EpicQuest Education International (EEIQ) - 2025 Q2 - Quarterly Report

Financial Performance - Total revenues for the six months ended March 31, 2025, increased to $5,367,405, up 29% from $4,162,650 in the same period of 2024[3] - Gross profit for the same period rose to $3,416,170, compared to $2,403,421, reflecting a gross margin improvement[3] - Net loss attributable to common stockholders decreased to $231,942 for the six months ended March 31, 2025, from $3,207,372 in the prior year, indicating a significant reduction in losses[3] - The company reported a segmented loss of US$1,963,101 for the six months ended March 31, 2025, compared to a segmented loss of US$4,143,558 in the same period of 2024[105] - The company recorded other income of US$1,890,840 for the six months ended March 31, 2025, significantly higher than US$493,554 in the same period of 2024, primarily due to a gain from settlement of student-deposit refunds[103] Assets and Liabilities - Total current assets decreased to $2,456,327 as of March 31, 2025, down 43% from $4,291,475 as of September 30, 2024[2] - Total liabilities decreased to $8,904,800 as of March 31, 2025, down 28% from $12,413,406 as of September 30, 2024[2] - The company reported an accumulated deficit of $15,190,620 as of March 31, 2025, compared to $14,958,678 as of September 30, 2024[2] - Cash and cash equivalents, along with restricted cash, decreased to $673,053 as of March 31, 2025, from $1,488,754 at the beginning of the year[7] - As of March 31, 2025, total assets located in the U.S. and Canada were US$18,618,515, representing 93% of the company's total assets[105] Cash Flow and Financing - The company experienced a net cash used in operating activities of $2,294,857 for the six months ended March 31, 2025, compared to $10,068,519 in the prior year[7] - The company raised US$800,000 through a private placement by issuing 400,000 units at US$2.00 each during the year ended September 30, 2024[80] - The company has a loan payable of US$409,956 with an annual interest rate of 2%, extended to November 15, 2026[79] - The company plans to implement cost reduction initiatives and actively seek additional equity financing to address liquidity concerns[14] Strategic Initiatives - Management is exploring strategic partnerships with universities to introduce new educational programs and increase revenue sources[14] - The Company incorporated a wholly owned subsidiary, Gilmore INV LLC, on November 17, 2023, in Ohio[16] - Gilmore owns 40% of SouthGilmore LLC, which was incorporated on November 20, 2023, in Ohio[16] Revenue Recognition and Expenses - The Company recognizes revenue from education services over time as students receive services, with deferred revenue released based on semester terms, typically three months[33] - Costs of services primarily consist of tuition fees paid to partnered education institutions and salaries for instructors, charged based on semester terms[36] - General and administrative expenses decreased to US$4,509,893 for the six months ended March 31, 2025, from US$5,850,927 in the same period of 2024[102] Goodwill and Impairment - The Company has not recorded any impairment losses for the six months ended March 31, 2025, and 2024[47] - Goodwill is tested annually for impairment as of September 30, with no impairment losses reported for the periods presented[50] - As of March 31, 2025, the Company performed a qualitative assessment of its goodwill under RIL's operation and concluded that there were no indicators of impairment[52] - As of September 30, 2024, the Company performed a quantitative assessment of its goodwill under DU's operation and concluded that there were no indicators of impairment[53] Deferred Revenue and Prepaid Expenses - The ending balance of deferred revenue decreased to US$1,993,629 as of March 31, 2025, down from US$5,332,194 as of September 30, 2024[78] - Total prepaid expenses decreased from US$1,305,935 on September 30, 2024, to US$554,428 on March 31, 2025[69] - The Company prepaid US$7.5 million for soccer games as part of a total agreement of US$15 million with the Argentine Football Association[73] Stock and Equity - During the six months ended March 31, 2025, the company issued 495,000 common shares valued at US$422,140 for services rendered[82] - The company granted 200,000 performance-based shares to executives, which became exercisable after meeting sales increase targets for the year ended September 30, 2024[93] - As of March 31, 2025, the company had 1,485,000 stock options outstanding with a weighted average exercise price of US$1.95[87]