Wah Fu Education : Announces Financial Results for the First Half of Fiscal Year 2022 - Form 6-K

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
[e-mail]

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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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