Management and Governance - Ms. Ngai Ngai Lam has been the CEO since July 2020, leading the growth of China Liberal Beijing from a focus on Sino-foreign academic programs to comprehensive educational services [237]. - The board of directors consists of five members, including three independent directors, complying with Nasdaq's requirement for a majority of independent directors [248]. - Ms. Ngo Yin Tsang has served as an independent director since May 2020, bringing over 20 years of experience in auditing and financial management [240]. - Mr. Wenhuai Zhuang has been the CFO since April 2019, with prior experience in management consulting and project management [237]. - The company has established an audit committee, a compensation committee, and a nominating and corporate governance committee to oversee its operations [249]. Compensation and Incentives - The company paid an aggregate of $30,505 in cash to its executive officer and $101,209 to non-executive and independent directors for the fiscal year ended December 31, 2021 [243]. - A total of 30,000 Ordinary Shares were granted to an executive officer and 57,000 Ordinary Shares to certain non-executive and independent directors, with corresponding share-based compensation expenses of $44,700 and $115,830 respectively [243]. - The 2021 Share Incentive Plan allows for the issuance of up to 1,500,000 Ordinary Shares, with awards including options, share appreciation rights, and restricted share units [246]. - The 2021 Share Incentive Plan has a term of ten years, with the board having the authority to amend or terminate the plan [247]. - The company incurred share-based compensation expenses of $2,288,251 during the reporting period, reflecting its investment in employee incentives [336]. Financial Performance - Total revenue for 2021 was $3,909,546, a decrease of 22.2% from $5,023,099 in 2020 [333]. - Gross profit for 2021 was $2,760,398, compared to $2,866,066 in 2020, reflecting a decline of 3.7% [333]. - Net loss for 2021 was $1,249,881, compared to a net income of $1,208,696 in 2020, indicating a significant turnaround [333]. - Operating expenses for 2021 totaled $3,931,088, significantly higher than $1,429,346 in 2020, indicating an increase of 175.5% [333]. - The company reported a basic and diluted loss per share of $0.12 for 2021, compared to earnings of $0.21 in 2020 [333]. Assets and Liabilities - Total current assets increased to $43,550,730 in 2021 from $12,325,454 in 2020, representing a growth of 253.5% [330]. - Total liabilities rose to $1,675,343 in 2021, up from $1,132,985 in 2020, marking an increase of 48.0% [331]. - Total shareholders' equity reached $41,958,388 in 2021, a substantial increase from $11,640,929 in 2020, reflecting a growth of 260.5% [332]. - Cash and cash equivalents surged to $32,678,421 in 2021, compared to $5,007,449 in 2020, an increase of 552.5% [330]. Taxation and Regulatory Environment - The company is incorporated in the Cayman Islands and relies on dividends from its PRC subsidiaries for cash requirements, including shareholder dividends [262]. - The corporate income taxes for fiscal years 2021, 2020, and 2019 were reported at approximately $300,034, $303,246, and $156,038 respectively, due to HNTE status [1]. - The effective tax rate for the year ended December 31, 2021, was 31.6%, influenced by the preferential tax rate for HNTEs and non-PRC entities [409]. - The company is classified as an exempted company under the Companies Act, which provides certain regulatory advantages [272]. - The company has not incurred significant penalties or interest related to income taxes during the fiscal years ended December 31, 2021, 2020, and 2019 [379]. Market and Operational Insights - The company is primarily engaged in providing Sino-foreign Jointly Managed Academic Programs and technological consulting services to improve data management systems for Chinese universities [339]. - The company experienced seasonal fluctuations in operations, with the largest student enrollments occurring in the third and fourth fiscal quarters [304]. - For the year ended December 31, 2021, the revenue from Sino-foreign Jointly Managed Academic Programs was not significantly impacted, with a 201.4% increase in students enrolled in tailored job readiness training services compared to 2020 [348]. - The number of students enrolled in Sino-foreign Jointly Managed Academic Programs decreased by 9.8% during the 2021 academic year, but no significant dropout was reported [348]. - The company has not recorded any allowance for uncollectible accounts as it considers all accounts receivable fully collectible as of December 31, 2021 [353]. Shareholder Information - Ngai Ngai Lam beneficially owns approximately 25.61% of the company's Ordinary Shares, representing 4,057,942 shares [256]. - The company does not have any present plan to pay cash dividends on its Ordinary Shares in the foreseeable future, intending to retain available funds for business expansion [261]. - The company completed the acquisition of an 8.8228% non-controlling interest in China Liberal Beijing for a total price of RMB 2.95 million (approximately $453,669) [257]. - The CEO purchased 2,000,000 ordinary shares at a price of $1.50 per share, totaling $3,000,000, reflecting confidence in the company's future [351]. - A private placement transaction is set to raise $9 million through the issuance of 6,000,000 ordinary shares, aimed at bolstering capital for growth initiatives [429].
China Liberal(CLEU) - 2021 Q4 - Annual Report