BEIJING, May 15, 2023
/PRNewswire/ -- China Liberal Education Holdings Limited (Nasdaq:
CLEU) ("China Liberal", the "Company", "we", "our", or "us"),
a China-based company that operates two colleges and provides
smart campus solutions and other educational services, today
announced its audited financial results for the fiscal year ended
December 31, 2022.
Ms. Ngai Ngai Lam, Chairwoman and CEO of China Liberal,
commented, "Fiscal year 2022 is a year of expansion and exploration
for China Liberal, as we completed two major acquisitions and
enhanced our service infrastructure and capabilities. The
acquisition of Wanwang Investment Limited ("Wanwang") marks a
transformational milestone for China Liberal to directly operate
colleges and further expand business scale toward our growth goals,
and the acquisition of Oriental Wisdom Cultural Development Co.,
Ltd. ("Oriental Wisdom") represents the implementation of the
Company's business strategy to drive business growth in the
vocational education industry through integrating enterprises and
developing vocational education across various industries. We are
glad to see the success of these expansion efforts reflected in our
financial results. Our revenue reached $11.60 million for fiscal year 2022, representing
an increase of 196.8% from $3.91
million for fiscal year 2021. Our gross profit increased by
117.6% to $6.01 million for fiscal
year 2022. What's more, we actively sought partnerships in the
education industry and achieved satisfying results in securing
clients and market share during this period. We are positive about
our long-term development to be brought by these strategic
initiatives in 2022. Looking ahead, we will continue searching for
potential acquisition targets to extend our business reach in the
education industry, while remain committed to improving our
existing services and optimizing our strategic initiatives. We
believe we have laid a solid foundation for long-term growth and
value-creation for shareholders."
Fiscal Year 2022 Financial Highlights
|
|
For the Years Ended
December 31,
|
($ millions, except
for percentages or per share data)
|
|
2022
|
|
2021
|
|
%Change
|
Revenue
|
|
11.60
|
|
3.91
|
|
196.8 %
|
Gross profit
|
|
6.01
|
|
2.76
|
|
117.6 %
|
Gross margin
|
|
51.8 %
|
|
70.6 %
|
|
-18.8pp
|
Loss from
operations
|
|
(1.38)
|
|
(1.17)
|
|
18.3 %
|
Net loss
|
|
(1.69)
|
|
(1.25)
|
|
35.1 %
|
Basic and diluted loss
per share
|
|
(0.07)
|
|
(0.12)
|
|
41.7 %
|
|
Note: pp represents percentage
points.
|
- Revenue increased by 196.8% year-over-year to $11.60 million for fiscal year 2022, from
$3.91 million for fiscal year
2021.
- Gross profit increased by 117.6% to $6.01 million for fiscal year 2022, from
$2.76 million for fiscal year
2021.
- Gross margins were 51.8% and 70.6% for fiscal years 2022 and
2021, respectively.
- Loss from operations was $1.38
million for fiscal year 2022, compared to $1.17 million for fiscal year 2021.
- Net loss was $1.69 million for
fiscal year 2022, compared to $1.25
million for fiscal year 2021.
- Basic and diluted loss per share were $0.07 for fiscal year 2022, compared to
$0.12 for fiscal year 2021.
Fiscal Year 2022 Financial Results
Revenue
Revenue increased by 196.8% year-over-year to $11.60 million for fiscal year 2022 from
$3.91 million for fiscal year 2021.
The increase in revenue was mainly attributable to revenue
contribution from acquired entities in 2022.
Revenue from course fees primarily derived from providing
educational programs to college students. On September 2, 2022, the Company completed its
acquisition of Wanwang. Wanwang, through its subsidiaries, operates
two colleges, Fuzhou Melbourne Polytechnic ("FMP") and Strait
College of Mingjiang University ("Strait College"). Course fees are
generally received in advance prior to the beginning of each
applicable course or program. Course fees are recognized
proportionately over the terms of the applicable course or program
because the students simultaneously receive and consume the
benefits provided by the Company. The portion of course fees
received from students but not earned is recorded as deferred
revenue in contract liabilities. Since the completion of
acquisition in September 2022, both
FMP and Strait College collectively enrolled 4,967 students, and
$6.4 million in course fees were
earned from September 2022 to
December 2022. The remaining course
fees of $7.5 million, which was
received in advance, will be recognized as revenue from
January 2023 to June 2023.
Revenue from Sino-foreign Jointly Managed Academic Programs
increased by $0.67 million, or 24.9%,
to $3.34 million for fiscal year
2022, from $2.68 million for fiscal
year 2021. This increase was primarily attributed to an increase in
the average tuition fees by 24.9%, which was mainly caused by a
change in student mix enrolled in different academic programs with
the universities / colleges. The increase is also caused by an
increase in the number of students by 1 from 2,488 students for the
year ended December 31, 2021 to 2,489
students for the year ended December 31,
2022.
Revenue from tailored job readiness training services increased
by $1.13 million, or 817.8%, to
$1.26 million for fiscal year 2022,
from $0.14 million for fiscal year
2021. The increase was mainly attributed to the revenue
contribution from our newly acquired entity, Oriental Wisdom. On
July 14, 2022, the Company completed
its acquisition of Oriental Wisdom, an integrated education
services provider focusing on operating jointly-managed academic
programs in the vocational higher education industry in
China.
Revenue from Overseas Study Consulting Services increased by
$0.28 million, or 777.0%, to
$0.32 million for fiscal year 2022,
from $0.04 million for the same
period last year. The increase was mainly because our performance
obligations for our service contract with Beijing Foreign Studies
University were satisfied for the year ended December 31, 2022. According to the
administration guidelines issued by General Office of the Ministry
of Education in December 2021,
universities and colleges shall cease projects and cooperation with
external parties and, as a result, after all existing contracts
with Beijing Foreign Studies University came to completion and all
existing performance obligations were completely satisfied, we
discontinued our Overseas Study Consulting Services.
Revenue from providing smart campus related technological
consulting service and technical support services decreased by
$0.78 million, or 73.6%, to
$0.28 million for fiscal year 2022,
from $1.06 million for fiscal year
2021. The decrease was primarily because we did not obtain smart
campus projects of large size for the year ended December 31, 2022. For the year ended
December 31, 2022, six projects were
completed as compared with 18 completed projects for the year ended
December 31, 2021. Many Chinese
universities/colleges put on hold their "smart campus" project
plans due to continued uncertainties associated with the COVID-19
pandemic during 2022, prior to the relaxation of the COVID-19
related restrictions imposed by the government. The decrease in
revenue was also attributable to the decrease in average project
size from $58,859 per project in 2021
to $46,563 per project in
2022.
Revenue from textbooks and course material sales increased to
$13,948 for fiscal year 2022 from nil
for fiscal year 2021. The increase was mainly attributed to
increased demand for our textbooks and course materials.
Cost of Revenue
Cost of revenue increased by $4.45
million, or 387.1%, to $5.60
million for fiscal year 2022, from $1.15 million for fiscal year 2021, primarily due
to $4.4 million cost associated with
providing educational programs to college students.
Gross Profit
Gross profit increased by $3.24 million, or 117.6%,
to $6.01 million for fiscal year 2022, from $2.76
million for fiscal year 2021, while gross profit margin
decreased by 18.8%, to 51.8% for fiscal year 2022, from 70.6%
for fiscal year 2021. The increase in gross profit was primarily
due to $2.0 million gross profit
contribution from two colleges. Also, gross profit contribution
from tailored job readiness training services increased by
$0.9 million in the fiscal year 2022
compared to the fiscal year 2021, mainly as a result of gross
profit contribution from our newly acquired entity, Oriental
Wisdom.
Operating Expenses
Selling expenses increased by $0.23 million, or 152.0%,
to $0.38 million for fiscal year 2022, from $0.15
million for fiscal year 2021. The increase in selling expenses
was primarily attributable to $0.1
million cost incurred in recruiting new students for two
colleges and $0.1 million increase in
selling expenses, resulting from expansion of our sales and
marketing force.
General and administrative expenses increased by $2.49
million, or 66.0%, to $6.27 million for the fiscal year
2022, from $3.78 million for fiscal year 2021, primarily due
to $1.8 million general and
administrative expense incurred in running the two colleges and an
increase in share-based compensation to employees of $0.6 million.
Interest Income
Interest income decreased by $72,045, or 76.5%, to $22,150 for fiscal year 2022, from $94,195 for fiscal year 2021. In connection with
the technological consulting services for smart campus projects, we
recognized financing component resulted from a timing difference
between when control was transferred and when we collected cash
consideration from the customer. For the years ended December 31, 2022 and 2021, we recognized nil and
$87,589 in interest income in
connection with the aforementioned financing component,
respectively. The decrease was partially offset by interest income
of $22,150 and $6,606 from bank deposit balance in the years
ended December 31, 2022 and 2021,
respectively.
Other Income (Expense)
Other income was $133,874 and
$126,648 for fiscal years 2022 and
2021, respectively.
Provision for Income Tax
Income tax provision was $0.46
million for fiscal year 2022, increased from $0.30 million for fiscal year 2021. Effective
income tax rate was 37.4% and 31.6% for the years ended
December 31, 2022 and 2021,
respectively. The significant change in effective income tax rate
comparing the two years is mainly due to the fact that significant
expenses incurred by non-PRC entities and net loss incurred by the
two colleges and Oriental Wisdom.
Net Loss
Net loss was $1.69 million for fiscal year 2022,
compared to a net loss of $1.25 million for fiscal year
2021, primarily due to the increase in general and administrative
expenses as discussed above. Basic and diluted loss per share were
$0.07 for fiscal year 2022,
compared to basic and diluted loss per share of $0.12 for fiscal year 2021.
Financial Condition
As of December 31, 2022, the Company had cash
of $13.65 million, compared to $32.68 million as of December 31,
2021.
Net cash provided by operating activities was $0.42
million for fiscal year 2022, compared to net cash used in
operating activities of $1.41 million for fiscal year
2021.
Net cash used in investing activities
was $32,551,228 for fiscal year 2022, compared to
$7,543 for fiscal year 2021.
Net cash provided by financing activities was $12.90
million for fiscal year 2022, compared to $29.06
million for fiscal year 2021.
Impact of the COVID-19 Pandemic on Our Performance and
Financial Indicators
Our results of operations and financial conditions in 2022 were
affected by the COVID-19 pandemic. The COVID-19 pandemic has
impacted China's study abroad
consulting and training services industry and the business
operations of our Company. The extent to which COVID-19 impacts our
results of operations in the future will depend on the future
developments of the pandemic, including new information concerning
the global severity of and actions taken to contain the pandemic,
which are highly uncertain and unpredictable. In addition, our
results of operations could be adversely affected to the extent
that the pandemic harms the Chinese and global economy in
general.
The pandemic and related travel restrictions have affected and
may continue to adversely affect our business and results of
operations, including the demand for our services and the ability
of partner schools to pay back accounts receivable on a timely
basis. Beginning in January 2023,
China no longer conducted nucleic
acid tests and centralized quarantines for all inbound travelers,
and measures to control the number of international passenger
flights were lifted. However, there are still uncertainties of
COVID-19's future impact. Therefore, while we do not expect the
COVID-19 pandemic to negatively impacting our business, results of
operations, and financial position, the related financial impact
cannot be reasonably estimated at this time.
Recent Developments
On November 2, 2022, the Company
entered into a definitive Agreement and Plan of Merger (the "Merger
Agreement") with AIWAYS Holdings Limited ("AIWAYS"), pursuant to
which AIWAYS will merge with a wholly-owned subsidiary of the
Company, and the issued and outstanding share capital of AIWAYS
will be cancelled in exchange for newly issued shares of the
Company on the terms and conditions set forth therein in a
transaction exempt from the registration requirements under the
Securities Act of 1933, as amended ("the Transaction"). Upon
consummation of the Transaction, AIWAYS will become a wholly-owned
subsidiary of the Company, and the existing AIWAYS shareholders and
existing Company shareholders will own approximately 99.2% and
0.8%, respectively, of the outstanding shares of the combined
company. For the purposes of consummating the transactions
contemplated by the Merger Agreement, Aiways Automobile Holdings
Limited and Aiways Merger Sub Limited were both formed on
September 29, 2022.
On April 30, 2023, the Company
terminated the Merger Agreement with AIWAYS in accordance with the
termination provisions of the Merger Agreement, effective the same
day. By virtue of terminating the Merger Agreement, the Support
Agreement, and the Company Voting Agreement, as such terms are
defined in the Merger Agreement, were also terminated.
About China Liberal Education Holdings Limited
Headquartered in Beijing, China Liberal is an educational
services provider in China. Currently, China Liberal operates
two colleges, Fuzhou Melbourne Polytechnic and Strait College of
Mingjiang University, and provides a wide range of services,
including those under overseas study consulting services;
technological consulting services for Chinese universities to
improve their campus information and data management system and to
optimize their teaching, operating and management environment,
creating a "smart campus"; and tailored job readiness training to
graduating students. For more information, please visit the
company's website at ir.chinaliberal.com/.
Forward-Looking Statements
This document contains forward-looking statements.
These forward-looking statements involve known and unknown
risks and uncertainties and are based on the Company's expectations
and projections about future events, which the Company derives from
the information currently available to the Company. Such
forward-looking statements relate to future events or our future
performance, including: our financial performance and projections;
our growth in revenue and earnings; and our business prospects and
opportunities. You can identify forward-looking statements by those
that are not historical in nature, particularly those that use
terminology such as "may," "should," "expects," "anticipates,"
"contemplates," "estimates," "believes," "plans," "projected,"
"predicts," "potential," or "hopes" or the negative of these or
similar terms. In evaluating these forward-looking statements, you
should consider various factors, including: our ability to change
the direction of the Company; our ability to keep pace with new
technology and changing market needs; and the competitive
environment of our business. These and other factors may cause our
actual results to differ materially from any forward-looking
statement. Forward-looking statements are only predictions. The
forward-looking events discussed in this press release and other
statements made from time to time by us or our representatives, may
not occur, and actual events and results may differ materially and
are subject to risks, uncertainties and assumptions about us. The
Company undertakes no obligation to update forward-looking
statements to reflect subsequent occurring events or circumstances,
or changes in its expectations, except as may be required by law.
Although the Company believes that the expectations expressed in
these forward-looking statements are reasonable, it cannot assure
you that such expectations will turn out to be correct, and the
Company cautions investors that actual results may differ
materially from the anticipated results and encourages investors to
review risk factors that may affect its future results in the
Company's registration statement and in its other filings with
the U.S. Securities and Exchange Commission.
Investor Relations Contact
China Liberal Education Holdings Limited
Email:ir@chinaliberal.com
Ascent Investor Relations LLC
Ms. Tina Xiao
Email:tina.xiao@ascent-ir.com
Tel: +1 917 609 0333
China Liberal
Education Holdings Limited
|
Condensed
Consolidated Balance Sheets
|
|
|
As of December
31,
|
|
2022
|
|
2021
|
ASSETS
|
|
|
|
CURRENT
ASSETS
|
|
|
|
Cash
|
$13,650,071
|
|
$32,678,421
|
Account
receivables, net
|
1,047,809
|
|
2,462,550
|
Contract
assets
|
-
|
|
2,014,146
|
Advance to
suppliers
|
44,105
|
|
4,525,794
|
Prepayment to
acquire subsidiaries
|
-
|
|
1,492,772
|
Inventories,
net
|
193,738
|
|
201,091
|
Prepaid expenses
and other current assets, net
|
3,475,714
|
|
175,956
|
TOTAL CURRENT
ASSETS
|
$18,411,437
|
|
$43,550,730
|
NON-CURRENT
ASSETS
|
|
|
|
Goodwill on
acquisitions
|
73,676,370
|
|
-
|
Property and equipment,
net
|
10,194,930
|
|
35,384
|
Land use right,
net
|
1,269,436
|
|
-
|
Intangible assets,
net
|
423,272
|
|
-
|
Right-of-use
assets
|
13,107
|
|
47,617
|
TOTAL NON-CURRENT
ASSETS
|
85,577,115
|
|
$83,001
|
|
|
|
|
TOTAL
ASSETS
|
$103,988,552
|
|
$43,633,731
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
CURRENT
LIABILITIES
|
|
|
|
Account
payables
|
$878,429
|
|
$169,137
|
Contract
liabilities
|
7,772,227
|
|
291,833
|
Short-term bank
loans
|
20,784
|
|
-
|
Taxes
payable
|
1,354,965
|
|
740,966
|
Due to related
parties
|
390,550
|
|
23,557
|
Lease
liability
|
10,887
|
|
47,617
|
Loans from third
parties
|
975,716
|
|
-
|
Accrued expenses
and other current liabilities
|
8,584,891
|
|
402,233
|
TOTAL CURRENT
LIABILITIES
|
$19,988,450
|
|
$1,675,343
|
|
|
|
|
NON-CURRENT
LIABILITIES
|
|
|
|
Contingent
consideration
|
21,515,801
|
|
-
|
TOTAL
LIABILITIES
|
$41,504,251
|
|
$1,675,343
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
Ordinary shares, $0.001
par value, 50,000,000 shares authorized,
31,598,333 and 13,848,333 shares issued and outstanding at
December 31, 2022 and 2021, respectively
|
$31,598
|
|
$13,848
|
Additional
paid-in capital
|
63,191,010
|
|
40,686,311
|
Statutory
reserve
|
1,006,384
|
|
719,804
|
(Accumulated
losses) retained earnings
|
(1,828,205)
|
|
147,278
|
Accumulated
other comprehensive (loss) income
|
83,514
|
|
391,147
|
Total
shareholders' equity
|
$62,484,301
|
|
$41,958,388
|
|
|
|
|
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY
|
$103,988,552
|
|
$43,633,731
|
China Liberal
Education Holdings Limited
|
Condensed
Consolidated Statements of Operations and Comprehensive
Income
|
(Unaudited)
|
|
|
For the years ended
December 31,
|
|
2022
|
2021
|
2020
|
|
|
|
|
REVENUE
|
$11,603,300
|
$3,909,546
|
$5,023,099
|
COST OF
REVENUE
|
(5,598,048)
|
(1,149,148)
|
(2,157,033)
|
GROSS
PROFIT
|
6,005,252
|
2,760,398
|
2,866,066
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
Allowance for
doubtful accounts
|
(734,750)
|
-
|
-
|
Selling
expenses
|
(384,885)
|
(152,759)
|
(229,656)
|
General and
administrative expenses
|
(6,270,504)
|
(3,778,329)
|
(1,199,690)
|
Total operating
expenses
|
(7,390,139)
|
(3,931,088)
|
(1,429,346)
|
|
|
|
|
(LOSS) INCOME
FROM OPERATIONS
|
(1,384,887)
|
(1,170,690)
|
1,436,720
|
|
|
|
|
OTHER
INCOME
|
|
|
|
Interest
income
|
22,150
|
94,195
|
101,257
|
Other income
(expenses), net
|
133,874
|
126,648
|
(26,035)
|
Total other
income, net
|
156,024
|
220,843
|
75,222
|
|
|
|
|
(LOSS) INCOME
BEFORE INCOME TAXES
|
(1,228,863)
|
(949,847)
|
1,511,942
|
INCOME TAX
EXPENSE
|
(460,040)
|
(300,034)
|
(303,246)
|
NET (LOSS)
INCOME
|
($1,688,903)
|
($1,249,881)
|
$1,208,696
|
|
|
|
|
COMPREHENSIVE (LOSS)
INCOME
|
|
|
|
Total currency
translation differences arising from consolidation
|
(307,633)
|
232,001
|
471,554
|
TOTAL COMPREHENSIVE
(LOSS) INCOME
|
($1,996,536)
|
($1,017,880)
|
$1,680,250
|
|
|
|
|
(Loss)
earnings per share
|
|
|
|
Basic and
diluted
|
($0.07)
|
($0.12)
|
$0.21
|
|
|
|
|
Weighted average
number of shares outstanding
|
|
|
|
Basic and
diluted
|
23,687,374
|
10,368,563
|
5,852,459
|
China Liberal
Education Holdings Limited
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
For the years ended
December 31,
|
|
2022
|
2021
|
2020
|
Cash flows from
operating activities
|
|
|
|
Net (loss)
income
|
($1,688,903)
|
($1,249,881)
|
$1,208,696
|
Adjustments to
reconcile net (loss) income to net cash provided by (used
in) operating activities:
|
|
|
|
Depreciation of
property and equipment
|
638,612
|
18,652
|
15,891
|
Amortization of
intangible assets
|
32,365
|
-
|
-
|
Amortization of land
use right
|
15,690
|
-
|
-
|
Non-cash lease
expenses
|
86,911
|
91,386
|
41,524
|
Loss from
disposal of property and equipment
|
-
|
607
|
37,468
|
Share-based
compensation
|
2,832,500
|
2,288,251
|
-
|
Changes in
operating assets and liabilities:
|
|
|
|
Accounts
receivable, net
|
1,932,649
|
(1,504,828)
|
(343,165)
|
Contract
receivable, net
|
1,898,236
|
2,781,603
|
(719,615)
|
Advance to
suppliers
|
4,223,766
|
(4,355,926)
|
756,846
|
Inventory,
net
|
(8,368)
|
199
|
(185,985)
|
Prepaid expenses
and other current assets
|
(3,050,385)
|
33,653
|
128,658
|
Accounts
payable
|
(3,438,152)
|
40,239
|
66,961
|
Contract
liabilities
|
8,336,652
|
462,253
|
(421,834)
|
Taxes
payable
|
649,753
|
90,150
|
191,373
|
Operating lease
liabilities
|
97,222
|
(67,754)
|
(60,907)
|
Accrued expenses
and other current liabilities
|
(12,134,951)
|
(40,842)
|
(80,097)
|
Net cash provided by
(used in) operating activities
|
423,597
|
(1,412,238)
|
635,814
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
Purchase of
property and equipment
|
(612,955)
|
(4,439)
|
(21,230)
|
Prepayment for
acquisitions
|
-
|
(1,474,217)
|
-
|
Advance to a
related party
|
-
|
-
|
(1,374,895)
|
Acquisitions of
subsidiaries, net of cash
|
(31,938,273)
|
-
|
-
|
Repayment of
advance from related parties
|
-
|
1,471,113
|
-
|
Net cash used in
investing activities
|
(32,551,228)
|
(7,543)
|
(1,396,125)
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
Proceeds from
advance from a related party
|
-
|
9,415
|
-
|
Proceeds from
loans from third parties
|
996,610
|
-
|
-
|
Repayment of due
to a related party
|
(91,308)
|
-
|
(1,439,799)
|
Net proceeds from
issuance of ordinary shares
|
11,989,949
|
29,047,088
|
5,405,451
|
Net cash provided by
financing activities
|
12,895,251
|
29,056,503
|
3,965,652
|
|
|
|
|
Effect of changes of
foreign exchange rates on cash
|
204,030
|
34,250
|
99,829
|
Net (decrease)
increase in cash
|
(19,028,350)
|
27,670,972
|
3,305,170
|
Cash, beginning of
year
|
32,678,421
|
5,007,449
|
1,702,279
|
Cash, end of
year
|
$13,650,071
|
$32,678,421
|
$5,007,449
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
Cash paid for
interest expense
|
$2,399
|
$40,555
|
$2,697
|
Cash paid for
income tax
|
-
|
-
|
$20,775
|
Supplemental
disclosure of non-cash investing and financing
activities
|
|
|
|
Right-of-use
assets obtained in exchange for operating lease
obligations
|
-
|
-
|
$180,528
|
View original
content:https://www.prnewswire.com/news-releases/china-liberal-education-holdings-limited-reports-financial-results-for-fiscal-year-2022-301825193.html
SOURCE China Liberal Education Holdings Limited