EpicQuest Education Group International Ltd. Announces First Half Fiscal Year 2023 Financial Results and Operations Update
"Our operations provide a diversified revenue stream from our two owned and operated colleges as well from our recruiting relationships. We believe that EEIQ's educational niche provides practical educational programming that meaningfully connects to students who see our programs as an effective way to reach their career goals. However, the effects of the global Covid-19 pandemic severely hampered our recruiting activities in the year-ago period which, coupled with a heightened wave of the pandemic in
However, our costs decreased for the first six months of fiscal 2023 as compared to the year-ago period due to operational synergies, which resulted in an increase in our gross margin. With the worst of the pandemic expected to be behind us, we believe that our strong recruiting efforts and a normalized learning environment will result in improved top line results going forward, while cost synergies across our operations could continue to enhance our gross margin," continued CEO Jianbo Zhang.
"Our two acquired colleges, EduGlobal College and Davis College, have developed cross-border educational collaborations and created global academic programming designed to better serve our students' needs and have diversified our student base, which steps taken together are expected to improve our operating metrics over time. We believe that an enriched international academic experience will help our students reach their full potential and better prepare them for fulfilling careers. Further, our recently executed five-year agreement with
First Half 2023 Financial Results Ended March 31, 2023
Revenues were
Gross profit was
Operating Expenses were
Operating loss was
Income tax recovery was
Net loss was
Net Loss Per Basic and Diluted Share for the first half of fiscal 2023 was
Financial Condition
As of March 31, 2023, the Company had
Liquidity and Capital Resources
Net cash used in operating activities for the six months ended March 31, 2023 was
Net cash provided by investing activities was
Net cash used in financing activities was
Operations Update
In March 2020, The World Health Organization declared the Covid-19 outbreak to be a global pandemic. The pandemic resulted in and continues to cause travel restrictions, related public health orders and economic uncertainties that affect the normal operations of many businesses, including our higher education company. The pandemic went through multiple waves, with the most recent surge occurring in the period from November 2022 to February 2023 in
For the six months ended March 31, 2023, our indicators of recruitment and enrollment for the English Language Program at the
- As of March 31, 2023, 100 students attended in-person classes in the English Language Program at the MU Regional Campuses, which was comprised of 79 students for the Fall 2022 term and 21 students for the Spring 2023 term; this compares to 142 students who attended the program online for the same two terms in the previous year.
Davis College showed promising results in its first year of the Company's control.
- As of March 31, 2023, for Davis College, 111 students were enrolled in the Winter Quarter (November 2023 - January 2023) and 99 students in the Spring Quarter (February 2023 - May 2023). The Company gained control over Davis College on December 1, 2022 via the conversion of the acquired holding company's loan into shares of Davis College common stock.
We have made significant steps to execute upon our strategic plan to become an international service provider of higher learning by acquiring colleges around the globe and by developing cross-border educational relationships.
- EEIQ operates and is a
70% owner of Davis College, a two-year career-training college located inToledo, Ohio . Davis College offers career-training educational courses in business management, data science, nursing, electrical engineering, and other areas that most often lead to careers that are in high demand. In June 2023, its first Bachelor's degree program, a Bachelor of Science in Business, was approved by the Higher Learning Commission (HLC). The HLC accreditation extends our academic programming beyond our two-associate degree programs and potentially opens the door for our offering additional four-year Bachelor's degrees. - In addition, Davis College is internationalizing its academic programming internationally and fostering a global experience for its students by entering into MOUs (Memoranda of Understandings) for a variety of bilateral academic activities. As previously announced, we entered into ten MOUs that encompass institutions of higher learning in
Malaysia ,the Philippines ,Singapore ,Sri Lanka ,China and theUK . We believe that several of these MOUs will translate into agreements that will contribute to the EEIQ's mission of internationalization and increase student enrollment at Davis College.
To date, the Company's internationalization efforts have resulted in a
- EEIQ operates and is the
100% owner of EduGlobal College, located inVancouver, Canada , which provides English language programs for international students to help them to achieve baccalaureate and graduate programs at Canadian universities. EduGlobal College launched its pioneering pathway program with Algoma University, located inSault Ste. Marie, Ontario, Canada , that establishes a seamless pathway for our students to earn transferable university credits and complete their baccalaureate degrees and graduate certificates. In June 2023, EduGlobal College launched a pathway program withYorkville University, based inToronto, Canada . The academic pathway withYorkville University enhances our students' choices as the pathway facilitates admission to their Bachelor's degree program and the opportunity for EduGlobal students to transfer applicable course credits toYorkville . EduGlobal College's core mission is to attract a diverse student population from around the world and provide students with a well-rounded education that will enhance all areas of their personal and professional lives. - In May 2023, we entered into an agreement with
Miami University to recruit international students residing outside of the US for admission to the English Language Center at theMiami University Regional Campuses. Our comprehensive 'One-Stop' services to international study abroad students include pick-up services, private housing, dining facilities, a gym, a student life center, safety guidance for freshmen, academic consulting, advice for further education, legal aid and medical escorting. The agreement is for five years as compared to the previous three-year agreements during the past decade, and it serves as a cornerstone for our business which we believe will help to propel us forward to fully implement our international plans.
As with other colleges and universities, we have adapted to the challenges that the Covid-19 pandemic has had on higher education. While we believe that in-person instruction and an on-campus social experience is best for our students, we believe that the new hybrid system of remote and in-person learning adopted by many colleges and universities will continue to evolve. Our creative approach to the currently modified education model is our development of numerous collaborations which include courses that can be taken both online and in-person from different countries and then applied as credit to programs while attending our schools in-person.
We believe that our current operations provide a diversified revenue stream that balances both our owned and operated colleges and our extensive recruiting relationships. We also believe that our educational niche provides practical educational programming that meaningfully connects to students who may not ordinarily pursue higher education but who see our programs as an effective way to reach their career goals. We believe that this positive and effective business model is a successful one for providing a solid return on investment for both our students as well as our shareholders.
Our strategic plan is to achieve sustainable growth through our strategy of internationalization. This refers to Davis College and EduGlobal College, our owned and operated colleges, as well as our recruiting relationship with
About EpicQuest Education Group International Limited
EpicQuest Education Group International Limited ("EpicQuest Education" or the "Company") provides comprehensive education solutions for domestic and international students seeking university and college degrees in the US,
Safe Harbor Statement
Certain of the statements made in this press release are "forward-looking statements" within the meaning and protections of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance, capital, ownership or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as "may," "will," "anticipate," "assume," "should," "indicate," "would," "believe," "contemplate," "expect," "estimate," "continue," "plan," "point to," "project," "could," "intend," "target" and other similar words and expressions of the future.
All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our most recent Form 20-F and otherwise in our SEC reports and filings. Such reports are available upon request from the Company, or from the Securities and Exchange Commission, including through the SEC's Internet website at http://www.sec.gov. We have no obligation and do not undertake to update, revise or correct any of the forward-looking statements after the date hereof, or after the respective dates on which any such statements otherwise are made.
Contacts:
EpicQuest Education Group International Limited
+1 513-649-8350
info@epicquesteducation.com
Investor Relations:
Precept Investor Relations LLC
David Rudnick
+1 646-694-8538
david.rudnick@preceptir.com
FINANCIAL TABLES | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
AS OF MARCH 31, 2023 and SEPTEMBER 30, 2022 | ||||||||
(US$, except share data and per share data, or otherwise noted) | ||||||||
March 31, | September 30, | |||||||
US$ | US$ | |||||||
Assets | (Unaudited) | |||||||
Current Assets | ||||||||
Cash and cash equivalents | 5,862,460 | 11,443,059 | ||||||
Restricted cash | 338,712 | - | ||||||
Receivables, net | 331,179 | 47,639 | ||||||
Prepaid expenses | 1,431,012 | 946,299 | ||||||
Inventory | 36,365 | - | ||||||
Notes receivable | - | 485,000 | ||||||
Income tax receivable | 787,086 | 1,147,213 | ||||||
Total current assets | 8,786,814 | 14,069,210 | ||||||
Non-current assets | ||||||||
Property and equipment, net | 2,210,933 | 2,205,084 | ||||||
Long term investment | - | 5,086,413 | ||||||
Deferred income tax assets | 578,919 | 411,934 | ||||||
Right-of-use assets | 1,308,503 | 976,404 | ||||||
Intangible assets | 2,226,609 | 398,794 | ||||||
Goodwill | 4,522,586 | 854,887 | ||||||
Total assets | 19,634,364 | 24,002,726 | ||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Liabilities: | ||||||||
Current liabilities | ||||||||
Accounts payable and other liabilities | 2,108,462 | 2,120,660 | ||||||
Student deposits | 52,040 | 46,040 | ||||||
Due to related party | 140,000 | 140,000 | ||||||
Lease liabilities – current | 636,126 | 461,161 | ||||||
Deferred revenue | 1,459,886 | 3,286,350 | ||||||
Total current liabilities | 4,396,513 | 6,054,211 | ||||||
Non-current liabilities | ||||||||
Lease liabilities – non current | 760,799 | 561,897 | ||||||
Deferred income tax liabilities | 490,184 | 107,674 | ||||||
Total liabilities | 5,647,497 | 6,723,782 | ||||||
Commitments and contingencies | ||||||||
Shareholders' equity | ||||||||
Common shares, | 18,585 | 18,017 | ||||||
Additional paid-in capital | 17,220,527 | 17,526,546 | ||||||
Deficit | (5,567,784) | (2,416,788) | ||||||
Accumulated other comprehensive loss | (33,093) | (28,939) | ||||||
Total shareholders' equity | 11,638,235 | 15,098,836 | ||||||
Noncontrolling interests | 2,348,632 | 2,180,108 | ||||||
Total liabilities and shareholders' equity | 19,634,364 | 24,002,726 |
EPICQUEST EDUCATION GROUP INTERNATIONAL LTD | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||||||
FOR THE SIX MONTHS ENDED MARCH 31, 2023 AND 2022 | ||||||||
(US$, except share data and per share data, or otherwise noted) | ||||||||
For The | For The | |||||||
March 31, | March 31, | |||||||
US$ | US$ | |||||||
(Unaudited) | (Unaudited) | |||||||
Revenues | 3,420,669 | 4,055,213 | ||||||
Costs of services | 769,619 | 1,327,308 | ||||||
Gross profit | 2,651,050 | 2,727,905 | ||||||
Operating costs and expenses: | ||||||||
Selling expenses | 474,169 | 757,969 | ||||||
General and administrative | 5,367,085 | 5,299,119 | ||||||
Total operating costs and expenses | 5,841,254 | 6,057,088 | ||||||
Income from operations | (3,190,204) | (3,329,183) | ||||||
Other (income) expenses: | ||||||||
Other income | (1,655) | (797,411) | ||||||
Interest income | (20,833) | - | ||||||
Foreign exchange gain | (5) | (4,206) | ||||||
Total other (income) expenses | (22,493) | (801,617) | ||||||
Loss before provision for income taxes | (3,167,711) | (2,527,566) | ||||||
Current income tax expense | 8,553 | - | ||||||
Deferred income tax expense (recovery) | (172,975) | 13,741 | ||||||
Income taxes expense (recovery) | (164,422) | 13,741 | ||||||
- | - | |||||||
Net loss | (3,003,289) | (2,541,307) | ||||||
Net loss attributable to noncontrolling interest | (305,928) | (57,782) | ||||||
Net loss attributable to common stockholders | (2,697,361) | (2,483,525) | ||||||
Foreign currency translation adjustment | (4,154) | (8,214) | ||||||
Total Comprehensive loss | (3,007,443) | (2,549,521) | ||||||
Basic & diluted net loss per share | $ | (0.24) | $ | (0.23) | ||||
Weighted average number of ordinary shares-basic and diluted | 11,469,800 | 10,835,956 |
EPICQUEST EDUCATION GROUP INTERNATIONAL LTD | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
FOR THE SIX MONTHS ENDED MARCH 31, 2023 AND 2022 | ||||||||
(US$, except share data and per share data, or otherwise noted) | ||||||||
For The | For The | |||||||
2023 | 2022 | |||||||
US$ | US$ | |||||||
Cash Flows from Operating Activities: | (Unaudited) | (Unaudited) | ||||||
Net loss | (3,003,289) | (2,541,307) | ||||||
Adjustments for items not affecting cash: | ||||||||
Depreciation and amortization | 163,863 | 111,597 | ||||||
Stock-based compensation expenses | 900,877 | 2,629,603 | ||||||
Accretion of finance lease | 3,546 | - | ||||||
Net (gain)/loss from disposal of fixed assets | - | (813,064) | ||||||
Deferred income tax expense | (172,975) | 13,740 | ||||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable | 235,640 | 150,110 | ||||||
Operating leases | (51,592) | 11,070 | ||||||
Inventory | (16,350) | - | ||||||
Prepaid expenses | (176,420) | 178,295 | ||||||
Accounts payable & accrued liabilities | (225,407) | (618,187) | ||||||
Deferred revenue | (2,364,570) | (2,267,475) | ||||||
Income tax receivable | 360,126 | (9,768) | ||||||
Student deposits | 6,000 | - | ||||||
Net cash used in operating activities | (4,340,551) | (3,155,386) | ||||||
Cash Flows from Investing Activities: | ||||||||
Purchase of property and equipment | (7,641) | (30,147) | ||||||
Notes receivable | - | 180,000 | ||||||
Due from related party | - | (296,199 | ||||||
Net cash acquired from (used for) business acquisitions | 562,791 | (1,954,145) | ||||||
Proceeds from sale of property and equipment | - | 1,920,861 | ||||||
Net cash provided by (used in) investing activities | 555,330 | (179,630) | ||||||
Cash Flows from Financing Activities: | ||||||||
Proceeds borrowed from related parties | - | (269,893) | ||||||
Repayment of lease liabilities | (15,001) | - | ||||||
Share buyback | (1,250,007) | - | ||||||
Acquisition of additional interest in subsidiary | (187,505) | - | ||||||
Net cash used in financing activities | (1,452,513) | (269,893) | ||||||
Effect of exchange rate change on cash | (4,153) | - | ||||||
Net decrease in cash, cash equivalents and restricted cash | (5,241,887) | (3,604,909) | ||||||
Cash, cash equivalents and restricted cash, beginning of period | 11,443,059 | 16,537,174 | ||||||
Cash, cash equivalents and restricted cash, end of period | 6,201,172 | 12,932,265 |
EPICQUEST EDUCATION GROUP INTERNATIONAL LTD | |||||||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | |||||||||||||||||||||||||||||||||||||
SIX MONTHS ENDED MARCH 31, 2023 AND 2022 | |||||||||||||||||||||||||||||||||||||
(US$, except share data and per share data, or otherwise noted) | |||||||||||||||||||||||||||||||||||||
Common | Common | Additional | Subscription | Accumulated | NCI | Deficit | Total | ||||||||||||||||||||||||||||||
Balance as of | 11,350,704 | 18,017 | 17,526,546 | - | (28,939) | 2,180,108 | (2,416,788) | 17,278,944 | |||||||||||||||||||||||||||||
Net loss | - | (305,928) | (2,697,361) | (3,003,289) | |||||||||||||||||||||||||||||||||
Share buyback | (201,614) | (320) | (1,249,687) | - | - | - | - | (1,250,007) | |||||||||||||||||||||||||||||
Share-based | 559,083 | 888 | 1,028,592 | - | - | - | - | 1,029,480 | |||||||||||||||||||||||||||||
Stock option | - | - | 123,397 | - | - | - | - | 123,397 | |||||||||||||||||||||||||||||
Acquisition of | - | - | - | - | - | 453,635 | (453,635) | - | |||||||||||||||||||||||||||||
Acquisition of | - | - | (208,321) | - | - | 20,817 | - | (187,504) | |||||||||||||||||||||||||||||
Translation | - | - | - | - | (4,154) | - | - | (4,154) | |||||||||||||||||||||||||||||
Balance as of | 11,708,173 | 18,585 | 17,220,527 | - | (33,093) | 2,348,632 | (5,567,784) | 13,986,867 | |||||||||||||||||||||||||||||
Common | Common | Additional | Subscription | Accumulated | NCI | Retained | Total | ||||||||||||||||||||||||||||||
Balance as of | 10,412,843 | 16,528 | 11,464,979 | (200,000) | - | - | 3,654,441 | 14,935,948 | |||||||||||||||||||||||||||||
Net loss | - | (57,782) | (2,483,525) | (2,541,307) | |||||||||||||||||||||||||||||||||
Share issued for | 201,614 | 320 | 1,249,687 | - | - | 2,344,995 | - | 3,595,002 | |||||||||||||||||||||||||||||
Share-based | 430,856 | 684 | 2,628,919 | - | - | - | - | 2,629,603 | |||||||||||||||||||||||||||||
Translation | - | - | - | - | (8,214) | - | - | (8,214) | |||||||||||||||||||||||||||||
Balance as of | 11,045,313 | 17,532 | 15,343,585 | (200,000) | (8,214) | 2,287,213 | 1,170,916 | 18,611,032 |
###
Source: EpicQuest Education Group International Limited
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