EX-99.1 2 ea175470ex99-1_wahfuedu.htm PRESS RELEASE - WAH FU EDUCATION GROUP LTD. ANNOUNCES FINANCIAL RESULTS FOR THE FIRST HALF OF FISCAL YEAR 2023

Exhibit 99.1

 

Wah Fu Education Group Ltd. Announces Financial Results for the First Half of Fiscal Year 2023

 

BEIJING, China, 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%   8.7pp
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.

 

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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
ir@edu-edu.com.cn

 

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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 

 

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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 

  

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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 

 

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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 

 

 

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