INTRODUCTION
You need 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 Kind 10-Okay for the fiscal yr
ended December 31, 2021. This dialogue incorporates forward-looking statements and
entails quite a few dangers, uncertainties, assumptions and different vital components
that would trigger the precise outcomes, efficiency or our achievements, or
trade 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 Concerning Ahead-Wanting
Data.”
Enterprise Overview
We’re a supplier of sensible, high-quality, and value-based academic
coaching on the matters of non-public finance, entrepreneurship, actual property, and
monetary markets investing methods and strategies. Our packages are provided
via quite a lot of codecs and channels, together with free workshops, fundamental
trainings, boards, phone mentoring, one-on-one mentoring, teaching and
e-learning. Through the 9 months ended September 30, 2022, we marketed our
services and products underneath our Constructing Wealth with LegacyTM model. Through the
yr ended December 31, 2021, we marketed our services and products underneath two
manufacturers: Constructing Wealth with LegacyTM; and Home made Investor by Tarek El Moussa.
Our college students pay for his or her programs in full up-front or via fee
agreements with unbiased third events. Underneath 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 could possibly be a number of quarters after
the coed purchases a program and pays the payment. We acknowledge income
instantly once we promote our (i) proprietary merchandise delivered at time of sale
and (ii) third social gathering merchandise gross sales. Our symposiums and boards mix a number of
superior coaching programs in a single location, permitting us to realize 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, significantly, 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 classes).
Mentoring entails a subject professional interacting with the coed remotely
or in particular person and guiding the coed, 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, turned a publicly-held
firm in November 2014. As we speak we’re a world firm that has cumulatively
served greater than two million college students from greater than 150 international locations 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 now have operated underneath two manufacturers:
? Constructing Wealth with Legacy TM: gives sensible, high-quality and
value-based academic coaching on the matters of non-public 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 and marketing its Legacy EducationTM
merchandise transitioning to model title Constructing Wealth with LegacyTM. Through the
9 months ended September 30, 2022, we marketed our services and products
completely underneath this model.
? Home made Investor by Tarek El MoussaTM introduces folks to the investor
mindset, actual property investing methods, and methods to generate money stream that
are designed to assist construct a basis of data for his or her monetary
targets. Home made Investor occasions provided nationwide free workshops, 3-day
trainings and enormous stage occasions with Tarek presenting because the keynote speaker,
all promoting into our superior coaching merchandise.
28
Influence from COVID-19 Coronavirus.
Traditionally, our operations have relied closely on our and our college students’
potential to journey and attend dwell occasions the place massive teams of individuals collect in
native markets inside every of the segments during 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 dwell gross sales and achievement and
furloughed considerably all of our staff. 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 achievement actions in June 2020. We resumed dwell operations
on a restricted foundation, in November 2020, with occasions in Florida. In December 2021,
the Firm briefly suspended dwell in-person occasions and can proceed
following strict security protocols on the dwell occasions when resumed. We now have
simplified our product choices and restructured our compensation program with
respect to each staff and unbiased contractors to cut back prices and
enhance margins, however there could be no assurances that the Firm might be
efficient in promoting its services and products, or what the impression such
actions can have on our monetary efficiency. We’re not in a position to totally
quantify the continued impression that these components can 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. Because of the 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 massive 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 Word 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
hundreds):
Three Months Ended 9 Months Ended
September 30, September 30,
2022 2021 2022 2021
Income 57 1,379 410 7,361
Working prices and bills:
Direct course bills 66 675 270 1,899
Promoting and gross sales bills 27 729 169 1,343
Royalty bills 0 0 0 0
Common and administrative bills 579 1,172 1,888 3,568
Complete working prices and bills 672 2,576
2,327 6,810
Earnings (loss) from operations (615 ) (1,197 ) (1,917 ) 551
Different expense:
Curiosity expense, internet (188 ) (35 ) (424 ) (421 )
Different expense, internet – 9 3 6
Achieve on forgiveness of PPP Mortgage 1,148 910 1,148 910
Complete different expense, internet 960 884 727 495
Earnings (loss) from persevering with
operations earlier than revenue taxes 346 (313 ) (1,190 ) 1,046
Earnings tax (expense) profit – 118 136 (797 )
Web revenue (loss) from persevering with
operations 346 (195 ) (1,054 ) 249
Earnings from discontinued operations – –
– 171
Web revenue from discontinued
operations – – – $ 171
Web revenue (loss) $ 346 $ (195 ) $ (1,054 ) $ 420
Fundamental earnings (loss) per widespread
share – persevering with operations $ 0.01 $ (0.01 ) $ (0.03 ) $ 0.02
Fundamental earnings (loss) per widespread
share – discontinued operations – – – –
Fundamental earnings (loss) per widespread
share $ 0.01 $ (0.01 ) $
(0.03 ) $ 0.02
Diluted earnings (loss) per widespread
share – persevering with operations $ 0.01 $ (0.01 ) $ (0.03 ) $ 0.01
Diluted earnings (loss) per widespread
share – discontinued operations – – – –
Diluted earnings (loss) per widespread
share $ 0.01 $ (0.01 ) $ (0.03 ) $ 0.01
Fundamental weighted common widespread
shares excellent 35,696 33,064 34,683 26,373
Diluted weighted common widespread
shares excellent 35,696 33,064 34,683 41,776
Complete revenue:
Web revenue (loss) 346 (195 ) (1,054 ) 420
International forex translation
changes, internet of tax of $0 101 336 722 387
Complete complete revenue (loss) 447 141
(332 ) 807
29
Our working outcomes are expressed as a share of income within the desk
beneath:
Three Months Ended 9 Months Ended
September 30, September 30,
2022 2021 2022 2021
Income 100 100 % 100 100
Working prices and bills:
Direct course bills 115 49 66 26
Promoting and gross sales bills 47 53 41 18
Royalty bills – – – –
Common and administrative bills 1,012 85 460 48
Complete working prices and bills 1,174 187
567 93
Earnings (loss) from operations (1,074 ) (87 ) (467 ) 7
Different expense: – – – –
Curiosity expense, internet 328 (3 ) 103 (6 )
Different expense, internet – 1 (1 ) 0
Achieve on forgiveness of PPP Mortgage (2,009 ) 66 (280 ) 12
Complete different expense, internet (1,680 ) 64 (177 ) 7
Earnings (loss) from persevering with
operations earlier than revenue taxes 606 (23 ) (290 ) 14
Earnings tax (expense) profit – 9 33 (11 )
Web revenue (loss) from persevering with
operations 606 (14 ) (257 ) 3
Earnings from discontinued operations – – – 2
Web revenue from discontinued
operations – – – –
Web revenue (loss) 606 (14 )% (257 ) 6
Outlook
Money gross sales had been $ 0.1 for the 9 months ended September 30, 2022 in comparison with
$1.four million for the 9 months ended September 30, 2021, a lower of $1.Three or
93%. The lower was pushed by the momentary suspension of dwell in-person
occasions and ongoing pupil achievement within the North America phase.
We consider that money gross sales stay an vital 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 could possibly be a number of quarters after the coed
purchases a program. Our college students pay for his or her programs in full up-front or
via fee agreements with unbiased third events.
Because of the financial severity of COVID-19 pandemic on the Firm’s outcomes of
operations, monetary situation, and liquidity, dwell in-person occasions had been
briefly suspended in December 2021 to give attention to strategic initiatives. The
impression of the momentary suspension of dwell occasions has induced a fabric antagonistic
impact on our operations and outcomes of operations.
© Edgar On-line, supply Glimpses