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Puhui Wealth Investment Management Co. Ltd. Announces Financial Results for the Fiscal Year Ended June 30, 2019

BEIJING, October 31, 2019 /PRNewswire/ -- Puhui Wealth Investment Management Co., Ltd. (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 year ended June 30, 2019. The Company will file these results today on Form 20-F 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

  • Total revenues for the year ended June 30, 2019 were $3.2 million, a decrease from the prior year due to lower one-time fees. The Company implemented a proactively conservative investment strategy on behalf of its clients in the first half of calendar 2019 due to uncertainty in the macroeconomic outlook for the year.
  • The Company continues to maintain a sizable client base.  As of June 30, 2019, 990  high-net worth individuals ("HNW") have transacted with the company. 
  • As of June 30, 2019, the Company's subsidiary served as manager or general partner of four funds with an aggregate of approximately $23.0 million under management.
  • Current financial products consist of 25 financial products, four of which are self-developed and 21 are issued by third-party institutions.
  • Continued to expand its strategic cooperation with a well-known investment manager, Yingke Innovation Asset Management Co., Ltd. ("Yingke").
  • Puhui had 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, "Puhui continued to service a greater total number of high net worth clientele despite challenges in the macro-economic environment that impacted our financial results for the year, particularly in the first half of calendar 2019. This uncertainty was due to a variety of factors, including a slowdown in growth, rising deflationary pressure, and trade concerns driven by geo-political concerns. This led to general credit tightening throughout the domestic China market, however we have seen this alleviate in recent months as credit growth has accelerated. Our service is predicated on providing prudent financial counsel to individual clients and building a loyal client base with long-term relationships. During uncertain times in the market, we feel that this represents an opportunity for Puhui to distinguish itself from competitors. With access to global markets as a public company, we believe Puhui is well-positioned to diversify its product offering for HNW clientele. We remain focused on utilizing our existing partnerships, such as with Yingke, to provide access to a broader base of investors where we can prove that our long-term investment philosophy can gain traction over time."

Market Commentary

Mr. Ji continued, "We remain very bullish on the long-term indicators surrounding China's wealth management industry, along with Puhui's position as a versatile manager able to provide comprehensive products and services at a competitive rate for a broad audience. According to Credit Suisse's Global Wealth Report 2019, the world's wealthiest 10% hold assets over USD $109,400, with over 100 million individuals who make that threshold residing in China (and is the fastest growing globally). Our target customer base are HNW individuals averaging over USD $200,000. We believe the long-term drivers remain strong and our focus on middle-class family investment through diversified products leave the Company well positioned."

Financial Review

Wealth Management

  • Since fiscal year 2017, Puhui's core business has been the marketing of financial products to high-net-worth 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 990 clients as of June 30, 2019 (282 of which have purchased products the Company markets more than once).

Asset Management

  • Starting in June 2017, Puhui also launched its in-house asset management business. As of June 30, 2019, the Company's subsidiary served as manager or general partner of four funds with an aggregate of approximately US$23.0 million under management.

Revenues

  • The Company categorizes revenues into third party revenues and related party revenues. Related party revenues consist primarily of recurring management fees paid by limited partnership funds where the Company serves as general partner.
  • Overall, total revenues were $3.2 million for the year ended June 30, 2019, compared to $4.1 million in the prior year. The overall decrease was mainly due to a decrease in one-time commissions driven by the Company maintaining a cautious approach with its HNW clients due to uncertainty in the macroeconomic outlook in fiscal year 2019.

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 $316,718 and $367,548 for the years ended June 30, 2019 and 2018, respectively. Cost of revenues remained largely consistent from year to year.

Operating Expense

  • The Company's operating expense increased to $5.7 million from $3.8 million in the prior year, largely due to an increase in salaries, rent and professional fees associated with public company costs, business expansion, and consulting fees.

Net Loss

  • Net loss for the year ended June 30, 2019 was $3.1 million, as compared to net income of $125,827 for the prior year, largely due to the higher operating expenses detailed above.

Liquidity and Capital Resources

  • The Company has historically financed its operations primarily through cash flows from operations, additional capital contributions from shareholders and short-term advances from related parties.
  • For the year ended June 30, 2019, the Company received approximately $8.0 million, net of expenses, from issuance of ordinary shares from its Nasdaq IPO.
  • The Company had approximately $2.0 million of cash and approximately $7.4 million of working capital as of June 30, 2019 and believes its current working capital is sufficient to support operations for the next twelve months.

About Puhui Wealth Investment Management Co., Ltd.

Headquartered in Beijing, China, 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 (PHCF).

Additional information about Puhui can be found at the Company's corporate website: www.puhuiwealth.com.

Forward Looking Statements

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

Lucy Ma

(212) 836-9606

+86 10 5661 7012

aprior@equityny.com

lma@equityny.com




PUHUI WEALTH INVESTMENT MANAGEMENT CO., LTD AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)








For the Years Ended June 30,



2019


2018






REVENUES






Revenues

$

3,072,809

$

2,808,346


Revenues - related parties


129,122


1,351,515


Sales taxes


(21,297)


(20,680)



Total revenues


3,180,634


4,139,181








OPERATING EXPENSES






Cost of revenues


(316,718)


(367,548)


Selling expenses


(2,005,367)


(1,500,572)


General and administrative expenses


(3,421,412)


(1,888,310)


Impairment loss


(5,628)


(78,984)



Total operating expenses


(5,749,125)


(3,835,414)






(LOSS) INCOME FROM OPERATIONS


(2,568,491)


303,767






OTHER INCOME (EXPENSES)






Interest income


62,967


11,526


Other finance expenses


(206,081)


(128,112)


Other income (expenses), net


808


86,966



Total other expenses, net


(142,306)


(29,620)






(LOSS) INCOME BEFORE INCOME TAXES 


(2,710,797)


274,147






PROVISION (BENEFIT) FOR INCOME TAXES






Current


11,803


298,935


Deferred


380,302


(150,615)



Total income tax provision


392,105


148,320








NET (LOSS) INCOME


(3,102,902)


125,827






Less: Net loss attributable to noncontrolling interests


(645,716)


(349,519)






NET (LOSS) INCOME ATTRIBUTABLE TO PUHUI WEALTH

$

(2,457,186)

$

475,346






NET (LOSS) INCOME

$

(3,102,902)

$

125,827






OTHER COMPREHENSIVE INCOME (LOSS)






Foreign currency translation adjustment


(271,194)


(34,199)








COMPREHENSIVE (LOSS) INCOME

$

(3,374,096)

$

91,628






Less: Comprehensive loss attributable to noncontrolling interests


(672,272)


(350,314)






COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO PUHUI WELATH

$

(2,701,824)

$

441,942






WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES






Basic and diluted


10,793,017


10,000,000







EARNINGS PER SHARE 






Basic and diluted

$

(0.23)

$

0.05


 

 

PUHUI WEALTH INVESTMENT MANAGEMENT CO., LTD AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS







June 30,


June 30,


2019


2018





ASSETS

CURRENT ASSETS






Cash

$

2,004,625

$

4,809,040


Short-term investments


706,226


1,101,317


Accounts receivable


1,853,041


1,673,764


Accounts receivable - related parties


1,013,135


1,051,718


Other receivables


213,252


206,831


Loans receivable - related party


1,647,858


-


Prepaid expenses


1,278,133


265,138


Deferred offering costs


-


700,094



Total current assets


8,716,270


9,807,902






PROPERTY AND EQUIPMENT, NET


223,385


135,682






OTHER ASSETS 






Long-term security deposits


384,860


-


Acquisition prepayment


2,447,259


416,761


Intangible asset, net


10,241


-


Long-term prepaid expenses


2,247,872


-


Deferred tax assets, net


347,195


782,911



Total other assets


5,437,427


1,199,672











Total assets

$

14,377,082

$

11,143,256






LIABILITIES AND SHAREHOLDERS' EQUITY






CURRENT LIABILITIES






Customer deposits

$

-

$

250,529


Other payables and accrued liabilities


808,328


677,215


Other payables - related party


-


196,300


Deferred revenues


227,622


303,637


Taxes payable


10,512


356,440


Current portion of long-term debt


315,983


302,001



Total current liabilities


1,362,445


2,086,122






LONG-TERM DEBT


1,206,565


1,208,003









Total liabilities


2,569,010


3,294,125






COMMITMENTS AND CONTINGENCIES










SHAREHOLDERS' EQUITY






Preferred shares, $0.001 par value, 1,000,000 shares authorized, 0 shares issued and


-


-



outstanding as of June 30, 2019 and June 30, 2018




Ordinary shares, $0.001 par value, 49,000,000 shares authorized,


11,508


10,000



11,507,558 and 10,000,000 shares issued and outstanding





 as of June 30, 2019 and June 30, 2018, respectively




Additional paid-in capital


21,911,045


14,613,119


Accumulated deficit


(9,221,341)


(6,764,155)


Accumulated other comprehensive loss


(251,958)


(7,320)



Total shareholders' equity attributable to controlling shareholders

12,449,254


7,851,644






Noncontrolling interests


(641,182)


(2,513)








Total shareholders' equity


11,808,072


7,849,131











Total liabilities and shareholders' equity 

$

14,377,082

$

11,143,256


 

 

PUHUI WEALTH INVESTMENT MANAGEMENT CO., LTD AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS




For the Years Ended June 30,



2019


2018






CASH FLOWS FROM OPERATING ACTIVITIES:






Net (loss) income

$

(3,102,902)

$

125,827


Adjustments to reconcile net (loss) income to net cash (used in)






provided by operating activities:








Depreciation and amortization


135,939


78,514




Loss on disposal of property and equipment


78


280




Impairment loss on equity security


5,628


78,984




Loss from disposal of subsidiaries


32,641


-




Deferred tax provision (benefits)


380,302


(150,615)



Change in operating assets and liabilities








Accounts receivable


(242,674)


(1,332,431)




Accounts receivable - related parties


-


(1,070,648)




Other receivables


(402,174)


114,479




Prepaid expenses


(932,928)


(139,496)




Long-term prepaid expenses


(2,248,912)


-




Customer deposit received (returned)


(233,541)


968,426




Other payables and accrued liabilities


156,724


177,776




Other payables - related party


(190,666)


199,834




Deferred revenues


(65,413)


309,102




Taxes payable


(426,597)


319,696





Net cash (used in) provided by operating activities


(7,134,495)


(320,272)






CASH FLOWS FROM INVESTING ACTIVITIES:






Proceeds from sales of short-term invesements


365,462


-


Purchases of short-term investments


(24,347)


(1,913,794)


Loans receivable to related party 


(1,661,514)


-


Acquisition prepayment


(2,042,460)


-


Purchases of property and equipment


(159,514)


(132,998)


Proceeds from sale of property and equipment


990


3,536


Purchase of intangible asset 


(12,644)


-





Net cash (used in) provided by investing activities


(3,534,027)


(2,043,256)






CASH FLOWS FROM FINANCING ACTIVITIES:






Payment of deferred offerring costs


-


(712,696)


Payment of acquisition deposit


-


(424,263)


Capital contribution from shareholders


-


6,469,679


Short-term advances made to related parties


-


-


Short-term advances from related parties


-


-


Proceeds from issuance of ordinary shares through IPO, net


8,032,912


-


Proceeds from long-term debt


-


1,537,184





Net cash provided by (used in) financing activities


8,032,912


6,869,904






EFFECT OF EXCHANGE RATE ON CASH


(168,805)


(19,854)






(DECREASE) INCREASE IN CASH


(2,804,415)


4,486,522






CASH, beginning of year


4,809,040


322,518






CASH, end of year

$

2,004,625

$

4,809,040






SUPPLEMENTAL CASH FLOW INFORMATION:






Cash paid for income tax 

$

240,508

$

27,722


Cash paid for interest

$

197,999

$

-






NON-CASH TRANSACTIONS OF FINANCING ACTIVITIES






Fair value adjustment offsetting customer deposits with short-term investment

$

-

$

713,568


Prepaid IPO costs to be net against IPO proceeds

$

733,478

$

-