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[1] “歸屬于華欽科技股東的Non-GAAP凈利潤”是一種Non-GAAP財務(wù)指標(biāo)，其定義為歸屬于公司的不包括股份補償費用的凈利潤，詳細(xì)信息請參閱 “Reconciliation of GAAP and Non-GAAP Results”。

[2] “Non-GAAP管理費用”是一種Non-GAAP財務(wù)指標(biāo)，其定義為不包含股份補償費用的管理費用，詳細(xì)信息請參閱“Reconciliation of GAAP and Non-GAAP Results”。

[3]“Non-GAAP凈利潤”是一種Non-GAAP的財務(wù)指標(biāo)，其定義為不包括股份補償費用的凈利潤，詳細(xì)信息請參閱 “Reconciliation of GAAP and Non-GAAP Results”。

CLPS INCORPORATION

CONSOLIDATED BALANCE SHEETS

 (Amounts in U.S. dollars (“$”), except for number of shares)

As of June 30,

 As of December 31,

2020

（Audited）

2019

(Unaudited)

ASSETS

Current assets

Cash and cash equivalents

$

12,652,120

$

11,234,260

Short-term investments

636,934

-

Accounts receivable, net

25,753,856

20,857,441

Escrow receivable

-

200,000

Prepayments, deposits and other assets, net

1,280,967

1,998,499

Prepaid income tax

15,780

524,352

Amounts due from related parties

169,185

252,706

Total Current Assets

40,508,842

35,067,258

Property and equipment, net

452,472

471,886

Intangible assets, net

1,144,579

1,240,490

Goodwill

2,118,700

2,184,001

Long-term investments

680,131

1,102,691

Prepayments, deposits and other assets, net

244,387

220,661

Deferred tax assets, net

203,247

251,912

Total Assets

$

45,352,358

$

40,538,899

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities

Short-term bank loans

$

2,161,239

$

802,514

Accounts payable and other current liabilities

489,043

1,006,896

Tax payables

1,426,614

1,178,472

Contract liabilities

755,178

1,241,706

Salaries and benefits payable

11,522,268

10,789,713

Total Current Liabilities

16,354,342

Long-term bank loans

22,554

-

Deferred tax liabilities

163,163

192,127

Unrecognized tax benefits

194,939

-

 TOTAL LIABILITIES

16,734,998

15,211,428

Commitments and Contingencies

Shareholders’ Equity

Common stock, $0.0001 par value, 100,000,000 shares authorized; 15,930,330 shares issued and outstanding as of June 30, 2020; 13,913,201 shares issued and outstanding as of June 30, 2019. *

1,593

1,425

Additional paid-in capital

28,586,048

25,648,785

Statutory reserves

2,803,811

2,331,138

Retained earnings

（2,680,143) 

(2,776,767)

Accumulated other comprehensive loss

（1,362,665)

(960,744)

Total CLPS Incorporation’s Shareholders’ Equity

27,348,644

24,243,837

Non-controlling Interests

1,268,716

1,083,634

Total Shareholders’ Equity

28,617,360

25,327,471

Total Liabilities and Shareholders’ Equity

$

45,352,358

$

40,538,899

* The shares and per share data are presented on a retroactive basis to reflect the nominal share issuance.

CLPS INCORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Amounts in U.S. dollars (“$”), except for number of shares)

For the six months ended

June 30,

2020

2019

Revenues

$

46,847,534

$

34,137,189

Less: Cost of revenues (note 1)

(31,104,457)

(21,552,693)

Gross profit

15,743,077

12,584,496

Operating expenses:

Selling and marketing expenses (note 1)

1,655,650

1,206,153

Research and development expenses

5,416,455

4,939,522

General and administrative expenses (note 1)

8,446,840

8,223,126

Other operating expense

187,496

-

Total operating expenses

15,706,441

14,368,801

Income (loss) from operations

36,636

(1,784,305)

Subsidies and other income, net

1,163,956

156,352

Other expenses

(77,229)

(30,712)

Income (loss) before income tax and share of loss in equity investees

1,123,363

(1,658,665)

Provision (benefits) for income taxes

446,601

(56,283)

Income (loss) before share of income in equity investees

676,762

(1,602,382)

Share of income in equity investees, net of tax

107,895

(145,329)

Net income (loss)

784,657

(1,747,711)

Less: Net income attributable to non-controlling interests

215,359

89,434

Net income (loss) attributable to CLPS Incorporation’s shareholders

$

569,298

$

(1,837,145)

Other comprehensive loss (income)

Foreign currency translation loss

$

(432,198)

$

(58,964)

Less: foreign currency translation (loss) gain attributable to non-controlling interest

(30,277)

2,052

Other comprehensive loss attributable to CLPS Incorporation’s shareholders

$

(401,921)

$

(61,016)

Comprehensive income (loss) attributable to

CLPS Incorporation shareholders

$

167,377

$

(1,898,161)

Non-controlling interests

184,562

91,486

$

351,939

$

(1,806,675)

Basic earnings  (loss) per common share*

$

0.04

$

(0.13)

Weighted average number of share outstanding – basic

15,169,655

13,889,460

Diluted  earnings (loss) per common share*

$

0.04

$

(0.13)

Weighted average number of share outstanding – diluted (note 2)

15,212,010

13,889,460

Note:

(1)  Includes share-based compensation expenses as follows:

 Cost of revenues

9,042

9,472

Selling and marketing expenses

181,257

46,100

General and administrative expenses

2,747,132

2,946,803

(2)  All dilutive potential common shares had anti-dilutive impact and were excluded in computation of diluted earnings per share in the period when loss was reported.

* The shares and per share data are presented on a retroactive basis to reflect the nominal share issuance.

CLPS INCORPORATION

RECONCILIATION OF NON-GAAP AND GAAP RESULTS

(Amounts in U.S. dollars (“$”), except for number of shares)

For the six months ended 

June 30,

2020

2019

Cost of revenues

$

(31,104,457)

$

(21,552,693)

Less: share-based compensation expenses

9,042

9,472

Non-GAAP cost of revenues

$

(31,095,415)

$

(21,543,221)

Selling and marketing expenses

$

1,655,650

$

1,206,153

Less: share-based compensation expenses

181,257

46,100

Non-GAAP selling and marketing expenses

$

1,474,393

$

1,160,053

General and administrative expenses

$

8,446,840

$

8,223,126

Less: share-based compensation expenses

2,747,132

2,946,803

Non-GAAP general and administrative expenses

$

5,699,708

$

5,276,323

Operating income (loss)

$

36,636

$

(1,784,305)

Add: share-based compensation expenses

2,937,431

3,002,375

Non-GAAP operating income

$

2,974,067

$

1,218,070

Operating margin

0.1%

Add: share-based compensation expenses

6.2%

8.8%

Non-GAAP operating margin

6.3%

3.6%

Net income (loss)

$

784,657

$

(1,747,711)

Add: share-based compensation expenses

2,937,431

3,002,375

Non-GAAP net income

$

3,722,088

$

1,254,664

Net income (loss) attributable to CLPS Incorporation's shareholders

$

569,298

$

(1,837,145)

Add: share-based compensation expenses

2,937,431

3,002,375

Non-GAAP net income attributable to CLPS Incorporation's shareholders

3,506,729

1,165,230

$

$

Weighted average number of share outstanding used in computing GAAP and non-GAAP basic earnings

15,169,655

13,889,460

GAAP basic earnings (loss) per common share

$

0.04

$

(0.13)

Add: share-based compensation expenses

0.19

0.21

Non-GAAP basic earnings per common share

$

0.23

$

0.08

Weighted average number of share outstanding used in computing GAAP diluted earnings

15,212,010

13,889,460

Add: effect of dilutive securities (note 1)

-

184,316

Weighted average number of share outstanding used in computing non-GAAP diluted earnings

15,212,010

14,073,776

GAAP diluted earnings (loss) per common share

$

0.04

$

(0.13)

Add: share-based compensation expenses

0.19

0.21

Non-GAAP diluted earnings per common share

$

0.23

$

0.08

Note:

(1)   All dilutive potential common shares had anti-dilutive impact and were excluded in computation of GAAP diluted earnings per share in the period when loss was reported.

CLPS INCORPORATION

AUDITED CONSOLIDATED BALANCE SHEETS

 (Amounts in U.S. dollars (“$”), except for number of shares)

As of June 30,

2020

2019

ASSETS

Current assets

Cash and cash equivalents

$

12,652,120

$

6,601,335

Short-term investments

636,934

1,791,697

Accounts receivable, net

25,753,856

19,263,584

Escrow receivable

-

200,000

Prepayments, deposits and other assets, net

1,280,967

1,028,154

Prepaid income tax

15,780

630,790

Amounts due from related parties

169,185

230,540

Total Current Assets

40,508,842

29,746,100

Property and equipment, net

452,472

566,591

Intangible assets, net

1,144,579

427,769

Goodwill

2,118,700

447,790

Long-term investments

680,131

914,006

Prepayments, deposits and other assets, net

244,387

222,507

Deferred tax assets, net

203,247

338,221

Total Assets

$

45,352,358

$

32,662,984

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities

Short-term bank loans

$

2,161,239

$

2,184,996

Accounts payable and other current liabilities

489,043

196,832

Tax payables

1,426,614

915,629

Deferred subsidies

-

109,250

Deferred revenues

-

124,192

Contract liabilities

755,178

-

Salaries and benefits payable

11,522,268

7,735,487

Total Current Liabilities

16,354,342

11,266,386

Long-term bank loans

22,554

-

Deferred tax liabilities

163,163

-

Unrecognized tax benefits

194,939

-

 TOTAL LIABILITIES

16,734,998

11,266,386

Commitments and Contingencies

Shareholders’ Equity

Common stock, $0.0001 par value, 100,000,000 shares authorized; 15,930,330 shares issued and outstanding as of June 30, 2020; 13,913,201 shares issued and outstanding as of June 30, 2019. *

1,593

1,391

Additional paid-in capital

28,586,048

24,276,622

Statutory reserves

2,803,811

1,833,802

Retained earnings

（2,680,143) 

(4,509,729)

Accumulated other comprehensive loss

（1,362,665) 

(813,650)

Total CLPS Incorporation’s Shareholders’ Equity

27,348,644

20,788,436

Non-controlling Interests

1,268,716

608,162

Total Shareholders’ Equity

28,617,360

21,396,598

Total Liabilities and Shareholders’ Equity

$

45,352,358

$

32,662,984

* The shares and per share data are presented on a retroactive basis to reflect the nominal share issuance.

CLPS INCORPORATION

AUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Amounts in U.S. dollars (“$”), except for number of shares)

For the years ended

June 30,

2020

2019

Revenues

$

89,415,798

$

64,932,937

Less: Cost of revenues (note 1)

(58,296,097)

(41,178,356)

Gross profit

31,119,701

23,754,581

Operating expenses:

Selling and marketing expenses (note 1)

3,059,877

2,179,029

Research and development expenses

10,436,975

7,978,883

General and administrative expenses (note 1)

16,343,936

17,384,393

Total operating expenses

29,840,788

27,542,305

Income (loss) from operations

1,278,913

(3,787,724)

Subsidies and other income, net

2,535,868

779,508

Other expenses

(107,322)

(92,429)

Income (loss) before income tax and share of income (loss) in equity investees

3,707,459

(3,100,645)

Provision for income taxes

835,444

186,615

Income (loss) before share of income (loss) in equity investees

2,872,015

(3,287,260)

Share of income (loss) in equity investees, net of tax

207,363

(145,329)

Net income (loss)

3,079,378

(3,432,589)

Less: Net income (loss) attributable to non-controlling interests

141,139

(162,813)

Net income (loss) attributable to CLPS Incorporation’s shareholders

$

2,938,239

$

(3,269,776)

Other comprehensive loss

Foreign currency translation loss

$

(571,943)

$

(429,348)

Less: foreign currency translation loss attributable to non-controlling interests

(22,928)

(17,375)

Other comprehensive loss attributable to CLPS Incorporation’s shareholders

$

(549,015)

$

(411,973)

Comprehensive income (loss) attributable to

CLPS Incorporation shareholders

$

2,389,224

$

(3,681,749)

Non-controlling interests

118,211

(180,188)

$

2,507,435

$

(3,861,937)

Basic earnings (loss) per common share*

$

0.20

$

(0.24)

Weighted average number of share outstanding – basic

14,689,224

13,843,764

Diluted earnings (loss) per common share*

$

0.20

$

(0.24)

Weighted average number of share outstanding – diluted (note 2)

14,692,299

13,843,764

Note:

(1)   Includes share-based compensation expenses as follows:

Cost of revenues

14,110

9,472

Selling and marketing expenses

211,573

46,100

General and administrative expenses

3,778,397

6,960,517

(2)  All dilutive potential common shares had anti-dilutive impact and were excluded in computation of diluted earnings per share in the period when loss was reported.

* The shares and per share data are presented on a retroactive basis to reflect the nominal share issuance.

CLPS INCORPORATION

RECONCILIATION OF NON-GAAP AND GAAP RESULTS

(Amounts in U.S. dollars (“$”), except for number of shares)

For the years ended 

June 30,

2020

2019

Cost of revenues

$

(58,296,097)

$

(41,178,356)

Less: share-based compensation expenses

14,110

9,472

Non-GAAP cost of revenues

$

(58,281,987)

$

(41,168,884)

Selling and marketing expenses

$

3,059,877

$

2,179,029

Less: share-based compensation expenses

211,573

46,100

Non-GAAP selling and marketing expenses

$

2,848,304

$

2,132,929

General and administrative expenses

$

16,343,936

$

17,384,393

Less: share-based compensation expenses

3,778,397

6,960,517

Non-GAAP general and administrative expenses

$

12,565,539

$

10,423,876

Operating  income (loss)

$

1,278,913

$

(3,787,724)

Add: share-based compensation expenses

4,004,080

7,016,089

Non-GAAP operating income

$

5,282,993

$

3,228,365

Operating Margin

1.4%

(5.8%)

Add: share-based compensation expenses

4.5%

10.8%

Non-GAAP operating margin

5.9%

5.0%

Net income (loss)

$

3,079,378

$

(3,432,589)

Add: share-based compensation expenses

4,004,080

7,016,089

Non-GAAP net income

$

7,083,458

$

3,583,500

Net income (loss) attributable to CLPS Incorporation's shareholders

$

2,938,239

$

(3,269,776)

Add: share-based compensation expenses

4,004,080

7,016,089

Non-GAAP net income attributable to CLPS Incorporation's shareholders

$

6,942,319

$

3,746,313

Weighted average number of share outstanding used in computing GAAP and non-GAAP basic earnings

14,689,224

13,843,764

GAAP basic earnings (loss) per common share

$

0.20

$

(0.24)

Add: share-based compensation expenses

0.27

0.51

Non-GAAP basic earnings per common share

$

0.47

$

0.27

Weighted average number of share outstanding used in computing GAAP diluted earnings

14,692,299

13,843,764

Add: effect of dilutive securities (note 1)

-

194,824

Weighted average number of share outstanding used in computing non-GAAP diluted earnings

14,692,299

14,038,588

GAAP diluted earnings (loss) per common share

$

0.20

$

(0.24)

Add: share-based compensation expenses

0.27

0.51

Non-GAAP diluted earnings per common share

$

0.47

$

0.27

Note:

(1)   All dilutive potential common shares had anti-dilutive impact and were excluded in computation of GAAP diluted earnings per share in the period when loss was reported.