BEIJING, June 9, 2020 /PRNewswire/ -- Puhui Wealth
Investment Management Co., Ltd. (Nasdaq: PHCF) ("Puhui" or the
"Company"), a third-party wealth management service provider with a
focus on wealth management services for high net worth ("HNW")
individuals and corporate clients, today announced its financial
results for the six months ended December
31, 2019. The Company also filed these results on Form 6-K
with the Securities and Exchange Commission, which can be viewed at
www.sec.gov. All amounts in this press release are in USD unless
otherwise noted.
Financial and Operating Highlights
- Revenues for the six months ended December 31, 2019 were $577,645, compared to $1.9
million in the same period of 2018.
- The Company continues to add incremental HNW clientele, with
new HNW clients transacting with Puhui totaling 98 for the six
months ended December 31, 2019.
- As of December 31, 2019, the
Company's subsidiary served as manager or general partner of four
funds with an aggregate of approximately $23.5 million under management.
- As of June 1, 2020, the Company
maintained 8 sales and service locations based in Beijing (3), Shanghai, Suzhou, Qingdao, Changchun and Hong
Kong.
- On December 3, 2019, Puhui
acquired 100% of the shares of Granville Financial Services Company
Limited ("Granville") for HK$29,390,000, or approximately $3.8 million. The purpose of the acquisition of
Granville is to expand the Company's operations outside of Mainland
China into Hong Kong and take
advantage of financial qualifications and licenses to broaden the
Company's existing product portfolio.
- Puhui had approximately $2.2
million of cash and approximately $1.9 million of working capital as of
December 31, 2019, as compared to
approximately $2.0 million of cash
and approximately $7.4 million of
working capital as of June 30,
2019.
Mr. Zhe Ji, the Chairman and CEO
of the Company, stated, "We experienced slower growth than
anticipated due to uncertainty in the macroeconomic environment as
a result of slower economic growth and pending trade conflicts.
Over the past few months, Puhui, like so many companies across the
globe, has been affected by the outbreak of a novel strain of
coronavirus (COVID-19). Our immediate focus was on the safety and
well-being of our employees and customers, and we also took
proactive steps to ensure continuity across our organization. We
temporally closed our offices and implemented a work-from-home
policy beginning in February 2020, as
required by relevant PRC regulatory authorities. We plan on
beginning to reopen all offices in June
2020, and Puhui has benefitted from long-lasting
relationships formed over our history as a wealth manager focused
on HNW individuals and the inherent ability of our workforce to
operate successfully in a remote capacity."
Mr. Ji continued, "While we have continued to maintain a
consistent level of operating capacity during this uncertain
period, the volatility in the market and across the globe prevents
our Company from accurately predicting the potential long-standing
impact of the pandemic. Our customers could potentially be
negatively impacted by the outbreak, which may reduce their budgets
for investment in 2020. As a result, our revenue and profitability
may be negatively impacted in 2020. We are taking a conservative
approach in our financial forecasts, while retaining a constant
discourse with our clientele and partners that provide a wide array
of financial products to offer these customers."
Mr. Ji concluded, "Prior to the outbreak of COVID-19, we were
delighted to announce the acquisition of Granville, which served as
the first step in expanding our business development activities
outside of Mainland China into Hong
Kong. While we certainly could not have predicted the impact
of the pandemic, we do feel that a diversified strategy is in the
best interest of Puhui and its shareholders and will allow our
company to grow through multiple cycles. We have seen net inflows
of capital begin to accelerate in China in the spring months, which we believe
is a favorable trend as China
transitions back into full resumption of economic activity. We
believe that that increasingly diversified nature of our investment
portfolio and trust we have cultivated with Puhui's clientele will
help to increase our brand recognition as a trusted advisor to our
clients and help to increase shareholder value over time."
Financial Review for the Six Months Ended December 31, 2019
Wealth Management
- Since fiscal year ended June 30,
2017, Puhui's core business has been the marketing of
financial products to HNW clients and small and medium enterprises
in China. As a growing independent
wealth management service provider, the Company maintains a sizable
client base, consisting of 1,088 clients as of December 31, 2019 (282 of which have purchased
products the Company markets more than once). This compares to 990
clients as of June 30, 2019, with 282
purchasing products more than once.
Asset Management
- Starting in June 2017, Puhui also
launched its in-house asset management business. As of December 31, 2019, the Company's subsidiaries
served as manager or general partner of four funds with an
aggregate of approximately $23.5
million under management, compared to $23.0 million under management as of June 30, 2019. The increase was primarily due to
interest and dividend received from the funds.
Revenues
- The Company categorizes revenues into third-party revenues and
related-party revenues. Revenue mainly includes one-time
commission, recurring services fees and recurring management fees.
Related party revenues consist primarily of one-time commission
fees we charged for our affiliates or management fees we received
from fund/limited partnership where the Company's subsidiaries
serves as manager or general partner. Our affiliate is entity under
common control of one of our principal shareholders.
- Total revenues were $577,645 for
the six months ended December 31,
2019, compared to $1.9 million
in the six-month period in 2018, a decrease of $1.3 million, or 69.1%. The overall decline was
mainly due to the decrease in one-time commissions and recurring
services fees as a result of the decrease in the aggregate value of
wealth management products distributed. Due to slower economic
growth, our clients are more conservative in purchasing wealth
management products.
Cost of Revenues
- Puhui's cost of revenues consist of compensation paid to
financial product development team members along with benefits. The
Company's cost of revenues were $132,334 and $206,881 for the six months ended December 31, 2019 and 2018, a decrease of
$74,547 or 36%. As we experienced
slower revenue growth and product distribution, the Company's cost
of revenue decreased accordingly.
Operating Expense
- The Company's operating expenses increased to $4.0 million from $2.5
million in the same period in 2018, an increase of
$1.5 million or 58.2%, largely due to
an increase in general and administrative expenses, impairment loss
and selling expenses. The increase in general and administrative
expenses was mainly due to additional consulting fees for business
development, audit and financial reporting services and legal
services as a public company.
Net Loss
- Net loss for the six month period ended December 31, 2019 was $3.4
million, as compared to $0.7
million for the six month period ended December 31, 2018, an increase of $2.7 million or 386%, due to the above
reasons.
Liquidity and Capital Resources
- The Company historically financed its operations primarily
through cash flows from operations, additional capital
contributions from shareholders and short-term advances from
related parties. Going forward, the Company will rely on its cash
flows from operations and may have to consider supplementing its
available sources of funds through additional borrowings either
from financial institutions in China or from its major shareholders,
- As of December 31, 2019, the
Company had cash of approximately $2.2
million, as compared to $2.0
million as of June 30,
2019,
- As of December 31, 2019, the
Company had approximately $1.9
million of working capital.
About Puhui Wealth Investment Management Co., Ltd.
Headquartered in Beijing, China
and founded in 2013, Puhui is a third-party wealth management
service provider focusing on marketing financial products
(including private equity and other diversified products and
services) to, and managing funds for, individuals and corporate
clients in the PRC. On December 27,
2018, the Company's ordinary shares were listed and began
trading listed on the Nasdaq Capital Market (ticker: PHCF).
Additional information about Puhui can be found at the Company's
corporate website: www.puhuiwealth.com.
Additional Disclosure Concerning COVID-19
The impacts of COVID-19 on Puhui's business, financial
condition, and results of operations include, but are not limited
to, the following:
- The Company temporally closed its offices and implemented
work-from-home policy beginning in February
2020, as required by relevant PRC regulatory authorities. We
plan to reopen our offices in June
2020 as the situation improved in China.
- Due to the nature of the Company's business, the impact of the
closure on operational capabilities was not significant, as most of
Puhui's work force continued working offsite during such
closure.
- Puhui's customers could potentially be negatively impacted by
the outbreak, which may reduce their budgets for investment in
2020. As a result, revenue and profitability may be negatively
impacted in 2020.
- The economy may worsen if the COVID-19 outbreak continues.
Puhui's product provider may be negatively impacted by the
outbreak, however the Company has not seen any significant
disruption of its product supply to date.
Because of the uncertainty surrounding the COVID-19 outbreak,
the business disruption and the financial impact related to
the outbreak of and response to the COVID-19 outbreak cannot be
reasonably estimated at this time.
Forward Looking Statement
This news release contains "forward-looking statements" within
the meaning of the "safe harbor" provisions of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by the use of words such as
"anticipate", "believe", "expect", "estimate", "plan", "outlook",
and "project" and other similar expressions that indicate future
events or trends or are not statements of historical matters. These
statements are based on our management's current expectations and
beliefs, as well as a number of assumptions concerning future
events.
Such forward-looking statements are subject to known and unknown
risks, uncertainties, assumptions and other important factors, many
of which are outside of our control and all of which could cause
actual results to differ materially from the results discussed in
the forward-looking statements. Accordingly, forward-looking
statements should not be relied upon as representing our views as
of any subsequent date, and we do not undertake any obligation to
update forward-looking statements to reflect events or
circumstances after the date they were made, whether as a result of
new information, future events or otherwise, except as may be
required under applicable securities laws. Factors that could cause
actual results to differ materially from those expressed or implied
in forward-looking statements can be found in our reports filed
with the Securities and Exchange Commission, which are
available, free of charge, on the SEC's website
at www.sec.gov.
Investor
Relations:
|
|
The Equity Group
Inc.
|
In China
|
Adam Prior, Senior
Vice
President
|
Lucy Ma,
Associate
|
(212)
836-9606
|
+86 10 5661
7012
|
aprior@equityny.com
|
lma@equityny.com
|
PUHUI WEALTH
INVESTMENT MANAGEMENT CO., LTD AND SUBSIDIARIES
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended December 31
|
|
|
|
|
2019
|
|
2018
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
REVENUES
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
463,437
|
$
|
1,872,685
|
Revenues - related
parties
|
|
|
|
115,303
|
|
7,779
|
Sales
taxes
|
|
|
|
(1,095)
|
|
(13,494)
|
Total
revenues
|
|
|
|
577,645
|
|
1,866,970
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
Cost of
revenues
|
|
|
|
(132,334)
|
|
(206,881)
|
Selling
expenses
|
|
|
|
(1,017,176)
|
|
(922,693)
|
General and
administrative expenses
|
|
|
|
(2,822,029)
|
|
(1,387,407)
|
Impairment
loss
|
|
|
|
(19,845)
|
|
(5,512)
|
Total operating
expenses
|
|
|
|
(3,991,384)
|
|
(2,522,493)
|
|
|
|
|
|
|
|
LOSS FROM
OPERATIONS
|
|
|
|
(3,413,739)
|
|
(655,523)
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSES)
|
|
|
|
|
|
|
Interest
income
|
|
|
|
64,445
|
|
6,091
|
Interest and other
finance expenses
|
|
|
|
(103,706)
|
|
(101,069)
|
Other income,
net
|
|
|
|
57,902
|
|
31,896
|
Total other expenses,
net
|
|
|
|
18,641
|
|
(63,082)
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME
TAXES
|
|
|
|
(3,395,098)
|
|
(718,605)
|
|
|
|
|
|
|
|
PROVISION FOR INCOME
TAXES
|
|
|
|
|
|
|
Current
|
|
|
|
-
|
|
-
|
Deferred
|
|
|
|
32,035
|
|
27,410
|
Total income tax
provision
|
|
|
|
32,035
|
|
27,410
|
|
|
|
|
|
|
|
NET LOSS
|
|
|
|
(3,427,133)
|
|
(746,015)
|
|
|
|
|
|
|
|
Less: Net loss
attributable to noncontrolling interest
|
|
|
|
(447,733)
|
|
(282,524)
|
|
|
|
|
|
|
|
NET LOSS ATTRIBUTABLE
TO PUHUI WEALTH
|
|
|
$
|
(2,979,400)
|
$
|
(463,491)
|
|
|
|
|
|
|
|
NET LOSS
|
|
|
$
|
(3,427,133)
|
$
|
(746,015)
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE
INCOME (LOSS)
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
|
|
190,158
|
|
(285,769)
|
|
|
|
|
|
|
|
COMPREHENSIVE
LOSS
|
|
|
$
|
(3,236,975)
|
$
|
(1,031,784)
|
|
|
|
|
|
|
|
Less: Comprehensive
loss attributable to noncontrolling interest
|
|
|
|
(453,786)
|
|
(310,967)
|
|
|
|
|
|
|
|
COMPREHENSIVE LOSS
ATTRIBUTABLE TO PUHUI WEALTH
|
|
|
$
|
(2,783,189)
|
$
|
(720,817)
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
NUMBER OF ORDINARY SHARES
|
|
|
|
|
|
|
Basic and
diluted
|
|
|
|
11,507,558
|
|
10,090,126
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE
|
|
|
|
|
|
|
Basic and
diluted
|
|
|
$
|
(0.26)
|
$
|
(0.05)
|
PUHUI WEALTH
INVESTMENT MANAGEMENT CO., LTD AND SUBSIDIARIES
|
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
June 30,
|
|
|
|
|
2019
|
|
2019
|
|
|
|
|
(Unaudited)
|
|
|
ASSETS
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash
|
|
|
$
|
2,211,010
|
$
|
2,004,625
|
Cost method
investments
|
|
|
|
673,877
|
|
706,226
|
Accounts
receivables
|
|
|
|
387,030
|
|
1,853,041
|
Accounts receivables
- related parties
|
|
|
|
998,395
|
|
1,013,135
|
Other
receivables
|
|
|
|
143,358
|
|
213,252
|
Other receivables -
related party
|
|
|
|
1,272,259
|
|
1,647,858
|
Prepaid
expenses
|
|
|
|
1,344,326
|
|
1,278,133
|
Total current
assets
|
|
|
|
7,030,255
|
|
8,716,270
|
|
|
|
|
|
|
|
PROPERTY AND
EQUIPMENT, NET
|
|
|
|
542,207
|
|
223,385
|
|
|
|
|
|
|
|
OTHER
ASSETS
|
|
|
|
|
|
|
Long-term security
deposits
|
|
|
|
428,886
|
|
384,860
|
Acquisition
prepayment
|
|
|
|
-
|
|
2,447,259
|
Operating lease
right-of-use assets
|
|
|
|
1,537,856
|
|
-
|
Long-term prepaid
expenses
|
|
|
|
1,858,877
|
|
2,247,872
|
Deferred tax assets,
net
|
|
|
|
309,959
|
|
347,195
|
Intangible asset,
net
|
|
|
|
1,027,869
|
|
10,241
|
Goodwill
|
|
|
|
1,808,294
|
|
-
|
Total other
assets
|
|
|
|
6,971,741
|
|
5,437,427
|
|
|
|
|
|
|
|
Total
assets
|
|
|
$
|
14,544,203
|
$
|
14,377,082
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
Customer
deposit
|
|
|
$
|
166,839
|
$
|
-
|
Acquisition
payable
|
|
|
|
368,439
|
|
-
|
Deferred
revenue
|
|
|
|
1,534,049
|
|
227,622
|
Other payables and
accrued liabilities
|
|
|
|
564,907
|
|
808,328
|
Other payables -
related party
|
|
|
|
169,192
|
|
-
|
Operating lease
liabilities - current
|
|
|
|
801,369
|
|
-
|
Financing lease
liabilities - current
|
|
|
|
43,955
|
|
-
|
Taxes
payable
|
|
|
|
19,205
|
|
10,512
|
Current portion of
long-term debt
|
|
|
|
1,458,891
|
|
315,983
|
Total current
liabilities
|
|
|
|
5,126,846
|
|
1,362,445
|
|
|
|
|
|
|
|
NON-CURRENT
LIABILITIES
|
|
|
|
|
|
|
Operating lease
liabilities - noncurrent
|
|
|
|
723,965
|
|
-
|
Financing lease
liabilities - noncurrent
|
|
|
|
92,954
|
|
-
|
Long-term
debt
|
|
|
|
29,341
|
|
1,206,565
|
Total non-current
liabilities
|
|
|
|
846,260
|
|
1,206,565
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
|
5,973,106
|
|
2,569,010
|
PUHUI WEALTH
INVESTMENT MANAGEMENT CO., LTD AND SUBSIDIARIES
|
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(CONTINUED)
|
|
|
|
|
|
|
|
December
31,
|
|
June 30,
|
|
|
2019
|
|
2019
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
Preferred shares,
$0.001 par value, 1,000,000 shares authorized, 0 shares issued
and
outstanding as of December 31, 2019 and June 30,
2019
|
|
-
|
|
-
|
|
|
|
|
|
Ordinary shares,
$0.001 par value, 49,000,000 shares authorized,
11,507,558 shares issued and outstanding
as of December 31, 2019 and June 30, 2019
|
|
11,508
|
|
11,508
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in
capital
|
|
21,911,045
|
|
21,911,045
|
Accumulated
deficit
|
|
(12,200,741)
|
|
(9,221,341)
|
Accumulated other
comprehensive loss
|
|
(55,747)
|
|
(251,958)
|
Total shareholders'
equity attributable to controlling shareholders
|
|
9,666,065
|
|
12,449,254
|
|
|
|
|
|
Noncontrolling
interest
|
|
(1,094,968)
|
|
(641,182)
|
|
|
|
|
|
Total shareholders'
equity
|
|
8,571,097
|
|
11,808,072
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
14,544,203
|
$
|
14,377,082
|
PUHUI WEALTH
INVESTMENT MANAGEMENT CO., LTD AND SUBSIDIARIES
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
For the Six Months
Ended December 31
|
|
|
|
2019
|
|
2018
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
Net loss
|
|
$
|
(3,427,133)
|
$
|
(746,015)
|
Adjustments to
reconcile net loss to net cash
used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
95,187
|
|
67,704
|
Amortization of operating lease right-of-use assets
|
|
|
358,820
|
|
-
|
Impairment
loss on equity securities
|
|
|
14,371
|
|
5,512
|
Deferred
tax provision
|
|
|
32,034
|
|
57,271
|
Change in operating assets and liabilities
|
|
|
|
|
|
Accounts
receivables
|
|
|
1,432,389
|
|
482,556
|
Other
receivables
|
|
|
51,572
|
|
(343,652)
|
Prepaid
expenses
|
|
|
(16,514)
|
|
(982,395)
|
Long-term
prepaid expenses
|
|
|
387,055
|
|
-
|
Accounts
payable
|
|
|
165,109
|
|
-
|
Deferred
revenue
|
|
|
1,303,676
|
|
(264,441)
|
Other
payables and accrued liabilities
|
|
|
(31,319)
|
|
85,310
|
Other
payables - related parties
|
|
|
-
|
|
(189,372)
|
Operating
lease liabilities
|
|
|
(371,283)
|
|
-
|
Taxes
payable
|
|
|
(43,148)
|
|
(328,175)
|
Net cash used in operating activities
|
|
|
(49,184)
|
|
(2,155,697)
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
Proceeds from sales of short-term investments
|
|
|
7,600
|
|
338,878
|
Repayment from related parties
|
|
|
349,996
|
|
-
|
Acquisition prepayment
|
|
|
-
|
|
(3,264,978)
|
Purchases of property and equipment
|
|
|
(262,570)
|
|
(107,292)
|
Cash acquired from Granville, net of purchase price paid
|
|
|
125,365
|
|
-
|
Purchase of intangible asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
(12,558)
|
Net cash provided by (used in) investing activities
|
|
|
220,391
|
|
(3,045,950)
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
Proceeds from issuance of ordinary shares through IPO,
net
|
|
|
-
|
|
8,032,912
|
Repayment of financing lease liabilities
|
|
|
(3,515)
|
|
-
|
Principal payments of long-term debt
|
|
|
(12,107)
|
|
-
|
Net cash (used in) provided by financing activities
|
|
|
(15,622)
|
|
8,032,912
|
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATE ON CASH
|
|
|
50,800
|
|
(175,226)
|
|
|
|
|
|
|
INCREASE IN
CASH
|
|
|
206,385
|
|
2,656,039
|
|
|
|
|
|
|
CASH, beginning of
period
|
|
|
2,004,625
|
|
4,809,040
|
|
|
|
|
|
|
CASH, end of
period
|
|
$
|
2,211,010
|
$
|
7,465,079
|
|
|
|
|
|
|
SUPPLEMENTAL CASH
FLOW INFORMATION:
|
|
|
|
|
|
Cash paid for income tax
|
|
$
|
-
|
$
|
227,152
|
Cash paid for interest
|
|
$
|
192,619
|
$
|
196,655
|
NON-CASH TRANSACTIONS
OF INVESTING AND FINANCING ACTIVITIES
|
|
|
|
|
|
Prepaid IPO costs to be net against IPO proceeds
|
|
$
|
-
|
$
|
733,478
|
Initial recognition of right-of-use assets and lease
liabilities
|
|
$
|
1,889,558
|
$
|
-
|
Acquisition of Granville offset with acquisition
prepayment
|
|
$
|
2,447,259
|
$
|
-
|
Acquisition of Granville with payables
|
|
$
|
537,631
|
$
|
-
|
Purchase of fixed asset through financing lease
|
|
$
|
139,790
|
$
|
-
|
View original
content:http://www.prnewswire.com/news-releases/puhui-wealth-investment-management-co-ltd-announces-financial-results-for-the-six-months-ended-december-31-2019-301073020.html
SOURCE Puhui Wealth Investment Management Co., Ltd.