Financial Position - As of June 30, 2024, cash at bank in Hong Kong amounted to $83.9 million, up from $20.0 million as of December 31, 2023[22] - The company maintains most of its bank accounts in the PRC and Hong Kong, with cash in PRC banks covered by deposit insurance regulations for amounts less than RMB0.5 million[22] - As of June 30, 2024, net accounts receivable increased to $1,462,571 from $1,453,230 as of December 31, 2023, reflecting a slight growth in tailored job readiness training services[18] - The allowance for doubtful accounts remained stable at $169,910 as of June 30, 2024, compared to $169,330 as of December 31, 2023, indicating consistent management of credit risk[75] - Net inventories decreased to $144,862 as of June 30, 2024, down from $167,493 as of December 31, 2023, primarily due to a reduction in the allowance for inventories[76] - The total taxes payable decreased to $1,185,754 as of June 30, 2024, from $1,438,658 as of December 31, 2023, showing improved tax management[89] - Goodwill on acquisitions was recorded at $6,747,543 as of June 30, 2024, after a non-cash impairment charge of $2,734,004 was recognized in 2023[83] - Short-term bank loans increased significantly to $437,154 as of June 30, 2024, compared to $32,191 as of December 31, 2023, indicating a shift in financing strategy[87] - The net intangible assets decreased to $312,836 as of June 30, 2024, from $351,680 as of December 31, 2023, due to amortization expenses[85] - The company has unsecured loans from third parties with a weighted average annual effective interest rate of 23.1% as of June 30, 2024, indicating high borrowing costs[90] - Related party transactions included a balance due to a related party of $0.7 million as of June 30, 2024, consistent with the previous period, reflecting stable financing from related parties[91] Revenue and Performance - As of June 30, 2024, China Liberal had total revenue of $885,804, a decrease of approximately 34.8% compared to $1,358,617 for the six months ended June 30, 2023[104] - Revenue from tailored job readiness training services was $861,647 for the six months ended June 30, 2024, down from $944,944 in the same period of 2023, representing a decline of about 8.8%[104] - Revenue from Technological Consulting Services for Smart Campus Solutions decreased significantly to $10,681 from $413,673, a decline of approximately 97.4%[104] - Five customers accounted for over 10% of total revenue, representing approximately 20.6%, 18.1%, 15.6%, 15.6%, and 11.6% of total revenue for the six months ended June 30, 2024, compared to no customers exceeding this threshold in the same period of 2023[94] - As of June 30, 2024, two customers accounted for 55.3% of the total outstanding accounts receivable balance, with 31.3% and 24.0% respectively[95] Revenue Recognition - The company recognizes revenue from sales of textbooks upon delivery, when risks and titles are transferred[47] - The Company recognizes revenue from technological consulting services based on the timing of control transfer and cash collection, which may involve significant financing components[49] - For "smart campus" solution contracts, the Company identifies multiple performance obligations and allocates revenue based on relative standalone selling prices[50][51] - Revenue from post-contract maintenance support is recognized over time, while revenue from solution and application customization is recognized upon completion[51] - As of June 30, 2024, the Company reported deferred revenue of $0.2 million, reflecting unsatisfied performance obligations[54] - The Company provides tailored job readiness training services to students, with fixed-price contracts that result in deferred revenue recognized over the training period[53] Expenses and Costs - The company reported a depreciation expense of $1,776 for the six months ended June 30, 2024, compared to $6,491 for the same period in 2023, reflecting a decrease in asset utilization[84] - The company recognized share-based compensation expense of $1,256,504 for the six months ended June 30, 2024, related to the grant of 465,372 ordinary shares to employees[98] - The Company applies ASC 718 for share-based compensation, recognizing costs based on the probable achievement of performance conditions[60][61] Regulatory and Compliance - The company’s financial statements are prepared in accordance with US GAAP, and operating results for the six months ended June 30, 2024, may not be indicative of full-year results[19] - No significant income was generated outside the PRC for the six months ended June 30, 2024, and all tax returns remain open for examination by PRC tax authorities[58] - The Company has not incurred significant penalties or interest related to income taxes during the six months ended June 30, 2024[57] - The FASB issued ASU 2023-09 to enhance income tax disclosures, effective for annual periods beginning after December 15, 2024, with no material impact on the Company's financial position[70][73] Share Issuance - China Liberal issued 25,000,000 ordinary shares at a price of $1.00 per share in June 2024, generating net proceeds of $24.9 million[97] - On September 19, 2024, China Liberal entered into agreements to issue 250,000,000 ordinary shares at a price of $0.28 per share, totaling an aggregate purchase price of $70.0 million[111] Assets and Liabilities - The company has developed and edited more than 16 English textbooks and course materials, which are sold to students enrolled in Fuzhou Melbourne Polytechnic and Strait College[46] - The company assesses goodwill for impairment annually as of December 31, with no impairments reported as of June 30, 2024[30] - The company evaluates inventories annually for net realizable value adjustments, reducing carrying value for obsolete items[27] - The company utilizes advanced information technology to provide total solutions to targeted Chinese universities and colleges, enhancing operational efficiency[48] - The company has not recorded any allowance for advances to suppliers, considering all advances to be fully realizable as of June 30, 2024[25] - The company’s statutory reserves and restricted net assets totaled $5.8 million as of June 30, 2024, down from $8.8 million as of December 31, 2023[101]
China Liberal(CLEU) - 2024 Q2 - Quarterly Report