Exhibit 99.1
Wah Fu Education Group Ltd. Announces Financial Results for the First Half of Fiscal Year 2022
BEIJING, China, March 28, 2022 (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, 2021.
Financial Highlights for the Six Months Ended September 30, 2021
For the Six Months Ended September 30, | ||||||||||||
($’000, except per share data) | 2021 | 2020 | % Change | |||||||||
Revenue | $ | 5,805 | $ | 4,302 | 34.9 | % | ||||||
Gross profit | $ | 3,406 | $ | 2,430 | 40.2 | % | ||||||
Gross margin | 58.7 | % | 56.5 | % | 3.9 | pp | ||||||
Income (loss) from operations | $ | 688 | $ | 687 | 0.1 | % | ||||||
Operating profit (loss) margin | 11.8 | % | 16.0 | % | (25.9 | )pp | ||||||
Net income (loss) | $ | 594 | $ | 511 | 16.3 | % | ||||||
Basic and diluted earnings (loss) per share | $ | 0.11 | $ | 0.09 | 18.1 | % |
* | pp: percentage points |
● | Revenue increased by 34.9% year-over-year to $5.81 million for the six months ended September 30, 2021 from $4.30 million for the same period of the prior fiscal year. The increase in revenue is primarily attributable to the increased revenue from providing online education services. | |
● | Gross profit increased by 40.2% to $3.41 million for the six months ended September 30, 2021 from $2.43 million for the same period of the prior fiscal year. Gross margins were 58.7% and 56.5% for the six months ended September 30, 2021 and 2020, respectively. The increased gross profit was mainly due to the sharply increased revenue from providing online education service, which had a higher gross margin. For further details, please see below section titled “Revenue.” | |
● | Income from operations were $0.69 million for the each of six months ended September 30, 2021 and 2020. Operating profit margin was 11.8% for the six months ended September 30, 2021, compared to operating profit margin of 16.0% for the same period of the prior fiscal year. | |
● | Net income was $0.59 million or, income per share of $0.11 for the six months ended September 30, 2021, compared to net income of $0.51 million, or income per share of $0.09, for the same period of the prior fiscal year. |
Unaudited Financial Results for the six months Ended September 30, 2021
Revenue
For the six months ended September 30, 2021, revenue increased by $1.50 million, or 34.9%, to $5.80 million from $4.30 million for the same period of the prior fiscal year. The increase in revenue is primarily attributable to the increase of revenue from providing online education services.
For the six months ended September 30, 2021, revenue from providing online education services increased by $1.55 million, or 36.9%, to $5.73 million from $4.19 million for the same period of the prior fiscal year. The increase was primarily due to increase in Business-to-Business-to-Customer (“B2B2C”) revenues. The increase in B2B2C revenues was due to the increased revenue from providing online continuing education and examination services. The online courses we provided during the six months ended September 30, 2021 increased sharply. As a consequence, revenue from online education services increased compared to the same period of the prior fiscal year. The number of online courses provided increased by 65,807 from 285,653 courses for the six months ended September 30, 2020 to 351,460 courses for the six months ended September 30, 2021.
Cost of revenue
Cost of revenue increased by $0.51 million, or 27.5%, to $2.36 million for the six months ended September 30, 2021 from $1.85 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. Because revenue from the online education services increased, the co-operation fee paid to collaborators increased. The increase was partially offset by payroll expense due to the decrease of the total number of employees during the six months ended September 30, 2021.
Cost of revenue for online education services increased by $0.21 million, or 11.4%, to $2.03 million for the six months ended September 30, 2021 from $1.83 million for the same period of the prior fiscal year. The increase in cost of revenue for online education services was primarily due to increased collaboration fees resulting from business expansion in Hunan Province. As the total numbers of adult education course increased, the collaboration fees paid to collaborator increased accordingly.
Gross profit
Gross profit increased by $0.98 million, or 40.2%, to $3.41 million for the six months ended September 30, 2021 from $2.43 million for the same period of the prior fiscal year. As a result, gross margin increased by 2.2 percent to 58.7% for the six months ended September 30, 2021 from 56.5% for the same period of the prior fiscal year.
Gross profit for online education services increased by $1.32 million or 56.4% to $3.66 million for the six months ended September 30, 2021 from $2.34 million for the same period of the prior fiscal year. As the online courses we provided during the six months ended September 30, 2021 increased sharply, the revenue from online education services increased compared to the same period of the prior fiscal year. Further, as the growth of our platform does not depend on additional research and development nor significant customer acquisitions costs, the cost of online education services, such as collaboration fees paid to universities, depreciation and amortization expenses did not increase in line with the increase in revenue. As a result, gross margin for online education services increased to 63.9% for the six months ended September 30, 2021 from 56.0% for the same period of the prior fiscal year.
Operating expenses
Selling expenses increased by $0.19 million, or 22.9%, to $1.00 million for the six months ended September 30, 2021 from $0.81 million for the same period of the prior fiscal year. The increase was mainly due to the Company increased marketing expenses for the period.
General and administrative expenses increased by $0.79 million, or 84.9%, to $1.72 million for the six months ended September 30, 2021 from $0.93 million for the same period of the prior fiscal year. The increase was primarily because the Company was exempted from contributing social insurance payments during the six months ended September 30, 2020 due to the impact of COVID-19. There was no such item during six months ended September 30, 2021, the Company resumed social insurance payments and social insurance expenses accordingly increased for the same period.
Total operating expenses increased by $0.98 million, or 56.0%, to $2.72 million for the six months ended September 30, 2021 from $1.74 million for the same period of the prior fiscal year.
Income (loss) from operations
Income from operations was $0.69 million for each of the six months ended September 30, 2021 and 2020. 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 $0.02 million and $0.04 million for the six months ended September 30, 2021 and the same period of the prior fiscal year, respectively.
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Income before income taxes
Income before income taxes was $0.70 million for the six months ended September 30, 2021, compared to income before income taxes of $0.72 million for the same period of the prior fiscal year.
Net income and earnings per share
Net income was $0.59 million for the six months ended September 30, 2021, compared to net income of $0.51 million for the same period of the prior fiscal year. Net profit margin was 10.2% for the six months ended September 30, 2021, compared to net profit margin of 11.9% for the same period of the prior fiscal year.
After deducting non-controlling interests, net profit attributable to the Company was $0.47 million, or profit of $0.11 basic and diluted share, for the six months ended September 30, 2021. This compared to net profit of $0.37million, or profit of $0.09 per basic and diluted share, for the same period of the prior fiscal year.
Weighted average number of shares outstanding was 4,430,243 for the six months ended September 30, 2021, compared to 4,381,033 for the same period of last fiscal year.
Financial Condition
As of September 30, 2021, the Company had cash of $8.17 million, compared to $12.05 million as of March 31, 2020. Total working capital was $9.62 million as of September 30, 2021, compared to $8.97 million as of March 31, 2020.
Net cash used in operating activities was $2.42 million for the six months ended September 30, 2021, compared to net cash provided by operating activities of $1.59 million for the same period last year. Net cash used in investing activities was $1.70 million for the six months ended September 30, 2021, compared to net cash provided by investing activities $0.68 million for the same period last year. Net cash provided by financing activities was $0.06 million for the six months ended September 30, 2021, compared to net cash used in financing activities $0.09 million for the same period of last year.
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, | |||||||
2021 | 2021 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash | $ | 8,174,775 | $ | 12,054,015 | ||||
Accounts receivable, net | 2,090,655 | 1,919,379 | ||||||
Other receivables, net | 3,816,185 | 217,174 | ||||||
Loan to third parties, current | 560,330 | 623,711 | ||||||
Loan to related parties | 1,737,229 | 78,979 | ||||||
Other current assets | 164,627 | 139,940 | ||||||
TOTAL CURRENT ASSETS | 16,543,801 | 15,033,198 | ||||||
Loan to third parties, noncurrent | 130,494 | 78,882 | ||||||
Right-of-use assets | 259,800 | 371,603 | ||||||
Rent deposit | 80,375 | 79,045 | ||||||
Property and equipment, net | 715,370 | 759,445 | ||||||
Investments in unconsolidated entities | 12,078 | 11,879 | ||||||
Deferred tax assets, net | 789,924 | 639,269 | ||||||
TOTAL ASSETS | $ | 18,531,842 | $ | 16,973,321 | ||||
CURRENT LIABILITIES: | ||||||||
Due to related parties | $ | 297,855 | $ | 297,855 | ||||
Deferred revenue | 4,796,157 | 4,141,555 | ||||||
Operating lease liabilities, current | 214,158 | 256,600 | ||||||
Taxes payable | 984,215 | 712,327 | ||||||
Other payables | 133,046 | 118,442 | ||||||
Accrued expenses and other liabilities | 503,334 | 532,246 | ||||||
TOTAL CURRENT LIABILITIES | 6,928,765 | 6,059,025 | ||||||
Operating lease liabilities, noncurrent | 36,912 | 105,872 | ||||||
TOTAL LIABILITIES | 6,965,677 | 6,164,897 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
EQUITY | ||||||||
Common stock, $0.01 par value, 30,000,000 shares authorized; 4,440,085 and 4,381,033 0 shares issued and outstanding as of September 30, 2021 and March 31, 2021, respectively | 44,401 | 43,810 | ||||||
Additional paid-in capital | 4,798,793 | 4,799,384 | ||||||
Statutory reserve | 323,820 | 323,820 | ||||||
Retained earnings | 5,783,442 | 5,312,654 | ||||||
Accumulated other comprehensive loss | (125,051 | ) | (278,180 | ) | ||||
Total shareholders’ equity | 10,825,405 | 10,201,488 | ||||||
Non-controlling interest | 740,760 | 606,936 | ||||||
TOTAL EQUITY | 11,566,165 | 10,808,424 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 18,531,842 | $ | 16,973,321 |
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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, | ||||||||
2021 | 2020 | |||||||
REVENUE | $ | 5,804,552 | $ | 4,302,082 | ||||
COST OF REVENUE AND RELATED TAX | ||||||||
Cost of revenue | 2,364,854 | 1,853,601 | ||||||
Business and sales related tax | 33,506 | 18,634 | ||||||
GROSS PROFIT | 3,406,192 | 2,429,847 | ||||||
OPERATING EXPENSES | ||||||||
Selling expenses | 998,720 | 812,877 | ||||||
General and administrative expenses | 1,719,664 | 929,998 | ||||||
Total operating expenses | 2,718,384 | 1,742,875 | ||||||
INCOME FROM OPERATIONS | 687,808 | 686,972 | ||||||
OTHER INCOME (EXPENSE) | ||||||||
Interest income | 32,483 | 82,864 | ||||||
Other expenses | (16,336 | ) | (46,389 | ) | ||||
Total other income, net | 16,147 | 36,475 | ||||||
INCOME BEFORE INCOME TAX PROVISION | 703,955 | 723,447 | ||||||
PROVISION FOR INCOME TAXES | 109,829 | 212,024 | ||||||
NET INCOME | 594,126 | 511,423 | ||||||
Less: net income attributable to non-controlling interest | 123,208 | 136,783 | ||||||
NET INCOME (LOSS) ATTRIBUTABLE TO WAH FU EDUCATION GROUP LIMITED | $ | 470,918 | $ | 374,640 | ||||
COMPREHENSIVE INCOME (LOSS) | ||||||||
Net income (loss) | 594,126 | 511,423 | ||||||
Other comprehensive loss: foreign currency translation loss | 129,926 | 247,135 | ||||||
Total comprehensive loss | 724,052 | 758,558 | ||||||
Less: Comprehensive income attributable to non-controlling interest | 10,486 | 18,746 | ||||||
COMPREHENSIVE INCOME ATTRIBUTABLE TO WAH FU EDUCATION GROUP LIMITED | $ | 713,566 | $ | 739,812 | ||||
Earnings per common share - basic and diluted | $ | 0.11 | $ | 0.09 | ||||
Weighted average shares - basic and diluted | 4,430,243 | 4,381,033 |
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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, 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 | ||||||||||||||||||
Balance at March 31, 2020 | 4,381,033 | $ | 43,810 | $ | 4,799,384 | $ | 231,424 | $ | 4,723,999 | $ | (734,028 | ) | $ | 9,064,589 | $ | 234,540 | $ | 9,299,129 | ||||||||||||||||||
Net income (loss) | - | - | - | - | 374,640 | - | 374,640 | 136,783 | 511,423 | |||||||||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | - | - | 228,389 | 228,389 | 18,746 | 247,135 | |||||||||||||||||||||||||||
Balance at September 30, 2020 | 4,381,033 | $ | 43,810 | $ | 4,799,384 | $ | 231,424 | $ | 5,098,639 | $ | (505,639 | ) | $ | 9,667,618 | $ | 390,069 | $ | 10,057,687 |
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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 | ||||||||
2021 | 2020 | |||||||
Cash flows from operating activities: | ||||||||
Net Income (loss) | $ | 594,126 | $ | 511,423 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 68,190 | 70,124 | ||||||
Non-cash lease expense | 252,897 | 130,173 | ||||||
Loss from disposal of property and equipment | 4,444 | - | ||||||
Provision for doubtful accounts | 265,965 | 241,551 | ||||||
Provision for investments in unconsolidated entities | - | 23,329 | ||||||
Interest income from loan to third parties | (24,956 | ) | (72,600 | ) | ||||
Deferred tax benefit | (139,442 | ) | (53,069 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | (404,495 | ) | (645,705 | ) | ||||
Other receivable, net | (3,583,568 | ) | 150,959 | |||||
Other current assets | (23,352 | ) | (44,446 | ) | ||||
Rent deposit | - | (77,731 | ) | |||||
Deferred revenue | 583,009 | 787,789 | ||||||
Taxes payable | 259,051 | 245,863 | ||||||
Other payable | 12,825 | 4,074 | ||||||
Operating lease liabilities | (250,247 | ) | (129,738 | ) | ||||
Accrued expenses and other liabilities | (37,742 | ) | 445,590 | |||||
Net cash provided by operating activities | (2,423,295 | ) | 1,587,586 | |||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | (69,923 | ) | (7,417 | ) | ||||
Proceeds made for loans to related party | (1,650,000 | ) | (1,650,000 | ) | ||||
Proceeds from loans to related party | - | 2,355,481 | ||||||
Payments made for loans to third parties | 23,513 | (18,321 | ) | |||||
Net cash provided by (used in) investing activities | (1,696,410 | ) | 679,743 | |||||
Cash flows from financing activities: | ||||||||
Changes in due to related parties | 58,250 | (88,510 | ) | |||||
Net cash provided by (used in) financing activities | 58,250 | (88,510 | ) | |||||
Effect of exchange rate fluctuation on cash | 182,215 | 253,600 | ||||||
Net increase in cash | (3,879,240 | ) | 2,432,419 | |||||
Cash at beginning of the period | 12,054,015 | 6,833,891 | ||||||
Cash at end of the period | $ | 8,174,775 | $ | 9,266,310 | ||||
Supplemental cash flow information | ||||||||
Cash paid for income taxes | $ | (9,678 | ) | $ | 29,066 | |||
Non-cash financing activities | ||||||||
Right of use assets obtained in exchange for operating lease obligations | $ | 793,531 | $ | 816,057 |
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