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Wah Fu Education Group Ltd. Announces Financial Results for the First Half of Fiscal Year 2025

1. WAFU revenue fell 23.3% to $2.80 million in H1 2024. 2. Operating loss increased significantly to $0.57 million this period. 3. Net loss reached $0.58 million, contrasting with prior year's profit. 4. General and administrative expenses surged by 40.71% year-over-year. 5. Cash balance decreased to $10.15 million, affecting liquidity.

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Why Very Bearish?

WAFU experienced significant revenue decline and operational losses, reminiscent of past failures that triggered stock drops.

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The negative earnings report signals severe financial distress, crucial for investor decisions.

Why Short Term?

Immediate market response expected due to poor financial results and increased operational losses.

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EDUCAPOLSTRA
BEIJING, March 07, 2025 (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, 2024. Financial Highlights for the Six Months Ended September 30, 2024   For the Six Months EndedSeptember 30, ($’000, except per share data) 2024  2023  % Change Revenue $2,799  $3,648   (23.3)%Gross profit $1,572  $2,063   (23.8)%Gross margin  56.1%  56.6%  (0.5)pp(Loss) income from operations $(571) $273   (309.5)%Operating (loss) profit margin  (20.4)%  7.5%  (27.9)ppNet (loss) income $(581) $125   (566.3)%Basic and diluted (loss) earnings per share $(0.12) $0.05   (343.3)%              * pp: percentage points Revenue decreased by 23.3% year-over-year to $2.80 million for the six months ended September 30, 2024 from $3.65 million for the same period of the prior fiscal year. The decrease in revenue was primarily attributable to a decrease in self-taught higher education exams included in our Business-to-Business-to-Customer (“B2B2C”) revenue from our online education services.Gross profit decreased by 23.8% to $1.57 million for the six months ended September 30, 2024 from $2.06 million for the same period of the prior fiscal year. Gross margins were 56.1% and 56.6% for the six months ended September 30, 2024 and 2023, respectively. The decrease in gross profit of online education services was primarily due to the decrease in revenue.Loss from operations was $0.57 million for the six months ended September 30, 2024 when it was income from operation of $0.27 million for the six months ended September 30, 2023. Operating loss margin was 20.4% for the six months ended September 30, 2024, compared to operating profit margin of 7.5% for the same period of the prior fiscal year.Net loss was $0.58 million or, loss per share of $0.12 for the six months ended September 30, 2024, compared to net income of $0.13 million, or income per share of $0.05, for the same period of the prior fiscal year. Unaudited Financial Results for the six months ended September 30, 2024 Revenue For the six months ended September 30, 2024, revenue decreased by $0.85 million, or 23.3%, to $2.80 million from $3.65 million for the same period of the prior fiscal year. The decrease in revenue was primarily due to the decrease of revenue from self-taught higher education exams included in our Business-to-Business-to-Customer (“B2B2C”) revenues from our online education services. For the six months ended September 30, 2024, revenue from providing online education services decreased by $0.99 million for the same period of the prior fiscal year. The decrease was mainly due to a decrease in self-taught higher education exams included in our Business-to-Business-to-Customer (“B2B2C”) revenues. During the six months ended September 30, 2024, 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”) decreased gradually. Cost of revenue Cost of revenue decreased by $0.35 million, or 22.4%, to $1.22 million for the six months ended September 30, 2024 from $1.57 million for the same period of the prior fiscal year. The decrease in overall cost of revenue was mainly due to decrease in 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, 2024 compared to the same period last year. Gross profit Gross profit decreased by $0.49 million, or 23.8%, to $1.57 million for the six months ended September 30, 2024 from $2.06 million for the same period of the prior fiscal year. Gross margin decreased by 0.5 percent to 56.1% for the six months ended September 30, 2024 from 56.6% 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 self-taught higher education exams. Operating expenses Selling expenses decreased by $0.05 million, or 6.0%, to $0.76 million for the six months ended September 30, 2024 from $0.80 million for the same period of the prior fiscal year. This decrease was primarily due to the decrease in salaries for our sales department since our revenue decreased. General and administrative expenses increased by $0.40 million, or 40.71%, to $1.39 million for the six months ended September 30, 2024 from $0.99 million for the same period of the prior fiscal year. General and administrative expenses increased mainly due to the increase of provision for bad debts. Total operating expenses increased by $0.35 million, or 19.72%, to $2.14 million for the six months ended September 30, 2024 from $1.79 million for the same period of the prior fiscal year. Income (loss) from operations Loss form from operations was $0.57 million for the six months ended September 30, 2024 when it was an income of $0.27 for the six months ended September 30, 2023. Please see above for a detailed description of such Income (loss) from operations. Other income (expenses) Total other income expenses, including interest income, net of other expenses, net other income was $0.08 million for the six months ended September 30, 2024 when it was a net expense of $0.09 million in the same period of the prior fiscal year. Income before income taxes Loss before income taxes was $0.49 million for the six months ended September 30, 2024, compared to income before income taxes of $0.18 million for the same period of the prior fiscal year. Net income (loss) and earnings (loss) per share Net loss was $0.58 million for the six months ended September 30, 2024, compared to net income of $0.12 million for the same period of the prior fiscal year. Net loss margin was 20.7% for the six months ended September 30, 2024, compared to net profit margin of 3.4% for the same period of the prior fiscal year. After deducting non-controlling interests, net loss attributable to the Company was $0.55 million, or loss of $0.12 basic and diluted share, for the six months ended September 30, 2024. This compared to net profit of $0.23 million, or profit of $0.05 per basic and diluted share, for the same period of the prior fiscal year. Weighted average numbers of shares outstanding were 4,410,559 and 4,440,085 for the six months ended September 30, 2024 and 2023. Financial Condition As of September 30, 2024, the Company had cash of $10.15 million, compared to $11.05 million as of March 31, 2024. Total working capital was $10.56 million as of September 30, 2024, compared to $10.75 million as of March 31, 2024. Net cash used in operating activates was $1.19 million for the six months ended September 30, 2024 compared to net cash used in operating activities of $0.10 million for the same period last year. Net cash used in investing activities for the six months ended September 30, 2024 was $0.04 million. There was no cash used in or provided by investing activities for the six months ended September 30, 2023. There was no cash used in or provided by financing activities for the six months ended September 30, 2024 and 2023. Subsequent Events On January 21, 2025, Wah Fu Education Group Ltd. (the “Company”) amended and restated its memorandum and articles of association, including Creation of a new class of Class A shares with each Class A share being entitled to fifteen (15) votes on all matters subject to vote at general meetings of the Company. Any Class A Shares which are fully paid may be converted into ordinary shares on a one-for-one basis at the option of the holder of such Class A Shares upon giving five days' notice by such holder to the Company.The maximum number of shares that the Company is authorized to issue was increased from 30,000,000 ordinary shares of US$0.01 par value each to 600,000,000 shares divided into 500,000,000 ordinary shares with a par value of US$0.01 each and 100,000,000 Class A shares with a par value of US$0.01 each.The redemption of 1,488,000 ordinary shares held by HFGFR Inc. and reissue of 1,488,000 Class A Shares to HFGFR Inc. were approved. Management has evaluated subsequent events through March 7, 2025, the date which the financial statements were available to be issued. All subsequent events requiring recognition as of September 30, 2024 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 Duir@edu-edu.com.cn WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS         As ofSeptember 30,  As ofMarch 31,   2024  2024   (Unaudited)    ASSETS      CURRENT ASSETS:      Cash $10,145,053  $11,045,708 Accounts receivable, net  646,487   1,039,580 Other receivables, net  1,014,317   188,441 Loan to third parties, current  514,634   524,969 Loan to related parties  1,778,524   1,778,524 Other current assets  59,728   95,583 TOTAL CURRENT ASSETS  14,158,743   14,672,805          Loan to third parties, noncurrent  215,229   194,229 Property and equipment, net  464,073   485,660 Intangible assets, net  1,918   7,456 Long-term investment  142,499   138,498 Operating lease right-of-use assets  237,865   341,895 Long-term rent deposit  45,735   53,303 Deferred tax assets, net  231,919   262,577 TOTAL ASSETS $15,497,981  $16,156,423          CURRENT LIABILITIES:        Due to related parties $315,512  $315,512 Deferred revenue  1,575,010   1,818,426 Operating lease liabilities, current  197,316   260,283 Taxes payable  1,003,350   969,595 Other payables  300,018   176,257 Accrued expenses and other liabilities  165,348   173,791 Accounts payable  39,023   210,348 TOTAL CURRENT LIABILITIES  3,595,577   3,924,212          Operating lease liabilities, noncurrent  39,377   72,975 TOTAL LIABILITIES  3,634,954   3,997,187          COMMITMENTS AND CONTINGENCIES                 EQUITY        Ordinary shares, $0.01 par value, 30,000,000 shares authorized; 4,410,559 shares issued and outstanding as of September 30, 2024 and March 31, 2024  44,106   44,106 Additional paid-in capital  5,124,236   5,124,236 Statutory reserve  867,530   867,530 Retained earnings  5,813,559   6,362,554 Accumulated other comprehensive loss  (923,282)  (1,248,648)Total shareholders’ equity  10,926,149   11,149,778 Non-controlling interest  936,878   1,009,458 TOTAL EQUITY  11,863,027   12,159,236 TOTAL LIABILITIES AND EQUITY $15,497,981  $16,156,423  WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)   For the Six MonthsEndedSeptember 30,   2024  2023        REVENUE $2,799,328  $3,647,954          COST OF REVENUE AND RELATED TAX        Cost of revenue  1,217,472   1,569,477 Business and sales related tax  10,083   15,606          GROSS PROFIT  1,571,773   2,062,871          OPERATING EXPENSES        Selling expenses  756,639   804,790 General and administrative expenses  1,386,486   985,346 Total operating expenses  2,143,125   1,790,136          (LOSS) INCOME FROM OPERATIONS  (571,352)  272,735          OTHER(EXPENSES) INCOME        Interest income  99,809   98,240 Other expenses  (19,254)  (190,929)Total other income (expense), net  80,555   (92,689)         (LOSS) INCOME BEFORE INCOME TAX PROVISION  (490,797)  180,046          PROVISION FOR INCOME TAXES  89,953   55,492          NET (LOSS) INCOME  (580,750)  124,554          Less: net loss attributable to non-controlling interest  (31,755)  (102,575)         NET (LOSS) INCOME ATTRIBUTABLE TO WAH FU EDUCATION GROUP LIMITED $(548,995) $227,129          COMPREHENSIVE (LOSS) INCOME        Net income  (580,750)  124,554 Other comprehensive loss: foreign currency translation gain (loss)  284,541   (732,741)Total comprehensive loss $(296,209)  (608,187)Less: Comprehensive (loss) income attributable to non-controlling interest  (40,825)  2,352          COMPREHENSIVE LOSS ATTRIBUTABLE TO WAH FU EDUCATION GROUP LIMITED $(255,384) $(610,539)         (Loss) earnings per ordinary share - basic and diluted $(0.12) $0.05 Weighted average shares - basic and diluted  4,410,559   4,440,085  WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATION STATEMENTS OF CHANGES IN EQUITY   Ordinary Shares  AdditionalPaid-in  Statutory  Retained  AccumulatedOtherComprehensive  Shareholders’  Non-controlling  Total   Shares  Amount  Capital  Reserves  Earnings  Income (Loss)  Equity  Interest  Equity                             Balance at March 31, 2024 4,410,559  $44,106  $5,124,236  $867,530  $6,362,554  $(1,248,648) $11,149,778  $1,009,458  $12,159,236                                     Net loss -   -   -       (548,995)  -   (548,995)  (31,755)  (580,750)Foreign currency translation adjustment -   -   -   -   -   325,366   325,366   (40,825)  284,541                                     Balance at September 30, 2024 4,410,559  $44,106  $5,124,236  $867,530  $5,813,559  $(923,282) $10,926,149  $936,878  $11,863,027                                     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  WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS   For the six monthsended September 30,   2024  2023 Cash flows from operating activities:      Net (loss) income $(580,750) $124,554 Adjustments to reconcile net (loss) income to net cash used in operating activities:        Depreciation and amortization  45,344   37,158 Non-cash lease expense  110,983   122,276 Loss from disposal of property and equipment  3,245   - Provision for doubtful accounts  127,686   194,014 Interest income from loan to third parties  (14,995)  1,445 Deferred tax benefit  37,262   - Changes in operating assets and liabilities:        Accounts receivable, net  284,584   (225,539)Other receivable, net  (782,810)  (33,407)Other current assets  37,521   (112,254)Deferred revenue  (288,352)  (115,033)Taxes payable  5,601   (12,102)Accounts payable  -   (131,131)Other payable  116,056   (1,551)Operating lease liabilities  (103,468)  58,915 Accrued expenses and other liabilities  (185,969)  (7,708)Net cash used in operating activities  (1,188,062)  (100,363)         Cash flows from investing activities:        Purchase of property and equipment  (8,281)  - Repayment received for loans to third parties  24,845   - Purchase of ownership of a subsidiary  (53,733)    Net cash used in investing activities  (37,169)  -          Effect of exchange rate fluctuation on cash  324,576   (1,045,602)         Net decrease in cash  (900,655)  (1,145,965)Cash at beginning of the period  11,045,708   12,567,463 Cash at end of the period $10,145,053  $11,421,498          Supplemental cash flow information        Cash paid for income taxes $(49,575) $(37,190)         Non-cash financing activities        Right of use assets obtained in exchange for operating lease obligations $-  $200,115 

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