MIDDLETOWN, Ohio, January 23, 2023 /PRNewswire/ -- EpicQuest Education Group International Limited (NASDAQ: EEIQ), (the “Company” or “EpicQuest Education Group International”), a provider of comprehensive education solutions for domestic and international students interested in college and university programs in the US, Canada and the UK, today announced its financial results for the twelve months ended September 30, 2022.

We are pleased to report a 19% increase in revenue for fiscal year 2022 as compared to fiscal year 2021. We saw in-person attendance continue to normalize at the English Language Program at the regional campuses of Miami University relative to our strategic pivot to remote learning in previous periods attributable to the disruptive effects of the Covid-19 pandemic. While our operating performance was stronger than that in the previous fiscal year, the Company is still in the process of recovering from the significant impact of Covid-19 over the past two and a half years. As our acquired colleges contribute to our financial results in future periods, and as we realize cost synergies, we are optimistic that our financial performance will improve over time,” commented Jianbo Zhang, Chairman and Chief Executive Officer of EpicQuest Education.

We are committed to our growth strategy of international expansion. Davis College entered into seven educational relationships with international universities in 2022, and we expanded our recruiting efforts to further internationalize our student body. We believe that our strategic plan will optimally grow the company and lead to superior educational outcomes for our students. Davis College and EduGlobal College both offer a cost-effective and practical education for our students, and combined with our pathway programs, enable advanced degrees and expanded career options,” continued CEO Jianbo Zhang.

We continue to engage in vigorous marketing and recruitment activities for all of our educational programs. Since January 2023, we have held more than 70 online promotional and training sessions, including business training with partners and live broadcast activities for potential students. We have also increased the number and variety of online activities that include online guidance classes and online service training sessions to spur student enrollment rates,” concluded CEO Jianbo Zhang.

First Half 2022 Financial Results Ended September 30, 2022

Revenues were $6.3 million for the fiscal year ended September 30, 2022 compared to $5.3 million for the twelve months ended September 30, 2021, representing an increase of $1.0 million, or 18.9%. The increase was due to a rise in student registration at the regional campuses of Miami University (“the MU Regional Campuses”).

Gross profit was $4.3 million for the fiscal year ended September 30, 2022 compared to $3.4 million for the twelve months ended September 30, 2021, representing an increase of $0.9 million, or 26.5%. Our gross margin increased to 68.1% in fiscal 2022 from 63.8% for the twelve months of 2021 due to higher revenue and a lower direct costs attributable to operational efficiencies.

Operating Expenses were $11.5 million for the fiscal year ended September 30, 2022 compared to $4.9 million for the twelve months ended September 30, 2021, representing an increase of $6.6 million, or

134.7%. The increase was partly due to higher general and administrative expenses which included a non-cash expense attributable to share-based compensation granted to directors, officers and employees for retention purposes following the Company’s IPO in March of 2021, as well as an increase in the professional fees that are mainly related to the Company’s two major acquisitions and expansion efforts.

Operating loss was $7.2 million for the fiscal year ended September 30, 2022 compared to an operating loss of $1.5 million for the twelve months ended September 30, 2021. This was due to higher general and administrative expenses that offset the increases in revenue and gross margin for the twelve months ended September 30, 2022.

Other income was $0.85 million for the fiscal year ended September 30, 2022 compared to $0.08 million for the twelve months ended September 30, 2021, attributable to the sale of residential properties adjacent to the MU Regional Campuses at a sales price of approximately 150% of its initial purchase price.

Net loss was $6.2 million for the fiscal year ended September 30, 2022 compared to a net loss of $1.1 million for the twelve months ended September 30, 2021, due to the factors discussed above. Net Loss Per Basic and Diluted Share for the fiscal year ended September 30, 2022 was $0.55 compared to a net loss of $0.12 per basic and diluted share for the twelve months ended September 30, 2021.

Financial Condition

As of September 30, 2022, the Company had $11.4 million in cash and cash equivalents, a decrease of $5.1 million as compared to $16.5 million as of September 30, 2021. As of September 30, 2022, working capital was $8.0 million (current assets minus current liabilities) and the current ratio (current assets divided by current liabilities) was 2.3, as compared to working capital of $11.0 million and a current ratio of 2.3 as of September 30, 2021. Stockholders’ equity as of September 30, 2022 was $15.1 million, an increase of $0.2 million as compared to $14.9 million as of September 30, 2021.

Liquidity and Capital Resources

Net cash used in operating activities for the twelve months ended September 30, 2022 was $4.6 million as compared to cash provided from operations of $0.3 million for the twelve months ended September 30, 2021. The increase was primarily due to the changes in net loss and other working capital balances; the changes in these balances are included in the changes in assets and liabilities presented in the consolidated statement of cash flows.

Net cash used in investing activities was $0.7 million and $0.5 million for the twelve months ended September 30, 2022 and 2021, respectively. The net cash used in investing activities for fiscal 2022 was attributable to $1.9 million for business acquisitions which was offset by $1.9 million in proceeds from the sale of property and equipment. Net cash provided from financing activities was $0.2 million and $9.3 million for the twelve months ended September 30, 2022 and 2021, respectively.

About EpicQuest Education Group International Limited

EpicQuest Education Group International Limited ("EpicQuest Education" or the "Company"), through its subsidiaries Quest Holding International LLC and Highrim Holding International Limited, provides comprehensive education solutions for domestic and international students interested in university and college degree programs in the US, Canada and the UK. Through its wholly-owned subsidiary in Canada Highrim Holding International Limited, the Company owns 80% of the equity of EduGlobal College, based in British Columbia, Canada, which focuses on English proficiency educational programming for students

pursuing academic degrees. The Company owns 70% of the equity of Ameri-Can Education Group Corporation, the holding company of Davis College, a career training college located in Toledo, Ohio. In addition, the Company has a recruiting relationship with the Miami University Regional Campuses, where it maintains residential facilities, a full-service cafeteria, recreational facilities, shuttle buses and an office for the regional campuses that provides study abroad and post-study services for its students; these facilities are not owned, maintained, operated or are a part of Miami University. The Company also acts as a recruiting agent for the University of the West of Scotland (through The Education Group (London) Ltd) and Coventry University, both of which are located in the UK. For more information, please visit https://www.epicquesteducation.com/.

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 in this press release include, without limitation, the Company’s ability to implement its international strategy as described. 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

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Investor Relations:

Precept Investor Relations LLC

David Rudnick
+1 646-694-8538
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FINANCIAL TABLES FOLLOW

 

EPICQUEST EDUCATION INTERNATIONAL CO., LTD

CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2022 and SEPTEMBER 30, 2021

(US$, except share data and per share data, or otherwise noted)

  September 30,
2022
  September 30,
2021
 
  US$  US$ 
Assets      
Current Assets      
Cash and cash equivalents  11,443,059   16,537,174 
Accounts receivables  47,639   154,537 
Prepaid expenses  946,299   1,560,847 
Notes receivable  485,000   180,000 
Income tax receivable  1,147,213   1,149,506 
Total current assets  14,069,210   19,582,064 
Non-current assets        
Property and equipment, net  2,205,084   3,479,922 
Long term investment  5,086,413     
Deferred income tax assets  411,934   321,057 
Intangible assets  398,794     
Right-of-use assets  976,404   626,596 
Goodwill  854,887     
Total assets  24,002,726   24,009,639 
         
LIABILITIES AND SHAREHOLDERS’ EQUITY        
Liabilities:        
Current liabilities        
Accounts payable and other liabilities  2,120,660   2,960,915 
Student deposits  46,040   681,818 
Due to related party  140,000   140,000 
Lease liabilities – current  461,161   259,297 
Deferred revenue  3,286,350   4,569,664 
Total current liabilities  6,054,211   8,611,694 
Non-current liabilities        
Lease liabilities – non current  561,897   461,997 
Deferred income tax liabilities  107,674     
Total liabilities  6,723,782   9,073,691 
         
Commitments and contingencies        
Shareholders’ equity        
Common shares, US$0.0015873 par value, 31,500,000 shares authorized, 11,350,704 and 10,412,843 shares issued and outstanding as of September 30, 2022 and 2021, respectively  18,017   16,528 
Additional paid-in capital  17,526,546   11,464,979 
Subscription receivable      (200,000)
Retained earnings (deficit)  (2,416,788)  3,654,441 
Accumulated other comprehensive loss  (28,939)    
Total shareholders’ equity  15,098,836   14,935,948 
         
Non-controlling interests  2,180,108     
Total liabilities and shareholders’ equity  24,002,726   24,009,639 
     

EPICQUEST EDUCATION INTERNATIONAL CO., LTD

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2022, 2021 AND 2020

(US$, except share data and per share data, or otherwise noted)

  September 30,
2022
  September 30,
2021
  September 30,
2020
 
  US$  US$  US$ 
Revenues  6,330,428   5,341,850   9,063,137 
Costs of services  2,021,058   1,934,237   2,342,276 
             
Gross profit  4,309,370   3,407,613   6,720,861 
             
Operating costs and expenses:            
Selling expenses  952,888   1,732,758   2,310,188 
General and administrative  10,521,551   3,148,256   3,115,120 
Total operating costs and expenses  11,474,439   4,881,014   5,425,308 
             
Income (loss) from operations  (7,165,069)  (1,473,401)  1,295,553 
             
Other (income) expenses:            
Other income  (819,135)  (71,640)  (55,000)
Interest income  (26,463)  (9,537)  (35,293)
Foreign exchange gain      (743)  (23,262)
Total other (income) expenses  (845,598)  (81,920)  (113,555)
             
Income (loss) before provision for income taxes  (6,319,471)  (1,391,481)  1,409,108 
             
Current income tax expense (recovery)  16,459   13,889   397,553 
Deferred income tax expense (recovery)  (99,814)  (321,057)    
Income taxes expense (recovery)  (83,355)  (307,168)  397,553 
             
Net income (loss)  (6,236,116)  (1,084,313)  1,011,555 
Net income (loss) attributable to non-controlling interest  (164,887)        
Net income (loss) attributable to common stockholders  (6,071,229)  (1,084,313)  1,011,555 
Unrealized foreign currency translation adjustment  (28,939)        
Comprehensive income  (6,265,055)  (1,084,313)  1,011,555 
             
Basic & diluted net income per share $(0.55) $(0.12)  0.13 
             
Weighted average number of ordinary shares-basic and diluted  11,010,240   9,160,447   7,938,000 
 

EPICQUEST EDUCATION INTERNATIONAL CO., LTD

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2022, 2021 AND 2020

(US$, except share data and per share data, or otherwise noted)

  September 30,
2022
  September 30,
2021
  September 30,
2020
 
  US$  US$  US$ 
Revenues  6,330,428   5,341,850   9,063,137 
Costs of services  2,021,058   1,934,237   2,342,276 
             
Gross profit  4,309,370   3,407,613   6,720,861 
             
Operating costs and expenses:            
Selling expenses  952,888   1,732,758   2,310,188 
General and administrative  10,521,551   3,148,256   3,115,120 
Total operating costs and expenses  11,474,439   4,881,014   5,425,308 
             
Income (loss) from operations  (7,165,069)  (1,473,401)  1,295,553 
             
Other (income) expenses:            
Other income  (819,135)  (71,640)  (55,000)
Interest income  (26,463)  (9,537)  (35,293)
Foreign exchange gain      (743)  (23,262)
Total other (income) expenses  (845,598)  (81,920)  (113,555)
             
Income (loss) before provision for income taxes  (6,319,471)  (1,391,481)  1,409,108 
             
Current income tax expense (recovery)  16,459   13,889   397,553 
Deferred income tax expense (recovery)  (99,814)  (321,057)    
Income taxes expense (recovery)  (83,355)  (307,168)  397,553 
             
Net income (loss)  (6,236,116)  (1,084,313)  1,011,555 
Net income (loss) attributable to non-controlling interest  (164,887)        
Net income (loss) attributable to common stockholders  (6,071,229)  (1,084,313)  1,011,555 
Unrealized foreign currency translation adjustment  (28,939)        
Comprehensive income  (6,265,055)  (1,084,313)  1,011,555 
             
Basic & diluted net income per share $(0.55) $(0.12)  0.13 
             
Weighted average number of ordinary shares-basic and diluted  11,010,240   9,160,447   7,938,000 
 

EPICQUEST EDUCATION INTERNATIONAL CO., LTD

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2022, 2021 AND 2020

(US$, except share data and per share data, or otherwise noted)

  September 30,  September 30,  September 30, 
  2022  2021  2020 
  US$  US$  US$ 
Cash Flows from Operating Activities:         
Net income (loss)  (6,236,116)  (1,084,313)  1,011,555 
Adjustments for items not affecting cash:            
Depreciation and amortization  252,097   126,234   87,593 
Share-based compensation  4,813,049         
Non-cash adjustment to lease expenses  (25,643)  94,698     
Deferred income tax expense  (99,814)  (321,057)    
Gain from disposal of fixed assets  (813,064)  (4,000)    
Changes in operating assets and liabilities            
Accounts receivable  118,608   (5,176)  89,521 
Prepaid expenses  614,548   71,800   428,592 
Long-term prepaid expenses      159,382   584,356 
Accounts payable & accrued liabilities  (1,320,563)  1,117,184   545,606 
Deferred revenue  (1,283,314)  961,426   (3,221,807)
Income tax receivable  2,293   (480,866)  (664,399)
Student deposits  (635,778)  (313,122)  994,940 
Net cash provided from (used in) operating activities  (4,613,697)  322,190   (144,043)
             
Cash Flows from Investing Activities:            
Purchase of property and equipment  (51,410)  (618,529)  (288,555)
Notes receivable  (305,000)  100,000     
Long-term investment  (270,000)        
Net cash used for business acquisitions  (1,945,931)        
Proceeds from sale of fixed assets  1,920,861   4,000     
Net cash used in investing activities  (651,480)  (514,529)  (288,555)
             
Cash Flows from Financing Activities:            
Deferred costs related to initial public offering          (432,035)
Share issuances, net of issuance costs  200,000   9,321,523     
Net cash provided from (used in) financing activities  200,000   9,321,523   (432,035)
             
Effect of exchange rate changes on cash and cash equivalents  (28,938)        
Net increase/(decrease) in cash, cash equivalents  (5,094,115)  9,129,184   (864,633)
Cash and cash equivalents, beginning of period  16,537,174   7,407,990   8,272,623 
Cash and cash equivalents, end of period  11,443,059   16,537,174   7,407,990 
             
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:         
Interest paid         
Income taxes paid  14,166   490,250   1,053,360 
Non-cash investing activities – acquisition of operating lease right-of-used assets  574,483         
Non-cash investing activities – assumption of operating lease obligation  574,483         

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