total other income, including interest income, loss from investments in unconsolidated entity, net of other expenses, were $0.1 million and $0.01 million for the six months ended September 30, 2022 and the same period of the prior fiscal year, respectively.

Income before income taxes

Income before income taxes was $1.22 million for the six months ended September 30, 2022, compared to income before income taxes of $0.70 million for the same period of the prior fiscal year.

Net income and earnings per share

Net income was $1.06 million for the six months ended September 30, 2022, compared to net income of $0.59 million for the same period of the prior fiscal year. Net profit margin was 19.4% for the six months ended September 30, 2022, compared to net profit margin of 10.2% for the same period of the prior fiscal year.

After deducting non-controlling interests, net profit attributable to the Company was $0.86 million, or profit of $0.19 basic and diluted share, for the six months ended September 30, 2022. This compared to net profit of $0.47 million, or profit of $0.11 per basic and diluted share, for the same period of the prior fiscal year.

Weighted average number of shares outstanding was 4,440,085 for the six months ended September 30, 2022, compared to 4,430,243 for the same period of last fiscal year.

Financial Condition

As of September 30, 2022, the Company had cash of $10.83 million, compared to $11.76 million as of March 31, 2021. Total working capital was $10.46 million as of September 30, 2022, compared to $10.21 million as of March 31, 2021.

Net cash provided by operating activities was $0.30 million for the six months ended September 30, 2022, compared to net cash used in operating activities of $2.42 million for the same period last year. Net cash used in investing activities was $0.18 million for the six months ended September 30, 2022, compared to net cash used in investing activities $1.70 million for the same period last year. Net cash provided by financing activities was $0.04 million for the six months ended September 30, 2022, compared to net cash used in financing activities $0.06 million for the same period of last year.

Subsequent Events

On October 13, 2022, Huaxia Dadi Distance Learning Services Co., Ltd. (“Distance Learning”), our wholly owned subsidiary, loaned $20,000,000 (approximately $USD2,811,555) on an interest-free and unguaranteed basis to Beijing Haohua Haoxin Assets Management Consultant Co. Ltd. (“Haohua Haoxin”) with a maturity date of March 31, 2023. On March 30, 2023, Haohua Haoxin fully repaid the above-mentioned loan to the Company.

On January 31, 2023, Distance Learning, our wholly owned subsidiary, signed an equity transfer agreement with Hubei Education Investment Co., Ltd. (“Hubei Education”) to acquire the 20% equity interests of Huaxia MOOC Internet Technology Co., Ltd. (“Huaxia MOOC”) owned by Hubei Education. The total consideration of the acquisition was RMB 714,984 (approximately $100,511 dollars). After the transaction, the Distance Learning’s equity interest of Huaxia MOOC increased from 51% to 71%.

About Wah Fu Education Group Limited

Headquartered in Beijing, China, Wah Fu Education Group Limited provides online training and exam preparation services, as well as related training materials and technology solutions for both institutions, such as universities and training institutions, and students. For more information about Wah Fu, please visit www.edu-edu.cn

Safe Harbor 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 not 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 guarantees 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 online training industry in China and the other markets the Company serves or plans to serve; reputation and brand; the impact of competition and pricing; government regulations; fluctuations in general economic and business conditions in China and the other markets the Company serves or plans to serve 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 (the “SEC”).  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 SEC, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly update these forward-looking statements to reflect events or circumstances that arise after the date hereof.

For more information, please contact:

Raincy Du
[email protected] 

WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

    As of
September 30,
    As of
March 31,
 
    2022     2022  
ASSETS            
CURRENT ASSETS:            
Cash   $ 10,827,786     $ 11,763,445  
Accounts receivable, net     2,506,760       1,712,430  
Other receivables, net     263,109       320,784  
Loan to third parties, current     648,124       569,532  
Loan to related parties     1,753,729       1,745,479  
Other current assets     130,534       90,630  
TOTAL CURRENT ASSETS     16,130,042       16,202,300  
                 
Loan to third parties, noncurrent     148,566       149,673  
Right-of-use assets     491,201       158,697  
Rent deposit     64,528       72,409  
Property and equipment, net     567,774       710,727  
Investments in unconsolidated entities     23,195       12,277  
Deferred tax assets, net     651,324       697,823  
TOTAL  ASSETS   $ 18,076,630     $ 18,003,906  
                 
CURRENT LIABILITIES:                
Due to related parties   $ 315,512     $ 315,512  
Deferred revenue     3,376,462       3,980,132  
Operating lease liabilities, current     204,654       136,467  
Taxes payable     1,143,453       983,869  
Other payables     180,382       199,066  
Accrued expenses and other liabilities     447,210       372,657  
TOTAL CURRENT LIABILITIES     5,667,673       5,987,703  
                 
Operating lease liabilities, noncurrent     286,138       6,063  
TOTAL LIABILITIES     5,953,811       5,993,766  
                 
COMMITMENTS AND CONTINGENCIES                
                 
EQUITY                
Common stock, $0.01 par value, 30,000,000 shares authorized; 4,440,085shares issued and outstanding as of September 30, 2022 and March 31, 2022, respectively     44,401       44,401  
Additional paid-in capital     4,798,793       4,798,793  
Statutory reserve     657,329       657,329  
Retained earnings     6,643,158       5,722,151  
Accumulated other comprehensive loss     (1,028,627 )     (1,190 )
Total shareholders’ equity     11,115,054       11,221,484  
Non-controlling interest     1,007,765       788,656  
TOTAL EQUITY     12,122,819       12,010,140  
TOTAL LIABILITIES AND EQUITY   $ 18,076,630     $ 18,003,906  

WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

    For the Six Months Ended
September 30,
 
    2022     2021  
             
REVENUE   $ 5,453,052     $ 5,804,552  
                 
COST OF REVENUE AND RELATED TAX                
Cost of revenue     2,650,570       2,364,854  
Business and sales related tax     14,379       33,506  
                 
GROSS PROFIT     2,788,103       3,406,192  
                 
OPERATING EXPENSES                
Selling expenses     573,881       998,720  
General and administrative expenses     1,097,104       1,719,664  
Total operating expenses     1,670,985       2,718,384  
                 
INCOME  FROM OPERATIONS     1,117,118       687,808  
                 
OTHER INCOME (EXPENSE)                
Interest income     104,846       32,483  
Other income (expenses)     1,596       (16,336 )
Total other income, net     106,442       16,147  
                 
INCOME BEFORE INCOME TAX PROVISION     1,223,560       703,955  
                 
PROVISION FOR INCOME TAXES     167,071       109,829  
                 
NET INCOME     1,056,489       594,126  
                 
Less: net income attributable to non-controlling interest     193,622       123,208  
                 
NET INCOME (LOSS) ATTRIBUTABLE TO WAH FU EDUCATION GROUP LIMITED   $ 862,867     $ 470,918  
                 
COMPREHENSIVE INCOME (LOSS)                
Net income (loss)     1,056,489       594,126  
Other comprehensive loss: foreign currency translation loss     (1,044,121 )     129,926  
Total comprehensive loss     12,368       724,052  
Less: Comprehensive income attributable to non-controlling interest     (16,687 )     10,486  
                 
COMPREHENSIVE INCOME ATTRIBUTABLE TO WAH FU EDUCATION GROUP LIMITED   $ 29,055     $ 713,566  
                 
Earnings per common share – basic and diluted   $ 0.19     $ 0.11  
Weighted average shares – basic and diluted     4,440,085       4,430,243  

  

WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATION STATEMENTS OF CHANGES IN EQUITY

    Ordinary Shares     Additional 
Paid-in
    Statutory     Retained     Accumulated Other Comprehensive     Shareholders’     Non-controlling     Total  
    Shares     Amount     Capital     Reserves     Earnings     Income (Loss)     Equity     Interest     Equity  
                                                       
Balance at March 31, 2022     4,440,085     $ 44,401     $ 4,798,793     $ 657,329     $ 5,722,151     $ (1,190 )   $ 11,221,484     $ 788,656     $ 12,010,140  
                                                                         
Capital contribution                                               42,174       42,174  
Net income (loss)                             921,007             921,007       193,622       1,114,629  
Foreign currency translation adjustment                                   (1,027,437 )     (1,027,437 )     (16,687 )     (1,044,124 )
                                                                         
Balance at September 30, 2022     4,440,085     $ 44,401     $ 4,798,793     $ 657,329       6,643,158     $ (1,028,627 )   $ 11,115,054     $ 1,007,765     $ 12,122,819  
                                                                         
Balance at March 31, 2021     4,381,033     $ 43,810     $ 4,799,384     $ 323,820     $ 5,312,654     $ (278,180 )   $ 10,201,488     $ 606,936     $ 10,808,424  
                                                                         
Common stock     59,052       591       (591 )                                    
Net income (loss)                             470,788             470,788       123,338       594,126  
Foreign currency translation adjustment                                   153,129       153,129       10,486       163,615  
Balance at September 30, 2021     4,440,085     $ 44,401     $ 4,798,793     $ 323,820     $ 5,783,442     $ (125,051 )   $ 10,825,405     $ 740,760     $ 11,566,165  

WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

    For the six months ended,
September 30
 
    2022     2021  
Cash flows from operating activities:            
Net Income   $ 1,056,489     $ 594,126  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation and amortization     81,492       68,190  
Non-cash lease expense     519,099       252,897  
Loss from disposal of property and equipment     818       4,444  
Provision for doubtful accounts     19,658       265,965  
Interest income from loan to third parties     27,558       (24,956 )
Deferred tax benefit     (31,120 )     (139,442 )
Changes in operating assets and liabilities:                
Accounts receivable, net     (1,056,061 )     (404,495 )
Other receivable, net     15,891       (3,583,568 )
Other current assets     (50,228 )     (23,352 )
Rent deposit     8,746        
Deferred revenue     (180,174 )     583,009  
Taxes payable     281,809       259,051  
Other payable     708       12,825  
Operating lease liabilities     (518,667 )     (250,247 )
Accrued expenses and other liabilities     121,649       (37,742 )
Net cash provided by (used in) operating activities     297,667       (2,423,295 )
                 
Cash flows from investing activities:                
Purchase of property and equipment     (4,205 )     (69,923 )
Payments made for loans to related party           (1,650,000 )
Payments made for l loans to related party     (8,250 )      
Payments made for loans to third parties     (164,607 )     23,513  
Net cash provided by (used in) investing activities     (177,062 )     (1,696,410 )
                 
Cash flows from financing activities:                
Changes in due to related parties           58,250  
Capital contribution by shareholders of non-controlling interest     42,174        
Net cash provided by (used in) financing activities     42,174       58,250  
                 
Effect of exchange rate fluctuation on cash     (1,098,438 )     182,215  
                 
Net increase in cash     (935,659 )     (3,879,240 )
Cash at beginning of the period     11,763,445       12,054,015  
Cash at end of the period   $ 10,827,786     $ 8,174,775  
                 
Supplemental cash flow information                
Cash paid for income taxes   $ (6,745 )   $ (9,678 )
                 
Non-cash financing activities                
Right of use assets obtained in exchange for operating lease obligations   $ 766,584     $ 793,531  

Wah Fu Education Group Limited



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