INTRODUCTION
It is best to learn the next dialogue of our monetary situation and outcomes
of operations with our audited consolidated monetary statements and associated
notes thereto included in our Annual Report on Type 10-Ok for the fiscal 12 months
ended December 31, 2021. This dialogue incorporates forward-looking statements and
includes quite a few dangers, uncertainties, assumptions and different necessary components
that might trigger the precise outcomes, efficiency or our achievements, or
business outcomes, to vary materially from historic outcomes, any future
outcomes, or efficiency or achievements expressed or implied by such
forward-looking statements. See “Cautionary Assertion Relating to Ahead-Wanting
Info.”
Enterprise Overview
We’re a supplier of sensible, high-quality, and value-based academic
coaching on the subjects of private finance, entrepreneurship, actual property, and
monetary markets investing methods and strategies. Our applications are supplied
via a wide range of codecs and channels, together with free workshops, primary
trainings, boards, phone mentoring, one-on-one mentoring, teaching and
e-learning. In the course of the six months ended June 30, 2022, we marketed our merchandise
and providers underneath our Constructing Wealth with LegacyTM model. In the course of the 12 months
ended December 31, 2021, we marketed our services underneath two manufacturers:
Constructing Wealth with LegacyTM; and Selfmade Investor by Tarek El Moussa.
Our college students pay for his or her programs in full up-front or via fee
agreements with impartial third events. Below United States of America
usually accepted accounting ideas (“U.S. GAAP”), we acknowledge income
upon the sooner of (i) when our college students take their programs or (ii) the time period
for taking their course expires, each of which may very well be a number of quarters after
the scholar purchases a program and pays the payment. We acknowledge income
instantly after we promote our (i) proprietary merchandise delivered at time of sale
and (ii) third get together merchandise gross sales. Our symposiums and boards mix a number of
superior coaching programs in a single location, permitting us to attain sure
economies of scale that scale back prices and enhance margins whereas additionally accelerating
U.S. GAAP income recognition, whereas on the similar time, enhancing our college students’
expertise, notably, for instance, via the chance to community with
different college students.
We additionally present a richer expertise for our college students via one-on-one
mentoring (two to 4 days in size, on web site or remotely and phone
mentoring (10 to 16 weekly one-on-one or one-on-many phone periods).
Mentoring includes an issue knowledgeable interacting with the scholar remotely
or in individual and guiding the scholar, for instance, via his or her first actual
property transaction, offering an actual hands-on expertise.
We had been based in 1996, and thru a reverse merger, grew to become a publicly-held
firm in November 2014. Immediately we’re a world firm that has cumulatively
served greater than two million college students from greater than 150 nations and
territories over the course of our working historical past.
Traditionally, our operations have been managed via three working segments:
(i) North America, (ii) United Kingdom, and (iii) Different International Markets. We no
longer function underneath our Different International Markets phase.
Since January 1, 2021, we’ve operated underneath two manufacturers:
? Constructing Wealth with Legacy TM: gives sensible, high-quality and
value-based academic coaching on the subjects of private finance,
entrepreneurship, actual property, monetary markets and investing methods and
strategies. This coaching program encompasses hands-on expertise and the true
spirit of investing from newbie to educated investor. In response to the
limitations on journey and the social distancing protocols arising out of the
Coronavirus pandemic, the Firm started advertising its Legacy EducationTM
merchandise transitioning to model title Constructing Wealth with LegacyTM. In the course of the
six months ended June 30, 2022, we marketed our services
solely underneath this model.
? Selfmade Investor by Tarek El MoussaTM introduces individuals to the investor
mindset, actual property investing methods, and methods to generate money move that
are designed to assist construct a basis of information for his or her monetary
objectives. Selfmade Investor occasions supplied nationwide free workshops, 3-day
trainings and huge stage occasions with Tarek presenting because the keynote speaker,
all promoting into our superior coaching merchandise.
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Current Developments
Influence from COVID-19 Coronavirus.
Traditionally, our operations have relied closely on our and our college students’
potential to journey and attend reside occasions the place giant teams of individuals collect in
native markets inside every of the segments through which we function. On March 11,
2020, the World Well being Group (WHO) declared the COVID-19 outbreak as a
pandemic. Because of worldwide restrictions on journey and social distancing,
in March 2020 we briefly ceased conducting reside gross sales and success and
furloughed considerably all of our workers. We resumed gross sales operations in
June 2020 with on-line gross sales occasions promoting into our suite of on-line, on-demand,
and over-the-phone merchandise. We additionally resumed on-line, on-demand, and
over-the-phone success actions in June 2020. We resumed reside operations
on a restricted foundation, in November 2020, with occasions in Florida. In December 2021,
the Firm briefly suspended reside in-person occasions and can proceed
following strict security protocols on the reside occasions when resumed. We’ve got
simplified our product choices and restructured our compensation program with
respect to each workers and impartial contractors to cut back prices and
enhance margins, however there may be no assurances that the Firm will likely be
efficient in promoting its services, or what the impression such
actions may have on our monetary efficiency. We aren’t capable of absolutely
quantify the continued impression that these components may have on our monetary
outcomes, however count on developments associated to COVID-19 to proceed to have an effect on the
Firm’s monetary efficiency in 2022 and past.
Outcomes of Operations
Our monetary outcomes proceed to be considerably impacted by the COVID-19
pandemic. As a result of severity and scope of the pandemic, the tempo at which
authorities and personal journey restrictions and public issues about public
gathering will ease, the speed at which traditionally giant will increase of
unemployment charges will lower, and the velocity with which the financial system recovers
are all components that impacted our monetary outcomes. As well as, our monetary
outcomes had been impacted because of the winding down our Wealthy Dad model and different
issues as disclosed within the litigation part of Notice 13 “Commitments and
Contingencies” within the Notes to Consolidated Monetary Statements.
Our Outcomes of Operations in 2022 and 2021 had been as follows ({dollars} in
1000’s):
Three Months Ended Six Months Ended
June 30, June 30,
2022 2021 2022 2021
Income 68 3,362 353 5,982
Working prices and bills:
Direct course bills 100 790 204 1,224
Promoting and gross sales bills 54 556 142 614
Royalty bills 0 0 0 0
Normal and administrative
bills 662 1,398 1,309 2,396
Complete working prices and
bills 816 2,744 1,655 4,234
Earnings (loss) from operations (748 ) 618 (1,302 ) 1,748
Different earnings (expense):
Curiosity expense, internet (112 ) (386 ) (237 ) (386 )
Different expense, internet 3 (1 ) 3 (3 )
Achieve on forgiveness of PPP Mortgage – – – –
Complete different earnings (expense),
internet (109 ) (387 ) (234 ) (389 )
Earnings (loss) from persevering with
operations earlier than earnings taxes (856 ) 231 (1,535 ) 1,359
Earnings tax (expense) profit – 131 136 (915 )
Internet earnings (loss) from
persevering with operations (856 ) 362 (1,399 ) 444
Earnings from discontinued
operations – – – 171
Internet earnings from discontinued
operations – – – $ 171
Internet earnings (loss) $ (856 ) $ 362 $ (1,399 ) $ 615
Primary earnings (loss) per frequent
share – persevering with operations $ (0.04 ) $ 0.01 $ (0.04 ) $ 0.02
Primary earnings (loss) per frequent
share – discontinued operations – – – $ –
Primary earnings (loss) per frequent
share $ (0.04 ) $ 0.01 $ (0.04 ) $ 0.02
Diluted earnings (loss) per
frequent share – persevering with
operations $ (0.04 ) $ 0.01 $ (0.04 ) $ 0.02
Diluted earnings (loss) per
frequent share – discontinued
operations – – – $ –
Diluted earnings (loss) per
frequent share $ (0.04 ) $ 0.01 $ (0.04 ) $ 0.02
Primary weighted common frequent
shares excellent 24,410 25,113 34,168 24,156
Diluted weighted common frequent
shares excellent 24,410 31,843 34,168 30,048
Complete earnings:
Internet earnings (loss) (856 ) 362 (1,399 ) 615
International forex translation
changes, internet of tax of $0 765 (52 ) 621 51
Complete complete earnings
(loss) $ (91 ) $ 310 $ (778 ) $ 666
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Our working outcomes are expressed as a share of income within the desk
beneath:
Three Months Ended Six Months Ended
June 30, June 30,
2022 2021 2022 2021
Income 100 100 % 100 100
Working prices and bills: %
Direct course bills 146 23 58 20
Promoting and gross sales bills 78 17 40 10
Royalty bills – – – –
Normal and administrative
bills 967 42 371 40
Complete working prices and
bills 1,192 82 469 71
Earnings (loss) from operations (1,092 ) 18 (369 ) 29
Different expense: – – – –
Curiosity expense, internet 163 (11 ) 67 (6 )
Different expense, internet (4 ) (0 ) (1 ) (0 )
Achieve on forgiveness of PPP Mortgage – – – –
Complete different expense, internet 159 (12 ) 66 (7 )
Earnings (loss) from persevering with
operations earlier than earnings taxes (1,251 ) 7 (435 ) 23
Earnings tax (expense) profit – 4 38 (15 )
Internet earnings (loss) from
persevering with operations (1,251 ) 11 (396 ) 7
Earnings from discontinued
operations – – – 3
Internet earnings from discontinued
operations – – – –
Internet earnings (loss) (1,251 ) 11 % (396 ) 10
Outlook
Money gross sales had been $ 0.1 for the six months ended June 30, 2022 in comparison with $0.7
million for the six months ended June 30, 2021, a lower of $0.7 or 100%. The
lower was pushed by the non permanent suspension of reside in-person occasions and
ongoing pupil success within the North America phase.
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We imagine that money gross sales stay an necessary metric when evaluating our
working efficiency. Pursuant to U.S. GAAP, we acknowledge income upon the
earlier of (i) when our college students take their programs or (ii) the time period for taking
their course expires, each of which may very well be a number of quarters after the scholar
purchases a program. Our college students pay for his or her programs in full up-front or
via fee agreements with impartial third events.
As a result of financial severity of COVID-19 pandemic on the Firm’s outcomes of
operations, monetary situation, and liquidity, reside in-person occasions had been
briefly suspended in December 2021 to give attention to strategic initiatives. The
impression of the non permanent suspension of reside occasions is unknown.
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