Visionary Holdings Inc 20-F for FY2024
Visionary Holdings Inc. (GVHGF)
About this 20-F
Visionary Holdings Inc filed this 20-F on August 15, 2024, covering the fiscal year ended March 31, 2024 (FY2024).
Headline figures
Fiscal year ended March 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $9.38M
- up 11.2% from $8.43M a year earlier
- Net income
- $1.02M
- compared with a net loss of $3.47M a year earlier
- Diluted EPS
- $0.32
- compared with -$1.34 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
OR
For the fiscal year ended
OR
For the transition period from _______________ to _______________
OR
Date of event requiring this shell company report _______________
For the transition period from ___________________________ to ___________________________
Commission file number
(Exact name of Registrant specified in its charter)
Not Applicable
(Translation of Registrant’s name into English)
Ontario,
(Jurisdiction of incorporation or organization)
905-739-0593
(Address of principal executive offices)
Chief Executive Officer
+1
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
| Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The |
Securities registered or to be registered pursuant to Section 12(g) of the Act.
Not Applicable
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
Not Applicable
(Title of Class)
Number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of business of the period covered by the annual report.
Common Shares
Indicate by check mark if the Registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.
Yes ☐
If this report is an annual or transition report, indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Yes ☐
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “accelerated filer,” “large accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer ☐ | Accelerated Filer ☐ |
| Emerging Growth Company |
If an emerging growth company that prepares its
financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards † pursuant to Section 13(a) of the Exchange
Act.
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared
or issued its audit report.
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| International Financial Reporting Standards as issued | Other ☐ | |
| by the International Accounting Standards Board ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:
Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b 2 of the Exchange Act):
Yes ☐ No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐
Not applicable.
TABLE OF CONTENTS
| i |
FORWARD LOOKING STATEMENTS
This annual report contains statements that constitute “forward-looking statements”. Any statements that are not statements of historical facts may be deemed to be forward-looking statements. These statements appear in a number of different places in this annual report and, in some cases, can be identified by words such as “anticipates”, “estimates”, “projects”, “expects”, “contemplates”, “intends”, “believes”, “plans”, “may”, “will”, or their negatives or other comparable words, although not all forward-looking statements contain these identifying words. Forward-looking statements in this annual report may include, but are not limited to, statements and/or information related to: strategy, future operations, projected production capacity, projected sales or rentals, projected costs, expectations regarding demand and acceptance of our products, availability of material components, trends in the market in which we operate, plans and objectives of management.
We believe that we have based our forward-looking statements on reasonable assumptions, estimates, analysis and opinions made in light of our experience and our perception of trends, current conditions and expected developments, as well as other factors that we believe to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. Although management believes that the assumption and expectations reflected in such forward-looking statements are reasonable, we may have made misjudgments in preparing such forward-looking statements. Assumptions have been made regarding, among other things: our expected production capacity; labor costs and material costs, no material variations in the current regulatory environment and our ability to obtain financing as and when required and on reasonable terms. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used.
The forward-looking statements, including the statements contained in Item 3.D “Risk Factors”. In particular, without limiting the generality of the foregoing disclosure, the statements contained in Item 4.B. – “Business Overview”, Item 5 – “Operating and Financial Review and Prospects” and Item 11 – “Quantitative and Qualitative Disclosures About Market Risk” and elsewhere in this annual report, are subject to known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from those expressed or implied by such forward-looking statements.
Although management attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Forward-looking statements might not prove to be accurate, as actual results and future events could differ materially from those anticipated in such forward-looking statements or we may have made misjudgments in the course of preparing the forward-looking statements. Accordingly, readers should not place undue reliance on forward-looking statements. We wish to advise you that these cautionary remarks expressly qualify, in their entirety, all forward-looking statements attributable to our company or persons acting on our company’s behalf. We do not undertake to update any forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such statements, except as, and to the extent required by, applicable securities laws. You should carefully review the cautionary statements and risk factors contained in this annual report and other documents that we may file from time to time with the securities regulators.
OTHER STATEMENTS IN THIS ANNUAL REPORT
Unless the context otherwise requires, in this annual report, the term(s) “we”, “us”, “our”, “Company”, “our company”, “our business” and “GV” refer to Visionary Holdings Inc. together with its consolidated subsidiaries.
CAD” or “C$” refers to the Canadian dollar, all “U.S. Dollar,” “USD,” “dollar” or “$” references when used in this annual report refer to United States dollar.
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PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not Applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not Applicable.
ITEM 3. KEY INFORMATION
| A. | [Reserved] |
| B. | Capitalization and Indebtedness |
Not applicable.
| C. | Reasons for the Offer and Use of Proceeds |
Not applicable.
| D. | Risk Factors |
An investment in our common shares carries a significant degree of risk. You should carefully consider the following risks, as well as the other information contained in this annual report, including our historical financial statements and related notes included elsewhere in this annual report, before you decide to purchase the common shares. Any one of these risks and uncertainties has the potential to cause material adverse effects on our business, prospects, financial condition and operating results which could cause actual results to differ materially from any forward-looking statements expressed by us and a significant decrease in the value of our ordinary shares. Refer to “Special Note Regarding Forward-Looking Statements”.
We may not be successful in preventing the material adverse effects that any of the following risks and uncertainties may cause. These potential risks and uncertainties may not be a complete list of the risks and uncertainties facing us. There may be additional risks and uncertainties that we are presently unaware of, or presently consider immaterial, that may become material in the future and have a material adverse effect on us. You could lose all or a significant portion of your investment due to any of these risks and uncertainties.
Risks Related to Our Business and Industry
Our business, results of operations and financial condition have been adversely impacted by the COVID-19 pandemic.
Although the COVID-19 pandemic has been declared over worldwide, the adverse impacts that it has developed upon the private education business are still severe and greatly affecting our growth in terms of the number of overseas students and revenue. The economic situation in the countries that are the major sources for our overseas student recruiting is largely damaged during and after the COVID-19 pandemic. Consequentially, families who had planned to send their children overseas for education are no longer capable of doing so due to their compromised financial situation.
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We still experienced challenges in enrolling new students in the fiscal year ended March 31, 2024. Despite a significant increase in tuition revenue for the fiscal year ended March 31, 2024, compared to the previous fiscal year, the overall revenue growth stabilized in 2024. However, the number of enrolled students, particularly international students, remained low. The number of students is very slowly recovering but is still adversely impacted by the negative outcomes of the pandemic. With the pandemic officially over and the economies in our targeted countries and regions gradually recovering, we anticipate that student enrollment will continue to increase.
We have limited operating history providing education services, which makes it difficult to predict our prospects and our business and financial performance.
Although we have been engaged in the real estate business since 2013 and have management with prior experience in providing education services, we have only been providing education services and operating schools through several acquisitions beginning in November 2017 when we purchased a majority interest in Toronto ESchool. Additionally, our limited history of operating our planned main business lines may not serve as an adequate basis for evaluating our prospects and operating results, including net revenue, cash flows, profitability, or prospects. We have encountered, and may continue to encounter in the future, risks, challenges, and uncertainties associated with operating a private education business, such as addressing regulatory compliance and uncertainty, engaging, training, and retaining high-quality teachers and administrators, and expanding our school network. If we do not manage these risks successfully, our operating and financial results may differ materially from our expectations and our business and financial performance may suffer.
Some of our schools are in the early stages of development and have only limited operations. A negative change in the development or implementation of our public-private partnership colleges programs (the “PPP programs”) or 2+2 collaborative undergraduate programs that allow students to complete part of their education in their home country and the remaining years in Canada (the “2+2 programs) with public colleges or public universities, could cause delays in the execution of our business plan. Our inability to successfully increase the utilization rate for the schools that are in the ramp-up stage or adverse changes in our development of our PPP programs could have a material adverse effect on our results of operations, financial condition, and prospects.
In addition, as some of our schools commenced operations recently, they have not yet reached their full capacity. For newly established schools, we have recruited students only for certain grades, which leads to a relatively lower utilization rate for such schools. With our existing students progressing into the next grades in school and as we fill up new entry classes, we expect the utilization rates of our newly established schools to increase accordingly. We cannot assure you that we will be able to successfully increase the utilization rate for the schools that are in the ramp-up stage, which may materially and adversely affect our business growth and profitability.
The report of our independent registered public accounting firm on our financial statements for the years ended March 31, 2024 includes an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern, and if our business is unable to continue it is likely investors will lose all of their investment.
As discussed in Note 1 to the consolidated financial statements to this Annual Report, the Company has suffered significant losses from operations and has a significant decrease in working capital that raises substantial doubt about its ability to continue as a going concern. Our auditor, YCM CPA Inc., has indicated in their report on the Company’s financial statements for the fiscal year ended March 31, 2024 that there is “substantial doubt about our ability to continue as a going concern”. A “going concern” opinion could impair our ability to finance our operations through the sale of equity, incurring debt, or other financing alternatives.
Management’s plan to alleviate the substantial doubt about our ability to continue as a going concern include working to improve the Company’s liquidity and capital sources mainly through cash flow from its operations, renewal of bank borrowings and borrowing from related parties. In order to fully implement its business plan and sustain continued growth, the Company may also seek equity financing from outside investors. At the present time, however, the Company does not have commitments of funds from any potential investors. There can be no assurance that additional financing, if required, would be available on favorable terms or at all and/or that these plans and arrangements will be sufficient to fund the Company’s ongoing capital expenditures, working capital, and other requirements. If we are unable to achieve these goals, our business will be jeopardized and we may not be able to continue. If we ceased operations, it is likely that all of our investors will lose their investment.
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If we fail to establish and maintain proper internal financial reporting controls, our ability to produce accurate financial statements or comply with applicable regulations could be impaired.
We will be in a continuing process of developing, establishing, and maintaining internal controls and procedures that will allow our management to report on, and our independent registered public accounting firm to attest to, our internal controls over financial reporting if and when required to do so under Section 404 of the Sarbanes-Oxley Act of 2002. Although our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act until the date we are no longer an emerging growth company, our management will be required to report on our internal controls over financial reporting under Section 404.
As of March 31, 2024, our management assessed the effectiveness of our internal control over financial reporting. The material deficiencies are due to the fact the Company does not have in-house accounting personnel with sufficient knowledge of US GAAP and SEC reporting experiences. In addition, the Company does not have adequate controls in place for the overall accounting function and oversight of financial reporting which resulted in audit adjustments. Management concluded that as of March 31, 2024, our internal control over financial reporting was ineffective.
In order to address and resolve the foregoing material weaknesses, we have implemented measures designed to improve our internal control over financial reporting to remediate the material weaknesses, including hiring consultants who have requisite training and experience in the preparation of financial statements in compliance with applicable SEC requirements. In addition to hiring an outside consultant, we also plan to take remedial measures including (i) hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial and system control framework; (ii) implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel; (iii) setting up an internal audit function as well as engaging an external consulting firm to assist us with assessment of Sarbanes-Oxley compliance requirements and improvement of overall internal control; and (iv) appointing independent directors, establishing an audit committee, and strengthening corporate governance.
The implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting, and we cannot conclude that they have been fully remedied. Our failure to correct theses material weaknesses or our failure to discover and address any other material weaknesses could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, our business, financial condition, results of operations and prospects, as well as the trading price of our Ordinary Shares, may be materially and adversely affected. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent fraud. In addition, once we cease to be an “emerging growth company” as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, as a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.
We are subject to the risks of the volatility of the real estate industry.
Revenue from the sale of real property, from leasing office space to third parties, and from construction activities accounted for 85.5% of our revenue for the fiscal year ended March 31, 2024, and 84.1% of our revenue for the fiscal year ended March 31, 2023, and lease revenue is likely to account for a substantial portion of our revenue for at least the next several years. We are subject to the volatility and uncertainty of the Toronto real estate market, particularly regarding our ability to refinance the mortgages on our office buildings and renew leases for office space at rents that are equivalent to or greater than the rents we currently receive, should we decide to not renew the leases and utilize the space for our own operations. In addition, defaults by a significant number of tenants would have a material adverse impact on our revenue. In such an event, there is no guaranty that we would be able to lease any space vacated by those tenants or lease such space at equivalent rents. A material reduction in lease revenue could have a material adverse effect on our ability to finance our operations and result in a loss from operations should revenue from the education business not offset any such reduction in revenue. As of June 22, 2023, we have sold 41 Metropolitan Road E., Toronto, Canada (the “41 Metropolitan Building”) for $13.3 million (C$ 18 million).
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We do not expect to generate revenue from the sale of real estate in the future, which has been a principal source of our revenue in previous fiscal periods.
We do not have any real estate lots available for sale and do not have any plans to sell any of the other real estate that we own. Therefore, we do not expect to generate any other revenue from the sale of real estate in future periods, and our principal sources of revenue will be from our educational business and leases of existing real estate that we own. If we are unable to generate additional income from those sources, our revenue will decline, which could have a material adverse effect on our results of operations.
Risks related to the renovation and conversion of our properties.
The Company is currently upgrading and renovating its properties located at #95-105 105 Moatfield Dr, Toronto, Ontario, Canada, M3B 0A2 and #200-260 Town Centre, Markham, ON L3R 8H8. Our strategic plan involves leveraging favorable Canadian policies, particularly the surplus of commercial real estate and the shortage of mixed-use and high-end apartments. We plan to submit renovation proposals to the government to convert #200-260 Town Centre, Markham, ON L3R 8H8 and #95-105 Moatfield Dr, Toronto, Ontario, Canada, M3B 0A2 into mixed-use and high-end residential apartments. Our management expects that this initiative may increase their value by over 700%, generating more than US$2.1 billion in revenue and US$500 million in profit over the next five years. However, there is no guarantee that our renovation proposals will receive the necessary approvals from the government. Regulatory hurdles or changes in policy could delay or prevent the conversion of our properties, impacting our projected revenue and profits. While current market conditions are favorable, any adverse changes in the real estate market, such as a decrease in demand for high-end residential apartments or an increase in commercial real estate demand, could affect the viability and profitability of our renovation projects. Further, the cost of upgrading and renovating the properties may exceed our estimates. Additionally, if we are unable to secure sufficient financing on favorable terms, our ability to complete the renovations and achieve the expected increase in property value may be compromised. Our revenue and profit projections are based on current assumptions and market conditions. Any deviation from these assumptions could result in lower-than-expected financial performance, affecting our overall business and financial health. Given these risks, there is a significant uncertainty regarding the successful completion of the renovations and the realization of the anticipated benefits.
Our strategy to use the space currently occupied by tenants for our operations upon termination of their leases could have a material adverse impact on our cash flow.
We intend to expand our operations into some, or all, of the office space currently occupied by unaffiliated tenants. Rental income provides a significant portion of our current revenue, which will continue after the acquisition of the property for Visionary University Town that was completed on September 23, 2022. Revenue from rent was $8,019,186 in the fiscal year ended March 31, 2024, and $7,090,140 in the fiscal year ended March 31, 2023. While we anticipate generating revenue from our education business to be located in these spaces to offset the potential loss of rental revenue, there is a risk that the revenue generated from the education business may fall short of the rental revenue, in which case our ability to finance our operations and service the mortgages on these properties will be impaired, which could lead to loan defaults.
We have limited experience operating some of our education businesses.
We have acquired several of our education companies since March 31, 2021, including Conbridge College of Business and Technology Inc., Visionary (formerly Lowell) Academy and MTM. While we have an experienced management team, operating those businesses and integrating them with our current operations is challenging and the inability to successfully operate one or more of these businesses could have a material adverse impact on our operations, financial condition, and prospects.
We have transitioned into the artificial intelligence and high-tech industries.
Adapting to global market changes and growth of new industries, we have successfully transitioned into the artificial intelligence and high-tech industries, forming a new leadership team with experience in these areas. Under the leadership of the new team, the Company has achieved remarkable results in a short period.
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We have experienced losses and may not maintain profitability.
Although we have had profitable quarterly and annual periods, we have also experienced losses in the past and may experience losses in the future. We expect that our operating expenses and business development expenses will increase as we enroll more students, open new campuses and develop new programs. As a result, there can be no assurance we will be able to generate sufficient revenues to maintain profitability.
We assembled our new management team beginning in 2024. As a result, they have had a limited amount of time working in their positions and working together and may not be able to accomplish our business plan.
Our Chief Executive Officer, Chief Operating Officer, Chief Academic Officer Chief Financial Officer, and Chief Information Officer began employment in these positions at various times since November 2020. Ms. Zhou, our founder, majority shareholder, director, and Executive Director, served as Chief Executive Officer from April through October 2020. Ms. Fan Zhou was reappointed as our Chief Executive Officer on December 14, 2022 and became our Chairman of the Board on June 6, 2023. On February 6, 2024. The Company's board of directors (the "Board") elected Mr. William Chai as the Company's Chairman of the Board to succeed Ms. Zhou. Ms. Zhou remains as a director of the Company.
Our business, financial condition and results of operations may be adversely affected by a downturn in the global or Canadian economy.
Our student enrollment is influenced by various factors, including the disposable income levels of our students, current and potential, and their parents, perceived job prospects, willingness to spend on education, and the hiring demand in the areas in which our schools specialize. Consequently, our education business and prospects may be affected by economic conditions in Canada or globally. The global financial markets experienced significant disruptions in 2008 and 2020, leading to recessions in Canada and other economies. Recovery from these downturns has been uneven, with the global recovery from the 2020 lows remaining slow and inconsistent. Although the COVID-19 pandemic has been declared over and Canada is open for international study visas and expects to gradually open for other categories of entry visas, the economic recovery in our target countries and regions remains sluggish and unstable. As a result, our student recruitment in these countries and regions remains challenging, resulting in lower than previously predicted.
Economic conditions in Canada and other countries from which we expect to draw our international students are sensitive to global economic trends, domestic policies, and perceived economic growth rates. A decline in economic prospects in industries related to our vocational training courses could shift our current or prospective students’ spending priorities and reduce demand for workers, affecting our students’ job prospects. We cannot assure you that education spending in general or with respect to our course offerings in particular will increase, decrease, or remain stable. Therefore, a slowdown in Canada’s or the global economy may reduce demand for our training courses, which could materially and adversely affect our financial condition and results of operations.
We will need additional capital to fully carry out our proposed expansion plan, and we may not be able to further implement our business strategy unless sufficient funds are raised, which could cause us to scale back our proposed plans or discontinue our expansion.
We will require a significant expenditure of capital in order to carry out our full expansion plan. As of March 31, 2024, we had cash and cash equivalents of $0.8 million and a negative working capital of approximately $67.6 million. While we completed an initial public offering for gross proceeds of $17 million in May 2022, we estimate that we will need additional financing of approximately $30 million to complete our proposed expansion plan for the next 12 months. This additional $30 million will be used for expanding our current businesses and possibly acquiring complementary businesses.
We may obtain the necessary additional funds from bank loans and the sale of additional securities, if required. However, there can be no assurance that we will obtain the financing required. If we are not able to obtain the necessary additional financing, we may be forced to scale back our expansion plans. Expending our cash resources on expansion could also negatively impact our current operations by reducing the amount of funds available to cover additional expenses that may arise in the future or offset losses should we suffer a decrease in revenues.
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Historically, we have funded our operations primarily from loans from affiliates, revenue from our real estate operations and the sale of real property. Ms. Zhou, our founder, majority shareholder, director and former chairperson and CEO, had outstanding advances to us of $2,949 as of March 31, 2024, and $4,165,912 as of March 31, 2023, interest free for the deposit on the acquisition of the proposed campus for VUT. Ms. Zhou is willing but not otherwise obligated to advance additional funds to us. However, our ability to obtain additional financing is subject to a number of factors, including market conditions and their impact on the market price of our common shares, the downturn in the global economy and resulting impact on stock markets and investor sentiment, our competitive ability, investor acceptance of our business or our expansion plan, and the political and economic environments of countries where we are doing business. These factors may make the timing, amount, terms and conditions of additional financing unattractive or unavailable to us. If we are unable to raise additional financing, we will have to significantly reduce, delay or cancel our planned activities. We cannot assure you that we will have sufficient resources to successfully conduct our expansion, or that we will be able to obtain any additional funding required, in which event we may not be able to continue our expansion or our expansion plan may fail. There can be no assurance that we will achieve our plans, or any of them.
The expansion of our business through acquisitions, joint ventures, and other strategic transactions creates risks that may reduce the benefits we anticipate from these strategic transactions.
We intend to enter into acquisitions, partnerships, joint ventures and other strategic transactions, directly or through our subsidiaries, as vehicles to expand our education business in Canada and other countries, particularly partnerships and licensing agreements with public colleges and other educational institutions. We continually seek out new business acquisitions, partnership opportunities and joint ventures to expand our operations. Our management is unable to predict whether or when any future strategic transactions will occur, including identifying suitable acquisition targets, partnership opportunities or joint venture partners, or the likelihood of any particular transaction being completed on terms and conditions that are favorable to us.
Acquisitions, partnerships, joint ventures or other strategic transactions may present financial, managerial and operational challenges. We may be exposed to successor liability relating to prior actions involving a predecessor company, or contingent liabilities incurred before a strategic transaction. Liabilities associated with an acquisition or a strategic transaction could adversely affect our financial performance. Any failure to integrate new businesses or manage any new alliances successfully could adversely affect our reputation and financial performance.
The operations of any businesses that we acquire are subject to their own risks, which we may not be able to manage successfully.
The financial results of any businesses that we acquire may be subject to many of the same factors that affect our financial condition and results of operations, including the seasonal nature of the education business, exposure to currency exchange rate fluctuations, the competitive nature of our markets, and regulatory, legislative and judicial developments. The financial results of any businesses acquired could be materially adversely affected as a result of any of these or other related factors, which we may not be able to manage successfully, and which could have a material adverse effect on our results of operations and financial condition on a consolidated basis.
We may have only limited recourse for losses relating to an acquisition.
The due diligence conducted in connection with an acquisition that we make and the indemnification that may be provided in the related acquisition agreement may not be sufficient to protect us from, or compensate us for, losses resulting from such acquisition. Subject to certain exceptions, the seller may only be liable for misrepresentations or breaches of representations and warranties for several months from the closing date of the acquisition. A material loss associated with the acquisition for which there is no adequate remedy under the acquisition agreement that becomes known to us after that time could materially adversely affect our results of operations and financial condition and reduce the anticipated benefits of the acquisition.
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We may not be able to adopt new technologies important to our business.
Technology standards in internet and value-added telecommunications services and products in general, and in online education in particular, may change over time. If we fail to anticipate and adapt to technological changes, our market share and our business development could suffer, which in turn could have a material and adverse effect on our financial condition and results of operations. If we are unsuccessful in addressing any of the risks related to the technology that we utilize, our reputation and business may be materially and adversely affected.
Failure to effectively and efficiently manage the expansion of our school network may materially and adversely affect our ability to capitalize on new business opportunities.
We plan to pursue a number of different strategies to expand our operations. These strategies include:
| · | acquiring existing education institutions that align with our business plan, | |
| · | exploring blockchain and artificial intelligence technology to be applied into our business, | |
| · | expanding our relationship with agents who recruit students on our behalf, | |
| · | bringing international students to Canada who will pay higher tuition fees, thereby generating more revenues than domestic students, | |
| · | enhancing our infrastructure in Canada, and | |
| · | opening additional campuses in Canada. |
We acquired control of MTM and Conbridge on February 28, 2022 and September 1, 2021, respectively. We plan to expand their program offerings and partnerships. The rapid pace at which we have expanded and plan to continue expanding may place substantial demands on our management, faculty, administrators, operational, technological and other resources. In particular, we may face challenges in the following areas:
| · | controlling costs and developing operating efficiencies to manage the financial side of our expansion; | |
| · | maintaining the consistency of our teaching quality and our culture to ensure that recognition of our brands does not suffer; | |
| · | improving our existing operational, administrative and technological systems and our internal control over financial reporting; | |
| · | recruiting, training and retaining additional qualified instructors and management personnel as well as other administrative and sales and marketing personnel, particularly as we expand into new markets; | |
| · | continuing to market our brands to recruit new students for existing and future learning centers; and | |
| · | obtaining the necessary government approvals to operate in new schools and programs. |
We cannot assure you that we will be able to effectively and efficiently manage the growth of our operations. Any failure to effectively and efficiently manage our expansion may materially and adversely affect our ability to capitalize on new business opportunities or effectively run our existing operations, which in turn may have a material adverse impact on our business, our internal control over financial reporting, our financial condition and our results of operations.
If fewer international students aspire to study abroad, especially in the Canada, demand for our international schools may decline.
One of the principal drivers of the growth of our schools has been the increasing number of international students who aspire to study abroad, especially in Canada. As such, any adverse changes in immigration policy or political sentiments toward foreigners and immigrants, terrorist attacks, geopolitical uncertainties and any international conflicts involving these countries could increase the difficulty for international students to study overseas or decrease the appeal of studying in Canada to international students. Any significant change in admission standards for international students could also affect the demand for overseas education by international students.
In addition, any fluctuation in the currency exchange rate could have a negative impact on the translation of home country currencies into Canadian dollars, which may increase the costs of living and tuition for international students studying abroad. The attractiveness of pursuing education in Canada may decrease accordingly, which could adversely affect our business and profitability.
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Furthermore, international students may also become less likely to study abroad due to other reasons, such as improving domestic education or employment opportunities associated with continued economic development in their home countries. These factors could cause declines in the demand for our schools, which may adversely affect our business and profitability.
Our students in Canada are subject to risks relating to financial aid and student loans. A substantial decrease in government student loans, or a significant increase in financing costs for our students, could have a material adverse effect on student enrollment and financial results.
Our Canadian and foreign students are highly dependent on government-funded financial aid programs. Students apply for student loans on an annual basis. Changes to financial aid program regulations that restrict student eligibility or reduce funding levels for student loans, may adversely affect our enrollment and collection of student billings, causing revenues to decline.
Students who are Canadian citizens also receive a tax deduction for all or a portion of the amount of tuition paid by the individual in a particular tax year, and an amount for textbooks (called an education tax credit) that is based on whether the student attended on a “full-time” or “part-time” basis, as set out in applicable Canadian and provincial income tax laws. The availability of these tax credits may impact the financial ability of our students to enroll in our programs and if such tax credits were to be eliminated or reduced, our enrollment levels may decline, which could result in a decrease in our revenues.
If we are not able to continue to attract students to enroll in our courses, our revenues may decline and we may not be able to maintain profitability.
The success of our business depends primarily on the number of students enrolled in our schools and courses and the amount of course fees that our students are willing to pay. Our ability to continue increasing our student enrollment levels without a significant decrease in course fees is critical to the continued success and growth of our business. This in turn will depend on several factors, including our ability to develop new programs and enhance existing programs to respond to changes in market trends and student demands, manage our growth while maintaining the consistency of our teaching quality, effectively market our programs to a broader base of prospective students, develop and license additional high-quality educational content and respond to competitive pressures. If we are unable to continue to attract students to enroll in our courses without a significant decrease in course fees, our financial condition, results of operations and cash flows could be materially adversely affected.
If we fail to develop and introduce new courses, services and products that meet our students’ expectations, our competitive position and ability to generate revenues may be materially and adversely affected.
Our core business is centered on providing our education programs and training services in Canada. Unexpected technical, operational, logistical, regulatory or other problems could delay or prevent the introduction of one or more new programs or services. Moreover, we cannot assure you that any of these programs or services will match the quality or popularity of those developed by our competitors, achieve widespread market acceptance, or generate the desired level of income.
Our new courses and services may compete with our existing courses and services.
We are constantly developing new courses and services to meet changes in student demands, school curriculum, testing materials, government policies, market trends and technologies. While some of the courses and services that we develop will expand our current course catalogue and services and increase student enrollment, others may compete with or render obsolete our existing courses and services without increasing our total student enrollment. If we are unable to increase our total student enrollment and profitability as we expand our course catalogue and services, our business and growth may be adversely affected.
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Our quarterly results of operations are likely to fluctuate based on our seasonal student enrollment patterns.
Our business is seasonal in nature, and we receive the bulk of our cash flows at the beginning of each new school term. Accordingly, our results in a given quarter may not be indicative of our results in any subsequent quarter or annually. Our quarterly results of operations have tended to fluctuate as a result of seasonal variations in our education business in Canada, principally due to seasonal enrollment patterns. Our second quarter results tend generally to be relatively low as few students are enrolled in courses over the summer.
Changes in our total student population may influence our quarterly results of operations. Our student population varies as a result of new student enrollments, graduations and student attrition.
Our schools’ academic schedule generally does not affect our costs, and our costs do not fluctuate significantly on a quarterly basis. Fluctuations in quarterly results, however, may impact management’s ability to accurately project the available cash flows necessary for operating and growing expenses through internal funding. We expect quarterly fluctuations in results of operations to continue as a result of seasonal enrollment patterns. These patterns may change, however, as a result of new campus openings, new program offerings and increased enrollment of adult students. Our operating results have fluctuated and may continue to fluctuate widely.
We operate in a highly competitive industry, and competitors with greater resources could harm our business, decrease market share and put downward pressure on our tuition rates.
The secondary and post-secondary education market is highly fragmented and competitive. We compete for students with traditional high schools, public and private colleges and universities, other not-for-profit schools, including those that offer online learning programs, and alternatives to higher education, such as employment and military service. Many public and private high schools, colleges, and universities offer online programs. We expect to experience additional competition in the future as more high schools, colleges, universities, and for-profit schools offer an increasing number of online programs due in part to the pandemic. Public institutions receive substantial government subsidies, and public and private non-profit institutions have access to government and foundation grants, tax-deductible contributions, and other financial resources generally not available to for-profit schools. Accordingly, public and private nonprofit institutions may have instructional and support resources superior to those in the for-profit sector, and public institutions can offer substantially lower tuition prices. Some of our competitors in both the public and private sectors also have substantially greater financial and other resources than we have. We may not be able to compete successfully against current or future competitors and may face competitive pressures that could adversely affect our business, prospects, financial condition, and results of operations. These competitive factors could cause our enrollments, revenues, and profitability to significantly decrease.
Compliance with rules and requirements applicable to public companies may cause us to incur increased costs, which may negatively affect our results of operations.
Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and related regulations implemented by the SEC and NASDAQ are increasing legal and financial compliance costs and making some activities more time consuming. We are currently evaluating and monitoring developments with respect to new and proposed rules and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed. We also expect that these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified directors to sit on our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.
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As of March 31, 2024, we had accrued and unpaid income tax liabilities of $1.4 million and other unpaid tax liabilities of $0.6 million, in both cases including penalties and interest. We believe that we have an oral understanding with the Canada Revenue Agency (the “CRA”) to pay all such tax liabilities by installments starting from September 1, 2023. If the CRA determines that there is a risk of not collecting all or part of the assessed corporate income tax debt, it can apply to the federal court or the superior court of a province for a jeopardy order, which will allow the CRA to seize any assets that the company owns and to take immediate action to collect the debt.
The CRA has not commenced or threatened any action to collect such delinquent tax payments as of the date of this annual report. We intend to satisfy these liabilities, including any penalties and interest, from our operating income and advances from affiliates, including Ms. Zhou. However, we expect the payments of unpaid taxes will have an adverse effect on our 2024 cash flow, but will not affect our operating income. The failure to pay these liabilities and any resulting enforcement action by the CRA could have a material adverse impact on our operations, financial condition, results of operations, and prospects.
Risks Related to Doing Business in Canada
Failure to obtain or maintain our cooperative relationship or partnership with public colleges in Canada may adversely affect our business.
We plan to partner with one or more colleges in Canada in the form of PPP. In a PPP partnership contract, we will provide to a public college applied arts and technology college programs leading to an Ontario College Credential. If we fail to obtain such partnerships or fail to maintain them, or if any unforeseeable events cause us to terminate our cooperation with our partner public colleges, we may not be able to accomplish our business goals and our prospects will suffer.
We are exposed to currency exchange risk which could cause our reported earnings or losses to fluctuate.
The value of the Canadian dollar, or CAD, against the U.S dollar fluctuates and is affected by, among other things, changes in political and economic conditions in Canada as well as the global economy. We can offer no assurance that the CAD will be stable against the U.S. dollar or any other foreign currency.
Our reporting currency is the U.S. dollar. However, all of our assets, liabilities, revenues and expenses are denominated in CAD. As a result, we are exposed to currency exchange risk on any assets and liabilities and revenues and expenses denominated in currencies other than the U.S. dollar. To the extent the U.S. dollar strengthens against CAD, the translation of CAD denominated transactions results in reduced revenue, operating expenses and net income or loss for our international operations. Similarly, to the extent the Canadian dollar weakens against foreign currencies, the translation of these foreign currency denominated transactions results in increased revenue, operating expenses and net income or loss for our international operations. We do not currently engage in currency hedging transactions to offset fluctuating currency exchange rates.
It may be difficult for non-Canadian citizens to enforce a judgment against us.
We were incorporated in Canada, and our corporate headquarters is located in Canada. A majority of our directors and executive officers and certain of the experts named in this annual report reside principally in Canada and all of our assets and all or a substantial portion of the assets of these persons are located outside the United States. It may be difficult for investors who reside in the United States to effect service of process upon these persons in the United States, or to enforce a U.S. court judgment predicated upon the civil liability provisions of the U.S. federal securities or other U.S. laws against us or any of these persons. There is substantial doubt whether an action could be brought in Canada in the first instance predicated solely upon U.S. federal securities laws. Canadian courts may refuse to hear a claim based on an alleged violation of U.S. securities laws against us or these persons on the grounds that Canada is not the most appropriate forum in which to bring such a claim. Even if a Canadian court agrees to hear a claim, it may determine that Canadian law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process. Certain matters of court procedures will also be governed by Canadian law.
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Operating Risks
Loss of certain key personnel may adversely impact our business.
The success of our business will depend on the management skills of Ms. Fan Zhou, our director of the board, and the relationships they and other key personnel have with educators, administrators and other business contacts they have overseas and in Canada. The loss of the services of any of our key personnel could impair our ability to successfully manage our business in Canada. We also depend on successfully recruiting and retaining qualified and experienced managers, salesperson and other personnel who can function effectively in Canada. In some cases, the market for these skilled employees is highly competitive. We may not be able to retain or recruit such personnel on acceptable terms to us, which could adversely affect our business prospects and financial condition.
The personal information that we collect may be vulnerable to breach, theft, or loss, which could subject us to liability or adversely affect our reputation and operations.
Possession and use of personal information in our operations subjects us to risks and costs that could harm our business and reputation. We collect, use and retain large amounts of personal information regarding our students and their families, including personal and family financial data. We also collect and maintain personal information of our employees in the ordinary course of business. Although we use security and business controls to limit access and use of personal information, a third party may be able to circumvent those security and business controls, which could result in a breach of student or employee privacy. In addition, errors in the storage, use or transmission of personal information could result in a breach of student or employee privacy. Possession and use of personal information in our operations also subjects us to legislative and regulatory burdens that could require us to implement certain policies and procedures, regarding the identity theft related to student credit accounts, and could require us to make certain notifications of data breaches and restrict our use of personal information. A violation of any laws or regulations relating to the collection or use of personal information could result in the imposition of fines against us. As a result, we may be required to expend significant resources to protect against the threat of these security breaches or to alleviate problems caused by these breaches. While we believe we take appropriate precautions and safety measures, there can be no assurances that a breach, loss or theft of any such personal information will not occur. Any breach, theft or loss of such personal information could have a material adverse effect on our financial condition, reputation and growth prospects and result in liability under privacy statutes and legal actions against us.
We may not be able to attract and retain a sufficient number of qualified teachers and principals.
As an education service provider, our ability to recruit and retain qualified teachers and principals is crucial to the quality of our education and services and our brand and reputation. To ensure our successful operation and growth, we need to retain and continue to hire high-quality teachers specialized in specific subjects that are able to teach the courses we offer or plan to offer to our students, as well as high-quality principals who are able to effectively manage the operation of our schools. We must provide competitive compensation and benefits packages to attract and retain qualified candidates. However, there is no guarantee that we would be able to keep recruiting teachers and principals meeting the high standards in the future, or retain our current, high-quality teachers and principals, especially when we seek a more rapid expansion plan to meet the growing demands for our services. Furthermore, under our business model, we may not be able to provide extensive training to our newly hired teachers for them to familiarize with our teaching methods and to retain existing teachers who can provide such trainings. A shortage of high-quality teachers and principals, a decrease in the quality of our teachers’ and principals’ performance, whether actual or perceived, or a significant increase in the cost to engage or retain high-quality teachers and principals would have a material adverse effect on our business, financial condition and results of operations.
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Some students may decide not to continue taking our courses for a number of reasons, including a perceived lack of improvement in their performance in specific courses, a change in requirements or general dissatisfaction with our programs, which may adversely affect our business, financial condition, results of operations and reputation.
The success of our business depends in large part on our ability to retain our students by delivering a satisfactory learning experience and improving their performance in the courses they have taken. If students feel that we are not providing them the experience they are seeking, they may choose not to renew their existing packages. For example, our courses may fail to significantly improve a student’s performance in the relevant subject area. Student satisfaction with our programs may decline for a number of reasons, many of which may not reflect the effectiveness of our lessons and teaching methods. Students also need to be self-motivated in order to successfully complete the courses in which they enroll. If students’ performances decline as a result of their own study habits or inability to learn the course material, they may not renew their memberships with us or refer other students to us, which could materially adversely affect our business.
A student’s learning experience may also suffer if his user experience does not meet expectations. If a significant number of students fail to significantly improve their proficiency in the applicable course subject after taking our lessons or if their learning experiences with us are unsatisfactory, they may not renew their enrollment with us or refer other students to us and our business, financial condition, results of operations and reputation would be adversely affected.
Risks Related to Our Common Shares
Should our common shares not qualify for an exemption from being classified as a “Penny Stock,” the ability of shareholders to sell our common shares in the secondary market will be limited should our common shares not be listed on a national securities exchange.
The SEC has adopted regulations which generally define a “penny stock” to be an equity security that has a market price, as defined, of less than $5.00 per share, or an exercise price of less than $5.00 per share, subject to certain exceptions, including an exception of an equity security that is quoted on a national securities exchange. Should our common shares not be quoted on a national exchange such as NASDAQ and have a market price less than $5.00 per share, they will be subject to rules that impose additional sales practice requirements on broker-dealers who sell these securities. For example, the broker-dealer must make a special suitability determination for the purchaser of such securities and have received the purchaser’s written consent to the transactions prior to the purchase. Additionally, the rules require the delivery, prior to the transaction, of a disclosure schedule prepared by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered Underwriters, and current quotations for the securities, and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, among other requirements, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. The “penny stock” rules, may restrict the ability of our stockholders to sell our common shares in the secondary market.
One Person Has Significant Voting Power and May Take Actions That May Not Be in the Best Interests of Other Stockholders.
Ms. Wanhong Wu is the controlling shareholder (the “Controlling Shareholder”) of the Company by holding 100% of the equity interests of 3888 Investment Group Limited, which owns a 40.2% equity interest of Visionary Holdings Inc. Ms. Wanghong Wu is therefore able to exert significant control over our management and affairs requiring stockholder approval, including approval of significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change in control and might adversely affect the market price of our common shares. This concentration of ownership may not be in the best interests of all of our stockholders.
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Certain provisions of our Amended Articles of Incorporation may make it more difficult for a third party to effect a change in control.
Our Amended Articles of Incorporation authorizes our board of directors to issue an unlimited number of shares of preferred stock. While no shares of preferred stock have been issued to date, the preferred stock may be issued in one or more series, the terms of which may be determined at the time of issuance by our board of directors without further action by the stockholders. These terms may include voting rights including the right to vote as a series on particular matters, preferences as to dividends and liquidation, conversion rights, redemption rights and sinking fund provisions. The issuance of any preferred stock could diminish the rights of holders of our common shares, and therefore could reduce the value of such Common Shares. In addition, specific rights granted to future holders of preferred shares could be used to restrict our ability to merge with, or sell assets to, a third party. The ability of our board of directors to issue preferred shares could make it more difficult, delay, discourage, prevent or make it more costly to acquire or effect a change-in-control, which in turn could prevent the stockholders from recognizing a gain in the event that a favorable offer is extended and could materially and negatively affect the market price of our common shares.
We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.
Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:
| · | the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC; |
| · | the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; |
| · | the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and |
| · | the selective disclosure rules by issuers of material nonpublic information under Regulation FD. |
We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely than that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.
We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.
We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from requirements applicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 for so long as we remain an emerging growth company. As a result, if we elect not to comply with such auditor attestation requirements, our investors may not have access to certain information they may deem important. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards.
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The market price for our common shares may be volatile.
The market price for our common shares may be volatile and subject to wide fluctuations in response to factors such as actual or anticipated fluctuations in our quarterly results of operations, changes in financial estimates by securities research analysts, changes in the economic performance or market valuations of other comparable companies, announcements by us or our competitors of material acquisitions, strategic partnerships, joint ventures or capital commitments, fluctuations of exchange rates between the Canadian dollar and the U.S. dollar, intellectual property litigation, release of lock-up or other transfer restrictions on our outstanding Common Shares, and economic or political conditions in Canada. In addition, the performance, and fluctuation in market prices, of other companies with business operations located mainly in Canada that have listed their securities in the United States may affect the volatility in the price and trading volumes of our common shares.
We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. holders of our common shares.
We do not expect to be considered a “passive foreign investment company”, or PFIC, for U.S. federal income tax purposes for our taxable year ending March 31, 2024. However, the application of the PFIC rules is subject to ambiguity in several respects, and we must make a separate determination each taxable year as to whether we are a PFIC (after the close of each taxable year). Accordingly, we cannot assure you that we will not be a PFIC for the taxable year ending March 31, 2024 or any future taxable year. A non-U.S. corporation will be considered a PFIC for any taxable year if either (i) at least 75% of its gross income is passive income or (ii) at least 50% of the value of its assets is attributable to assets that produce or are held for the production of passive income. The market value of our assets generally will be determined based on the market price of our common shares, which is likely to fluctuate. In addition, the composition of our income and assets will be affected by how, and how quickly, we spend the cash we raised. A significant portion of our assets and income is attributable to real estate and may be passive income under PFIC rules. If we were treated as a PFIC for any taxable year during which a U.S. person held a Common Share, certain adverse U.S. federal income tax consequences could apply to such U.S. person. See “Taxation—U.S. Federal Income Tax Consequences – PFIC Rules”.
We do not intend to pay dividends and there will be fewer ways in which you can make a gain on any investment in us.
We have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future. To the extent that we require additional funding currently not provided for in our financing plan, our funding sources may likely prohibit the payment of dividends. Because we do not intend to declare dividends, any gain on an investment in us will need to come through appreciation of our stock price.
We indemnify our directors and officers against liability, and this indemnification could negatively affect our operating results.
In accordance with our by-laws, we indemnify our officers and our directors for liability arising while they are carrying out their respective duties. Our by-laws also allow for reimbursement of certain legal defenses. In addition to this, we intend to provide insurance to our directors and officers against certain liabilities. The costs related to such indemnification and insurance coverage, if either one of them or both were to increase, could materially adversely affect our operating results and financial condition.
We have limited insurance coverage with respect to our business and operations.
We are exposed to various risks associated with our business and operations, and we have limited insurance coverage. We are exposed to risks including, among other things, accidents or injuries in our schools, loss of key management and personnel, business interruption, natural disasters, terrorist attacks and social instability or any other events beyond our control. We do not have any business interruption insurance, or key-man life insurance. Any business interruption, legal proceeding or natural disaster or other events beyond our control could result in substantial costs and diversion of our resources, which may materially and adversely affect our business, financial condition and results of operations.
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ITEM 4. INFORMATION ON THE COMPANY
| A. | History and Development of the Company |
Introduction
Visionary Education Technology Holdings Group Inc. was founded in 2013 by Ms. Zhou, a vocational educator in Canada. We were incorporated by Ms. Zhou on August 20, 2013, as 123 Natural Food Ontario Ltd., a company limited by shares, under the Ontario Business Corporations Act. The name was subsequently changed to Visionary Education Technology Holdings Group Inc. and on January 30, 2024 to Visionary Holdings Inc. Our original goal was to develop and operate an international education platform focused on vocational education based on agricultural technology. However, we did not pursue this goal due to marketing barriers caused by the over specialization of the concept and a limited market.
In 2015, Ms. Zhou redirected our business toward an international education program focused on the Ontario Secondary School Diploma (OSSD). She launched a new company, China Youth Langton (Canada) Education Technology Ltd. (“Langton”). Langton, as the majority investor, and unaffiliated third-party investors organized Toronto ESchool Inc. (“Toronto ESchool”), on March 7, 2016, to provide grades 9 through 12 the online OSSD courses. On November 15, 2017, we entered into a share purchase agreement to acquire a 55% equity interest in Toronto ESchool from Langton for a nominal purchase price of $0.8. Ms. Zhou sold her interest in Langton in 2018 to an unaffiliated party. On June 19, 2020, we acquired an additional 15% equity interest in Toronto ESchool from one of its third-party investors for $31,808. As a result of this transaction, we own a 70% equity interest of Toronto ESchool. On June 19, 2020, we transferred our 70% equity interest in Toronto ESchool to our wholly owned subsidiary Farvision Education Group Inc.
Concurrently with our organization, on August 20, 2013, Ms. Zhou founded 123 Real Estate Development Ontario Ltd. (“123 Real Estate”), to acquire and develop educational real estate facilities as a complement to the education company. To better explore the international market and to enhance our competitiveness, through 123 Real Estate Ms. Zhou increased her investment in teaching facilities through. From 2013 through 2015 123 Real Estate purchased 22.4 acres of vacant land in Peterborough, Ontario, which was originally planned to be developed into an international student housing center. On November 14, 2015, 123 Real Estate purchased a building at 41 Metropolitan Road, Toronto for use as a headquarters and teaching facility for international education. On April 1, 2019, we acquired all the shares of 123 Real Estate from Ms. Zhou for $3,210,000 in order to be able to own the office building and the vacant land and to develop the land into a facility for international student services. In April 2021, we purchased office buildings at 200 and 260 Town Centre Blvd. under the subsidiaries Animation Group and NeoCanaan Investment respectively, carrying the mortgage in the aggregate amount of $11.2 million (C$15.2 million) and a private mortgage of $3.0 million (C$4 million). to provide additional revenue from leasing and space for expansion of our educational facilities. On May 28, 2021, 123 Real Estate Development Ontario Ltd. changed its name to Visionary Education Real Estate Group Inc. On October 15, 2021, Visionary Education Real Estate Group Inc changed its name to Visionary Education Services and Management Inc. In July 2023, the Company entered the purchase agreements with two unrelated parties to sell its properties located at 200 and 260 Town Centre, Markham (the “Town Centre Buildings”) for cash in the amount of $18.7 (C$25.3 million). The transactions were expected to close on August 31, 2023. Currently, The Company is upgrading and renovating Town Centre Buildings, planning to take advantage of favorable Canadian policies with respect to the surplus of commercial real estate and the shortage of mixed-use and high-end apartments. To that end, the company plans to submit renovation proposals to the government to convert Town Centre Buildings into mixed-use and high-end residential apartments.
On February 25, 2019, Visionary Education Services and Management Inc., then known as 123 Real Estate Development Ontario Ltd., entered into a share purchase agreement to acquire 100% of the equity interests in PrideMax Construction Group Inc., or PrideMax Construction, from its original shareholder for a nominal fee of $0.80. Incorporated on July 20, 2010 in Scarborough, Ontario, PrideMax Construction had no active business since its inception. The transaction was completed on April 1, 2019. On May 23, 2020, 123 Real Estate Development Ontario Ltd. transferred its 100% ownership in PrideMax Construction to NeoCanaan Investment Corporation, which was 100% owned by us, for a nominal fee of $0.80. On June 16, 2021, PrideMax Construction changed its name to Farvision Development Group Inc. (“Farvision Development”). On November 3, 2022, Farvision Development Group Inc. changed its name to Farvision Digital Technology Group Inc. (“Farvision Digital”). On February 5, 2024, the Company transferred 80% equity of Farvision Digital Technology Group Inc., a wholly owned subsidiary of the Company to an individual unrelated to the Company, at a price of $59,088 (80,000 CAD). On February 24, 2024, the Company transferred the remaining 20% equity of Farvision Digital Technology Group Inc. the same individual unrelated the Company, at a price of $14,772 (20,000 CAD).
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Between 2017 and 2019, we conducted a survey of the international market for OSSD. Based on the promising market opportunity for OSSD, we gradually built up a network of agents in Southeast Asia, India and South America to recruit students for our OSSD programs. In the meantime, we also developed online teaching dossiers for more than 60 OSSD courses (core courses and a broad range of elective courses). We established collaboration with educational organizations such as Mississauga District School Board and Trent University. The collaboration includes developing OSSD teaching methods and technologies, school management, and student promotion. We concluded that the initial results of this initiative and operation were promising.
However, beginning early in 2020, we were adversely impacted by the COVID-19 pandemic. Our tuition and other revenue dropped precipitously. Without exception, the entire education industry in Canada has suffered from the difficulties caused by the pandemic. To survive while still creating opportunity to grow, we made significant changes to our strategic plan and commenced exploring new business opportunities. In response to the special economic environment in Canada, we optimized our educational assets so that our operations could be concentrated in the Toronto metropolitan area. We sold most of our land in Peterborough and channeled the income to the acquisition of quality educational organizations and institutional buildings. We have grown through the acquisition of seven educational organizations and two institutional buildings at what we believe are favorably low prices. These acquisitions and the reorganization of our corporate structure are described below.
On May 14, 2020, Farvision Education Group Inc., or Farvision Education, was incorporated under the Canada Business Corporation Act. Farvision Education is our wholly owned subsidiary of Visionary Holdings Inc. On February 2, 2023, Farvision Education Group Inc, has changed its name to Farvision Career Education Group Inc.
On July 27, 2020, Farvision Education entered into an investment agreement with 2549601 Ontario Inc., which owns a private high school license registered with Ontario Ministry of Education, to incorporate Maple Toronto Arts & Performance Academy Inc. with a total investment of $159,046 from Farvision Education and 2549601 Ontario Inc. Pursuant to the agreement, Farvision Education subscribed for 80% of the total 200,000 common shares at $0.80 per share, and 2549601 Ontario Inc. subscribed the remaining 20% of its total common shares at the same price. On August 3, 2020, Farvision Education filed articles of amendment to change the name of Maple Toronto Arts & Performance Academy Inc. from Alathena International Academy Richmond Hill to Maple Toronto Art Academy Inc. or Toronto Art Academy. On July 27, 2020, Toronto Art Academy entered into a license transfer agreement with 2549601 Ontario Inc. (operating as Alathena International Academy Richmond Hill), a private high school registered with Ontario Ministry of Education. Pursuant to the agreement, Toronto Art Academy acquired the private high school license for a consideration of $159,040. The transaction was completed on September 1, 2020.
On May 26, 2020, NeoCanaan Investment Corporation, or NeoCanaan Investment, was incorporated under the Canada Business Corporation Act. NeoCanaan Investment is a wholly owned subsidiary of Visionary Holdings Inc. NeoCanaan Investment provides and manages investment of real properties to be used for educational purposes and other education services through two wholly-owned subsidiaries, Farvision Development Group Inc. and Canada Animation Industry Group Inc.
On October 8, 2020, Canada Animation Industry Group Inc., or Animation Group, was incorporated under the Canada Business Corporation Act. Animation Group provides investment on facilities for animation education and the animation industry, and an incubator for graduates to set up their own animation companies. Animation Industry Group Inc. is a wholly owned subsidiary of NeoCanaan Investment.
On June 12, 2021, Farvision Education entered into an investment agreement with two individuals who were the original shareholders of 9651837 Canada Inc., operating as “Lowell Academy,” a private high school offering classes for students in grades 9 through 12 and registered with the Ontario Ministry of Education. Pursuant to the agreement, Farvision Education subscribed for 70% of the shares of Lowell Academy for a consideration of $168,063 (C$210,000). The transaction was completed on June 12, 2021. On February 5, 2024, the Company transferred its equity in Visionary Academy (Lowell Academy) from Farvision Career Education Group Inc. to an unrelated third party at a nominal price of 1 CAD.
On March 1, 2021, Farvision Career Education entered into an investment agreement with two individuals who were the original shareholders of 7621531 Canada Inc., operating as Conbridge Institute of Technology, a private vocational college registered with Ontario Ministry of Colleges and Universities. Pursuant to the agreement, Farvision Education acquired 80% of the equity interest of Conbridge Institute of Technology for a total consideration of $64,024 (C$80,000). The transaction was completed on September 1, 2021.
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On April 1, 2021, we entered into a share transfer agreement with Mr. Xiaofeng Wang, a related party, to transfer his 100% of the equity interests in Glorious Future Study Abroad Immigration Group Inc. (“Glorious Immigration”), and PrideMax International Human Resources Services Inc. (“PrideMax HR”), for a nominal fee of $0.80. Before this share transfer, both Glorious Immigration and PrideMax HR had no active business since their incorporation. The transaction was completed on June 12, 2021. On July 13, 2021, Glorious Future Study Abroad Immigration Group Inc. changed its name to Visionary Study Abroad and Immigration Services Inc. On June 27, 2021, PrideMax HR changed its name to Farvision Human Resource Service Company Inc. Farvision HR acts as a human resource agent and provides career and internship recommendations for international students.
On June 6, 2021, Farvision Career Education entered into a share transfer agreement with Mr. Xiaofeng Wang, a related party to transfer his 70% of the equity interests in Princeton Career Education Group Inc. (“PCE”), for a nominal fee of $0.80. The transaction was completed on June 12, 2021.
On July 26, 2022, we decided to streamline our business lines, and focus on our core education sectors, including the operation of OSSD, Griggs International Academy USA, Max the Mutt College for Animation, Design and Art, and future investment in education technology. We transferred Visionary Study Abroad and Immigration Services Inc., Farvision Human Resource Service Company Inc., and The Princeton Career Education Group Inc. for a sum of $0.80 to their prior owner, Mr. Xiaofeng Wang. Mr. Wang had transferred these companies to us in 2021 and then worked for us until his departure in May 2022. The divestiture of these three subsidiaries does not represent a strategic shift by us and is not expected to have any material effect on the Company’s operations and financial results.
On June 22, 2021, Ms. Zhou exchanged 100% of our common shares held by her for 100% of the common shares of 3888 Investment Group Limited (“3888”). Subsequently, Ms. Zhou transferred her ownership of the shares of 3888 in exchange for 83.212% of Northern CC Group, (‘Northern”) which owns 70% of 3888.
On December 15, 2021, 3888 transferred a portion of its Common Shares to each of its shareholders, other than Northern, in exchange for their shares of 3888 and transferred a portion of its common shares to certain shareholders of Northern, thereby reducing its ownership of us to 65% of our issued and outstanding Common Shares. 3888 transferred the Common Shares to give the owners of 3888 and Northern their proportionate interest in the asset of 3888, which was our common shares, and make them direct owners of us.
On February 28, 2022, we acquired 70% of the issued and outstanding shares of Max the Mutt Animation Inc., which operates Max the Mutt College of Animation, Art and Design, or MTM. MTM was founded in 1997 as a Canadian private career college and is located in Toronto, Ontario.
On May 24, 2022, the Company entered a purchase agreement to purchase a property in New York for a total price of $4,100,000. The Company has agreed to pay a deposit of $410,000 at agreement signing. The closing date of the purchase has been deferred to September 25, 2023. The deposit is non-refundable. During the year ended March 31, 2024, the original purchase agreement was mutually released by both parties and the non-refundable portion of deposit $336,892 was written off as a loss on investment deposit.
On June 24, 2022, pursuant to the agreement signed on December 19, 2020 and the amended agreement signed on February 28, 2022, Farvision Education paid the first deferred purchase payment of $80,030 for 10% of the shares of MTM. After this payment and share transfer, Farvision Education owns 80% of the total issued and outstanding shares of MTM.
MTM offers a full-time, four-year college diploma programs in Classical and Computer Animation and Production, Illustration and Storytelling for Sequential Arts, Concept Art for Animation and Video Games. MTM also offers a variety of digital, animation and art workshops and courses outside of the diploma programs as well as an intensive six-week certificate program for students who will be applying to art-based post-secondary programs.
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On July 14, 2022, the Company entered into a Capital Increase and Share Expansion Agreement (the “Contribution Agreement”) with Griggs International Academy China Co. Ltd. (“Griggs China”), a Hong Kong private consulting and investment holding company. Pursuant to the Contribution Agreement, the Company has agreed to invest $900,000 in Griggs China in exchange for 9,000 newly issued shares of Griggs China, which will equal 90% of issued and outstanding shares of Griggs China. On July 19, 2022, both parties agreed to amend the agreement to acquire the all the shares from two Griggs Shareholders for a total consideration of $50,000. As a result, the Company owned 100% of equity interest in Griggs China after the transaction. On August 1, 2022 due to no business activities in Griggs China, the Company sold its 100% of Griggs China to a third party at total consideration of $50,000. There was no impact to the Company’s financial position due to the short period that the Company held the ownership of Griggs China.
On September 23, 2022, we successfully completed the acquisition of two office buildings with a total of approximately 433,000 square feet of space at 95-105 Moatfield Drive, Toronto, which used to be the Canadian headquarters of IBM and Kraft Heinz. We completed the acquisition for aggregate consideration of $69.7 million (C$94.4 million).
We listed our common shares on the Nasdaq Capital Market under the symbol “VEDU” on May 17, 2022 and completed an initial public offering of 4,250,000 Common Shares on May 19, 2022 (the “IPO”), raising approximately $14.33 million in net proceeds after deducting underwriting commissions and the offering expenses payable by us.
In May 2023, the lien of $1.1 million (C$1.5 million) was registered on 95/105 Moatfield by the general contractor on its parking lot project assumed from the seller of the properties on September 23, 2022. Among the amount, approximately $0.7 million (C$0.9 million) has been settled between the Company and one subcontractor in March 2023. The remaining balance of $0.4 million (C$0.6 million) was accrued as contingency liabilities on March 31, 2023. The Company believes that all liabilities related to this project shall be responsible by the seller and amount shall be credited on the purchase price, thus, the Company has filed a lawsuit against the seller and the general contractor and the subcontractor to reimburse all excess payments subsequent to the purchase date on this project and remove the lien registration.
On June 22, 2023, Visionary Holdings Inc. (the “Company”) sold its office building located at 41 Metropolitan Road E., Toronto, Canada (the “41 Metropolitan Building”) for CAD18 million to an unrelated purchaser for cash. The 41 Metropolitan Building was acquired by the Company in 2019 when the Company acquired 123 Real Estate Development Ontario Ltd., an affiliated company under common ownership with Ms. Fan Zhou, our chairman and chief executive officer. The 41 Metropolitan Building carried mortgages in the aggregate amount of approximately CAD13.6 million. The net proceeds of cash to the Company from the sale of the 41 Metropolitan Building was approximately CAD3.3 million. The Company sold its 41 Metropolitan Building to reduce its real estate holdings.
In June 2023, 41 Metropolitan Rd property was sold and the security interest in the Collateral (as described below) was released. An initial loan of $5,250,000, evidenced by a promissory note, is interest free and payable on demand, and a second and a third loan of $1,700,000 and $1,440,000, respectively, also evidenced by a promissory note, is interest free and is payable on March 8, 2023 and April 3, 2022, respectively, which payment date may be extended at our option. On May 25, 2022, July 15, 2022 and July 18, 2022, Ms. Zhou loaned an additional $4.8 million, $0.8 million and $2.96 million to the Company. To support the installments required and also the final balance at closing for 95-105 Moatfield purchase, Ms. Zhou, borrowed approximately $4.5 million from third-party private lenders (the “Third Party Lenders”) and lent it to us as non-interest shareholder loan. The Third-Party Lender’s loans were secured by our real estate properties at 41 Metropolitan (the “Collateral”). From April 1, 2022 to March 31, 2023, we repaid Ms. Zhou $13.0 million leaving a balance of $4.1 million as of March 31, 2023. Also the security interest in the Collateral was released when 41 Metropolitan Rd property was sold in June 2023, where approximately $4.5 million from net proceeds of sale of Collateral was released to the Third-Party Lenders as repayment of Ms. Zhou’s advances to the Company and to pay down the Bethune Advance Deposit and interests charged by Third Party Lenders. As of the date of this Report, all loans and advances by Ms. Fan Zhou to the Company have been substantially repaid.
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In July 2023, the Company received offers for purchasing its two office buildings located at 200 and 260 Town Center, Markham, Canada for CAD $25.3 million to two unrelated purchasers for cash. The two office buildings were acquired by the Company in 2021, and the ownership of two office buildings is under the Animation and NeoCanaan respectively. The transaction is estimated to close by August 31, 2023.
On October 9, 2023, the Company changed its ticker symbol from “VEDU” to “GV”, its common shares trade on NASDAQ under the new ticker symbol “GV”.
On October 31, 2023, 100% of registered capital of Shanghai Yuanjian was transferred from an unrelated individual to the Company and therefore the Company acquired Shanghai Yuanjian and its subsidiaries.
On November 8, 2023, the Company entered into an Agreement of Purchase and Sale (“Agreement”) with 1000593277 Ontario Inc. in connection with the sale its properties located at Unit D63, 4300 Steeles Ave. E, Markham ON L3R 0Y5 for 260,000 CAD. On January 22, 2024, both parties agreed to enter into an amendment to change title search date and closing date, while other terms in the Agreement remain the same. The Agreement includes customary representations, warranties, covenants, and closing conditions. The transaction contemplated by the Agreement, as amended, closed on March 8, 2024.
On December 1, 2023, the Company incorporated Visionary Asia SDN. BHD and Visionary International SDN. BHD in Malaysia for its business expansion.
On December 11, 2023, the shareholders of Visionary Holdings Inc., f/k/a Visionary Education Technology Holdings Group Inc. (the “Company”), approved to change the Company’s name from “Visionary Education Technology Holdings Group Inc .” to “Visionary Holdings Inc.” (the “Name Change”). On January 30, 2024, the Company filed Articles of Amendment on change of name with Ontario Business Registry, Canada, reflecting the Name Change.
On December 15, 2023, the Company entered into a share transfer agreement to purchase 100% shares of Bethune Great Health Investment Management Inc. (“Bethune”) at a price of $478,613 (C$648,000). Ms. Fan Zhou has no ownership of Bethune but acts as one of its directors. The transaction was closed on January 1, 2024.
On December 20, 2023, the Company sold one of its properties located at Unit No. E25 4300 Steeles Ave E Markham, Ontario L3R 0Y5 (the “Steele Property”) for CAD250,000 to an unrelated purchaser for cash. The Steele Property was acquired by the Company in 2021. The Company sold its Steele Property to reduce its real estate holdings.
On February 28, 2024, the Company entered into a joint venture agreement with a group of unrelated parties to form a new company, in which, the Company hold a 55% stake in the joint venture. On March 11, 2024, Visionary Biotechnology Group Inc., the joint venture company, was incorporated in Toronto, Ontario.
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The details of Visionary Holdings Inc. and our subsidiaries are set out below as of the date of this report:
| Name of Entity | Date of Incorporation/Acquisition | Place of Incorporation | % of Ownership(1) | Principal Activities | ||||
| Visionary Holdings Inc. (formerly known as “Visionary Education Technology Holdings Group Inc.”) (“Visionary Group” or the “Company”) | August 20, 2013 | Richmond Hill, Ontario | Parent | Holding company and rental business | ||||
| Visionary Education Service and Management Inc. (“VESM”) | August 20, 2013 | Richmond Hill, Ontario | 100% | Real estate development | ||||
| Farvision Career Education Group Inc. “Formerly known as “Farvision Education Group Inc.” (“Farvision Education”) | May 14, 2020 | Toronto, Ontario | 100% | Education services | ||||
| NeoCanaan Investment Corporation (“NeoCanaan Investment”) | May 26, 2020 | Richmond Hill, Ontario | 100% | Rental business | ||||
| Canada Animation Industry Group Inc. (“Animation Group”) | October 8, 2020 | Richmond Hill, Ontario | 100% by NeoCanaan Investment | Rental business | ||||
| Toronto ESchool Ltd. (“Toronto ESchool”) | November 15, 2017 | Toronto, Ontario | 70% by Farvision Education | Online high school education | ||||
| Maple Toronto Art Academy Inc. (“Art Academy”) | July 27, 2020 | Toronto, Ontario | 80% by Farvision Education | Arts and high school education | ||||
| 7621531 Canada Inc. (“Conbridge College”) | September 1, 2021 | Toronto, Ontario | 80% by Farvision Education | Career college education | ||||
| Max the Mutt Animation Inc. (“MTM Animation”) | February 28, 2022 | Toronto, Ontario | 80% by Farvision Education | Animation education | ||||
| 13995291 Canada Inc. (“13995291”) | April 28, 2022 | Toronto, Ontario | 100% | Rental business | ||||
| Bethune Great Health Investment Management Inc. (“Bethune”) | December 15, 2023 | Toronto, Ontario | 100% | Property investment | ||||
| Shanghai Yuanjian Trillion Commercial Group Co., Ltd. (“Shanghai Yuanjian”) | October 31, 2023 | Shanghai, China | 100% | Dormant | ||||
| Shanghai Airong Hundred Billion Technology Development Group Co., Ltd. | October 31, 2023 | Shanghai, China | 80% by Shanghai Yuanjian |
Dormant | ||||
| Shanghai Yulankang Health Technology Group Co., Ltd. (“Shanghai Yulankang”) | October 31, 2023 | Shanghai, China | 56% by Shanghai Yuanjian | Dormant | ||||
| Shanghai Yuanjian Shulian Education Technology Co., Ltd. | March 13, 2024 | Shanghai, China | 70% by Shanghai Yuanjian | Dormant | ||||
| Shanghai Yuanjian Cailai Consulting Management Co., Ltd. | March 18, 2024 | Shanghai, China | 80% by Shanghai Yuanjian | Dormant | ||||
| Changle Shuang (Guangzhou) Health Industry Investment Co., Ltd. | February 29, 2024 | Guangdong, China | 51% by Shanghai Yuanjian | Dormant | ||||
| Yulankang (Huai'an) Health Management Co., Ltd. | October 31, 2023 | Jiangsu, China | 80% by Shanghai Yulankang | Dormant | ||||
| Visionary Asia SDN. BHD | December 1, 2023 | Kuala Lumpur, Malaysia | 100% | Dormant | ||||
| Visionary International SDN. BHD | December 1, 2023 | Kuala Lumpur, Malaysia | 100% | Dormant | ||||
| Visionary Biotechnology Group Inc. | March 11, 2024 | Toronto, Ontario | 55% | Dormant |
_____________________________
1 Minority interests in subsidiaries owned by Farvision Education are held by unaffiliated third parties.
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RECENT DEVELOPMENTS:
On August 9, 2024, the board of directors held a special meeting of shareholders, seeking and having received the approval of shareholders for the following proposals: 1. to authorize an amendment of the articles of incorporation of the Company (The “Articles”) to create the voting Class A and Class B Common Stock and the non-voting Class C Capital Stock, 2. to authorize an amendment of the Articles to authorize the board of the directors of the Company to issue in series and establish the rights, preferences and limitations of the Preference Shares of the Company, as detailed in the accompanying proxy statement and Appendix B thereto, 3. to authorize the increase of the number of directors from five (5) to nine (9), within the range specified in the Articles of a minimum of one (1) and a maximum of ten (10) directors, 4. to authorize the board of the directors of the Company to convert all of the shares held by Shareholder 3888 Investment Group Limited into Class B Common Stock, 5. to authorize the board of directors to approve the issuance of Class A Common Stock and Class C Capital Stock, aimed at developing the Company's business and to create greater value for Shareholders, 6. To transact such other business as may properly be brought before the Special Meeting or any adjournment thereof.
On July 18, 2024, as reported on the Form 6-K filed with the SEC on July 19, 2024, the board of directors of the Company confirmed its decision, initially made on June 6, 2024, to appoint Zhong Chen, the Company’s chief executive officer and chief financial officer, as a director of the Company.
On July 18, 2024, Mr. Marc Kealey, a director of the Company, was appointed as successor member of Audit Committee, Nominating Committee, Compensation Committee, succeeding the previous member, Mr. Michael Viotto. Mr. Kealey is an independent director under the applicable rules and regulations of the Securities and Exchange Commission and rules of Nasdaq. He does not have a family relationship with any director or executive officer of the Company and has not been involved in any transaction with the Company during the past two years that would require disclosure under Item 404(a) of Regulation S-K. There are no arrangements or understandings with major shareholders, customers, suppliers or others pursuant to which Mr. Kealey was selected as a director.
On July 10, 2024, as reported on the Form 6-K filed with the SEC on July 19, 2024, Mr. Michael Viotto resigned as a director and a member of the Audit Committee, the Compensation Committee and the Nominating Committee of the Company. Mr. Viotto’s decision to resign did not arise or result from any disagreement with the Company.
On May 29, 2024 the Company effected a share consolidation of its ordinary shares at a ratio of one (1) post-split ordinary share for every fifteen (15) pre-split ordinary shares (the "Share Consolidation") so that every fifteen (15) shares issued and outstanding will be combined into one (1) share. Any fractional share of a shareholder resulting from the Share Consolidation will be rounded up to the nearest whole number of shares. The Share Consolidation reduced the issued and outstanding number of ordinary shares of the Company from 55,368,883 shares to approximately 3,691,259 shares.
On May 6, 2024, as reported on the Form 6-K filed with the SEC on May 15, 2024, the board of the Company appointed Mr. Zhong Chen, the Company’s chief executive officer, as its new chief financial officer, effective immediately. Mr. Chen’s employment agreement with the Company, dated April 23, 2024, remains the same.
On April 22, 2024, as reported on the Form 6-K filed with the SEC on April 24, 2024, the Board appointed Mr. Zhong Chen as its new chief executive officer, effective immediately. On April 23, 2024, the Company entered into the Agreement of Employment with Mr. Chen, which became effective on the same day. Pursuant to the Agreement, Mr. Chen will receive an annual salary of $150,000, plus an additional performance bonus of up to $350,000 in company stock, contingent upon year-end performance.
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On April 10, 2024, as reported on the Form 6-K filed with the SEC on April 24, 2024, Mr. Ransom Wu notified the Company of his resignation as its chief executive officer, effective immediately. Mr. Wu’s resignation did not result from any disagreement or disputes with the Company.
On March 11, 2024, Visionary Biotechnology Group Inc., the joint venture company, was incorporated in Toronto, Ontario.
On March 4, 2024, the Company appointed YCM CPA Inc. as successor auditor of the Company and for the fiscal year ending March 31, 2024.
On March 4, 2024, MNP LLP resigned as the Company’s independent certified public accounting firm effective as of March 4, 2024.
On February 28, 2024, the Company entered into a joint venture agreement with a group of unrelated parties to form a new company, in which, the Company hold a 55% stake in the joint venture.
On February 9, 2024, as reported on the Form 6-K filed with the SEC on May 15, 2024, Katy Liu notified the Company of her resignation as its chief financial officer, effective May 6, 2024. Ms. Liu’s resignation did not result from any disagreement or disputes with the Company.
Visionary initiated a strategic transformation in September 2023. Transitioning from traditional education to high technology, life sciences, and AI education, after over six months of efforts, we have successfully executed this strategic transformation objectives.
These objectives are outlined below:
In September 2023, the Company transitioned from traditional education to focus on three major business sectors: high technology, life sciences, and education. We plan to deeply cultivate these three sectors in the future, adhering to the principle of refined management, and rapidly advancing the development of these sectors through global mergers and acquisitions. Visionary has achieved significant success in the field of artificial intelligence, with a focus on AI education and robotics. It is a leading high-tech company specializing in AI software-integrated robotics, with its business covering AI education, AI science popularization, cultural tourism, and consumer robots. The company holds over 100 core technology patents, and its products are sold in more than 30 countries.
In the life sciences sector, Visionary has made major breakthroughs in the fields of biochips and AI health. In the biochip domain, it has achieved significant results through collaboration with renowned biologists, expert professors from the University of British Columbia in Canada, and the Canadian Bio-Ran Biotechnology Group. They have already produced medical chips, animal chips, and cold chain chips, with technology that meets world-class standards. Visionary is preparing to invest in factory construction for large-scale production, with plans to launch products by 2025. The prospects are promising, providing a strong guarantee for Visionary’s future business growth.
In the AI health sector, Visionary has also made breakthroughs and is actively advancing specific projects in both Canada and China, with a positive outlook.
In the traditional education sector, Visionary places great emphasis on innovation, particularly promoting AI education and developing industry-education integration projects. The company values the development of vocational education, especially in the areas of AI in film, animation, industry cooperation, and vocational education. Visionary actively collaborates with leading institutions in the U.S. and China to drive the growth of its education business, with significant performance increases expected.
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EMERGING GROWTH COMPANY STATUS
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”), and we are eligible to take advantage of certain exemptions from various reporting and financial disclosure requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, (1) presenting only two years of audited financial statements and only two years of related management’s discussion and analysis of financial condition and results of operations in this annual report, (2) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (3) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and (4) exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these exemptions.
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. As a result, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We could remain an emerging growth company for up to five years, or until the earliest of (1) the last day of the first fiscal year in which our annual gross revenues exceed $1.235 billion, (2) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our Ordinary Shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter and we have been publicly reporting for at least 12 months, or (3) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.
FOREIGN PRIVATE ISSUER STATUS
We are a foreign private issuer within the meaning of the rules under the Exchange Act. As such, we are exempt from certain provisions applicable to United States domestic public companies. For example:
| · | we are not required to provide as many Exchange Act reports, or as frequently, as a domestic public company; | |
| · | for interim reporting, we are permitted to comply solely with our home country requirements, which are less rigorous than the rules that apply to domestic public companies; | |
| · | we are not required to provide the same level of disclosure on certain issues, such as executive compensation; | |
| · | we are exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; | |
| · | we are not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; and | |
| · | we are not required to comply with Section 16 of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and establishing insider liability for profits realized from any “short-swing” trading transaction. |
The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of the SEC’s Internet site is http://www.sec.gov. We maintain an Internet site at http://gsmg.co. However, information contained in, or that can be accessed through our website or any other website cited in this annual report is not part of this annual report.
Our principal executive offices are located at 105 Moatfield Dr. Unit 1003, Toronto, Ontario, Canada M3B 0A2. Our telephone number at this address is 1-905-739-0593.
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| B. | Business Overview |
Our Solution
We are an education provider located in Canada that offers our high-quality education resources to students around the globe. We aim to provide access to secondary, college undergraduate and graduate and vocational education to students in Canada through technological innovation so that more people can learn, grow and succeed to their full potential. We use the technology that we have developed to provide customized teaching methods and to cultivate talented students to meet the challenges that they may face in their careers. We believe that we have assembled a distinguished faculty and experienced management team in North America to provide those resources to enable our students to achieve their career goals. We offer educational programs for secondary school, college, university, and advanced degree students together with services to support them, such as housing and career guidance. As a fully integrated provider of educational programs and services in Canada, we have been serving and will continue to serve both Canadian and international students. Our current businesses are organized into three clusters: Degree-oriented education, vocational education and education services, as described below. The three lines of business are inter-beneficial. We operate Education Services to support our students enrolled in both the degree-oriented and the vocational education programs. Such support includes study visa and immigration visa services, student housing, job placement, and funding.
Our degree-oriented educational programs include the OSSD (grades 9 through 12) program, career-oriented two-year college and four-year university programs, and master’s programs. Through three schools, we offer OSSD programs to both Canadian and international students using online, in-person, and hybrid learning methods that combine pre-recorded lectures, live-streamed lectures and tutorials, and live online and in-person consultation. Our three OSSD schools have signed agreements with public post-secondary institutions so that international students graduated from our OSSD schools can have an option to be directly admitted to the degree programs in these institutions without having to pass English proficiency tests such as the Test of English as a Foreign Language, or TOEFL, or the International English Language Testing System, or IELTS. We offer college programs through Conbridge College of Business and Technology, or Conbridge. Its curriculum is developed, regulated and updated to educate students to be career ready. At the bachelor’s degree level, Conbridge has established a partnership with a public university through “2+2” and “1+3” collaborative education modes, which are described below. At the master’s degree level, we have been collaborating with Niagara University Ontario, or NUO, as the exclusive student recruiting agent in Canada, China, India and certain other southeast Asian countries for four master’s programs in education offered by NUO. Additionally, on February 28, 2022, we acquired control of MTM, which has been operating a “4+1” collaborative education with Duncan of Jordanstone College of Art and Design, or Duncan College. Under that agreement, MTM students can be admitted to Duncan College for a one-year master’s program after they have successfully completed the four-year program at MTM.
Foreign students who graduate from our post-secondary programs are eligible to apply for immigration to Canada, which makes our programs attractive to international students. To facilitate international students’ transition into Canada and their successful development, we provide ancillary education services with respect to study and immigration visas, student housing, job placement, and internship and entrepreneurship.
Like many other education organizations, our business has been adversely affected during and after the COVID-19 pandemic. In order to maintain the quality of our existing education programs and services and to create opportunity to healthily grow during and after the pandemic, we have adapted a strategy for “survive and grow” in response to the adverse impact of COVID-19. During the pandemic, we have followed the governmental guidance to protect our staff and students. We have installed clear signage in all indoor environments and building entrances to remind people to social distance, that masks are mandatory, and that hand sanitizer is available. We have a special task force to address any emergency that may arise if any COVID-19 case is identified within our Company or its facilities. Thus far, no COVID-19 cases have been found among our students or staff. We have reorganized our assets from our pre-pandemic focus on providing student housing to establishing a comprehensive education eco-system. This new strategy emphases the importance of academic partnerships with reputable education organizations and employing technology in education. We own two campuses (the total building floor area of 65,000 square feet and 100,000 square feet, respectively) with one more in the final stage of acquisition (the total building floor area of 433,000 square feet). The education programs, which have been developed or are being developed, are or will be housed in these campuses, one focused on post-secondary programs, one on vocational education, and one on OSSD and animation education (one of our expected college/university programs). We believe that the facilities that we own make us unique and attractive to public colleges and universities seeking opportunities for collaborative education.
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Degree-Oriented Education
We offer four levels of degree-oriented education programs, namely OSSD, college, university bachelor’s degree, and master’s degree. Currently, these programs are either offered by our own schools or in partnership with public institutions. The following sections provide the details of these operations.
Ontario Secondary School Diploma
The OSSD is a diploma granted to secondary school graduates in the Canadian province of Ontario. It is part of the publicly funded, province-wide school system. It is awarded to all students who complete the Ontario education curriculum, including students in Special Education, the Talented Offerings for Programs in the Sciences, or TOPS, program, the Mathematics, Science, and Computer Science, or MaCS, program, the International Baccalaureate, or IB, program, and other focused secondary school programs. OSSD education emphasizes critical, independent thinking and problem-solving skills and is recognized as a valid high school diploma by colleges and universities in Canada as well as many other countries. We believe that an OSSD lays the foundation for future learning and growth in the workplace, vocational training, college or university.
Ontario secondary high school normally runs from grade 9 to grade 12. To earn a high school diploma in Ontario, students must earn 18 compulsory credits and 12 optional credits, pass the literacy requirement, and complete a minimum of 40 hours of community involvement activities.
High school students can earn an OSSD through publicly funded schools, private schools, or homeschooling. There are four publicly funded school systems in Ontario, consisting of English Public, English Catholic, French-language Public, and French-language Catholic. All publicly funded schools are managed by district school boards. Private schools do not receive government funding, and usually students must pay, fully or partially, to attend them. These schools may focus on religion, culture, language, or specific approaches to teaching. The Ministry of Education maintains an up-to-date list of private schools in Ontario. As an alternative, students can also receive education via homeschooling.
We operate three OSSD schools through our subsidiaries: Visionary Academy, Toronto Art School, and Toronto ESchool:
| Visionary Academy (online and in-person teaching) |
Visionary Academy—9651837 Inc., which does business as Visionary Academy, offers high school credit courses and university preparatory courses for grades 9 to 12 in person at its facility in Toronto and online. Visionary Academy has signed agreements with Trent University and Algoma University that allow Visionary Academy graduates who have achieved a grade of more than 80% in Grade 12 English to be directly admitted to the degree programs in these two universities. Visionary Academy was founded in March 2016. We acquired a 70% equity interest in Visionary Academy in June 2021.
Supported by 12 certified teachers, Visionary Academy operates six terms per academic year so that international students have more flexibility in scheduling their studies. In each of the six terms, students concentrate on two courses. We believe that this is helpful for international students to overcome language difficulties. In comparison, all public and most private OSSD schools operate two semesters per academic year.
Based on the need and competence of the individual student, Visionary Academy offers personalized programs to best serve students. To ensure the quality of education, all courses are taught in small classes by Ontario Certified Teachers, or OCT’s. Additionally, students have access to one-to-one consultation from bilingual consultants. The teaching facilities consist of modern teaching equipment, computers, and science labs.
To enrich students’ learning experience and to enhance their connection with Canadian society, Visionary Academy also organizes special learning camps, one in the summer and one in the winter. Through these learning camps, the participating students have a chance to explore the world and extend their study beyond their comfort zone.
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Tuition at Visionary Academy and the marketing costs that we pay our agents to recruit students are:
| · | Full enrollment: | $14,400 for 8 credits | |
| · | Individual course credit: | $680 per credit | |
| · | Individual counseling: | $32 per hour | |
| · | Winter and summer camps: | $2,400 for a 15-day program | |
| · | Marketing costs: | 30% to 50% for full enrollment 20% for individual course credit |
Visionary Academy has established a comprehensive student management system through which the students, parents/guardians, and school can have effective communication. Whenever there is a problem with an individual student, all parties involved can work together for the best solutions. This ensures that all students can properly make progress with their learning plan. For students with learning difficulties, Visionary Academy offers extra time and opportunities so that they can catch up.
We believe that Visionary Academy has built a reputation for high quality education through its students’ success. All graduated students have been admitted to colleges and universities.
| Toronto ESchool (online teaching only) |
Toronto ESchool Ltd., or Toronto ESchool, is an internet-based high school that provides grade 9 to 12 OSSD online courses to domestic students and to international students. It also provides special English and on-site tutorials for OSSD courses. Toronto ESchool has signed an agreement with Trent University in Peterborough, Ontario, Canada, which allows Toronto ESchool graduates to be directly admitted to the degree programs at that university. Toronto ESchool was founded in 2016. We acquired a 55% interest in Toronto ESchool from an affiliate in November 2017 and an additional 15% interest in June 2020.
We believe that Toronto ESchool, situated in Toronto, is a premier online high school that represents a leading education model in Canada. The school is fully inspected and approved to grant the OSSD diploma by the Ministry of Education (BSID# 886520). Toronto ESchool was founded by Demosthenes Aliferis, a renowned educator in Ontario. It is a pioneer and leader in the early stage of online education in Canada. Due to sale of 41 Mettropolitan Building in June 2023, the Toronto ESchool has moved to the Company’s another office building – 95 Moatfield.
According to the syllabus formulated by the Ontario Department of Education, Toronto ESchool has mapped out a unified curriculum based on its own research and development and has taken a customized education approach to meet students’ needs with the help of a team of OCT teachers. Through international education cooperation, Toronto ESchool has signed more than 20 OSSD authorized partners around the world to promote its global online education model in North America. Going beyond the traditional brick-and-mortar model, Toronto ESchool enables students to register and start learning anywhere at any time with flexible course schedules and self-paced learning processes. Students from around the world can directly register as Canadian high school students without going abroad, enjoy a high school education in North America, and apply to universities globally with an OSSD diploma.
Toronto ESchool has developed its global reach and presence over the years. Since it commenced operation in 2013, Toronto ESchool has granted more than 7,000 course credits and graduated more than 2,500 registered students, including local high school students in Canada, as well as students from more than 30 countries, including the United States, South Korea, Japan, India, Pakistan, Bangladesh, Singapore, the Philippines, Malaysia, Mexico, Ukraine, Russia, Morocco, Panama, Iran, and Bahrain. Through working closely with more than 100 global agents who recruit students, we have successfully helped thousands of students enter universities worldwide, including Canada, the United States, the United Kingdom, Australia, New Zealand, Japan, Singapore, and Hong Kong.
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Tuition at Toronto ESchool and the marketing costs that we pay our agents to recruit students are:
| · | Individual course credit: | Canadian students: $480 per credit. International students with a Canadian study visa: $680 per credit. International students without a study visa: $960 per credit | |
| · | Marketing costs: | 17% for Canadian students 30% for international students with a Canadian study visa 40% for international students without a study visa |
Toronto ESchool has also entered into agreements with the eight public universities and colleges in the Province of Ontario listed below under which qualified Toronto ESchool graduates can be directly admitted without taking the TOEFL or IELTS examinations.
| · | Wilfrid Laurier University, Waterloo, Ontario | · | Georgia College, Barrie, Ontario | |
| · | Trent University, Oshawa, Ontario | · | Fleming College, Peterborough, Ontario | |
| · | Algoma University, Sault Ste. Marie, Ontario | · | Centennial College, Scarborough, Ontario | |
| · | Laurentian University, Sudbury, Ontario | · | Fanshawe College, London, Ontario |
Toronto ESchool students who earn an OSSD can apply to colleges or universities in Canada and globally as an Ontario high school graduate. Toronto ESchool has a dedicated professional team to provide hands-on assistance to our students with a view to ensure a high enrollment rate into colleges and universities. A majority of the graduates are admitted by universities in Canada, such as the following:
| · | University of Toronto, Toronto, Ontario | · | McMaster University, Hamilton, Ontario | |
| · | University of Waterloo, Waterloo, Ontario | · | York University, Toronto, Ontario | |
| · | University of Western Ontario, London, Ontario | · | Ryerson University, Toronto Ontario | |
| · | Queen’s University, Kingston Ontario | · | Windsor University, Windsor, Ontario | |
| · | University of Ottawa, Ottawa, Ontario |
| Toronto Art Academy (online and in-person teaching) |
Maple Toronto Art Academy Inc., or Art Academy, is a private school approved by the Ontario government (BSID#668739). It was founded in 2012 as Alathena International Academy Richmond Hill. We acquired an 80% equity interest in Toronto Art Academy in 2020.
We believe that with experienced OCT’s and advanced teaching facilities, Toronto Art Academy has become known as one of the top new educational institutions in Toronto. It provides grades 9 to 12 OSSD art programs, short-term art training programs, and summer and winter art camps to domestic and international students. As a specialized high school, Toronto Art Academy has established a four-year, art-focused high school curriculum. In addition to Ontario credit courses, it emphasizes a core art education. It offers the following four courses of instruction:
| · | Art university preparatory courses, | |
| · | OSSD high school diploma, | |
| · | Specialized art sub-curriculum and university portfolio courses, and | |
| · | Customized learning internship programs. |
These programs enable its graduates to obtain admission into a variety of art programs in universities in Canada. Toronto Art Academy has signed an agreement with the Canadian Film and Television Institute, under which Toronto Art Academy graduates can be directly admitted to the institute.
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By offering the following specialized courses, the Toronto Art Academy features the following advantages that are attractive to students with art talent:
| Art-focused online OSSD with flexible enrollment, which permits a student to enter its program at grade 9, 10 or 11. | ||
| Specialized art courses, including: |
| o | Media Arts: The media art class focuses on cultivating students’ creativity, artistry, technical skills, and theoretical knowledge. Students produce media art to convey ideas, feelings and beliefs to specific audiences. | |
| o | Visual Arts: The visual arts classes in grades 9 and 10 focus on the appreciation of studio art works, aiming to cultivate students’ visual literacy, transform “sight” into “visual” perception, and explore the expressive power of art and personal opinions of the work and the elements and principles of the design. | |
| o | Music: This course provides students with the opportunity to improve their musical literacy through creation, appreciation, analysis and performance of music (including traditional, commercial and artistic music). | |
| o | Drama: Drama learning provides students with opportunities for role-playing and creating and entering the world of imagination. They learn in a unique way to re-recognize themselves, the art of drama, and the world around them. |
| University portfolio courses: from our 38 part-time instructors, who are located at our facilities, are experienced professionals who can help students plan their careers at early stages through: |
| o | Consultation: preliminary consultation and professional evaluation. | |
| o | Training Plan: develop a personal portfolio training plan. | |
| o | Portfolio Creation: guidance for students in the creation of their portfolios. | |
| o | Improvement: portfolio improvement and post-optimization. | |
| o | Interview Coach: students practice with mock interviews. | |
| o | Offer Reference Letter: instructors will offer a reference letter to all students. |
Tuition for Toronto Art School and the marketing costs that we pay our agents to recruit student are:
| · | Full enrollment: | $12,000 per year (8 credits) | |
| · | Individual course credit: | $624 per credit for Canadian students | |
| $980 per credit for international students | |||
| · | Marketing costs: | 20% to 40% |
The market and competition
OSSD is a high school diploma recognized by colleges and universities in most countries and territories. The total number of students enrolled in post-secondary institutions in Canada increases each year, especially in the case of international students. According to Statistics Canada and Immigration and Citizenship Canada, Ontario has had the largest number of international students in Canada over the last ten years, which is largely the result of the increase in OSSD international students.
There are 76 public school boards in Ontario, including 38 public secular boards (34 English boards and 4 French boards (ACÉPO)), 38 public separate boards (29 English Catholic boards, eight French Catholic boards and one English Protestant board), and seven public school authorities that operate in children’s treatment centers. There are 1,503 private schools in Ontario in the 2021-2022 school year. The public high schools in the Markham area, where we are located, include Markville High School, Unionville High School, Bur Oak Secondary School, Pierre Elliott Trudeau High School, and Bill Crothers Secondary School. Private high schools in the Markham area include Peoples Christian Academy, J Addison School, Holy Trinity School, TMS School, and La Citadelle International Academy of Arts and Science. These competitors have long history, relatively large campus and excellent teaching facilities.
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Our Development Plan
Based on our existing programs that are with flexible scheduling and supported by advanced teaching facilities and methods, we expect to enhance our OSSD programs as follows:
| · | Engage in partnerships with more public colleges and universities. Under the leadership of our Board of Directors, we have been working with universities on agreements that will allow our qualified graduates to be directly admitted to their degree programs without English proficiency tests. | |
| · | Establish a comprehensive student management system based on Artificial Intelligence, or AI. This system will be able to trace the learning journey of individual students and produce personalized tutorials to optimize their learning productivity. | |
| · | Build a virtual teaching lab based on Virtual Reality, or VR, which we believe can greatly enhance our students’ learning experience. The VR lab will visualize complicated methods and processes in subjects such as math, physics, chemistry, and biology, making it easier for students to comprehend. | |
| · | Develop OSSD Massive Open Online Courses, or MOOC, which will be aimed to provide enriched learning components for our students. We have already built a MOOC platform that is currently used for animation education. | |
| · | Further develop a marketing network in targeted countries, including China, India, Brazil, and southeast Asia. |
Regulatory Matters
In Ontario, private schools operate as for-profit businesses or non-profit organizations, and as a result, the scheduling of the academic year, tuition, student recruiting, and school administration are not subject to control by the Ministry of Education. However, the curriculum must comply with the OSSD curriculum prescribed by the Ministry of Education. Private schools do not receive any funding or other financial support from the Ontario Provincial government. The Ministry does not regulate, license, accredit or oversee the day-to-day operation of private schools.
Despite this flexibility, any person, business, or non-profit entity wishing to operate a private school in Ontario must do so in accordance with the legal requirements of the Education Act, as amended by the Education Amendment Act, or more commonly known as Bill 82, and with the policies and procedures detailed in “Private Schools Policy and Procedures Manual” issued by Ministry of Education.
Over the past two school years, the COVID-19 pandemic has had a significant impact on the delivery of education in Ontario. Under a new Ministry of Education policy, starting with the grade 9 cohort for the 2020-21 school year, students will be required to earn two credits online as part of the graduation requirements of the OSSD. Online courses will be a mandatory graduation requirement.
College and University
We operate two colleges, Conbridge College of Business and Technology and Max the Mutt College of Animation, Art & Design, that offer college diploma programs, short-term training courses, vocational training programs, and collaborative education in partnership with public colleges and universities (1+3 and 2+2 programs) for bachelor’s degrees.
Conbridge College of Business and Technology
Conbridge College of Business and Technology, or Conbridge College, is a private vocational institute registered in Ontario under the Private Career College Act of 2005. It offers a wide variety of short-term, specialized programs, professional examination preparation, and professional development training courses and is qualified to confer college degrees. Conbridge College focuses on providing educational resources with a goal of ensuring the success of its graduates by equipping them with the knowledge and skills needed by potential employers. Its faculty members are experienced working professionals who have academic credentials that correlate with their areas of expertise.
The predecessor to Conbridge College was founded in 2005 as Toronto Engineering Training Centre, whose mission was to offer short-term courses and pre-examination sessions to facilitate the integration of new immigrants into the Canadian workforce. Its current training programs cover such areas as civil engineering, mechanical engineering, environmental engineering, and electrical engineering. The courses are designed to meet the immediate needs of newcomers to Canada. Since 2016, Conbridge College has prepared more than 300 students for entry into Canada’s labor force as trained engineers and professional technicians. Its strategic plan is to develop and register more college diploma programs and to seek partnerships with public colleges and universities.
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Currently Conbridge College offers two vocational programs that are registered with the Ontario Ministry of Colleges and Universities:
| · | Quality Control and Assurance | |
| · | Computerized Accounting |
Another three vocational programs have been registered and are pending approval:
| · | Business Administration | |
| · | Game Design | |
| · | Global Business Management |
Our subsidiary Farvision acquired an 80% equity interest in Conbridge College on September 1, 2021. Under the new ownership, Conbridge College has made the following advancements:
| · | Establishing an Academic Advisory Board and Quality Assurance Program. Farvision recognizes the importance of creating, developing, and implementing quality assurance processes to ensure academic and service excellence. The approach extends beyond compliance with external and government regulations, standards, and practices. In addition to the quality assurances in place at its various educational units, Farvision has established an Academic Advisory Board chaired by Dr. Harley d’Entremont, our Chief Academic Officer. | |
| · | Developing a public college-private college partnership, or PPP, program with College Boreal, or Boreal. A PPP program is a contractual arrangement between a public college of applied arts and technology in Ontario and a third party for the delivery, by the third party, of college programs leading to an Ontario College Credential. Third party means an independent legal entity other than a college of applied arts and technology, publicly assisted university or Indigenous Institute prescribed under the Indigenous Institutes Act, 2017. In short, this is a partnership between a public college and a private college. We are in negotiations with Boreal to enter into an agreement for a PPP program in which Conbridge College will provide educational courses and facilities to Boreal’s students. | |
| · | Developing 2+2 programs in partnership with the University of Canada West, or UCW, Trent University, and Lakehead University. Under this program, students who successfully complete their two-year course of study at Conbridge College can be admitted to a partner university to complete a bachelor’s degree. |
Student Services
In terms of student services, the Binding Policy Directive from the Minister of Education requires that “students enrolled in programs offered through PPP’s are entitled to all the rights and privileges afforded to other students of the college” and that “colleges will be held accountable for ensuring access to an appropriate range of student supports, either on the partnership campus, in the community, or through the college’s main campus.” Conbridge College has submitted a proposal to Holland College on Prince Edward Island for a PPP that would provide that students enrolled in the PPP program would have an appropriate range of services provided to them by Holland College. These services would include, student housing, and career development. As is the case with smaller campuses of public colleges, this range of services may not be as broad as the range of student services offered on the main campus, but will cover the essential services required, and may expand over time as enrollment grows.
Advantages of Conbridge College
Conbridge College had a history of successful operations prior to the COVID-19 pandemic, and we believe that it is now positioned for healthy growth supported by the following advantages:
| · | Financial Stability. We believe that we have the financial viability to offer potential students a stable educational environment. We have cash flow from our short-term training courses, ownership of a dedicated educational facility with up to 433,000 square feet usable space for educational purposes in the north of Toronto, closed to two major highways to recruit international and domestic students to meet the demand of enrollment trends. |
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| · | Quality Assurance. We are committed to ensuring quality assurance. As an example of the application of quality assurance procedures for its operations, Conbridge College has developed and implemented several procedures and methods to implement quality assurance for all programs delivered, including data collection, analysis, and improvement measures. The following practices are conducted currently on a regular basis. Faculty meetings are held at the end of each semester to review the courses offered and textbooks selected for the program. The information and insights gathered at these meetings is then used to enhance teaching effectiveness and improve the quality of the programs. A program assessment meeting is held at the end of each academic year. The program advisory committee conducts assessments of the operations of the program and recommends possible revisions to maintain the relevance of the program. Research is conducted constantly to ensure that Conbridge College is aware of key trends in terms of academic training requirements in each field of study as well as any change of demand in the field. Moreover, we monitor similar programs in other institutions annually to ensure that our programs are comparable and competitive. In addition, a survey of employers’ needs is conducted annually to ensure the program is providing students with useful knowledge and the practical skills required by the employers. Surveys of the graduates of the program are also conducted annually to get their feedback, their perception on the usefulness of the program, how it has prepared them for their current employment, and what they found to be most pertinent for their employment. Moreover, graduates are asked to provide suggestions on ways that the program could be improved. |
Conbridge College’s tuition and the marketing costs that we pay our agents to recruit students are set forth below:
| Two-year college diploma programs open only to international students: | $20,000 CAD per year | |
| Marketing cost: | 20% to 50% of tuition paid | |
| One-year college certificate programs open principally to Canadian students: | $6,750 CAD per year | |
| Marketing cost: | 20% to 30% of tuition paid | |
| Short-term training courses: | $675 CAD per course | |
| Marketing cost: | 10% |
Industry competitors
The following private colleges have entered into PPP agreements with public colleges in the Greater Toronto Area:
| · | Lambton College-Toronto Campus | |
| · | Sault College - Toronto Campus | |
| · | Niagara College Toronto Campus | |
| · | Northern College at Pures Toronto | |
| · | St Clair College Toronto Campus | |
| · | Mohawk College Mississauga Campus | |
| · | Canadore College in Toronto | |
| · | Loyalist College in Toronto | |
| · | Cambrian College at Hanson in Toronto |
These are all public colleges that have PPP programs with other private colleges. In comparison with these colleges and their partnerships, we have the following advantages:
| · | Facilities: we currently own three buildings at two campuses, providing a total of 180,000 square feet of teaching space. We are in the process of acquiring two additional buildings comprising 433,000 square feet that will constitute our third campus. | |
| · | Academic program: under the leadership of our Board of Directors, the academic programs are frequently updated and expanded for the best quality and to reflect the demand of the market. | |
| · | Marketing: we have a global network of agents to recruit international students. This enhances the promotion of our programs and student recruiting. |
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Marketing
To promote multi-level, innovative partnerships and develop education on a global scale, Farvision is actively extending its outreach to recruit students from China, India, Vietnam, Southeast Asia, South Korea, Japan, Latin America, and other regions. Our mandate is to create a first-class learning environment and to develop opportunities for international students to allow them to study in Canada and pursue their educational, personal and career goals.
Farvision, through its colleges and schools, has developed partnerships with Canadian universities, public colleges and school boards in Ontario, Nova Scotia, Saskatchewan, and British Columbia. Farvision’s staff visits the key overseas markets and participates in education fairs in China and Hong Kong regularly.
MTM College (Max the Mutt College of Animation, Art & Design )
MTM College, formerly known as Max the Mutt College of Animation, Art & Design, or MTM, formerly known as Max the Mutt Animation School, and Studio M, was founded in 1997 as a Private Career College under the Private Career Colleges Act, 1990 with the Ontario Ministry of Advanced Education and Skills Development (Registration number 101408). MTM is located in Toronto, Canada.
Programs
MTM offers three four-year college diploma programs, Animation, Concept Art, and Illustration & Storytelling for Sequential Arts. The curriculum is largely designed, regularly reviewed, and updated by working professionals. Most faculty are working professionals who teach part-time. MTM also regularly offers short-term workshops and training courses.
Over the last 27 years, MTM has produced approximately 4,000 graduates who have entered the animation industry. Many of these graduates have joined animation studios such as Pixar, Walt Disney Animation Studios, and DreamWorks, or created their own studios. MTM currently has about 150 students. We believe that the market demand for graduates of animation programs has been rapidly expanding in recent years.
MTM’s tuition structure
| · | All 4-year programs: | |||
| $11,850 CAD /year (Local student) | ||||
| $14,000 CAD /year (International student) | ||||
| 2024-2025 school year: the tuition fees for the local and international students are $11,850 and $14,000 respectively. | ||||
| · | Short-term training | |||
| o | Portfolio development: | Learn to draw $700 CAD /7 hours | ||
| Single Session Life $550 CAD /36 hours | ||||
| o | Workshop | Introduction to traditional animation $320 CAD /7 hours | ||
| Illustration Basics of Clip Studio Paint $260 CAD /3 hours | ||||
| Creating a Webcomic Series $320 CAD /7 hours | ||||
| Portfolio Workshop $2200 CAD / 120 hours | ||||
| o | Professional Development | Introduction to Autodesk Maya $680 CAD /7 hours | ||
| Digital Painting for Professional Development $60 CAD /hour | ||||
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Development
MTM entered into an agreement in 2018 with Duncan of Jordanstone College of Art and Design, or Duncan College, located in Dundee, Scotland, for collaborative education. MTM students can be admitted to Duncan College for a one-year master’s program after they have successfully completed the four-year program at MTM. This is known as a “4+1 program.” MTM is also developing a “2+2 program” with two Canadian public universities (Trent University and Brock University) in disciplines related to animation and art education. Under a 2+2 program, MTM students will be able to directly transfer to a public university for the remaining two years of study for bachelor’s degree after they have completed the first two years of study at MTM.
MTM is also preparing to file an application to convert all of its three college diploma programs to university bachelor’s degree programs with Ontario Ministry of Colleges and Universities. We expect MTM to obtain this approval by the end of 2023. These bachelor’s degree programs are expected to be housed in our property located at 95 Moatfield Dr. We are the sole owner of this buildings that have a total floor area of 200,000 square feet.
We believe that MTM programs have developed an exceptional reputation both nationally and internationally, which we believe will enhance MTM’s opportunity to attract highly talented students from all over the globe.
Marketing
We believe that the acquisition of MTM will generate a great opportunity to further develop MTM’s degree programs and relationships with other universities. Farvision has a global network of marketing agents that will connect MTM with potential talented art students. While maintaining MTM’s Canadian market share, Farvision plans to progressively promote MTM’s existing programs to attract international students. Targeted markets include China, India, South American countries, and southeast Asian countries. With expanded academic programs and enhanced teaching facilities, we plan to increase the enrollment to 2,000 students.
Post-Secondary Education Services in Canada
Canada ranks as the fourth most popular destination for international students after the United States, United Kingdom, and China. According to Statistics Canada, in the school year 2022-2023, revenue of universities and degree-granting colleges reached more than $47.5 billion by 2023. We believe significant potential for growth exists in the post-secondary education service industry in Canada.
Master’s Degree Programs
We presently offer educational opportunities at the master’s degree level through a collaboration agreement that Farvision signed with Niagara University Ontario, or NUO, on July 14, 2021. Under that agreement, Farvision is the exclusive student recruiting agent for NUO in Canada, India, and certain countries in southeast Asia. MTM also offers opportunities for a master’s degree through an agreement with Duncan of Jordanstone College of Art and Design, Dundee University. These programs are described in further detail below.
Niagara University Ontario
Niagara University Ontario was established on January 18, 2019 as the Toronto campus of Niagara University in Lewiston, New York, which was founded in 1856. NUO’s campus is located in the Expo City commercial and residential complex of the Vaughan Metropolitan Centre, Ontario. The campus covers 12,000 square feet, with classrooms, faculty offices, and student lounge and other facilities.
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Currently, NUO offers four master’s degree programs that are registered with Ontario Ministry of Colleges and Universities:
| · | Master of Science in Education. | |
| · | Master of Business Administration. | |
| · | Master of Science in Finance | |
| · | Master of Science in Information Security and Digital Forensics | |
| · | Master of Science in Sports Management | |
| · | Master of Science in Criminal Justice Administration |
Advantages of Niagara University Ontario Programs
We believe that the master programs offered by NUO have the following advantages:
| · | Admission criteria: the English language proficiency requirement for admission is relatively low in comparison with other similar programs. In order to assist students to be better prepared for the challenges that they need to succeed at the master’s degree level, Farvision provides pre-masters courses and language training. | |
| · | Relatively low tuition for the Greater Toronto Area: The total tuition fee for the NUO MBA program is approximately $38,000, and the other master’s programs are approximately $96,000. | |
| · | Qualified for immigration and working permit: after graduating with a master’s degree from NUO, students can apply for a three-year working permit, and after one year of work, one can apply for immigration to Canada. |
Competition
Major competitors for NUO’s MBA program is set forth below:
| MBA colleges in Canada |
Tuition (domestic) |
Tuition (international) |
GMAT Score | Location |
| The University of Toronto – Rotman School of Management | 81,915 | 101,734 | 670 | Toronto |
| York University – Schulich School of Business | 57,613 | 85,010 | 660 | Toronto |
| Western University – Ivey Business School | 66,203 | 68,191 | 660 | London |
| Queen’s Smith School of Business | 62,823 | 79,125 | 650 | Kingston |
| Sobey School of Business | 22,664 | 34,195 | 590+ | Halifax |
| Brock University – Goodman School of Business | 20,650 | 24,650 | 550+ | St. Catharine’s |
| Carleton University – Sprott School of Business | 26,592 | 43,738 | 550+ | Ottawa |
| McMaster University – DeGroote School of Business | 60,437 | 65,209 | 590 | Burlington |
| Ryerson University – Ted Rogers School of Management | 17,778 | 30,807 | NA | Toronto |
| Simon Fraser University – Beedie School of Business | 33,797 | 44,394 | 620 | Vancouver |
| University Canada West (UCW) | 27,913 | 27,913 | NA | Vancouver |
| The University of Windsor – Odette School of Business | 15,341 | 38,121 | 600 | Windsor |
| University of Ottawa – Telfer School of Management | 41,590 | 50,895 | 550+ | Ottawa |
| Wilfrid Laurier University | 25,162 | 36,751 | 550+ | Toronto/Waterloo |
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Major competitors for the other master’s degree programs is summarized below.
| University | Program |
Tuition (Domestic) ($) |
Tuition (International) ($) |
| McMaster University | MBA with concentration in finance | 34,990 | 34,990 |
| Ryerson University | MA in International Economics and Finance | 53,280 | 53,280 |
| University of Alberta | MBA with specialization in finance | 58,608 | 58,608 |
| University of Saskatchewan | Masters of Finance | 7,952 | 11,928 |
| Saint Mary’s University | Masters of Finance | 30,616 | 37,375 |
| UBC | Masters of Finance | 29,047 | 44,755 |
| University of Toronto | Masters of Finance | 49,392 | 71,865 |
| Ontario Tech University | Master of Information Technology Security | 6,027 | 30,483 |
| University of Ottawa | Master of Computer Science – Bioinformatics | 12,792 | 43,769 |
| Concordia University | Master of Engineering in Information Systems Security | 9,973 | 32,138 |
| Trent University | Master of Science in Forensic Science | 6,369 | 20,068 |
| University of New Brunswick | Master of Cybersecurity | 5,693 | 10,578 |
| University of Calgary | Master of Information Security and Privacy | 4,448 | 12,491 |
| New York Institute of Technology (Vancouver) | Master of Science in Cybersecurity | 18,127 | 22,795 |
Duncan of Jordanstone College of Art and Design, Dundee University
Duncan of Jordanstone College of Art & Design, or Duncan, is the creative heart of the University of Dundee, internationally known for its high-quality teaching and research. It offers a broad range of bachelor’s degree programs in art and design, including animation, art and design, art and philosophy, and graphic design. Its graduate programs include Animation & Visual Effects (VFX) Master of Science (MSc), Art & Humanities Master of Fine Arts (MFA), Art, Science & Visual Thinking MFA, Comics and Graphic Novels Master of Letters/Master of Design (MLitt)/Mdes), Design for Business MSc, Design for Healthcare MSc, Fine Art MFA, Forensic Art & Facial Imaging MSc, Medical Art MSc, and Product Design MSc.
Under the 4+1 agreement signed on September 10, 2018, between MTM and Duncan, MTM graduates will be treated as though they have earned a bachelor’s degree and will be able to apply for admission to the following master’s degree programs:
| · | MSc in Animation and Visual Effects | |
| · | MDes or MLitt in Comics and Graphic Novels | |
| · | MSc Design for Business | |
| · | MSc in Forensic Art | |
| · | MSc in Product Design | |
| · | MFA in Art and Humanities | |
| · | Masters courses in Humanities, such as Film Studies or the MLitt in Science Fiction |
Vocational Education
Vocational education is a different learning option from the path of college or universities. It offers a career path that imparts the skills and knowledge needed to work in a given occupation. It is coordinated with the requirements of the labor market and is an integral part of the education system.
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We believe that good vocational education expands a student’s ability to keep a job and teaches students how to educate themselves as they follow a career path. Vocational education usually provides for a quick education that will provide a marketable skill in a short time span. Often vocational programs are implemented on aspects of skilled trades license training, skilled trades career training, and high demand job training. Even though at the outset vocational education programs are relatively short in duration, lifelong learning is what students should continuously engage over their diverse career paths. Teachers focus on teaching students how to grow with technological trends, because few careers are stable technologically. However, the basics are generally constant in most fields.
The Canadian government has adopted a “block-purchased” training approach to fund large-scale training in response to the needs of certain recovery industries such as construction, manufacturing and hospitality. Examples of such programs include the Canada Ontario Job Grant Program, or COJG, the Second Career Program, and the Canadian Apprenticeship Program.
We offer the following vocational education programs through:
| · | Personal Service Worker, or PSW (in partnership with Canadian International Career College). |
Immigration
According to the Annual Report to Parliament on Immigration, Immigration, Refugees and Citizenship Canada (available on https://www.canada.ca/en/immigration-refugees-citizenship/news/notices/supplementary-immigration-levels-2024-2026.html)
2022 —— 431,645 New Immigrants
2023 —— 447,055 New Immigrants
2024 —— 451,000 New Immigrants
Second Career Program
The Second Career strategy launched by the Ontario Ministry of Training, Colleges and Universities pays for the training or education that Ontarians require to get a better job. It provides financial assistance of up to $22,400, or more in some cases, to pay for tuition, living expenses, help caring for dependents, travel, transportation, disability supports, other living and training costs, and books.
The market size of the Canada Second Career Training Project is estimated to be $26.4 billion for 1.19 million people between 2022 and 2027. This estimate is based on the following official numbers issued by the Canadian government:
| · | The actual working population in Canada is 18.3 million. | |
| · | The annual average unemployment rate in 2020-2021 is 8.5% | |
| · | The unemployment rate in Canada should be 6.5% if without the effect of COVID-19, which means the number of unemployed workers would normally be approximately 1.2 million. | |
| · | An individual’s Employment Insurance, or EI, living expense is $22,400. |
Canada-Ontario Job Grant and Apprenticeship Programs
The Canada-Ontario Job Grant, or COJB, provides direct financial support to individual employers or employer consortia that wish to purchase training for their employees. It is available to small, medium, and large businesses with a plan to deliver short-term training to existing and new employees.
Between 2016 and 2022, Canadian governmental jurisdictions have made the following expenditures for training:
| · | $42.2 million in apprenticeship programs. | |
| · | $33.6 million in the Specialist High Skills program. | |
| · | $16.6 million in a pre-apprenticeship program, which is mainly open to secondary school students. |
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Vocational Education Revenue in Canada
Vocational education’s revenue in Canada from 2016 through 2020 is shown below in millions of US$.
| 2016 | 2017 | 2018 | 2019 | 2020 | Total | |
| Skilled Trades Certificate | ||||||
| Canada | 212.42 | 186.62 | 196.34 | 203.06 | 212.42 | 1,010.8 |
| Ontario | 45.5 | 52.17 | 56.4 | 66.8 | 79.1 | 299.95 |
| Apprenticeship Training Programs | ||||||
| Canada | 72 | 72 | 72 | 72 | 7 | 72 |
| Ontario | 28 | 28 | 28 | 28 | 28 | 28 |
| Canada-Province Job Grant | ||||||
| Canada | 1,014 | 1,044 | 1,042 | 1,067 | 1,093 | 5,261 |
| Ontario (COJG) | 459.81 | 496.4 | 492.0 | 514.52 | 520.38 | 2,483 |
| EI funded second career | ||||||
| Canada | 3,904 | 4,064 | 4,032 | 3,424 | 2,552 | 18,976 |
Personal Service Worker
To meet the growing need for personal service workers, or PSW, as a result of the growth of the aging population in North America, we have begun to build up our capacity to provide the education for PSWs. We are taking the following steps to enhance our educational resources to address this opportunity:
| · | Collaborating with public colleges in which PSW training is offered: we have signed a Recruitment Agent Agreement with Cambrian College. Through offering student recruiting services to Cambrian College, we believe that we can take advantage of the growing market in China, India and other southeast Asian countries for PSW education. | |
| · | We are also taking the initiative to establish our own PSW program. This program will be a part of our vocational education program that is to be operated in this specialized teaching facility. The development of our own PSW program will be based on the success of our collaboration with Cambrian College and our marketing network. |
The duties of a PSW include managing daily tasks for people who are suffering from illness or injury or dealing with the effects of aging. PSWs generally provide services in home management, personal care, family responsibility, social and recurrent activities, and spiritual comfort. In Canada, where the population of people above 65 years has increased significantly and most family members work outside the home, it has become a significant challenge for family members to provide the full-time care that their elderly or ill family member needs. More and more families are now looking for PSWs to provide home-based health care.
The PSW Job Market
According to the Ontario Ministry of Health and Long-term Care, as many as 100,000 professionals work in the PSW field in Ontario. Approximately 34,400 PSW positions are expected to open nationwide before 2026. In addition, Employment Canada notes that many full-time and part-time positions are available for PSWs. Sixty percent of PSWs work full-time, while 40 percent work part-time.
The median wage per hour in Ontario for this profession is $19.0. PSWs who work in city-owned nursing homes, however, can make as much as $20.00 per hour, and those in hospitals can earn approximately $25.40 per hour.
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We believe that the outlook for employment in Ontario after completing PSW training is positive, based on several factors, including employment growth and positions opening up as current employees retire. More specifically, opportunities in the PSW field are expected to be driven by the needs of Ontario’s senior population, as well as how much funding is provided for these types of health care services. In fact, approximately 2.68 million people, or 18.1% of Ontario’s population, are seniors aged 65 and over. That percentage is expected to increase to 25 percent by 2041.
PSWs are generally employed by the following organizations:
| · | Home Care | |
| · | Retirement Homes | |
| · | Assisted Living Rooms | |
| · | Palatine Care Centers | |
| · | Hospitals | |
| · | Long-term Care Facilities | |
| · | Community Adult Day Programs | |
| · | Supportive Housing Settings | |
| · | Group Homes | |
| · | Educational Facilities |
We believe that training as a PSW affords several advantages to immigrants. From June 18, 2019, the IRCC, officially launched two new five-year caregivers pilot projects for nursing immigrants, the family support care project, and the family early childhood care project. Through these projects, qualified PSW and their family members are eligible to applying for immigration to Canada. Minor children who accompany immigrants under these programs can enroll in free public education in Canada. After obtaining a work visa and working in Canada for two years, participants in the programs can apply for permanent resident status directly.
Advantages of Ontario PSW immigration project
We believe that the Ontario PSW immigrant project provides several advantages to prospective immigrants to Canada:
| · | Low risk: the 3-year open work permit period is sufficient, and a participant can freely choose employers and industries. | |
| · | Low language requirements: immigrants have low language requirements. They do not need to provide IELTS scores in the early stage and only need to provide 5 IELTS scores in the later stage. | |
| · | Flexible courses without pressure: the opening time is flexible and there is no need to wait for the opening season. The training courses are divided into skill training, professional terminology training, and pre-job training. Low learning pressure, with pre-exam training courses to enhance the chances of passing required examinations. | |
| · | Formal certificate: after passing the examination at the end of the course, a participant can obtain the National Association of Career Colleges, or NACC, certificate and obtain employment with the certificate. The certificate is issued by the unified management function training institution in Canada. The NACC certificate is common in North America. | |
| · | Short immigration time: the part-time work experience during study can be used to deduct the requirements of up to nine months of immigration work experience, so as to reduce the time required to obtain permanent resident status. | |
| · | High employment: our program provides paid internship opportunities during the study period, and a participant can continuously earn income during the immigration process; the employment contract can be signed at the same time of obtaining the academic visa, and permanent employment? can be assigned after graduation; and employment can be obtained upon graduation; all employers meet the employer guarantee requirements of Ontario and realize the one-stop process of “Study Abroad, Work and Immigration”. | |
| · | Good development prospects: PSW private nurses are in short supply in all provinces and regions of Canada, with stable work, high income and large room for rise. Applicants who want to work in medicine in the future can use this as a springboard. After obtaining immigration status, they can continue to study RPN (registered intern nurse) and RN (registered nurse). |
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Employment Prospects for PSW Nursing Students
We believe that the employment prospects for PSW nursing students and other PSWs are very promising.
With the surge in demand for nursing professionals in the international medical market, the phenomenon of “nursing shortage” has become increasingly prominent in various countries. In the next 10 years, the United States, Britain, Canada, New Zealand, Singapore, Japan and other countries in the world will be in urgent need of two million nurses.
The worldwide shortage of nurses has created more opportunities for nurses in various countries to enter the international market. Nursing is listed as a specialty talent by many governments. The shortage in supply coupled with growth in demand has driven up the compensation for nursing professionals. For example, the average annual salary of nurses in North American countries is US$50,000, while North American countries lack more than 300,000 nurses. In Australia, nurses are most likely to find jobs or get promotions. At the same time, if they have the qualification of Australian registered nurses, they are equal to getting a “green card” to work in commonwealth countries. Many European countries, such as Britain, France and Germany, have many preferential policies for nurses. Therefore, we believe that well trained nursing professionals with extensive professional knowledge and fluent international communication skills have broad prospects for employment.
With the transformation of countries to an aging society, we believe that PSWs engaged in geriatrics will be especially popular in the future, and doctors and family nursing practitioners will also become popular careers. With the improvement of people’s living standards, the disease spectrum of people has changed, and the demand for chronic disease care has increased. While people pay attention to physical and mental health, their awareness of disease prevention and self-care has also been strengthened. Accordingly, we believe that community medical care is facing a rare opportunity.
Partnership Canadian International Career College Introduction
Canadian International Career College (CICC) is a private career college accredited and regulated by the Ministry of Training, Colleges, and Universities (MTCU). Since 2008, CICC has been dedicated to training excellent and professional nursing talent.
CICC provides the courses as follows:
Personal Support Worker (PSW) Certificate Program
Medication Administration for PSW Certificate Course
Early Childcare Assistant (ECA) Certificate Course
Intensive Care Unit (ICU) Program for Nurse Certificate Course
Medical Surgical Certificate Course
CPR/AED Certificate Course
Standard First Aid and CPR
Emergency First Aid and CPR
Education Services
Study and Immigration Visa Services
Visionary Education Services & Management Inc., a direct wholly owned subsidiary of our Company, provides Canada study visa and immigration visa services. The application for a Canadian study visa is a complicated process, which includes both a study permit and a study visa. The study permit is issued the Canadian Government and allows foreign nationals to study at designated learning institutions, or DLI’s, in Canada. A study permit can be obtained through a face-to-face interview by immigration officers or through a visa issued by a Canadian embassy. After receiving a study permit, all students who wish to study in Canada must apply for a visa, and students can apply for it through the visa center of the Canadian Embassy. Visionary Education Services & Management Inc. assists international students with each step of the study permit and visa application process.
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Other Services
In order to better serve international students, we also provide a full range of other services for international students’ dormitory living, including dormitory decoration, water and electricity maintenance, facilities and equipment maintenance, daily necessities, and school supplies through Visionary Education Services and Management Inc.
Our Education Facilities
In 2019, we acquired 123 Real Estate Development Ontario Ltd., an affiliated company under common ownership with Ms. Zhou for $3,210,000. At the time of the acquisition, 123 Real Estate, which changed its name to Visionary Education Real Estate Group Inc. in 2021 and changed to Visionary Education Service & Management Inc. in 2023. Through the end of our 2021 fiscal year, rental income from and sales of these properties have been our principal source of revenue. In April 2021, we acquired the Town Centre Boulevard properties described below. While all or a portion of each of the buildings that we own are currently leased to unaffiliated third parties, we expect that rental income from such leases will decline as the leases expire and we plan to use the available space for our principal education business. See “Business-Properties”, “Risk Factors.” The Company is upgrading and renovating two office buildings at Town Centre Boulevard properties and plans to submit renovation proposals to the government to convert the properties into mixed-use and high-end residential apartments, taking advantage of favorable current Canadian policies with respect to the surplus of commercial real estate and the shortage of mixed-use and high-end apartments.
We own two buildings in North Toronto, Ontario, which house our current operations, are expanding to develop Visionary University Town. We believe that these facilities are sufficient for our current operations and planned expansion.
In order to strengthen the competitiveness of our college and university businesses, to provide a state-of-art learning environment to match with the growing demands for our students, and to develop our partnerships with universities, we are establishing an innovative university town by utilizing two buildings acquired in North York, a suburb of Toronto. VUT will be the campus for our PPP program, with a capacity of approximately 12,000 to 15,000 students.
We executed a purchase agreement on May 19, 2021 to acquire the campus comprising nine acres of land and two buildings, with a total of approximately 433,000 square feet of space for a total price of $69.8 million (C$94.4 million). This acquisition closed on September 23, 2022.
We assumed two tenants at 95-105 Moatfield Dr. On May 1, 2023, the Company entered into agreement with one of the tenants to early terminate the lease agreement on MTM’s premise on July 31, 2023, and the remaining tenant’ leases, for an aggregate of approximately 220,000 square feet leasing premise, will expire in May 2026. MTM agreed to pay $140,336 (C$189,926) termination penalty and the regular month rent from May 2023 to July 2023. From July 31, 2023, MTM moved to 95 Moatfield for its future operation. With the current tenants occupying their respective spaces, there will be 190,000 square feet of available space for our use from August 1, 2023 and we have moved our MTM and Toronto Eschool to this facility on August 1, 2023.
Land Purchases
From 2013 through 2015, 123 Real Estate purchased 28 parcels for residential construction on 22.4 acres of land in Peterborough, Ontario, which we acquired as a result of our acquisition of 123 Real Estate. The initial intent of the purchase was to build an international student housing center. Partly because of the economic adversity caused by the COVID pandemic, we revised our strategy and are not seeking vacant land for development of educational facilities, preferring to acquire existing structures. We sold one parcel of land in the fiscal year ended March 31, 2019, sold 19 parcels in the fiscal year ended March 31, 2021 and utilized a portion of the approximately $6.6 million in sales revenue to purchase additional education companies. We have sold an additional eight parcels in the fiscal year ended March 31, 2022 for revenue of approximately $2.3 million, which we are using for our education business’ operating expenses.
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Government Regulation
Canadian Federal and Provincial Laws Governing the Administration of Education
Disclaimer:
This summary is based on the provisions of the applicable laws and regulations in force as of October 1, 2021. This summary considers all specific proposals to amend the Income Tax Act publicly announced by or on behalf of or by the Government of Canada or any applicable Canadian provincial or territorial jurisdiction prior to October 1, 2021 (the “Proposed Amendments”) and assumes that all Proposed Amendments will be enacted in the form proposed. However, no assurances can be given that the Proposed Amendments will be enacted as proposed, or at all. This summary does not otherwise consider or anticipate any changes in law or administrative policy whether by legislative, regulatory, administrative, or judicial action nor does it consider legislation or considerations of any foreign jurisdiction, which may differ from those discussed herein.
Law and Regulatory Matters
As a service provider to students and working with education institutions in various levels, both in Canada and internationally, either directly or indirectly through our arrangements with domestic and global partners, we are required to comply with education laws and regulations in Canada.
General
Canada has no federal education department or similar governmental authority. All delivery, organization, and evaluation of educational services fall under the jurisdiction of its 10 provinces and 3 territories, subject to the federal laws which indirectly impacts education as further explained below. The only exception to this at the post-secondary level is the Royal Military College, which is part of the Canadian Ministry of National Defense. The provincial/territorial jurisdiction over education was determined in 1867 and is explicitly set out in Canada’s Constitution Act 1867. One reason for this decentralization was to protect the interests of the different populations who inhabited the particular parts of the country, as strong ethnic and religious differences existed by region.
The actual delivery and structure of educational services is, however, very similar across the country, even though there are differences between jurisdictions which were due to the unique historical, cultural, geographical, and political circumstances upon which such jurisdictions evolved. Each jurisdiction has its own Education Act, which is a detailed legal document that outlines how education will be organized and delivered, along with student eligibility criteria, duties of employees (teachers, principals, superintendents, and support staff), accountability measures, and different types of programs permitted and/or available. Most jurisdictions, including Ontario, also have other Acts dealing with community colleges, universities as well as private career colleges.
Federal Laws Relating to Education in Canada
For greater clarity, in addition to the provincial/territorial Education Acts noted above, the requirements set out in the following federal laws and regulations has impact on the delivery of education in Canada:
| · | The Constitution Act, 1867 (previously known as the British North America Act) establishes exclusive provincial/territorial mandates with respect to education matters. |
| · | The Government of Canada Constitution Act, 1982 (also known as the Canadian Charter of Rights and Freedoms) ensures the rights of all peoples in Canada to: freedom, democracy, mobility, security, well-being, minority language education rights. |
| · | Canadian Human Rights Act |
The Canadian Human Rights Act 1985 requires that individuals cannot be discriminated against on the basis of: race, national or ethnic origin, color, religion, age, sex, sexual orientation, marital status, family status, disability, and covers the field of education.
| · | Indian Act |
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The Indian Act 1985 defines the rights and responsibilities of First Nations people and communities, and the role of the federal government in First Nations matters. This includes federal responsibility for the education of First Nations children and youth living on reserve. The Indian Act also enables First Nations to enter into agreements with provincial school boards so that their students may attend schools that are located off reserve.
| · | Copyright Act |
The Copyright Act 1985 establishes the rights of ownership, reproduction and use of original works (for example, textbooks and other educational resources, literature, music, academic writing) and the penalties for unauthorized use of such works. All provincial school authorities must comply with international and federal copyright legislation and related agreements.
Provincial Authorities Administrating Education in Canada
Under the Canadian Constitution, provincial governments have exclusive responsibility for all levels of education. There is no ministry or department of education at the federal level.
In the province of Ontario, The Ministry of Colleges and Universities is the ministry of the government of Ontario responsible for the administration of policies, laws, and funding relating to Ontario’s 24 public colleges and 22 public universities as well as private colleges and universities. This ministry is one of two education ministries, the other being the Ministry of Education, which is responsible for the administration of the system of publicly funded elementary and secondary school education in Ontario.
The key legislation governing private career colleges in Ontario is the Private Colleges Act (2005) and associated Regulations. For those private career colleges interested in developing a public-private-partnership with a public college (referred to as a PPP), they are also subject to the Minister’s Binding Policy Directive of December 2019, but only for those activities falling within the purview of the PPP. From a legal perspective, the Minister’s Binding Policy Directive of December 2019 regulates the public colleges who enter into partnerships with private career colleges. Notwithstanding, the Directive can have an impact on private career colleges.
Within the Ministry, the administrative unit responsible for private career colleges is headed by a Superintendent of Private Career Colleges. The Superintendent is responsible for ensuring that all private career colleges operate in accordance with the Private Career Colleges Act. Among the key requirements of the Act are the need to have an approved license to operate and that programs of study leading to a credential have been approved by the Ministry. In addition, the Act and Regulations specify the reporting requirement, including Annual Reports and data on key performance indicators.
The Ministry of Colleges and Universities of Ontario also works with the following organizations:
| · | Higher Education Quality Council of Ontario | |
| · | Ontario Research Fund Advisory Board | |
| · | post-secondary Education Quality Assessment Board, and | |
| · | Training Completion Assurance Fund Advisory Board. |
Elementary and secondary education in Ontario is governed by the Education Act. Section 16 of the Act deals with private schools. Although all private schools must be approved to operate through an annual Notice of Intent process, those wishing to grant the Ontario Secondary School Diploma (OSSD) are designated as “Inspected Private Schools” and subject to additional requirements to ensure that the Provincial curriculum is being respected. The Policy Procures Manual (p. 6) defines “Inspected Private Schools” as follows: “Inspected private schools are seeking or have been given authority by the Ministry to provide courses offering credits toward the OSSD. This includes private schools offering a combined elementary-secondary curriculum (in which case only the secondary school will be inspected) and private schools offering credits in an online environment.”
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Although referred to an inspection of the private school, the scope of the inspection is limited to the curriculum. The Policy Procedures Manual (p. 23) states the following: “The Ministry inspects all private schools seeking authority to grant credits in courses leading to the OSSD. The purpose of the inspection is to determine whether the instruction in OSSD credit courses is being delivered in compliance with Ministry requirements, including curriculum, assessment and evaluation policies.” Given that the OSSD diploma granted by the inspected private school is recognized as the equivalent to the diplomas granted by the public school boards, this is not an unexpected requirement.
The Ministry of Education of Ontario is affiliated with the following independent agencies, boards and commissions:
| · | Advisory Council on Special Education | |
| · | Education Quality and Accountability Office | |
| · | Languages of Instruction Commission of Ontario | |
| · | Provincial Schools Authority | |
| · | TFO (Ontario French-Language Educational Communications Authority) | |
| · | TVO (Ontario Educational Communications Authority) |
Education and Immigration Regulations in Canada
As a service provider to international students of various levels in Canada, we are required to comply with immigration laws and regulations in Canada.
IRCC is the federal department of the Government of Canada responsible for immigration matters in Canada, and includes the processing of refugees, and the granting of Canadian citizenship. We employ professionals to provide visa and immigration-related services to student clients in Canada. These professionals may include RCICs, Canadian Law Society members including licensed lawyers and paralegals. When RCIC consultant provides immigration related services with IRCC on behalf of client, his or her work will be under the supervision of College of Immigration and Citizenship Consultants (CICC). CCIC is the national regulatory body that promotes and protects the public interest by overseeing regulated immigration and citizenship consultants and international student advisors.
CCIC ’s current federal mandate stems from the Immigration and Refugee Protection Act (IRPA) 2001, the College of Immigration and Citizenship Consultants Act 2019, and the Citizenship Act 1985 which require anyone providing Canadian immigration or citizenship advice or representation for a fee or other consideration to be a member in good standing of CICC, a Canadian Law Society or the Chambre des notaires du Québec.
When the student client’s representative is a member from Canadian Law Society, such as the Law Society of Ontario, the representative could be a licensed lawyer or a licensed paralegal, then the work of this representative should be under the supervision of its governing body, the Law Society of Ontario. Created by an act of the Legislative Assembly in 1797, the Law Society of Ontario governs Ontario’s lawyers and paralegals in the public interest by ensuring that the people of Ontario are served by lawyers and paralegals who meet high standards of learning, competence and professional conduct. The Law Society regulates, licenses and disciplines Ontario’s more than 55,000 lawyers and over 9,000 licensed paralegals pursuant to the Law Society Act and the Law Society’s rules, regulations and guidelines.
RCICs or lawyers and paralegals all have mandatory professional insurance to cover its liabilities. Only lawyers and paralegals can provide legal services directly to the public. The Law Society’s by-laws, Rules of Professional Conduct for lawyers and Paralegal Rules of Conduct, all based on the Law Society Act, set out the professional and ethical obligations of our lawyers and paralegals.
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Our Employees
As of the date of this report, we had approximately 67 full time employees. We believe we maintain good relationships with our employees. The table below sets forth the breakdown of our employees by function:
| Function | Number of Employees | |||
| Management | 7 | |||
| Finance | 4 | |||
| Information Technology | 2 | |||
| Marketing and Publicity | 10 | |||
| Human Resources | 1 | |||
| Academy | 36 | |||
| Education Services | 7 | |||
| Total | 67 | |||
Our management considers our employees as key assets which play a pivotal role in our growth. It is our policy to maximize the potential of our employees through training and development. We provide on-the-job training to our employees covering various aspects of the marketing solution industry to keep abreast of the latest industry development. Our employee training and development aim at equipping our employees with the knowledge and skills necessary to perform their job functions and enhance their capability.
We do not engage any recruitment agent to hire our employees. We have a recruitment policy in place to maintain a fair and effective recruitment procedure. Under such policy, we normally recruit employees with (a) appropriate skills, both technical and personal; (b) relevant academic background; and (c) work experience in order to meet our current and future needs and to ensure that the employees appointed are qualified and competent to carry out the duties.
We have always maintained a good working relationship with our employees. As of the date of this annual report, none of our employees were members of any labor union, nor were there any labor dispute involving or against us.
We generally remunerate our employees with a fixed salary and a discretionary bonus based on our performance. We have designed an annual review system to assess the performance of our employees, which forms the basis of our decision with respect to salary increment, bonus and promotion.
| C. | Organizational Structure |
The following diagram illustrates our corporate structure as of the date of this report.
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| D. | Property, Plants and Equipment. |
Properties
As of the date of this annual report, we own the following properties: 200 Town Centre Boulevard, 260 Town Centre Boulevard and 95-105 Moatfield Drive. We have commercial tenants at each of the locations All leases are with independent third parties, except as indicated below for three subsidiaries that lease space at 200 Town Centre Boulevard. We intend to use any vacant space that becomes available in any building for use by us and our subsidiaries. We also plan to develop the two office buildings at 95-105 Moatfield Drive to be the Visionary University Town.
200 Town Centre Boulevard
The property is a 2.09-acre property site with an office/commercial building located at 200 Town Centre Boulevard, Markham, Ontario, Canada. The building is 52,157 square feet and has a total of 18 units. The nine leases with unaffiliated third parties range in size from approximately 1,800 to 6,200 square feet, with rents from approximately $5,000 to $18,000 per month and expiration dates between February 2022 and July 2027. Three of our subsidiaries, Toronto Art Academy, Lowell Academy and 7621531 Canada Inc., lease between approximately 1,000 and 1,700 square feet each with rents from approximately $3,000 to $4,700 per month that expire between August 2023 and August 2026. The Company entered a sale agreement with an unrelated party in July 2023, and the carrying value of property has been reclassified as “assets held for sale” as of March 31, 2023. The building also carried mortgage in the aggregate amount of CAD $6.5 million and a private mortgage of CAD $4.0 million. The deal was not completed in fiscal year 2024.Currently, the Company is upgrading and renovating the property and plans to submit renovation proposals to the government to convert the properties into mixed-use and high-end residential apartments, taking advantage of favorable current Canadian policies with respect to the surplus of commercial real estate and the shortage of mixed-use and high-end apartments.
260 Town Centre Boulevard
The property is a 1.73-acre property site with an office/commercial building located at 260 Town Centre Boulevard, Markham, Ontario, Canada. The building is 39,252 square feet and has a total of five units. At this location, the five units are leased to unaffiliated third parties, who rent between approximately 4,400 and 13,700 square feet for rents ranging from approximately $15,000 to $35,000 per month and terms that expire between June 2022 and October 2024. The Company entered a sale agreement with an unrelated party in July 2023, and the carrying value of property has been reclassified as “assets held for sale” as of March 31, 2023. The building also carried mortgage in the aggregate amount of CAD $6.6 million. The deal was not completed in fiscal year 2024. Currently, the Company is upgrading and renovating the property and plans to submit renovation proposals to the government to convert the properties into mixed-use and high-end residential apartments, taking advantage of favorable current Canadian policies with respect to the surplus of commercial real estate and the shortage of mixed-use and high-end apartments.
41 Metropolitan Road
On June 22, 2023, Visionary Holdings Inc. (the “Company”) sold its warehouse located at 41 Metropolitan Road E., Toronto, Canada (the “41 Metropolitan Building”) for CAD18 million to an unrelated purchaser for cash. The 41 Metropolitan Building was acquired by the Company in 2019 when the Company acquired 123 Real Estate Development Ontario Ltd., an affiliated company under common ownership with Ms. Fan Zhou, our former chairperson and chief executive officer. The 41 Metropolitan Building carried mortgages in the aggregate amount of approximately CAD13.6 million. The net proceeds of cash to the Company from the sale of the 41 Metropolitan Building was approximately CAD3.3 million. The Company sold its 41 Metropolitan Building to reduce its real estate holdings.
95-105 Moatfield Drive
On September 23, 2022, the Company completed the acquisition two office buildings with a total of approximately 411,000 square feet, for aggregate consideration of C$93.9 million. The Company plans to develop the two building for the development of industry-education integration in new businesses, which is expected to build a solid foundation for its future development, expand its education programs, and greatly scale its business.
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Environmental Regulations
Our operations are subject to local, state, and federal laws and regulations governing environmental quality and pollution control. To date, our compliance with these regulations has had no material effect on our operations, capital, earnings, or competitive position, and the cost of such compliance has not been material. We are unable to assess or predict at this time what effect additional regulations or legislation could have on our activities.
Legal Proceedings
We may from time to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of business. Litigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of our resources, including our management’s time and attention. Although we can give no assurances about the resolution of pending claims, litigation or other disputes and the effect such outcomes may have on the Company, the Company believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided or covered by insurance, will not have a material adverse effect on the Company’s consolidated financial position or results of operations or liquidity on March 31, 2024 and 2023.
On June 27, 2023, Visionary Education Technology Holdings Group, Inc. (“Visionary”) and Fan Zhou (“Zhou”), filed an Application in the Ontario Superior Court of Justice, Toronto, Canada (“Ontario Application”) under 14.0593)(e) of the Canadian Rules of Civil Procedure. The Notice of Application initiates a lawsuit in Canada for breach of contract against the former executives of Visionary, Dr. Thomas Traves and Mr. Ken Chan, in connection with a certain agreement that was made between Visionary and Dr. Thomas Traves and Mr. Ken Chan on or about June 19, 2022, and documented through a Memorandum dated June 19, 2022 (the “Memorandum Agreement”). In support of the Ontario Application, on July 20, 2023, Visionary, Zhou and an entity wholly owned by Zhou filed an Application and Complaint for Temporary Restraining Order, Preliminary Injunction and for Declaratory Judgment in Superior Court, County of Wake, North Carolina, against Issuer Direct Corporation, the transfer agent to prevent Dr. Traves and Mr. Chan from assigning and/or removing certain restriction on Visionary’s common shares issued to Dr. Traves and Mr. Chen under the Memorandum Agreement. The case is in the early stage of litigation and it is premature to assess and predict the outcome of this pending litigation.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not Applicable.
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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes to those statements included elsewhere in this Form 20-F filing. This discussion and analysis contains forward-looking statements based upon current beliefs, plans and expectations related to future events and our future financial performance that involve risks, uncertainties and assumptions, such as statements regarding our intentions, plans, objectives, expectations, forecasts and projections. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under the section titled “Risk Factors” and elsewhere in this Form 20-F. You should carefully read the “Risk Factors” to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section titled “Special Note Regarding Forward-Looking Statements.”
Results of Operations
For the Years Ended March 31, 2024, 2023 and 2022
The following table summarizes the results of our operations during the fiscal years ended March 31, 2024 and 2023, respectively, and provides information regarding the dollar and percentage increase or (decrease) comparing fiscal 2024 against fiscal 2023.
| For the Years Ended March 31, | ||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||
| Amount | As % of Sales | Amount | As % of Sales | Amount Increase (Decrease) | Percentage Increase (Decrease) | |||||||||||||||||||
| Sales | $ | 9,380,985 | 100.0% | $ | 8,432,511 | 100.0% | $ | 948,474 | 11.2% | |||||||||||||||
| Cost of sales | 6,841,136 | 72.9% | 4,669,191 | 55.4% | 2,171,945 | 46.5% | ||||||||||||||||||
| Gross profit | 2,539,849 | 27.1% | 3,763,320 | 44.6% | (1,223,471 | ) | (32.5)% | |||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||
| General and administrative expenses | 1,148,172 | 12.2% | 1,227,424 | 14.6% | (79,252 | ) | (6.5)% | |||||||||||||||||
| Professional fees | 2,907,676 | 31.0% | 968,435 | 11.5% | 1,939,241 | 200.2% | ||||||||||||||||||
| Salaries and compensations | 812,388 | 8.7% | 1,136,676 | 13.5% | (324,288 | ) | (28.5)% | |||||||||||||||||
| Total operating expenses | 4,868,236 | 51.9% | 3,332,535 | 39.5% | 1,535,701 | 46.1% | ||||||||||||||||||
| Income (loss) from operations | (2,328,387 | ) | (24.8)% | 430,785 | 5.1% | (2,759,172 | ) | (640.5)% | ||||||||||||||||
| Other income (expenses) | ||||||||||||||||||||||||
| Interest expense, net | (5,835,449 | ) | (62.2)% | (2,955,008 | ) | (35.5)% | (2,880,441 | ) | 97.5% | |||||||||||||||
| Accretion interest | (285,625 | ) | (3.0)% | (320,497 | ) | (3.8)% | 34,872 | (10.9)% | ||||||||||||||||
| Government subsidies | – | – | 109,723 | 1.3% | (109,723 | ) | (100.0)% | |||||||||||||||||
| Impairment loss | (49,784 | ) | (0.5)% | – | – | (49,784 | ) | N/A | ||||||||||||||||
| Change in fair value on warrants | 1,536,494 | 16.4% | (1,565,570 | ) | (18.6)% | 2,462,064 | (157.0)% | |||||||||||||||||
| Change in fair value on convertible debenture | 367,663 | 3.9% | (157,010 | ) | – | 524,673 | (334.2)% | |||||||||||||||||
| Gain on disposal of properties | 8,614,079 | 91.8% | – | – | 8,614,079 | N/A | ||||||||||||||||||
| Loss on acquisition deposit | (336,892 | ) | (3.6)% | – | – | (336,892 | ) | N/A | ||||||||||||||||
| Loss on disposal of subsidiaries | (163,405 | ) | (1.7)% | – | – | (163,405 | ) | N/A | ||||||||||||||||
| Other income | 22,764 | 0.2% | 23,605 | 0.3% | (841 | ) | (3.6)% | |||||||||||||||||
| Total other expenses | 3,869,845 | 41.3% | (4,864,757 | ) | (57.7)% | 8,094,602 | (166.4)% | |||||||||||||||||
| Income (loss) before income taxes | 1,541,458 | 16.4% | (4,433,972 | ) | (52.6)% | 5,335,430 | (120.3)% | |||||||||||||||||
| Provision (credit) for income taxes | 574,209 | 6.1% | (861,864 | ) | (10.2)% | 1,436,073 | (166,6)% | |||||||||||||||||
| Net income (loss) | $ | 967,249 | 10.3% | (3,572,108 | ) | (42.4)% | 3,899,357 | (109.2)% | ||||||||||||||||
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The following table summarizes the results of our operations during the fiscal years ended March 31, 2023 and 2022, respectively, and provides information regarding the dollar and percentage increase or (decrease) comparing fiscal 2023 against fiscal 2022.
| For the Years Ended March 31, | ||||||||||||||||||||||||
| 2023 | 2022 | |||||||||||||||||||||||
| Amount | As % of Sales | Amount | As % of Sales | Amount Increase (Decrease) | Percentage Increase (Decrease) | |||||||||||||||||||
| Sales | $ | 8,432,511 | 100.0% | $ | 5,248,461 | 100.0% | $ | 3,184,050 | 60.7% | |||||||||||||||
| Cost of sales | 4,669,191 | 55.4% | 2,637,025 | 50.2% | 2,032,166 | 77.1% | ||||||||||||||||||
| Gross profit | 3,763,320 | 44.6% | 2,611,436 | 49.8% | 1,151,884 | 44.1% | ||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||
| General and administrative expenses | 1,227,424 | 14.6% | 437,278 | 8.3% | 790,146 | 180.7% | ||||||||||||||||||
| Professional fees | 968,435 | 11.5% | 350,636 | 6.7% | 617,799 | 176.2% | ||||||||||||||||||
| Salaries and compensations | 1,136,676 | 13.5% | 792,546 | 15.1% | 344,130 | 43.4% | ||||||||||||||||||
| Total operating expenses | 3,332,535 | 39.5% | 1,580,460 | 30.1% | 1,752,075 | 110.9% | ||||||||||||||||||
| Income from operations | 430,785 | 5.1% | 1,030,976 | 19.6% | (600,191 | ) | (58.2)% | |||||||||||||||||
| Other income (expenses) | ||||||||||||||||||||||||
| Interest expense, net | (2,955,008 | ) | (35.5)% | (906,398 | ) | (17.3)% | (2,048,610 | ) | 226.0% | |||||||||||||||
| Accretion interest | (320,497 | ) | (3.8)% | – | – | (320,497 | ) | N/A | ||||||||||||||||
| Government subsidies | 109,723 | 1.3% | 490,171 | 9.3% | (380,448 | ) | (77.6)% | |||||||||||||||||
| Impairment loss | – | N/A | (379,165 | ) | (7.2)% | 379,165 | (100.0)% | |||||||||||||||||
| Loss on warranty | (1,565,570 | ) | (18.6)% | – | – | (1,565,570 | ) | N/A | ||||||||||||||||
| Loss on convertible debenture valuation | (157,010 | ) | (1.9)% | – | – | (157,010 | ) | N/A | ||||||||||||||||
| Other income | 23,605 | 0.3% | 20,709 | 0.4% | 2,896 | 14.0% | ||||||||||||||||||
| Total other expenses | (4,864,757 | ) | (57.7)% | (774,683 | ) | (14.8)% | (4,090,074 | ) | 528.0% | |||||||||||||||
| Income/(loss) before income taxes | (4,433,972 | ) | (52.6)% | 256,293 | 4.9% | (4,690,265 | ) | (1,830.0)% | ||||||||||||||||
| Provision for income taxes | (861,864 | ) | (10.2)% | 312,767 | 6.0% | (1,174,631 | ) | (375.6)% | ||||||||||||||||
| Net income (loss) | $ | (3,572,108 | ) | (42.4)% | (56,474 | ) | (1.1)% | (3,515,634 | ) | 6,225.2% | ||||||||||||||
Revenues
Revenues increased by $0.9 million, or 11.2%, to approximately $9.4 million in fiscal 2024 from approximately $8.4 million in fiscal 2023. The increase in revenue was principally due to increase of rent revenue of $0.9 million in fiscal 2024, with a stable tuition revenue in fiscal 2024. In fiscal 2024, the Company had $nil revenue generated from construction and sale of vacant lands.
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Revenues increased by $3.2 million, or 60.7%, to approximately $8.4 million in fiscal 2023 from approximately $5.2 million in fiscal 2022. The increase in revenue was principally due to increase of rent revenue of $4.8 million in fiscal 2023, offset by no sales of land in fiscal 2023. In fiscal 2022, the Company had $2.3 million from the sales of vacant land.
Revenue by Type
| For the Year Ended March 31, | ||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||
| Revenue category | Revenue | % of total Revenue | Revenue | % of total Revenue | Amount Increase (Decrease) | Percentage Increase (Decrease) | ||||||||||||||||||
| Rent revenue | $ | 8,019,186 | 85.5% | $ | 7,090,140 | 84.1% | $ | 929,046 | 13.1% | |||||||||||||||
| Tuition revenue | 1,361,799 | 14.5% | 1,342,371 | 15.9% | 19,428 | 1.4% | ||||||||||||||||||
| Construction revenue | – | 0.0% | – | –% | – | N/A | ||||||||||||||||||
| Sales of vacant land | – | 0.0% | – | –% | – | N/A | ||||||||||||||||||
| Total | $ | 9,380,985 | 100.0% | $ | 8,432,511 | 100.0% | $ | 948,474 | 11.2% | |||||||||||||||
| For the Year Ended March 31, | ||||||||||||||||||||||||
| 2023 | 2022 | |||||||||||||||||||||||
| Revenue category | Revenue | % of total Revenue | Revenue | % of total Revenue | Amount Increase (Decrease) | Percentage Increase (Decrease) | ||||||||||||||||||
| Rent revenue | $ | 7,090,140 | 84.1% | $ | 2,298,198 | 43.8% | $ | 4,791,942 | 208.5% | |||||||||||||||
| Tuition revenue | 1,342,371 | 15.9% | 669,442 | 12.8% | 672,929 | 100.5% | ||||||||||||||||||
| Construction revenue | – | – | 8,117 | 0.1% | (8,117 | ) | (100.0)% | |||||||||||||||||
| Sales of vacant land | – | – | 2,272,704 | 43.3% | (2,272,704 | ) | (100.0)% | |||||||||||||||||
| Total | $ | 8,432,511 | 100.0% | $ | 5,248,461 | 100.0% | $ | 3,184,050 | 60.7% | |||||||||||||||
Rent revenue
Revenue from rent increased by $0.9 million, or 13.1%, from $7.1 million in fiscal 2023 to $8.0 million in fiscal 2024. The increase in rent revenue was mainly due to the revenue generated from the newly purchased office building in September 2022. In fiscal 2023, it generated rental income of $4.9 million for 6 months and in fiscal 2024, it generated rental income of 6.6 million for 12 months. In addition, one office building was sold in June 2023 which generated rental income of $0.7 million in fiscal 2023 and less than $0.2 million rental income in fiscal 2024. The rental income in general decreased in fiscal 2024 due to economic downward post to pandemic.
Revenue from rent increased by $4.8 million, or 208.5%, from $2.3 million in fiscal 2022 to $7.1 million in fiscal 2023. The increase in rent revenue was mainly due to the revenue generated from the newly incorporated subsidiary with has office building for rent revenue. In fiscal 2023, it generated rent income of $4.9 million.
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Tuition revenue
Revenue from tuition income increased by $0.1 million, or 1.4%, from $1.3 million in fiscal 2023 to $1.4 million in fiscal 2024. The total tuition income was stable for fiscal 2024 and 2023. However, the tuition income from Toronto Eschool decreased by $0.1 million in fiscal 2024, and the tuition income from Max the Mut College of Animaiton (“MTM”) increased by $0.2 million in fiscal 2024, and tuition revenue from other educational subsidiaries, including Lowell Academy, Toronto Art Academy and Conbridge are all decreased slightly in fiscal 2024. The increase of tuition revenue from MTM was mainly due to increase of tuition fee per student consistent with the inflation past pandemic.
Revenue from tuition income increased by $0.7 million, or 100.5%, from $0.7 million in fiscal 2022 to $1.3 million in fiscal 2023. The increase in revenue was mainly from newly acquired Max the Mutt College of Animation, a Private Career College offers diplomas in Classical & Computer Animation & Production, Illustration & Storytelling for Sequential Arts, and Concept Art for Animation & Video Games. Revenue from Lowell Academy, a private high school offers high school education, decreased by $39,000, and the revenue from our online learning platform, Toronto ESchool, decreased slightly.
For our subsidiary Max the Mutt College of Animation, the college had total enrollment of 134 students in 2024, which includes 43 domestic students and 91 international students. 173 students in 2023, which includes 123 domestic students and 50 international students. Benefit from the reputation over its 26 years in animation education, we believe our resource and management have positioned well to maintain healthy and sustainable growth of Max the Mutt College of Animation fiscal 2025.
The number of students enrolled in our online learning platform in Toronto ESchool was 313, 357, and 305 for fiscal 2024, fiscal 2023 and fiscal 2022, respectively. These students enrolled in a total of 424 courses, 504 courses, and 623 courses in fiscal 2024, fiscal 2023 and fiscal 2022, respectively. The average fee for each course was $735, $584, and $550 for fiscal 2024, fiscal 2023 and fiscal 2022, respectively.
With the economic recovery from COVID-19 and the ease of international travel restrictions, more international students are expected to come back to Canada for better education. We expect more students to enroll in our OSSD courses, vocational college course and animation programs in fiscal 2025.
Construction revenue
We did not record any revenue from our decoration and construction business in fiscal 2024 and 2023. We had no significant income from our construction business in fiscal 2022.
Sales of vacant land
We had no sales of vacant land in fiscal 2024 and 2023. We sold 8 lots of vacant land in fiscal 2022 and generated revenue of approximately $2.3 million. As of March 31, 2022, we had no vacant land for future sales.
Gross profit
Our gross profit decreased by $1.2 million, or 32.5%, to $2.5 million in fiscal 2024 from $3.7 million in fiscal 2023. Gross margin was 27.1% in fiscal 2024, as compared with 44.6% in fiscal 2023. The decrease of 17.5% in the gross profit margin was primarily attributable to the lower gross profit margin for our rental business segment because of the increased costs in connection with the newly purchased office buildings with low occupancy rates and the higher gross profit margin from our education segment due to lower staffing costs.
Our gross profit increased by $1.2 million, or 44.1%, to $3.7 million in fiscal 2023 from $2.6 million in fiscal 2022. Gross profit margin was 44.6% in fiscal 2023, as compared with 49.8% in fiscal 2022. The decrease of 6.5% in the gross profit margin was primarily attributable to the lower gross profit margin for our rental business segment because of the increased costs in connection with the newly purchased office buildings and the lower gross profit margin from our education segment due to higher staffing costs.
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Our cost and gross profit by revenue types are as follows:
| For the year ended March 31, 2024 | For the year ended March 31, 2023 | |||||||||||||||||||||||||||||||||||
| Category | Cost of revenue | Gross profit | Gross profit % | Cost of revenue | Gross profit | Gross profit % | Variance in Cost of revenue | Variance in gross profit | Variance in gross profit % | |||||||||||||||||||||||||||
| Rental business | $ | 6,325,094 | $ | 1,694,092 | 21.1% | $ | 3,899,012 | $ | 3,191,128 | 45.0% | $ | 2,426,082 | (1,497,036 | ) | (23.9)% | |||||||||||||||||||||
| Education business | 516,042 | 845,757 | 62.1% | 770,179 | 572,192 | 42.6% | (254,137 | ) | 273,565 | 19.5 % | ||||||||||||||||||||||||||
| Total | $ | 6,841,136 | $ | 2,539,849 | 27.1% | $ | 4,669,191 | $ | 3,763,320 | 44.6% | $ | 2,171,945 | (1,223,471 | ) | (17.5)% | |||||||||||||||||||||
| For the year ended March 31, 2023 | For the year ended March 31, 2022 | |||||||||||||||||||||||||||||||||||
| Category | Cost of revenue | Gross profit | Gross profit % | Cost of revenue | Gross profit | Gross profit % | Variance in Cost of revenue | Variance in gross profit | Variance in gross profit % | |||||||||||||||||||||||||||
| Rental business | $ | 3,899,012 | $ | 3,191,128 | 45.0% | $ | 1,322,188 | $ | 976,010 | 42.5% | $ | 2,576,824 | 2,215,118 | 2.5% | ||||||||||||||||||||||
| Education business | 770,179 | 572,192 | 42.6% | 319,913 | 349,529 | 52.2% | 450,266 | 222,663 | (9.6)% | |||||||||||||||||||||||||||
| Construction business | – | – | – | 4,663 | 3,454 | 42.6% | (4,663 | ) | 3,454 | – | ||||||||||||||||||||||||||
| Cost of vacant land | – | – | – | 990,261 | 1,282,443 | 56.4% | (990,261 | ) | (1,282,443 | ) | – | |||||||||||||||||||||||||
| Total | $ | 4,669,191 | $ | 3,763,320 | 44.6% | $ | 2,637,025 | $ | 2,611,436 | 49.8% | $ | 2,032,166 | 1,151,884 | 5.1% | ||||||||||||||||||||||
Cost of revenue for our rental business increased by $2.4 million from $3.9 million in fiscal 2023 to $6.3 million in fiscal 2024. Gross margin decreased from 45.0% in fiscal 2023 to 21.1% in fiscal 2024. The increased cost of revenue and decreased gross margin were mainly due to increased costs in connection with the newly purchased office buildings with low occupancy rate in fiscal 2024 compared to fiscal 2023. One major tenant signed lease termination agreement with us in September 2022 and its last rent payment was up to July 2023.
Cost of revenue for our rental business increased by $2.6 million from $1.3 million in fiscal 2022 to $3.9 million in fiscal 2023. Gross margin increased from 42.5% in fiscal 2022 to 45.0% in fiscal 2023. The increased cost of revenue and gross margin were mainly due to increased costs in connection with the newly purchased office buildings.
Cost of revenue for our education program decreased from $770,179 in fiscal 2023 to $516,042 in fiscal 2024, and gross profit increased from $572,192 in fiscal 2023 to $845,757 in fiscal 2024. Our gross margin increased from 42.6% in fiscal 2023 to 62.1% in fiscal 2024. The increase in gross margin was mainly due to sharing of staffing costs among different subsidiaries. We believed that the combination of online self-learning, online interactive instructions, as well as in-person education in our education platforms, MTM Animation and vocational college provided by our qualified instructors will be our competitive advantage compared to other education providers.
Cost of revenue for our education program increased from $319,913 in fiscal 2022 to $770,179 in fiscal 2023, and gross profit increased from $349,529 in fiscal 2022 to $572,192 in fiscal 2023. However, gross profit margin decreased from 52.2% in fiscal 2022 to 42.2% in fiscal 2023. The decrease in gross profit margin was mainly due to increased staffing costs. We believe that the combination of online self-learning, online interactive instructions, as well as in-person education in our education platforms, MTM Animation and vocational college provided by our qualified instructors will be our competitive advantage compared to other education providers.
We did not incur significant costs in our construction business in fiscal 2024, 2023 and 2022 due to less management focus on this segment. During fiscal 2022, we incurred costs of $4,663 in our construction business.
We did not have sales of vacant land or property in fiscal 2024 and 2023. Cost of revenue for the sales of vacant land was $1.0 million and the gross profit generated was $1.3 million in fiscal 2022. The Company sold 8 lots of vacant land in fiscal 2022, and no inventory of vacant land since then.
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General and administrative expenses
Our general and administrative expenses primarily include office expenses, travel expenses, commission expense, insurance expenses, and depreciation and amortization expenses. General and administrative expenses decreased by $79,252, or 6.5%, from $1,227,424 in fiscal 2023 to $1,148,172 in fiscal 2024. The decrease was mainly due to an increase of $1.1 million on amortization (i) from two buildings transferred from assets held for sales to used propert and equipment as we change in our future plans in fiscal 2024 and (ii) the full-year amortization of office building purchased in September 2022, partly offset by the decrease of our office expenses, travel expenses, commission expense and insurance. Our general and administrative expenses represented 12.2% and 14.6% of our total revenue for fiscal 2024 and 2023, respectively.
Our general and administrative expenses primarily include office expenses, travel expenses, commission expense, insurance expenses, and depreciation and amortization expenses. General and administrative expenses increased by $790,146, or 180.7%, from $437,278 in fiscal 2022 to $1,227,424 in fiscal 2023. The increase was mainly due to increased amortization, repair and maintenance and utility expenses from our newly acquired office buildings. Our general and administrative expenses represented 14.6% and 8.3% of our total revenue for fiscal 2023 and fiscal 2022, respectively.
Professional fees
Our professional fees increased by $1,939,241, or 200.2%, from $968,435 in fiscal 2023 to $2,907,676 in fiscal 2024, representing 31.0% and 11.5% of our total revenue for fiscal 2024 and fiscal 2023, respectively. The increase was mainly due to a total of $1.9 million consulting fee settled by our common shares in fiscal 2024. Our regular legal and accounting fees were stable and slightly decreased from the prior year.
Our professional fees increased by $617,799, or 176.2%, from $350,636 in fiscal 2022 to $968,435 in fiscal 2023, representing 11.5% and 6.7% of our total revenue for fiscal 2023 and fiscal 2022, respectively. The increase was mainly due to the increased legal fees and accounting fees.
Salaries and compensations
Our salaries and compensations decreased by $324,288 or 28.5%, from $1,1,36,676 in fiscal 2023 to $812,388 in fiscal 2024, representing 8.7% and 13.5% of our total revenue for fiscal 2024 and 2023, respectively. The significant decrease was mainly due to the reduction of our budget on our administrative team in both of our rental business and our educational business.
Our salaries and compensations increased by $344,130 or 43.4%, from $792,546 in fiscal 2022 to $1,1,36,676 in fiscal 2023, representing 13.5% and 15.1% of our total revenue for fiscal 2023 and 2022, respectively. The significant increase was mainly due to the expansion of our educational business and the increased compensation that we paid during fiscal 2023 to attract and retain experienced senior management and professional employee team.
Interest expense, net
Our interest expense increased by $2.8 million, from $3.0 million in fiscal 2023 to $5.8 million in fiscal 2024. The significant increase was mainly due to the increase of prime rate by Bank of Canada (from 2.7% as of April 1, 2022 to 7.20% as of March 31, 2024) which has significant impact on all our outstanding mortgages with variable interest rates and the increase of two private 2nd mortgage with principal balance of $6.7 million in the middle of fiscal 2023.
Our interest expense increased by $2,048,610, from $906,398 in fiscal 2022 to $2,955,008 in fiscal 2023. The significant increase in interest expense was mainly due to newly acquired Moatfield property which has a bank loan with principal of $44.3 million , and also two new 2nd mortgages with principal balance of 6.7 million and increased mortgage interest rate in fiscal 2023.
Government subsidies
We received $nil, $109,723 and $490,171 from the Canada Emergency Wage Subsidy program and Canada Emergency Rent Subsidy program in fiscal 2024, 2023 and 2022, respectively.
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Impairment expenses
In fiscal 2024, we recorded impairment loss of $49,784 for the property and equipment at MTM due to out of date for its computer and software used in animation education. In fiscal 2022, we recorded impairment loss of $379,165 for the intangible assets and goodwill in connection with the private high schools and Conbridge College, a private college because we are in the process of improving the efficiency of the operations, streamlining the business lines to focus on its core education sector, and optimizing the structure of the vocational educational business. There was no such impairment loss record based on our assessment in fiscal 2023.
Warrants expense
We recorded $893,878 debt component and $443,208 embedded derivatives at the inception date on September 19, 2022 and recognized day 1 loss of $1,565,570 due to fair value assessment. From the inception date to March 31, 2023, we further recorded loss on change in fair value of warrants liabilities of $251,237 for share warrants. On May 15, 2023, we entered into exchange agreement with the convertible note holders and 66,667 common shares were issued (1,000,000 before the share consolidation at 15:1) to exchange for Series B warrants. The deal was closed on May 15, 2023. For fiscal 2024, we recognized gain of $1,536,494 on Series A and B warrants on change of fair value of warrant liabilities recognized. There was no warrant liabilities or corresponding changes in valuation in fiscal 2022.
Loss on convertible debenture valuation
In fiscal 2023, we recorded loss of $157,010 on change in fair value of a convertible note with a debt component and the embedded derivative components issued on September 19, 2022. In June 2024, the convertible note holders elected to convert the outstanding principal of $1.5 million, along with the accrued interest of $147,130 into 449,977 (6,749,650 shares before the share consolidation) common shares. In fiscal 2024, we recognized a gain of $367,663 on fair value of the embedded derivative components. There was no convertible note or corresponding changes in valuation in fiscal 2022.
Other income
We had other income of $22,764, $23,605 and $20,709 in fiscal 2024, 2023 and 2022, respectively, mainly from referral commissions.
Loss before income taxes
We had income before income taxes of approximately $1.5 million in fiscal 2024, as compared to loss before income taxes of approximately $4.4 million in fiscal 2023. The increase of income before income taxes was primarily attributable to a gain of $8.6 million on disposal of four rental property, a gain of $1.9 million on fair value assessment on warrants and embedded derivative components with the convertible notes before the conversion, as well as increased other expenses as discussed above.
We had loss before income taxes of approximately $4.4 million in fiscal 2023, as compared to income before income taxes of approximately $0.3 million in fiscal 2022. The increase of net loss before income taxes was primarily attributable to the decreased revenues and gross profit, increased operating expenses, as well as increased other expenses as discussed above.
Recovery for current and deferred income taxes
We had no provision of current income tax in fiscal 2024 due to losses carried forward from prior years, as compared to an income tax recovery of $64,768 in fiscal 2023 as we had loss before tax. We also had a deferred income tax expense of $574,209 in fiscal 2024.
We had an income tax recovery of $64,768 in fiscal 2023, as compared to provision for income taxes was $312,767 in fiscal 2022. Income tax recovery was noted mainly due to we had loss before tax, and loss was carried back to prior years. We also had a deferred income tax recovery of $797,096 in fiscal 2023, due to non-capital loss generated at two subsidiaries which to be carried forward to future years to offset their future net income before income tax.
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Net income (loss)
We had net income of $967,249 and net loss of $3,572,108 for fiscal 2024 and fiscal 2023 respectively. The increase of net income was primarily attributable to the gain of $8.6 million on disposal of four rental property, gain of $1.9 million on fair value assessment on warrants and embedded derivative components with the convertible notes before the conversion, as well as increased other expenses as discussed above.
We had net loss of $3,572,108 and $56,474 for fiscal 2023 and fiscal 2022 respectively. The increase of net loss was primarily attributable to the increased operating expenses, interest expenses, as well as increased other expenses as discussed above.
Cash Flows
For the Years Ended March 31, 2024, 2023 and 2022
The following table sets forth summary of our cash flows for the periods indicated:
| For the Years Ended March 31, | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| Net cash (used in) provided by operating activities | $ | (4,103,676 | ) | $ | 335,919 | $ | 6,361,523 | |||||
| Net cash provided by (used in) investing activities | 13,078,314 | (63,413,360 | ) | (24,284,231 | ) | |||||||
| Net cash (used in) provided by financing activities | (9,478,590 | ) | 63,871,642 | 17,535,259 | ) | |||||||
| Effect of exchange rate change on cash | (14,585 | ) | (312,010 | ) | 6,522 | |||||||
| Net (decrease) increase in cash | (518,537 | ) | 482,192 | (380,927 | ) | |||||||
| Cash and restricted cash, beginning of year | 1,291,881 | 809,689 | 1,190,616 | |||||||||
| Cash and restricted cash, end of year | $ | 773,344 | $ | 1,291,881 | $ | 809,689 | ||||||
Operating Activities
Net cash used in operating activities was approximately $4.1 million in fiscal 2024, compared to cash provided by operating activities of approximately $0.3 million in fiscal 2023. The increase in net cash used in operating activities was primarily attributable to the following factors:
| · | Prepayments and other receivable increased by approximately $0.7 million in fiscal 2024, compared with an increase of approximately $0.4 million in fiscal 2023. The increase was mainly due to the payments made by Visionary Shanghai to start its business in China in fiscal 2022. |
| · | Deferred revenue decreased by approximately $0.4 million in fiscal 2024 compared with an increase of approximately $0.9 million in fiscal 2023. The decrease was mainly due to a decrease in student enrollments in fiscal 2024. |
| Plus: | |
| · | We had net loss of $3.7 million in fiscal 2024, after the adjustments of all non-cash items, compared to a net loss of $0.7 million in fiscal 2023, after the adjustments of all non-cash items. |
Net cash provided by operating activities was approximately $335,919 in fiscal 2023, compared to cash provided by operating activities of approximately $6.4 million in fiscal 2022. The decrease in net cash provided by operating activities was primarily attributable to the following factors:
| · | Due from related parties decreased by approximately $99,334 in fiscal 2023, compared with an increase of approximately $2.1 million in fiscal 2022. The decrease in fiscal year is minimal. |
| · | Accrued liabilities increased by approximately $50,206 in fiscal 2023 compared with an increase of approximately $0.9 million in fiscal 2022. The decrease was mainly due to high legal and professional expenses in connection with the initial public offering (“IPO”) process in year 2022. |
| Offset by: | |
| · | The increase in our net loss. We had net loss of $3,572,108 in fiscal 2023, a decrease of approximately $3.0 million from approximately 56,474 in fiscal 2022. |
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Investing Activities
Net cash provided by investing activities was approximately $13.1 million in fiscal 2024, compared to net cash used in investing activities of $63.4 million in fiscal 2023. The increase in net cash provided by investing activities was primarily attributable to the proceed from disposal of office buildings for approximately $13.9 million in cash and the writing off of the deposits made on a property in New York State, as well as the payments made to acquire a vacant land for approximately $1.3 million.
Net cash used in investing activities was approximately $63.4 million in fiscal 2023, compared to net cash used in investing activities of $24.3 million in fiscal 2022. The increase in net cash used in investing activities was primarily attributable to the purchase of office buildings for approximately $62.7 million to acquire the properties located on 95-105 Moatfield Drive, Toronto, and $410,000 deposit made on a property in New York State, as well as the payments made to acquire additional shares of MTM from its non-controlling interest.
Financing Activities
Net cash used in financing activities was approximately $9.5 million in fiscal 2024, compared to net cash provided by financing activities of approximately $63.9 million in fiscal 2023. The increase in net cash used in financing activities in fiscal 2024 was primarily attributable to the mortgages payoff of approximately 6.1 million in connection with the disposal of office building in June 2023. In May 2023, we settled our convertible notes of $1.5 million with embedded convertible feature by exchange of common stocks. When we converted our Series B warrants by conversion of our common stocks, we obtained subscription proceeds of approximately 1.7 million. In addition, our controlling shareholder Ms. Fan Zhou withdrew approximately $4.2 million from the Company from her advances account and reduce her advance to the Company from $4.2 million to few thousand dollars.
Net cash provided in financing activities was approximately $63.4 million in fiscal 2023, compared to net cash used in financing activities of approximately $17.5 million in fiscal 2022. The increase in net cash provided in financing activities in fiscal 2023 was primarily attributable to the mortgages of $45.4 we obtained from Bank of China and private mortgages of total $6.8 million. In connection with the purchase of the two office buildings, on September 23, 2022, we obtained bank loans of $45.4 million (C$60.0 million) from Bank of China. The loans have two-year terms with a flexible interest rate of prime +1% per annum, with equal monthly instalments of blended principal and interest over an amortization period of 25 years. In February 2023, we borrowed additional $3.7 million (C$5 million) as second mortgage to support our daily operation. The loan term is 1 year with a fixed rate of 13%, the interest is payable on monthly basis and the principal is only due to the end of 1 year term. The 2nd mortgage is secured by the two office buildings and also personally guaranteed by our controlling shareholder Ms. Zhou. Due to 2nd mortgage, our covenant at Bank of China was in default and the first mortgage balance of $44.1 million from Bank of China was treated as current liabilities as at March 31, 2023.
Net cash provided in financing activities was approximately $17.5 million in fiscal 2022, compared to net cash used in financing activities of approximately $0.4 million in fiscal 2021. The increase in net cash provided in financing activities in fiscal 2022 was primarily attributable to the mortgages we obtained from HSBC Bank. In connection with the purchase of the two office buildings, on April 15, 2021, we obtained bank loans of $7.2 million (C$9.0 million) and $5.6 million (C$7.0 million) respectively from HSBC Bank. The loans have five-year terms with a fixed interest rate of 3.3% per annum, with equal monthly instalments of blended principal and interest over an amortization period of 25 years. Our controlling shareholder, Ms., Zhou, also made an advance of approximately $5.7 million to the Company. In fiscal 2021, we borrowed a total of $6.0 million for refinancing our mortgages, repaid $2.6 million bank loan, and repaid $4.0 million loan to our controlling shareholder, Ms. Zhou.
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On May 19, 2022, the Company closed its initial public offering (“IPO”) of 283,333 (4,250,000 shares before the share consolidation) common shares at a public offering price of $4.0 per share for gross proceeds of $17.0 million. The total net proceeds to the Company from the IPO, after deducting discounts, expense allowance, and expenses, were approximately $14.3 million.
In July 2022, we borrowed a private loan of $3.0 million (C$4 million) as a 2nd mortgage secured by two office building at 200/260 town center jointly to use as portion of down payment on our purchase of two office buildings at 95-105 Moatfield. The original loan term is 6 months from July 2022 to January 2023 with a fixed term of 13% per annual, and we renewed it for another 6 months to July 2023 with a fixed term of 15% per annual. Subsequent to year end, the loan term was extended to August 31 2023 further. The principal is only required at matured date and only interest was paid on monthly basis during the term. The loan is secured by two office buildings jointly at 200/260 town center and is also personally guaranteed by our controlling shareholder Ms. Zhou. To support the down payment of 95-105 Moatfield buildings, we also entered into an Amended and Restated Securities Purchase Agreement (the “SPA”), with an accredited investor (the “Purchaser”), to issue and sell to the Purchaser a senior secured convertible note of the Company in the principal amount of $1.5 million (the “Note”), and a Series A Warrant and a Series B Warrant to purchase additional common shares of the Company (the Series A Warrant and the Series B Warrant are collectively referred to as the “Warrants”). We received $1.35 million net proceeds from the convertible note transaction.
In fiscal 2023, the Company’s controlling shareholder Ms. Fan Zhou withdrew approximately $2.9 million from the Company from her advances account and reduce her advance to the Company from $7.1 million to $4.2 million.
Liquidity and Capital Resources
Overview
The general objectives of our capital management strategy reside in the preservation of our capacity to continue operating, in providing benefits to our stakeholders and in providing an adequate return on investment to our shareholders by selling our education services at a price commensurate with the level of operating risk assumed by us.
We thus determine the total amount of capital required consistent with risk levels. This capital structure is adjusted on a timely basis depending on changes in the economic environment and risks of the underlying assets. We are not subject to any externally imposed capital requirements.
Credit Facility
As of March 31, 2024, we had outstanding loans totaling approximately $55.0 million from banks in Canada and approximately $7.5 million from private lenders. Ms. Zhou, the controlling shareholder, had also periodically advanced funds to support our operations when needed. These advances were non-interest bearing and due upon demand.
Working Capital
As of March 31, 2024 we had cash and cash equivalents of approximately $0.6 million. Our current assets were approximately $2.1 million, and our current liabilities were approximately $69.7 million, including mortgage balance of $11.0 million for 2 office buildings held for rental, $44.0 million mortgage in default from Bank of China, $6.6 million of two short-term private mortgages, and $3.4 million liabilities from accounts payable and accrued liabilities, which resulted in a negative working capital of $67.6 million. Total shareholders’ equity as of March 31, 2024 was approximately $17.8 million.
As of March 31, 2023 we had cash and cash equivalents of approximately $0.6 million. We also had short-term investments of approximately $51,723, which could be used as working capital when needed. Our current assets were approximately $22.3 million, including approximately $20.3 million assets held for sale (3 office buildings owned by GV, Animation and NeoCanaan), and our current liabilities were approximately $80.5 million, including mortgage balance of $19.7 million for 3 office buildings held for sale, $45.4 million mortgage in default from Bank of China, $6.8 million of two short-term private mortgages, and $1.3 million liabilities from convertible loan, which resulted in a negative working capital of $58.1 million. Total shareholders’ equity as of March 31, 2023 was approximately $12.7 million.
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In assessing our liquidity, management monitors and analyzes our cash on-hand, our ability to generate sufficient revenue sources in the future and our operating and capital expenditure commitments. We plan to fund working capital through our operations, selling 3 office buildings in the market, bank borrowings and additional loans and loan guarantees from Ms. Zhou. We expect to be able to refinance all of our loans upon maturity based on past experience and our good credit history.
On May 19, 2022, we closed our IPO of 283,333 (4,250,000 shares before the share consolidation) Common Shares at a public offering price of $4.00 per share for gross proceeds of $17.0 million. The total net proceeds to the Company from the IPO, after deducting discounts, expense allowance, and expenses, were approximately $14.3 million.
Our primary source of cash is currently generated from our business and bank borrowings in addition to proceeds from related party borrowings. In the coming years, we will be looking to other sources, such as raising additional capital by issuing shares of stock, to meet our cash needs. While facing uncertainties regarding the size and timing of capital raises, we are confident that we can continue to meet operational needs solely by utilizing cash flows generated from our operating activities, borrowings from Ms. Zhou and bank borrowings which may also be guaranteed by Ms. Zhou, as necessary.
As the result of the strategic shift, in fiscal 2022, we have seen significant increase in revenue from our education programs and the rent income from the newly purchased buildings. Our revenue from education programs increased 100.5%, from $669,442 to $1,342,371, and our revenue from rent business increased 208.5%, from approximately $2.3 million to approximately $7.1 million.
We expect our revenue from education sector will continue to grow because of the successful acquisition of Max the Mutt College of Animation on February 28, 2022, the easing of COVID travel restrictions which will facilitate the travel of the international students to Canada, as well Canada’s immigration policy that favors immigrants with post-secondary education degrees.
We have historically funded our working capital needs primarily from operations, bank loans, equity financing, and advances from controlling shareholder. Our management believes that current levels of cash, cash flows from operations and cash flow from bank loans, will be sufficient to meet our anticipated cash needs for at least the next 12 months from the date of this filing. However, it may need additional cash resources in the future if it experiences changed business conditions or other developments, and may also need additional cash resources in the future if it wishes to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions. If it is determined that the cash requirements exceed our amounts of cash on hand, we may seek to issue additional debt or equity securities or obtain a credit facility.
Loan Facilities
As of March 31, 2024 and 2023, the details of all bank loans are as follows:
| March 31, | March 31, | |||||||
| 2024 | 2023 | |||||||
| Canada Emergency Business Account Program (“CEBA Loan”) (1) | $ | – | $ | 118,224 | ||||
| HSBC Bank – (see note 4) | 11,027,234 | – | ||||||
| Bank of China (“BOC”) (2) | 43,990,600 | 44,149,424 | ||||||
| Private mortgage at 95 Moatfield (3) | 3,696,000 | 3,694,500 | ||||||
| Private mortgage at 200/260 Town Centre – (see note 4) | 2,954,400 | – | ||||||
| TD Trust (4) | – | 7,218 | ||||||
| RBC line of credit (5) | – | 21,982 | ||||||
| Private mortgage for Bethune (6) | 812,460 | – | ||||||
| Less: unamortized financing cost | (54,251 | ) | (296,648 | ) | ||||
| 62,423,443 | 47,694,700 | |||||||
| Less: current portion of bank loans | (62,423,443 | ) | (47,694,700 | ) | ||||
| Total | $ | – | $ | – | ||||
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| (1) | As at March 31, 2022, the Company received a loan of $217,470 (C$300,000) through the Canadian Emergency Business Account Program (“CEBA Loan”), which provides financial relief for Canadian small businesses during the COVID-19 pandemic. The CEBA Loan has an initial term date on December 31, 2022 (the “Initial Term Date”) and has been extended to December 31, 2023. The CEBA Loan is non-revolving, with an interest rate being 0% per annum prior to the Initial Term Date and 5% per annum thereafter during any extended term, which is calculated daily and paid monthly. The CEBA Loan can be repaid at any time without penalty and, up to $72,490 (C$100,000) of the loans will be forgiven if the balance is repaid by Initial Term Date. The Company anticipates repaying the CEBA Loan prior to the Initial Term Date. As a result, the amount of $72,490 (C$100,000) which is expected to be forgiven was recognized as government subsidies by March 31, 2022. During the year ended March 31, 2023, the Company has excluded one CEBA loan from business separation at Princeton Education. As at March 31, 2023, the Company has outstanding CEBA loan balance of $177,336 (C$240,000) and only unforgiveness portion of $118,244 (C$160,000) was recorded as bank loan payable on the consolidated balance sheet. As at March 31, 2024, the Company has fully paid back the unforgiven portion of CEBA loan and nil balance outstanding. | |
| (2) | In connection with the purchase of two office buildings at 95/105 Moatfield Dr. at the cost of $69.4 million (C$93.9 million) on September 23, 2022, one of the Company’s subsidiaries, 13995291 Canada obtained a bank loan of $44.3 million (C$60 million) from Bank of China (Canada) (“BOC”). The loan has two-years terms with a flexible interest rate of prime +1% per annum, with equal monthly instalments (C$403,251) of blended principal and interest over an amortization period of 25 years. The bank loan is guaranteed by the shareholder Ms. Fan Zhou personally and the Company, with a collateral of the two office buildings purchased. To meet the Bank’s covenants, the Company’s subsidiary 13995291 holding the ownership of these two office buildings have to keep the debt service coverage ratio higher than 1.25. The bank has right to recall the loan if the Company does not meet the annual assessment and review. As at March 31, 2024 and 2023, the Company’s loan was in default due to an unauthorized private mortgage identified by the BOC, and the outstanding balance was on demand at BOC’s call. | |
| (3) | On February 10, 2023, the Company entered a private mortgage agreement with an unrelated party for a proceed of $3.69 million (C$5 million) to support its daily operation and a liability of approximately $1.3 million on a renovation project which was assumed from the prior owner of 95/105 Moatfield Dr. The loan term was 12 months from February 16, 2023 to February 16, 2024 (6 months closed and 6 months open for early termination) with a fixed interest rate of 13% per annum. The loan is guaranteed and secured by the two office buildings owned by 13995291 and Ms. Fan Zhou personally. The loan was extended. The interest is paid/payable on monthly basis and the principal is payable at matured date or the early termination date. | |
| (4) | The Company’s subsidiary Lowell Academy obtained a five-year term loan of $22,370 (C$28,500) from TD Trust in February 2019, with the floating interest rate of prime rate + 3.5% per annum. The monthly payment is $447 (C$569). As of March 31, 2023, the loan balance was $7,218 (C$9,769). The maturity date is February 1, 2024. The Lowell Academy was deconsolidated from the Group as at March 31, 2024. | |
| (5) | The Company’s subsidiary Lowell Academy obtained a line of credit with limit of $24,009 (C$30,000) from RBC bank in 2019 with the floating interest of RBC prime +2.5% per annum. As at March 31, 2023, a balance of $21,887 (C$29,750) was outstanding from this credit facility. The Lowell Academy was deconsolidated from the Group as at March 31, 2024 | |
| (6) | On December 15, 2023, the Company purchased 100% share in Bethune from a unrelated party, and consolidated Bethune as one wholly owned subsidiary. On December 15, 2023, Bethune had a piece of land with the carrying value of $1,314,708 (C$1,780,000) and a mortgage with a principal balance of $812,460 (C$1,100,000) from a unrelated individual. The mortgage has an open term as of March 31, 2024, with a fixed interest rate of 10% per annum on the principal balance of $738,600 (C$1,000,000) and a fixed interest of 15% per annum on the principal balance of $73,860 (C$100,000). The mortgage is collateral by the land. The Company agreed to assume the mortgage principal balance and the monthly interest payments effective on January 1, 2024. |
Capital Expenditures
Our capital expenditures consisted primarily of expenditures for the purchase of fixed assets, intangible assets and business acquisition as a result of our business growth. Our capital expenditures amounted to approximately $1.3 million and $62.7 million for fiscal 2024 and 2023, respectively.
On May 19, 2021, the Company entered into a purchase agreement to purchase two office buildings with a total floor area of 433,000 square feet at 95-105 Moatfield Drive, Toronto, for a total price of $68.7 million (C$93.3 million). The deal was closed on September 23, 2022, and the Company obtained a bank loans of $44.3 million (C$60 million) from Bank of China. The two office buildings are pledged as collateral to secure the loans, are guaranteed by the subsidiary with the ownership, and also guaranteed by Ms. Fan Zhou personally and the Company.
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Contractual Obligations
As of March 31, 2024, our contractual obligations consisted of the following:
| Contractual Obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
| Lease commitment | $ | 46,686 | $ | 19,739 | $ | 26,946 | $ | – | $ | – | ||||||||||
| MTM Animation acquisition | 133,002 | 133,002 | – | – | – | |||||||||||||||
| Repayment of other loan payable | 767,133 | 511,422 | 255,711 | – | – | |||||||||||||||
| Repayment of bank loans | 62,412,996 | 62,412,996 | – | – | – | |||||||||||||||
| Total | $ | 63,359,816 | $ | 63,077,159 | $ | 282,657 | $ | – | $ | – | ||||||||||
Off-balance Sheet Commitments and Arrangements
There were no off-balance sheet arrangements for the years ended March 31, 2024 and 2023, that have, or that in the opinion of management are likely to have, a current or future material effect on our financial condition or results of operations.
Related Party Transactions
In addition to the executive officer and director compensation arrangements discussed in “Executive Compensation,” below we describe transactions in which we have been a participant and in which the amount involved in the transactions is material to us or the related party.
The relationship of main related parties is summarized as follows:
| Name of Related Party | Relationship to the Company | |
| Ms. Fan Zhou | Director of the Company | |
| China Youth Langton (Canada) Education Technology Co. Ltd. (“Langton”) | Related due to Ms. Fan Zhou and her immediate family member were directors of Langton before June 2021 | |
| Kelly Xu | Operation manager and minority shareholder of Lowell | |
| Katy Liu | Employee | |
| Rusheng Wu | Principal of Toronto ESchool and spouse of the minority shareholder of Toronto ESchool |
| (1) | Due from related party |
As of March 31, 2024 and 2023, due from related party consists of the following:
| March 31, | March 31, | |||||||
| 2024 | 2023 | |||||||
| Due from Kelly Xu (Lowell Academy) | $ | 76,888 | $ | 191,595 | ||||
The Company has a receivable balance from two minority interest shareholders due to the acquisition of Lowell Academy, as the minority interest shareholders are personally responsible for liabilities incurred before the purchase date, and Ms. Fan Zhou is also personally guaranteed on these loans’ collectability. As of March 31, 2024, Lowell Academy is not a subsidiary of the Company.
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(2) Due to related parties
| March 31, | March 31, | |||||||
| Name | 2024 | 2023 | ||||||
| Ms. Fan Zhou (a) | $ | 3,872 | $ | 4,165,912 | ||||
| Katy Liu (b) | 322,768 | – | ||||||
| Total | $ | 326,640 | $ | 4,165,912 | ||||
| (a) | The balance represented unsecured, due on demand and interest free borrowings between the Company and Ms. Fan Zhou. | |
| (b) | On April 1, 2023, the Company entered a one year loan agreement with one employee, and agreed to pay back the principal balance of $258,510 (C$350,000) plus the accrued interest of 64,258 (C$87,000) at the maturity date. As at March 31, 2024, the balance of 322,768 was outstanding with an interest rate of 20% annual after the maturity date. |
Related Party Transactions
The Audit Committee of our Board of Directors must approve all related party transactions. All related party transactions will be made or entered into on terms that are no less favorable to us than can be obtained from unaffiliated third parties.
Future Development
Subsequent to the year ended March 31, 2024, we continued to optimize and acquire assets in the education and related business. Below are some major activities:
On May 29, 2024, the Company effected effect a share consolidation of its ordinary shares at a ratio of one (1) post-split ordinary share for every fifteen (15) pre-split ordinary shares (the "Share Consolidation") so that every fifteen (15) shares issued and outstanding will be combined into one (1) share. The Share Consolidation will reduce the issued and outstanding number of ordinary shares of the Company from 55,368,883 shares to approximately 3,691,259 shares.
Quantitative and Qualitative Disclosure about Market Risks
Foreign Exchange Risk
All of our revenues and substantially all of our expenses are denominated in Canadian Dollars (“C$”). In our consolidated financial statements, our financial information that uses C$ as the functional currency has been translated into U.S. dollars. The value of the C$ against the U.S. dollar and other currencies is affected by the changes in Canada’s economic conditions. We do not believe that we currently have any significant direct foreign exchange risk and have not used any derivative financial instruments to hedge exposure to such risk.
Interest Rate Risk
Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. Our exposure to interest rate risk primarily relates to the interest rates from our borrowings with banks. We have not been exposed to material risks due to the fact that our borrowing interest rates are normally fixed, and we have not used any derivative financial instruments to manage our interest risk exposure. However, we cannot provide assurance that we will not be exposed to material risks due to changes in market interest rate in the future.
Liquidity Risk
Liquidity risk arises through the excess of financial obligations over available financial assets due at any point in time. Our objective in managing liquidity risk is to maintain sufficient readily available reserves in order to meet our liquidity requirements at any point in time. We achieve this by maintaining sufficient cash and banking facilities.
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Critical Accounting Policies and Estimates
We prepare our financial statements in conformity with accounting principles generally accepted by the United States of America (“U.S. GAAP”), which requires us to make judgments, estimates and assumptions. Significant estimates required to be made by management include, but are not limited to, valuation of other receivables, useful lives of property, plant and equipment and student list as intangible assets, the recoverability of intangible assets and goodwill, allocation of cost between building and land newly acquired, revenue recognition, fair value of intangible assets at business acquisition, provision necessary for contingent liabilities, and realization of deferred tax assets. Actual results could differ from those estimates.
We believe that the following accounting policies involve a higher degree of judgment and complexity in their application and require us to make significant accounting estimates. Accordingly, these are the policies that we believe are the most critical to understanding and evaluating our consolidated financial condition and results of operations.
Revenue recognition
We follow ASC 606 - Revenue from Contracts with Customers, which establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.
To determine revenue recognition for contracts with customers, we perform the following five steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) we satisfy the performance obligation.
We generate our revenues through educational programs and services with individual students. In addition, we generate revenues from other services such as rents, decoration and construction projects, and the sales of vacant lands.
Income Tax
Current income tax payable is based on taxable income for the period. Taxable income differs from income as reported in the statement of income or loss because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. Our liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profits against which those deductible temporary differences can be utilized will be available. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which we expect, at the end of the reporting period, to recover or settle the carrying amount of our assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and we intend to settle our current tax assets and liabilities on a net basis.
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Recent Accounting Pronouncements
The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued.
In October 2021, the FASB issued ASU No. 2021-08, “‘Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). This ASU requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for the Company beginning after December 15, 2023, and are applied prospectively to business combinations that occur after the effective date. The Company does not expect the adoption to have a material impact on the consolidated financial statements.
In June 2022, the FASB issued ASU No. 2022-03, "Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions," which clarifies and amends the guidance of measuring the fair value of equity securities subject to contractual restrictions that prohibit the sale of the equity securities. The guidance will be effective for fiscal years beginning after December 15, 2023 and interim periods within those fiscal years. The Company does not expect the adoption to have a material impact on the consolidated financial statements.
In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. This ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. The new standard will become effective for us beginning January 1, 2024, using either a modified retrospective or a fully retrospective method of transition, and early adoption is permitted. Management is currently evaluating the impact of the new standard on our financial statements.
In November 2023, the FASB issued ASU No. 2023-07, “Improvements to Reportable Segment Disclosures” (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. This ASU will likely result in us including the additional required disclosures when adopted. Management is currently evaluating the provisions of this ASU and expect to adopt them for the year ending December 31, 2024.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial statements.
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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
The following tables sets forth information regarding our directors and executive officers as of the date of this report.
| Directors and Executive Officers | Age | Position/Title |
| Zhong Chen | 64 | Chief Executive Officer, Chief Financial Officer, Director, |
| William Chai(1)(3)(4)(5) | 64 | Chairman of the Board of Directors |
| Marc Kealey(1)(3)(4)(5) | 63 | Vice-Chairman of the Board of Directors |
| Fan Zhou(2) | 59 | Director |
| Simon Tang(1)(3)(4)(5) | 65 | Director |
__________________
(1) Indicates independent director.
(2) Fan Zhou, our founder and previously a majority shareholder, was our Chief Executive Officer from April 1, 2020 to October 31, 2020. Ms. Zhou served as a director from August 20, 2013 and as executive director from March 24, 2021 until December 15, 2021. On June 27, 2022, she was re-appointed as Executive Director and re-elected as a director. On December 14, 2022, Ms. Zhou was re-appointed as our Chief Executive Officer. On June 6, 2023, the Board appointed Ms. Zhou as the Chairman of the Board. Ms. Zhou resigned from the positions of the Chief Executive Officer and Chairman on February 6, 2024 and remains as a director of the Company.
(3) Audit Committee member.
(4) Nominating and Corporate Governance Committee member.
(5) Compensation Committee member.
Biographical Information
Zhong Chen, Chief Executive Officer, Chief Financial Officer, Director
Zhong Chen, age 64, is our Chief Executive Officer, Chief Financial Officer, and director. Mr. Chen has over 27 years of experience in development, construction, and architectural management. He has been serving as the President of Addington Development in Toronto, Canada since 2010, which under his leadership successfully raised over $150 million CAD through various financings and improved construction processes and reduced costs by 15%. Prior to Addington Development, Mr. Chen was the President & Chief Representative at P&H International Architects in Toronto and Shanghai from 2000 to 2018, where he led extensive urban and residential projects and earned multiple design awards. From 1993 to 2008, he was the President of Olympic Construction and Installation Engineering Company in Shanghai, where he won two China Luban Awards for construction excellence. Mr. Chen holds an Executive MBA (EMBA) from Nanyang Technological Institute in Singapore. Mr. Chen obtained his Bachelor of Science (B.S.) in Physics from Shanghai University of Science and Technology, China.
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Fan Zhou, Director
Fan Zhou serves as our director and founder. Ms. Zhou was the Chief Executive Officer from April 1, 2020 to October 31, 2020 and from December 14, 2022 until February 8, 2024. Ms. Zhou served as a director from August 20, 2013 and as the Executive Director from March 24, 2021 until December 15, 2021. On June 27, 2022, she was re-appointed as Executive Director and a director, and was appointed as Chairman of our Board of Director on June 6, 2023. She resigned as a Chief Executive Officer and the Chairman of the Board as of February 6, 2024. Ms. Zhou has over 20 years of experience in international vocational education in Canada and China. In 2000, she became the Director of China marketing at US Xintra International Computer Institute (“Xintra”) in Toronto, Canada. Between 2001 and 2004, she served as the Director of the China Branch of Xintra in Guangzhou, China, and later the Chair of Guangzhou Xintra Computer Ltd. and the Principal of Guangzhou Xintra Computer Training School. From 2005 to 2019, she was the Director for the International Financial Management Association, South China Chapter and the Chair and Chief Executive Officer of China Youth Lang Dun Education Culture and Technology in Toronto, Canada, From 2015 to 2019, she served as the Marketing Director for the Toronto E-School, now a subsidiary of our Company, to promote and market the program in China, and served as the Director of the International Commercial Art Designer Association (“ICAD”) in Toronto, Canada, where she managed the program for ICAD certification. She is the Executive Chairman of the Canada-China Economic and Trade Development Policy Committee, the Chairman of the Board of Directors for the North American Chinese Culture and Education Exchange Promotion Association, and, since March 2020, the Chairman of the Board of Directors for the Canadian Youth Education Mutual Aid Association. Ms. Zhou is pursuing her doctorate (PhD Candidate) degree from Jinan University in China.
William Chai, Chairman of the Board of Directors, Member of the Audit, Compensation and Nominating Committees
Mr. William Chai serves as of November 22, 2022 as a member of the Board and a Chairman of the Audit Committee, a member of the Nominating and Corporate Governance Committee and a member of the Compensation Committee of the Board. Mr. Chai was elected as the Chairman of the board of directors on February 6, 2024. Mr. Chai has over 35 years’ experience in business investment, venture capital investment, fund management, and fundraising. For the past five years, Mr. Chai has served as one of the founding partners of Global Call to Acton Against Poverty, a nonprofit organization and global network, which works with the United Nations and World Health Organization to support people in their struggles for justice and against poverty and inequality. Mr. Chai is also a senior advisor at Global Innovation Centre, a global think tank. He is a director at Alpha Ring International Ltd., a company headquartered in California that provides software, industrial engineering, and green energy optics. Mr. Chai earned his Bachelor of Science in Electrical Engineering from National Cheng Kung University in Taiwan, a Master of Science in Systems Engineering from Arizona State University, a EMBA degree in Business Administration from National Chengchi University in Taiwan, and an honorary doctorate degree in Management from the International Academy of Public Welfare Corporation.
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Marc Kealey, Director, Vice-Chairman, Member of the Audit, Compensation and Nominating Committees
D. Mark Kealey serves as of March 22, 2024 as a director, vice chairman of the board, and a member of the Audit Committee, the Compensation Committee and the Nominating Committee of the Company. He had previously served as the Chairman of the Board from November 2022 until he resigned in June 2023. Mr. Kealey has over 30 years’ experience in business and advocacy. He has been the President of K&A Inc. since 2007, a public policy and business management firm located in Mississauga, Ontario Canada, where he has been active in prescription drug reform, smoke free legislation, cannabis regulation and cross border healthcare initiatives. Prior to K&A Inc., Mr. Kealey served as CEO of Ontario Pharmacists’ Association, the largest professional organization serving the interests of pharmacists in Canada from February 2004 to September 2007. Prior to that, Mr. Kealey served as General Manager at AECL from June 1999 to February 2004, where he led the CANDU technology team in Asia, particularly in China and Eastern Europe; he helped to interface with governments where CANDU nuclear reactors were either in operation or under construction and integrated healthcare system delivery with projects in Qinshan, China and Cernavoda, Romania. Mr. Kealey sits on the University of Waterloo’s School of Pharmacy advisory board as well as on a number of boards in the for-profit and non-for-profit sectors including the Canada India Foundation and the Jamaica Disaster Relief and Resilience Initiative in Jamaica. He sits on the board of CITIZN, a global social network. In 2022, he was appointed to the Board of Wounds Canada, as well as to the Board of “Resilient Kids Canada”, a charity for young people. He is also a director at CHG Inc.– a Canadian hospital development group. Mr. Kealey is a graduate of St. Jerome’s University at the University of Waterloo and attended Kent State University in Ohio and Queen’s University in Kingston, Ontario.
Dr. Simon Tang, Director, Member of the Audit, Compensation and Nominating Committees
Dr. Tang has served as a vice-chairman of our Board of Directors since June 21, 2021. Dr. Tang has served as the Managing Director of WinWin Law PLLC in Houston, Texas, since 1994, and was a shareholder of Allied Law Firm and Allied Management Consulting Group, which he founded in 1999 has offices in Hong Kong and Shenzhen, China. Dr. Tang specializes in trans-border corporate transactions. Dr. Tang is member of the State Bar of Texas. He earned his Bachelor of Arts from the University of Utah, a Master’s in Global Geopolitics from Brigham Young University, a Ph.D. in Economics and History from the University of California, and a Juris Doctor from the University of Minnesota School of Law. We believe that Dr. Tang’s experience as a lawyer, and, specifically, his familiarity with United States and Canadian laws and education policy makes him well qualified to serve on our Board of Directors.
Board Diversity
The table below provides certain information regarding the diversity of our board of directors as of the date of this annual report.
| Board Diversity Matrix | ||||
| Country of Principal Executive Offices: | Canada | |||
| Foreign Private Issuer | Yes | |||
| Disclosure Prohibited under Home Country Law | No | |||
| Total Number of Directors | 5 | |||
| Female | Male |
Non- Binary |
Did Not Disclose Gender | |
| Part I: Gender Identity | ||||
| Directors | 1 | 4 | 0 | 0 |
| Part II: Demographic Background | ||||
| Underrepresented Individual in Home Country Jurisdiction | 3 | |||
| LGBTQ+ | 0 | |||
| Did Not Disclose Demographic Background | 0 | |||
Family Relationships
There are no family relationships among any of our directors and executive officers.
Arrangements
We are not aware of any arrangement among shareholders regarding the nomination or approval of directors or senior management.
Term of Office
Each director is to serve until his or her successor is elected and qualified or until his death, resignation or removal. Our Board of Directors appoints our officers and each officer is to serve until his successor is appointed and qualified or until his or her death, resignation or removal.
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Involvement in Certain Legal Proceedings
During the past ten years, none of our directors or executive officers have been the subject of the following events:
| 1. | a petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing; |
| 2. | convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| 3. | the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities; |
| i) | acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; |
| ii) | engaging in any type of business practice; or |
| iii) | engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; |
| 4. | the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph 3.i in the preceding paragraph or to be associated with persons engaged in any such activity; |
| 5. | was found by a court of competent jurisdiction in a civil action or by the SEC to have violated any Federal or State securities law, and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated; |
| 6. | was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; |
| 7. | was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: |
| i) | any Federal or State securities or commodities law or regulation; or |
| ii) | any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or |
| iii) | any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
| 8. | was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
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Director Independence
We have three directors who qualify as “independent” according to the rules of the Nasdaq Stock Market, LLC. Our Board has determined that the following director are “independent” as such directors do not have a direct or indirect material relationship with our company: Dr. Simon Tang, William Chai, and Marc Kealy.
A material relationship is a relationship which could, in the view of our Board of Directors, be reasonably expected to interfere with the exercise of a director’s independent judgment.
Code of Ethics and Business Conduct
We have adopted a Code of Ethics and Business Conduct that applies to our directors, officers and other employees.
B. Compensation
Compensation Discussion and Analysis
This section sets out the objectives of our company’s executive compensation arrangements, our company’s executive compensation philosophy and the application of this philosophy to our company’s executive compensation arrangements. It also provides an analysis of the compensation design, and the decisions that the Board intends to make with respect to our executive officers. When determining the compensation arrangements for our executive officers, our Compensation Committee considers the objectives of: (i) retaining an executive critical to our success and the enhancement of shareholder value; (ii) providing fair and competitive compensation; (iii) balancing the interests of management and our shareholders; and (iv) rewarding performance, both on an individual basis and with respect to the business in general.
Benchmarking
Our Compensation Committee handles matters relating to compensation, including benchmarking. The Compensation Committee considers a variety of factors when designing and establishing, reviewing and making recommendations for executive compensation arrangements for all our executive officers. The Compensation Committee does not intend to position executive pay to reflect a single percentile within the industry for each executive. Rather, in determining the compensation level for each executive, the Compensation Committee will look at factors such as the relative complexity of the executive’s role within the organization, the executive’s performance and potential for future advancement and pay equity considerations.
Elements of Compensation
The compensation paid to executive officers in any year consists of two primary components:
| (a) | base salary; and |
| (b) | long-term incentives in the form of stock options. |
The key features of these two primary components of compensation are discussed below:
Base Salary
Base salary recognizes the value of an individual to our company based on his or her role, skill, performance, contributions, leadership and potential. It is critical in attracting and retaining executive talent in the markets in which we compete for talent. Base salaries for the Named Executive Officers are intended to be reviewed annually. Any change in base salary of a Named Executive Officer is generally determined by an assessment of such executive’s performance, a consideration of competitive compensation levels in companies similar to our company and a review of our performance as a whole and the role such executive officer played in such corporate performance.
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Amended and Restated 2023 Restricted Stock Plan
On May 16, 2023, our Board approved the Amended and Restated 2023 Restricted Stock Plan (the “2023 Plan”) which was previously approved by the Board on May 9, 2023. The purpose of the 2023 Plan is to advance our interests and our shareholders by providing a means to attract, retain, and motivate our service providers and of our subsidiaries and affiliates upon whose judgment, initiative and efforts our continued success, growth and development of the Company are dependent. The Plan shall be administered by our Compensation Committee, or such other Board committee (which may include the entire Board) as may be designated by the Board to administer the Plan. The total number of shares reserved under the Plan is five million (5,000,000).
Risks Associated with Compensation Policies and Practices
The oversight and administration of our executive compensation program requires the Compensation Committee to consider risks associated with our compensation policies and practices. Potential risks associated with compensation policies and compensation awards are considered at annual reviews and also whenever it is deemed necessary by the Compensation Committee.
Our executive compensation policies and practices are intended to align management incentives with the long-term interests of the Corporation and its shareholders. In each case, the Corporation seeks an appropriate balance of risk and reward. Practices that are designed to avoid inappropriate or excessive risks include (i) financial controls that provide limits and authorities in areas such as capital and operating expenditures to mitigate risk taking that could affect compensation, (ii) balancing base salary and variable compensation elements and (iii) spreading compensation across short and long-term programs.
Compensation Governance
The Compensation Committee intends to conduct a yearly review of directors’ compensation having regard to various reports on current trends in directors’ compensation and compensation data for directors of reporting issuers of comparative our size. It is anticipated that the Chief Executive Officer will review the compensation of our executive officers for the prior year and in comparison to industry standards via information disclosed publicly and obtained through copies of surveys. The Board expects that the Chief Executive Officer will make recommendations on compensation to the Compensation Committee. The Compensation Committee will review and make suggestions with respect to compensation proposals, and then make a recommendation to the Board.
The Compensation Committee is comprised of independent directors.
The Compensation Committee’s responsibility is to formulate and make recommendations to our directors in respect of compensation issues relating to our directors and executive officers. Its responsibilities are more fully described under the section of this annual report entitled “Item 6.B Compensation — Compensation Governance”.
Summary Compensation Table
We set out below certain disclosure on compensation paid to our executives on an aggregate basis for the year ended March 31, 2024, as disclosure of compensation on an individual basis is not required in our home country and is not otherwise publicly disclosed by us.
| (U.S. dollars in thousands) | All executive officers | |||
| Base compensation | $ | 139,668 | ||
| Bonuses | – | |||
| Additional benefit payments | – | |||
| Total cash compensation | $ | 139,668 | ||
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Executive Compensation Agreements
Zhong Chen, CEO and CFO and Director
The employment agreement with Zhong Chen, our Chief Executive Officer, Chief Financial Officer, effective April 22, 2024, board member, effective July 18, 2024. Entitles Zhong Chen to an annual base salary of $150,000, with an additional $350,000 in performance bonuses in the form of the company stocks, contingent upon year-end performance. The employment agreement is at-will and requires that Mr. Chen provide four weeks’ notice in the event she resigns. The employment agreement also contains non-solicitation, confidentiality, and non-compete terms and provisions.
Fan Zhou, Director
The employment agreement with Fan Zhou, our Chief Executive Officer, effective December 14, 2022, entitled Ms. Fan Zhou to an annual base salary of $75,301. Ms. Zhou has been paid $15,887 as the salary for year ended March 31, 2023 and $83,333 for the year ended March 31, 2024. The employment agreement is at-will and requires that Ms. Zhou provide four weeks’ notice in the event she resigns. The employment agreement also contains non-solicitation, confidentiality, and non-compete terms and provisions. On February 6, 2024, Fan Zhou notified the Company of her resignation as its chief executive officer and chairperson, effective immediately. Ms. Zhou’s resignation did not result from any disagreement or disputes with the Company. Ms. Zhou remained a director of the Company.
Stock Option Plans and Stock Options
Restricted Stock Plan
On May 16, 2023, our board of directors approved our Amended and Restated 2023 Restricted Stock Plan (the “2023 Plan”) which was previously approved by the Board on May 9, 2023. The 2023 Plan allows for the award of stock, up to 333,333 common shares (5,000,000 shares before the share consolidation) ), to officers, directors, employees, and consultants.
Shares issued for services
On May 23, 2024 and on June 12, 2023, in accordance with the Amended and Restated 2023 Restricted Stock Plan adopted on May 16, 2023, the Company issued a total of 304,616 common shares (4,569,233 shares before the share consolidation) to certain employees as a reward for their services.
Director Compensation for Fiscal year 2024
In fiscal year ended March 31, 2024, we paid a total fee of $18,540 to three of our directors in that fiscal year for their services.
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Pension Benefits
We do not have any defined benefit pension plans or any other plans requiring us to make retirement payments or pay comparable benefits.
Termination of Employment and Change of Control Benefits
Details with respect to termination of employment and change of control benefits for our directors and executive officers is reported above under the section titled “Executive Compensation Agreements.”
C. Board Practices
Board of Directors
We have 5 directors, three of whom satisfy the “independence” requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq Stock Market and meet the independence standards under Rule 10A-3 under the Exchange Act. Our directors are elected annually at each annual meeting of our company’s shareholders. Currently, our board of directors assesses potential director candidates for required skills, expertise, independence and other factors, we intend to let Nominating Committee take responsibility for this action.
Our Board of Directors is responsible for appointing our company’s officers.
Board Committees
We established three committees under the board of directors: an Audit Committee, a Compensation Committee and a Nominating Committee. Each committee is governed by a charter approved by our Board of Directors. In addition, we have an informal Strategic Advisory Board that will assist the board in setting strategies, achieving goals and analyzing opportunities.
Audit Committee
We appointed to our Audit Committee three directors that satisfy the “independence” requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq Stock Market and meet the independence standards under Rule 10A-3 under the Exchange Act. One of our directors on the Audit Committee is an “audit committee financial expert” within the meaning of the SEC rules and possesses financial sophistication within the meaning of the Listing Rules of the Nasdaq Stock Market. The Audit Committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The Audit Committee is responsible for, among other things:
| · | selecting our independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by our independent registered public accounting firm; | |
| · | reviewing with our independent registered public accounting firm any audit problems or difficulties and management’s response and approving all proposed related-party transactions, as defined in Item 404 of Regulation S-K; | |
| · | discussing the annual audited financial statements with management and our independent registered public accounting firm; | |
| · | annually reviewing and reassessing the adequacy of our Audit Committee charter; | |
| · | meeting separately and periodically with the management and our independent registered public accounting firm; | |
| · | reporting regularly to the full board of directors; | |
| · | reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposure; and | |
| · | such other matters that are specifically delegated to our Audit Committee by our board of directors from time to time. |
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Compensation Committee
We appointed to our Compensation Committee three directors that will satisfy the “independence” requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq Stock Market and meet the independence standards under Rule 10A-3 under the Exchange Act. Our Compensation Committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. No officer may be present at any committee meeting during which such officer’s compensation is deliberated upon. The Compensation Committee is responsible for, among other things:
| · | reviewing and approving to the board with respect to the total compensation package for our most senior executive officers; | |
| · | approving and overseeing the total compensation package for our executives other than the most senior executive officers; | |
| · | reviewing and recommending to the board with respect to the compensation of our directors; | |
| · | reviewing periodically and approving any long-term incentive compensation or equity plans; | |
| · | selecting compensation consultants, legal counsel or other advisors after taking into consideration all factors relevant to that person’s independence from management; and | |
| · | programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans. |
Nominating Committee
We appointed to our Nominating Committee three directors that satisfy the “independence” requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq Stock Market and meet the independence standards under Rule 10A-3 under the Exchange Act. The Nominating Committee is responsible for overseeing the selection of persons to be nominated to serve on our board of directors. The Nominating Committee considers persons identified by its members, management, shareholders, investment bankers and others.
D. Employees
As of the date of this report, we had approximately 67 full time employees. We believe we maintain good relationships with our employees. The table below sets forth the breakdown of our employees by function:
| Function | Number of Full-Time Employees | |||
| Management | 7 | |||
| Finance | 4 | |||
| Information Technology | 2 | |||
| Marketing and Publicity | 10 | |||
| Human Resources | 1 | |||
| Academy | 36 | |||
| Education Services | 7 | |||
| Total | 67 | |||
Our management considers our employees as key assets which play a pivotal role in our growth. It is our policy to maximize the potential of our employees through training and development. We provide on-the-job training to our employees covering various aspects of the marketing solution industry to keep abreast of the latest industry development. Our employee training and development aim at equipping our employees with the knowledge and skills necessary to perform their job functions and enhance their capability.
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We do not engage any recruitment agent to hire our employees. We have a recruitment policy in place to maintain a fair and effective recruitment procedure. Under such policy, we normally recruit employees with (a) appropriate skills, both technical and personal; (b) relevant academic background; and (c) work experience in order to meet our current and future needs and to ensure that the employees appointed are qualified and competent to carry out the duties.
We have always maintained a good working relationship with our employees. As of the date of this annual report, none of our employees were members of any labor union, nor were there any labor dispute involving or against us.
We generally remunerate our employees with a fixed salary and a discretionary bonus based on our performance. We have designed an annual review system to assess the performance of our employees, which forms the basis of our decision with respect to salary increment, bonus and promotion.
None of our employees are covered by a collective bargaining agreement.
E. Share Ownership
Shares
The shareholdings of our officers and directors are set out in Item 7 below.
Options, Warrants and Other Convertible Securities
None of our officers and directors hold any stock options, exercisable into common shares of the Company. Our officers and directors do not hold any other securities convertible into our common shares on March 31, 2023. On June 12, 2023, pursuant to the Amended and Restated 2023 Restricted Stock Plan adopted by the Company on May 16, 2023, the Company issued total of 304,616 common shares (4,569,233 shares before the share consolidation) of the Company to certain employees and consultants of the Company as the award for the services.
F. Disclosure of A Registrant’s Action to Recover Erroneously Awarded Compensation
Not applicable.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial ownership of our common shares as of August 11, 2023 by (a) each shareholder who is known to us to own beneficially 5% or more of our outstanding ordinary shares; (b) all directors; (c) our executive officers and (d) all executive officers and directors as a group. Except as otherwise indicated, all shares are owned directly and the percentage shown is based on 3,248,644 (48,729,667 shares before the share consolidation) common shares issued and outstanding. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to, or the power to receive the economic benefit of ownership of, the securities. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option or other right or the conversion of any other security. However, these shares are not included in the computation of the percentage ownership of any other person.
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Unless otherwise indicated, the address of each beneficial owner listed in the table below is 200 Town Centre Boulevard, Markham Ontario.
| Shares Beneficially Owned | ||||||||
| Name of Beneficial Owner | Number | Percent | ||||||
| Officers and Directors: | ||||||||
| Dr. Simon Tang | – | – | ||||||
| Marc Kealey | – | – | ||||||
| Zhong Chen | – | – | ||||||
| William Chai | – | – | ||||||
| Fan Zhou | – | – | ||||||
| All directors and executive officers as a group (five persons) | – | – | ||||||
| 5% Stockholders: | ||||||||
| 3888 Investment Group Limited(1) | 1,516,668 | 40.2% | ||||||
| CAKL Holdings SDN BHD | 253,334 | 6.7% | ||||||
| Monolith IT Solutions Inc. (2) | 259,000 | 6.9% | ||||||
| 5% Stockholders as a group (three persons): | 2,029,332 | 53.8% | ||||||
________________
(1) Wanhong Wu is the sole owner of 3888 Investment Group Limited, which is the record owner of 1,516,668 Common Shares. Consequently, Ms.Wu may be deemed the beneficial owner of Common Shares held by 3888 Investment Group Limited.
(2) Wanhong Wu beneficially owns 100% of Monolith IT Solutions, Inc., which is the record owner of 253,334 Common Shares, and may be deemed to beneficially own such Common Shares held directly by Monolith IT Solutions Inc.
Transfer Agent
The transfer agent and registrar for our Common Shares is Issuer Direct Corporation, 1981 Murray Holladay Road, Suite 100, Salt Lake City, Utah 84117.
B. Related Party Transactions
Ms. Fan Zhou periodically provides funds to support the Company’s investment and acquisition when needed. As of March 31, 2024 and 2023, the balance due to Ms. Zhou amounted to $3,872 and $4,165,912, respectively.
An initial loan of $5,250,000, evidenced by a promissory note, is interest free and payable on demand, and a second and a third loan of $1,700,000 and $1,440,000, respectively, also evidenced by a promissory note, is interest free and is payable on March 8, 2023 and April 3, 2022, respectively, which payment date may be extended at our option. On May 25, 2022, July 15, 2022 and July 18, 2022, Ms. Zhou loaned an additional $4.8 million, $0.8 million and $2.96 million to the Company. To support the installments required and also the final balance at closing for 95-105 Moatfield purchase, Ms. Zhou, borrowed approximately $4.5 million from third-party private lenders (the “Third Party Lenders”) and lent it to us as non-interest shareholder loan. The Third-Party Lender’s loans were secured by our real estate properties at 41 Metropolitan (the “Collateral”). Ms. Zhou also paid the deposit of $665,010 on a land purchase on behalf of the Company from Bethune Great Health Investment Management Inc. on June 23, 2023 (“Bethune Advance Deposit”). The Bethune Advance Deposit will have a term of one year, be non-interest bearing, and it grants us an option to extend the due date. Between April 1, 2022 and March 31, 2023, we repaid Ms. Zhou $13.0 million leaving a balance of $4.1 million as of March 31, 2023. Also, the security interest in the Collateral was released when 41 Metropolitan Rd property was sold in June 2023, where approximately $4.5 million from net proceeds of sale of Collateral was released to the Third-Party Lenders as repayment of Ms. Zhou’s loan advances to the Company and to pay down the Bethune Advance Deposit and interests charged by Third Party Lenders. As of the date of this Report, all loans and advances by Ms. Fan Zhou to the Company have been substantially repaid.
Apart from the loans from Ms. Zhou and the employment agreements described elsewhere in this annual report, we have not entered into any material transactions with other directors, officers, promoters and shareholders or who beneficially own more than 10% of our common shares (or their immediate family members).
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C. Interests of Experts and Counsel
Not Applicable.
ITEM 8. FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
The financial statements required by this item may be found at the end of this report on 20-F, beginning on page F-1.
Legal Proceedings
See “Item 4. Information on the Company – Legal Proceedings.”
Dividends
We have not paid any dividends on our common shares since incorporation. Our management anticipates that we will retain all future earnings and other cash resources for the future operation and development of our business. We do not intend to declare or pay any cash dividends in the foreseeable future. Payment of any future dividends will be at the Board’s discretion, subject to applicable law, after taking into account many factors including our operating results, financial condition and current and anticipated cash needs.
B. Significant Changes
We have not experienced any significant changes since the date of the consolidated financial statements included with this Form 20-F except as disclosed in this Form 20-F.
ITEM 9. THE OFFER AND LISTING
A. Offer and Listing
Our common shares are traded on the Nasdaq Capital Market under the symbol “GV”.
B. Plan of Distribution
Not Applicable.
C. Markets
Please see Section 9.A above.
D. Selling Shareholders
Not Applicable.
E. Dilution
Not Applicable.
F. Expenses of the Issue
Not Applicable.
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ITEM 10. ADDITIONAL INFORMATION
A. Share Capital
Not Applicable.
B. Memorandum and Articles of Association
The following is a summary of the material terms of our share capital and certain provisions of our Articles. Because it is a summary, this discussion should be read together with our Articles and Bylaws.
General
We were incorporated by Ms. Zhou on August 20, 2013, as 123 Natural Food Ontario Ltd., a company limited by shares, under the Ontario Business Corporations Act. Our Articles of Incorporation provide that our authorized capital consists of an unlimited number of Common Shares, no par value, which do not have any special rights or restrictions and an unlimited number of Preference Shares, with the rights specified in the Articles of Incorporation.
As of March 31, 2024, we have 3,4,37,926 Common Shares issued and outstanding, and no Preference Shares and total of 304,616 restricted common shares to employees and consultants of the Company have been issued subsequently to March 31, 2023. As of March 31, 2024 and 2023, no options were outstanding respectively. As of March 31, 2023, the Company had a convertible note which is convertible, in whole and in part, from time to time at the option of the Purchaser commencing March 19, 2023 into the Company’s common shares at a conversion price equal to the lower of (i) $4.00, and (ii) the greater of (x) the Floor Price ($0.22 per share) then in effect and (y) 85% of the lowest trading price of our common shares during the 15 consecutive trading day period preceding the delivery of the conversion notice. In connection with this convertible note, the Company had granted Series A Warrant with right to purchase 85,290 common shares and Series B Warrant with rights to purchase 129,630 common shares. During the fiscal 2024, all options attached with the convertible note have been converted to 449,977 common shares, and Series B warrants have been fully exercised for 66,667 common shares. As of March 31, 2024, the Company had Series A Warrants with right to purchase 85,290 common shares. All share numbers are retroactively restated for the effect of share consolidation on May 29, 2024.
Rights, Preferences and Restrictions Attaching to Our common shares
The Business Corporations Act (Ontario) provides the following rights, privileges, restrictions and conditions attaching to our common shares:
| · | to vote at meetings of shareholders, except meetings at which only holders of a specified class of shares are entitled to vote; | |
| · | subject to the rights, privileges, restrictions and conditions attaching to any other class of shares of our Company, | |
| · | to share equally in the remaining property of our Company on liquidation, dissolution or winding-up of our Company; and | |
| · | the Common Shares are entitled to receive dividends if, as, and when declared by the Board of Directors. |
Our Articles of Incorporation provides the following rights, privileges, restrictions and conditions attaching to our common shares:
Each holder of Common Shares is entitled to receive notice of and to attend all meetings of shareholders of the Company, except meeting at which only holders of a specified class of shares (other than Common Shares) or a specified series of shares are entitled to vote. At such meetings attended by holders of Common Shares, each holder of Common Shares is entitled to one vote in respect of each Common Share held by the holder. Holders are entitled to elect all nominees to the board of directors of the Company.
Subject to the rights, privileges, restrictions, conditions, and limitations of any other class of shares of the Company, Common Share Holders are entitled to receive any dividends of the Company and, upon a liquidation, dissolution of winding-up of the Company, whether voluntary or involuntary, to receive the remaining property of the Company.
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Rights, Preferences and Restrictions Attaching to Our Preference Shares
Our Articles of Incorporation provides the following rights, privileges, restrictions and conditions attaching to our Preference Shares:
Dividends
All holders of Preference Shares are entitled to receive, and we shall pay, dividends only if and when declared by the board of directors. Dividends are non-cumulative and are to be paid only out of money of the Company properly applicable to the payment of the dividends.
The Board of Directors has discretion and may determine the priority that Preference Shares dividends are paid to Common Shares and if and when Common Shares dividends are paid and not the Preference Shares dividends, and vice-versa. Holders of the Preference Shares are not entitled to any dividend other than or more than the dividends as stated above.
Participation in Assets on Dissolution
If we are liquidated, dissolved or wound up, either voluntarily or involuntarily, or if there is a reduction of capital, or any distribution of assets among shareholders by way of repayment of capital, holders of the Preference Share are entitled to be paid the redemption amount for each preference share plus all unpaid dividends that have been declared. Such payment holds priority to any payment or distribution to Common Shareholders. If the amount payable is insufficient to pay in full the redemption amount owing on all Preference shares, the amount will be paid on a pro rata basis. All assets remaining after payment to the holders of Preference Shares are to be paid or distributed ratably among the Common Shareholders, and the Preference shareholders will have no further right of participation in such assets.
Redemption
We, on notice and as the discretion of the Board of Directors, have the right at any time to redeem all or any portion of the Preference shares for the redemption amount for each Preference share together with any declared and unpaid dividends without the consent of the holders of such shares. We, at the discretion of the Board of Directors, may redeem all or any part of the Preference Shares of any Preference shareholder in priority to any other Preference shareholder, and is not required to redeem the Preference shares of any other Preference shareholder. The redemption amount is the amount set at the time of issuance of the shares, or if not specified, the amount at the time of redemption.
Voting Rights
Except in the instances where there is an Amendment of the Articles of Incorporation with respect to the Preference Shares or to create special shares ranking in priority to or on par with the Preference Shares, Preference shareholders do not possess any voting rights at any meeting of our shareholders, but are entitled to notice of the meetings when called for the purpose of authorizing our dissolution.
Amendment of the Articles of Incorporation
Confirmation of any special resolution to amend our articles to delete or vary any preference, right, condition, restriction, limitation or prohibition attaching to the preference shares or to create special shares ranking in priority to or on a parity with the Preference shares may be given by at least two-thirds (2/3) of the votes cast at a meeting of the holders of the Preference share duly called for that purpose.
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Shareholder Meetings
The Business Corporations Act (Ontario) provides that: (i) a general meeting of shareholders shall be held at such place in or outside Ontario as the directors determine or, in the absence of such a determination, at our registered office is located; (ii) directors must call an annual meeting of shareholders not later than 18 months after the date of incorporation and no later than 15 months after the last preceding annual meeting; (iii) for the purpose of determining shareholders entitled to receive notice of or vote at meetings of shareholders, the directors may fix in advance a date as the record date for that determination, provided that such date shall not precede by more than 50 days or by less than 21 days, if we are a public company, otherwise 10 days, the date on which the meeting is to be held; (iv) the holders of not less than five percent of the issued shares entitled to vote at a meeting may requisition the directors to call a meeting of shareholders for the purposes stated in the requisition; (v) only shareholders entitled to vote at the meeting, our directors and our auditor are entitled to be present at a meeting of shareholders; and (vi) upon the application of a director or shareholder entitled to vote at the meeting, the Superior Court of Justice may order a meeting to be called, held and conducted in a manner that the Court directs.
Our Bylaws provide that a quorum is met when holders of not less than a majority of the shares entitled to vote at the meeting of shareholders are present in person or represented by proxy.
The holders of our common shares are entitled to attend and vote at all meetings of our shareholders.
Fully Paid and Non-assessable
All outstanding Common Shares are duly authorized, validly issued, fully paid and non-assessable.
Our Objects and Purposes
Article 5 of our Articles of Incorporation registered with the Ontario Ministry of Government Services (1901673) provides that there are no restrictions on the business that we may carry on or on the powers the Company may exercise.
Authority of Directors
A director may not vote on a proposal, arrangement or contract in which the director is materially interested, but such transaction must be approved by a majority of the independent directors and be on terms no less favorable than the terms that could be obtained from an unaffiliated third party. Under the charter of the Compensation Committee to be adopted by the Board of Directors, the Committee has the authority to determine the compensation of directors, including the directors who are members of the committee. Article 2 of the Bylaws grants the Board of Directors the power to delegate to a director or a committee of directors to authorize us to borrow money, issue debt obligations, guarantee the performance of obligations of other parties and grant a security interest in our assets to secure our obligations. Neither our Articles of Incorporation or Bylaws provide for any age limit requirement regarding the retirement of Directors or require Directors to be shareholders.
Penny Stock Regulation
The SEC has adopted regulations which generally define “penny stock” to be any equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share. Such securities are subject to rules that impose additional sales practice requirements on broker-dealers who sell them. For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchaser of such securities and have received the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a disclosure schedule prepared by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, among other requirements, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. As our common shares may be subject to such penny stock rules, purchasers will likely find it more difficult to sell their Common Shares in the secondary market.
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Limitations on Liability and Indemnification of Officers and Directors
In accordance with the Business Corporations Act (Ontario) and pursuant to the By-laws of the Company, subject to certain conditions, we shall, to the maximum extent permitted by law, indemnify a director or officer, a former director or officer, or another individual who acts or acted at our request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including any amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with us or other entity. We shall advance monies to a director, officer or other individual for costs, charges and expenses reasonably incurred in connection with such a proceeding; provided that such individual shall repay the moneys if the individual does not fulfill the conditions described below or is not successful on the merits in their defense of the action or proceeding. Indemnification is prohibited unless the individual:
| · | acted honestly and in good faith with a view to our best interests; | |
| · | in the case of a criminal or administrative action or proceeding enforced by a monetary penalty, had reasonable | |
| · | grounds to believe the conduct was lawful; and | |
| · | was not judged by a court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done. |
Registration of Common Shares
All transfers of our securities shall be made in accordance with the Business Corporations Act (Ontario) and the Securities Transfer Act. Subject to the provisions of the Business Corporations Act (Ontario) and the Securities Transfer Act, no transfer of shares represented by a security certificate (as defined in the Business Corporations Act (Ontario)) shall be registered in a securities register except upon presentation of the certificate representing such shares with an endorsement which complies with the Business Corporations Act (Ontario) and the Securities Transfer Act made thereon or delivered therewith duly executed by an appropriate person as provided by the Business Corporations Act (Ontario) and the Securities Transfer Act, together with such reasonable assurance that the endorsement is genuine and effective as the Board may from time to time prescribe, upon payment of all applicable taxes and any fees prescribed by the Board, upon compliance with such restrictions on transfer as are authorized by the articles and upon satisfaction of certain liens enumerated in the Bylaws.
Transfer Agent and Registrar
The transfer agent and registrar for our common shares is Issuer Direct Corporation, 1981 Murray Holladay Road, Suite 100, Salt Lake City, Utah 84117.
Listing
The Company’s common shares are listed on the Nasdaq Capital Market under the symbol “GV.”
C. Material Contracts
We have not entered into any material contracts other than in the ordinary course of business and other than those described in this annual report, including those described in Item 4. “Information on the Company.”
D. Exchange Controls
We are incorporated pursuant to the laws of Ontario, Canada. There is no law or governmental decree or regulation in Canada that restricts the export or import of capital, or affects the remittance of dividends, interest or other payments to a non-resident holder of common shares, other than withholding tax requirements. Any such remittances to U.S. residents are generally subject to withholding tax, however no such remittances are likely in the foreseeable future.
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E. Taxation
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the principal U.S. federal income tax consequences of the acquisition, ownership and disposition of our common shares that are generally applicable to a U.S. Holder, as defined below, with respect to shares that a U.S. Holder acquires. This summary assumes that the shares are held as a “capital asset” (generally, property held for investment), within the meaning of Section 1221 the U.S. Internal Revenue Code of 1986, as amended (the “Code”), in the hands of a U.S. Holder at all relevant times. This discussion is based on the Code, final, temporary and proposed Treasury regulations thereunder ( “Treasury Regulations”), pertinent judicial decisions, published and interpretive rulings of the U.S. Internal Revenue Service (the “IRS”). Future legislative, judicial, or administrative modifications, revocations, or interpretations, which may or may not be retroactive, may result in U.S. federal income tax consequences significantly different from those discussed herein. This discussion is not binding on the IRS. No ruling has been or will be sought or obtained from the IRS with respect to any of the U.S. federal tax consequences discussed herein. There can be no assurance that the IRS will not challenge any of the conclusions described herein or that a U.S. court will not sustain such a challenge.
This discussion does not address the U.S. federal income tax consequences to U.S. Holders subject to special rules, including U.S. Holders that (i) are banks, financial institutions, or insurance companies, (ii) are regulated investment companies or real estate investment trusts, (iii) are brokers, dealers, or traders in securities or currencies, (iv) are tax-exempt organizations (including private foundations) or pension funds, (v) are governments or agencies or instrumentalities thereof, (vi) are U.S. expatriates, (vii) elect to mark their securities to market, (viii) hold the shares as part of hedges, straddles, constructive sales, conversion transactions, or other integrated investments, (ix) acquire the shares as compensation for services or through the exercise or cancellation of employee stock options or warrants, (x) have a functional currency other than the U.S. dollar, (xi) own or have owned directly, indirectly, or constructively, shares of the Company representing 10% or more of the voting power or value of the Company; (xii) are grantor trusts; or (xiii) are persons holding shares of the Company in connection with a trade or business, permanent establishment, or fixed base outside the United States.
In addition, this discussion does not address tax considerations relevant to U.S. Holders under any non-U.S., state or local tax laws, the Medicare tax on net investment income, U.S. federal estate, gift tax, other non-income tax, or the alternative minimum tax. Each U.S. Holder is urged to consult his or its tax advisors regarding the U.S. federal, state, local, and non-U.S. income and other tax considerations of an investment in the shares.
As used herein, “U.S. Holder” means a beneficial owner of common shares that is (i) an individual who is a citizen or resident of the United States for U.S. federal income tax purposes, (ii) a corporation (or other entity taxable as a corporation for U.S. federal tax purposes) created or organized under the laws of the United States, any state thereof, or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income tax regardless of its source, or (iv) a trust that (a) is subject to the primary supervision of a court within the United States and for which one or more U.S. persons have authority to control all substantial decisions or (b) has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.
If a pass-through entity, including an S corporation, a partnership or other entity taxable as a partnership for U.S. federal income tax purposes, holds common shares, the U.S. federal income tax treatment of an owner or partner generally will depend on the status of such owner or partner and on the activities of the pass-through entity. A U.S. person that is an owner or partner of a pass-through entity holding common shares is urged to consult its own tax advisor.
Distributions on the Shares
Subject to the PFIC (as defined below) rules discussed below, the gross amount of any distribution paid by us will generally be subject to U.S. federal income tax as foreign source dividend income to the extent paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Such amount will be includable in gross income by a U.S. Holder as ordinary income, or as “qualified dividend income” (as discussed below), on the date that such U.S. Holder actually or constructively receives the distribution in accordance with such holder’s regular method of accounting for U.S. federal income tax purposes. The amount of any distribution made by us in property other than cash will be the fair market value (determined in U.S. dollars) of such property on the date of the distribution. Because we do not intend to calculate our earnings and profits on the basis of U.S. federal income tax principles, any distribution paid will generally be treated as a dividend for U.S. federal income tax purposes. Dividends paid by us will not be eligible for the dividends received deduction allowed to corporations.
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To the extent that a distribution exceeds the amount of our current and accumulated earnings and profits, as determined under U.S. federal income tax principles, such distribution will be treated first as a tax-free return of capital, causing a reduction in a U.S. Holder’s adjusted basis in the shares held by such U.S. Holder (thereby increasing the amount of gain, or decreasing the amount of loss, to be recognized by such U.S. Holder upon a subsequent disposition of the shares), with any amount that exceeds such U.S. Holder’s adjusted basis being taxed as a capital gain recognized on a sale or exchange (as discussed below). Because we may not calculate our earnings and profits under U.S. federal income tax principles, we expect that distributions generally will be reported to U.S. Holders as dividends.
So long as the shares are listed on the NASDAQ or we are eligible for benefits under the Income Tax Convention between the U.S. and Canada, dividends a U.S. Holder receives from us will be “qualified dividend income” if certain holding period and other requirements (including a requirement that we are not a PFIC in the year of the dividend or the immediately preceding year) are met. Qualified dividend income of an individual or other non-corporate U.S. Holder is subject to a reduced maximum U.S. federal income tax rate.
Subject to certain limitations, Canadian tax withheld with respect to distributions made on the shares may be treated as foreign taxes eligible for credit against a U.S. Holder’s U.S. federal income tax liability. Alternatively, a U.S. Holder may, subject to applicable limitations, elect to deduct the otherwise creditable Canadian withholding taxes for U.S. federal income tax purposes. The rules governing the foreign tax credit are complex and involve the application of rules that depend upon a U.S. Holder’s particular circumstances. Accordingly, a U.S. Holder is urged to consult its tax advisor regarding the availability of the foreign tax credit under its particular circumstances.
Sale, Exchange or Other Taxable Disposition of the Shares
Subject to the PFIC rules discussed below, a U.S. Holder generally will recognize gain or loss upon the taxable sale, exchange or other disposition of the shares in an amount equal to the difference between (i) the U.S. dollar value of the amount realized upon the sale, exchange or other taxable disposition and (ii) such U.S. Holder’s adjusted tax basis in the shares. A U.S. Holder’s adjusted tax basis in such shares will generally be its U.S. dollar cost. Generally, such gain or loss will be capital gain or loss and will be long-term capital gain or loss if, on the date of the sale, exchange or other taxable disposition, such U.S. Holder has held the shares for more than one year. If such U.S. Holder is an individual or other non-corporate U.S. Holder, long-term capital gains generally will be subject to a reduced maximum U.S. federal income tax rate. The deductibility of capital losses is subject to limitations under the Code. Gain or loss, if any, that a U.S. Holder realizes upon a sale, exchange or other taxable disposition of the shares generally will be treated as having a U.S. source for U.S. foreign tax credit limitation purposes.
PFIC Rules
A non-U.S. corporation, such as we will be classified as a passive foreign investment company, or a PFIC, with respect to a U.S. Holder for U.S. federal income tax purposes for a taxable year of a tested foreign corporation, if either (a) 75% or more of our gross income consist of certain types of passive income (which we refer to as the “income test”) or (b) 50% or more of the value of our assets either produce passive income or are held for the production of passive income. The value of our assets for this purpose is expected to be based, in part, on the quarterly average of the fair market value of such assets (which we refer to as the “asset test”). “Gross income” generally includes all sales revenues less the cost of goods sold. “Passive income” generally includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions, but does not include active business gains arising from the sale of certain commodities.
For purposes of the PFIC income test and asset test described above, if we own, directly or indirectly, 25% or more of the total value of the outstanding shares of another corporation, we will be treated as if it (a) held a proportionate share of the assets of such other corporation and (b) received directly a proportionate share of the income of such other corporation. In addition, for purposes of the PFIC income test and asset test described above, and assuming certain other requirements are met, “passive income” does not include certain interest, dividends, rents, or royalties that are received or accrued by us from certain “related persons” (as defined in the Code), to the extent such items are properly allocable to the income of such related person that is not passive income.
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Based on the projected composition of our assets and income, we believe that it might have constituted a PFIC for the taxable year ending March 31, 2021, were there to have been a U.S. Holder on such date, as a result of the significant gain reported from the sale of land (presumptively a passive asset). However, going forward, we do not anticipate it will constitute a PFIC with respect to any U.S. Holder acquiring shares after March 31, 2021. Although we do not anticipate being characterized as a PFIC with respect to U.S. Holders acquiring interests after March 31, 2021, because of (i) the nature of the anticipated income, and (ii) the value of our assets for purposes of the PFIC asset test generally should be determined by reference to the market price of the shares and on that basis will skew distinctly in favor of active income generating assets, it is possible that fluctuations in gain or income, or the market price of assets held may cause us to become a PFIC for the current or any subsequent taxable year. The determination of whether we will become a PFIC will depend, in part, on the composition of its income and assets, which will be affected by how, and how quickly, we us our liquid assets and cash raised in any offerings. Whether we are a PFIC is a factual determination, and we must make a separate determination each taxable year as to whether it is a PFIC (after the close of each taxable year). Accordingly, we cannot assure holders that we will not be a PFIC during the current or any future taxable year. If we are classified as a PFIC for any taxable year during which a U.S. Holder holds shares, we will continue to be treated as a PFIC, unless the U.S. Holder makes certain elections, for all succeeding years, even if we cease to qualify as a PFIC under the rules set forth above.
If we are considered a PFIC at any time that a U.S. Holder holds shares, any gain recognized by the U.S. Holder on a sale or other disposition of the shares, as well as the amount of any “excess distribution” (defined below) received by the U.S. Holder, would be allocated ratably over the U.S. Holder’s holding period for the shares. The amounts allocated to the taxable year of the sale or other disposition (or the taxable year of receipt, in the case of an excess distribution) and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an interest charge would be imposed. For the purposes of these rules, an excess distribution is the amount by which any distribution received by a U.S. Holder on shares exceeds 125% of the average of the annual distributions on the shares received during the preceding three years or the U.S. Holder’s holding period, whichever is shorter. Certain elections may be available that would result in alternative treatments (such as mark-to-market treatment or a “qualified electing fund” election) of the shares if we are considered a PFIC. However, we do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections which, if available, would result in tax treatment different from the general tax treatment for PFICs described above.
If a U.S. Holder holds shares during any taxable year that we are a PFIC, such holder generally must annually file Form 8621, “Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund”, with the IRS.
Holders are urged to consult their tax advisor concerning the U.S. federal income tax consequences of purchasing, holding, and disposing shares if we are or become a PFIC, including the possibility of making any election that may be available under the PFIC rules (including a mark-to-market election), which may mitigate the adverse U.S. federal income tax consequences of holding shares of a PFIC.
Receipt of Foreign Currency
The U.S. dollar value of any cash distribution made in Canadian dollars to a U.S. Holder will be calculated by reference to the exchange rate prevailing on the date of actual or constructive receipt of the distribution, regardless of whether the Canadian dollars are converted into U.S. dollars at that time. For U.S. Holders following the accrual method of accounting, the amount realized on a disposition of the shares for an amount in Canadian dollars will be the U.S. dollar value of this amount on the date of disposition. On the settlement date, such U.S. Holder will recognize U.S. source foreign currency gain or loss (taxable as ordinary income or loss) equal to the difference (if any) between the U.S. dollar value of the amount received based on the exchange rates in effect on the date of sale or other disposition and the settlement date. However, in the case of shares traded on an established securities market that are sold by a cash method U.S. Holder (or an accrual method U.S. Holder that so elects), the amount realized will be based on the spot rate in effect on the settlement date for the disposition, and no exchange gain or loss will be recognized at that time. A U.S. Holder will generally have a basis in Canadian dollars equal to their U.S. dollar value on the date of receipt of such distribution, on the date of disposition, or, in the case of cash method U.S. Holders (and accrual method U.S. Holders that so elects), on the date of settlement. Any U.S. Holder that receives payment in Canadian dollars and converts or disposes of the Canadian dollars after the date of receipt may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss and that generally will be U.S. source income or loss for foreign tax credit purposes. U.S. Holders are urged to consult their own U.S. tax advisors regarding the U.S. federal income tax consequences of receiving, owning, and disposing of Canadian dollars.
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Information with Respect to Foreign Financial Assets
Individuals and certain entities that own “specified foreign financial assets”, with an aggregate value in excess of $50,000 (and in some circumstances, a higher threshold) are generally required to file an information report on IRS Form 8938, Statement of Specified Foreign Financial Assets, with respect to such assets with their tax returns for each year in which they hold shares. “Specified foreign financial assets” include any financial accounts maintained by certain foreign financial institutions, as well as securities issued by non-U.S. persons if they are not held in accounts maintained by financial institutions. U.S. Holders are urged to consult their tax advisors regarding the application of this reporting requirement to their ownership of the shares.
Information Reporting and Backup Withholding
In general, information reporting will apply to dividends paid to a U.S. Holder in respect of the shares and the proceeds received by such U.S. Holder from the sale, exchange or other disposition of the shares within the United States unless such U.S. Holder is a corporation or other exempt recipient. Backup withholding may apply to such payments if a U.S. Holder fails to provide a taxpayer identification number or certification of exempt status or fails to report dividend and interest income in full. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be allowed as a refund or credit against a U.S. Holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.
CERTAIN CANADIAN TAX CONSEQUENCES FOR CANADIAN AND NON-CANADIAN INVESTORS
Disclaimer:
This summary is based on the provisions of the Canadian Tax Act in force as of the date hereof and our understanding of the current administrative policies of the Canada Revenue Agency published in writing prior to the date hereof. This summary considers all the Proposed Amendments and assumes that all Proposed Amendments will be enacted in the form proposed. However, no assurances can be given that the Proposed Amendments will be enacted as proposed, or at all. This summary does not otherwise consider or anticipate any changes in law or administrative policy whether by legislative, regulatory, administrative, or judicial action nor does it consider tax legislation or considerations of any province, territory or foreign jurisdiction, which may differ from those discussed herein.
Taxes only apply when the taxpayers sell the shares. as Canadian residents, they must pay Canadian income taxes on their worldwide investment income. (Income tax Act- ITA, Section 2(1))
Because we may qualify as a foreign private issuer under the Exchange Act, it is exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers. For the income tax concerns, an FPI a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes is not necessarily defined. Passive income for this purpose generally includes, among other things, dividends, interest, royalties, rents and gains from commodities and securities transactions and from the sale or exchange of property that gives rise to passive income. In determining whether a non-U.S. company is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is considered. Interests in less than 25% owned corporations are treated as passive assets.
A. For “Canadian Holder” – The resident in Canada for tax purpose
| 1. | Residency consideration |
For tax law purposes, a public corporation is generally defined in section 89(1) of the Income Tax Act as a corporation resident in Canada the shares of which are listed on a designated stock exchange in Canada (including the Toronto Stock Exchange (TSX), Tiers 1 or 2 of The TSX Venture Exchange, the Montreal Exchange, the Canadian National Stock Exchange, and the NEO Exchange (formerly, the Aequitas NEO Exchange). Therefore, a corporation that only has its securities listed on a foreign exchange does not fall with this definition of “public corporation”. We are in this category.
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| 2. | Dividends |
Dividends from shares of Canadian public corporations that trade on a U.S. stock exchange will generally not be subject to U.S. non-resident withholding tax. Dividends from Canadian public corporations are considered Canadian dividends regardless of what stock exchange they trade on.
Under the Income Tax Act s. 90(1), regarding the Shares in Foreign Corporations - Canadian residents who invest in shares which are traded on U.S. stock exchanges are not required to file a U.S. income tax return because of these investments, unless there is some other reason (e.g., U.S. citizen) for filing a U.S. income tax return. All income and capital gains from the foreign shares will be reported on taxpayer’s Canadian income tax return. There will be withholding tax deducted from the foreign dividends at the time they are paid, which the taxpayer can at least partially recover by claiming a foreign non-business tax credit. If the shares are in a registered account such as an RRSP or RRIF, there is often no withholding tax. When the foreign shares are in a TFSA, withholding tax will be deducted, and cannot be recovered. US estate tax may be payable by Canadian residents on US assets owned at the time of death, including shares in US corporations.
The dividend income received from foreign corporations does not qualify for a dividend tax credit, so tax is paid on 100% of the dividend (before deduction of withholding tax), when file the Canadian tax return, and the adjusted cost base (“ACB”) of purchased foreign shares must be calculated in Canadian dollars. If Canadian funds were transferred to pay for the purchase, use the exchange rate charged in the transfer. If foreign funds were used to purchase or sell shares, Canada Revenue Agency (“CRA”) now indicates that the exchange rate on the settlement date should be used to convert to Canadian dollars.
Distributions made by foreign non-resident corporations to Canadian shareholders are normally considered foreign dividends, 100% taxable. When distributions from US shares are categorized as capital gains or return of capital for US taxpayers, they will still be considered fully taxable to Canadian taxpayers. For a distribution from a non-resident corporation to be considered a return of capital for Canadian tax purposes, and thus reduce ACB under s. 53(2)(b)(ii) of the ITA, the distribution would have to be considered a return of capital under corporate tax law and not US tax law. This would also apply to foreign (non-resident) mutual funds or exchange traded funds. There is an exception in some cases when the non-resident corporation is a “foreign affiliate” of the Canadian taxpayer. One of the criteria for a foreign affiliate is that the Canadian taxpayer owns at least 1% of the equity of the non-resident corporation.
The dividend income must be converted to Canadian dollars to determine the amount to include in the inclusion of the income. The taxpayer can convert using the exchange rates on the dates of the foreign dividend income is received, or he/she can use the average annual exchange rate, as published by the Bank of Canada, for all the dividends received in the year.
For investors who are the corporate entity, the taxation of Investment Income may consist of income from property, which would include things like rentals, interest, dividends, and royalties. The corporate income tax rate on capital gains is 50% of the tax rate on investment income, because only 50% of a capital gain is taxable. When the principal business of a corporation is to earn investment income (income from property), the corporation is usually considered a specified investment business, and is not eligible for the small business deduction.
There is no gross-up or dividend tax credit for dividends received by a corporation. Dividends received from Canadian corporations may be deductible under s. 112 of the Income Tax Act (ITA), but Part IV tax (ITA s. 186-187) may be payable on these dividends at a tax rate of 38 1/3% (33 1/3% for taxation years ending before 2016) of the dividends received. Part IV tax becomes part of the corporation’s refundable dividend tax on hand (RDTOH). RDTOH is available as a dividend refund to the corporation when dividends are paid to shareholders of private corporations.
Under trust law in Canada, a capital gain realized by a trust is generally considered to be part of the capital of the trust. For income tax purposes, however, a taxable capital gain realized by a trust is included in computing its income. All or part of the amount of a taxable capital gain realized by a trust may, under certain circumstances, be included in the income of one or more of its beneficiaries under one of the provisions since such an amount included in the income of a beneficiary will also have been included in the trust’s income, a corresponding deduction could then be claimed. Any amount of a taxable capital gain realized by a trust that is paid or payable to a beneficiary is included in the beneficiary’s income under subsection 104(13) of ITA.
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Also, although a taxable capital gain may not form part of trust income under trust law, it does enter into the calculation of “accumulating income” (as defined in subsection 108(1) of the Income Tax Act) and thus an amount of a taxable capital gain can be included in the income of a preferred beneficiary by means of a subsection 104(14) preferred beneficiary election. The actions taken by the trustees of the trust that cause an amount of a taxable capital gain to be included in the income of a beneficiary under subsection 104(13) or (14) should not contravene the terms of the trust indenture.
| 3. | Tax Treaty |
Tax treaties act to eliminate double taxation by:
| · | specifying each country’s right to tax or not tax particular types of income, and/or | |
| · | requiring one of the countries to grant tax credits for tax already paid on the income. |
Tax treaties override the provisions of the Income Tax Act (ITA) of Canada and are relevant to both residents and non-residents of Canada with respect to international a particular transaction or series of transactions, taxpayers need to first consult the ITA and then consider the provisions of the applicable tax treaty. Tax treaty to taxation of foreign-source income, while non-residents of Canada need to consider tax treaties as they apply to Canadian-source income earned and/or Because of proximity to the United States, the tax treaty between Canada and the U.S. (Canada-U.S. Tax Convention) is most relevant for Canadian reside taxpayers earning Canadian-source income.
There are some examples of issues addressed in the Canada-U.S. Tax Convention:
| · | Tie-breaker rules for establishing residency of an individual or a corporation where that individual or corporation is considered resident of both Canada and US | |
| · | A definition of a permanent establishment for the purpose of determining whether a Canadian resident is carrying on business in the U.S. or Canada | |
| · | Withholding tax rates for U.S. dividends or interest earned by a resident of Canada. |
A Canadian resident is entitled to a lower withholding rate of 15% under a treaty between the two countries if they have filed a form W-8 BEN (IRS: Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting) with the brokerage where they hold the investments.
| 4. | Capital Gains and Losses |
Under Income Tax Act s. 3(b), 38(a), 248(1), A capital gain or loss is the gain or loss resulting from the sale of property, such as stocks, bonds, art, stamp collections, real estate, and promissory notes. Gains or losses from bad debts, foreign exchange and call and put options are also normally considered capital gains or losses.
Capital gains on sale of U.S. securities Withholding tax is generally not withheld on capital gains realized on the sale or redemption of shares of a U.S. corporation. The capital gain or loss is taxable in Canada and will receive the same beneficial tax treatment that the sale of Canadian shares would receive (i.e., 50% capital gains/losses inclusion rate).
Corporate actions Certain types of corporate actions (i.e., takeovers, mergers, spin-offs, etc.) involving shares in the U.S. and other foreign corporations may be non-taxable for Canadian tax purposes. Every corporate action is unique, and taxpayer will need to review the transaction prior to taking any action in respect to the security.
A loss on shares or debt may be considered a business investment loss instead of a capital loss, in certain circumstances. See our link below to the article on business investment losses.
A taxable capital gain is 50% of a capital gain. The capital gain or loss is calculated by deducting the original cost of the asset from the proceeds received on the sale of the asset. Because only 50% of the gain is taxable, less tax is paid on capital gains than on income such as interest.
An allowable capital loss is 50% of a capital loss. It can only be used to reduce or eliminate taxable capital gains, except in the year of a taxpayer’s death or the immediately preceding year, when it can be used to reduce other income.
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| 5. | Foreign Tax Credit (FTC) |
Generally, subsection 126(1) of the Act permits a Canadian resident taxpayer to deduct from the tax otherwise payable for a taxation year, a foreign tax credit in respect of “non-business income tax” (as defined in subsection 126(7) of the Act) paid by the taxpayer for the taxation year, and FTC separate foreign tax credit calculations under subsection 126(1) must be made for each country, and the tax paid to USA may only be credited against Canadian taxes otherwise payable in respect of non-business income from sources in USA.
Generally, when determining the source of a capital gain from the disposition of shares for foreign tax credit purposes under section 126 of the Act, certain factors as outlined in paragraph 1.65 of the Folio would be taken into consideration. However, where Canada has entered into a tax treaty with the country to whom taxes are paid, consideration must be given as to whether the provisions of the treaty may affect and modify the general sourcing rule. In general terms, pursuant to subparagraph 2(a) of Article 23 of the Treaty, Canada shall provide a foreign tax credit for taxes payable in US on profits, income or gains from sources in US, subject to the existing provisions of the law of Canada.
| 6. | Foreign Currency Purchase and Sale of Securities |
Individuals will most commonly encounter foreign exchange gains or losses when they are involved in purchasing or selling securities with settlement amounts denominated in a foreign currency. For purposes of distinguishing between ordinary capital gains and those that can be classified under ITA 39(2) as being in respect of foreign currencies, IT-95R provides the following examples of the time when the Department considers a transaction resulting in the application of ITA 39(2) to have taken place:
(a) At the time of conversion of funds in a foreign currency into another foreign currency or into Canadian dollars.
(b) At the time funds in a foreign currency are used to make a purchase or a payment in such a case the gain or loss would be the difference between the value of the foreign currency expressed in Canadian dollars when it arose, and its value expressed in Canadian dollars when the purchase or payment was made.
B. “Non-Canadian Holder” The Non- resident in Canada for tax purpose
While the basic approach to the assessment of income tax in Canada is to assess tax on Canadian residents, under certain circumstances non-residents can be required to pay Canadian income taxes. Depending on the type of income, the tax may be assessed under Part I, Part XIII, or other Parts of the Income Tax Act. Detailed consideration will be given to Part I and Part XIII tax as they are the most applied provisions. ITA 2(3) specifies that non-residents are responsible for Canadian Part I tax (tax assessed on Taxable Income) on certain types of income. As listed in that subsection, non-residents are responsible for:
| · | income earned while carrying on a business in Canada. | |
| · | employment income earned in Canada; and | |
| · | gains and losses resulting from dispositions of Taxable Canadian Property |
(1) is not, and is not deemed to be, resident in Canada for purposes of the Canadian Tax Act and any applicable income tax treaty or convention.
(2) deals at arm’s length with us, and
(3) does not use or hold, and is not deemed to use or hold, common shares in connection with carrying on a business in Canada; (such holder, a “Non-Canadian Holder”).
Special rules, which are not discussed in this summary, may apply to a Non-Canadian Holder that is an insurer carrying on a business in Canada and elsewhere.
For Canada/U.S. Tax Treaty on Dividend Payments purpose, and under ITA Part XIII Rules, most types of dividends are subject to the 25 percent Part XIII tax. This includes capital dividends, even though they are not subject to tax when received by Canadian residents. While there is nothing in the Canada/U.S. tax treaty to prevent the application of this tax to U.S. residents, the treaty serves to reduce the applicable rate. In this case, there are two different reduced rates, depending on the percentage of the dividend paying corporation that is owned by the non-resident recipient.
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5 Percent Rate If the U.S. resident recipient is a corporation and owns 10 percent or more of the voting shares of the resident Canadian company that is paying the dividend, the applicable rate is only 5 percent. This 5 percent rate for inter-corporate dividends reflects a view that dividend payments between parent companies and their subsidiaries should be less heavily taxed to encourage international trade and investment.
15 Percent Rate Other dividends paid by resident Canadian companies to shareholders who are U.S. residents are subject to the Part XIII withholding tax at a reduced rate of 15 percent.
F. Dividends and Paying Agents
Not Applicable.
G. Statements by Experts
Not Applicable.
H. Documents on Display
We file annual, semi-annual, quarterly (on a voluntary basis as a foreign private issuer) and current reports and other information with the Securities and Exchange Commission (the “SEC”). Our public filings are available from the Internet web site maintained by the SEC at www.sec.gov. In addition, our ordinary shares are listed on the Nasdaq Capital Market. Accordingly, our reports, statements and other information may be inspected at the offices of Nasdaq, One Liberty Plaza, 165 Broadway, New York, New York 10006.
Our web site address is www.visiongroupca.com. The information on, or accessible through, our web site, however, is not, and should not be deemed to be, a part of this report.
I. Subsidiary Information
Not Applicable.
J. Annual Report to Security Holders.
Not Applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk, Hedging and Financial Instruments
Our activities expose us to a variety of financial risks, including foreign currency risk and interest rate risk. We analyze each of these risks individually, as well as on an interconnected basis, and define strategies to manage the economic impact on our performance in line with our financial risk management policy. Management meets on a frequent basis and is responsible for reviewing the results of the risk assessment, approving recommended risk management strategies, monitoring compliance with the financial risk management policy and reporting to the Audit Committee.
Foreign Currency Risk
We are exposed to foreign currency risk on borrowings, investments, sales, purchases, royalties, licenses, management fees and interest expense/income whenever they are denominated in a currency other than the functional currency of our subsidiary engaged in the relevant transaction. To manage this risk, we primarily make use of cash deposits held in both U.S. dollars and Canadian dollars, in such amounts that match our forward budgeted expenditures.
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As far as foreign currency risk on firm commitments and forecasted transactions is concerned, our policy is, when material, to hedge operational transactions which are reasonably expected to occur (e.g., cost of goods sold and selling, general and administrative expenses) within the forecast period determined in the financial risk management policy. Operational transactions that are certain may be hedged without any limitation in time. Non-operational transactions (such as acquisitions and disposals of subsidiaries) may be hedged as soon as they are certain.
As of March 31, 2023, we have substantially locked in our anticipated exposures related to firm commitments and forecasted transactions for 2023 for the most important currency pairs such as USD/CAD.
Interest Rate Risk
In the future, we may be exposed to interest rate risk on variable-rate interest-bearing financial liabilities. In such instances in the future, we will apply a dynamic interest rate hedging approach where the target mix between fixed and floating rate is reviewed periodically. The purpose of our policy is to achieve an optimal balance between cost of funding and volatility of financial results, while taking into account market conditions as well as our overall business strategy. In the future, we may enter into interest rate swap agreements and forward rate agreements to manage our interest rate risk or into cross-currency interest rate swap agreements to manage both our foreign currency risk and interest rate risk.
Interest rates have been subject to significant volatility in the recent past and may be again in the future.
Inflation risk
Inflationary factors such as increases in the cost of our products and overhead costs may adversely affect our operating results. A high rate of inflation may have an adverse effect on our ability to maintain current levels of gross margin and selling, general and administrative expenses as a percentage of net revenues if the selling prices of our products do not increase proportionately with these increased costs.
Other Risks
See our audited consolidated financial statements as of March 31, 2023 and 2022, and the Risk Factors section of this Form 20-F for a fuller quantitative and qualitative discussion on the credit and liquidity risks to which we are subject and our policies with respect to managing those risks.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not Applicable.
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PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
There have not been any defaults with respect to dividends, arrearages or delinquencies since incorporation.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
There have been no material modifications to the rights of our holders of Common Shares since incorporation.
Use of Proceeds
On May 19, 2022, we completed an initial public offering of 283,333 (4,250,000 shares before the share consolidation) Common Shares. The offering was registered with the US Securities and Exchange Commission on Form F-1 (File No. 333-263290). We received approximately $14,333,969 in net proceeds from this offering.
We have used some of the net proceeds of this offering as follows:
| · | Approximately $1.0 million on PPP projects. | |
| · | Approximately $2.0 million on MTM course development and program partnerships with other universities | |
| · | Approximately $4.0 million at the vocational education level, including training equipment purchases, renovations of facilities, and promotions and professional trainer recruitments. | |
| · | Approximately $2.0 million on global market development and distribution channel establishments. | |
| · | Approximately $0.73 million for staff development. | |
| · | Approximately $2.0 million for working capital. | |
| · | $500,000 to be held in escrow for 18 months from the closing of the offering to cover potential indemnification claims by the Underwriters. |
ITEM 15. CONTROLS AND PROCEDURES
A. Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer (CEO) and chief financial officer (CFO), has performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(c) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this report, as required by Rule 13a-15(b) under the Exchange Act.
Based upon that evaluation, our management has concluded that, as of March 31, 2024, our disclosure controls and procedures were not effective in ensuring that the information required to be disclosed by us in the reports that we file and furnish under the Exchange Act was recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
B. Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP.
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The Company’s internal control over financial reporting includes those policies and procedures that:
| · | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; |
| · | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our directors; and |
| · | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the company’s financial reporting.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or because the degree of compliance with policies or procedures may deteriorate. Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an assessment of the effectiveness of our internal control over financial reporting as of March 31, 2023. The assessment was based on criteria established in the framework Internal Control – Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management determined that, as of March 31, 2023, we did not maintain effective internal control over financial reporting due to the existence of the following significant deficiencies and material weaknesses:
| · | Lack of a functional internal audit department or personnel that monitors the consistencies of the preventive internal control procedures and, as a result, the Company may not be able to discover the existence of problems and prevent the problematic behavior in internal control; | |
| · | Lack of well-structured IT general control policies and procedures for documentation of program changes, periodic transaction log reviews; control quality evaluations, backup restoration tests and centralized anti-virus detection, which may result in failure to accurately collect operational data to prepare the financial statements; | |
| · | Lack of control or appropriate process in the retention of supporting documents which may has significantly delayed the progress and incurred additional costs of the audit; | |
| · | There was limited segregation of duties in authorizing banking transactions which may result in misstatement of financial reporting or fraudulent activities since no controls in place to prevent and/or detect such incidents; | |
| · | Lack of adequate controls for the overall accounting function and oversight of financial reporting which resulted in audit adjustments provided by the Company’s independent auditors; | |
| · | Lack of timely and reliable communication channel among different departments to ensure all relevant parties are fully aware of all transactions that the Company has entered into; | |
| · | Lack of proper internal review procedures on accounting on special and complex transactions such as IPO and acquisitions of new companies which may result in adjusted and unadjusted differences; | |
| · | Lack of timely filing and remittance for income taxes and sales taxes which may have resulted in additional penalty and interest charges; | |
| · | The absence of a formal budgeting process in the Company has led to challenges in cash management, especially when it faces significant amount of liabilities to settle; | |
| · | Material weakness in corporate governance. |
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Remediation
During and subsequent to the year ended March 31, 2024, Management has worked to improve the Company’s internal controls. Our management has carried out and is planning to undertake the following actions to remediate the material weakness described above:
| · | Establish formal internal control policies and procedures. Implement an ongoing initiative and training in the Company to ensure the importance of internal controls and compliance with established policies and procedures are fully understood throughout the organization. Provide continuous U.S. GAAP knowledge training to relevant employees to ensure the procedures and policies are properly followed; | |
| · | Enhance our remediation effort by continuing the effort to seek and hire personnel with strong SEC Reporting, SOX and internal control backgrounds; | |
| · | Implement new applications and systems that are aligned with our focus on creating strong internal controls, as well as complete and accurate financial information; | |
| · | Set up a clear and appropriate process/internal controls with responsible individuals, to keep support documents of its accounting records for at least six years in compliance with requirement of Canada Revenue Agency and electronic copies of the documents should be made and saved in the Company’s database in an organized manner which can be easily located when needed; | |
| · | Set up appropriate information and communication process within the group, to ensure group management team, especially CEO and CFO, are fully aware of the status of all material transactions. On a timely basis, the CFO, or someone delegated by the CFO, shall collect all significant contracts and relevant amendments, other supporting documents, and determine the appropriate accounting treatment and journal entries. A periodically review of all entities accounting records; bank reconciliation of all bank accounts shall be performed by the CFO and head office. | |
| · | Set up robust internal controls on initiating, processing, recording and reporting of material transactions between the Company and the controlling shareholder. Reconcile the shareholder loan transactions between the Company’s accounting records and legal documents signed. Audit committee shall perform quarterly review on such transactions and reconciliation s to ensure consistency. | |
| · | Implement a robust budgeting and cash management system to ensure that the Company has sufficient resources available when needed, as well as to address its liabilities effectively and maintain financial stability. | |
| · | Update the corporate governance framework to align with US security regulations and disclosure rules. It is essential to conduct Board meetings to obtain approval for all material transactions. The board should periodically review the Company’s related party balances with the controlling shareholder to ensure accuracy and completeness. The Board should regularly discuss with the Company’s US security lawyer to ensure all practices are in compliance with US security regulations. This will enhance transparency, compliance, and adherence to proper corporate governance practices within the Company. | |
| · | Develop robust internal controls in authorizing bank transactions, segregation of duties and multiple-level approval matrix for various transactions. At least two signatures should be required for cheque-writing. Corporate governance framework shall be updated in accordance with US security regulations and disclosure rules. Transactions over certain threshold would require extra layer of approval, board meeting shall be conducted for the approval of all material transactions. | |
| · | Set up a proper review process to ensure all the special and complex transactions are accounted for properly in accordance to US GAAP. If possible, engage external experts on financial reporting to review the Company’s financial statements on a periodic | |
| · | Compile a schedule that details the filing and remittance deadlines for all applicable entities. The schedule will be periodically updated to ensure that the deadlines have been adhered to, to avoid interest and penalty charges. |
The material weaknesses in our internal control over financial reporting will not be considered remediated until ITGCs and process-level controls operate for a sufficient period of time and can be tested and concluded by management to be designed and operating effectively. We cannot provide any assurance that these remediation efforts will be successful or that our internal control over financial reporting will be effective as a result of these efforts. In addition, as we continue to evaluate and work to improve our internal control over financial reporting related to the identified material weaknesses, management may determine to take additional measures to address control deficiencies or determine to modify the remediation plan described above.
C. Attestation report of the registered public accounting firm
Not applicable.
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D. Changes In Internal Control Over Financial Reporting
Management continues to focus on internal control over financial reporting. During the fiscal year ended March 31, 2023, the Company has completed certain reviews of our internal controls and will be implementing the following remedial initiatives including engaging more qualified accounting personnel and consultants with relevant U.S. GAAP and SEC reporting experience and qualification to strengthen the financial reporting and U.S. GAAP training. The Company also plans to take other steps to strengthen our internal control over financial reporting, including training of the current accounting personal regarding U.S. GAAP and SEC reporting regulations; establishing an internal audit function and standardizing the Company’s semi-annual and year-end closing and financial reporting processes, hiring external financial consultants with experience in U.S. GAAP and SEC reporting obligations, hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial and system control framework, implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel; and setting up an internal audit function as well as engaging an external consulting firm to assist us with assessment of Sarbanes-Oxley compliance requirements and improvement of overall internal control.
ITEM 16. [RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
As of the date hereof, the audit committee is composed of William Chai, Dr. Simon Tang and Marc Kealey with William Chai serving as chair. William Chai qualifies as an “audit committee financial expert” pursuant to Items 16A(b) and (c) of Form 20-F. Our Board of Directors has affirmatively determined that William Chai, Dr. Simon Tang and Marc Kealey each meet the definition of “independent director” for purposes of serving on the audit committee under the NASDAQ rules and the independence standards under Rule 10A-3 of the Exchange Act.
ITEM 16B. CODE OF ETHICS
Our board of directors has adopted a code of business conduct and ethics. The purpose of the code is to promote ethical conduct and deter wrongdoing. The policies outlined in the code are designed to ensure that our directors, executive officers and employees act in accordance with not only the letter but also the spirit of the laws and regulations that apply to our business. We expect our directors, executive officers and employees to exercise good judgment, to uphold these standards in their day-to-day activities, and to comply with all applicable policies and procedures in the course of their relationship with the company. During fiscal year 2022, no amendments to or waivers from the Code were made or given for any of our executive officers. The code of ethics is updated as needed from time to time.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
We have appointed MNP LLP, as our independent registered public accounting firm. The following table sets forth information regarding the amount billed and accrued to us by MNP LLP for the fiscal year ended March 31, 2023 and 2022:
| Period Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Audit Fees: | $ | 184,725 | $ | 159,600 | ||||
| Audit Related Fees: | ||||||||
| Tax Fees: | – | – | ||||||
| Total: | $ | 184,725 | $ | 159,600 | ||||
On March 4, 2024, we have appointed YCM CPA Inc. (the "Successor Auditors") as successor auditor of the Company and for the fiscal year ending March 31, 2024 to replace MNP LLP.
| Period Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Audit Fees: | $ | 220,000 | $ | 184,725 | ||||
| Audit Related Fees: | ||||||||
| Tax Fees: | – | – | ||||||
| Total: | $ | 220,000 | $ | 184,725 | ||||
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Audit Fees
This category includes the aggregate fees billed by our independent auditor for the audit of our annual financial statements, reviews of interim financial statements that are provided in connection with statutory and regulatory filings or engagements.
Audit Related Fees
This category includes the aggregate fees billed in each of the last two fiscal years for assurance and related services by the independent auditors that are reasonably related to the performance of the audits or reviews of the interim financial statements and are not reported above under “Audit Fees,” and generally consist of fees for other engagements under professional auditing standards, accounting and reporting consultations.
Tax Fees
This category includes the aggregate fees billed in each of the last two fiscal years for professional services rendered by the independent auditors for tax compliance, tax planning and tax advice.
Policy on Pre-Approval by Audit Committee of Services Performed by Independent Auditors
The policy of our Audit Committee is to pre-approve all audit and permissible non-audit services to be performed by our independent auditors during the fiscal year.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not Applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
None.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
None.
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ITEM 16G. CORPORATE GOVERNANCE.
As a Ontario corporation listed on the Nasdaq Capital Market, we are subject to the Nasdaq Capital Market corporate governance listing standards. However, Nasdaq Capital Market rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the Nasdaq Capital Market corporate governance listing standards. We intend to follow the following home country practices in lieu of the Nasdaq Marketplace Rules as follows:
| · | Nasdaq Listing Rule 5605(b)(1) requires listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to, and we may follow home country practice in lieu of the above requirements. The corporate governance practice in our home country, Ontario, does not require a majority of our board to consist of independent directors. Currently, a majority of our board members are independent. |
| · | We do not intend to follow Nasdaq’s requirements regarding shareholder approval for certain issuances of securities under Nasdaq Listing Rule 5635. Under our By-Laws, as amended, and Articles of Incorporation, as amended, our board of directors is authorized to issue securities including in connection with certain events such as the acquisition of shares or assets of another company, the establishment of or amendments to equity-based compensation plans for employees, a change of control of us, rights issues at or below market price, certain private placements and issuance of convertible notes, and the issuance of 20% or more of our outstanding ordinary shares. | |
| · | Nasdaq Listing Rule 5250(b)(3) requires listed companies to disclose third party director and nominee compensation. As a foreign private issuer, however, we are permitted to, and we may follow home country practice in lieu of the above requirements. The corporate governance practice in our home country, Ontario, does not require us to disclose third party director and nominee compensation. |
Other than those described above, there are no significant differences between our corporate governance practices and those followed by U.S. domestic companies under Nasdaq Capital Market corporate governance listing standards. We may in the future decide to use the foreign private issuer exemption with respect to some or all the other Nasdaq corporate governance rules. As a result, our shareholders may be afforded less protection than they otherwise would under the Nasdaq corporate governance listing standards applicable to U.S. domestic issuers. We may utilize these exemptions for as long as we continue to qualify as a foreign private issuer.
In addition, we are a foreign private issuer within the meaning of the rules under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As such, we are exempt from certain provisions applicable to United States domestic public companies. For example:
| · | we are not required to provide as many Exchange Act reports, or as frequently, as a domestic public company; |
| · | for interim reporting, we are permitted to comply solely with our home country requirements, which are less rigorous than the rules that apply to domestic public companies; |
| · | we are not required to provide the same level of disclosure on certain issues, such as executive compensation; |
| · | we are exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; |
| · | we are not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; and |
| · | our insiders are not required to comply with Section 16 of the Exchange Act requiring such individuals, and entities to file public reports of their share ownership and trading activities and establishing insider liability for profits realized from any “short-swing” trading transaction. |
| · | we file annual reports on Form 20-F and reports on Form 6-K as a foreign private issuer. As a result of our reduced reporting requirements, our shareholders may not have access to certain information they may deem important. |
| 93 |
ITEM 16H. MINE SAFETY DISCLOSURE
Not Applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not Applicable.
ITEM 16J. INSIDER TRADING POLICIES
As an Emerging Growth Company (EGC), under the SEC rules, we are subject to reduced disclosure obligations. Currently, we have not adopted a formal insider trading policy as we are not required by the Ontario Business Corporations Act (OBCA) or other local regulations to do so. However, we are evaluating the adoption of an insider trading policy to align with best practices and ensure compliance with applicable insider trading laws as we continue to grow and mature as a company.
ITEM 16K CYBERSECURITY
As an EGS and Smaller Reporting Company with limited operations, we have not yet adopted formal cybersecurity risk management programs or established formal processes for assessing cybersecurity risks. However, we recognize the importance of managing risks associated with cybersecurity threats and are committed to implementing and maintaining an adequate information security program as our company grows, to protect our systems and data.
Our current approach to managing cybersecurity risks involves a combination of practices applicable to all users of our information technology systems and assets, including employees and contractors. These practices include the use of technology, the implementation of policies, the provision of training, and continuous monitoring to promote security awareness and prevent security incidents.
Given the early stage of development of our projects, we believe our exposure to cyber threats is limited, primarily concerning email communications and data storage. Financial transactions are conducted through well-established financial institutions, while accounting and employee information storage is managed by an external accounting firm.
As of the date of this report, we have not experienced any cybersecurity threats or incidents over the past three years that have materially affected or are reasonably likely to affect our business, results of operations, or financial condition. However, we cannot guarantee that such incidents will not occur in the future. For more information, please refer to our risk factor “The Company is exposed to information systems and cybersecurity risks” on page 4.
| 94 |
PART III
ITEM 17. FINANCIAL STATEMENTS
Not Applicable.
ITEM 18. FINANCIAL STATEMENTS
The consolidated financial statements of Visionary Holdings Inc. and its subsidiaries are included at the end of this annual report.
ITEM 19. EXHIBITS
| 95 |
| 96 |
______________
| * | Previously filed. | |
| ** | Filed herewith. |
| 97 |
SIGNATURE
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this report on its behalf.
| Date: August 15, 2024 | VISIONARY HOLDINGS INC. |
| /s/ Zhong Chen | |
| Zhong Chen, Chief Executive Officer |
| 98 |
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and the shareholders of
Visionary Holdings Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Visionary Holdings Inc. and subsidiaries (collectively, the “Company”) as of March 31, 2024, and the related consolidated statements of operations and comprehensive income, changes in shareholders’ equity, and cash flows for the year ended March 31, 2024 and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2024, and the results of its operations and its cash flows for the year ended March 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered loss from operations in the current year and has a working capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/
We have served as the Company’s auditor since 2024.
PCAOB ID 6781
August 14, 2024
| F-2 |
VISIONARY HOLDINGS INC.
(“FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
CONSOLIDATED BALANCE SHEETS
(IN U.S. DOLLARS)
| March 31, | ||||||||
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash – Current | ||||||||
| Short-term investments | ||||||||
| Accounts receivable, net | ||||||||
| Prepaid and other receivable | ||||||||
| Due from related parties | ||||||||
| Assets held for sale | ||||||||
| Total current assets | ||||||||
| Restricted cash – non-current | ||||||||
| Property, plant and equipment, net | ||||||||
| Right of use assets | ||||||||
| Intangible assets, net | ||||||||
| Acquisition deposits | ||||||||
| Deferred tax assets | ||||||||
| Goodwill | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Other tax payable | ||||||||
| Due to related parties | ||||||||
| Deferred revenue | ||||||||
| Lease liability - current | ||||||||
| Liabilities related to assets held for sale | ||||||||
| Bank loans - current | ||||||||
| Other loan payable- current | ||||||||
| Convertible notes | ||||||||
| Derivative liability - current | ||||||||
| Income tax payable | ||||||||
| Total current liabilities | ||||||||
| Deferred tax liabilities | ||||||||
| Lease liability, non-current | ||||||||
| Other loan payable, non-current | ||||||||
| Derivative liability, non-current | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments | ||||||||
| EQUITY | ||||||||
| Common shares, | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total shareholders’ equity attributable to the Company | ||||||||
| Noncontrolling interest | ( | ) | ||||||
| Total shareholders’ equity | ||||||||
| TOTAL LIABILITIES AND EQUITY | $ | $ | ||||||
* Retroactively restated for effect of recapitalization and share consolidation on May 29, 2024
The accompanying notes are an integral part of these consolidated financial statements.
| F-3 |
VISIONARY HOLDINGS INC.
(“FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
AND COMPREHENSIVE INCOME (LOSS)
(IN U.S. DOLLARS)
| For the Years Ended March 31, | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| Revenue – rent | $ | $ | $ | |||||||||
| Revenue – tuition | ||||||||||||
| Revenue – construction | ||||||||||||
| Revenue – sales of land | ||||||||||||
| Total Revenues | ||||||||||||
| Cost of revenue – rent | ||||||||||||
| Cost of revenue – tuition | ||||||||||||
| Cost of revenue – construction | ||||||||||||
| Cost of revenue – sales of land | ||||||||||||
| Total cost of revenues | ||||||||||||
| Gross Profit | ||||||||||||
| Operating expenses: | ||||||||||||
| General and administrative expenses | ||||||||||||
| Professional fees | ||||||||||||
| Salaries | ||||||||||||
| Total operating expenses | ||||||||||||
| (Loss) Income from operations | ( | ) | ||||||||||
| Other (expense) income | ||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ||||||
| Accretion interest | ( | ) | ( | ) | ||||||||
| Impairment loss | ( | ) | ( | ) | ||||||||
| Gain on disposal of properties | ||||||||||||
| Government subsidies | ||||||||||||
| Change in fair value of derivative liability | ( | ) | ||||||||||
| Change in fair value of convertible debenture | ( | ) | ||||||||||
| Loss on disposal of subsidiaries | ( | ) | ||||||||||
| Loss on investment deposit | ( | ) | ||||||||||
| Other income | ||||||||||||
| Total other (expense) income, net | ( | ) | ( | ) | ||||||||
| Income (loss) before income taxes | ( | ) | ||||||||||
| Provision for income taxes - current | ( | ) | ||||||||||
| Recovery for income taxes - deferred | ( | ) | ||||||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||
| Less: net (loss) attributable to noncontrolling interest | ( | ( | ) | ( | ) | |||||||
| Net income (loss) attributable to Visionary Holdings Inc. | ( | ) | ||||||||||
| Other comprehensive income (loss): | ||||||||||||
| Foreign currency translation gain (loss) | ( | ) | ||||||||||
| Comprehensive income (loss) | ( | ) | ( | ) | ||||||||
| Less: comprehensive (loss) attributable to noncontrolling interest | ( | ) | ( | ) | ( | ) | ||||||
| Comprehensive income (loss) attributable to Visionary Holdings Inc. | $ | $ | ( | ) | $ | |||||||
| Earnings (Loss) Per Share - Basic | 0.32 | (1.34 | ) | (0.00 | ) | |||||||
| Weighted Average Shares Outstanding - Basic* | ||||||||||||
| Earnings (Loss) Per Share - Diluted | $ | $ | ( | ) | $ | ( | ) | |||||
| Weighted Average Shares Outstanding - Diluted* | ||||||||||||
* Retroactively restated for effect of recapitalization and share consolidation on May 29, 2024
The accompanying notes are an integral part of these consolidated financial statements.
| F-4 |
VISIONARY HOLDINGS INC.
(“FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’
EQUITY
FOR THE FISCAL YEARS ENDED MARCH 31, 2024, 2023 AND 2022
(IN U.S. DOLLARS, EXCEPT SHARE NUMBERS)
| Common Share | Additional Paid in | Retained Earnings | Accumulated Other Comprehensive Income | Non-controlling | ||||||||||||||||||||||||
| Shares* | Amount | Capital | (Deficit) | (Loss) | interest | Total | ||||||||||||||||||||||
| Balance at March 31, 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Net income for the year | – | ( | ) | ( | ) | |||||||||||||||||||||||
| Capital contribution made by noncontrolling shareholders - Conbridge | – | |||||||||||||||||||||||||||
| Capital contribution made by noncontrolling shareholders - Lowell | – | |||||||||||||||||||||||||||
| Capital contribution made by noncontrolling shareholders - Princeton | – | ( | ) | ( | ) | |||||||||||||||||||||||
| Capital contribution made by noncontrolling shareholders – MTM Animation | – | |||||||||||||||||||||||||||
| Foreign currency translation loss | – | |||||||||||||||||||||||||||
| Balance at March 31, 2022 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Net loss for the year | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Initial public offering, net of share issuance costs | ||||||||||||||||||||||||||||
| Investment in subsidiary by additional 10% – MTM Animation | – | ( | ) | ( | ) | |||||||||||||||||||||||
| Foreign currency translation loss | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Balance at March 31, 2023 | $ | $ | $ | ( | ) | ( | ) | $ | $ | |||||||||||||||||||
| Net income (loss) for the year | – | ( | ) | |||||||||||||||||||||||||
| Exercise of Warrant B | ||||||||||||||||||||||||||||
| Share issuance of Senior Secured Convertible Notes | ||||||||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||||||
| Elimination of NCI at disposal of subsidiary | – | ( | ) | ( | ) | |||||||||||||||||||||||
| Foreign currency translation gain | – | |||||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | ( | ) | ( | ) | $ | ||||||||||||||||||||
* Retroactively restated for effect of recapitalization and share consolidation on May 29, 2024
The accompanying notes are an integral part of these consolidated financial statements.
| F-5 |
VISIONARY HOLDINGS INC.
(“FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN U.S. DOLLARS)
| For the Years Ended March 31, | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Gain recognized on government subsidy | ||||||||||||
| Gain on disposal of tangible assets | ( | ) | ||||||||||
| Amortization on finance fee on bank loan | ||||||||||||
| Amortization of intangible assets | ||||||||||||
| Change in fair value of warrant liability | ( | ) | ||||||||||
| Loss on disposal of subsidiaries | ||||||||||||
| Change in fair value of convertible debenture | ( | ) | ||||||||||
| Stock based compensation | ||||||||||||
| Deferred income tax recovery | ( | ) | ||||||||||
| Accretion cost | ||||||||||||
| Impairment loss on tangible assets | ||||||||||||
| Impairment loss on intangible assets and goodwill | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | ( | ) | ||||||||||
| Accounts receivable from related party | ||||||||||||
| Inventories | ||||||||||||
| Prepayments and other current assets | ( | ) | ( | ) | ( | ) | ||||||
| Due from related party | ||||||||||||
| Accounts payables | ||||||||||||
| Accrued liabilities | ||||||||||||
| Other tax payable | ( | ) | ( | ) | ||||||||
| Deferred revenue | ( | ) | ||||||||||
| Taxes payable | ( | ) | ||||||||||
| Net cash (used in) provided by operating activities | ( | ) | ||||||||||
| Cash flows from investing activities: | ||||||||||||
| Acquisition of business | ( | ) | ||||||||||
| Acquisition deposit | ( | ) | ||||||||||
| Purchase of property, plant and equipment | ( | ) | ( | ) | ||||||||
| Proceeds from disposal of property, plant and equipment | ||||||||||||
| Purchase additional shares from NCI | ( | ) | ||||||||||
| Loan advance to related parties | ||||||||||||
| Refund of land deposit | ||||||||||||
| Short-term investment | ( | ) | ||||||||||
| Loan advance from (to) unrelated parties | ( | ) | ||||||||||
| Refund from (payment to) acquisition deposits | ( | ) | ( | ) | ||||||||
| Net cash provided by (used in) investing activities | ( | ) | ( | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from bank loan | ||||||||||||
| Proceeds from mortgage | ||||||||||||
| Finance costs on mortgage | ( | ) | ( | ) | ( | ) | ||||||
| Proceed from private mortgage | ||||||||||||
| Repayment of other loan | ( | ) | ( | ) | ||||||||
| Proceed (repayment) from issue of convertible notes | ( | ) | ||||||||||
| Proceeds from initial public offering, net of share issuance costs | ||||||||||||
| Proceeds from share issuance for convertible note | ||||||||||||
| Deferred offering costs | ( | ) | ||||||||||
| Proceeds from an employee loan | ||||||||||||
| Repayment of mortgage principal | ( | ) | ( | ) | ( | ) | ||||||
| Proceeds (repayment) of shareholder advance | ( | ) | ( | ) | ||||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||||||
| Effect of exchange rate changes on cash | ( | ) | ( | ) | ||||||||
| Net (decrease) increase in cash | ( | ) | ( | ) | ||||||||
| Cash and restricted cash, beginning of the year | ||||||||||||
| Cash and restricted cash, end of the year | $ | $ | $ | |||||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||||||
| Cash paid for income tax | $ | $ | $ | |||||||||
| Cash paid for interest | $ | $ | $ | |||||||||
| NON-CASH ITEMS | ||||||||||||
| Disposal of subsidiaries | $ | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-6 |
VISIONARY HOLDINGS INC.
(“FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 1 – ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN
Visionary Holdings Inc. (“Visionary Group” or the “Company”) is a company limited by shares incorporated under the Business Corporation Act of Ontario, Canada on August 20, 2013. On January 30, 2024, the Company filed Articles of Amendment on change of name with Ontario Business Registry, Canada, to change its name from Visionary Education Technology Holdings Group Inc. to “Visionary Holdings Inc.”. The Company, through its subsidiaries, is primarily engaged in education related businesses, which includes high school education programs, real estate development, animation education, vocational education, online education and other education-related consulting services. The Company’s common shares are trading on the NASDAQ under the symbol “GV.”
Reorganization
On April 1, 2019, Ms. Fan Zhou transferred her 100% equity interest
in Visionary Education Real Estate Group Inc., formerly known as 123 Real Estate Development Ontario Ltd., to Visionary Group. Since this
reorganization, Visionary Group owns
Since the Company and its wholly-owned subsidiary, Visionary Education Service & Management Inc., are effectively controlled by the same Controlling Shareholder before and after the reorganization, they are considered under common control. The above-mentioned transaction was accounted for as a reorganization. The consolidation of the Company and this subsidiary has been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements.
The Company has subsidiaries in Canada. Details of the Company and its subsidiaries as of March 31, 2024 are set out below:
| Schedule of subsidiaries | ||||||||
| Name of Entity | Date of Incorporation/Acquisition | Place of Incorporation | % of Ownership | Principal Activities | ||||
| Visionary Holdings Inc. (formerly known as “Visionary Education Technology Holdings Group Inc.”) (“Visionary Group” or the “Company”) | Parent | |||||||
| Visionary Education Service and Management Inc. (“VESM”) | ||||||||
| Farvision Career Education Group Inc “Formerly known as Farvision Education Group Inc.” (“Farvision Education”) | ||||||||
| NeoCanaan Investment Corporation (“NeoCanaan Investment”) | ||||||||
| Canada Animation Industry Group Inc. (“Animation Group”) | ||||||||
| Toronto ESchool Ltd. (“Toronto ESchool”) | ||||||||
| Maple Toronto Art Academy Inc. (“Art Academy”) | ||||||||
| 7621531 Canada Inc. (“Conbridge College”) | ||||||||
| Max the Mutt Animation Inc. (“MTM Animation”) |
| F-7 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 1 – ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN (Continued)
| 13995291 Canada Inc. (“13995291”) | ||||||||
| Bethune Great Health Investment Management Inc. (“Bethune”) | ||||||||
| Shanghai Yuanjian Trillion Commercial Group Co., Ltd. (“Shanghai Yuanjian”) | ||||||||
| Shanghai Airong Hundred Billion Technology Development Group Co., Ltd. | ||||||||
| Shanghai Yulankang Health Technology Group Co., Ltd. (“Shanghai Yulankang”) | | |||||||
| Shanghai Yuanjian Shulian Education Technology Co., Ltd. | ||||||||
| Shanghai Yuanjian Cailai Consulting Management Co., Ltd. | ||||||||
| Changle Shuang (Guangzhou) Health Industry Investment Co., Ltd. | ||||||||
| Yulankang (Huai'an) Health Management Co., Ltd. | ||||||||
| Visionary Asia SDN. BHD | ||||||||
| Visionary International SDN. BHD | ||||||||
| Visionary Biotechnology Group Inc. |
The following entities were divested from the Company during the year ended March 31, 2024:
| Schedule of entities divested from the company | ||||||||
| Name of Entity | Date of Incorporation/Acquisition | Place of Incorporation | % of Ownership | Principal Activities | ||||
| Farvision Digital Technology Group Inc. (“Farvision Digital”) | ||||||||
| 9651837 Canada Inc. (“Lowell Academy”) |
On August 20, 2013, Ms. Fan Zhou incorporated 123 Natural Food Ontario Ltd. as a sole shareholder in Richmond Hill, Ontario. On March 25, 2021, the Company filed an article of amendment to change its name to Visionary Education Technology Holdings Group Inc. (“Visionary Group”). Ms. Fan Zhou transferred her 100% equity interest of Visionary Group to 3888 Investment Group Limited at cost on August 21, 2013.
On August 20, 2013, Ms. Fan Zhou incorporated 123 Real Estate Development Ontario Ltd. as a sole shareholder in Richmond Hill, Ontario. On April 1, 2019, Ms. Fan Zhou transferred all the shares to Visionary Group. On May 28, 2021, 123 Real Estate Development Ontario Ltd. filed an article of amendment to change its name to Visionary Education Real Estate Group Inc. (“Visionary Real Estate”). On October 12, 2021 Visionary Real Estate filed amendment to change its name to Visionary Education Services & Management Inc. (“VESM”)
| F-8 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 1 – ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN (Continued)
On February 25, 2019, VESM entered into a share purchase agreement to acquire 100% of the equity interests in PrideMax Construction Group Inc. (“PrideMax Construction”), a company incorporated on July 20, 2010 in Scarborough, Ontario and had no active business since inception, from its original shareholder for $0.8 (C$1). The transaction was completed on April 1, 2019. On May 23, 2020, VESM transferred 100% of the equity interests in PrideMax Construction to NeoCannaan Investment Corporation. On June 16, 2021, PrideMax Construction filed an article of amendment to change its name to Farvision Development Group Inc (“Farvision Development”). On November 3, 2022, Farvision Development filed an article of amendment to change its name to Farvision Digital Technologies Group Inc. (“Farvision Digital”). On February 24, 2024, Farvision Digital was divested from the Group.
On May 14, 2020, Farvision Education Group Inc. (“Farvision Education”) was incorporated under the Canada Business Corporation Act. Visionary Group owns all the issued shares of Farvision Education. On February 2, 2023, Farvision Education Group Inc. filed to change its name to Farvision Career Education Group Inc.
On November 15, 2017, the Company entered into a share purchase agreement to acquire 55% of the equity interest in Toronto ESchool Inc. (“Toronto ESchool”), a company incorporated on March 7, 2016 in Toronto, Canada, from its original shareholder, China Youth (Canada) Langton Education Technology Co. Ltd. (“Langton Canada”) for $0.8 (C$1). Langton Canada is a related party of the Company due to common control, as Ms. Fan Zhou was the sole director of Langton Canada. It was considered an asset acquisition in accordance with ASU 2017-01 since substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets – a private high school license. On June 19, 2020, the Company further acquired 15% of the equity interests in Toronto ESchool from its original shareholder (a third party) for consideration of $31,808 (C$40,000). After this transaction, the Company owns total of 70% of the equity interests of Toronto ESchool. On June 19, 2020, the Company transferred its 70% of equity interests in Toronto ESchool to its wholly owned subsidiary Farvision Education.
On July 15, 2020, Farvision Education entered into an investment agreement with 2549601 Ontario Inc., which owns a private high school license registered with the Ontario Ministry of Education, to incorporate Maple Toronto Arts & Performance Academy Inc. with a total investment of $159,040 (C$200,000) from both parties. Pursuant to the agreement, Farvision Education subscribed for 80% of its total 200,000 common shares at C$ 1.00 per share, and 2549601 Ontario Inc. subscribed the remaining 20% of its total common shares, which was completed on July 27, 2020. On August 3, 2020, the Company filed an article of amendment to change the name of Maple Toronto Arts & Performance Academy Inc. to Maple Toronto Art Academy Inc. (“Art Academy”). On July 27, 2020, Art Academy entered into a license transfer agreement with 2549601 Ontario Inc. (operating as Alathena International Academy Richmond Hill), a private high school registered with Ontario Ministry of Education. Pursuant to the agreement, Art Academy acquired the private high school license for a consideration of $159,040 (C$200,000). The transaction was completed on September 1, 2020.
On May 26, 2020, NeoCanaan Investment Corporation (“NeoCanaan Investment”) was incorporated under the Canada Business Corporation Act. Visionary Group owns all the issued shares of NeoCanaan Investment.
On October 8, 2020, Canada Animation Industry Group Inc. (“Animation Group”) was incorporated under the Canada Business Corporation Act. NeoCanaan Investment owns all the issued shares of Animation Group.
| F-9 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 1 – ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN (Continued)
On April 1, 2021, Visionary Education Services and Management Inc. (“VESM”) entered into a share transfer agreement with Mr. Jason Wang, a related party, to transfer his 100% of the equity interests in Glorious Future Study Abroad Immigration Group Inc. (“Glorious Immigration”) and PrideMax International Human Resources Services Inc. (“PrideMax HR”) for $0.8 (C$1). The transaction was completed on June 12, 2021. On June 16, 2021, Glorious Immigration changed its name Visionary Study Aboard & Immigration Services Inc. (“Visionary Immigration”). On June 17, 2021, PrideMax HR changed its name to Farvision Human Resources Service Company Inc. (“Farvision HR”). On July 26, 2022, both Visionary Immigration and Farvision HR have been divested from the Group, and both Visionary Immigration and Farvision HR have been inactive since the acquisition by VESM.
On June 6, 2021, Farvision Education entered into a share transfer agreement with Mr. Jason Wang, a related party, to transfer his 70% of the equity interests in Princeton Career Education Group Inc. (“Princeton Career”) for $0.8 (C$1). The transaction was completed on June 12, 2021. The Princeton Career was divested from the Group on July 26, 2022.
On June 12, 2021, Farvision Education entered into an investment agreement with two individuals who were the original shareholders of 9651837 Canada Inc. (o/a “Lowell Academy”), a private high school offering classes for Grades 9-12 students and registered with Ontario Ministry of Education. Pursuant to the agreement, Farvision Education subscribed for 70% of the shares of Lowell Academy for a consideration of $164,829 (C$210,000). The transaction was completed on June 12, 2021. On February 5, 2024, the Lowell Academy was divested from the Group.
On March 1, 2021, Farvision Education entered into an investment agreement with two individuals who were the original shareholders of 7621531 Canada Inc., operating as Conbridge College of Business and Technology (“Conbridge College”), a private career college registered with Ontario Ministry of Colleges and Universities. Pursuant to the agreement, Farvision Education acquired 80% of the equity interests of Conbridge College of Business and Technology for a total consideration of $63,616 (C$80,000). The transaction was closed on September 1, 2021.
On December 19, 2020, Farvision Education entered
into a purchase agreement with the original shareholders of Max the Mutt Animation Inc. (“MTM Animation”), a private vocational
college registered with Ontario Ministry of Colleges and University, to purchase all of the issued and outstanding shares of MTM Animation
for a total consideration of $2.1 million (C$2.6 million). The consideration included two components: i) a fixed or guaranteed purchase
price of $1.7 million (C$2.1 million), and ii) post-closing performance-based payments aggregating up to $392,450 (C$500,000). The Company
acquired 70% of equity interest of MTM Animation for a total consideration of $1,456,546 (C$1,820,000) on February 28, 2022. The remaining
30% of the purchased shares will be transferred over three years on the anniversary of the first three years after the closing. On February
28, 2022, the Company and the original shareholders of MTM Animation signed an amended agreement to transfer the remaining 30% of the
purchased shares over three years by transferring 10% of the purchased shares each year after the Company making three payments of $80,030,
$80,030, and $64,024 (C$100,000, C$100,000, and C$80,000) on February 28, 2023, February 28, 2024 and February 28, 2025, respectively.
On June 24, 2022, additional 10% of the equity was purchased by the Company for $
On April 28, 2022, Ms. Fan Zhou incorporated 13995291 Canada Inc. and on May 20, 2022, the shares were transferred to the Company. As the result, 13995291 Canada Inc. becomes the wholly owned subsidiary of the Company. The purpose of incorporating 13995291 Canada Inc. is to hold the two office buildings at 95-105 Moatfield Drive, Toronto, pursuant to the purchase agreement signed on May 19, 2021. The purchase was closed on September 23, 2022.
| F-10 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 1 – ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN (Continued)
On July 26, 2022, in order to better use the capital raised in connection with the IPO, improve the efficiency of the operations, streamline the business lines to focus on its core education sector, and optimize the structure of the vocational educational business, the Board of the Company approved to divest its three subsidiaries: Visionary Immigration, Farvision HR, and Princeton Education. The divestiture of these three subsidiaries does not represent a strategic shift of the Company and has no major effect on the Company’s operations and financial results.
On October 31, 2023, 100% of registered capital of Shanghai Yuanjian was transferred from an unrelated individual to the Company and therefore the Company acquired Shanghai Yuanjian and its subsidiaries.
On December 1, 2023, the Company incorporated Visionary Asia SDN. BHD and Visionary International SDN. BHD in Malaysia for its business expansion.
On December 15, 2023, the Company entered into a share transfer agreement to purchase % shares of Bethune Great Health Investment Management Inc. (“Bethune”) at a price of $ (C$). Ms. Fan Zhou has no ownership of Bethune but acts as one of its directors. The transaction was closed on January 1, 2024.
On February 25, 2024, the Company transferred
(i)
On February 28, 2024, the Company entered into
a joint venture agreement with a group of unrelated parties to form a new company, in which, the Company hold a
On May 29, 2024, the Company effected effect
a share consolidation of its ordinary shares at a ratio of one (1) post-split ordinary share for every fifteen (15) pre-split
ordinary shares (the “Share Consolidation”) so that every fifteen (15) shares issued and outstanding will be combined
into one (1) share.
Going Concern
As of March 31, 2024, the Company had cash
balance of $
The consolidated financial statements do not include any adjustments relating to the recoverability of assets and the classification of liabilities. The company's ability to continue as a going concern depends on its ability to obtain additional capital and achieve operating profits. In light of these circumstances, the company currently plans to fund its operations and ongoing acquisition projects primarily through the following means: cash flow from operations, including revenue from past business activities, and active development of new business since May 2023, such as AI-driven healthcare initiatives and collaborations in AI and international education. Additionally, the company is actively pursuing acquisitions to enhance its business cash flow. To ensure the company's continued operation and growth, it is undertaking measures such as debt-to-equity swaps with external investors, private placements, disposal of owned real estate, and borrowing from the controlling shareholder to secure sufficient working capital for active development and ongoing operations. However, there is no assurance that these efforts will be successful, and these events or conditions present uncertainties that could affect the company's ability to continue as a going concern.
| F-11 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and have been consistently applied. The accompanying consolidated financial statements include the financial statements of Visionary Group and its subsidiaries. All inter-company balances and transactions have been eliminated upon consolidation.
Noncontrolling Interests
As of March 31, 2024, noncontrolling
interests represent
As of March 31, 2023, noncontrolling
interests represented
The noncontrolling interests are presented in the consolidated balance sheets, separately from equity attributable to the shareholders of the Company. Noncontrolling interests in the operating results of the Company are presented on the face of the consolidated statements of income (loss) and comprehensive income (loss) as an allocation of the total income or loss between noncontrolling interest holders and the shareholders of the Company.
Use of Estimates
In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the use of going concern assumptions, valuation of other receivables, useful lives of property, plant and equipment and student list as intangible assets, the recoverability of intangible assets and goodwill, allocation of cost between building and land newly acquired, valuation of fair value of the derivative liabilities, revenue recognition, fair value of intangible assets at business acquisition, provision necessary for contingent liabilities, and realization of deferred tax assets. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on
hand, the balances with banks and the liquid investments with maturities of three months or less at the date of acquisition. The
Company maintains majority its bank accounts in Canada (except one in China and its subsidiaries) which are insured by
Canadian Deposit Insurance Corporation up to C$100,000 each for eligible deposits. Bank balances in 13995291, Animation Group, and
Toronto ESchool exceeded the insured limit of $
| F-12 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Restricted Cash
The Company’s subsidiaries Conbridge
College and MTM Animation are required to maintain a term deposit with a financial institution as collateral for an irrevocable
standby letter of credit issued in favor of the Ministry of Training, Colleges and Universities under the Ontario Private Career
Colleges Act 2005. As at March 31, 2024, the Company had term deposit of $
The following table provides a reconciliation of cash and restricted cash reported within the consolidated statement of balance sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows for the years ended March 31, 2024 and 2023:
| Schedule of reconciliation of cash and restricted cash | ||||||||
| March 31, 2024 | March 31, 2023 | |||||||
| Cash | $ | $ | ||||||
| Restricted cash - current | ||||||||
| Restricted cash – non-current | ||||||||
| Total cash and restricted cash | $ | $ | ||||||
Short-term Investments
The Company’s short-term investments
consist of mutual fund investments purchased from Canadian banks. These investments are carried at fair value at the date of the
consolidated balance sheets and are redeemable at any time as working capital when needed. The Company has short-term investments of
$ and $
Accounts Receivable
Accounts receivable are presented net of allowance
for doubtful accounts. The Company usually determines the adequacy of reserves for doubtful accounts based on individual account analysis
and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the
Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual
exposures, as well as a provision on historical trends of collections. The provision is recorded against accounts receivables balances,
with a corresponding charge recorded in the consolidated statements of income (loss) and comprehensive income (loss). Delinquent account
balances are written off against the allowance for doubtful accounts after management has determined that the likelihood of collection
is not probable.
Prepayments and Other Receivables
Prepayments and other receivables primarily consist of advances to non-related suppliers for short term operation support, employee advances, and prepayments on property taxes and other expenses. These advances are interest free, unsecured and short-term in nature and are reviewed periodically to determine whether their carrying value has become impaired. No impairment was recorded as of March 31, 2024 and 2023, as the Company considered all of the prepayments to be fully realizable and the advances to be repaid.
| F-13 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation and amortization. The straight-line depreciation method is used to compute depreciation over the estimated useful lives of the assets, as follows:
| Schedule of estimated useful lives | ||
| Useful life | ||
| Buildings | ||
| Furniture and equipment | ||
| Land | ||
| Computer and software | ||
| Leasehold improvement |
Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments that substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income (loss) and other comprehensive income (loss) as other income or expenses.
Indefinite-Lived Intangible Assets
An intangible asset determined to have an indefinite useful life is not amortized. Indefinite-lived intangible assets are tested for impairment on an annual basis at year end, or more frequently if an event occurs or circumstances change that indicate the fair value of an indefinite-lived intangible asset could be below its carrying amount.
The Company’s indefinite-lived intangible assets consist primarily of i) the registrations and qualifications arising from acquisitions of Lowell Academy, Art School, and Toronto Eschool which allow the Company to grant credits to students under Ontario Secondary School Diploma (the “OSSD”) by qualified secondary schools registered at Ontario Ministry of Education, ii) the registrations and the qualifications to operate as a private career college registered with Ontario Ministry of Training, Colleges and Universities, arising from the acquisitions of equity interest of Conbridge College and MTM Animation, and iii) the brand name and reputation in the education market arising from acquisition of MTM Animation equity interest.
In testing the indefinite-lived intangibles assets for potential impairment, the Company applies either a qualitative test, or a quantitative test, in accordance with Accounting Standards Codification (“ASC 350”), Intangibles — Goodwill and Other. A qualitative approach may be applied when the Company concludes that it is not “more likely than not” that the fair value of the indefinite-lived intangible assets is less than their carrying value. A quantitative impairment test consists of comparing the fair value of the indefinite-lived intangible asset with its carrying amount. An impairment loss would be recognized for the carrying amount in excess of its fair value. Significant judgment and estimates are applied when evaluating whether an intangible asset has an indefinite useful life and in testing for impairment. The Company recognized impairment of $ and $ on indefinite-lived intangible assets for years ended March 31, 2024 and 2023.
Definite-Lived Intangible Assets
The intangible assets with definite lives
are stated at cost, less accumulated amortization. Amortization is provided on a straight-line basis over the terms. The Company
recognized intangible assets of student lists arising from acquisition of Lowell Academy and MTM Animation. These intangible assets
are amortized over the term between
| F-14 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets, liabilities and contingent liabilities acquired in business combinations. Identifiable intangible assets are recognized separately from goodwill when they are separable or arise from contractual or other legal rights, and have fair values that can be reliably measured. Goodwill is not amortized and is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis, or more frequently if an event occurs or circumstances change that indicate the fair value of goodwill could be below its carrying amount. The Company recognized impairment loss of $ and $ on goodwill for the years ended March 31, 2024 and 2023 respectively.
Impairment of Long-lived Assets
The Company reviews long-lived assets, including property, plant and equipment, definitive-lived intangible assets, and ROU assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value.
Fair Value of Financial Instruments
ASC 825, “Financial Instruments” requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
| · | Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
| · | Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. | |
| · | Level 3 - inputs to the valuation methodology are unobservable. |
The Company determined that the conversion feature of its convertible notes and the Series A and B warrants in connection with these convertible notes shall be classified as derivative liabilities. Company engaged an independent valuation firm to perform the valuation. The fair value of the conversion feature, Series A and B warrants is calculated using the binomial tree model. These financial instruments are classified as level 3 instruments as the valuation was determined based on unobservable inputs which are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value. Significant estimates used in developing the fair value of these financial instruments include the probability to convert, variability of conversion price due to future stock price and exchange rate, and expected timing of conversion, etc. As of March 31, 2024, convertible notes and Series B warrants have been fully converted into the common shares of the Company. (See Note 14 and Note 15)
| F-15 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Unless otherwise disclosed, the fair value of the Company’s financial instruments including cash, short-term investment, accounts receivable, accounts receivable – related party, due from related party, related parties loan receivable, loan receivable, other receivable (excluding tax receivable), short-term restricted cash, accounts payable, accrued liabilities, due to related parties, current portion of lease liabilities, loan portion of convertible notes and short-term bank loans approximate their carrying values because of the short-term nature of these instruments.
The Company believes that the carrying amount of the short-term and long-term borrowings approximates fair value at March 31, 2024 and 2023 based on the terms of the borrowings and current market rates as the rates of the borrowings are reflective of the current market rates.
Leases
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current lease liabilities, and long-term lease liabilities in the consolidated balance sheets. Finance leases are included in property, plant and equipment, other current liabilities and other long-term liabilities in the consolidated balance sheets.
ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As one of the Company’s leases does not provide an implicit rate, the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date is used. The operating lease ROU asset also includes any lease payment made and excludes lease incentives. The Company may also include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Assets Held for Sale
The Company classifies long-lived assets or disposal groups to be sold as held for sale in the period in which all of the following criteria are met: (1) management, having the authority to approve the action, commits to a plan to sell the asset or disposal group; (2) the asset or disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets or disposal groups; (3) an active program to locate a buyer and other actions required to complete the plan to sell the asset or disposal group have been initiated; (4) the sale of the asset or disposal group is probable, and transfer of the asset or disposal group is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond our control extend the period of time required to sell the asset or disposal group beyond one year; (5) the asset or disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (6) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
The Company initially measures a long-lived asset or disposal group that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held-for-sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset or disposal group until the date of sale. The Company assesses the fair value of a long-lived asset or disposal group less any costs to sell each reporting period it remains classified as held for sale and report any subsequent changes as an adjustment to the carrying value of the asset or disposal group, as long as the new carrying value does not exceed the carrying value of the asset at the time it was initially classified as held for sale.
| F-16 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Assets Held for Sale (Continued)
Upon determining that a long-lived asset or disposal group meets the criteria to be classified as held for sale, the Company ceases depreciation and reports long-lived assets and/or the assets and liabilities of the disposal group, if material, in the line items assets held for sale and liabilities held for sale, respectively, in the Company’s consolidated balance sheet as current assets and current liabilities.
If circumstance arise that previously were considered unlikely and, as a result, the Company decides not to sell a long-lived asset previously classified as held for sale, the asset shall be reclassified as held and used. A long-lived assets that is reclassified shall be measured individually at the lower of the (1) its carrying amount before the asset was classified as held for sale, adjusted for any depreciation expense that would have been recognized had the asset been continuously classified as held and used, or (b) its fair value at the date of the subsequent decision not to sell. As of March 31, 2024 and 2023, the Company recorded $nil and 20,335,836 assets held for sales on the book.
Business Combinations
Business combinations are accounted for under the acquisition method of accounting. Under the acquisition method, assets and liabilities of the business acquired are recorded at their estimated fair values as of the date of acquisition with any excess of the cost of the acquisition over the fair value of the net tangible and intangible assets acquired recorded as goodwill. Results of operations of the acquired business are included in the income statement from the date of acquisition.
Government Subsidies
Government subsidies represent cash
subsidies received from the government of Canada to subsidize the wage expense under Canada Emergency Wage Subsidy (CEWS) program
and rent expense under Canada Emergency Rent Subsidy (CERS) program for the business affected by COVID-19, as well as the forgivable
portion of the loans provided under Canada Emergency Business Account (CEBA) program. The Company recognizes the government grant as
other income when cash is received and the Company will comply with the relevant conditions with reasonable assurance. For the years
ended March 31, 2024, 2023 and 2022, the Company received subsidy of $, $, and $
Revenue Recognition
The Company follows ASC 606, “Revenue from Contracts with Customers,” which establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.
To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.
| F-17 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition (Continued)
The Company generates its revenues through educational programs and services with individual students. In addition, the Company generates revenues from other services such as sale of vacant lands, rental, and renovation projects. The primary sources of the Group’s revenues are as follows:
Revenue from educational programs and services
Each contract of educational programs and services is accounted for as a single performance obligation which is satisfied proportionately over the service period.
For the Company’s online education courses, tuition fee is generally collected in advance and is initially recorded as deferred revenue. When tuition is paid at registration, the student is given access to online courses. The student normally has six months to complete the online courses by watching online learning materials and passing the required online exams. The student has an option to extend the course learning period from six months to maximum of twelve months for an additional cost. After twelve months from the registration, the student will lose the access of registered course. No refund is available for tuitions. The tuition income is recognized over the period that the course is expected to be completed.
For the Company’s other high school and private college education programs, all tuition fee, ancillary service fee and application fees are collected in advance and are initially recorded as deferred revenue. Revenue attributable to educational services is recognized over time, based on a straight-line basis over the school semester, as customers simultaneously receive and consume the benefits of these services throughout the service period. The refund is recorded as a reduction of deferred revenue and has no impact on the recognized revenue. The Company has not experienced significant refunds.
Revenue from rental
The Company rents several office buildings to several tenants and earns rental revenue. These lease agreements meet the criteria for recognition as leases under ASC 842, “Leases.” The Company commences recognizing rental revenue based on the date it makes the underlying asset available for use by the tenant. The Company accounts for rental revenue (lease component) and common area expense reimbursements (non-lease component) as one lease component under ASC 842. The Company also includes the non-components of its leases, such as the reimbursement of utilities, insurance, real estate taxes, and certain capital expenditures related to the maintenance of our properties, within this lease component. These amounts are included in Rental income on the Company’s Consolidated Statements of Income (Loss) and Comprehensive Income (Loss). Rental revenues are recognized as earned in accordance with the terms of the respective lease agreement on a straight-line basis. Promotional discounts are recognized as a reduction to rental income over the promotional period. Late charges, administrative fees and other fees are recognized as income when earned. Management reviews the tenant’s payment history and financial condition periodically in determining, in its judgment, whether any accrued rental income and unbilled rent receivable balances applicable to each specific property is collectable.
Revenue from renovation project
The Company provides decoration and construction services mainly for the education institutions. These projects are normally completed within several weeks. The Company recognizes revenue associated with these projects when the project is completed and accepted by the customer.
| F-18 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition (continued)
Revenue from sales of vacant lands
The Company recognizes revenue from the sales of vacant lands when the legal title is transferred to the buyers.
Contract Assets and Liabilities
Payment terms are established on the Company’s pre-established credit requirements based upon an evaluation of customers’ credit quality. Contract assets are recognized in related accounts receivable. Contract liabilities are recognized for contracts where payment has been received in advance of delivery. The contract liability balance can vary significantly depending on the timing of when payment is received and when shipment or delivery occurs.
As of March 31, 2024 and 2023, other than accounts receivable, deposit from tenants and deferred revenue, the Company had no other material contract assets, contract liabilities or deferred contract costs recorded on its consolidated balance sheet.
Disaggregation of Revenues
The Company disaggregates its revenue from contracts by service or products, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors. The Company’s disaggregation of revenues for the years ended March 31, 2024 and 2023 are disclosed in Note 19 of this consolidation financial statements.
Income Taxes
The Company uses the liability method of income tax allocation to account for income taxes. Deferred income tax assets and liabilities are recognized based upon temporary differences between the financial reporting and income tax bases of assets and liabilities and measured using enacted income tax rates and tax laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred income tax assets to the amount that is more likely than not to be realized. The Company considers both positive evidence and negative evidence on deferred tax assets, to determine whether, based upon the weight of that evidence, a valuation allowance is required for deferred tax assets. Judgment is required in considering the relative impact of negative and positive evidence.
Significant judgment is also required in evaluating the Company’s uncertain income tax positions and provisions for income taxes. Liabilities for uncertain income tax positions are recognized based on a two-step approach. The first step is to evaluate whether an income tax position has met the recognition threshold by determining if the weight of available evidence indicates that it is more likely than not to be sustained upon examination. The second step is to measure the income tax position that has met the recognition threshold as the largest amount that is more than 50% likely of being realized upon settlement. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provisions, income taxes payable and deferred income taxes in the period in which the facts that give rise to a revision become known. The Company recognizes interest and penalties related to uncertain income tax positions as interest expense, which is then netted and reported within investment income.
| F-19 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Sale Tax (“GST/HST”)
The Company is registered under Canada’s Goods and Services Tax (GST) and Harmonized Sales Tax (HST) account. Sales revenue represents the invoiced value of goods and services, net of GST/HST. The Company is operating mainly in the Province of Ontario which is subject to HST rate of 13% for its products and services supplied in Ontario, and thus the Company’s tuition revenue is GST/HST exempted.
The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average number of common shares outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. As of March 31, 2024, a total of unexercised Warrants Series A were included in the computation of weighted average number of common shares. As of March 31, 2023, there were dilutive impact on earnings per share due to loss positions, and dilutive shares existed as of March 31, 2022.
Foreign Currency Translation
The Company operates primarily in Canada and in China. The functional currency of the Company and its subsidiaries is the Canadian Dollar (“C$”) and the Chinese currency (“RMB”). The Company’s consolidated financial statements have been translated into the reporting currency U.S. Dollars (“$” or “US$”). Assets and liabilities of the Company are translated at the exchange rate at each reporting period end date. Equity is translated at historical rates. Income and expense accounts are translated at the average rate of exchange during the reporting period. The resulting translation adjustments are reported under other comprehensive income (loss). Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the results of operations.
The following table outlines the currency exchange rates that were used in creating the consolidated financial statements:
| Schedule of foreign currency translation | |||||
| March 31, 2024 | March 31, 2023 | March 31, 2022 | |||
| Year-end spot rate | |||||
| Average rate for the year |
Comprehensive Income (Loss)
Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses, gains and losses that under U.S. GAAP are recorded as an element of shareholders’ equity but are excluded from net income. Other comprehensive income (loss) consists of a foreign currency translation adjustment resulting from the Company not using the U.S. dollar as its functional currency.
Statement of Cash Flows
In accordance with ASC 230, “Statement of Cash Flows,” cash flows from the Company’s operations are formulated based upon the functional currencies. As a result, amounts related to assets and liabilities reported on the statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets.
| F-20 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Risks and Uncertainties
The Company’s business, financial condition and results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt the Company’s operations.
During the first quarter of 2020, the emergence of the novel coronavirus (Covid-19) resulted in a sharp contraction of economic and commercial real estate activity across of the world. Commercial real estate markets recovered strongly in year 2021 and 2022. However, the pandemic has likely engendered structural changes to the utilization of office buildings which will have ongoing repercussions for our business. In addition, the second half of 2022 has been marked by significant macroeconomic challenges as central banks around the world have rapidly and sharply raised interest rates in efforts to reduce inflation, thereby significantly limiting credit availability. Less available and more expensive debt capital has pronounced effects on the mortgage cost and property sales.
Recent Accounting Pronouncements
The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued.
In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). This ASU requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for the Company beginning after December 15, 2023, and are applied prospectively to business combinations that occur after the effective date. The Company does not expect the adoption to have a material impact on the consolidated financial statements.
In June 2022, the FASB issued ASU No. 2022-03, “Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions,” which clarifies and amends the guidance of measuring the fair value of equity securities subject to contractual restrictions that prohibit the sale of the equity securities. The guidance will be effective for fiscal years beginning after December 15, 2023 and interim periods within those fiscal years. The Company does not expect the adoption to have a material impact on the consolidated financial statements.
In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. This ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. The new standard will become effective for us beginning January 1, 2024, using either a modified retrospective or a fully retrospective method of transition, and early adoption is permitted. Management is currently evaluating the impact of the new standard on our financial statements.
| F-21 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
In November 2023, the FASB issued ASU No. 2023-07, “Improvements to Reportable Segment Disclosures” (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. This ASU will likely result in us including the additional required disclosures when adopted. Management is currently evaluating the provisions of this ASU and expect to adopt them for the year ending December 31, 2024.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial statements.
NOTE 3 – PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment stated at cost less accumulated depreciation consisted of the following:
| Schedule of property, plant and equipment | ||||||||
| March 31, | March 31, | |||||||
| 2024 | 2023 | |||||||
| Land | $ | $ | ||||||
| Building | ||||||||
| Computer and software | ||||||||
| Leasehold improvement | ||||||||
| Equipment and furniture | ||||||||
| Total | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant and equipment, net | $ | $ | ||||||
Depreciation expense was $
In connection with the $
In connection with the $
| F-22 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 3 – PROPERTY, PLANT AND EQUIPMENT, NET (Continued)
In connection with the $
On December 15, 2023, the Company entered a purchase agreement with a related party Bethune Great Health Investment Management Inc. (“Bethune”) to purchase its 100% of equity interest. Thus, the land owned by the Bethune was consolidated to the Company’s property, plant and equipment balance. As of March 31, 2024, the land had a carrying value of $1,291,073 (C$1,748,000) and is collateral by a private mortgage of $812,460 (C$1,100,000) from an unrelated individual. (See note 10).
There was an addition of $1,331,300 (C$1,802,464) and $69,772,605 (C$94,427,670) on property, plant and equipment during the years ended March 31, 2024 and 2023 respectively, and approximately $36,367 depreciation and $1,783,037 appreciation on total original cost and accumulated depreciation respectively are due to depreciation of Canadian dollar relative to US dollars during the years ended March 31, 2024 and 2023. During the year ended March 31, 2023, land, building and equipment and furniture with net book value of $20,335,836 (C$27,521,771) was reclassified as assets held for sale (see note 4). During the year ended March 31, 2024, land and buildings with net book value of $16,381,985 (C$22,179,779) was transferred back from assets held for sale.
$49,784, $nil and $nil impairment loss was recorded for the years ended March 31, 2024, 2023 and 2022.
NOTE 4 – ASSETS/(LIABILITIES) HELD FOR SALE
Assets held for sale consisted of the following:
| Schedule of assets held for sale | ||||
| March 31, | ||||
| 2023 | ||||
| Land | $ | |||
| Building | ||||
| Equipment | ||||
| Total | ||||
| Less: Accumulated depreciation | ( | ) | ||
| Property, plant and equipment held for sale, net | $ | |||
During the year ended March 31, 2023, land, building
and equipment and furniture with carrying value of $
| F-23 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 4 – ASSETS/(LIABILITIES) HELD FOR SALE Continued)
During the year ended March 31, 2024, land,
building and equipment and furniture with carrying value of $
Liabilities held for sale consisted of the following:
| Schedule of liabilities held for sale | ||||
| March 31, | ||||
| 2023 | ||||
| National Bank of Canada (“National Bank”) (1) | $ | |||
| HSBC Bank (2) | ||||
| Private mortgage (3) | $ | |||
| Less: unamortized financing cost | ( | ) | ||
| Total | $ | |||
| (1) |
On November 26, 2020, the Company entered into a loan agreement with National Bank to borrow $6.4 million (C$8.0 million) as the refinance on its property. The loan bears a fixed rate of 3.09% per annum for 4-year term, and the loan is amortized over 25 years. The monthly payment of $30,466 (C$38,312) including principal and interest was made since January 2021. National Bank also offers a maximum $19,880 (C$25,000) limit on the master credit card under the Company’s name.
The above financing facilities are guaranteed by the real estate property located at 41 Metropolitan Road, Toronto, and limited personal guarantee from Ms. Fan Zhou in the amount of $4.8 million (C$6.0 million) plus accrued interest and enforcement costs.
The loan was associated with assets held for sale and thus the remaining balance of $5,549,249 (C$7,492,648) was reclassified as current liabilities held for sale.
The complied financial ratio required by National Bank includes but not limited to the following: |
| · | A debt service coverage ratio not less than 1.25 at fiscal year end. | |
| · | The borrower shall not take on additional debt or further encumber on the property without written consent of the Bank. | |
| · | The nature of the Borrower’s business shall not be substantially changed without written consent of the Bank. | |
| · | The loan is limited personal guarantee from Ms. Fan Zhou in the amount of $4.8 million (C$6,000,000) plus accrued interest and enforcement costs. |
|
The Company paid $31,808 negotiation fee upon acceptance of the loan agreement. The amount was recorded as deferred financing costs and amortized over the term 4 years.
During the year ended March 31, 2024, the Company sold the property in June 2023 and use the proceeds of sale to pay off the outstanding mortgage balance of approximately $5.6 million. |
| F-24 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 4 – ASSETS/(LIABILITIES) HELD FOR SALE Continued)
| (2) | In connection with the purchase of two office buildings at a cost of $10.0 million (C$12.5 million) and $7.9 million (C$9.9 million), respectively, on April 15, 2021, two of the Company’s subsidiaries, Animation Group and NeoCanaan Investment, obtained bank loans of $7.2 million (C$9.0 million) and $5.5 million (C$7.0 million), respectively, from HSBC Bank. The loans have five-years terms with a fixed interest rate of 3.3% per annum, with equal monthly instalments ($35,290 and $27,448 respectively) of blended principal and interest over an amortization period of 25 years. Both bank loans are cross guaranteed by the two subsidiaries, and also guaranteed by Ms. Fan Zhou personally and the Company, with a collateral of the two office buildings purchased. To meet the Bank’s covenants, the Company’s two subsidiaries holding the ownership of these two office buildings have to keep the debt service coverage ratio higher than 1.20. The bank has right to recall the loan if the Company does not meet the annual assessment and review. |
| The Company paid a $49,108 (C$62,566) negotiation fee and legal fee on both buildings upon acceptance of the loan agreement. The amount was recorded against the loan balance and amortized over the term two years. | |
| During the
year ended March 31, 2023, the loan of $ | |
| During the
year ended March 31, 2024, the remaining outstanding loan balance of $ |
| (3) | On July 13, 2022, the Company entered a private mortgage agreement with an unrelated party for a proceed of $2.95 million (C$4 million). The original loan term was 6 months from July 13, 2022 to January 13, 2023 (3 months closed and 3 months open) with a fixed interest rate of 13%, per annum. The loan was extended on January 13 to March 31, 2024 with a fixed interest rate of 15% per annum. The loan is guaranteed and secured by the two office buildings owned by Canada Animation Group and NeoCanaan Investments jointly, and Ms. Fan Zhou personally. During the year ended March 31, 2024, this private mortgage was reclassified from current liabilities held for sale to current mortgage payable. (see Note 10). |
NOTE 5 – INTANGIBLE ASSETS, NET
Net intangible assets consisted of the following:
| Schedule of net intangible assets | ||||||||
| March 31, | March 31, | |||||||
| 2024 | 2023 | |||||||
| At Toronto ESchool (i) | ||||||||
| High school registration and licenses, net acquisition cost | $ | $ | ||||||
| Deferred tax liability | ||||||||
| At Conbridge College (ii) | ||||||||
| Private College license, net acquisition cost | ||||||||
| At MTM Animation (iii) | ||||||||
| Private College license, net acquisition cost | ||||||||
| Brand name, net acquisition cost | ||||||||
| Student list, net acquisition cost | ||||||||
| Intangible assets, net | $ | $ | ||||||
| F-25 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 5 – INTANGIBLE ASSETS, NET (Continued)
| (i) | On June 24, 2016, Langton, a related party of the Company purchased 55% of Toronto ESchool’s
common shares for a total consideration of $437,756 (C$585,000). In accordance with ASU 2017-01, this transaction was not considered
as a business acquisition since substantially all of the fair value of the gross assets acquired was concentrated in a single
identifiable asset or a group of similar identifiable assets – private high school license. On November 15, 2017, Langton
signed an agreement to transfer its 55% of the equity interest in Toronto ESchool to the Company for $0.8 (C$1). On June 19, 2020,
the Company further acquired 15% of the equity interest in Toronto ESchool from its original shareholder for a consideration of
$31,808 (C$40,000). An impairment loss of $ | |
| In accordance with ASC 740 Income Tax for the asset acquired outside of a business combination and
the tax basis of the asset differs from the amount paid, the Company recognized deferred tax liability of $ | ||
| (ii) | On March 1, 2021, Farvision Education entered into an investment agreement with two individuals who
were the original shareholders of Conbridge College, a private vocational college registered with Ontario Ministry of Colleges and
Universities. Pursuant to the agreement, Farvision Education acquired |
| (iii) | On December 19, 2020, Farvision Education entered into a purchase agreement with the original
shareholders of Max the Mutt Animation Inc. (“MTM Animation”), to purchase all of the issued and outstanding shares of
MTM Animation for a total consideration of $ |
NOTE 6 – ACQUISITION DEPOSITS
| Schedule of acquisition deposits | ||||||||
| March 31, | March 31, | |||||||
| 2024 | 2023 | |||||||
| Deposit on Olympic University license (b) | $ | $ | ||||||
| Deposit on property – New York (a) | ||||||||
| Total acquisition deposits | $ | $ | ||||||
| F-26 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 6 – ACQUISITION DEPOSITS (Continued)
(a) New York Property
On May 24, 2022, the Company entered a purchase
agreement to purchase a property in New York for a total price of $4,100,000. The Company has agreed to pay a deposit of $
(b) Olympic University license
On March 6, 2023, the Company entered a
cooperation agreement with Asian Olympic Foundation Limited for future development projects. The Company made an installment of
$
NOTE 7 – BUSINESS ACQUISITIONS AND GOODWILL
| Schedule of business acquisitions and goodwill | ||||||||
| March 31, | March 31, | |||||||
| 2024 | 2023 | |||||||
| Goodwill at MTM Animation | $ | $ | ||||||
On December 19, 2020, Farvision Education entered into a purchase agreement with the original shareholders of MTM Animation, a private vocational college registered with Ontario Ministry of Colleges and Universities. Pursuant to the agreement, Farvision Education has acquired 70% of the equity interest of MTM Animation for a total consideration of $1,456,546 (C$1,820,000) on February 28, 2022. As at March 31, 2023, Farvision Education purchased an additional 10% of the equity interest of MTM Animation and owns 80% of MTM Animation’s total equity interest.
The transaction was accounted for a business combination using the acquisition method of accounting. The purchase price allocation of the transaction was determined by the Company with the assistance of an independent appraisal firm based on the estimated fair value of the assets acquired and liabilities assumed as of the acquisition date. The purchase price allocation to assets acquired as of the date of acquisition was as follows:
| Schedule of purchase price allocation | ||||
| Amounts | ||||
| Working capital acquired | $ | |||
| Short-term investment | ||||
| Furniture and equipment | ||||
| Intangible assets | ||||
| ROU assets | ||||
| Lease liability | ( | ) | ||
| Deferred revenue | ( | ) | ||
| Deferred tax liabilities | ( | ) | ||
| Payable to minority interest holders | ( | ) | ||
| Noncontrolling interest | ( | ) | ||
| Goodwill | ||||
| Total consideration | $ | |||
| F-27 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 7 – BUSINESS ACQUISITIONS AND GOODWILL (Continued)
The Company recognized private vocational
college license, brand name as intangible assets with an indefinite life and student list as intangible asset with definite life
term of 1-4 years, totaling of $
During the period from the acquisition date February
28, 2022 to March 31, 2024, there was no event occurred or circumstances change that indicate the fair value of goodwill could be below
its carrying amount. As of March 31, 2024 and 2023,
NOTE 8 – LEASES
The Company has on operating lease on vehicles for management and one operating lease on MTM Animation’s printer as of March 31, 2024. During the year ended March 31, 2024, the operating lease on MTM Animation’s premises was terminated. No gain or loss was recognized upon the lease termination. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Supplemental balance sheet information related to operating leases was as follows:
| Schedule of operating leases | ||||||||
| March 31, 2024 | March 31, 2023 | |||||||
| Right-of-use assets – vehicle leases | $ | $ | ||||||
| Right-of-use assets – premise lease | ||||||||
| Right-of-use assets – equipment lease | ||||||||
| Total Right-of-use assets, net | ||||||||
| Operating lease liabilities – current | $ | $ | ||||||
| Operating lease liabilities – non-current | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of March 31, 2024 and 2023:
| Schedule of operating lease terms | ||||
| Remaining lease term and discount rate: | March 31, 2024 | March 31, 2023 | ||
| Weighted average remaining lease term (years) | ||||
| Weighted average discount rate |
The following is a schedule of payments of lease liabilities as of:
| Schedule of payments of lease liabilities | ||||
| Year ending March 31, | ||||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| Total future minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Total | $ | |||
| F-28 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 9 – DECONSOLIDATION OF TWO SUBSIDIARIES
On February 25, 2024, the Company transferred
The Company recognized a loss of $
The following table summarized the assets and liabilities of Farvision Digital as of the deconsolidation date:
| Schedule of deconsolidation of assets and liabilities of subsidiaries | ||||
| Amounts | ||||
| Cash | $ | |||
| Working capital (exclude cash), net | ||||
| Carrying value of net assets | ||||
| Fair value of the consideration received | ||||
| Loss on deconsolidation of a subsidiary | $ | ( | ) | |
On February 5, 2024, the Company transferred 70% equity of Visionary Academy (Lowell Academy) from Farvision Career Education Group Inc. to the same individual at a nominal price.
The Company recognized a loss of $
The following table summarized the assets and liabilities of Lowell Academy as of the deconsolidation date:
| Schedule of deconsolidation of assets and liabilities of subsidiaries | ||||
| Amounts | ||||
| Cash | $ | |||
| Working capital (exclude cash), net | ||||
| Carrying value of net assets | ||||
| Carrying value of net assets contributed to the Company (70%) | ||||
| Carrying value of the noncontrolling interest | ||||
| Carrying value of net assets divested by the Company | ||||
| Fair value of the consideration | ||||
| Loss on deconsolidation of a subsidiary | $ | ( | ) | |
| F-29 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 10 – BANK LOANS
Bank loans consisted of the following:
| Schedule of bank loans | ||||||||
| March 31, | March 31, | |||||||
| 2024 | 2023 | |||||||
| Canada Emergency Business Account Program (“CEBA Loan”) (1) | $ | $ | ||||||
| HSBC Bank – (see note 4) | ||||||||
| Bank of China (“BOC”) (2) | ||||||||
| Private mortgage at 95 Moatfield (3) | ||||||||
| Private mortgage at 200/260 Town Centre – (see note 4) | ||||||||
| TD Trust (4) | ||||||||
| RBC line of credit (5) | ||||||||
| Private mortgage for Bethune (6) | ||||||||
| Less: unamortized financing cost | ( | ) | ( | ) | ||||
| Less: current portion of bank loans | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
| (1) | As at March 31, 2022, the Company received a loan of $217,470 (C$300,000) through the Canadian Emergency Business Account Program (“CEBA Loan”), which provides financial relief for Canadian small businesses during the COVID-19 pandemic. The CEBA Loan has an initial term date on December 31, 2022 (the “Initial Term Date”) and has been extended to December 31, 2023. The CEBA Loan is non-revolving, with an interest rate being 0% per annum prior to the Initial Term Date and 5% per annum thereafter during any extended term, which is calculated daily and paid monthly. The CEBA Loan can be repaid at any time without penalty and, up to $72,490 (C$100,000) of the loans will be forgiven if the balance is repaid by Initial Term Date. The Company anticipates repaying the CEBA Loan prior to the Initial Term Date. As a result, the amount of $72,490 (C$100,000) which is expected to be forgiven was recognized as government subsidies by March 31, 2022. During the year ended March 31, 2023, the Company has excluded one CEBA loan from business separation at Princeton Education. As at March 31, 2023, the Company has outstanding CEBA loan balance of $177,336 (C$240,000) and only unforgiveness portion of $118,244 (C$160,000) was recorded as bank loan payable on the consolidated balance sheet. As at March 31, 2024, the Company has fully paid back the unforgiven portion of CEBA loan and nil balance outstanding. | |
| (2) | In connection with the purchase of two office buildings at 95/105 Moatfield Dr. at the cost of $69.4 million (C$93.9 million) on September 23, 2022, one of the Company’s subsidiaries, 13995291 Canada obtained a bank loan of $44.3 million (C$60 million) from Bank of China (Canada) (“BOC”). The loan has two-years terms with a flexible interest rate of prime +1% per annum, with equal monthly instalments (C$403,251) of blended principal and interest over an amortization period of 25 years. The bank loan is guaranteed by the shareholder Ms. Fan Zhou personally and the Company, with a collateral of the two office buildings purchased. To meet the Bank’s covenants, the Company’s subsidiary 13995291 holding the ownership of these two office buildings have to keep the debt service coverage ratio higher than 1.25. The bank has right to recall the loan if the Company does not meet the annual assessment and review. As of March 31, 2024 and 2023, the Company’s loan was in default due to an unauthorized private mortgage identified by the BOC, and the outstanding balance was on demand at BOC’s call. |
| F-30 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 10 – BANK LOANS (Continued)
| (3) | On February 10, 2023, the Company entered a private mortgage agreement with an unrelated party for a proceed of $3.69 million (C$5 million) to support its daily operation and a liability of approximately $1.3 million on a renovation project which was assumed from the prior owner of 95/105 Moatfield Dr. The loan term was 12 months from February 16, 2023 to February 16, 2024 (6 months closed and 6 months open for early termination) with a fixed interest rate of 13% per annum. The loan is guaranteed and secured by the two office buildings owned by 13995291 and Ms. Fan Zhou personally. The loan was extended to August 31, 2024 on February 16, 2024 for a fixed interest rate of 18% per annum. The interest is paid/payable on monthly basis and the principal is payable at matured date or the early termination date. | |
| (4) | The Company’s subsidiary Lowell Academy obtained a five-year term loan of $22,370 (C$28,500) from TD Trust in February 2019, with the floating interest rate of prime rate + 3.5% per annum. The monthly payment is $447 (C$569). As of March 31, 2023, the loan balance was $7,218 (C$9,769). The maturity date is February 1, 2024. The Lowell Academy was deconsolidated from the Group as at March 31, 2024. | |
| (5) | The Company’s subsidiary Lowell Academy obtained a line of credit with limit of $24,009 (C$30,000) from RBC bank in 2019 with the floating interest of RBC prime +2.5% per annum. As at March 31, 2023, a balance of $21,887 (C$29,750) was outstanding from this credit facility. The Lowell Academy was deconsolidated from the Group as at March 31, 2024. | |
| (6) | On December 15, 2023, the Company purchased 100% share in Bethune from a unrelated party, and consolidated Bethune as one wholly owned subsidiary. On December 15, 2023, Bethune had a piece of land with the carrying value of $1,291,073 (C$1,748,000) and a mortgage with a principal balance of $812,460 (C$1,100,000) from a unrelated individual. The mortgage has an open term as of March 31, 2024, with a fixed interest rate of 10% per annum on the principal balance of $738,600 (C$1,000,000) and a fixed interest of 15% per annum on the principal balance of $73,860 (C$100,000). The mortgage is collateral by the land. The Company agreed to assume the mortgage principal balance and the monthly interest payments effective on January 1, 2024. |
NOTE 11 – OTHER LOAN PAYABLE
| Schedule of other loan payable | ||||||||
| March 31, | March 31, | |||||||
| 2024 | 2023 | |||||||
| GTS (formerly Thales Canada) | $ | $ | ||||||
| Less: other loan payable - current | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
In the connection with the purchase of two
office buildings at 95/105 Moatfield, the Company assumed a loan with one tenant from the seller. The original loan term is
| Schedule of maturity debt | ||||
| Year ending March 31, | ||||
| 2025 | $ | |||
| 2026 | ||||
| Total future minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Total | $ | |||
| F-31 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 12 – TAXES
| (a) | Corporate Income Taxes |
The difference between the amount of the provision for income taxes and the amount computed by multiplying income before income taxes by the statutory Canadian tax rate is reconciled as follows:
| Schedule of income before income taxes | ||||||||
| For the year ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Income (loss) before tax | $ | $ | ( | ) | ||||
| Statutory Canadian tax rate | ||||||||
| Income tax based on statutory tax rate | ( | ) | ||||||
| Difference on tax rates | ( | ) | ||||||
| Change in estimate | ( | ) | ||||||
| Share issuance costs | ( | ) | ( | ) | ||||
| Change in valuation allowance | ||||||||
| Non-deductible expenses | ( | ) | ||||||
| Income tax (recovery) expense | $ | $ | ( | ) | ||||
The provision for income tax consists of the following:
| Schedule of provision for income tax | ||||||||
| For the year ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Current income tax – Canada | $ | $ | ( | ) | ||||
| Deferred income tax – Canada | ( | ) | ||||||
| Total income tax (recovery) expense | $ | $ | ( | ) | ||||
Deferred income taxes reflect the net
effects of temporary difference between the carrying amounts of assets and liabilities for financial statement purposes and the
amounts used for income tax purposes. As of March 31, 2024 and 2023, the Company had deferred tax assets of $
| F-32 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 12 – TAXES (Continued)
The components of deferred tax assets as of March 31, 2024 and 2023 consist of the following:
| Schedule of components of deferred tax assets | ||||||||
| March 31, 2024 | March 31, 2023 | |||||||
| Deferred tax assets: | ||||||||
| Loss carried forward to future years* | $ | $ | ||||||
| Property, plant and equipment | ||||||||
| Deferred financing costs | ||||||||
| Lease liability | ||||||||
| Intangible assets | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Total deferred tax assets | $ | $ | ||||||
| Deferred tax liabilities: | ||||||||
| Intangible assets | $ | ( | ) | $ | ( | ) | ||
| Deferred financing costs | ||||||||
| Property, plant and equipment | ( | ) | ( | ) | ||||
| Right of use assets | ( | ) | ( | ) | ||||
| Total deferred tax liabilities | $ | ( | ) | $ | ( | ) | ||
| Deferred tax assets | $ | |||||||
| Deferred tax liabilities, net | $ | ( | ) | $ | ( | ) | ||
| * |
The Company regularly assesses the need for a valuation allowance against its deferred tax assets. In making that assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all the deferred tax assets will be realized.
The Company’s taxes payable consists of the following:
| Schedule of taxes payable | ||||||||
| March 31, 2024 | March 31, 2023 | |||||||
| Corporate income tax payable | $ | $ | ||||||
As of March 31, 2024 and 2023, the Company
had accrued income tax liabilities of approximately $
As of March 31, 2024 and 2023, total of $ and
$
| F-33 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 12 – TAXES (Continued)
(b) Other Taxes Payable
The Company’s taxes payable consists of the following:
| Schedule of other taxes payable | ||||||||
| March 31, 2024 | March, 2023 | |||||||
| Other tax payable | $ | $ | ||||||
As of March 31, 2023 and 2022, the Company had
accrued other tax liabilities of approximately $
As of March 31, 2024 and 2023, total of $and
$
(c) Tax years that remain subject to Examination
The Company is subject to ongoing examination by tax authorities in the Canadian jurisdictions in which it operates. The Company has open tax years for Canada from 2018 to 2024, including both federal and provincial jurisdiction, as applicable. The Company regularly assesses the status of these examinations and the potential for adverse outcomes to determine the adequacy of the provision for income taxes, as well as the provisions for indirect and other taxes and related penalties and interest.
NOTE 13 – RELATED PARTY TRANSACTIONS
The relationship of related parties is summarized as follow:
| Schedule of relationship of related parties | ||
| Name of Related Party | Relationship to the Company | |
(1) Due from related party
As of March 31, 2024 and 2023, due from related party consists of the following:
| Schedule of due from related party | ||||||||
| March 31, | March 31, | |||||||
| 2024 | 2023 | |||||||
| Due from Kelly Xu (Lowell Academy) | $ | $ | ||||||
| F-34 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 13 – RELATED PARTY TRANSACTIONS (Continued)
The Company has a receivable balance from two minority interest shareholders due to the acquisition of Lowell Academy, as the minority interest shareholders are personally responsible for liabilities incurred before the purchase date, and Ms. Fan Zhou is also personally guaranteed on these loans’ collectability. As of March 31, 2024, Lowell Academy is not a subsidiary of the Company.
(2) Due to related parties
| Schedule of due to related parties | ||||||||
| March 31, | March 31, | |||||||
| Name | 2024 | 2023 | ||||||
| Ms. Fan Zhou (a) | $ | $ | ||||||
| Katy Liu (b) | ||||||||
| Total | $ | $ | ||||||
| (a) | ||
| (b) |
NOTE 14 – CONVERTIBLE NOTE
On September 19, 2022, the Company entered into
an Amended and Restated Securities Purchase Agreement (the “SPA”), with an accredited investor (the “Purchaser”),
to issue and sell to the Purchaser a senior secured convertible note of the Company in the principal amount of $
The Note is subject to an original issue discount
of 10%, and is convertible, in whole and in part, from time to time at the option of the Purchaser commencing March 19, 2023 into the
Company’s common shares at a conversion price equal to the lower of (i) $4.00, and (ii) the greater of (x) the Floor Price ($0.22
per share) then in effect and (y) 85% of the lowest trading price of our common shares during the 15 consecutive trading day period preceding
the delivery of the conversion notice. Pursuant to the original issue discount, the Purchaser paid $
The Note matures on
| F-35 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 14 – CONVERTIBLE NOTE (Continued)
The Company’s obligations under the Note, the SPA, the Warrants and other transaction documents are secured by (i) the grant of a first priority lien by the Company and its subsidiaries upon substantially all of the personal and real property of the Company and its subsidiaries pursuant to a security agreement between the Company, its subsidiaries and the Purchaser (the “Security Agreement”) and (ii) by a pledge of 241,358 shares (3,620,378 shares before the share consolidation) held by our principal shareholder, director, and executive director, Fan Zhou (the “Pledge Agreement"). The Company’s obligations under the Note are also subject to a guaranty by the Company and its subsidiaries (the “Guaranty”).
Under the SPA, the Purchaser has customary preemptive rights to participate in any future financing by the Company and the Company agreed to certain restrictions on changes in its capital structure, including the Company’s agreement to certain restrictions on the issuance of additional equity securities so long as the Purchaser owns any Securities (as defined in the SPA), or to engage in any Dilutive Issuances (as defined in the Note) so long as the Note or any Warrants are outstanding.
The Series A Warrant grants the Purchaser the right to purchase 85,290 common shares (1,279,357 shares before the share consolidation) at an exercise price of $0.27 ($4.00 before the share consolidation) per share until September 19, 2032. The Series B Warrant grants the Purchaser the right, from March 19, 2023 until September 19, 2032, to purchase 129,630 (1,944,445 shares before the share consolidation) common shares at an exercise price equal to lower of (i) $3.60 and (ii) the greater of (x) the Floor Price (as defined in the Note) and (y) 75% of the lowest volume weighted average price of the Company’s common shares during the 15 consecutive trading day period preceding the delivery of the exercise notice. The Warrants may not be exercised to the extent that the number of common shares owned by the Purchaser and its affiliates will exceed 4.99% of the issued and outstanding shares of the Company.
The Company determined that the conversion feature of it convertible loan and the Series A and B warrants in connection with this convertible loan shall be classified as derivative liabilities. Company engaged an independent valuation firm to perform the valuation. The fair value of the conversion feature, Series A and B warrants is calculated using the binomial tree model. These financial instruments are classified as level 3 instruments as the valuation was determined based on unobservable inputs which are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value. Significant estimates used in developing the fair value of these financial instruments include the probability to convert, variability of conversion price due to future stock price and exchange rate, and expected timing of conversion, etc.
Loan portion of the convertible note
The Company recorded $
| F-36 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 14 – CONVERTIBLE NOTE (Continued)
Conversion feature of convertible note
As of March 31, 2024, the note has been fully
converted to common shares (6,749,650 shares before the share consolidation) of the Company and recognized gain of $
| Schedule of assumptions | ||
March 31, 2023 | ||
| Risk-free interest rate | ||
| Expected life | ||
| Discount rate | ||
| Expected volatility | ||
| Expected dividend yield | ||
| Fair value | $ |
Series A Warrants
The fair value of the Series A warrants was assessed
at $
| Schedule of fair value of the Series A warrants | ||||
| March 31, 2024 | March 31, 2023 | |||
| Risk-free interest rate | ||||
| Expected life | ||||
| Discount rate | ||||
| Expected volatility | ||||
| Expected dividend yield | ||||
| Fair value | $ | $ |
Series B Warrants
On May 15, 2023, the Company entered into an
Exchange Agreement (the “Agreement”) with the convertible note holder (the “Holder”) for the Series B Warrants
(“Existing Warrant”) that was issued pursuant to the Amended and Restated Securities Purchase Agreement (see Note 14). Pursuant
to the Agreement, the Holder assigned the Existing Warrant to the Company in exchange for
As of March 31, 2024, the Series B warrants
have been fully converted into the Company’s common shares. The fair value of the Series B warrants was assessed at $
| Schedule of fair value of the Series B warrants | ||
| March 31, 2023 | ||
| Risk-free interest rate | ||
| Expected life | ||
| Discount rate | ||
| Expected volatility | ||
| Expected dividend yield | ||
| Fair value | $ |
| F-37 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 15 – EQUITY
Common Shares
The Company was incorporated under the Business
Corporation Act of Ontario, Canada on August 20, 2013. The Company is authorized to issue an unlimited number of shares designated as
common shares with a par value of $0.75 (C$1.00) each, and unlimited number of special shares designated as preference shares. On August
20, 2013, the Company issued 100 common shares to Ms. Fan Zhou at cost of $
On October 15, 2021, the shareholders of the Company
approved: (a) a
On March 18, 2022, the shareholders of the Company
further approved i) a decrease of the par value of the common shares from $0.000075 (C$0.0001) to no par value (the “Par Value Change”);
and ii) a
On May 29, 2024, the Company effected effect a share consolidation of its ordinary shares at a ratio of one (1) post-split ordinary share for every fifteen (15) pre-split ordinary shares (the “Share Consolidation”) so that every fifteen (15) shares issued and outstanding will be combined into one (1) share. The Share Consolidation will reduce the issued and outstanding number of ordinary shares of the Company. The impact of share consolidation is retroactively restated.
As of March 31, 2024 and 2023, 3,437,926 (51,568,883 shares before the share consolidation) and 2,616,666 common shares ( 39,250,000 shares before the share consolidation) were outstanding, respectively, at no par value.
As of March 31, 2024 and 2023, no options were outstanding respectively. As of March 31, 2023, the Company had granted Series A Warrant with right to purchase 85,290 common shares (1,279,357 shares before the share consolidation) and Series B Warrant with rights to purchase 129,630 common shares (1,944,445 common shares before the share consolidation). As of March 31, 2024, the Company had Series A Warrant with right to purchase 85,290 common shares (1,279,357 shares before the share consolidation) outstanding. (See note 14).
Initial Public Offering (“IPO”)
On May 19, 2022, the Company closed its IPO of 283,333 common shares (4,250,000 shares before the share consolidation) at a public offering price of $4.00 per share for gross proceeds of $17.0 million. The total net proceeds to the Company from the IPO, after deducting discounts, expense allowance, and expenses, were approximately $14.3 million. Pursuant to the terms and conditions of the Underwriting Agreement, the Underwriters may exercise an overallotment option to purchase all or any part of an additional 42,500 common shares (637,500 shares before the share consolidation) at $4.00 per Common Share by July 5, 2022. As of the reporting date, no such option has been exercised. At the closing of the Offering, the Company deposited $500,000 from the proceeds of the Offering into an escrow account for the purpose of covering potential claims against the Underwriters, pursuant to the indemnification provisions of the Underwriting Agreement. The escrow account will remain in place for a period of eighteen (18) months after the closing date of the Offering. In connection with the Offering, the Company’s common shares began trading on the NASDAQ under the symbol “GV.”
Shares issued for services
On June 12, 2023, pursuant to the Amended and Restated 2023 Restricted Stock Plan adopted by the Company on May 16, 2023, the Company issued total of 304,616 common shares (4,569,233 shares before the share consolidation) of the Company to certain employees and consultants of the Company as the award for the services.
| F-38 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 15 – EQUITY (Continued)
Shares issued for conversion of convertible note
Pursuant to the Amended and Restated Securities
Purchase Agreement in June 2023, the Holders elected to convert the notes with an aggregated principal of $1.5 million, along with the
accrued interest of $
Shares issued for warrants series B
On May 15, 2023, the Company entered into an
Exchange Agreement (the “Agreement”) with the convertible note holder (the “Holder”) for the Series B Warrants
(“Existing Warrant”) that was issued pursuant to the Amended and Restated Securities Purchase Agreement (see Note 14). Pursuant
to the Agreement, the Holder assigned the Existing Warrant to the Company in exchange for
For the years ended March 31, 2024, the effect of potential shares of common stock from unexercised Warrants Series A are included in the computation of diluted net earnings per share. As a result, a total of unexercised Warrants Series A were included in the computation of weighted average number of common shares for the year ended March 31, 2024.
For the years ended March 31, 2023, the Company has no options, warrants outstanding (see note 14) and no diluted impact on earnings per share due to loss position as of March 31, 2023.
The following table presents a reconciliation of basic and diluted net income per share:
| Reconciliation of basic and diluted net income per share | ||||||||||||
| For the years ended March 31, | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| Net income (loss) attributable to the Company | $ | $ | ( | ) | $ | |||||||
| Weighted average number of common shares outstanding – Basic* | ||||||||||||
| Dilutive securities – unexercised Warrant series A | ||||||||||||
| Weighted average number of common shares outstanding – Diluted* | ||||||||||||
| Earnings per share – Basic | $ | $ | ( | ) | $ | |||||||
| Earnings per share – Diluted | $ | $ | ( | ) | $ | |||||||
* Retroactively restated for effect of share consolidation on May 29, 2024
NOTE 17 – COMMITMENTS AND CONTINGENCIES
Contingencies
The Company may be involved in various legal proceedings, claims and other disputes arising from the commercial operations, projects, employees and other matters which, in general, are subject to uncertainties and in which the outcomes are not predictable. The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and18 can be reasonably estimated. Although the Company can give no assurances about the resolution of pending claims, litigation or other disputes and the effect such outcomes may have on the Company, the Company believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided or covered by insurance, will not have a material adverse effect on the Company’s consolidated financial position or results of operations or liquidity as at March 31, 2024 and 2023.
| F-39 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 17 – COMMITMENTS AND CONTINGENCIES (Continued)
Contractual Commitments
As of March 31, 2024, the Company’s contractual obligations consisted of the following:
| Schedule of contractual obligations | ||||||||||||||||||||
| Contractual Obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
| Lease commitment | $ | $ | $ | $ | $ | |||||||||||||||
| MTM Animation acquisition | ||||||||||||||||||||
| Repayment of other loan payable | ||||||||||||||||||||
| Repayment of bank loans | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
NOTE 18 – ECONOMIC DEPENDENCE
The Company had certain customers whose
revenue individually represented
For the year ended March 31, 2024, the
Company had two significant customers in their rental segment and generated approximately
NOTE 19 – SEGMENT
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, and is identified on the basis of the internal financial reports that are provided to and regularly reviewed by the Company’s chief operating decision maker in order to allocate resources and assess performance of the segment.
The management of the Company concludes that it has four reporting segments listed as below. The Company and all its subsidies are located in Ontario Canada. The Company’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company.
| F-40 |
VISIONARY HOLDINGS INC.
(FORMERLY KNOWN AS “VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP, INC.”)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)
NOTE 19 – SEGMENT (Continued)
The summary of key information by segments for the years ended March 31, 2024, 2023 and 2022 was as follows:
| Schedule of segment reporting information | ||||||||||||||||||||||||
| Rental | Education | Others | Construction | Real Estate | Total for the year ended March 31, 2024 | |||||||||||||||||||
| Revenue from external customers | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Revenue from inter segment | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Cost of revenue | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Gross profit | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Interest Expenses | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Depreciation & amortization | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Income tax provision | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Capital expenditure | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Segment assets | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Segment profit (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||
| Rental | Education | Construction | Real Estate | Total for the year ended March 31, 2023 | ||||||||||||||||
| Revenue from external customers | $ | $ | $ | $ | $ | |||||||||||||||
| Revenue from inter segment | $ | $ | $ | $ | $ | |||||||||||||||
| Cost of revenue | $ | $ | $ | $ | $ | |||||||||||||||
| Gross profit | $ | $ | $ | $ | $ | |||||||||||||||
| Interest Expenses | $ | $ | $ | $ | $ | |||||||||||||||
| Depreciation & amortization | $ | $ | $ | $ | $ | |||||||||||||||
| Income tax recovery | $ | $ | $ | $ | $ | |||||||||||||||
| Capital expenditure | $ | $ | $ | $ | $ | |||||||||||||||
| Segment assets | $ | $ | $ | $ | $ | |||||||||||||||
| Segment profit (loss) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||
| Rental | Education | Construction | Real Estate | Total for the year ended March 31, 2022 | ||||||||||||||||
| Revenue from external customers | $ | $ | $ | $ | $ | |||||||||||||||
| Revenue from inter segment | $ | $ | $ | $ | $ | |||||||||||||||
| Cost of revenue | $ | $ | $ | $ | $ | |||||||||||||||
| Gross profit | $ | $ | $ | $ | $ | |||||||||||||||
| Interest Expenses | $ | $ | $ | $ | $ | |||||||||||||||
| Depreciation & amortization | $ | $ | $ | $ | $ | |||||||||||||||
| Income tax recovery | $ | ( | ) | $ | $ | $ | $ | |||||||||||||
| Capital expenditure | $ | $ | $ | $ | $ | |||||||||||||||
| Segment assets | $ | $ | $ | $ | $ | |||||||||||||||
| Segment profit (loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||
NOTE 20 – SUBSEQUENT EVENTS
Share Consolidation of Ordinary Shares
On May 29, 2024, the Company effected effect a share consolidation of its ordinary shares at a ratio of one (1) post-split ordinary share for every fifteen (15) pre-split ordinary shares (the “Share Consolidation”) so that every fifteen (15) shares issued and outstanding will be combined into one (1) share. The Share Consolidation will reduce the issued and outstanding number of ordinary shares of the Company as of March 31, 2024 from 51,568,883 shares to approximately 3,437,926 shares. The impact of share consolidation is retroactively restated.
| F-41 |
EXHIBIT 1.9
AMENDMENT OF THE ARTICLES OF INCORPORATION
of
VISIONARY HOLDINGS INC.
The Articles of Incorporation of Visionary Holdings Inc. shall be amended in Section 7, Schedule A, section titled “Common Shares”, by entirely replacing the current preamble and subsection (a). Section “Common Shares” subsections (b) and (c) shall remain unchanged.
The amended section “Common Shares” preamble and subsection (a) shall read as follows:
Common Shares of the Company consist of Class A Common Stock, Class B Common Stock, and Class C Capital Stock.
Common Stock
A statement of the designations of each class of Common Stock and the powers, preferences, rights, qualifications, limitations, or restrictions thereof is as follows:
Voting Rights of Class A and Class B Common Stock:
| 1. | Except as otherwise provided herein or by applicable law, the holders of shares of Class A Common Stock and Class B Common Stock shall at all times vote together as one class on all matters (including the election of directors) submitted to a vote or for the consent of the stockholders of the Corporation. | |
| 2. | Each holder of shares of Class A Common Stock shall be entitled to one (1) vote for each share of Class A Common Stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the stockholders of the Corporation. | |
| 3. | Each holder of shares of Class B Common Stock shall be entitled to one hundred (100) votes for each share of Class B Common Stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the stockholders of the Corporation. |
Class C Capital Stock: A statement of the designation of the Class C Capital Stock and the powers, preferences, rights, qualifications, limitations, or restrictions thereof is as follows:
| 1. | Voting Rights of Class C Capital Stock: Except as otherwise required by applicable law, shares of Class C Capital Stock shall have no voting power and the holders thereof, as such, shall not be entitled to vote on any matter that is submitted to a vote or for the consent of the stockholders of the Corporation. | |
| 2. | Conversion upon Liquidation of Class C Capital Stock: Immediately prior to the earlier of (a) any distribution of assets of the Corporation to the holders of the Common Stock in connection with a voluntary or involuntary liquidation, dissolution, distribution of assets, or winding up of the Corporation, or (b) any record date established to determine the holders of capital stock of the Corporation entitled to receive such distribution of assets, each outstanding share of the Class C Capital Stock shall automatically, without any further action, convert into and become one (1) fully paid and nonassessable share of Class A Common Stock. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock, solely for the purpose of effecting the conversion of the shares of Class C Capital Stock, such number of its shares of Class A Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Class C Capital Stock into shares of Class A Common Stock. |
The Articles of Incorporation of Visionary Holdings Inc. shall be further amended in Section 7, Schedule A, by replacing the entire current section titled "Preference Shares". The amended section “Preference Shares” shall read as follows:
Preference Shares
The Board of Directors is authorized, subject to any limitations prescribed by law, to provide for the issuance of shares of Preference Shares in series, and to establish from time to time the number of shares to be included in each such series, and to fix the designation, power, preferences, and rights of the shares of each such series and any qualifications, limitations, or restrictions thereof. Except as otherwise required by law, holders of Common Shares shall not be entitled to vote on any amendment to the Articles of Incorporation that relates solely to the terms of one or more outstanding series of Preference Shares if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon by law or pursuant to the Articles of Incorporation.
EXHIBIT 2.1
DESCRIPTION OF SECURITIES
The following summary of the rights of our Class A Common Stock, Class B Common Stock, Class C Capital Stock, and preferred stock (collectively, the “Visionary Holdings Securities”) does not purport to be complete. This summary is subject to and qualified by the provisions of our Articles of Incorporation, as amended and restated from time to time (“Certificate of Incorporation”), our Bylaws, as amended and restated (“Bylaws”). Additionally, the Ontario Business Corporations Act (“OBCA”), as amended, also affects the terms of our capital stock.
Our Amended and Restated Articles of Incorporation, dated August 9, 2024, which are pending the filing of the Articles of Amendment with the Ontario Ministry of Public and Business Service Delivery, provides for (1) the Class A Common Stock, which has one vote per share; (2) the Class B Common Stock, which has 100 votes per share; and (3) the Class C Capital Stock, which has no voting rights unless otherwise required by law. Our Amended and Restated Articles of Incorporation also provides for 100,000,000 shares of preferred stock.
Capital Stock
Visionary Education Technology Holdings Group Inc. (the “Company”, “we”, “us” or “our”) is authorized to issue an unlimited number of Common Shares, which are divided into Class A Common Stock, Class B Common Stock, and Class C Capital Stock, and an unlimited number of Preference Shares, with the rights specified in the Articles of Incorporation.
As of the date of the Annual Report on Form 20-F of which this Exhibit 2.1 is a part, we have one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended: the Company’s common shares contained in the sections entitled “Description of Share Capital” in the Registrant's prospectus forming part of its Registration Statement on Form F-1 (File No. 333-263290), as initially filed publicly with the U.S. Securities and Exchange Commission (the “Commission”) on March 4, 2022, and as thereafter amended.
Rights, Preferences, and Restrictions Attaching to Our Common Shares
The Business Corporations Act (Ontario) provides the following rights, privileges, restrictions, and conditions attaching to our Common Shares:
| · | Voting Rights: The holders of Class A Common Stock and Class B Common Stock vote together as a single class on all matters submitted to a vote of the shareholders, except where otherwise required by law. | |
| ™ Class A Common Stock: Each share is entitled to one (1) vote. | ||
| ™Class B Common Stock: Each share is entitled to one hundred (100) votes. | ||
| · | Class C Capital Stock: These shares carry no voting rights, except where required by law. | |
| · | Conversion Rights: In the event of liquidation, dissolution, or winding up of the Company, each share of Class C Capital Stock automatically converts into one (1) fully paid and nonassessable share of Class A Common Stock. | |
| · | Liquidation Rights: Subject to the rights, privileges, restrictions, and conditions attaching to any other class of shares, holders of Common Shares are entitled to share equally in the remaining property of our Company upon liquidation, dissolution, or winding-up of our Company. | |
| · | Dividends: Common Shares are entitled to receive dividends if, as, and when declared by the Board of Directors. |
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Rights, Preferences, and Restrictions Attaching to Our Preference Shares
The Articles of Incorporation authorize the Board of Directors to issue Preference Shares in one or more series and to determine the designation, powers, preferences, and rights of each series, as well as any qualifications, limitations, or restrictions. The Board may establish:
| · | Dividend Rights: Preference Shares are entitled to receive dividends when declared by the Board, with the priority or subordination to dividends on Common Shares as determined by the Board. | |
| · | Liquidation Rights: In the event of liquidation, dissolution, or winding-up of the Company, holders of Preference Shares are entitled to be paid the redemption amount plus any declared and unpaid dividends before any distribution to Common Shareholders. | |
| · | Redemption: The Board may redeem Preference Shares at the redemption amount, together with any declared and unpaid dividends, at any time, with or without the consent of the holders of such shares. | |
| · | Voting Rights: Preference Shares generally do not carry voting rights, except when voting on amendments to the Articles of Incorporation that affect the terms of the Preference Shares or to create shares ranking in priority to or on par with the Preference Shares. |
Amendment of the Articles of Incorporation
Any special resolution to amend our Articles to delete or vary any preference, right, condition, restriction, or limitation attaching to the Preference Shares, or to create shares ranking in priority to or on par with the Preference Shares, must be approved by at least two-thirds (2/3) of the votes cast at a meeting of the holders of the Preference Shares.
Undesignated Preferred Stock
The ability to authorize undesignated preferred stock makes it possible for our Board of Directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us. These and other provisions may have the effect of deferring or preventing hostile takeovers or delaying or preventing changes in control or management of our company.
Three Classes of Stock
As discussed above, our Class B Common Stock has 100 votes per share, while our Class A Common Stock has one vote per share and our Class C Capital Stock has no voting rights (unless otherwise required by law). As a result of their ownership of a substantial portion of our Class B Common Stock, our majority shareholder currently has the ability to determine the outcome of most matters submitted to a vote of our stockholders. This concentrated voting control could discourage others from initiating any potential merger, takeover, or other change of control transaction that other stockholders may view as beneficial.
Because the Class C Capital Stock has no voting rights (except as required by law), the issuance of Class C Capital Stock will not result in voting dilution to the holders of shares of Class A Common Stock or Class B Common Stock. As a result, the issuance of Class C Capital Stock could prolong the duration of the majority shareholder’s current relative ownership of our voting power and their ability to determine the outcome of most matters submitted to a vote of our stockholders.
So long as the majority shareholder has the ability to determine the outcome of most matters submitted to a vote of our stockholders, third parties may be deterred in their willingness to make an unsolicited merger, takeover, or other change of control proposal, or to engage in a proxy contest for the election of directors. As a result, our three classes of stock may have the effect of depriving our stockholders of an opportunity to sell their shares at a premium over prevailing market prices and make it more difficult to replace our directors and management.
Listing
Our Class A Common Stock is listed on The NASDAQ Global Select Market under the symbols “GV”. Our Class B Common Stock and Class C Capital Stock are not listed on any stock market or exchange.
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EXHIBIT 4.53
Form 500 for use In lhe Pl'O¥ince of Ontario Agreement of Purchase and Sale Commercial .n A O ntari o R ealEsta t e Auoc l e tl o n This Agreement of Purchase and Sole dot ed this ............ ! . ........ ..... day of ..................................... ¥. ..... . . . . ... ...... . . ... . . .. . .......,.. 0 ................. . ...; .:. ....... ............. .... ..... . ... . ................. .... .................................. .... ... . . . ...., ogrlle$ lo purchase from (Ful legal name, of o D 6uye"J B UYER: .................... ... ; . . SE W R: .X . . !?!! 9..'. \ !:': . ?. .. '.1:!':. . ?.n'..!!?. . . !!.. ? - '.?.'!?... ':.: .. ... ..•.. . .... • . •.. ..... ..... . .... ..•. .. ........ . .. ..... .......... .... .. .... • .. ..•.•.. ..• . , the following lfull legol name, of oll Sollert) REAL P R OPE R T Y : Address ; ................. :': . '?.?. . .!: .. ... ...... . .. . ........ .. . ......... ......... ..... ............ .. . .. .................. ....... .......... ... ... . ....... ...... ........ .. ....... . .... ... . . fronting on !he .................... . .. ........... ...... ..... . . ............................................. side of .... .•••....• . . .... ... :': ?. . . .. .. ..... ....... .... . .. . .. in the . ............ Y. . .. '?. .... .... ......... . ...... . . .. ....... . . ...... . . ......... . . . ....................... ! . ? .. . ... . ?. .................. . . . . . .. . ........................ . ........... . . ... . ... .. . DEPOSIT: Buyer submit s ... . . .......... ..... . . ....... ....... ...... . ....... ...... .... .. . ..•. ...... ?.P. ... ,J?. .4:1 ... . ... . ... . .......... . ..... . . ... . . ..... . ..... ........ . . ... ............ . .. (Herew llh/Upon Acceptonc e/ os otherwise de scr ibed In th i s Agr eemen t) ........... . ..... .. ......... . .. . .. . ... .. I h!? . . . .... . ... ............ .. . ... ...... ... Dollars (CON$) ...... ... .... . .......... ... ........... ...... ....... q . .i. . . :. . . by negotiable c h e que payable t o .. .... . . . .... . • . • .• . ... . ...... .. /. .. .. . ! .! .. . : . ! ... .!_{: . .......... . ... ...... ...... . . .. .... "Deposit Holder" to be held in trust pending completion or other termina t ion of thi s Agreement and to be credited toward the Purchase Price on comple t ion. For the p urposes of this Agreemen , t • upon Acxeplonc • e shall mean that th e Buyer is requ i red lo deliver !he deposit to the Deposit Holder w i thin 24 hours of the accepta nce of this Agreement . The parties to this Agreement hereby acknowledge that, unless otherwise provided for in this Agreement, the Deposit Holder shall place the deposit in trust in the Deposit Holder ' s non . Interes t bearing Real E s ta te Trust Accoun t and no interest sha ll be earned, received or paid on the d epo s it . B uye r ag rff a to pay the ba l ance aa more particularly Ht out In Schedule A attached. l S C H E DU L ( l S ) A ... ...... ............ . ....... . . . . . .. ....... ... . . . . . . . ··· · [ , J · · c · t " . !' ! .. · · · . · Y ..: ( 1:.,." ƒ " h f e , z J ( 1 ) par t o f thi s Ag re; ' · ( ' - '? [i$J W ƒ ble by .. - • • • - . . . . ;;:;; ;'''" r [ , .. "' , , i : 1: : i . l J r ·] W .. ... . .. . f x. . . .. .. . r z .... . ! ! : . .. . . . .. . , . <>? . . 2 . , ..L . . , ofter w h i ch lime, if not occepted, t h is lMJ. · off,.,hall ho o,I{ aod ,.,;d aod tbo dopaol ,hall ho "'"'""' lo . full wtlhou t '""''"· 2 2 uf z 0 ) 0 2. COMPLETION DATE : This Agreem e nt $hall be completed by n o l ate r than 6:00 p.m. on the ...... ••.•....•.• day of .................................. ... n . ....... ... . , 20 ........................... Upon completion, vacant possession of the p roperty s h a ll b e given to the Buyer unless othe; .: : ; g r e e m e n t . INITIALS OF B UYER ( S ) : 0 n.. trodefflQfU IJott , RfMTORSf> MLS4 M P, ll . llil*/ UJling ond ouocioi.d logo& en owned Of contolled 1:,,/ m Lil TheCanadian Reel AHod a l on ond ldonlily ... real eslole proleuionala who or. members ol CREA and h -- quolty ol llMCa pro,icle. u..cl ... . 0 2023, Onlario 1.ec,I EJIOlt Aaioclalion l' OREA1 . Al rial,n re........i. Thi1 lorm wo1 h)'. OREA for the Ul8 and reproduction bv lb memben ond lioen - (!Illy . kff Oll>er UM or reprocluction 11 prohibited - ,ccepl ...;th pr,or wrollen oonsenl olOREA. Do not alter when prlnHng o, "'producing the alancl a rd pr ... t porfi an.OR EA i,..,,. noliabil ity f or your u .. ol,lh l lorm. INITIALS OF SEW R(S) : cw Form 500 Revised 2023 P ag e 1 of 9
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Email Address : .. .. . .. ...... . .. ... . . . }: . ! . .<?. ............... .... (For delivery of Documents lo Seller) 3 . NOTICES : The Seller hereby appoints the Lbting Brokerage 0 $ agent for the Seller for the purpo $ 8 of giving and rece i ving not i ces p urs ua nt t o thi s Agreement . Where a Brokerage (Buyer's Brokerage) hos entered into a represe ntation agreement with the Buyer, the Buyer hereby appoin t s the Buyer's Brokerage as agent for the purpose of giving and receivin g notices pursuant to this Agr e emen t . Where a Brokerage re pNt Mnts both the Seller and the Buyer ( multiple Npresentation), the lrokeroge shall not be appointed or authorized to be agent for either the Buyer or the Seller for the purpose of giving and rece i ving notices . Arty notice re lating hereto or provided for here i n shall be In writing . In addition to any provision con tained herein and in any Schedu e l hereto , this offer, any counter - offer, notice of acceptance thereof or any notice lo be g i ven or received pursuant to this Agreement or any Schedule hereto (any of them , " Document") sh a ll be deemed g i venond received when delivered personally or hand delivered to the Address for Service provided in the Acknowledgement below, or where a facsimile number or email address is provided herein, when transmitted elec t ronically to that facsim l ie num be r or email addres s, r espectively,in which case, the signoture(s) of the porty (parties) shall be deemed to beoriginal . FAX No .: • . . . ..... .. ...... .. . . ...... . . .: - . .: . . ? . ................ . ... .... .. . FAX No .: ..... .••. .......... . . . . . . . ...... . ;. . : - . .. <! .: - .; . . . ... ...... . . . .. . . . . ... . .. . .. .. (for delivery of Documents lo Seller) (For delivery of Documents lo Buyer) Email Address: ... . ......... . ..... Y.!. . . .;. . . . ; ... ..... . . ...... . ... . (For delivery of Documents lo Buyer) 4 . C HA11ELS INCWDED : Unless otherwi$8 stoled in this Agreement or any Schedule hereto, Seller agrees to convey all fixtures and chatte l s included in the Purchase Pr i ce free from all liens, encumb<onoes or claims affecting the said fixtures and chattels. 5. FIXlURES EXCWDED: 6. RENTAL ITEMS (Including Lease, Lease to Own) : The following equ i pment is re nt edand not i ncluded i n the Purchase Pr i ce . The B u ye r a grees toassume the rental controct(s), ii assum able : The Buyer agrees to co - operate and execute such documentation as may be required to facilitate such assumption. 7 . HST : If the sale of the property (Real Property as described above) la subject to Harmonized Sales Tax (H S , T) then such tax s ha ll be In addition to the Purchaae Price . The Se ller will not collect HST if the Buye r prov i des lo the Seller a warranty that the B u yer i s registered under the Excl $ e Tax Act ("ETA"), together with a copy of the Buyer' $ ETA registration, a warranty that the B uyer shall self - assess and remit the HST payable and file the prescribed form and shall indemnify the Seller In respect of any HST payable . The foregoing warrant i es shall not merge but shoU survive the completion of the transaction . If the sole of the property is not subject to HST, Seller agrees lo certify on or before clos i ng , that th e transaction is not subject to HST . Any HST on ch atte ls, If applicable, Is not include d in the Purchase Price . INITWS OF IIUYIR(S cO) m The Ndemorlr.t RfAl!OR 1 RfAll'ORS!,. . Multi!)!! Ulllng Servlcaal!I and ouocloled logosore owned oroon • oled by L,D The Conodion Red E11a11 AHo clol on !' - "£Al ond idenl.ly the reol eslale prolessionoh wl,o or. - ..bert of CREA ond the -- quol ty of fley prcwlde . U ted under lcien$e . 0 202 3. Onlorioleol Ellola Auoc io lion l' OREA ' ) . Al rig_N> reoerwd. Thia Ion,, wos by OREA for lhe u,. ond roproduefion bv i11 member, and Ian - • (!'11y . k¥ od>er ""'or n,production l a prohibited e,ccel)I with prior wr111en OOIU.,I of OREA Do no! o i ler when pr l nHngor reproduclr1g lhe a tanclord pr•sal por11on. OREA bears noliablllty for yow UM ol lhis form . INmALS OF SEW R ( S) : ® form 500 Revbed 2023 Page 2 of 9
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8. TITLE SEARCH: Buye r shall be allowed unti l 6:00p.m. on the ......... .•? • . • . .. . . doy of... • . . . .. . ... .... . ...... • . . .! .. . . . ..... . ,. 20 . . .? . . . . ..... . . . . , (Requislfon Dote) to examine the title to the property ot his own expense ond until the earlier of : (i) thirty doys from theloter of the Requisition Dote or the dote on which theconditions in this Agreement ore Fulfilled or otherwise woived or ; (HJ five doys prior to completion, to satisfy h i mself thot th e re ore no outstanding work orders or deficiency notices offectlng theproperty, thot its present use( .... • ............. ! ... . ! . :. .... ..... . ... . .. ) moy be lawfully continued and that the principal building may be insuredagainst risk of fire . Seller hereby consents to the municipality or other govern m e nt o l agencies releasing to Buyer details of all ou t standing work orders and deficiency notices affecting the property, and Seller ogrees lo execute ond deliver such further outhorizotions in this regard os Buyer may reosonobly require . 9. FUl \ JRE USE : Seller ond Buye r ogree thot there is no representotion or warranty of any kindthat the future intended use of the property by Buyer is or willbelawful except os may be specifically provided for in this Agreement . 10. nru : Prov i ded thot the ti 1 le lo the property is good and free from oll registered restridions , charges, liens , ond encumbrances ex c ept as otherw i se specifically provided in this Agreement and save and except for (o) any registered restrictions or covenants thot run with theland providing that such ore complied with ; (b) any registered municipal ag reements and reg ister ed agreements with pub licly regulated utilities providing such hove been complied with , or security hos been posted to ensur e compliance and completion, as evidenced by o letter from the relevant municipality or reg ul ated utility ; (c) ony m i nor easements for th e supply of domest i c utility or telecommunication services lo the property or adjacent properties ; ond ( d) any easements for drainage , storm or sonitory sewers, public utility lines, telecommunication l ines, coble television lines or other services which do not materially affect the use of the property . If within the specified times r eferre d to in porogroph 8 ony v olid objec t ion lo title or to any outstanding work order or deficiency notice, or to the fact the said present use moy not lawfully be continued, or that the principal building moy not be insured agai n st r i skof fireismode i n wr i ting lo Seller and which Seller is unableor unwilling lo remove, remedy or satisfy or obtain insurance saveond except aga i nst risk of fire (TIiie Insurance) in favour of the Buyer ond ony mortgagee, (with oll related costs al the expense of the Seller), and which Buyer w i ll not waive, th is Agreement notwithstan ding any interm ediote acts or nego tiations in respect of such objections, s hall be at an end ond all monie s pa i d shall be returned without interest or deduction and Seller, Listing Brokerage and Co - operating Brokerage sholl not be liable for ony costs or domoges . Save 0 $ lo any volid ob j ection so made by such doy ond except for ony objection go i ng to the root of the title, Buyer shall be con clu s i vely deemed t o hove ocoepted Seller' s title to the property . 11. CLOSING ARRANGEMENTS : Where eochof the Seller ond Buyer reto l n o l awyer l o complete the Agreement of Purchase and So l e of theproper ty, ond where the transact i on will be completed by electron i c registration pursuant to Port Ill of the land Reg i stration Reform Act, R . S . O . 199 0 , Chap te r l 4 ond the Electronic Registration Act, S . 0 . 199 1 , Chapter 44 , and ony amendments thereto, the Seller and Buyer acknowledge and agree thot the exchange of dosing funds, non - registrable documents and other i te ms (the · Requi sit e Deliveries*) ond the release thereof to the Seller and B u yer will (a) not occur at the some time os the registration of the transfer/deed (and any other documents intended to be reg i steredin connection w i th t he comple ti on of this transoction) ond (b) be subject to conditions whereby the lawyer(sJ receiving ony of the Requisite Deliveries will be required to hold some In trust and not release some except in accordance with the terms of o document regi stration agree ment between the said lawyers . The Seller ond Buyer irrevocably Instruct the said lawye r s to be bound by the document registration agreement which is recommended from time lo tim e by the law Society of On tario . Unless otherwise agreed to by the lawyers, such exchange of Requ i s i te Del i veries sholloccur by t he delivery of t he Req ui s ite Deliveries of eoch party to the office of the lawyer For the other party or such other locolion ogreeoble to both lawyers . 12. DOCUMENTS AND DISCHARGE : Buyer shall not coll for the production of ony title deed, abstract, survey or other evidence of t i tle to the prope r ty excep t such os are I n the possess i on or control of Seller . If reque $ ted by Buyer, Seller will deliver any sketch or survey of the property with i n Selle r' s control to Buyer as soon os poss i ble and prior to the Requisition Date . II o dischorge of ony Chorge/Mortgoge held by o corporation incorporated pursuant to the Trust And loan Com pan ies Ac . I (Canada), Chartered Bonk, Trust Company, C r edit Union , Caisse Populoire o r Insurance Company and wh i ch is not lo be assumed by Buyer on completion, ls not available In registrable form on completion, Buyer agrees to accept Seller's lawy e r' s personal u ndertaking to obtain , out of the closing funds , o discharge i n r eglstroble form ond to register some, or cause some lo be registered , on title w i thin o reasonable period of time ofter comple t ion , provided that on or before com p letion Selle r shall provide to Buyer a mortgage statement prepared by themor t gagee setting out t he balance required to obtain the discharge, and, where o reol . tlme electronic doored funds transfer system i s not be i ng used , o direction executed by Seller directing payment to the mortgagee of the amount required to obtain the discharge ou t of the bo lon c e due on c omplet i on . 13 , INSPECTION : Buyer acknowledge s having hod the opportunity to inspect the property and understands tha t upon acceptance of thi s offer there shall be a bind i ng agreement of purchase a nd sale between Buyer ond Seller . 14, INSURANCE: All buildings on the property and oil o th er things being purchased shall be ond remain until completion at the risk of Seller. Pond i ng completion, Seller shall hold all insurance policies, ii any , an d the proceed . s thereof in trust for the parties os their interests may oppeor and i n the event of substant i a l damage , B u yer may either terminate this Agreement ond hove all mon i es pa i d returned without i nterest o r ded ucti on or e l se t ake the proceeds of any ins u rance and complete the purchase. No I nsurance shall be transferred on completion. IF Seller is toking back o Charge / Mortgage , or Buyer I sassuming a Charge/Mortgage, Buyer shall supply Seller with reasonabl e evidence of adequate insuronco to protect Se ll er' s or other mortgagee's interest on compl etio n. INITIALS OF BUYER(S): 1 m 1he lrocle....b REAITOM REAITOISe MI.Sl!D M , ullipl, U SeMc..e ond o..oc: ioltd logosareowned 0t conroled by La The C CR>d lon Reel E - ASIOdalon mid idenlify !he M .... P'O*siono t , whooren,omb.rs of CREA ond h - - quolily ol MMC N hy pr0¥id e . Used under . O 202 3, Onlar lo teal biota As socio llon l' OREA'I · Al riahh reMrved . T , hi lonn was by OREA Jo, "" UMand reproduction bv n , members and licensees only . AtriOlher useorrep,ocluetion Isprohlb l tedexceJ)I wit!, poot wrollen oonsenl ol OREA. Do not a l ter wl - pri n ng ot reproducing the slondord pr•,., por1ion. OREA bears no tlobltily for you u.. ol lhl, form. INITIALS Of SEWR(S): ctw) form 500 Revi$&d 2023 Pe19• 3 of 9
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15 , PLANNING ACT : This Agreemen t shall be effective to creole on i nteres i t n the property only if Seller complies with the subdivis ion control provisions of the Planning Ad by completion and Seller covenants lo proceed diligently at his expense toobtain any necessary consent by completion . 16 , DOCUMENT PREPARATION : The Transfer/Deed shall, save for theland Transfer Tax Affidavit, be prepared in registrable form al the expense of Seller, andany Charge/Mortgageto be given bock by the Buyer to Seller at the expense of the Buye . r If requested by Buyer, Seller covenants that th e Transfer/Deed to be de livered on completion shall contain the statements contemplated by Section 50122 ) of the Planning Act, R . S . 0 . 1990 . 17 , RiSIDENCY : lo) Subiec : t to (b) below, the Seller represents and warrants that the SeUer is not andon completion will notbea nOMesident under the non - residency provisions of the Income Tax Ad which representationand warranty shall survive and not merge upon the completion of this transaction and the Seller shall deliver to the Buyer a statutory declaration that Seller is not !hen a non - resident of Canada ; (b) provided that i f the Seller is a non - resident under the non - residency provisions of the Income Tax kt, the Buyer shall be credited towards the Purchase Price w ith the amount, if any, necessary for Buyer lo pay to the Minister of Notional Revenue lo satisfy Buyer's liability in respect of tax payable by Seller under the non - <esidency provisions of the Income Tax Act by reason of this sole . Buyer shall not claim such credit if Seller delivers on completion the prescribed certificate . 18 , ADJUSTMENTS : Any rents, mortgage interest, realty taxes Including local im provement rotes and unmetered public or private utility charges and unmetered cost of fuel, as applicable, shall be apportioned and aUowed to the day of completion, the day of completion i t self to be apportioned to Buyer . 19 , TIME LIMITS : llmeshall inallrespects be of t he essence hereof provided that the time for doing or comp leting of any matter provided for herein may be extended or abridged by on agreement in writing signed by Seller and Buyer or by the ir respective lawyers who may be spec i fically authorized in that regard . 20 , PROPERTY ASSESSMENT : The Buyer and Seller hereby acknowledge that the Province of Ontario hos implemen t ed current valu e assessment and properties may be re - assessed on on annual basis . The Buyer and Seller agree that no claim will be mode against the Buyer or Seller, or any Brokerage, Broker or Salesperson, For any changes in property tax as o result of a re - assessment of the property, save and except any property taxes that accrued prior to the completion of this transaction . 21 , TENDER : Any tender of documents or money hereunder may be mode upon Seller or Buyer or the ir respedlve lawyers on the day set for comp l etion . M«iey shall be tendered with funds drown on a lawyer' s trust account in the form of a bank draft, certified cheque or wire transfer using the Lynx high value payment system as set out and prescribed by the Canadian Payments Act (R . S . C . , 1985 , c . C - 21 }, as amended from time to time . 22 , FAMILY LAW ACT : Seller warrants that spousal consent is not necessary to this transaction under the provisions of the Family low Act, R . S . 0 . 1990 unle $$ the spouse of the Seller hos executed the consent hereinafter provided . 23 , UFFI : Seller represenl $ and warrants to Buyer that du r ing the time Seller hos owned the property, Seller hos not caused ony building on the property to be insulated with insulation oon o t ining urea formaldehyde, and thot to the best of Seller's knowledge no building on the property contains or hos ever contained insulation that conta in s urea Formal de hyde . This warranty shall survive and notmerge on the completion of this transaction, and if the building is port of a multiple unit building, this warranty shall only apply to that po r t of the building which is the subiect of this transaction . 24 , LEGAL, ACCOUNTING AND ENVIRONMENT . AL ADVICE : The porties ocknowledge that any information provided by the brokerage is not legal, tax or environmental advice, and that it hos been recommended that the parties obtain independent professional advice prior to signing th i s document . 25 . CONSUMER REPORTS : The Buyer is hereby notified that a c onsumer report contain i ng credit and /or personal infonnation may be referred to In connection with this transaction . 26 , AGREEMENT IN WRITING : If there Is conflict or discrepancy between any provision added to t his Ag r eemen(tincluding any Schedule attached hereto) and any provision in the standard pr& - set portion hereof, the added provision shall supersede the standard pr& - set provision to the extent of such eonAict or discrepancy . This Agreement including any Schedule attached hereto, shall constitute the entire Agreement between Buyer and Selle r . There is norepresentation,warranty, collateral agreement or condition, which affects this Agreement other thanasexpressed herein . For the purposes of this Agreement, Seller means vendor and Buyer means purc hase r . Th is Agreem ent shall be read with all changes of gender or number required by the context . 27 . ELECTRONIC SIGNATURES : The parties hereto consent and ogree to the use of electronic signatures pursuant to the Electronic Commerce Act , 2000 , S . O . 2000 , c 17 as amended from time to time with respect to this Agreement and any other documents respecting this transaction . 28. TIME AND DAR: Any reference to a time and dote in this Agreement shall mean the time and dote where the property is located . INITIALS OF BUYH (S) 1 cc - P m . n .. 1 •od - h REAll'ON <?IIS4&, . Mull;>i! u s.,.,;.,.,. ond o, - iolod logo, 0<• owned ƒ ' contoled by n.. Ccnoctoon R...I E - . . - . - cioaon P.EA! and ld.nlify the real ..ia1e prof.>ionok who.,,. ,,_1,en al CREA and lhe quolily of a.vice, fwy p,oo,id. . U..d uncl. t - o 2023, Onlorio Real E. - Assodolion 1•0REA·). All riQ.hh ,... Md. This form we» l,y OREA lo, lhe u>eand reproduclion l,y . me<nben and1.,.., - only. Ally ad,« u.. or reproduction 11 proh ib iled .xc.J)I wilh pnor wrfffen consent al OREA. Do notolte, wl.... printing 0t reproducing 1he a tondord pr•set portion. OREA bears noliobil ily for your u .. of thl1 lonn . INITIALS OF SEWR(S}: cw Form 500 Revised 2023 Poge 4 of 9
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29. SUCCESSORS AND ASS IG NS: The heirs, executors, administrators , successors and assigns of th e undersigned ore bound by the terms herein. SIGNED, SEALED AND DELIVERED i n the prele nce of: IN WITNE SS whereof I have here unto set my hand and seol : (Wilna») jwi.;; f . . ..... . ' . ............. .... .... . .................................. . E Aull>clntl, ia, :::::::: : ::::::::::::::: . 4 [::::: (Buyer/Aulhoriied ing Ul!icerJCeatar Holding• INC. ! • Seo I • SeoQ 05/19/ 2 3 (Dote) i oc;iie ·· ·· · ·········· ·········· ······ · I, the Undersigned Sell«, ogree to the above offe r . I hereby irrevocobly instruct my lawyer lo pay directly to the brokeroge(s) with whom I have ogreed to pay commission, the un pa id bolonce of the commission together with a pp lica ble Harmonized Soles lox (and any other taxes as may hereafter be appl icable , )From the proceeds of the sole prior to any payment to the undersigned on completion, as advised by the brokerog e (s) to my lawyer . SIGNED, SEALED AND DELIVERED In the prese nce of: IN WITNESS whereof I have hereunto set my hand and sea l: jw.i;; j·········································· ·· ··········· · (Witness) W £'i..,Igjjiiljifrijij_ife i ! 1s · . ii«JXi;ii,;ii ·si e i· ii o« ;j···· · · · · ····· · · · · · · · · ···· 1 · ! ·· q io;Of ƒ .5.f. 3/23 iociei i··············· · · · · · · · · ········· SPOUSAL CONSENT: The undersigned spouse of the Seller hereby conse nts to the disposition evidenced herein pursuant t o the provisions of the Fomily low Act , R.S.0.1990, and her eby ogrees to exec u te all nece ssary or incidental documents to give full force and effect to the sole evidenced herein . iw.i;;eu, - ·········· ·· ····· ··········· ··· · · ············ ······· ··········· ···· ......................... . ..... .......... . ...... ........... . . .... ....... • !Spouse ) ( SeoQ i o c ; i i e ·· ······ ·············· ·········· CON FIRMA TI O N OF ACCE PTANCE : Notw ith standing anyth ing contained herein to the contrary, I confirm th is Agreement with all changes both typed 0 ,d writt,n = 6,olf t •"""'* ' by oil port;,, ot .. .. . . .. 1;1.:; :i· . . . . . .. I• ................ . doy of . .... - r= = · : :;;;; .,... 20 ........... · C Vt 1 ·········· - OS/30/23 i sig ; ;rs;;i ;;; ;;;· r · INFORMATION ON BROKERAGE(S) listing Brokerage ..................... . {. ... . .. .'!.! .. !:''.!. :.!... . ?. ................ ... .. 9 05 - 47 5 - 47 5 0 ( Tel.No. ) MICHELLE OOYANG (Salesperson/Broker/Broker of Record Nome) Coo p/Buyer Brokeroge . ......... ...... ..... ?. . . .! 9 . .. . ?:'! ... . .:...................... (416) 4 90 - 117 7 ( Tel.No. ) RUI ZHENG (Solesperson/Brolier /Broker of Record Nome) ACKNOWLEDGEMENT I ocknowledge receipt of my signed copy of this accepted Agreement of Purchase and Sole and I authorize the Brolteroge lo forward o corr, lo my lawyer. I acknowledge recf i ig ned co py of th i s accepted Agreement of Purchase and Sole 1 ' )#1 •• ' , I lorword o OOf1Y to my lawyer. .... . .......... . . . .. . . . . .. . .... . . . . .. . . . . 7 . p .. l .. . . . . 1 " . . ' . .. . ........... 0 . 5 .... / . 1 .. 9 . / . 2 .. 3 .................... ( Bc,yer ) caatar Hold.1090 111c. ( Dote ) 1s1.i;;;j:.:.:.:.:.·:.=::.: :::. . : ::.:.::::· ·········· · · · . · .·· · · · · · · · ·· · · · · · · · · · i · o;; r··················· (Sello,) ................................................................ ; ······· -- ······· ····· Address for Service ................................ . ................. . ...... .................. . (Buyert. •. ... ..•.................................................. 'f 6;;;;j.; ·············· ··· ······ Address for Service ................................................. ...... .................... . ............. . . . . . . . . . . . ............ . . . .................. (Tel. No.) Buyer's lawyer ................................ .. ................ . ............... . ............... . A d dress ...................... .. .................. .... . ....... .. . . ..... ............ . ................ . (Tel . No.) Seller's lawyer ............ .... ........................................... .. ......... ..... ....... . Address ...................... . . ..................... . .. ........... ... .......... ........ ..... ...... . Email ............................................................................................... . /tei:·N;;y. - ··········· · · · · ····· · · ···················· i i:o .' NoT ····· ······ ········· · · ····· · · ··· Ema il ............................................. .... .............................................. . 1r;r·N;;y.··········· · · · · · · ····· · · ······ · · ······· · · ·· 1·i:ci;i.''Noi:········· ··· ..··················· FOR OFflCE USE ONLY COMMISSION TRUST AG REE ME NT To: Cooperating Brokerage MIOWn on she foregoing Agreement of P urcho se ond Sole : In ccns idero lion for she Coope,oting Brolierage procuring the farego l 119 Agreement of Purchase and Sole, I hereby declare!hotoil moneys rece i ved or receiv oble by me i n conn ect i on with theTron so<:tlon os contemplated i n the MIS' R u lesond Regulations of my Real Esrote Boo r d sholl be receivable ond held in trvsl . Thi s ogreement shoU consritute a C omm lislon Trust Agreement as defined in the MI.S" Rules ond shall be subject lo ond go - ned by the MLS'" Rules per1a lnlng lo Comm lHion Trusl. ,o,. bfthe dote and ttme d the occeplan<:e of the loregoi119 Agreement of Purchose ond Sole. AcknowledgeiL. ..... . . . ........ . .... . R. U I .Z H €. N G . . . . . . . . . . . . . . .92.t.1'?.!..?.? - os123123 ulhorized Jo bi nd the Ulling Brokeroge) (Aulh 0tized to d the Cooperattng Btokerage) F o rm 5 00 Revised 2023 Page 5 o f 9
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Form 500 fo, use in Iha Province ol Ontorio Schedule A Agreement o f Purchase a nd Sale - C ommer ci a l A Ontario Real Estate Association This Schedule Is attached toand forms part of the Agreement of Purchose and So l e berween: BUYER: ... ..... . .... ... ....... ! . . 7. .. ƒ !! . - ? . SEWR: .... Y. . . ... . . . .. . f or the purchaseand sole of . .... .. ......... . 5' - .. ; . <::. .............. . . .. ........ . . . ...... . ........ . . . . . . .. ......... . . .... . . .......... . . . . ... . . ................... . ...............,.. a nd ?. . .. . . . . .. ? . .. . . : . ......... ... . .. .. . ......... ...... . . ................ . ... . .. . ... .. .. . . ... ............... . . .. .... . . .. .. ....... : . . . . .. . . ....... .... .. ..... ....... ...... . .... .. . .. ........... .... . . ...... . ..... .. . . ... . : . . ......... . . .. . . ....... . .... . . . .. ...?. . ............ ...... . .. . .. ! .. .... . ...... . .... doted the .... . .. . . !. .. . ..... .. day of .. ...... .. .. ... . ..... .. .... . ... ! . ... ....... . . .... . . .... . .... .... , 2C'f.? . .. ............ . Buyer agrees lo pay the bolonce as follows: The Buyer agrees to pay the balance of the purchase price, subject to adjustments, to the Seller on completion of this transa c tion, with funds drawn on a lawyer's trust account in the form of a bank draft, certified cheque or wire transfer using the Large Value transfer System. T we n ty &O) d a s ( uJ THIS OPPBR IS CONDITIONAL upon the Buyer obtaining at his own expense the necessary financing r:z suitable to the Buyer to complete this transaction within Sixty (60) ba&iness d a ys (Bscel.1uli.R!J /1. Satuzday, Sanday and Hel.11.j a :, a l from acceptance of this offer, failing w hich this offer shall become null and void and the Buyer's deposit shall be returned to him in full without interest or deduction. This c ondition is included for . t he sole b[?J u o e Buyer and may be waived at his option. r : z T wenty , 2 0 [1. · from acceptance of this offer upon the THIS OPPER IS CONDITIONAL for a period of Si x t y (69) following, l, conducting such inspections as it wishes on the property and the obtaining of reports satisfactory to the Buyer in its abs o l u te di s cretion at its o wn expense. The Buyer agrees to treat the results of such inspections in a strictly confidential manner and not to disclose the results to a third party except where required by law. There shall be no compulsory requirement to disclose the results to the Seller. 2 . inspecting and approving the Leases, as well as any assignments of Leases, renewals or extensions thereof ( or offer to lease if no leases are available). The Buy er agrees to treat the results of such inspections in a strictly confidential manner and not to disclose the results to a third party except where required by law. There shall be no compulsory requirement to disclose the results to the Seller. THESE CONDITIONS are inserted for the benefit of the Buyer and may be waived by written notice, in whole or in part by the Buyer. If the Buyer fails to waive these conditions, this transaction shall be deemed null and void and all deposit monies shall be returned forthwith without interest or deduction. Without derogating from any party's other obligations under this Agreement. It is agreed that the Seller shall act in good faith and use reasonable commercial efforts to satisfy or c auae to be satiafied, the conditions set forth in this section. Subsequent to acceptance, the Seller will pe rm it the Buyer and its agent access to the land and building two (2) times during normal business hours until closinr1te at times which are mutually acceptable to Seller and Buyer and Tenants. Both Buyer's a n - d Sell e r ' s I t: : 7 ' THIS OFFER IS FORTHBR CONDITIO N AL u pon the "!ni y e...._. Solici J;rz!s approv i ng the terms and conditions of the said offer within three (3) business days from acceptance of this offer, failing which this o ffer shall become null and void and the Buyer's deposit shall be returned to him in full with ou t i nterest or deduction. this condition is included for the sole benefit of the Buyer and may be waived at his option. This form must be initialled by all part i es to the Agreement of Purchase INITIALS OF BUYER ( S ): m The troct.. - b REA110Re , R£AUORS4t W4S<e , ... u s.mc.,e ondo oledlogos ore owned or conwolled by M LJ3 Tho Ca,oclicn Roal Auo ci aion and idenllly the .. - proleuionals who or. .......i..r.of aEA and the -- qualily of N<vlcos they provid e . U..d under • 0 2023, Onlario Rool Ellalo Assoc lcllon (·OREA1 . riahts re.... - ..c . l Th i s loon wm by OREA !or f>o useond reproduction bv Its members ond lieensee, only . Arw o4fwtr UM or rep'ocl,;ction Is prolllblled e,ccept with poor wnllen coruent of OQ£A. Do no/ o l ter w1 - prinling or reproducing the slat>clotd pr.Mt por1ion. OREA b.cts no llobUily for ycur use of this form . INITIALS O F S E LLER(S) : cw Form 500 Ravlsed 2023 Page 6 of 9
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Schedule A Agreement of Purchase and Sale - Commercial A Ontario Real Estate Association Form 500 fo< u.. In the Province cl Ontario Th is Schedule is ottoched to ond forms port of the Agreement of Purchase ond Sole between : BUYER: ...... . ................ .!.!; . ' . :': .. !! - .'?. . .. . : .... ........................................................ ....... ........... . . . . .. .............. . ............ . . ...... . . .. . .... , ond SEWR: ... Vi•ionary .. Education . T . ec hnolo gy . Holdinsi• .. Group .. :rn . c ............ .... . ........... .. .. ....... ............. ......... .......................................... .... . for the purchase and sole of . ........... .... ! ?: . <:>. . .7. .. .. ............ ............. ..... ............................... ..... ........ . .. ! . :. .. .... . ......... ..... . . ..... insurance jnthe Seller's possession. , • THE SELLER SHALL with in a p e (5) days from the date of acceptance hereof, deliver to the Buyer a copy of a t ec tural plans, structural, mechanical, electric, plumbing and engineering drawings Seller's possession. At Se lle r' s best knowledge. ..... .. . .... ...... ............... ... .!.................. doted the ... ...... . .......... day of...... . . .............. ... . . ..... . ............ . . . ................ , . 2<:t.? .. .. .. .. .... ..... B uy er agrees lo poy the balance os follows: SBLLBR agrees to supply upon acceptance at its expense, to the Buyer a survey before closing date. THE SEL LER shall within five (5) calendar days following acceptance provide the Buy er with all information and documentation related to the building including but not limited to copies of leases, environment l a audits, building specifications, roof repairs, appraisals, work orders, contracts, property managemriiJDts, operating expenses, breakdown of taxes, maintenance and that there is not on or under the building any hazardous materials · (as hereinafter defined). •H azardousMaterial" means any contaminant or pollutant and means any substance that when released to the natural environment is likely to cause, at some immediate or future time, material harm or degradation to the natural environment or material risk to human health and without restrict i ng the generality of the foregoing, hazardous Material includes any pollutant, contaminant, waste, hazardous waste or dangerous good as defined by applicable federal, provincial or municipal laws or guidelines for the protection of the natural environment or human health. THE SELLER WARRANTS T O TH B BUYBR AS FOLLOWS: l . The Seller o r Tenan ts h av e not received any work o rder. deficiency notice Or other written notice from any author it y, or board of fire insurance underwriters or anyone else, advi sing of any breach of any by - law, code , regulation, or standard or suggesting that any repa ir or work is necessary to the Property or any part thereof. 2. The Property does not contain any asbestos, urea formaldehyde or other noxious or dangerous substance or condition to the best of the Seller's knowledge, 3. As of the day of closi ng, the Seller will be th e own e r of the Property free and clear of a ll mortg ages, charges or othe r encumbrances exc ep t as provided herein. 4.Ifthere i s any Work Order, or deficiency notice atclosing, Seller Is responsible and has a 12 0day s to rectify such work order or deficie ncy "" ƒ '" (w 0 This form must be initiall ed by all parties lo the Agreement of Purchase a nd Sole. INITIALS OF BUYER(S) : c[p m 11,e ll'ode - i.. REAll'Qn, REAIJ'Oltlie, Ml.54!>, Usling Servica4 ond a,sociatld logo& o.. c,,med o, contolled t., La n,., Canoaoon R.al Auoeiolon PEAi and ld.nlify 1h. rec,1...,.. profeulonols who""' - ..bers of CREA ond lhe -- quat.1y of ...vlcM fiey p<OYide . U..d under f,oe,,. .. 0 2023, Onlario lteol E - Auoclollon (·OREA*} . All rlA.htt reMMd. This lo,m WCII d...aoc.d bf. OREA for h UMand r eprodudion bv ff, members ond l ice n - . Any omer UMor rep<cxluction Is prohibited e,cc,,pt wi4h prior wr,nen consent ol OREA. Do not alter w'hen printing 0t , - producing the ,tondard prNel portion. OREA bears no liab l l lly !or your.,.. ol lh11 form . INrTIALS OF SEWR(S): C© Fonn 500 Revised 2023 Page 7 of 9
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Schedule A Agreement of Purchase and Sale - Commercial A Ontario Real Estate Association Form 500 fol uMJ in the Pr OYlnce of Onlotlo Th is Schedule ls ottoched to ond form s port of the Agreement of Purchase and Sale between: BUYER: ......... ..... ......... .!. !:': .. '!f - . :';1: .. .'?.: ......... .. ...... .. ... . ... . ........... . . . . . . . . . ....... . . . . . . ... . ..... ........ . . . . . .. . ......... . . . . . .......... . . ......... . ...... , . and SEWR: .... . . :". .. . . .} . ... . . .?. ...?.:. .} . ? : ...... ..... .......... ........ ......... ................. . ............ ... ......... ...... . ... .. ...... ........ . . . for the purch0$e and sole of . .. .......... ! ... - . ?. . . . . ... .... ......... .. . . . ......... .. ........ ............ ... ........ . .. . .. '!:' .:.'?. .......... .. .. . . ......... ....... ... ..... ... . ..... . . ..... 7. . .. .7. ... .............. d . ated the ........ ..:... ....... d . ay of .... ............ .. .. ...... ..... . .¥. ....... .... . .. . .. .... ... . . ... , . 2c:r.?... ............ . Buyer agrees to pay the balance as fallow s : THE SELLER COVENANTS AND AGRBBS with the Buyer that: i) as of and from t he Effecti ve Date, the Seller shall not further transfer, assign, convey or oth erwis e, in any manner whatsoever, deal with the Property or any part thereof including without limit ati on amend or renew the Leases, nor mortgage or charge the Property nor shall it allow, suff er o r permit any lien, encumbrance, restriction or interest to arise or to attach to or be regi stered against the Property, all without the Buyer's prior written consent thereto. ii) as of and from the Effective Date, the Seller shall not enter into any contracts or agreements affecting the Property without the written consent of the Buyer, iii) as of Closing, all Te nant inducements and leasehold improvement costs and charges payable or required to be paid by the Landlord pursuant to the Lease, Tenant allowances and incentives, Tenants leasehold construc tion r equi red to be performed by the Landlord pursuant t o the Leas e and all real estate commissions payable in re spect of the Lease and options thereto whether payable befo re or after Clo sing . hav e been paid, or if not pa id are the responsibility of the Seller and shall be adju s ted for on the stat em ent of adjustments. iv) the Sel ler shall provide the Buyer forthwith with all contracts related to the Property. As of Clo sing the re w ill be no con trac ts or agreements affect ing the operation of the Pro per ty; v) save and except as herein otherwise provided, the Seller shall operate, manage and maintain the Prop er ty to the Clo sing date as would a prudent owner. vi) as of •c losing, no work order shall exist; and vii) each of the representat ions and war rant ie s of the Seller made pursuant to thi s Agreeme nt shall be true and correct to the best of his knowle dge and belief and complied with fully in all resp ect at Closing. ON THE DAY OF CLOSING, the Seller agrees to deliver to the Buyer, in addition to any other clos i ng doc umentat i on , which may be required, the following; a) Deed or Transfer in regi strable form of the Property being conveyed. b) The originals of the Leases. c) an assignment by the Seller of all leases, offers to leas e . tenancy agreements and al l amendments thereto of space in the property and all rent relating ther e to. The Seller shall deli ver an indemnity in fav our of th e Buyer in co nnection with the assigned Leases and the Sell er's obligations thereund er arising prior to the Closing Date, d) A written direction from the Selle r to the Tenants directing each Tenant to pay al l futu re r entals to the Buyer, or as the Buyer may direct a nd advising the Tenant of the change in ownership . This form must be initialled by all parties to the Agreement of P urchase and Sole. INIIIALS Of BUYER($ cD m Tho RfAIJ'OR \ 9 RfAITOlS4'J . Mu_ U 1J' ancl ouociot9d logo& are owned o, La The c - .dlon Reel Eslall Aisociaion PEAi one! idenlily ... '1.ai..... proleuionoh who .... , ."'OEA and ... by -- quali1y cl ...ic.. hey p<0¥1de . Used under Sconse . 0 2023, Onlotio Real Ellolo Auaclotlon 1·0REA , 1 Al riahb ..._.....j. lhia lorm was " - loped bv OREA lor lhe use and repradudlan bv Its members and llc:AlnSffs . A,w otfle( use o, reprooudlan I s prohibited - •pl with poor wnhll consent cl OREA. Do not oiler w'hen pnnlng a, , - producing the slant3otd pr.,., par,1¢n. OREA boor, no lloblllty fa, 'fCAJI UM cl this lor m. INITIALS OF SEWR(S) : c@) Form 500 Revised 2023 Page 8 of 9
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Form 500 lo, u,e inlhe PrO'tlnc:e of Ontorlo Schedule A Agreement of Purcha se and Sa l e - C omme r c i a l . - .n A Ontario Real Estate Association This Schedule Is attached to and forms port of the Agreement of Purchase and Sole between: BUYER: ....................... !. . .. . . ! .. ?:! . '?.:. ... ......... . . . . . .. . ......... . . . ................ . . . . . ................................... . . . . . . . .. . ........................,. a .. n . d . SEUER: .... . ?. ...! . . .'? .. . '? ?. .'? ?'. .. '? . . .. 7 .'? .. .'? : ...... .... ..... .. .... ........ .............. . . ... ....... . ................ . . ... .... . ........................... for the purchase and soleof . ............... !:!: g . .!: .. ... ...... .. ....... . . ..... . . ..... . .... . ... . ......... . . ... ........... . . . . . . ... . . . ':': .::. !: ............................ ...... .?. ............. . . . . .. . .... .. ! .... .............. . . doted 1he ...... ... !.. .......... day of ........... .................... X: ........ . . ... ................ , . 2 . < . :t.? ............... . B uy er agrees to pay the balance os follow$: e) An assignment of those contracts which th e Buyer is to assume (provided that nothing herein cont ained shall require the Buyer to assume contracts made between the Seller and a non - arms length third party) ,including a con se nt to the assignment by the other contracting party if required by law or the terms of the contract, and all acknowledgement by it that all paym ents due und er the terms of the con tract have been made and that the contrac t is not in default and is valid and subsisting, and a covenant by the Seller to that effect, together with the Seller's in demnity in connection with all and any defaults arising prior to closing relating to such cont racts , and an assignment of all warranti e s, guarantees and similar rights which the Seller may have in relation to the Property. the Buyer shall assume only those contracts it has agreed to assum e prior to closin g. f) An undertaki ng by the Seller to readjust a ny errors, omissions or changes in th e Statement of Adjustments. The Buyer shall deliver a corresponding undertaking to the Se ller . g) all duplicate k eys and master keys (if available) to the Building and units and facil itie s o n the Property and all machinery. ALL PARTIBS AGRBB th a t adjustments shall be made as of the Day of Closing with respect to rentals, tax es, utilities, ov erpayments of tenants• installments of tax and operating expense escalation s or payments, amounts collected from the Tenant on account of amortized costs, overpayments of othe r landlord's recoveries from the Tenant and other similar and usual adjustments and items, prepaid rents and security deposits. No adjustment shall be made in respect of any claim of the Sell er for any rental a rrear s , but the Seller shall remain enti t led to collect su ch arrears , and the Buyer shall turn over to the Seller any am ounts specifica l ly receiv e d by it on account of such arrears, the Seller shall d el iver to the Buy e r on the Date of Closing a list setting out the Tena nts and all rents in arr e ars by such Tenants . Pire and other insurance shall not be transf erred or adjusted. The Day of Closing shal l be for the Buyer ' s ac cou nt both as to re ven ue and expense. Thi s Agreement con sti tutes the en ti r e agreem e nt between the parties pertaining to the subject matter hereof and supersedes all prior or contemporaneous agreements, negotiations and discussions, whether oral or w ritten, of the parties and there are no warranties, repre sen tation or other agreements between the parties in connection with the subject matter hereof ex cept as specifi cally set forth herein. IT IS UNDBRSTOOD AND AGR BBD that the Seller shall indemnify and hold harmless the Buyer for the paym ent of any and all work c ompleted on the b uilding prior to closing by any contractor. In the event that a contractor liens the property subsequent to closing for work done prior to closing, the Seller shall be responsible for any and al l costs. SBL LBR WARRANTS th at all chattels an d fixtures included in the purchase price shall be in work ing ord e r on date o f c lo sing h e r ein and f r • • of all encumbrances. !bis wazxauLJ &ball auzvive lot a . T . J . '.ia :: ,w.:.;;; fEz:i .................. @=J This form must be initialled by all parties lo the Agreement of Purchase and Sole. 1NfflA1.S OF BUYER(S ) I cC : b m Th. REAIJOM,l::' ƒ ' se MLSe, Ulfln g Scnl - e olld os,odollld logos en owned o r contoled b/ L J3 The Canodion R.al Etlolo • and identify h real - p,oleulonok who ore........,.,. cf CREA and 11,e ... ,,.. quoli1 y cf M1Yicos hey provide. Used undo, ... 0 2023, Onlorlo Real Eslolo A&soclotion l"OREA1. Al right. re... - ...1. lhi 1 lonn wa, bv O REA lo, lhe u.. and reproduction bv i t1 membe<1 and licenMes (!Illy. Any oilier UMt or r cxluction 1 1 prohibiled .,..,p1 wtth pnor w,1..., consent cf OREA. Do not oiler w'h.n prining or reproduc i ng the11onclord pr•MI po<1<>n. OREA be , ar no lloblR ly ro, your u,. cf IN, form. IN111A1S OF SEW R(S) o cw Form 5 00 Revised 2023 Page 9 of 9
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· OntarioRealEstate Schedule Association ---- Agreement of Purchase and Sale • Commercial B Form 505 lot UMt in the Province of OnlOrio Th is Schedule Is a ttac hed to and forms port of the Agreement of Purchase and Sale between: BUYER: ................ .. ........... . r . ff9.}gJ. .& . JNG. .... ........... ........ . . ......... . . . . . .. . ........................ . .. .. ..................................................,.. a . n .. d sEUER: .Y .9.P.m:Y.. f 9.n.I M - 9. . 2SY.J 2t n&.Grn P.J .. .. .. .. ... ..... . . .... . . . .... . . . .. . .... . . . ......................... ... .... ... . ........ ......... . . . . . . ... . .. for the purchase and sale of ......... . ........ M . . 9.P.9. U .R9.g ...................... . .................................................... . . . . . . ................. . .......... . . .... . .. . ........ ....... ....... ... ... ..... ................. .......... . ..... dated the . ... ..... J .......... doyof ... ........ .. . ....... ............. . M Y. ................................... , 2 . . . ...... . .. .. ln accordance with Subsection 27 of the Real Estate and Business Brok ers Act, 2002, the panics hereby acknowledges that the Deposit Holder , RE/MAX Excel Realty Ltd. Brokerage, shall place thedeposit in trust in its NON - INTEREST bearing real estate trust account and no interest shall be earned, received or paid on thedeposit The Buyerand Selleragree and/or acknowledge that all measurements and infonnati on provided by RE/MAX Excel Realty Ltd. Brok erage onth e MLS listing, Feature Sheets, and any other marketing materials forthesubject property, have been supplied for reference purposes only , and such RF1MAX Excel Realty L td . Brokerage docs not warrant th e ir accuracy . The Buyer is advised to verify any measurements or infom \ ation upon which heor sheis relying . In the event that any Con di tions contained in this Agreement of Purcha se and Sale arc not fulfil.led , the panics to this Agreement (Buyer and Seller) acknowledge and accept that this Agreement shall bedeclared nuU and void. The Seller(s)shall have the right to offer the property for sa l e again wi1.h o ut any consent and/or release from the Buyer(s). The Parties agree to sign a Mutual Release for this Agreement within forty - eight(48) hours thereafte r. The Parties acknowledge that no information provide d by RE/MAX Excel Realty Ltd . Brokerage's representatives is to be construed as expert le gal, tax, financial, building condition, wning, construction, en v ironmental or othe r professional advice. The panics furtheracknowledge that the represen tatives of the Listing Brokerages in this transacti on have recommended that they consult with any such professional advisors pri or tosigning thi s Agreement. In accordance with th e Federal Privacy Act(PI P EDA), upon the acceptance of this Agreement, all parties to this transacti on consent to the publication and distribution of the sa le price of this property , before and afterclosing . The brokerages and the sales representatives named in thi s Agreement arc authorized to advertise and disclose thesale pri ceand othe r information with the exception of the names of the Buyer and Seller and any o f their personal info=tion toot . hcr realtors and to the public for th e purpose of promoting theirdaily real estate activities. Information provided on the MLS Listing may not beaccurate . Toensure accuracy, Buyer and/or Buyer's Real Estate Agent to verify all taxes , f ees and measurements. DIRECT DEPOSIT/WIRE TRANSFER INSTRUCTIONS Note: Funds can only be wired/deposited to ourtrust account on accepted offers. Please notify theTransaction Services Department by email to : dealsccretary@remax exce l.com and provide the address of the property, client name and theamount being wired/directly deposited, a copy of thedeposit re cei pt from the bank and a copy of thechequeor bank draft (if applicable). Please note this could take 3 - 4 days before we ca n confirm receipt . Toronto Dominion Banking A ddress : 220 Commerce Valley W Suite 100, Markham, ON , L3T OAS Account Holder: RE/MAX Exce l Realty Ltd., Brokerage Real Estate Trust Account Payable Nam e: RE/MAX Excel Realty Ltd ., lo Trus t Transit#: 18822 Institution #: 004 Accoun t #: S2 22180 Swift Code: TDOMCATITOR Interm ediary Bank : Bankof America Intermediary Bank Address: New Yorlc, New York USA Routing Number: 026009S93 Buyer to pay $17.SO Serv i c e Charge (only applies on Wire Transfer. Noservice charge for Direct Deposit). This form must be i n i tialled by all part i es lo the Agreement of Purchase and Sole. INITIALS OFBUYER(S): (D [D The lrOCMfflarlt, REAITOle 1 REAITOA MLS4P, Multlf'I, Ulling oncl cmoc)lolad logol ore OWMd OI COMoled bf The Canodion Reel Elloll AOsocio1ion ond idrily... ,..,, - prolelsionols who oi. - ,be,, of CREA one!... -- quo5ly of teMC» S hy pro,nde. Used under ... 0 2023 , Onlorio R.al Eslall Auoc:lo•on !'OR EA , "I Al rig_hll .. - we!. Thi, lonn was clew,loped hr. OREA !or 11,e use ond reproducllan bv Its memben ond lloenM.s only . MV ctltM - 0< reptoituction Is prol,lbiled ei«:eJ)I with pnor wnloo consent of OREA. Do not a l ter w'hen ptlnllng a< reproducing the stondatd p, - ponon . OREA bears no liobl(Uy for '(OAK UM of this lorm. INITIALS OF SEWR(S): c(fzl) ,orm 505 Revised 2023 Page 1 of 1
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Confirmation of Co - operation and Representation Buyer/Seller A Ontario Real Estate Association Form 320 for U$8 in 11,e Provine:• of Ontorio . 1: .} ?.l: .;. ... . f: ....... . .. . . . . .. . . .. . .......... . . .... .... ..... . . ......... .... ............ . . .. .......... ........ ...... . ..... ........ . . ... .. .. .... . ... . BUYER: ............ . ....... . ..... <; SEWR: . : - '. . . . ':' :.¥ . .. . ' . '::! . . ?. .. . ' ? . ' ! . .. !' : ? . ':1 g .. : . ....... . ................ . .................................................. . ............................... For the transaction on the property knownas: .; ....•..... . .1: . '? Y. . .. .. .... . .. ..... ............. .. ......... . . ...... !?.1:. !? .................. . ... . . . .!. . . DEFINfflONS AND INTERPRETATIONS : For the purposes of this Confirmation of Cooperation and Representation : ·Seller" includes a vendor , a landlord, lessor or a prospective seller, vendor , landlord or lessor and · Buyer • i nclude $ o purchaser, tena nt,l essee or o prospective buyer , purchaser , tenant or lessee and ·sole • i ncludeso lease , and ·Agreement of Purchase and Sole • includes on Agreement lo lease . Co mmiss i on shall be deemed to include other remuneration . The following information is confirmed by the uncl . nignecl salesperson/broker tatives of the Bn>keroge(s) . If a Co - operating Brokerage is involved in the transaction, the brokerages agree lo co - operate , in consideration of, and on the terms and conditions as set out below . DECLARATION OF INSURANCE : The undersigned salespenon/brok er repmenlotive(s) of the Bn>kerage(s) her . by declare that he/sht is insured as required by the Real Eslate and Business Broken Act , 2002 , (REaaA) . 1. USTING BROKERAGE a) The Listing Brokerage represents the interests of the Seller in this tronsoction. It is further understood and agreed that: 1) The Listing Brokerage is not repre senting or providing Customer Service to the Buyer. (If the Buyer is working with a Co - <>peroting Brokerage , Section 3 is to be completed by Co - <>peroting Broke rage) 2) D The listing Brokerage is providing Cus tomer Service to the Buyer . b) D MULTIPLE REPRES ENTATION : Thelisting Brokerage hos entered into o Buyer Representation Agreement with the B uyer and represe nts the inte re sts of the Seller and the Buyer , with their consent , for this tronsoction . The li s t ing Brokerage must be lmportiol and equally protect the i nterests of the Seller and the Buyer i n this tron$0dion. The listing Broke rag e hos o duty of full disclosure lo both the SeRer a nd the Buyer, in cludingo requirement lo disclose all factual information about the property known t o the listing Brokerage . Howeve r, the Usting Brokerage shall not disclose: • That the Seller may or will accept less than the listed pr ice, unless otherwise instructed in writ i ngby the Seller; • That the B uyer may or will pay more than the offered price , unles s otherwise i nstrucet d in wr iti ng by the Buyer; • The motivation of or personal information about the Seller or Buyer, unless otherwise in structed i n wr iting by th . e party to wh ich the information applies, or unless failure tod i sclose would constitute fraudulen , t unlawfu l or unethical pra ctic e; • The price the Buyer should offer or the price the Seller sho uld accept; • And ; the listing Brokerage shall not disclose to the Buyer the terms of any othe r offet. However , I t is understood that foctuol market I nformation about comparable propert i es and information known to the li st in g Br oke rage concerning potential uses for the property will be disclosed to both Seller and Buyer to assist them to come to their own conclu sion s. Addi tion al comments and/or disclosures by Listing Brokerage : (e.g., The listing Brokerage represents more than one Buyer offllfing on thi s property .) 2, PROPERTY SOLD IY BUYER BROKERAGE - PROPERTY NO T LISTED D The Brok erage .................. . ......... represent the Buyer and theproperty Is no! listed w ith any real eslate brokerag e. The Brok eragewill be paid ( does / doe s noll D D or: by the Seller I n accordance with o Seller Customer Service Agreement by the Buyer directly Additional c omments and/or disclosures by Buyer Brokerage : (e.g., The B uy e r Brok erage repr ese nts more than one Buyer offering on this property.) INmALS OF BUYER(S)/SEWR(S)/BROKERAGE REPRESENTATIVE{S) (Where applicable) fP " _ @ . _ ._ u The REAIJ OR$.. :OR54P , ,.,., U'1lng Sorrice,9 ood ouociolld logo& ore owned or eontoled bf lheConodlan Reel lion CINI identify h ,oc,1..ia1a proleuionol& who or e .. - hen of OfA and lhe - quor,1y of MMCeS f,ey prOO/lde. Uted under nse . 0 2023 , Onla rio RealEllole A saoclafion l"OREA' ) . All riglm r e,erved . lhi, lonn WOl bv OREA fer ti,. UM and reprod ue!ion bv n, memben and Ileen - only. Any oln.r u,e or reproduction 1, prohibited elCCl!l>I wilh prior wrfllen oonMnl of OREA Do not olte< wl.. pr inti ng or reproducing h •la ndard pr....t portion. OREA beot, no liob iUty for yo,x u,. of lh l • lcm, . Form 320 Revbed 2023 Page 1 of 2
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3. Co - oper at ing Brokerage completes Section 3 and Usting Brokerage completes Section 1. CO - OPERATING BROKERAGE • REPRESENTATION : a) The C0<>perolin9 Br oke rage represents the in ter e sts of the Buyer In this tron$0Clion . b) D The C0<>peroting Brokerage is provid ing Cus tomer Service to the Buye r in this transaction. c) D TheCo - operating Brokerageisnot re present ing the Bu yer and hosnot enter ed into on agreement t o provi de custome r service(s) to theBuyer. CO - oPERATING BROKERAGE • COMMISSION: a) The listing Broke rage will paythe Co - operating Br ok erage th e commi ssion as in d icated in the MLS® information for th e property .......... ...... ... .; .. . I?.':1.7.7. !' . ! .. : - : .. :!.'.. ! ....... . . . . .... . . to be paid from the amount paid by the Seller to thelisting B . rokerage . (Commission N Indicated In Ms - lnlonnoHon) up on closing - (;.. - ::; - ) II b) D The Co - operating Brokerage w ill be pa id a s follows : _.. lf2.J 0 Additional comments and/or disclosures by Co - operating Brokerage: (e.g., The Co - o perating Brokerage represents more than one Buyer offering on this property.) Commission will be payable as descri bed above, plus applicable taxe s . COMMISSION TRUST AGREEMENT : If the above C<><>peroting Brokerage is receiving payment of commission from the listing Brokerag , e then the agreement between listing Brokerage and C 0 <>perating Brokerage further includes o Commission Tr ust Agreemen t, the consideration for which is the Co - operating Brokerage procuring on offer for o trade of the property, acc eptabl e to the Seller . Th is Commission T rust Agreement shall be subject to and governed by th e MLS • rules and regulations pertaining to commission t rusb of the Lis ting Brokerage 's local real estate board, ii the local board's MLS • rules ond regulations so prov ide . Otherwise, the provisions of the OREA recommended MLS - r ules and regul a tions shall apply to th is Commission Trust Agree ment . For the purpose of this Com m is sion T rust Agreement, the CQl!lmission Trust Amount sh a ll be the am ount noted in Section 3 above . The Listing Brokerage hereby declares that all monies received i n connection with the trade shall constitute o Commission Trust and sh all be held, in trust, for the Co - opera ting Brokerage under the terms of the applicable MLS • rules and reg u l ations . SIGNED BY nu BROKIR/SAUSPERSONREPRESENTATIVE(S) OF THE BROKERAGE(S) (Where applicable) 201 CONSlllllUUI JU> •• 9TB. 205 TORONTO ON M2J4G8 RB/MAX EXCEL REALTY L TD., BROKERAGE (Nome of UMing Brobroge) . 5 . 0 ... A .. c . a .. d . i . a .. A .. v .. e .. S .. u .. i . t . e . . . 1 . . . .. 2 .. 0 ............. . . . .. M ... a . r . k .. h . a .. m .......... O .. N .... . . L . .. 3 .... R .. O . .. . . B 3 . . .. HOMELIFB NEW WORLD REALTY INC. (Nome ol Cooperating/Buyer 8rolceroge) (A iiec'ik>·bi.:ia· c ;;g1 ·e;;c*.; i" jo'.c;; j···· · · · ·····.·. · ········· ; J e;. ; i · li ai······················ · · · · · · · · · · · · ····· tivr1liJ1l?. .;.;?.? . .... . Fox: ......... . t .; / ; · ; ; · · · · · · · · · r T .?.:: :?. ?:. - . ?. . ........ Fox: . . ...... ... . . ? .: - . ?. ::. .?. ?.. ........... ii.;g· ;;.;; ;················· «21(?. ! . ............ . ( R Pr U i I i· Z . H ;; E ;J NG ; M j/ I >;i i C · H E , L :, L ;;J E OU ; Y A ;. N ; G i ii k / s ·o1 1i· o c i i ······· ·· ·................ . . . . ....... . . CONSENT FOR MULTIPl.l REPRESENTATION (To be completed only if the Brokerage represents more than one client for the transaction ) The Buyer and Seller conMnt with their initials to their Brourage senting men than one client for thistrumaction. C) INrTIALS OF IUYER(S) INITIALS OP SEW R(S ) ACKNOWLEDGEMENT m eived , read, and undentancl the above information. :f t isiij it;;;.; i ri · - · Vlq S! (F, . .? ? .......... . (Signature of Seller! ------- (Do te) (Signature of Buyer) 05/19/2023 · · i · :··· ii:i ;·· ····· ···· ········· ··· ······ ···· !Dole) . • • •••• ••.• ••• ••.•• • . ... (S g i na tru e of Seller) i D j ..... . . ...... .... ...... . . ....... 1 m TIM trodeniorlt, REAIJC>Re RfA!.T S®, MLS<e, Mukif>l, U1tl09 SeNtc.>e and o),oc lolld logo) ore owned 0< conrolled by LD The Ccnodlon Real E - "" ƒƒƒ ""' PEAi and identify the ieal Mlole proleosionok wl,o ore rn•n1ben of CREA and lhe -- quality of >orvicM !hey . U..d '""* r_,$8. 0 2023, Onlorio Real E - Auoclollon ("OREA·). All riah b re,er;ed . Thi, lorrn wu, dewlop..J bv OREA lor the use and r eprodudion bv its members Olld I an - (!Illy. Any o"1.r ""'or reproiiudion ia prohlbiled with pno r wr f •.,, consent cl OREA. Do not oho, when prln Mng or reproducing theslondord pre - Ml potllon. OREA beor, noliability ro, - yo,,t UM cl lhl. lorrn. Ponn 320 ReviMl<I 2023 Page 2 of 2
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EXHIBIT 4.55
n -------- -- . - . -- ._, I! A Ontario Real Estate Association Offer Summary Document - 4 ) DURHAM • • REGION For use with Agreement of Purchase and Sale Assoc,AT,oN oF REALTOR • s Form 801 lo, u1e In1tieProvince of Ontotio This Form when completed may be utilized to comply with the provisions of the Real Estate and Business Broke rs Ad wh i ch prescribes content that is required for on offer summary document . Further , when sent to the Listing Brokerage this document may be used to confirm the existence of a written signed offer by a Buyer . Section For Brokerage submitting the offer on behalf of the Buyer : REA1PROPERTY ADDRESS: } . .... . . . .! ! . .. . ....................... .. .. . . . ; .. ......... .... ... . ... ..... .. . :': . . (the • prope rty") (municipal oddren ond/or legal de$Cl'lption) for an Agreementaf PurchaMand Sale dated: th e .. ... .......dayof ...... .. ....................... .;¥. .. .. ............. . . . . ........ . .,. 2 } ........... r offe r") BROKERAGE: . . ....... . . . .................. . . .......... . ..... . . . .. .. ....... . ... /. . '!. .. . .. ; . . '::: ... .. .. ..... . .. . . .... .. . ..... . . .......... . . . . ......... . . . . ... . .. ... . SALES REPRESENTATIVE/BROKER: .................... ... . .................... . . . .......... . ...... . .... .. ........ . .. . ....... ........ . . . ........ .... ..... . . .. ........ ..... ..... .. I/W e , ...... . . . . . . . } . .. - ; . . ........... ....... ....... .. . ....... . . . ..... . ..... .. .. . .... . .......... . . . ... .. .. .. .... ... ........ , hove signed onoffer for theproperty . ..... .c:.: '.:; . :. .... ........ ... .. .... .. . ... . . . . ....... .. 1,;; ............. .. . .. . ...... . ................ . .. . . ........... . ................. . ............... . ............ . .. ... ( Slgnolure of Buyer ) ( Dole ) ( Signolure of Buyer ) ( Dole ) This offer was submitted, ......... ........ ........ Y... !; ................ . .......... lo the listing Brok«oge al .. ..... . : . .. . ..... ..... on the ...... ? . .. ....... day of (by fox, by emoll OI' In peBOn) (o.m./ p . m . J ,c ........ . ............. .....'! X'. ..... .. . .........,. 2<1.. ... . ..... Irrevocable until ....}. .:. ....... on the .. . .. . ....... day of ...... . ........ ... - ¥. ............. ......, 2 (o.m./p.m.l ,c ( For Buy« counter offer • complele the following) I/W e , ... .. . .. . .. ............. ..... ................ ........... ..... ............ .. ... ....... ...... . ....... .......... ....... ..... ........ .. . .. ...... . .. ..... ..... , hove signed onoffer for theproperty . Nome of Buyer (s) (Signolure of 8uyarl (Dole) (Signolure of Buyer) ( D o l e ) An offer wos submitted , .. .. ......... . .. .. .............................. .... .. .. ............... to the Listing Brokerage at .................... . ...... . on the ...... .......... ....... doy of (by fax, by email or In person) ( o . m./ p.m. ) ... ..... .... ...... ..... ......... . .... ..... ..., 20 .. .. .. ...... Irrevocable until ......... .......... .... on the ....... ... ...... day of .... .... . .. ........ ............ ........ ......., 20 ...... ...... . (a.m./p.m.) For Listing Brokerage receiving the offer: SEWR(S): - . . . !. . ... '.1'. .?:".'. !: . .'!:'? !:':.?. .. ?.':'.. . !:: ...... . ........ . .. .. ........... . . . .. . . . . . .. . .......... . . . . . .. .. ........... . . . . . . . . .. . ..... .... . . ..... . .. Email SELLER(S) CONTACT: . ...... ............ ............ . ....................... . .................... . ... ... .................. . ................. . .. .. ...... . ........................... . . . . ............ . .. .... (le. phone/ email/ fax) LISTING BROKERAGE : .... . ............ ........... ....... . . ......... ( ... . ! .. . ' ! .. . . : . ! ... . . . ... ..... ............... . . . .. . .. ......... . . ..... . SALES REPRESENTATIVE/ BROKER : .......... ... .. . ........... .... .. . ... .. ............ .... . ... .......... . .. ƒ !:'. ... ...... . . . . ...... . .. .. ......... ............. . . ...... .... . .. . .. . ... ... T his offer wosreceived, .. .. .. ... .. ...... ...................... by the Listing Brokerage at .. .... ...... .. ........ on the .... ..... .. day of ........... ... ...... .............. ..., 20 . ..... (by fax , by emai l Of in person) (o . m./ p . m.) This offer was presented, ...... ........ ............................. to the Seller(s) at ...................... on the ......... .... .. day of ..... ......... ..... . ....... .... ... ,... 20.. ...... (by fa>< , by email OI' I n P9 Œ >n) (a . m./ p.m.) Offer was : 0 Accepted Signed Bock/ Counter 0 Expired/Declined Comments: . . .......... . ........ . .......... . ....... ... ............. .............. ....... ... .... ..... ....... . ............ ... ........... . ... .. . . .. . ... ....... ........................ . . . . . . ... ................. . m n,. REAIJO., REALTOltS. . Mullif>I! Ulling Semce4 ond auocioled logo, en owned o, c:ontolled by PE Ai who are . - .bor.of CREA and 11,e T q u h a e lity of servk:M provide. La Canod"JOn Ree h l y Ema Assoc U m se o d n under and idenlily 1he reel .. 1a 1e llc. n ... O 2023 , Onlario Real Ealole Auociaffon r•otU:A'I . Aft righh re!ONed . n.1, lorm wa, developed b)I OREA lo, hto use and repraducfion bv it , membeR and lic:en - • only . Atw olhe< U10 ƒ ' rep - oouctlon 1 1 p,ohibiled except wflh pnor wr1Nen consen t of OREA Do nolalle, w'hen prlnllng or reproducing IN 11andord pr_. ponton. OREA beat, no liob ily fo, ya,,r uoe of thb lorm. Form 801 Revl&ed 2022 Page 1 of 1
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Agreement of Purchase and Sale Condominium Resale • Commercial Aulhenllllgn I D · : 1 1 - - 1 1 - - 18 -- -- - ltF A O ntari o Reel Estate Ass o ciat i on Form 50 1 fo r u se In lhe P rovinc e of Ontario This Agreeme n t o f Purc h ase o n d So le doted this. . .. ........ ... .... ... .... .... doy of .. ...... . .. ........ .... ...... . . .. .Y. . ..... . .... .... . .... ... ... . .. .. . . , 2 0 . .......... .. .. .... B UYE R: . . ............. . . . .?. . ?. . . ... :! ;.. . ; . .:.. ...... . ... ... ........ . . .. . . ....... .... ..... . .. ..... .......... . . ... ......... . ........ . . .. ..... .. .., ag r ee s t o pu rchase fr om SE W R: .. ! . . . .. .'! .?. .. ! (Full legal names of all Buyers) . .. .?. ?. ?. .. .? . . . '? . ' :.. . ............ . ............ . ......... . ........................... . .............. . .........., the f ol lo wi ng lfu l lega l oomes of a ll Sellers) P R O P E RT Y : o unit in the con dom iniu m pro pe r ty known os . . .. ......... ..... . . ..................... .. ......... . ... ?. ··· · · · ····················· · ············ · ·········· · No .......... · ··· ··· ···· (Apartment/Town ho use/Su i le/Uni loc o ted ot . . .. . ........... . ; . . . - . . . . . .. . ... ......... ..... .... ..... . . ...... ... ... ...... .... ....... ....... . ... . ... .. . . ............. ... ........... .. .......... . ... .. ............ .. ...... .. .. ... in the ........ .... . . .¥. .. . .. . . ....... . . . . ..... .. ................ . . .. ..... ... . . .. . ..... . .. . . .... . ..... ... . . .. .. ... ?:.. ........ .. . ... ....... . . ..... . .... . .......... .. . . .. . .... . .................. . b e ing ................. . ! . ... . . ; . .. .<?. :.; .. .. . ... . . . . ... ... C ondomin i um P l a n No . .... ..... .. .. . .. . .. . . . .. .. . . ? ......... . . . .. . ........ . . . . !lega l Nome of Condom i niumCorporotton) Unit Number ......... . ........... ; . . .... ... . .. . ........... Level No ................... ; .. ..................... B uil d i ng N o. .. . ... .... ... . . .. ............ . ... ..... . t og e t her w ithowne rs hip or ex cl us iveuseof Parking Space(s) ............. . . . ........................... . ..... ( ........... . ............... .... ....... ... ........ , together w i th o wnersh i p or e x cl usi ve us e of !N u mber{, ), lewl(a l) L ocker(s) .. .. . . . .... ... ... .... ...... ... . . ..... . .. ..... . :: /..'! - .... . .......... . . .... ...... ...... .... .... . ... .. , together wi t h Seller's proportionate u ndivided tenoncy·i n< om mon interest ( N u mber{s), level(al) in the com mon e l emen t s a ppu rt e na n t lo the Unit as described in the Dec l ara tionand Description i nclud i ng the ex cl u si ve right to use such o t he r p ort s of •• - m® ,t - ,• •PP'rt,na" lo t he u,, a, - be ,p,c;God t, •• D0do<0Hoo aod D l lo, a •• , U tt , t ho propo"""" t"o t 1, t ho , =, L l e lem e nts appurtenant the r e to , on d the e x clusiveuse porti o ns o f the common elements , m e i n called the · Property " . r:z z /1. T wo H u n d r e d S · ' xty - . E h t 19 T h o u s a n d 2 2 68 00 0 0 0 2eeeee . ee eee e e PURCHASE PRIC , E Lffi Th o I lo"dred Eiglll)' • • • • • ..., N$J. . . .. .. r;; - ;) r o · · · ' " , ··· · ... .. . . r; / ; I ······················· · · · · · · · · ················· F ·· z ·{) ··· · · · . !.:: . !;i . - . !. ! . I .. .. · · · · · · · l · f B · · · · · · · · · · · · l · f B · · F 2 · · . . . . . . . .. D o a l l rs Lffi DEPOSIT : B uy e r subm its ............... . ............. . ........... .. .......... .. . . ......... . .. . .. } : . ' ?. .. . . !'!?. . . !'! .. .. .......... . ... . ...... . .. . ............ . ............ .. ................ . I Herew ll h/U pon k:,ceptonc. / a . s Olh - iM descr i bed i n lh l s Agreem on .............. . .......... ... ............ . .........f ; !;!. . .. ! !?. ..... . . .... .. . . ... . .... ........ .. . . .......... .. ... Dolla r s (C ON$ ) . ..................................... ; . .!. .:. . by neg otiab le cheq ue payable t o ..... .. . . ..... .. . . . .... .... ... .. /. . .!'! - . ?: .. . ! r. . . . ; : . .. .7.?. ?:.. !'!........... . . ........... . . . ..... · Deposi t H o lder" to be held i n t ru s t pending complet i on or other t erm ination of this Agreeme n t and lo be credite d toward t he Purchase Price on c omplet ion. For the pu r poses o f th is Ag r eeme nt, · u pon A cce pta n ce • s hall mean that the B uy e r i s r eq ui red to de li ver tho de pos i t t o th e Deposi t Holder w i th i n 2.d hours of t he oce r e l a nce of this Agreement. The pa rti es to thi s Agreement hereby acknowl edg e that , unless otherw i se prov i ded for i n th i s Agreement , the Deposit Holder s hol pla ce the d epos it in trust in the Deposit Hold e r's n on· inter es l bear i n g Real Estate Tr us t Account and no in t e re st shall be ea rned, received or pa i d on the depo si t . Buy er ag rees to pa y the balanc e as more tru · • larty set out (m edule A attached . SCHEDULE(S)A ·· · i · a · · · t · · Y ··· · 1 £Y pa ol l,h t Ag - o . n t t L S cll e F B u y e r CY . - ( EZ J he..,. lon n • l J h bl b - »1 1¥ e r i i 11159 I • I R !w! I r s lY i ev:g s )rvc "' 1 · · · " ·· · ·is i;,;; i T' . fl T " . . : . . 7 . . . .. ... u: · · · · ····· · : · · · ··· ·· ·i a :m) p; · r ······ · · · · · ·· · ······ · ·· on (m 1 . o , l1. , . ; ; ; · .:.;;; ; ; , ; :/ % 1 ; ; d th e .. ; ;;; ; · ; ; dg ;. ; e;;; ; i fu i i ; ; ; ; ;; ! ·· J 1;2 1 " . ' : llt) =•pt<d 2. C OM t; N DA TE: Tb ;, ""'"'"'" .,_uh. - '"' - ' 1w b "ha' 6,00 p.m · . , o •• · w 2 · 01 ... ..... . .. . . .... .... .. .... . u 9t - September Augu s t I L ..... . F .. Z . .. - ... - eoe't!' . "l!?:9: . 9 . 'a .. a1"" . . . . ·· r':7 ' fr - l J pa . n com pl et i o n, vo co n t possess i on o e Prope rty s hall be g i ve n to the Buyer unl e s o therwise pro vi i n t h is Agreemen t @ . /1. ( cy J I N ITIALS OF BUYER(S) : INITIALS OF SEWR ( S ): m The 1roct.mo<k. REAlJ OReA:=, SdD, MlSdD , MukiJ>I! U.r lr1g S«vk:e and 0 1>a<; l olld logoo ar e owned Ol conlrolled by LJ:! 1he Cmo d ion R eal Em. . !C REAi and Identify lhein esla te profeuionol . 1 wt.o are .....,ber, ol C REA and lhe - - quolily ol MMCM !hey pr . UMd under 0. - .. . O 2023, Onlorio R eal Auoc: iotion ( · OR EA·). All r l g/lhre se .. - ..d . lli i , lorm'""' d...ioo.d br OREA for h U JO and roprodUdion bv n, members and Ileen - <J!tly . /vrv <>Iner UM or r o pr ocluc:tion i , pro hib ited excepl with priorwn lle n consent ol OREA. Do no t o l ie< wl,en p< lnHng o, , - produc: lr1g the 1 11:>ndo n:I pr - po, ff on . OREA bears no l iob U l ty lor '.l'OO" use ol th i 1 lcm, . Fonn 501 R evl .ed 2 023 Page 1 of 6
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AUltllnllllg n 10 : 11 · ••11 - m11&!11111E11 - ••••nmr11F 3 . NOTICES : The Seller hereby appoints the listing Brokerage as agent for the Seller for the purpose of giving and recei ving notices pursuant to this Agreement . Wh er e a Brokerage (Buyer's Brokerage) has entered into a representation agreement with the Buyer, the Buyer hereby appo i nts the Buyer's Brokerage as agent for the purpose of giving and receiving notices pursuan t to this Agreement . Where a Brokerage represents both tho Soller and tho Buyer (multiple representation), tho Brokerage shall not be appointed or authorized to be agent for eithe r tho Buyer or tho Soller for tho purpose of giving and receiving notices . Any notice r elating hereto or provided for here i n shall be in wr i ting . In add i tion to any provision conloined h«ein and i n any Schedule hereto, this offer, any counter,offer, notice of occeplonce t hereof or any notice to be given or received pu rs uant to this Agreemenl or any Sche dule hereto (any of them, "Docume nt • ) s hall be deemed g iv en and received when delivered personally or hand delivered to the Address for Service provid ed in the Acknowledgement below, or where o facs i mile number or email address is provided herein, w hen transmitted electronically lo that facsimile number or email address, respectively , in wh i ch case , Iha signohJre(s) of the party (porti es) shall be deemed to be original . FAX No .: ... . .. . ......... ...... ........ ................................. .... ....... . . . ... . ........ FAX No .: ...................... ... ....... .... .......... ..... ........ ..... ..... ........... .. .... (for delivery of Documents lo SeDerJ (For delivery of Documenls IO Buyer) Email Address : . . ....... . .. .. ....... . . .... ........ .... ......... .. ..... ... . ........... . . ... ...... Email Add r es s : ..... . . ... ..... . ! - - . ! . . : . . ...... . .. . . . .. (For del iv eryof Documenls lo Buyer) lf or del i very of Documenls IO Seller! 4 . CHAfflLS INCWDED : n/a Unless otherwise stoled in this Agreement or any Schedule hereto, Seller agrees to con vey all fixtures and chattels included in the Purchase Price free from all liens , encumbrances or claims affecting the said fixtu res and chatt els. 5. FIXlURES EXCLUDED: n/a 6. RENTAL ITEMS (Including Lease, Loa50 to Own): The following equipmen t is rent ed and not incl uded In the Purchase Pric e. The Buyer agree s to assume the rental controct(s , ) i f assumable: n/a The Buye r ogr84U to co - operate and execute such documentotion as may be required to fa cilitate such assumption. 7. COMMON EXPENSES : Seller wa r rants to Buyer that the common expenses presently payable to the Condominium Corporolion i n res pec t o f th e Property are approximately$ .. .. . ......................... .. ......... :?. .?.:. per month, wh ic h amount incl udes the followinA: Com Elem ,B uilding Insuran ce, 8. PARKING AND LOCKERS : Parking ond Lockers ore as described aboveor assigned as follows: /. .. .. .. ... .. .... ... .. .. .... .. .. .. .. .... .. ... .. .. .... .. . .. .. .. .. . .. . . .. .... ..... . ...... .. ... ... . ...... .. . ....... .. . .. . . ... .. .. .. . .. . ........ . .... . ... at on additional cost of: . . .......... . ......... ..... ....... ...... .. !. .. . . . ... ... ......... . . ... . ... ... . . ... ..... 9. HST : If tho sale of the property (Roal Property 05 described above) Is subioct to Hannonb : ed Sales Tax (HST), then su ch tax shall be In addition to tho Purchase Price . The Seller will not collect HST if the Buyer provides to the Seller a warranty that the Buyer is registered under the Excise Tax Act ("ETA"), together with a copy of the Buyer's ETA registra tion , o warranty that the Buyer shall self,ossen and remit the H S T payab le and file the prescr ibed form and sha ll indemnify the Seller in respect of any HST payable. The foregoing warranties shall not merge but shall survive the completion of the transaction . If the sole of the property is not subject to HST, Seller agr ee s to certify on or before clos i ng , that the transaction is not subject to HST. Any HST o n chattels, If applioable, i s not Inclu ded in the P urcha se Price. I NITIALS OF IUYER(S): {D INITIALS OF SEW R(S) : C l Th e . . od.morb RE>JIOR<e,I,: = . M L S4D, Mu il*, lhllng Sen<1c.1' 9 ond 0$J0Cloled logo s ore owned OI co n . . olle d bl/ n,. Canodion R.al e - · ICRfAI ond ldentily 11,e ..al.. - proleuionols who ore . - ber.ol CREA and h quality ol - ,Ion f,ey provide . UMd under nc.n .. . O 2023 Onlorio R.al Ealole Aiaociolion l"OREA1. All rlgh b . -- :I. 11"1 lonn wos cleo.looed bJ, OREA for II,,, u .. ond reproduction l,y i b memben ond llcensffs only. Ally olfl9( U10 <it reprooudion I s prohibiled ex.cepl wilh prlOI wnlen oonsen l cl OREA. Do not ohor w1* printing ƒ ' - .produc i ng !he slonclord pr•sel por1on . OREA boon no liab ility for you - UM ol lllh l« m . Form 501 Revised 2023 Page 2 of 6
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Aulhdllgnio:e --- aw (Zy] August 1 O. mu SEARCH: Buyer shallbe alloweduntil6:00p.m. onthe........ ; . .?......... doy of ....... ...... ........ ...... . . . 8 i . o .6.. 9 9 "ilO.'I:! . " : . ' .. - ...... ................. , .. 2 .. 0 . .... . .. (Requisition Dote) to examine the title to the Property of Buyer's own expense ond until the earlier of : (i) thirty days from the later of the Requisition Date or the date on which the conditions in this Agreement ore fulfilled or otherwise waived or ; (iii five days prior lo completion, to satisfy Buyer thot there are no outstanding work orders or deficiency notices affecting the Property, ond that its present use ( . . ............................... . . .... ...... ........... . C om mercial ............................................... . . . . . . . ......................................................................................................................... ) ......... moy be lawfully continued . If within that time any valid objection to title or to any outstanding work order or deficiency notice, or to the fact th e said present use may not lawfully be continued, is made in writing to Seller and which Seller is unable or unwilling to remove, remedy or satisfy or obtain insurance save and except against risk of lire (Title Insurance) in lovour of the Buyer ond any mortgagee, (with all relatedcosts ot the expense of the Selle r), and which Buyer will not waive, t his Agreement notwithstanding any intermediate acts or negotiations in respect of such objections, shall be of on end and oil monies paid shall be returned without inter est or deduct ion and Seller, Listing Brokerage and Cooperating Brokerage shall not be liable for ony costs or domoges . Save as to any validobjection so made by such day and except for any objection going to the root of the title, Buyer shall be conclusively deemed to hove acce p ted Seller's title ta the Property . Seller hereby consents to tho municipality or other governmental agencies releasing to Buyer details of ol outstanding work orders ond deficiency notices affecting the Property, and Seller agrees to execute and deliver such further outhorizotions in this regard as Buyer may reasonably require . 11. mu : Buyer agrees to accept title to the Property subject ta all rights and easements registered against title for the supply and installation of telecommunicotion services, electricity, gos, sewers, waler, television cable facilities and other related services ; provided that title to the Property is othe rwise goodand free from all encumbrances except : (a) os herein expressly provided ; (b) any registered restrictions, conditions or covenants thot run with the land provided such hove been complied with ; (cl the provisions of the Conclamlnium Act and its Regulations and the terms , conditions and provisions of the Dedoro 1 ion, Description and By - lows, Occupancy Standards By - lows, including the Common Element Rules and other Rules and Regulations ; and (d) any existing municipal agreements, zoning by - lows and/or regulations and utilities or service contracts . 12. CLOSING ARRANGEMlNTS : Where each of the Seller and Buyer retaino lawyer to complete the Agreement of Purchase and Sole of the Property, and where the transaction willbecompleted by electronic registration pursuant to Part Ill of the Land Regist r ation Reform Act, R . S . 0 . 1990 , Ch apte r IA and the Electronic Registration Act, S . 0 . 1991 , Chapter 44 , and any amendments thereto, the Seller and Buyer ocknowledge and agree that the exchange of closing funds, noMeglstrable documents and other items (the ·Requisite Deliverie · s ) and the release thereof to the Seller and Buyer will (o) not occur or the some time as t he registration of the transfer/deed (and any other documents inten ded to be registered in connection with the completion of this transact io n) and (b) be subject to conditions whereby the lawyer(s) receiving any of the Requ isi te Deliveries will be requ ir ed to hold same in trust and not release some except in accordance with the terms of o document registration agreement between the said lawyers . The Seller and Buyer Irrevocably instruct the sold lawye r s to be bound b y the document registration agreement which is recommended from time to time by the Law Society of Ontario . Unless otherwise agreed to by the lawyers, suchexchange of Requ i site Deliveries shalloccur by the delivery of the Requisite Deliveries of each party to the office of the lawyer for the other party Of such other location agreeable to both lawyers . 13. STATUS CERTIFICATI AND MANA GEMENT OF CONDOMINIUM : Seller represents and warrants lo Buyer that there ore no special assessments contemplated by the Condominium Corporation, and thereore no legalactions pending by o< ago inst or contemplated by the Condominium Corporation . The Seller consents to a request by the Buyer or his authorized represenlotive for o Status Certificate from the Condominium Corporation . Buyer acknowledges that the Condominium Corporation may hove entered into a Management Agreement for the management of the condominium property . 14. DOCU M ENTS AND DISCHARG E : Buyer shall not collfor the production of any title deed, abstract , survey or other evidence of title to the Properly except such as are in the possession or control of Seller . Seller agrees to deliver to Buyer, ii it is possible without incurring any costs in so doing , copies of oD current condominium documentation of the Condominium Corporation, inclu ding the Declaration , Description, B>"'ows, Common Element Rules and Regulations and the most r ecent financial s ta t ements of the Condominium Co r poration . If a discharge of any Charge/Mortgage held by o corpora t ion incorporated pursuant lo the Trust And Loan Companies Ad (Canada), Chartered Sonic, Trust Company, Credit Union, Col $$ & Populoiro or Insurance Company and which is not to be assumed by Buyer on completion, is not ovoiloble in registrable form on completion, Buyer agrees to accept Seller's lawyer's personal undertaking to obtain, out of the dosing funds, o discharge In registrable form and to register some, or cause some to be registered , on title within o reasonable period of time ofter completion, provided that on or before completion Seller shall provide to Buyer a mortgage statement prepared by the mortgagee setting out the bolonce required lo obtain the discharge, and, where o real - time electron ic cleared funds transfer system is not being used, a direction executed by Seller directing payment to the mortgagee of the amount required to ob tain the discharge out of the balance due on completion . 15. MEET I N GS : Seller represents and wa rran t s lo Buyer that ot the lime of the acceptance of this Offer he hos not received a notice convening o special o, general meeting of the Condominium Corporation respec ting ; (o) the termination of the government of the con dom i nium property ; (b) any substantial alteration in or substantial addition to the common elements or the renovation thereof ; OR (c) any substantial change in the assets or liabilities of the Condo minium Corporation ; and Seller covenants that if he receives any such notice prior to the dote of com pletion he shall forthwith notify Buyer in writing and Buyer may thereupon al his option declare this Agreement lo be null and void and all mon i es paid by Buyer shall be refunded without intereMor deduction . 16. INS P ECTION: Buyer acknowledges having hod the opportunity to inspect the Property and understands that upon acceptance of this offer there shall be a binding agreement of purchase and sale between Buyer and Seller. I NITIALS OF aUYER(S ): {v m The tr • REA!r 0Rlj& ltEAITOR5'&, Ml.5'&, """ltii>I! Ulllng ond ouocloted logo, O(e owned or controlled by La The Canocllon Red bloll N 1 >otiolon ICRfAl ond1denlily lhe ieol eslole prof..sionols whoare .....bet• of CREA ond the -- qual'ily of MMCM by p, O'<lde . Uaed under &con.. . O 2023 Onla/lO Real Elloll Auociolion ("0REA1 . Al rial>ts .......d.lhi, lonn wo, by OREA forhe u.. and rep,oducllon b v 11, member , on d lic:en - • (!Ill y . Any oll,er ""' 0t reproauc;tion 1, p,ohl b i ted ei«:OJ ) I wi" ' P,IOt wnllon oonHnl of OUA. D o no t o i ler w....., p,lnling o, reproducing the ,tandotd pr•set po,11on . OREA bean no llobllity lor yo,x u .. of this foml . INITIALS O F SEW R ( S ): cw F orm 50 1 Revised 2023 Page 3 of 6
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AIAhentlllgn IO : 11 • ••11 -- R - IBlll -- · -- IDIPWalF 17. APPROVAL OF THE AGREEMENT : In the event that consent to this sole is required to be given by the Condominium Corporation or the Boord of Directors , the Seller will apply forthwith for the requisite consent, and if such consent is refused, then this Agreement shall be null and void and the deposit monies poid hereunder shall be refunded without interest or other penalty to the Buyer . 18. INSURANCE : The Unit and allother things being purchased shall be and remain at the risk of the Seller until completion . In the event of substantial damage to the Property Buyer may at his option either permit the proceeds of insur ance to be used for repair of such damage in accordance with the provisions of the Insurance Trust Agreement, or terminate this Agreement and oil deposit monies pold by Buyer hereunder shall be refunded without interest or deduction . If Seller is toking bock o Char ge/ Mortgage , or B uyeris assuming a Charge/Mortgage, Buyer shall supply Seller with reasonable evidence of adequate insurance to protect Seller's or other mortgagee's interest on completion . 19. DOCUMENT PREPARATION : The Transfer/Deed sholl, save for the land Transfer Tax Affidavit, be prepared in registrable form at the expense of Seller, and any Charge/Mortgage lo be given bock by the Buyer lo Seller at the expense of the Buyer . 20. RESIDENCY : (a) Subject to (b) below, the Seller represents and warrants that the Seller is not and on completion willnot beo non - <esident under the non - <esldency provisions of the Income Tax Ad which representation and warranty shall survive and not merge upon the completion of this transac t ion and the Seller s hall deliver lo the Buyer a slolulory declaration that Seller Is not then a non - resident of Canada ; (bl provided that if the Seller is a noiwesident under the non, . residency provisions of the Income Tax Ad, the Buyer shall be credited towards the Purchase Price with the amount, if a ny, necessary for Buyer to pay lo the Minister of Notional Revenue to satisfy Buyer's liability in respect of tax payable by SeUer under the non . residency provisions of the Income Tax Ad by reason of this sole . Buyer shall not claim such credit if Seller delivers on compl e tion the prescribed certificate . 21 . ADJUSTMENTS : Common Expenses ; realty taxes, including local improvement rotes ; mortgage interest ; rentals ; unmetered public or private utilities and fuel where biDed to the Unit and not the Condominium Corporation ; ore lo be apportioned and allowed to the day of completion, the day of completion itself to be apportioned to the Buyer . There s hall be no adjustme nt For the Seller's shore of ony assets or liabilities of the Condominium Corporation including any reserve or contingency fund to which Seller may hove contributed prior to the dote of completion . 22 . PROPERTY ASSESSMENT : The Buyer and Seller hereby acknowledge tha t the Prov inceof Ontario hos implemented current value assessment and properties may be re - assessed on on annual basis . The Buyer and Seller agree that no claim will be mode against the Buyer or Seller, or any Brokerage, Broker or Solespenon, for any changes in property lox asa result of a r&<iuessment of the Property, save and except any property loxes that accrued prior to the completion of th is tronsodion . 23 . TIME UMITS : nme shall in all respects be of the essence hereof provided that the time For doingor completing of any matter provided for herein may be extended or abridged by on agreement in writing signed by Sell er and Buyer or by their respective lawyers who may be specifically authorized in that regard . 24. TENDER : Any tender of documents or mon ey hereu nd er may be mode upon Seller or Buyer or th ei r respective lawyers on the day set for comp letion . Money shall be tendered with funds drown on a lawyer 's trust OCC 01 Jnt In the Form of a bank draft, certified cheque or wire transfer using the lynx high value payment system as set out and prescribed by the Canadian Payments Act (R . S . C . , 1985 , c . C - 21 }, as amended From time to time . 25. FAMILY lAW ACT : Seller warrants that spousa l consent is not necessary to this transaction under the provisions of the Family low Ad, R . S . O . 1990 u nless the spouse of the SeHer ho . s executed the consent hereinafter prov ided . 26. UFFI : Seller represents and warrants to Buyer that during the time Seller hos owned the Property, Seller hos not caused any bu ilding on the Property to be insulated with insulation containing urea formaldehyde, and that to the best of Seller's knowledge no building on the Property contains or hos ever con tained Insula t ion that contains ure a formaldehyd . eThis warranty shall survive andnotmerge on the completion of this transaction, ond if the building Is port of a multiple unit building, this warranty shall only apply to that port of the building which is the subject of this tronsoction . 27. . LEGAL, ACCOUNTING AND ENVIRONMENTAL ADVICE : The parties acknowledge that any information provided by t he Brokerage is not legal, tax or environmental advice, and that it hos been recommended that the parties obtain independent professional advice prior to signing this document . 28. CONSUMER REPORTS : The Buyer Is hereby notified that a consumer report c ontaining credit a nd / M personal information may be referred to in connection with thi s transoction . 29. . AGREEMENT IN WRfflNG : If there I s conflict or discrepancy between any provision added to th is Agreement (including any Schedule ottoched hereto) ond ony provision in the standard pre - set portion hereof, the added provision shall supersede the stondord pre - set provision to the extent of such conflict or discrepancy . This Ag reem ent including any Sche duleatt ached hereto, shall conslilute the entire Agreement between Buyer and Seller . There Is norepresentatoi n , warranty, collolerol agreement or condition, which affects this Agreement other than a s expressed herein . For the purposes of this Agreement, Seller means vendor and Buyer means purchaser . This Agreement shall be read with allchanges of gender or number required by the context . 30. ELECTRONIC SIGNATURES : The parties hereto consent and agree to the useof electronic signatures pursuant to the Electronic Commerce Act, 2000 , S . O . 2000 , c l 7 as amended from lime to time with respect to this Agreement and any other documents respect i ng this transaction . 31. TIME AND DATE : Any reference to a time and dote i n this Agreement shall mean the time ond dote where the Property is located. INITIALS OF BUYER(S): rn m Thell'Odomorb REAJJORe, RfAI.TOR MLS®, /wilt lilllng Servic.14!l and ouocloled logot ore ewned Cl conll'olled by La The Conodicn Real Ewa AUociation l' - REAI and lden61y 1M r...l eslale p,aleuionoh who ore member, al aEA ond lhe -- quolity al ...vioos hr provld.. u.ed under llcon.. . O 2023 Qnlorio hal Eslato Auoclo on ("OREA'). Allright \ r - ,,ed . Thi,lonn wot deYelooed bv OREA la, fie u.e ondreproduclion bv It• memben and I an - • only. 1vri olf,.,.,.. or rep<oouction 1, prohibited eXCll)I wilh prio r wrf..,. con,..,, ol OREA Do not olte, wl,on pnnling a, reproducing lheabndotd pr. - 1 ponio , n OREA bear, noliability la, your ute ol thblarm. INITIAU OF SEW R(S , } c:fm:) Form 501 Revbed 2023 Page 4 of 6
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---- -- m• -- ••••••r 32, S UCCES SORS AND ASSIG NS : The heirs, executors, administrators, successors and assigns of the undersigned are bound by the terms herein . SIGNED, SEALED AND DELIVERED in the pr858nce of: IN WITNESS whereof I hove hereunto set my hand and seal: :( I : ; ri:; k ;;: ::: :;:: . : , ! 11 ,0o:' ' 22 2 23 itneu) jwi ; l· .. · .... · · ·· ········ ·.·......... ... ..... . ... . . . .. ..... . ..... ....... is / Moiizeci ƒ signinijOffk: j; .............. . .. . . . ... . .... 1 ! 11 i i.......... . . . ............ . . ..... . rwi ei ,................................................................... . (Wltneu) I, the Undersl9ned Seller, agree to the above offer. I hereby irrevocably Instruct my.lmYyer to pay, directly to the brokeroge(s) with whom I hove agreed to pay commission, the unpaid balance o f the commission together with applicable Hormon1zeo Sales Tax (and any other taxes as may hereofier be applicable), from the proceeds of the sale prior to any payment to theundersigned on completion, as advised by the brokeroge(s) to my lawyer. SIGNED, SEALED AND DELIVERED in the p r esence of: IN W I TNESSwhereof I hove hereunto set my hand and seal: h Aulhonli<lc: u : i . E !l N.?JJ!..[. (!.:::::: : :: :::::::: :::: ::::: (Se ll e r/Au thorized Sign i ng Officer! ----- · (Seller/ Authorized Signing Oflicerj io ie 0 i. 7 .. / . 2 .. 4 .. / . 2 . . 3 ...... ....... ..... .. (Dole) S P OU SA L CONSENT : The undersigned spouse of the Selle r hereby consen t s to the disposition evidenced herein 1:>ursuont to the provisions of t he Family low Ad, R.S.0.1990, and hereby ag r ees to execute all necessary or inciden t a l documents to give fu ll force and effec t to the sole evidenced herein. (Witness) s1· pc;;;j; ....... ................................................ . . . ... 1 ! 11 ( Dote ) .. .. ... .. .. . . . .. .. C ON FIRMATIONOF A C CEPTANC ! E N otwi t h s t andi ng a nythi n g contained her e in to the co ntr ary, I confi r m this Agreement with all changes both typed and written WO$ finally accepted by all parties al .................. .1.0;5.8.AM ...... this ........ I... ..................................... OelO .e./.? to ... ... ..... ( o.m./p.m. ) si iiioo I. ¥ .,A0 .... . . . . . .08/.08/2 3 ............. . . . . . . . . . INFORMATION ON BROK£RAGE(S) Listing Brokerage .................. l ... .! ... ;J .. f.:.! ... 9. . ........ . . ........ 905 - 470 - 9800 (Tel.No.) .......................................... P ... H .. O .. E ... B .. E .... L .. I ............... i&. ƒ 1eij,;; Ja;.;;i; ;isi ; ·;;iii.;;;c:,;.c1·N;; ;···· ...................................................................... . C<><>p/Buyer Brokerage ........................ l . ! - . /. .. .! 2ff... :IT .. ;fff .:................ .......... (905) 470 - 9800 ( Tel.No. ) ...... ........ . . ..... .. . ... ........... .... P .. H . O .. E .. B .. E ... L .. I ............. . ....(S..i ·;p;; ; a;.;;ie;js:; ;cli; · 'Rim d ·N;; ; - ········..· · ·.... . .................. . . . . ..... .......... . . ...... . . ....... . . Property Manager: .. iN - ,;;;; - · · ···· · ···· · ····· ..·· ·..···..···· ·· · ·iAckl, ;;r ·· ··· ·..· ·· ·· ·· ....···· · · ..··· · · ·· ..····· · ·· ··...···· · · ·.. ·..····· · ·· .. ·· · ... trei: N · F .:· o ·: ;;io:i .... ·· ·..···.. ACKNOWLEDGEMENT I ocknowleclg f ,ny signed copy of this accepted Agreement of I acknowledge receipt of my signed copy of this accepted Agreement of . . . L t B . 'lfl 2 l J tJ.. . . ; ; .;; . . . · r. ;!;; · .· . - '. . . '. . 1 . . . . : (Seller) ------ ( Dote ) ( Dole ) ( Seller ) ( Dale ) Address For Service ........................................................................... . (Buyer) lOOOUtul, ...,. .. o J IOC . (8uye,j . .. • . (Dote) ..... .. .. . ..... .. ..... . . ...... . . . . . .. . ..... . . . . . .. . . . ............. . . . . . ....... (Tel. No.) Address For Service ........... .. .. . ......... . ................................................. . ........................................................ ff :· .;·································· Buyer's lawyer .......... .... . .. .... ............ ..... ............... ...... .................. . . . ... Seller's lawyer ................................................................................... Address ............................................................................................ Email ............................................................................................... . (Tel. No.) (Fox. No.) Address ........... . ... .......... .......................... ........ ......... ......... ......... . .. ... . Email ................................................................................................ i'rei:'N;; :,........ .................................... iFo .'Nof""" ... . ...... . . ....... ....... fOlt OFFICE USE ONLY COMMISSION 1RUST AGUIMINT To: uxiperoling Brokeroge shown on the foregoing Agreemeni of Purchase ond Sole: In considerolion for the Coq,erating Brokerag e procuring th e foregoing Aer ee ment of Purchose and Sole, I hereby dedare lhot oll moneyi received or receivable by me in connection with the Transaction as contemplated i n the MlS" Rulesand Regul a t i o n s of my Real Estate Board shall be receivable ond held in trust.Th i s agr eement shall constitute = = fll.ffiii.fr = : = - 7·;='07'..3./ · 2 · 3·········· · (Authorized to bind t he UJHng Brokerage) (A uthorized to bind the Coope, otlng Broker09e) [D n.. tro.i..na<b REAIJ OR:ie MMJ,Mukiplt usirng Seivicat® andauocialld logot ore OWMd o, conl'om..! by MNicM 1 q h u e al e ity c c - l dlon Rea h l E o a y a . lien and id«ilily the real Male prolouionok wl,o 019 .......i..,. cl CREA oncl 11,e . U s e d w,dor M. O 2023, Onlotlo Real e - Auocloflon . r OREA'I . All rig!,hr. -- l. Thll lorm wo• cleYeloped 1w Ol!EA lor !he UM oncl repn,dudion t,y . membe n ond Ileen - • only. An v oll w .,. . o r rep,oouelion •• prohibited - •p l with prior wrliten con,e n l cl OREA. D o no t oiler wlwon printing or reproduc i ng I!.. ,londotcl pt....po,11M. OREA'*'< • noliobillty for your use cJ lhl, lorm. Form 501 Revised 2023 Pa g e 5 of 6
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AIMlenllllgn ID: I -- Schedule A Agreement of Purcha s e and Sale - Condominium Resale • Commercia l A Ontario Real Estate Auociation Form 501 for use in the Prcwince cl Onlorio This Schedule is o lto ched toand forms port of the Agreement of Purchase and Sole between: BUYER: ....... ... .......... } .<?.<?.9 . . 1 ... 2 .; ; .. I . ..... . . . ....... . ..... . ............. . . ... ......... .............. . ........... .. ............. . .......... . . . . ............... , . and SEWR: .. .. J !!.'? . . . . ?. .. .'?. . . . ? . . .. :... ....... ......... . . ... .......... . . ..... . . ... . ...... .... ........ ........ ...... ............. . ............... forthepurchaseandsaleof . . .. .... . .... . . .! ,.'! .. . , ............. . . ...... ....... . . .......... . . ... ... . .; ....... . .... . .... . ............ . ... :':' .1?:.. ............. . ........... .... . . . ....................... . .. ! ................ doted the ......... .... . . d . ay .o.f.. . . .. . . ........ . . . . .. . . . . . .... - . :1 . : 'l . ....... . ..................... ... , . 20. . ... . .............. . Buyer agrees to pay the balance asfollows: The Buyer agrees to pay the balance o f the purchase price, subject to adjustments, t o the Seller on the completion of this transaction, with funds drawn on a lawyer trust account in the form of a bank draft, certified cheque or wire transfer using the L a rge Valu e Transfer System . The Seller agrees to dis charge any mortgage or liens or other encumbrances registered against the property on or before cl osing at his own expense either from the proceeds of the sal e or by solicitor's undertaking. The Seller warrants that ther e are no work orders or deficiency notices outstanding agai ns t the property, and if so will be complied with at his expense, on or before c losing . The Buyer knowledge that the chattels and fixtures as not included in the Agreement of Purchase and Sale. And the Buyer agr ees to accept existing lease agreement all the term left. This Offer is conditional upon the Bu ye r's Solicitor review the following Condominium Corporat ion's documentation: a Status Certificate an d a tta chments, and finding all of th e for egoing satisfactory in the Buyer's Solicitor's sole and absolute d iscretion. Unless the Buyer gives notic e in writing delivered to the Seller no later than Pive(S) banking days ( excluding Saturday, Sunday and Statutory H oli day s) after rec ei pt by the Buyer's Solicitor of the foregoing documentation, that thi s condition is ful filled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction. The Sell er agrees to request and deliver to the Buyer's Solicitor, at the Seller ' s expense, the foregoing documentation within twenty (20)days after acceptance of this Agreement. This condition is includ ed for the benefit of the Buyer and maybe waived at the Buyer's sole option by the not ic e in writing to the Seller within the time period s t ated herein. The Buyer shall have the right to ente r the property TWO (2 ] further times prior to the completion , at a mutually agreed upon time. The Seller agrees to provide the access to the property for the purpose of this visit. The Seller represents and warrants that during the time the Seller has o wned the property, the us e of the property and the buildings and structures thereon has not been for the growth or manufacture of any illegal substances, and th a t to the best of the Seller's knowledge and belief, th e use of the property and the buildings and struct ures thereon has never been for the growth or manufacture of illegal substances. This warranty shall survive and not merge on th e comp let ion of this transaction. The Sel ler represents and warr a nts that during th e time the Seller has owned the property, the use o f th e property and the buildings and st r uctures thereon, there have been no deaths , suicides, or murders on the property at any time, an d furt he r to the best of the Seller ' s kn ow l edg e and belief that the r e are no nei ghb orhood conditions that could negatively affect the buyers us e and enjoyment or perceived value of the property. Thia warranty shall survive and not merge on the completion of this transaction. The part ies to the tran saction hereby acknowledge that the Co - o pera ting Broker a ge acts for the Buy er Cs] under a Buye r Agen cy Agreement and that the Co - operating Brokerage w ill be compensated through the Selle r for the amount as provided fo r on seller commission agreement with co - operating brok erage for the listed property plus applicable HS T on such amount . The B uyer r epresentsand warrants that there is no Buyer Represent ation Agreement with any ot h er broker a ge binding with t h e buyer. This form must be initialled by all parties to the Agreement of Purchase a n d Sale. INITIALS OF BUYER(S) : (D m U..1rod.mo,t,., REAi! . , O 7 R ... . , .v.LS<* , Muhif>I, Ual lng 5 - vice.&ond o,,oclolld logos ore owned o, COMol led by IJ::! lhe Cano<f,on Real Al$CICiollOII IClEAI and ldenlify h reel..aat. p,oleuionol. wl,o at e membon of CREA and the -- quali f'/ ol wvicts t,ey provide . Used under bnse. 02023, Onlorio ho! e. - Auocio11on ("0REA1 . Al righbresorwd. Thi, formwas 1w OREA lo, f,e UM and reprod udion bv i, memb.n and l i<»n - • o.nlY . Anv olh« useor roprocluc:lion 11 prohibii.d . - ""91 with prior wrfwon oonsenl ol OREA. Do no toho< wl.... prinHng 0< reproduc ing h , 1anda rd pr - porffon. OREA beor, no liobilily for your ute of th 1 1 lom, . INl1IA1S OF SEW R(S ), cfm) fo,m 5 01 Revised 20 23 Pa ge 6 of 6
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Aulhtnllllgn MT al ... r . - . l . B . ... .... ._,_. · OntarloRealEstate Schedule B Association . • : • : • : • . • TREB • • This Schedule Is attached to and Forms part of the Agreement between: . ... ! ... ;. : ...... .. ..... ........... ...... ..... ...... ...... . . . . .... . . . . . . . ........................... .............. . . .. . .... . , and IUYl1l(S)/1INANT(S)I ................ ; .. . . . SB1D(S)/IANDU)ID(l)I - . ?. .. . ?.. .. ?. .. ' . ? . .. .:................ ... ................................ .... . . ................... . . ..... ...... . . .. for the property known as ... - ... . - .. '!. ............................................. ; ........................ ?:' A ........................ .'t!. .... . ... .! . ... . . ... . . ... . .... . . . ....... . . . . . ................ . ............... ... d . oted th e .. . ................... . - ........ . ........... d . a . y of ................. ?:x ..... . ..........., 20 . } ............ The Pruties to thi s Agreement h ereby acknow ledg e and agree t h at the Deposit Holder , RE/MAX Realtron Realty Inc. ("Realtron"), s hall place t he D epos it in it s real estate t m s t account , which earns interest at a rate of Prime less 1.85% per a nm un. Fw1her , the Parti es acknowledge and agree that the Deposit Holder shall pay any interest it eams and re ceiv es on th e Dep osi t , le ss a $195.00 plu s HST processing fee, to the Buyer upon completion of the transaction and upon s ub missio n by the Buyer to the Depo si t Holder of their Soc ial Insurance Nmnber ("SIN,,) (or their Canada Revenue Agency Bus ine ss Number , "BN", if the Buyer is a Corporation) and mailing address in accorda nce wi th Canada Revenue Agency's requireme nt s for the preparation of a T5 slip. Should the SIN or BN and mailing address not be provided to the D epos it Hol der w ithin t hirty (30) day s following completion of the transaction, sa id intere s t sha ll be fo rfeited to the Dep osi t Holder. Fw1her , the Parties agree that if an interest c hequ e i s i ss ued to the Buyer and the Buyer does n ot negotiate that cheque within s i x (6) months from the date of the c heque , then interest amo unt s hall be forfeited to the Deposit Holder. In the event a transaction is mutually released and bec omes null and void, Realtron wil l issue a tmst account cheque for return of the deposit, to the pruty designated by the fully and pro perly exe cut ed Mutual Release , not before ten (10) Business Days (for ce11ified funds) and not before twenty - one (21) Business Day s (for all other funds) from the date the funds were deposited into o ur r ea l estate tmst ac count as state d on our deposit receipts. A Bu s in ess Day excludes all Saturdays , Sundays , and Ontru·io statuto1y holiday s. This policy is in place on the advice of o ur banker to protect yo ur deposit from fra ud . This form must be initialled by all parties to the Agreement. INl1W.SOf IUYEll(S)/TENANl(S)a Cb INITWS OF SIWR(l)/LANDLOID(S)I (@:) 1 m The lrodemar \ 1 RtAJJOl!e REAi.TOR MI.S® , Mulll Ulling Sen1ca8 and auodaled logos en owned a, caMolled by LJ3 The Ca,odian Real ,u>Odalon 11 - EAI and ldenlily lhe real eolale poleuionola who are members ol CREA ond lhe -- quality o/ lOMOO$ lhey pmvide. U...d uncle, - fic:enae . e 2023, Ontor1o Roal Aoociation l"OREA"I, All r lgh1t... -- 1 . T , hi lonn WQ$ cle....looed b), OREA lor lhe uae and reprodudlon bv it1 memben oncl l ioon - • only. A,,v oll,er useor reproouclion t, prol,ibilod ex.cop! with prior wnlen consen t ol OREA. Do not oher wl,en prinli119 or reproduci<,g the,lanclard .,, - 1 potion . OREA bean noliobllity for yoor uae ol Ibis lorm. Vet"i.ion 2023 - 01 CREA WEBForms • )
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Form 320 lo, usein th. Province of Onlorio Confirmation of Co - operation and Representation Buyer/Seller .tdhtnllllg n IO : 11· ----- IB ----- IJIMW'aF I! A Ontario Real Estate Association BUYIR: .... . ........... ..... . ; . . . ?. . }. .. SEWR: . . . <:> .. ! . <:> .. ?:! . ?:.. .:.............. .. .............. . ... ..... ... . ... ... ........ .... .... .... ........ ... ... . . .. ....... . ... ..... . .. .. ... . ....... . ... . . .. .. . .. . . .!.. ?.':'. .. . : . ...... . . . .. . . .... . ... . . ................ .... ...... .. .... .. ........... . . . . . ... . ..... .. ....... . . . ....... .... ... For the transaction on the property know n o s : . . ?. . . . ... . . . . !! ! .. ... . . . .. . ...... . . . . . . .. . . . . . . . . . . . ; 7 . . ... .. . .. . ... .. . . .... .. ?.. . . DEFINfflONS AND INTERPRETATIONS : For the purposes of this Confirmation of Co - operation and Representation: "Seller" includes a vendor , a landlord, l essor or a prospective seller, vendor, landlord or lessor and ·Buyer• i ncludes o p urch a se r, tenant , lessee or o prospective buyer, p urch aser , tenant or lenee and ·sole• I ncludesa lease, and " Agreement of Purch ase and Sole" i ncludeson Agreement to Lease . Co mm i s sion shall be dee me d to include othe r rem unera t ion . The following in fonnation is confirmed by the und.nigned soleJs,enon/broker r.presenlativfl of the Brokerage(s). If a Co - operating Brokerage isinvolved in lhe transaction , the brokerages agree lo co - operate , in consideration of, and on lhe twms and conditiom asset out below . DEQARATION OF INSURANCE: The undersigned 501esperson/broktr represenlotiwi(s) of the Brokeroge(s) hereby declare that he/she i s insured os required by the Real Eslote and Business Brokers Act , 2002 , (REB8A). 1. umNG BROKERAGE a) D The Listing Brokerage represents the interests of the Seller I n this tronsodion. It is further undel'$tood and agreed that: 1) D The Lis ting Brokerage is not representing or pro vidi ng Customer Service to the Buyer . (If the Buyer is working with a Co - operating Brokerage , Section 3 is to be completed by Co - operating Broker age) 2} 0 The listing Brokerage is providing Customer Service to the Buyer . b) IKJ MULTIPU REPRESENTATION: Th e Listing Brokerage hos entered into o Buyer Representation Agreement with the Buyer and represents t he interests of the Sell er and the Buye r, with their consent, for th is transact ion. The Listing Brokerage must be impartial and equally prolecl the interests of the Seller and the Buyer in this transaction . The Listing Brokerage hos o duty of lull disclosure to both the Seller ond the Buyer, inclu ding o req ui rement lo disclose oil Fac tual informa t ion about the property known to the listing Brokerage . However, the listing BrokerQge shall not d isclo se : • That the Seller may or will accept less than the listed price, unl ess otherwise instructed i n writing by the Sell er ; • That the Buyer may or will paymore than the offered price, unless o the rw i se instructed in writing by th e Buyer; • The mo tivation of or personal informa t ion abou t the Seller or Buyer, unleu otherwise instructed in writ ing by the party to which the Informat i on appl i es , or unless failure to d isc lose would constitute fra udulent , u n lawful or unethicol practice; • The price the Buyer should offer or the price the Seller should accept; • And; the Listing Brokerage shall not disclose to the Buyer the terms of any other offer . However, ii i s understood that Factual market inlor m o lion about comparabl e properties and i nlormolion known to the Listing Brokeroge concern i ng potential uses for the property willbedisclosed to both Seller and Buyer to ossis t them to come to their own conclusions. Add i tional comments and/or disclosures by Lis ting Brokeroge: (e . g., T he listing Brokeroge r epresents more than one Buyer offer i ng on this pr o perty . ) The listing brokerage represents both parties. 2. PROPERTY SOLD BY BUYER BROKERAGE - PROPERTY NOT USTlD D The Brokerage . . ... .. .................... .represent the Buyer ond the property is no! listed with any real estate brokerage . Th e Brokerage wi ll be paid (does/ does not! D D o r : by the Seller in accordance with o Seller Cus tomer Service Agreement by the B uyer d i rectly Ad dit ional commen s t an d/ or disclosures by Buyer Brokerage: (e . g., The Buyer Brokerage represents more than o ne Buyer offering on this property . ) (Whe,. applkableJ r o rrw s OF &UYIER ( ®OKERAG E RE IUYER CO - ONRATING/IUYER UOKUAGl SEUIII 1 W The1rod.mo,b REAllO' R RfAlTORS!,} l , Mu lti !M, Uallng Service a nd anocialld logo$ are owned Of con .. ol l ..l by The Canadian Real Ealall AS socloion EAi and ldenlily the reel Mloll p - oleulonols whoa,. memben ol CREA and the ,.... quali ly ol .....ic.s hy provide . U,ed under bNe. O 2023 Onlario hal Etloll As1«iallan ( · OREA · ) . Al rial,ls re... - ..d . Th i , lorm wo• I>)' OREA lot the u .. and rtproduction bv ffs mimber, and licen - only . Jv,y ol!,er u.. o, rep,oouction i• prohibit.cl el«:.i>i with pno, 1len conHnl of OREA. Do not olter wl.. pr l nllng o, reproducir41 the standard , - sei ponion . OREA bear• no liability for your UM of this lcrm . Form 320 Revbed 2023 Page 1 of 2
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I0: ---- 11 - IE!IIIIII _ I .,.. _ . 3 . Co - operating Brokerage completes Section 3 and Ustlng Brokerage complete, Section 1. CO - oPERATING BROKERAGE · REPRESENTATION : a) [&I The Co - <>peroting Brokerage represents the interests of the Buyer i n this tronsoction. b) D The C0<>peroting Brokerage is provid ing Cu stomer Service to the Buyer in this transa cti on . c) D The Co - <>peroting Brok erage is not representing theBuyer andhosnot entered into onagreement t o providecustomer service(s) to theB u yer . CO - OPERATING BROKERAGE • COMMISSION: a) I&] The Listing Brokerage will pay the C0<>peroti ng Brokerage the commi$Sion as indic ated in the MLS® information for the property ... ..... . . . .... . .. .... . .. .. .... . .? :.?. . ! ... ... ...... .... ...... . . . .... . . . .. to be poidfrom the amount poid by the Seller to the Listing Brokerage . ( Comm i ss i on As Indicated In M.:;, • lnlormo on) The C0<>peroting Brokerage will be pa id as follows: b) D Additional comments ood/or disclosures by Co - <>peroting Brolceroge: (e.g., The CO<>peroting Brokerage represents more than one Buyer offering on th i s property.) Comml $ Slon will be payable as described abov e , plus applicable taxes . COMM ISS ION TRUST AGRE EMEN T : If the above C 0 <>peroting Brokerage is rec e iving payment of commis i s on from the Listing Brokerage , the n t he agreement belween Listing Brokerage and CO<>peroting B rolc e rage Further indudes a Commission Trust Agreement, the consideration for which i s the Co - operat n i g Brokerage procuring on offer for a trade of the property , acceptable to the Sell er . This Commission Trust Agreement shall be subject to and governed by the MLS • rules and regulations pertaining to commi $ Sion trusts of the Listing Brokerage's local reol estate board , i f the local boa r d ' s MLS • rules and regulations so prov i de . Otherwise, the provisions of the OREA recommended MLS - r ul es and regulations shall apply to thi s Commi ssion Trust Agreement . For the purpose of this Commission Tru st Agreement, the Comm iss ion Trust Amount s hall be the am ount noted in Section 3 above . The Listing Brokerage hereby declares that all moni es rece ived in connect ion with the trade shall consttiu te a Commi $ Sion Tr ust and shall be held, in trust, for the CO<>peroting Brokerage under the terms of the appl ic able MLS • rules an d regu lation s . SIGNED BY THE BROKER/SAl.!SPERSON REPRESENTATIVE($) OF THE BROKERAGE($) (Where applicable) RB/MAX RBALTRON REALTY INC. (Nome of Cooperoflng/Buyer Brokerage) RB/MAX RRALTRON RBALTY IN C., BROKERAGB (Nome of Us ng Brokerage) · 7 · 8 · · · 0 ·· 0 ·· · · W ·· O · O ·· D · ·· B ·· I ·· N · E · ····· A · V ·· · E ·· · N ··· U · E ·· · ········ M · · A ··· R ··· K · · H · · A · - M · ···· · ·· · --- · - O · N · ····· · · L · · 3 ·· R ·· 2 · N ·· 7 · · ·· 7 .. 8 . . . 0 .. 0 ... W ... o .. . o . . d .. b .. i .. n . . e . ... A .. v . e . .. . n . . u .. e .... . .. .. .... M .. a .. r .. k .. h .. a .. m ... . . . . . ... ... . O . . . N . ..... . L .. 3 .. R . 2 . . . N . .. 7 .. rf.PJ/ . t J . .i · . '? E · · . · · · . · . · . . . · .. . · . : = · . . . · · · · . . · · . . . ' · · . · . . . · · ·. . i ; . · ;; r - · . · · . · . · . · . · . . (Authorized to bind the C o,operotf ng/ Buyer Brolceroge) (Dole) PHOEBE LI (Prin1 Name of Solespersoo/Broker/Sroker of Record) ' ' r ' ' ,, 1 . , . . , . . , . . . . . . . . . . . . ' = . . . . . . . . . . . . . . . . .,.!?..o.,.?.1.?.. o . . . .... . . . Q † f;[ ; / ; J " j··· · ······0·7· { · (23.. .... . ............ PHOEBE LI {Print Nome of non/8rolcer/8roker of Record) CONSENT FOR MUIDPLE REPRESENTATION (b be completed only if the Brokerage repnt:Mtnts more than one client for the transaction) The Buyer and s.ller consent with their initials lo their Brabroge repl"OHnting more than one client for this transaction . cw INfflALS OF IUYER(S) INmA1.S OF SlWR(S) t:;;. : := . . - : a .. . ; · . ..... . . .... .. .... , . . . ( Signature of B uye r ) 1 ooo s u 1 n o,rriuuo I M C . ( Dote ) ACKNOWLEDGEMENT lfi ( NzHOU 07/24/23 i&:. j ..... .. . . .. .. .... . ...... . ... . ... (Sgi na ture of Buyer) i i;,;j" ····· · · · ···· · .. ·· · · ··..·· ····· ·· ·..··· (Signature of Sefter) i i .. .. .. ..· .. ·· ... . . . · ... ·....·.. m n,., 1rod.n,orlr 1 . REAIJ 1 REALTORMl , Muhipl, Ulli"9 So<vic. - * and ouoc;ioled logo, are owned 0t co,,to ll&d by La The Conoclion Reol E..lote Auoc:lolion l' - REAJ end l&.ritily 1h. r.al e,lat. prol•sio<,ok who ore ......bera of CREA and 1h. -- quolily o f """' ƒ " f,ey proo,id. . u - l under licens . . 0 2023 , ONo,io Rool Assoc:io llon 1·0REA 1 . Al rlAt.. , ts _....i . Th i a lonn wo o cleY91oped by OREA for Ille u>e and reprodudk>n bv ib momben ond Ileen_, . 1',r, o4f>er UM o, roprocludion la prohibited ex<:o_pl with poor wnllen oonsen l of OREA. Do no t ofter w'hen prlnllng o, reproducing tlwo slondord p,•sel ponon . OREA boon no liobM i ly for your U M of thl, lorm . Form 320 Revi..d 2023 Page 2 of 2
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EXHIBIT 4.56
DigiSign Ve ri fied - Od090e3a - 2f97 - 41ae - 895d - 73ddf9a0d42a9 Agreement of Purchase and Sale Condominium Resale - Commercial · : · : = - · : · : TREB A Ontario Real Estate Association Form 501 for use in the Province of Ontario COMMERCIAL NETWORK This Agreement of Purchase end Sole dated this.}.O ......... . .......... . ...... day of .. :N.O.Y E!i: ......... . . . ... . .... ... . . . . . .......... . . .... . . . ...... , 20.. } ....... . .. . .. . BUYER: .. . Trl3_E_T . ' . l : _ l S !' : R :I : f'.l : _ {; C _ : t _ J L T.tJ L . . . n . J! i ! !! J· : f , ; ; ;; } ...... . . . . . . . . . . ........ . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . , agrees to purchase from 9 . T . . E . . . . C . . . H . . NO i L F O l G ii' Y H i' O ; L ;, D ; IN i' G ·1 S i·s 1 G 1 R ; O ;} U .. P .. . .I.N.C: .• .. ....... . . . . .. ............ . . ............ .... ....... . ... ., the following SELLER: . . .Y:rl:l.I.<>N.11.:RJ. ED .. UCATI . O . . . N .. PROPERTY: a unit in the condominium property known as .. V . i:i . i . t ... . .. .... . . . . . . . ... ... . .. i A j; ri· ;;, i/ ,' :;, h - /s ii iu i·ii'.. ... ... . . .. . .... .... . . . . . ...... . . . . No . .. E .... 25 ... .... .... ... · · · · · located at - . _ 3_0_ Cl .. l:l.et . . E! ta! . S Ave .. . : _ e: . ?a>i _ : _ i :Jcl'l all \ .. C> ... L.3.: _ R. ()Y.S .. . . . .. . . . ......... .. .......... . ........ .. . ... . in the . . . . . . M . . . a ' . r ' . k . . h . . a . . m . . ····· · · ·· · ············ · ···· .......... . ........... . .... . ... . .. ........ . .... . .. .. ........ .. ....... .. . .. . .. .. . .. ........... . . . . . ... . . . ... being ............ ... Condominium Pion No .... ... .... ... ... .. .. ... .... .... .... .. ... .. .. . . ... ...... . . Unit Number .. . ........ ... .. ........... .... .. ...... . . . .. .. . Leve l No . .. .. .. .. .. . .. .... .. . . . .... . .. Building No . .. ... .......... .... ................ . .. together with ownership or exclusive use of Parking Space(s) .. .. .. .. .. . ...... . ... .. ... . . . ........ .. .. , .. together with ownership or exclus ive use of Locker(s).. ......... ..... . . ....... ....... .. ................... , toge t her with Seller's proportionate undivided tenancy - in - common interest · ... · . · · .. · jN .;;1:, ds), leveljs))· .. in the common elements appurtenant to the Unit as described in the Declaration and Description including the exclusive righ t to use such other parts of the common elements appurtenant to the Un it as may be specified in the Declaration and Description: the Unit, the proportionate interest in the common elements appurtenant thereto, and the exclusive use portions r f !t co ) mmon elements, being herein cal l ed the "Property". 250000.00 .fJ / .M Dollars (CDN$). 260, 0_0.9_ '..0. .. .. .. ... .......... .. ... . . . .fJI .M PURCHASE PRICE: F if t y ... T.YlC> .. 11 . u. 11 cI:r.e.cl .. .. t: _ll C>t1 S.< . i Il. .. < _ iI1 cl_ . CJ( _ ) /. l CJ CJ .......... ................. .. . .... ..... ............. .. ....... .... . .................. ................. ....... . ...... Dollars DEPOSIT : Buyer submits .. l.lJ? . 0. 11 .. cct . c . _Ep! t _ :_ari c:(;! .. ... ........... ....... .......... .... . ...... ....... .... ...... . ....... . ......... . .... .... .. .. .. . ...... . .. .. . .... . . .. ... . .... ... ... .... .. .. .. .. (Herewith/Upon Acceplonce/os otherwise described in this Agreement! .. 1'.i' . _ f . 1:(;!ta!I1 _.. 1:l'l C?:U.l.l .a. Il cI .. .a.Il cl. _._ O Cl( JO,_ O _ .. . ....... ... .......... .. ... .... . .. . .. ............. .. ... .... . . . ... .... Dollars (CDN$) .. J,_5 i _ Cl() Cl.: . o . Cl_ .......... . . .. ........... . .. ... . . . b:i:r a r ffi acb :t;1 ·t! · !;:;i · ; ;! ; ; ; ; ! i } t · : : ; - i 0 i ·t · b · ; ;iit d ·t ;;;;; j th ·p ; - h - ;;;;" - - - - pl ti ; · . · h;i : : 1 of this Agreement, "Upon Acceptance" shall mean that the Buyer is requ i red to deliver t he deposit to the Deposi t H older within 24 hours of the occe t ance of this Agreement. T he parties t o this Agreement hereby acknowledge that, unless otherwise provided for in this Agreement, the Deposit Holder shal place the deposit in trust in the Deposit Holder's non - in t erest bearing Real Estate Trust Account and no interest shell be eorned , received or paid on the deposit. Buyer agrees to pay the balance as more particularly set out in Schedule A attached . SCHEDULE(S) A .......... . ........... attached hereto form(s) part of this Agreement. 1. IRREVOCABILITY: T his offer shall be i rrevocable by ... B.ll Y . e . r. . ............................... . . ...... , .... . until .. ;l,J .; . 1? . .... .. .... .. - ........ . . . . ..... .. .. . . on !Seller/Buyer) (o.m./p.m.) the .J o ...... .. . . .. .. day of .. f'.l:C>Y . . r. .. . .. .. .. .. .. .. .... .. ... . .. .. ... .. ..... .. .. .. ... .. .... .. .. . , 20 ... 2.3. ............, after which time, if not accepted, this offer shall be null and void end the deposit shall be returned to the Buyer in full without interest. 2. COMPLETION DATE: This Agreement shall be completed by no later than 6:00 p.m. on the .. . o ............... ... .. ......... day of .. ... .... ..... .. .. . . . .... . .. . _ . I _ ) e _ c E!ll _ l1 _ )e r. .. ...... . ...... ..... . .... ....... , 20 . .:2.3. . ... .... Upon comple ti on, vacant possession of the Property she ll be given to the Buyer unless otherwise provided for in t his Agreement. INITIALS OF BUYER(S): INITIALS OF SELLER(S): m The trademarks REALTOR ® , REALTORS®, MLS®, Multiple li sting Services® and ossocioted logos ore owned or con trol l ed by • , . , u ,,, : , :!J The Conodion Rea l Es t ate Association !CREA) and identify the rea l estate professionals who ore membe rs of CREA and the quality o f services they prov i de. Used under license . © 2023, Ontario Rea l Estate Association ("OREA") . All rights .reserved. This form was deve l oped by OREA for the use and repr oductio n by its members and licensees only. Any other use or reprocluchon is prohibited except with pnor wrinen consent of O RE A. Do not olter when printing or reproducing the standard pre - set por tion . OREA beors no liability for your use o f this form. Form 501 Revised 2023 Page 1 of 6 Created by GINA ZHENG with SkySlope i» Fonns
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D g i iSi gn Ver i fied - O d090e 3a - 2f97 - 41ae - 89 5d - 73 dd f9a0d 4 2a9 3 . N O TI C E S : T he Seller hereby appoint s the Listing Brokerage as agent for the Seller fo r the pu r pose of giving and receiving n o t ices pursuant to this Agreement . Where a Brokerage (B uy er's Brokerage) hos entered i nto a re presentat i on agreement w i th the Buyer , the Buye r hereby appoints the Buyer's Brokerage as agent for the purpose of giving and receiving notices pursuan t t o this Agreement . Where a Brokerage represents b oth th e S eller and the Buyer (multiple repr e sentation) , the Brokerage shall not be appointed or authori z ed to b e agen t for either the Buyer or the Seller for th e purpose of giving and receiving notices . Any notice relating he r eto or provided for herein shall be in writing . In addition to any provision contained herein and in any Schedule hereto, this offe , r any counter - offer, notice of acceptance thereof o r a n y notice to be given or received pursuant to th i s Agreement o r any Schedule hereto (any of them, "Doc u ment") sh ell be deemed given and r eceived when delivered personally or hand del i vered to the Address for Service p ro vided in t h e Acknowledgemen t below, or where a facsim i le number or email address i s provided herein, when transm i tted elec t ronically to that facsimile number or emai l address , respectively, in which case, t he signo t ure(s) of the party (parties) shall be deemed to be o r iginal. FAX No .: .... . . . . . . !For delivery of Documents to S e ll )· ·· ·· ·· · '· ······ ·· '· · '··· ·· · · · · Email Address: 4 . CHATIELS INCLUDED: . . 1'T / ll.. . . . . . .. ..... . .. .. ..... . . .. ... . . ..... .. . . . . . ....... . . . .. . . . . . U n l essotherwise stated i n t his Agreement or any Schedu l e h e reto, S e ll e r agrees to convey all f ixt u res and chatte l s i nclud e d in t he P u r c hase Pr i ce free fr om all liens, encumbrances or claims a ffecting t h e said fix tur es and c hat t els . S . FIXTU R ES EXCLUDED: .. 1'T / ll._ ... ....... . . ... . ... . . . . ... . ... . . . 6. R E N TAL I TEMS (Including Lease , Lease to Own): T he following equipment is rented and not included in t he Purchase Price. The B u yer agrees to assume the rental controct(s), i f assumable: . . 1'T / ll... . ····· · ····· · · ····· T he Buyer agrees to co - operate and execute such documentation as may be required to faci l itate such a ssu mption . 7 . COMMON EXPE N SES: Selle r warrants to Buyer that the common expenses p r esen tly payable to t he Condominium Co r por a tion i n respec t of t he Property are app r oxima t ely $ . .? . 9 . 5 . . . .. .. . . . .. . . ..... . . . . .... . . . . . .. ..... . per month, which amoun t includ e s t he following: .. C: . <?II \ IllClil ... . ll e l . . Il t: E · l · _ · , .. . .. . 8. PARKING AND LOCKERS : Parking a n d Lockers ore as desc r ibed above or ass i gn e d as fo ll ows: .. .. .. ..... . ..... .. .. ... .... . . . . ... . . . . .. . . . .. .. . .. ... . ... .... . .. . . . .. .. .. .. . . . .. ... . . .. . . . ... . .. , ... . . .... . .... ... . .... .... ... . .......... . .. . .. .. . at an addit i onal cost of: ... . . ... ... . . . . . ... .. .. . ... . .. . . ... . . . . . .. . . . ... . .. .. . .... . . . . . . . . . . .. . . ... .... .. .. 9 . HST : If the sale of the property (Real Property as described above) is subject to Harmonized Sales Tax (HST), then such tax shall be in addition to the Purchase Price . T he Seller will not co ll ec t HST if the Buyer provid e s to t he Seller a w ar ra n ty t h at t he Buyer is registered u nder t he E xcise Tax Act ("E T A "), together wit h a copy o f the Buyer's E T A r e gistration, a warranty that the Buyer s h all self - assess and remit t he HST payable an d f il e the prescrib e d form and sh all indem n ify the Se ll er in respect of any H ST paya bl e . The foregoi n g warranties sha ll not m erge bu t s h all survive the completion of th e transac t io n . If the so l e o f t he property is not sub j ect to HS T, Se ll er ag r ees to ce rti fy on or before closing, t hat t h e transaction i s not subject t o HS T . Any H STon cha tt els, If applicab l e, i s not i ncluded i n the Purc h ase P r ice . INITIALS OF BUYER(S): INITIALS OF SELLER(S): C£) • u m ,, o, I. J : '! The trademarks REALTOR ®, REALTORS®, MLS®, Mu ltip l _e lis t ing Services® and associated logos ore owned or controlled by The Canad i a n Rea l Es t ate A ssociat i on (CREA) a nd identify t he real estate professionals who are members of CREA and t he quality of s e rvices t hey provide . Used under licen s e © 2023, Ontario Rea l Es. t a l e Association ("O REA" ). A ll r ights r eserved. This for m was. d e v e loped by OREA for the us e and rep rodu ction by it s m mbers and lic ensees. on l y . Any other use or reproOuction is proh i bited ex ce pt with pnor wntten cons ent of OREA_ Do not alt er when printing or reproducing t h e sta ndard pre - set portion. OREA bears no l iabi l ity for your use of t his form. Form 501 Re v i sed 2023 Page 2 of 6
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DigiSign Ve r ified - Od090e3a - 2f97 - 41 ae - 895d - 73 d df9a0d42a9 1 O . TITLE SEARCH: Buyer shall be allowed until 6:00 p.m. onthe .. 0 . 6 . ............... day of l) .e . c:Elilll>.e . r. ...... ................. . .. , 20 .. .3 .... .. (Requisition Dote) to examine t he tit le to the Property at Buyer's own expense and until the ear li er of : (i) th irty days from the later o f the Requisition Dote or the dote on wh i ch the cond i tions in this Ag r eement ore f ulfilled o r otherwise waived or ; ( i i) five days prior to completion, to sa t isfy Buyer that there ore no o u tstanding work orders or deficiency notices affect i ng the Property, and tha t it s present use ( . c : ()l . !lll \ : rc . i . a . .. .. ...... .. . ..... .. .. .. ) may be lawfully cont inued . I f within tha t time any va l id objection t o ti tl e or t o any ou t standing work ord e r or deficiency not ic e, or t o the fact the said present use may not lawfully be cont i nued, is mode in writing to Seller and which Seller is unable or unwill i ng to remove , r emedy or satisfy or obtain insu rance save and except against risk of fire (T i t l e Insurance) in favour of the Buyer and any mortgagee, ( wi t h o il related costs a t the expense of t he Sel l er), and which Buyer wil l not waive, t his Agreement notwithstanding any intermediate acts or negotiations in respect of such objections, shall be at on end and a ll monies pa i d shal l be returned without interest or deduction and Seller, listing Brokerage and Co - operating Brokerage shall not be liable for any cos t s or damages . Save as to any valid ob j ection so mode by such day and except for any objection going t o the root of t he title, Buyer shall be conclusively deemed to hove accepted Seller's title to the Property . Seller hereby consents t o the m un icipality or other governmental agencies releasing to Buyer deta i ls of a ll outstandi n g wo rk orders a n d deficiency no t ices affecting the Property , and Seller agr e es to execute and deliver such fu r ther authoriza t ion s in this regard as Buyer may reasonably require . 11 . TITLE : Buyer agrees to accept title to the Property subject to oil righ ts and easements registered against ti tle for the supply and instal l ation of telecommunication services , electricity , gos, sewers, wa t er, te l evision coble faci l ities and o the r relat ed services ; provided that ti t l e to the Property is otherwise good and free from all encumbrances except : (a) as herein expressly provided ; (b) any registered restrictions, conditions or covenants that run with the land prov i ded such hove been compl i ed with ; (c) the provisions of the Condominium Act and its Regulations and the terms, condi t ions and provisions of the Declara tion , Description and By - low s , Occupancy Standards By - l ow s, inc lu ding the Common Element Rules and other Rules and R egulat i ons ; and (d) any existing municipal agreements, zon ing by - lows and/or regulations and util i t ies or service contracts . 12 . CLOSING ARRANGEMENTS : Where each of the Seller and Buyer retain a lawyer to complete the Agreement o f Purchase and Sole of the Property, and where the transaction wi ll be completed by electronic registration pursuant to Pa r t Ill of the Land Registration Reform Act , R . S . O . 199 0 , Chapter L 4 and t he El ectronic Registra t ion Act , S . O . 1991 , Chapter 44 , and any amendments thereto , the Seller and Buyer acknowledge and agree that t he exchange of closing funds, non - registrable documents and o t her i t ems ( t he "Requisite Deliver ie s") and the r elease thereof to the Seller and Buyer will (a) not occur at the some tim e as the regi s t ration of the transfer/deed (and any other doc u ments intend ed to be reg ist e red in connect i on with the completion of this t ransaction) and (b) be subject to conditions whereby the lowyer(s) receiving any o f t he Requisite Deliveries will berequired to hold some in trust and not release some except in accordance with the terms of a document registration agreement between the said lawyers . T he Seller and Buyer irrevocably ins t ruct t he said lawyers to be bound by the document registration agreement which is recommended from time to time by the Low Society of Ontario . Unless otherw i se agreed to by the lawyers, such exchange of Requisite Deliveries shall occur by t he delivery of the Requisite Deliveries of each party to the office of the lawye r for the o ther party or such other location agreeable to both lawye rs . 13. STATUS CERTI FI CATE AND MANAGEMENT OF CONDOMINIUM : Seller represents and wa r rants t o Buyer that there ore no s pecial assessments contemplated by the Condominium Corporation , and there ore no lega l actions pending by or against or contemplated by t he Condominium Corporation . The Seller consents to a request by the Buyer or his authorized representative for a Status Cer t ificate from t he Condominium Corporation . Buyer acknowledges that the Condominium Corporation may hove entered into a Management Agreement for the management of the condom in ium property . 14. DOCUMENTS AND DISCHARGE: Buyer shall not coll for the production of any t it l e deed , abstract, survey or other evidence of title to the Property except such as are in the pos s ession or con tr o l of Seller. Seller agrees t o del i ver to Buyer , if it is possible without inc u rring any cos t s in so doing, copies of a l l current condominium documentation o f the Condominium Corporation, inclu d ing the Declar a t ion , Description, By - lows, Commo n Element Rules and Reg ul ations and the most recent financial statements of the Condomin i um Corpora tion . I f a discharge of any C h arge/ M ortgage held by 0 corporation incorpora ted pursuant to the Trust And Loon Companies Act (Canada), Chartered Bon k , Tru s t Company, Credit Un ion, Caisse Populoire or Ins u rance Company and which is not t o be assumed by Buy er on complet i on , is not a v a ilable in registrable form on completion, Buyer agrees to accep t Se ll er's lawyer's personal undertaking t o obta i n, out of the closing f u nd s , a discharge in regi strabl e form and to register some , or cause some to be registered , on tit l e within a reasonable period of t ime ofter complet i on, provided that on or before comp l etion Seller shall p r ovide to Buyer o mortgage statem ent prepared by the mortgagee setting out the balance r equired to obta i n the discharge, and, where a real - time electronic cleared funds tran s fer system is not be i ng u sed, a direction executed by Se ll er direc t ing payment to the mortgagee of t he amount r eq u ired to ob t ain the discharge out of the ba l ance due on comple ti on. 15 . M! : ! : T!NGS : Se l ler represents and warrants to Buyer that at the time of the acceptance of t his Offer he hos no t received a notice convening a specia l or general meeting of the Condominium Corporation respecting ; (o) the terminat i on of t he government o f the condo m inium property ; (b) any substantial alteration i n or subs t antia l addition to the common elements or the renovation thereo f ; OR (c) any substantia l change in t he assets or l iabili t ies of the Condominium Corporation ; and S e ller covenants tha t if he receives a ny such not ice prior to the date of completion he shall forthwith notify Buyer in writing and Buyer may th ereupon at h i s option declare t his Agreemen t to be null and void and all monies paid by Buyer shal l be refunded withou t inte rest or deduction . 16 , IN SPECTION : Buyer acknowledges having had the opportunity to i nspect the Property and unders t an d s that upon acceptance of th i s offer ther e shall be a binding agreement of purchase and sole between Buyer and Seller . INITIALS OF BUYER(S): IN IT I ALS OF SELLER(S): ,, ,, I , T o , T The trade m arks. REALTOR®, RE . A LTOR S®, MLS®, Mult i p l e Listi ng Services® and ass oc iated lo gos are owned or con tr oll ed by LJ::! The Canadian Rea l Estate Association {CREA) and identify the real esta t e pr ofessio a n l s w ho are m embers of CREA and the qual i ty of services they provide . Used und er l icense . © 2023, On t a rio Rea l Estate Association " l O REA " J. All r ig h ts rese rved. T his form was deve lo ped by OREA f o r the u s e and reproduction by ih members and l icensees on ly . Any other use or r eproOuction is prohibited except with prior written consent of OREA Do no t a lt er when pr i nting or rep rod ucing t he s t anda rd pre - se t po rt ion. O R EA bears no l iabi li ty tor your use of this fo rm. Form 501 Re v i sed 2023 Page 3 of 6
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DigiSign Veri fie d - Od090e3a - 2f97 - 41ae - 895d - 73 ddf9a0d42a9 17. APPROVAL OF TH E AGRE E M EN T : In the event that consent ta this sale is required t o be g iv en by the Condominium Co rp orat ion or th e Board of Directors, the Seller will apply forthwith for the requisite consent, and if such consent is refused, then this Agreement shall be nu l l and void and the depos i t monies paid hereunder shall be refunded without interest or o t her penalty to t he Buyer . 18. I N SURANCE : T he U ni t and all other things be i ng purchased shall be and remain at the risk of t he Seller until completion . In the event of substantial damage to the Property Buyer may at his option either permit the proceeds of insurance ta be used for repair of such damage in accordance wi t h t he provi s i o ns of the Insurance Trust Agreeme n t , or terminate this Agreement and all deposit monies paid by Buyer hereunder shall be refunded without in t erest or deduction . If Se l ler is taking bock a Charge/Mortgage, or Buyer is assuming a Charge/ M or t gage, Buyer shall supply Seller with reasonable evidence of adequa t e i nsu r ance to protect Seller's or other mortgagee's in t erest on co mpletion . 19 . DOCUMENT PREPARATION : The Transfer / D eed shall , save for the Land Transfer Ta x Affidavit, be prepared in registrable form at the expense of Seller, and any Charge/Mortgage to be given back by the Buye r to Sel l er at th e expense of the Buyer . 20 . RESIDENCY : (a) Sub j e ct to (b) below, the Seller represents and warrants that the Seller is not and on comp l etion will not be a non - resident under t he non - residency provisions of t he I ncome Ta x Act which representation and warranty shal l survive a n d not merge upon the completion of this transaction and the Seller shall de l iver to the Buyer a statutory decla rat i on that Seller is not th en a non - r es i dent of Canada ; (b) provided that if the Seller is a non - res ident under the non - residency prov i sions of t he Income Tax Act , the Buyer shall be credited towards the Purchase Price with the amount, if any, necessary for Buyer to pay to the M i nister of Nationa l Revenue to satisfy Buyer's l iabili ty in respect of tax payab l e by Seller under the non - residency provisions of the I ncome Tax Act by reason of th is sale . Buyer shall not claim s uch credit if Seller delivers on comp le t i on the prescribed certificate . 2 1 . ADJUSTMEN TS : Common E xpenses ; realty taxes , including loca l i mp r ovementrates ; mortgage interest ; rentals ; unmetered public or private uti l ities and fue l where billed to the Uni t and not the Condominium Corpora t ion ; are to be apportioned and allow e d to the day of completion , the day of complet i on itself to be appor t ioned t o the Buyer . There shall be no adjustment for the Se l ler's share of any asse t s or liabi l itie s of the Condom i nium Corporation including any reserve or contingency fund to which Seller may have contributed p rior t o the date of completion . 22. PROPERTY ASS ESSMEN T : T he Buyer and Seller hereby acknowledge that the Province of Ontario has implemented current value assessment and properties may be re - assessed on an annual basis . T he Buyer and Seller agree that no claim wil l be made against the Buyer or Seller, or any Brokerage , Broker or Sa l esperson, for any changes in property tax as a result of a re - asses sment of the Property, save and except any property taxes that accrued prior to the complet i on of this transaction . 23. TIME LIMITS : T ime sha ll in all resp e cts be of the essence hereof provided that the time for doing or completing of any matter provided for herein may be extended or ab ri dged b y a n agreement i n wr i ti ng signed by Selle r and Buyer or by the i r r es pective lawyers who may be specif i cally a u thorized in that regard . 24. T ENDER : Any tender of documents or money hereunder may be made upon Seller or Buyer or their respective lawyers on the day set for completion . Money shall be tendered with funds drawn on a lawyer ' s trust acco un t i n the form of a bank draft, cer t if ied ch eque or wire t ransfer using the Lynx high value payment system as set out a n d prescribed by the Canadian Pa y ments Act (R . 5 . C . , 1985 , c . C - 21 }, as amended from time to time . 25 . FAMILY LAW ACT : Seller warrants tha t spousal consent is not necessary to this transaction under the pr ovisions of the Family Law Act, R . S . O . 1990 unless the spouse of t he S e ller hos executed the consent hereinafter provided . 26 . UFFI : Seller represents and warrants to Buyer that during the time Seller h as owned the Proper ty , Seller has not caused any building on t he Property t o be insulated with insulation containing u re a formaldehyde, and that to the best of Seller's knowledge no bu i lding on the Property con t ai n s or has ever contained in su l a tion that con t ains u r ea formaldehyde . This warranty shall su r vive and not merge on the comp le t i on of this transaction, and i f the building i s port o f o multiple unit building, t his warranty shall only apply to that part of the build i ng which is t he sub j e ct of th i s transaction . 27. LEG AL, ACCOUNTING AND ENVIRONMENTAL ADVICE : The part i es acknowledge that any informat i on provided by the Brokerage is not legal , t ax or environmental advice, and that i t has been r e commended that t he parties obta i n independent professional adv i ce prior to signing this documen t . 28. CONSUMER REPORTS : The Buyer is hereby notified that a consumer report containing credit and/or personal information may be referred to in connection with this transaction . 29. AGREEMENT IN WRITING : I f the re is conflict or disc r epancy betwee n any provision added to t his Agreement (includ ing any Schedule attached hereto) and any provision in the standard pre - set portion hereof, the added provision shall supersede the standard pre - set provision ta the extent of suc h conflic t or d i screpancy . This Agre e men t incl ud i n g any Sche d ule attached hereto, shall cons t itute t he entire Agreement between Buye r and Se lle r . Ther e is no rep r esentation, warran ty , colla ter al agreement or condition, which affects this Agreement o t her than as expressed herein . For the purpos es of th i s Agreement, Seller means vendo r a nd B u yer m e ans purchaser . T his Agreement shal l be read with all changes of gender or number requi r ed by the context . 30 . ELECTRONIC SIGN ATURES : T he part ies h ereto co n sent and agree to the u se of electronic s i gna t u res pu r suant to the Ele ctron ic Commerce Act, 2000 , S . O . 2000 , c 17 as amen d ed from time to time with resp e c t to th i s Agreement and any other d oc u ments r es pecting t h is transac t ion . 31. TIME AND DATE : Any reference t o a time and date in this Agreement shall mea n the time and date where the Property is loca t ed. INITIALS OF BUYER(S): INITIALS OF SELLER(S): rt] T h e tr ad emarks REALTOR ®, REALTOR S® , MLS®, M u l tip l e listing Services® and assoc ia t ed l og os ore owned o r contro ll ed by , L . . D ,,, T h e Canadian Rea l Estate Associat io n jCREAJ and identify t he real estate profess i ona l s who are membe r s of CREA and the • qua li ty of services they prov i de. Use d un der licens e. © 2 0 23 , Ontario Rea l Estate Associat i on (" OREA " J . A ll righls reserved. T h is f orm wos deve lo ped by OREA for the u se and rep roduction by its members and lic e ns ees only. Any otfier use or r e production is prohibited ex cept with pnor written cons ent of OREA. Do no t alter w h en printing or reproducing the standard pre - sel portion. ORE A bears n o l iabi li ty tor your use of this for m. Fo r m 501 Revised 2023 Page 4 of 6
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12/01/2023 12/01/202
D i giSign Ve r i fied - Od090e3 a - 2 f 97 - 4 1 ae - 895d - 73 d df9a0d 4 2a9 Schedule A Agreement of Purchase and Sale Condominium Resale - Commercial . · • = : · • : : . TREB A On tar io R ea l Esta t e A ss o ciation Form 501 for use in the Province of Ontario C O M M ERC I AL N ETWOR K This Schedule i s attached to and forms part of the Agreemen t o f Purchase a nd Sale betw e en: BU YER : .. T . I . ElJ;:'.l' . '. . S. .. PP . R. . 1'1<3 . . . C:1JI,,'.l':U.R.A.I,, .. _r,i;: y i;:_L . C> P,z.ill:1'1T, . } 1'1 . C . : ..... . . . . . . . . . . . . . . ... . . . . ..... .... . . . . . .. .. .. ...... ... . . .. . . . . . . .. .. .............. . . . . ... ... . .... ..., and for the pu r c hase and sale of .. . o . . () . P . t Ea!E:! E:!s ... l \ " E:! . .. E. , ! . :i;:2s . · . ' . a,r.J<:11 . aJII ! . .. ()111 . . I,, :R .. ()X - !5 . . .. ..... .... .. . . . . . . ... ... . . . . .... .. . . . . .. . . . .... . ... . . . ..... . . ... .. . . . ... . .. .. .. . . ...... .... .. .... datedtheJO .. ..... . . ... . .. day o f . c:>:'f. Ea!Illl:) . e r, ...... . . . . . . . .. . . . . . . .. .. . .. .. .. . .. . . . . .... . . . . . . , 20 2 } .. .... . Buyer agrees to p ay the balance as f ol l ows : Reminder o f page intenti o nally left blank T his form must b e initial l ed by all parties to the Agreement of Purchase and Sale . IN I TIA L S O F BUYER(S : ) INITIALS OF SE L LER( S ): rn The trademarks REALTOR®, RE ALTO RS ®, M LS ® , M ult iple Li s t in g Services® and associa ted l ogos ore owned or con t rolled by , . , Y , 3 The Canadian Rea l Estate Association ICR E AJ and ide n ti fy the r ea l e sta t e pro f e ssion a ls who ore members o f CREA and t he • ..,. , qua l ity of services t h ey p r ov ide. Used und er l i ce n se. © 2023 , Ontario Re(JI Es t a t e Association {"O REA " ) . A ll r i g htsreserved . This f orm was dev e l op e d by OREA f or the use and re pr oduction b y its members a nd li censees on l y. Any other use or re proOuction is proh i bited except with prior writte n consent of OREA Do not a l ter when pr i nting or reproducing the standard pre - s et porfton . OR E A bears no l iabi l ity For your use of this form. F or m 5 0 1 Re vi s ed 2023 Page 6 o f 6
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D i giSign Ve r i fi ed - O d 09 0 e 3a - 2f97 - 41ae - 8 9 5d - 73ddf9a0d 4 2a9 Form 501 for use in the Province o f Ontar i o Schedule A Agreemen t of Purchase and Sale Condominium Resale - Comm e r cial ll!A Ont a ri o R ea l E sta t e A ss oci a tion T hi s S chedule is a ttac he d t o and fo r m s part o f t he Agreement of Pur c hase and S a le b e tw e en: 1) / M Ti be t ' s S p r i ng Cultural De ve l o p omen t I n c . B UY ER: .. . ,and S ELL ER: V i :, io ll :":Y. . E . " " t ' . i . o n Te c,ll · no· l " 9.Y . . !l c l , d . i ll !,1 '3 Grou p . . r 11c . : . .. ., . . .. . .. . . .. . E · 2 s . . ... ... .. . ........ . . . .... .. ........... . ....... . .... . 1) / M Markham fo r the p ur c h a s e an d s ale of . _ 4 . 3 0 . . . ... . . . s . t . ee les Ave 2 0 · .. . . .. .. . . .... .. . . . . . . .. .. .. .. . . . .. .. .. . . . . .. . .. . , .... . . .. . . .. .. da ted the . " :LJ / M . . . day of . . . . ... . .. . . . ... . . . . . .. ... .. . r:ro v e mber . .. . .. . . .. . .. . . , 2 0 . 2 } Bu y e r a g ree s t o pay th e bala nce a s foll o w s: The Buyer agrees to pay the balance of the purchase price, subject to adjustments, to the seller on the completion of this transaction, with funds drawn on a lawyer trust a c count in the form of a bank draft,certifi e d cheque or wire transfer using the large va l ue transfer system. The Se l ler agrees to discharge any m o rtgage or liens or other encumbrances registered against the property on or before closing at his own expense, on or before closing. The Buyer knowledge that the chattels and fixtures as not included in the Agreement of purchase and sale . The Buyer agrees to accept e x isting lease agreement a l l term left. This Offer is c onditional upon the Buyer's S o licitor review the following Condominium Corporation's D o cumentati o n : a ) Status Certificate and attachments, and finding all of the foregoing satisfactory in the Buyer ' s Solicitor ' s s o le and absolute discretion . Unless the buyer gives notice in writing delivered to the Seller no later than Five(S) banking days (excluding Saturday, Sunday and Statutory Holidays) after receipt by the Buyer ' s solicitor of the foregoing documentation, that this c o ndition is fulfilled, this o ffer s hall be null and void and t he deposit shall be r e tu r ned to the buyer in full without deduction . The Seller agrees to request and deliver to the Bu y er ' s Solicitor, at the Seller's expense, the foregoing documentation within twenty(20 ) days after acceptance of this Agreement . This c o nditi o n is included for the benefit f o r the Buyer and maybe waived at the Buyer ' s sole option by the notice in writing to the seller within the time period stated herein rranging satis ;i.s a st .. aiueGI lay then become nul l inter 7 st ƒ ?, n. V(/ The Seller represents and warrants that during the time the Se l ler has owned the property, the use of the property and building and structures thereon has not been for the growth or manufacture of any il l egal substances, and that to the best of the Se l ler ' s knowledge and be l ief, the use of the property and the buildings and structures thereon has never been for the growth or manufacture of illegal substances . This warranty shall survive and not merge on the completion of this transaction . The Se l ler represents and warrants that during the time the Sell e r has owned the p r operty , the use of the property and building and structures thereon, there have been no deaths, suicides, or murders on the property a t any time, and further to the best of the S eller's knowledge and belief that there are no neighborhood conditions that could negatively affect the buyers use and enjoyment or perceived value of the property. This warranty shall survi v e and not merge on the completion of this transaction. Thi s f o rm must be i n it ialled by all par t ies to th e Ag r e emen t of Purchase an d Sole . INITIALS OF BUYER(S): C0 m Th e trod e m o rks R E ALTO R ® , R E AL T ORS® , ML S® , Multip l e Us t ing Se r v i ces® ond ossociated l ogos or e own e d or c ontro lle d by , l , d , ,JI Th e Cono d io . n Real E s t at e Associati o n (CREA) and i den t i fy t h e real estate p r of es s i o n a l s who ore membe r s o f CREA and the ' ..... . qua l i ty o f s e rvic e s th e y p r ovid e . Us e d und e r l ic e n e © 2023, Onta r io Rea l Estate A s sociatio n ! " O REA " ) . All right s r ese r v e d. This f or m was deve l oped by O RE A for th e us e and rep r oduct ion by i ts mem ers and licensees only. Any ot h e r use o r r e produc t ion i s prohibit e d e cept w i th p no r written consent of OREA. Do not a l te r when p r i nting or repro d ucing t h e s tandard p r e - . - se t por tion . O R E A b e a rs no l iabi l i ty for you r u s e o f this form . INITIALS OF SELLER(S) : Form 501 R e vised 20 23 Pa g e 6 of 6
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EXHIBIT 8.1
SUBSIDIARIES
The following list sets forth the subsidiaries of the Company as of March 31, 2024:
| Name of Entity | Place of Incorporation | |
| Visionary Education Service and Management Inc. (“VESM”) | Richmond Hill, Ontario | |
| Farvision Career Education Group Inc “Formerly known as “Farvision Education Group Inc.” (“Farvision Education”) | Toronto, Ontario | |
| NeoCanaan Investment Corporation (“NeoCanaan Investment”) | Richmond Hill, Ontario | |
| Canada Animation Industry Group Inc. (“Animation Group”)(1) | Richmond Hill, Ontario | |
| Toronto ESchool Ltd. (“Toronto ESchool”)(2) | Toronto, Ontario | |
| Maple Toronto Art Academy Inc. (“Art Academy”)(3) | Toronto, Ontario | |
| 7621531 Canada Inc. (“Conbridge College”)(3) | Toronto, Ontario | |
| Max the Mutt Animation Inc. (“MTM Animation”)(3) | Toronto, Ontario | |
| 13995191 Canada Inc. (“13995191”) | Toronto, Ontario | |
| 13995291 Canada Inc. (“13995291”) | Toronto, Ontario | |
| Bethune Great Health Investment Management Inc. (“Bethune”) | Toronto, Ontario | |
| Shanghai Yuanjian Trillion Commercial Group Co., Ltd. (“Shanghai Yuanjian”) | Shanghai, China | |
| Shanghai Airong Hundred Billion Technology Development Group Co., Ltd.(4) | Shanghai, China | |
| Shanghai Yulankang Health Technology Group Co., Ltd. (“Shanghai Yulankang”)(5) | Shanghai, China | |
| Shanghai Yuanjian Shulian Education Technology Co., Ltd. | Shanghai, China | |
| Shanghai Yuanjian Cailai Consulting Management Co., Ltd.(4) | Shanghai, China | |
| Changle Shuang (Guangzhou) Health Industry Investment Co., Ltd.(6) | Guangdong, China | |
| Yulankang (Huai'an) Health Management Co., Ltd.(4) | Jiangsu, China | |
| Visionary Asia SDN. BHD | Kuala Lumpur, Malaysia | |
| Visionary International SDN. BHD | Kuala Lumpur, Malaysia | |
| Visionary Biotechnology Group Inc.(7) | Toronto, Ontario |
(1) 100% owned by NeoCanaan Investment
(2) 70% owned by Farvision Education
(3) 80% owned by Farvision Education
(4) 80% by Shanghai Yuanjian
(5) 56% by Shanghai Yuanjian
(6) 51% by Shanghai Yuanjian
(7) 55% stake held by the Company in a joint venture
EXHIBIT 12.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO
EXCHANGE ACT RULE 13A-14(A)/15D-14(A)
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Zhong Chen, certify that:
| 1. | I have reviewed this Annual Report on Form 20-F of Visionary Holdings Inc. |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
| 4. | The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and |
| 5. | The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
Date: August 15, 2024
| By: | /s/ Zhong Chen |
| Name: | Zhong Chen |
| Title: |
Chief Executive Officer (Principal Executive Officer) |
EXHIBIT 12.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO
EXCHANGE ACT RULE 13A-14(A)/15D-14(A)
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Zhong Chen, certify that:
| 1. | I have reviewed this Annual Report on Form 20-F of Visionary Holdings Inc. |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
| 4. | The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and |
| 5. | The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
Date: August 15, 2024
| By: | /s/ Zhong Chen |
| Name: | Zhong Chen |
| Title: |
Chief Financial Officer (Principal Financial Officer) |
EXHIBIT 13.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Visionary Holdings Inc. (the “Company”) on Form 20-F for the year ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to her knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. |
Date: August 15, 2024
| By: | /s/ Zhong Chen |
| Name: | Zhong Chen |
| Title: |
Chief Executive Officer (Principal Executive Officer) |
EXHIBIT 13.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Visionary Holdings Inc. (the “Company”) on Form 20-F for the year ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to her knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. |
Date: August 15, 2024
| By: | /s/ Zhong Chen |
| Name: | Zhong Chen |
| Title: |
Chief Financial Officer (Principal Financial Officer) |