UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of March 2020

 

 

 

Commission File Number: 001-38619

 

 

 

Wah Fu Education Group Ltd.

 

Room 505 Building No.40, No.1 Disheng North Street

Economic and Technological Development Zone

Beijing, China 100176
(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F ☒                 Form 40-F ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

 

 

 

 

 

 

EXHIBITS

 

Exhibit 99.1   Press Release — Wah Fu Education Group Ltd. Announces Financial Results for the First Half of Fiscal Year 2020

 

1

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Wah Fu Education Group Limited
     
  By: /s/ Xinhui Yang
  Name: Xinhui Yang
  Title: Chief Executive Officer

 

Date:  March 6, 2020

 

2

 

Exhibit 99.1

 

Wah Fu Education Group Ltd. Announces Financial Results for the First Half of Fiscal Year 2020

 

BEIJING, China, March 6, 2020 (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, 2019.

 

Financial Highlights for the Six Months Ended September 30, 2019

 

   For the Six Months Ended
September 30,
 
($’000, except per share data)  2019   2018   % Change 
Revenue  $2,500   $2,896    -13.7%
Gross profit  $986   $1,839    -46.4%
Gross margin   39.4%   63.5%   -24.1 pp 
Income (loss) from operations  $(1,038)  $277    -474.7%
Operating profit (loss) margin   -41.5%   9.6%   -51.1 pp 
Net income (loss)  $(1,183)  $224    -628.1%
Basic and diluted earnings (loss) per share  $(0.29)  $0.05    -680.0%

 

* pp: percentage points            

 

Revenue decreased by 13.7% year-over-year to $2.50 million for the six months ended September 30, 2019 from $2.90 million for the same period of the prior fiscal year. The decrease in revenue is primarily attributable to the decreased revenue from technological development and operation services, partially offset by the increased revenue from online education services.
   
Gross profit decreased by 46.4% to $0.99 million for the six months ended September 30, 2019 from $1.84 million for the same period of the prior fiscal year. Gross margins were 39.4% and 63.5% for the six months ended September 30, 2019 and 2018, respectively. The decreases in gross profit and gross margin were primarily due to the increased cost of revenue for online education services.
   
Loss from operations was $1.04 million for the six months ended September 30, 2019, compared to income from operations of $0.28 million for the same period of the prior fiscal year. Operating loss margin was 41.5% for the six months ended September 30, 2019, compared to operating profit margin of 9.6% for the same period of the prior fiscal year.
   
Net loss was $1.18 million or, loss per share of $0.29 for the six months ended September 30, 2019, compared to net income of $0.22 million, or earnings per share of $0.05, for the same period of the prior fiscal year.

 

 

 

 

Unaudited Financial Results for the Six months Ended September 30, 2019

 

Revenue

 

For the six months ended September 30, 2019, revenue decreased by $0.40 million, or 13.7%, to $2.50 million from $2.90 million for the same period of the prior fiscal year. The decrease in revenue is primarily attributable to the decreased revenue from technological development and operation services, partially offset by the increased revenue from online education services.

 

For the six months ended September 30, 2019, revenue from online education services increased by $0.50 million, or 25.6%, to $2.45 million from $1.95 million for the same period of the prior fiscal year. The increase was primarily driven by the increase of both its B2B2C and B2C revenues. The increase in B2C revenues was due to the increased sales and the utilization of pre-paid self-study cards, since the Company formed a telemarketing team to promote its B2C business starting from the late 2018. The increase in B2B2C revenues was due to the increased revenue from continuing education, and the resumed self-study examinations from Hunan Province starting from January 2019.

 

Revenue from technological development and operation services decreased by $0.89 million, or 94.7%, to $0.05 million for the six months ended September 30, 2019 from $0.94 million for the same period of the prior fiscal year. The decrease was mainly because the Company did not provide software system development services for the six months ended September 30, 2019. The Company does not plan to provide such services in the future.

 

Cost of revenue

 

Cost of revenue increased by $0.45 million, or 42.5%, to $1.51 million for the six months ended September 30, 2019 from $1.06 million for the same period of the prior fiscal year. The increase in overall cost of revenue was due to increased cost of revenue for online education services and partially offset by decreased cost of revenue for technological development and operation services.

 

Cost of revenue for online education services increased by $0.70 million, or 88.6%, to $1.49 million for the six months ended September 30, 2019 from $0.79 million for the same period of the prior fiscal year. The increase in cost of revenue for online education services was primarily due to the increased payroll expenses by $0.3 million, and increased collaboration fees of $0.1 million resulting from business expansion in Hubei Province. The increase in payroll expenses was primarily due to the Company developing self-use software in fiscal 2018 and it capitalized some payroll expenses, while no self-used software was developed during the six months ended September 30, 2019. Cost of revenue for technological development and operation services decreased by $0.25 million, or 98.6%, to $3,682 for the six months ended September 30, 2019 from $0.25 million for the same period of the prior fiscal year. The decrease was primarily because less resources were required to fulfill technical support and maintenance services than development services, and the Company only had technical support and maintenance services for the six months ended September 30, 2019.

 

Gross profit

 

Gross profit decreased by $0.85 million, or 46.2%, to $0.99 million for the six months ended September 30, 2019 from $1.84 million for the same period of the prior fiscal year. As a result, gross margin decreased by 24.1 points to 39.4% for the six months ended September 30, 2019 from 63.5% for the same period of the prior fiscal year. The decrease in gross margin was primarily due to the increased cost of revenue for online education services.

 

2

 

 

Gross profit for online education services decreased by $0.22 million or 19.0% to $0.94 million for the six months ended September 30, 2019 from $1.16 million for the same period of the prior fiscal year. Due to the fierce competition in distance learning market in China, there was no substantial increase in the sales price of the Company’s online education services. As a result, gross margin for online education services decreased to 38.4% for the six months ended September 30, 2019 from 59.5% for the same period of the prior fiscal year.

 

Gross profit for technological development and operation services decreased by $0.63 million, or 92.6%, to $0.05 million for the six months ended September 30, 2019 from $0.68 million for the same period of the prior fiscal year. Gross margin for technological development and operation services increased by 19.4 points to 91.9% for the six months ended September 30, 2019 from 72.5% for the same period of the prior fiscal year.

 

Operating expenses

 

Selling expenses increased by $0.08 million, or 11.8%, to $0.76 million for the six months ended September 30, 2019 from $0.68 million for the same period of the prior fiscal year. The increase was mainly due to the increased effort the Company put in marketing in 2019. As a percentage of sales, selling expenses was 30.4% for the six months ended September 30, 2019, compared to 23.5% for the same period of the prior fiscal year.

 

General and administrative expenses increased by $0.37 million, or 42.7%, to $1.26 million for the six months ended September 30, 2019 from $0.89 million for the same period of the prior fiscal year. The increase was primarily related to the increased expenditures of new subsidiaries, increased professional fees and director expenses after the IPO in April 2019. As a percentage of sales, general and administrative expenses was 50.4% for the six months ended September 30, 2019, compared to 30.7% for the same period of the prior fiscal year.

 

Total operating expenses increased by $0.46 million, or 29.5%, to $2.02 million for the six months ended September 30, 2019 from $1.56 million for the same period of the prior fiscal year. As a percentage of sales, total operating expenses was 81.0% for the six months ended September 30, 2019, compared to 54.0% for the same period of the prior fiscal year.

 

Income (loss) from operations

 

Loss from operations was $1.04 million for the six months ended September 30, 2019, compared to income from operations of $0.28 million for the same period of the prior fiscal year. As a result, operating loss margin was 41.5% for the six months ended September 30, 2019, compared to operating profit margin of 9.6% for the same period of the prior fiscal year.

 

3

 

 

Other income (expenses)

 

Total other income, including interest income, loss from investments in unconsolidated entity, net of other expenses, was $0.04 million for the six months ended September 30, 2019, compared to $0.07 million for the same period of the prior fiscal year.

 

Income (loss) before income taxes

 

Loss before income taxes was $1.00 million for the six months ended September 30, 2019, compared to income before income taxes of $0.35 million for the same period of the prior fiscal year.

 

Net income (loss) and earnings (loss) per share

 

Net loss was $1.18 million for the six months ended September 30, 2019, compared to net income of $0.22 million for the same period of the prior fiscal year. Net loss margin was 47.2% for the six months ended September 30, 2019, compared to net profit margin of 7.6% for the same period of the prior fiscal year.

 

After deducting non-controlling interests, net loss attributable to the Company was $1.23 million, or loss of $0.29 basic and diluted share, for the six months ended September 30, 2019. This compared to net income of $0.14 million, or earnings of $0.05 per basic and diluted share, for the same period of the prior fiscal year.

 

Weighted average number of shares outstanding was 4,199,336 for the six months ended September 30,2019, compared to 3,200,000 for the same period of last fiscal year. The increase of shares outstanding was the new shares issued in connection with the Company’s IPO.

 

Financial Condition

 

As of September 30, 2019, the Company had cash $9.60 million, compared to $3.93 million as of March 31, 2019. Accounts receivable was $0.72 million as of September 30, 2019, compared to $1.78 million as of March 31,2019.

 

Total current assets and current liabilities were $10.62 million and $3.04 million, respectively, leading to a current ratio of 3.49 as of September 30, 2019. This compared to total current assets and current liabilities of $6.84 million and $1.78 million, respectively, and current ratio of 3.84 as of March 31, 2019.

 

Recent Developments

 

On January 8, 2020, the Company announced that through its majority owned subsidiary, Nanjing Suyun Education Technology Co., Ltd., the Company entered into a 5-year service agreement to develop a customized online educational platform for Jiuzhou Polytechnic Vocational College, featuring cloud-based online courses related to vocational training required by the Ministry of Education of China, administration and student management services.

 

4

 

 

On November 21, 2019, the Company announced that it had entered into a one-year partnership agreement with Chengdu Neusoft University to develop and maintain a customized online education platform featuring online courses, self-taught examinations, and administration and student management services, etc. for Chengdu Neusoft University.

 

On September 19, 2019, the Company announced that it had entered into a strategic cooperation agreement with Guangzhou Modern Information Engineering College to provide the administrators, staffs, teachers and students of Guangzhou Modern with its proprietary online education and training program, and to develop a customized online education system for Guangzhou Modern which includes online courses, self-study examination, administration and student management services, etc.

 

On April 29, 2019, the Company announced the closing of its IPO of 1,181,033 ordinary shares at a public offering price of $5.00 per share, for total gross proceeds of approximately $5.9 million before deducting underwriting discounts, commissions and other related expenses. The shares commenced trading on the NASDAQ Capital Market on April 30, 2019 under the ticker symbol “WAFU.”

 

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 other than 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:

 

At the Company:

Email: ashely.ai@horwathcapital.com.cn

 

Investor Relations:

Tony Tian, CFA
Weitian Group LLC
Email: ttian@weitianco.com

Phone: +1-732-910-9692

 

5

 

 

WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

   As of September 30,   As of
March 31,
 
   2019   2019 
ASSETS        
CURRENT ASSETS:        
Cash  $9,597,530   $3,927,718 
Accounts receivable, net   716,229    1,781,360 
Other receivables, net   222,353    75,213 
Loan to third parties, current   -    490,420 
Other current assets   86,527    146,058 
Deferred offering costs   -    417,100 
TOTAL CURRENT ASSETS   10,622,639    6,837,869 
           
Loan to third parties, noncurrent   560,434    89,404 
Right-of-use assets   721,995    - 
Rent deposit   72,574    - 
Property and equipment, net   771,810    868,802 
Investments in unconsolidated entities   266,256    283,113 
Deferred tax assets, net   291,073    403,466 
TOTAL  ASSETS  $13,306,781   $8,482,654 
           
CURRENT LIABILITIES:          
Due to related parties  $280,269   $252,874 
Deferred revenue   1,705,947    620,332 
Operating lease liabilities, current   244,027    - 
Taxes payable   404,648    318,685 
Other payables   110,398    268,550 
Accrued expenses and other liabilities   296,391    324,510 
TOTAL CURRENT LIABILITIES   3,041,680    1,784,951 
           
Operating lease liabilities, noncurrent   500,006    - 
TOTAL LIABILITIES   3,541,686    1,784,951 
           
COMMITMENTS AND CONTINGENCIES          
           
EQUITY          
Common stock, $0.01 par value, 30,000,000 shares authorized; 4,381,033 and 3,200,000 shares issued and outstanding as of September 30, 2019 and March 31, 2019, respectively   43,810    32,000 
Additional paid-in capital   4,844,424    217,395 
Statutory reserve   222,180    222,180 
Retained earnings   5,196,917    6,421,944 
Accumulated other comprehensive loss   (769,154)   (407,169)
Total shareholders’ equity   9,538,177    6,486,350 
Non-controlling interest   226,918    211,353 
TOTAL EQUITY   9,765,095    6,697,703 
TOTAL LIABILITIES AND EQUITY  $13,306,781   $8,482,654 

 

6

 

 

WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

 

   For the Six Months Ended September 30, 
   2019   2018 
         
REVENUE  $2,500,195   $2,896,107 
           
COST OF REVENUE AND RELATED TAX          
Cost of revenue   1,491,384    1,041,871 
Business and sales related tax   22,509    14,867 
           
GROSS PROFIT   986,302    1,839,369 
           
OPERATING EXPENSES          
Selling expenses   764,179    677,224 
General and administrative expenses   1,259,784    885,560 
Total operating expenses   2,023,963    1,562,784 
           
INCOME (LOSS) FROM OPERATIONS   (1,037,661)   276,585 
           
OTHER INCOME (EXPENSE)          
Interest income   46,447    74,729 
Income (loss) from investments in unconsolidated entities   -    (186)
Other expenses   (5,726)   (4,471)
Total other income, net   40,721    70,072 
           
INCOME (LOSS) BEFORE INCOME TAX PROVISION   (996,940)   346,657 
           
PROVISION FOR INCOME TAXES   186,434    123,089 
           
NET INCOME (LOSS)   (1,183,374)   223,568 
           
Less: net income attributable to non-controlling interest   41,653    79,381 
           
NET INCOME (LOSS) ATTRIBUTABLE TO WAH FU EDUCATION GROUP LIMITED  $(1,225,027)  $144,187 
           
COMPREHENSIVE INCOME (LOSS)          
Net income (loss)   (1,183,374)   223,568 
Other comprehensive loss: foreign currency translation loss   (388,073)   (708,281)
Total comprehensive loss   (1,571,447)   (484,713)
Less: Comprehensive income (loss) attributable to non-controlling interest   (26,088)   94,629 
           
COMPREHENSIVE LOSS ATTRIBUTABLE TO WAH FU EDUCATION GROUP LIMITED  $(1,545,359)  $(579,342)
           
Earnings (loss) per common share - basic and diluted  $(0.29)  $0.05 
Weighted average shares - basic and diluted   4,199,336    3,200,000 

  

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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, 2019   3,200,000   $32,000   $217,395   $222,180   $6,421,944   $(407,169)  $6,486,350   $211,353   $6,697,703 
                                              
Common stock issued net of stock issuance costs of $1,266,326   1,181,033    11,810    4,627,029              -    4,638,839         4,638,839 
Net income (loss)   -    -    -    -    (1,225,027)   -    (1,225,027)   41,653    (1,183,374)
Foreign currency translation adjustment   -    -    -         -    (361,985)   (361,985)   (26,088)   (388,073)
                                              
Balance at September 30, 2019   4,381,033   $43,810   $4,844,424   $222,180   $5,196,917   $(769,154)  $9,538,177   $226,918   $9,765,095 
                                              
Balance at March 31, 2018   3,200,000   $32,000   $217,395   $217,001   $7,373,306   $116,015   $7,955,717   $217,596   $8,173,313 
Capital contribution   -    -    -    -    -    -    -    10,976    10,976 
Net income   -    -    -    -    144,187    -    144,187    79,381    223,568 
Foreign currency translation adjustment   -    -    -    -    -    (723,529)   (723,529)   15,248    (708,281)
                                              
Balance at September 30, 2018   3,200,000   $32,000   $217,395   $217,001   $7,517,493   $(607,514)  $7,376,375   $323,201   $7,699,576 

  

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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 
   2019   2018 
Cash flows from operating activities:        
Net Income (loss)  $(1,183,374)  $223,568 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:          
Depreciation and amortization   113,767    58,033 
Non-cash lease expense   78,861    - 
Loss from disposal of property and equipment   88    2,547 
Provision for doubtful accounts   59,242    8,594 
Provision for investments in unconsolidated entities   -    186 
Interest income from loan to third parties   (15,610)   (12,837)
Deferred tax benefit   91,148    (2,882)
Changes in operating assets and liabilities:          
Accounts receivable, net   929,249    (391,342)
Other receivable, net   (155,658)   (55,080)
Other current assets   67,131    (345,630)
Rent deposit   (74,856)   - 
Deferred revenue   1,157,842    112,781 
Taxes payable   108,238    35,773 
Operating lease liabilities   (56,131)   - 
Accrued expenses and other liabilities   13,928    30,904 
Net cash provided by (used in) operating activities   1,133,865    (335,385)
           
Cash flows from investing activities:          
Purchase of property and equipment   (63,111)   (59,910)
Proceeds from disposal of property and equipment   -    65 
Payment made on capitalized software development costs   -    (220,273)
Proceeds from loans to third parties   -    455,063 
Payments made for loans to third parties   -    (91,013)
Net cash provide by (used in) investing activities   (63,111)   83,932 
           
Cash flows from financing activities:          
Changes in due to related parties   26,040    2,742 
Net proceeds from initial public offering (“IPO”)   4,866,512    - 
Capital contribution by shareholders of non-controlling interest   -    10,976 
Net cash provided by financing activities   4,892,552    13,718 
           
Effect of exchange rate fluctuation on cash   (293,494)   (394,129)
           
Net increase (decrease) in cash   5,669,812    (631,864)
Cash at beginning of the period   3,927,718    4,722,955 
Cash at end of the period  $9,597,530   $4,091,091 
           
Supplemental cash flow information          
Cash paid for income taxes  $11,228   $94,527 
           
Non-cash financing activities          
Right of use assets obtained in exchange for operating lease obligations  $823,554   $- 
Deferred offering cost netted with proceeds from IPO  $227,673   $- 
Payable for capitalized software development costs  $-   $34,744 

 

 

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