VEDU Visionary Education Technology Holdings Group Inc

TORONTO, Aug. 15, 2023 /PRNewswire/ -- Visionary Education Technology Holdings Group Inc. (the "Company") (NASDAQ:VEDU), a private education provider located in Canada, with subsidiaries in Canada and market partners in China, today announced its financial results for the fiscal year ended March 31, 2023.

Fiscal Year 2023 Financial Highlights

• Revenues was approximately $8.4 million in fiscal year 2023, compared to $5.2 million in fiscal year 2022.
• Gross profit margin was 44.6% in fiscal year 2023, compared to 49.8% in fiscal year 2022.
• Income from operations was $430,785 in fiscal year 2023, compared to $1.0 million in fiscal year 2022.
• Net loss was $3,572,108 in fiscal year 2023, compared to net loss of $56,474 in fiscal year 2022.

Fiscal Year 2023 Financial Results

Revenues

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 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.

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.

Gross profit and Gross Margin

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.

General and administrative 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

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

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

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 2^nd mortgages with principal balance of 6.7 million and increased mortgage interest rate in fiscal 2023.

Government subsidies

We received $109,723 and $490,171 from the Canada Emergency Wage Subsidy program and Canada Emergency Rent Subsidy program in fiscal 2023 and 2022, respectively.

Impairment expenses

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. 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. There was no convertible note or corresponding changes in valuation in fiscal 2022.

Other income

We had other income of $23,605 and $20,709 in fiscal 2023 and 2022, respectively, mainly from referral commissions.

Loss before income taxes

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 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.

Net income (loss)

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.

Balance Sheet

The Company had cash balance of $651,490 as of March 31, 2023 ($741,868 as of March 31, 2022).

Cash Flow

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.

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.

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 2^nd mortgage is secured by the two office buildings and also personally guaranteed by our controlling shareholder Ms. Zhou. Due to 2^nd 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.

Recent Development

On June 22, 2023, Visionary Education Technology Holdings Group 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 July 2023, the Company received offer 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 May 24, 2022, the Company entered a purchase agreement to purchase a property in New York State for a total price of $4.1 million. The Company has made 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. If the Company cannot raise enough funding to close the property, Ms. Zhou will refund the deposit amount to the Company.

About Visionary Education Technology Holdings Group Inc.

Visionary Education Technology Holdings Group Inc., headquartered in Toronto, Canada, is a private education provider located in Canada, with subsidiaries in Canada and market partners in China, that offers high-quality education resources to students around the globe. The Company aims 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. As a fully integrated provider of educational programs and services in Canada, the Company has been serving and will continue to serve both Canadian and international students. For more information, visit the Company's website at https://ir.visiongroupca.com/.

Forward-Looking Statements

All statements other than statements of historical fact in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company's current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as "believes," "expects," "anticipates," "estimates," "intends," "would," "continue," "should," "may," or similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and in its other filings with the SEC.

For more information, please contact:

Visionary Education Technology Holdings Group Inc.
Investor Relations Department
Email: ir@farvision.ca

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SOURCE Visionary Education Technology Holdings Group Inc.