Wah Fu Education Group Ltd. Announces Unaudited Financial Results for the First Half of Fiscal Year 2024

BEIJING, April 01, 2024 (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, 2023.

Financial Highlights for the Six Months Ended September 30, 2023

    For the Six Months Ended
September 30,
 
($’000, except per share data)   2023     2022     % Change  
Revenue   $ 3,648     $ 5,453     (33.1 )%
Gross profit   $ 2,063     $ 2,788     (26.0 )%
Gross margin     56.6 %     51.1 %   (5.4 )pp
Income (loss) from operations   $ 273     $ 1,117     (75.6 )%
Operating profit (loss) margin     7.5 %     20.5 %   (13.0 )pp
Net income (loss)   $ 125     $ 1,056     88.2 %
Basic and diluted earnings (loss) per share   $ 0.05     $ 0.19     (73.1 )%
                       
* pp: percentage points                      
                       
  • Revenue decreased by 33.1% year-over-year to $3.65 million for the six months ended September 30, 2023 from $5.45 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 26.0% to $2.01 million for the six months ended September 30, 2023 from $2.79 million for the same period of the prior fiscal year. Gross margins were 56.6% and 51.1% for the six months ended September 30, 2023 and 2022, respectively. The decrease in gross profit of online education services is primarily due to the decrease in revenue.
  • Incomes from operations were $0.27 million and $1.12 million for the each of six months ended September 30, 2023 and 2022. Operating profit margin was 7.5% for the six months ended September 30, 2023, compared to operating profit margin of 20.5% for the same period of the prior fiscal year.
  • Net income was $0.13 million or, income per share of $0.05 for the six months ended September 30, 2023, compared to net income of $1.06 million, or income per share of $0.19, for the same period of the prior fiscal year.

Unaudited Financial Results for the six months ended September 30, 2023

Revenue

For the six months ended September 30, 2023, revenue decreased by $1.81 million, or 33.1%, to $3.65 million from $5.45 million for the same period of the prior fiscal year. The decrease in revenue was primarily due to the decrease of revenue from one course offering from our online education services.

For the six months ended September 30, 2023, revenue from providing online education services decreased by $1.83 million for the same period of the prior fiscal year. The decrease was mainly due to a decrease in revenue from one course offering in our Business-to-Business-to-Customer (“B2B2C”) platforms. During the six months ended September 30, 2023, due to the implementation of local policies in Hunan province, some universities canceled the self-study examination, thus the courses provided to self-study examination decreased, the revenue from Business-to-Business-to-Customer (“B2B2C”) decrease gradually.

Cost of revenue

Cost of revenue decreased by $1.08 million, or 40.8%, to $1.57 million for the six months ended September 30, 2023 from $2.65 million for the same period of the prior fiscal year. The decrease of overall cost of revenue was mainly due to decrease of 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. As the decrease of online education service revenue, cost related to online education service deceased for the six months ended September 30, 2023 compared to the same period last year.

Gross profit

Gross profit decreased by $0.73 million, or 26.0%, to $2.06 million for the six months ended September 30, 2023 from $2.79 million for the same period of the prior fiscal year. Gross margin increased by 5.4 percent to 56.6% for the six months ended September 30, 2023 from 51.1% for the same period of the prior fiscal year. The decrease of gross profit was mainly due to the decrease of online education service revenue from one course offering. The minor increase in gross margin in the six months ended September 30, 2023 compared to the same period last year was due to the fact that our online education service has lower gross margin than technology development and other service revenue. The revenue of online education service decreased significantly in this period, thus the gross margin of total revenue increased for the six months ended September 30, 2023 compared to the same period last year.

Operating expenses

Selling expenses increased by $0.23 million, or 40.2%, to $0.80 million for the six months ended September 30, 2023 from $0.57 million for the same period of the prior fiscal year. The increase was mainly due to the fact that the Company increased the input in marketing promotion for this period.

General and administrative expenses decreased by $0.11 million, or 10.2%, to $0.99 million for the six months ended September 30, 2023 from $1.10 million for the same period of the prior fiscal year

Total operating expenses increased by $0.12 million, or 7.1%, to $1.79 million for the six months ended September 30, 2023 from $1.67 million for the same period of the prior fiscal year.

Income (loss) from operations

Incomes from operations were $0.27 million and $1.12 million for each of the six months ended September 30, 2023 and 2022. Please see above for a detailed description of such Income (loss) from operations.

Other income (expenses)

Total other expenses, including interest income, loss from investments in unconsolidated entity, net of other expenses, was $0.1 million for the six months ended September 30, 2023 when it was a net income of $0.1 million in the same period of the prior fiscal year.

Income before income taxes

Income before income taxes was $0.18 million for the six months ended September 30, 2023, compared to income before income taxes of $1.22 million for the same period of the prior fiscal year.

Net income and earnings per share

Net income was $0.12 million for the six months ended September 30, 2023, compared to net income of $1.06 million for the same period of the prior fiscal year. Net profit margin was 3.4% for the six months ended September 30, 2023, compared to net profit margin of 19.4% for the same period of the prior fiscal year.

After deducting non-controlling interests, net profit attributable to the Company was $0.23 million, or profit of $0.05 basic and diluted share, for the six months ended September 30, 2022. This compared to net profit of $0.86 million, or profit of $0.19 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, 2023 and 2022.

Financial Condition

As of September 30, 2023, the Company had cash of $11.42 million, compared to $12.57 million as of March 31, 2023. Total working capital was $11.10 million as of September 30, 2023, compared to $11.69 million as of March 31, 2023.

Net cash used in operating activities was $0.10 million for the six months ended September 30, 2023 compared to net cash provided by operating activities $0.30 million for the same period last year. There was no cash used in or provided by investing activities for the six months ended September 30, 2023, compared to net cash used in investing activities $0.18 million for the same period last year. There was no cash used in or provided by financing activities for the six months ended September 30, 2023, compared to net cash provided by financing activities $0.04 million for the same period of last year.

Subsequent Events

Management has evaluated subsequent events through April 1, 2024, the date which the financial statements were available to be issued. All subsequent events requiring recognition as of September 30, 2023 have been incorporated into these financial statements and there are no subsequent events that require disclosure in accordance with FASB ASC Topic 855, “Subsequent Events.”

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,
 
  2023     2023  
ASSETS          
CURRENT ASSETS:          
Cash $ 11,421,498     $ 12,567,463  
Accounts receivable, net   777,440       793,212  
Other receivables, net   253,700       251,953  
Loan to third parties, current   603,165       551,930  
Loan to related parties   1,745,384       1,761,979  
Other current assets   216,393       69,104  
TOTAL CURRENT ASSETS   15,017,580       15,995,641  
               
Loan to third parties, noncurrent   92,218       171,004  
Property and equipment, net   499,659       495,255  
Intangible assets, net   16,834       54,382  
Operating lease right-of-use assets   448,862       391,189  
Long-term rent deposit   52,749       56,040  
Deferred tax assets, net   352,681       374,681  
TOTAL ASSETS $ 16,480,583     $ 17,538,192  
               
LIABILITIES AND SHAREHOLDERS’ EQUITY              
CURRENT LIABILITIES:              
Due to related parties $ 315,512     $ 315,512  
Deferred revenue   1,874,303       2,110,628  
Operating lease liabilities, current   219,072       210,274  
Taxes payable   1,042,037       1,119,601  
Other payables   116,830       136,110  
Accrued expenses and other liabilities   171,732       179,440  
Accounts payable   91,640       233,473  
TOTAL CURRENT LIABILITIES   3,831,126       4,305,038  
               
Operating lease liabilities, noncurrent   227,661       203,171  
TOTAL LIABILITIES   4,058,787       5,993,766  
               
COMMITMENTS AND CONTINGENCIES              
               
SHAREHOLDERS’ EQUITY              
EQUITY              
Common stock, $0.01 par value, 30,000,000 shares authorized; 4,440,085 shares issued and outstanding as of September 30, 2023 and March 31, 2023, respectively   44,401       44,401  
Additional paid-in capital   5,123,941       5,123,941  
Statutory reserve   907,869       867,530  
Retained earnings   6,604,632       6,417,842  
Accumulated other comprehensive loss   (1,487,484 )     (752,391 )
Total shareholders’ equity   11,193,359       11,701,323  
Non-controlling interest   1,228,437       1,328,660  
TOTAL SHAREHOLDERS’ EQUITY   12,421,796       13,029,983  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 16,480,583     $ 17,538,192  
               
WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
 
  For the Six Months Ended
September 30,
 
  2023     2022  
           
REVENUE $ 3,647,954     $ 5,453,052  
               
COST OF REVENUE AND RELATED TAX              
Cost of revenue   1,569,477       2,650,570  
Business and sales related tax   15,606       14,379  
               
GROSS PROFIT   2,062,871       2,788,103  
               
OPERATING EXPENSES              
Selling expenses   804,790       573,881  
General and administrative expenses   985,346       1,097,104  
Total operating expenses   1,790,136       1,670,985  
               
INCOME FROM OPERATIONS   272,735       1,117,118  
               
OTHER INCOME (EXPENSE)              
Interest income   98,240       104,846  
Other income (expense)   (190,929 )     1,596  
Total other income (expense), net   (92,689 )     106,442  
               
INCOME BEFORE INCOME TAX PROVISION   180,046       1,223,560  
               
PROVISION FOR INCOME TAXES   55,492       167,071  
               
NET INCOME   124,554       1,056,489  
               
Less: net income (loss) attributable to non-controlling interest   (102,575 )     193,622  
               
NET INCOME ATTRIBUTABLE TO WAH FU EDUCATION GROUP LIMITED $ 227,129     $ 862,867  
               
COMPREHENSIVE INCOME (LOSS)              
Net income   124,554       1,056,489  
Other comprehensive loss: foreign currency translation loss   (732,741 )     (1,044,121 )
Total comprehensive income (loss)   (608,187 )     12,368  
Less: Comprehensive income (loss) attributable to non-controlling interest   2,352       (16,687 )
               
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO WAH FU EDUCATION GROUP LIMITED $ (610,539 )   $ 29,055  
               
Earnings per common share – basic and diluted $ 0.05     $ 0.19  
Weighted average shares – basic and diluted   4,440,085       4,440,085  
               
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, 2023   4,440,085     $ 44,401     $ 5,123,941     $ 867,530     $ 6,417,842     $ (752,391 )   $ 11,701,323     $ 1,328,660     $ 13,029,983  
                                                                       
Net income (loss)                             227,129             227,129       (102,575 )     124,554  
Appropriation of statutory reserve                     40,339       (40,339 )                        
Foreign currency translation adjustment                                 (735,093 )     (735,093 )     2,352       (732,741 )
                                                                       
Balance at September 30, 2023   4,440,085     $ 44,401     $ 5,123,941     $ 907,869     $ 6,604,632     $ (1,487,484 )   $ 11,193,359     $ 1,228,437     $ 12,421,796  
                                                                       
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  
                                                                       
WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
     
  For the six months ended,
September 30
 
  2023     2022  
Cash flows from operating activities:          
Net Income $ 124,554     $ 1,056,489  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:              
Depreciation and amortization   37,158       81,492  
Non-cash lease expense   122,276       519,099  
Loss from disposal of property and equipment         818  
Provision for doubtful accounts   194,014       19,658  
Interest income from loan to third parties   1,445       27,558  
Deferred tax benefit         (31,120 )
Changes in operating assets and liabilities:              
Accounts receivable, net   (225,539 )     (1,056,061 )
Other receivable, net   (33,407 )     15,891  
Other current assets   (112,254 )     (50,228 )
Rent deposit         8,746  
Deferred revenue   (115,033 )     (180,174 )
Taxes payable   (12,102 )     281,809  
Accounts payable   (131,131 )      
Other payable   (1,551 )     708  
Operating lease liabilities   58,915       (518,667 )
Accrued expenses and other liabilities   (7,708 )     121,649  
Net cash provided by (used in) operating activities   (100,363 )     297,667  
               
Cash flows from investing activities:              
Purchase of property and equipment         (4,205 )
Payments made for loans to related party          
Payments made for loans to related party         (8,250 )
Payments made for loans to third parties         (164,607 )
Net cash used in investing activities         (177,062 )
               
Cash flows from financing activities:              
Changes in due to related parties          
Capital contribution by shareholders of non-controlling interest         42,174  
Net cash provided by financing activities         42,174  
               
Effect of exchange rate fluctuation on cash   (1,045,602 )     (1,098,438 )
               
Net decrease in cash   (1,145,965 )     (935,659 )
Cash at beginning of the period   12,567,463       11,763,445  
Cash at end of the period $ 11,421,498     $ 10,827,786  
               
Supplemental cash flow information              
Cash paid for income taxes $ (37,190 )   $ (6,745 )
               
Non-cash financing activities              
Right of use assets obtained in exchange for operating lease obligations $ 200,115     $ 766,584  


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