Visionary Education Technology Holdings Group Inc. Reports Fiscal Year 2022 Financial Results

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Visionary Education Technology Holdings Group Inc.

Aug 12, 2022, 20:30 ET

MARKHAM, Canada, August 12, 2022 /PRNewswire/ -- Visionary Education Technology Holdings Group Inc. (the "Company") (Nasdaq: VEDU), a private education provider located in Canada that offers high-quality education resources to students around the globe, today announced its financial results for the fiscal year ended March 31, 2022.

Fiscal Year 2022 Financial Highlights

Revenues was $5.2 million in fiscal year 2022, compared to $7.7 million in fiscal year 2021.
Gross profit margin was 49.8% in fiscal year 2022, compared to 55.2% in fiscal year 2021.
Income from operations was $1.0 million in fiscal year 2022, compared to $3.7 million in fiscal year 2021.
Net loss was $56,474 in fiscal year 2022, compared to net income of $2,913,646 in fiscal year 2021.

Mr. David Xu, Chief Executive Officer and Chief Operating Officer of the Company, commented, "In fiscal year 2022, we have invested and consolidated our education resources and built a solid foundation for our future development. On May 17, 2022, we completed our initial public offering, which was an important milestone in the history of the Company. Becoming a publicly traded company provides us with more opportunities to continue developing our education resources. We plan to invest in more profitable and higher growth business areas such as high school education for international students, integrated platform of technology and education, online standardized artificial intelligence driven central platforms and offline personalized education services which are expected to drive exponential tuition revenue growth in the near future. In addition, we intend to close the purchase of the properties at 95-105 Moatfield Drive, Toronto this month. This education facility is expected to generate about $10 million annual rent revenue. Looking forward, we will continue to provide high-quality education to students, execute our strategic initiatives and expand our market share. We believe our organic growth and strategic development will position us well for the future and we are confident in creating long-term values and returns for our shareholders."

Fiscal Year 2022 Financial Results

Revenues

Revenues decreased by $2.5 million, or 32.1%, to approximately $5.2 million in fiscal year 2022 from approximately $7.7 million in fiscal year 2021. The decrease in revenue was principally because the Company's sales of vacant land decreased $4.3 million, partially offset by increased rent revenue of $1.6 million in fiscal year 2022.

	For the Year Ended March 31,
	2022			2021
($)	Revenue	Cost of Revenue	Gross Margin	Revenue	Cost of Revenue	Gross Margin
Rent	2,298,198	1,322,188	42.5 %	674,898	256,981	61.9 %
Tuition	669,442	319,913	52.2 %	358,241	124,762	65.2 %
Construction	8,117	4,663	42.6 %	78,219	19,529	75.0 %
Vacant land	2,272,704	990,261	56.4 %	6,613,863	3,058,175	53.8 %
Total	5,248,461	2,637,025	49.8 %	7,725,221	3,459,447	55.2 %

Revenue from rent increased by $1.6 million, or 240.5%, to $2.3 in fiscal year 2022 from $0.7 million in fiscal year 2021. The increase in rent revenue was mainly due to the revenue generated from two office buildings purchased by the Company on April 15, 2021. These two office buildings are located in Downtown Markham, Ontario, Canada. In addition, rent revenue from the Company's facility located in 41 Metropolitan Road, Toronto, Ontario also increased due to an increase in the number of tenants as compared to fiscal year 2021.

Revenue from tuition income increased by $0.3 million, or 86.9%, to $0.7 million in fiscal year 2022 from $0.4 million in fiscal year 2021. The increase in revenue was mainly from newly acquired Max the Mutt College of Animation, a private career college that offers diplomas in Classical & Computer Animation & Production, Illustration & Storytelling for Sequential Arts, and Concept Art for Animation & Video Games, and Lowell Academy, a private high school that offers high school education. Revenue from the Company's online learning platform, Toronto ESchool remained stable.

Revenue from the decoration and construction business decreased by $70,102, or 89.6%, to $8,117 in fiscal year 2022 from $78,219 in fiscal year 2021. The decrease was mainly due to the negative impact caused by the COVID-19 pandemic and less focus on this business segment. The Company had no significant income from its construction business in fiscal year 2022.

The Company sold 8 lots of vacant land in fiscal year 2022 and generated revenue of approximately $2.3 million. The Company sold 19 lots of vacant land in fiscal year 2021 and generated revenue of approximately $6.6 million. As of March 31, 2022, the Company had no vacant land for future sales.

Gross Profit and Gross Margin

Total cost of revenue decreased by $0.8 million to $2.6 million in fiscal year 2022, from $3.4 million in fiscal year 2021.

Gross profit decreased by $1.7 million, or 5.5%, to $2.6 million in fiscal year 2022, from $4.3 million in fiscal year 2021. Overall gross margin was 49.8% in fiscal year 2022, compared to 55.2% in fiscal year 2021.

Gross margins for rent business, education business, construction business and sales of vacant land were 42.5%, 52.2%, 42.6% and 56.4%, respectively, for fiscal year 2022, compared to 61.9%, 65.2%, 75.0% and 53.8%, respectively, for fiscal year 2021.

General and Administrative Expenses

General and administrative expenses increased by $305,054, or 230.7%, to $437,278 in fiscal year 2022 from $132,224 in fiscal year 2021. The increase was mainly because the Company recorded arrear interest of $172,993 in fiscal year 2022 due to the late filing of tax returns. In addition, there was increased amortization and utility expenses from the Company's newly purchased two office buildings in downtown Markham.

Professional Fees

Professional fees increased by $139,119, or 65.8%, to $350,636 in fiscal year 2022 from $211,517 in fiscal year 2021. The increase was mainly due to the increased legal fees and accounting fees related to the Company's public offering process.

Salaries and Compensations

Salaries and compensations increased by $599,299, or 310.1%, to $792,546 in fiscal year 2022 from $193,247 in fiscal year 2021. The significant increase was mainly due to the expansion of the Company's educational business and the increased compensation that the Company paid during fiscal year 2022 to attract and retain experienced senior management and professional employees.

Interest Expense, Net

Interest expense increased by $0.8 million, to $0.9 million in fiscal year 2022 from $0.1 million in fiscal year 2021. The significant increase was mainly due to a higher bank loan balance in connection with the purchase of two office buildings located in Downtown Markham, Ontario, Canada. The Company's outstanding bank loan balance was approximately $18.8 million and $6.4 million as of March 31, 2022 and 2021, respectively.

Government Subsidies

In fiscal year 2022, the Company received $490,171 from the Canada Emergency Wage Subsidy program and Canada Emergency Rent Subsidy program. In fiscal year 2021, the Company applied for total loans of $143,136 under the Canada Emergency Business Account (CEBA) program, of which $45,450 is expected to be forgiven. In addition, the Company received $39,207 from the Canada Emergency Wage Subsidy program in fiscal year 2021. The increase of wage subsidy was consistent with the increase of the Company's salary and compensation expenses.

Impairment Expenses

In fiscal year 2022, the Company 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 the Company is 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.

Other income

The Company had other income of $20,709 in fiscal year 2022. In fiscal year 2021, the Company had other income of $245,109, mainly from the one-time sales of personal protective equipment to one Canadian financial institution during the pandemic.

Provision for Income Taxes

Provision for income taxes decreased by $0.7 million, to $0.3 million for fiscal year 2022 from $1.0 million for fiscal year 2021. The decrease was mainly due to the decreased income before income taxes.

Net Income (Loss)

Net loss was $56,474 for fiscal year 2022, as compared to net income of approximately $2.9 million for fiscal year 2021.

Balance Sheet

As of March 31, 2022, the Company had cash of $0.7 million, as compared to $1.2 million as of March 31, 2021.

Cash Flow

Net cash provided by operating cash flow was $6.4 million in fiscal year 2022, compared to $4.4 million for fiscal year 2021.

Net cash used in investing activities was $24.3 million in fiscal year 2022, compared to $3.1 million in fiscal year 2021. The increase in net cash used in investing activities was primarily attributable to the purchase of two office buildings for approximately $16.9 million in downtown Markham, the deposits of approximately $7.2 million paid to acquire the properties located on 95-105 Moatfield Drive, Toronto, as well as the payments made to acquire various private school licenses and Max the Mutt College of Animation.

Net cash provided by financing activities was $17.5 million in fiscal year 2022, compared to net cash used in financing activities of $0.4 million in fiscal year 2021. The increase in net cash provided by financing activities in fiscal year 2022 was primarily attributable to the mortgages the Company obtained from HSBC Bank. In connection with the purchase of the two office buildings, on April 15, 2021, the Company obtained bank loans of $7.2 million (C$9.0 million) and $5.6 million (C$7.0 million) respectively from HSBC Bank.

Recent Development

Initial Public Offering

On May 19, 2022, the Company closed its IPO of 4,250,000 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. Following the closing of the Offering, the Company has a total of 39,250,000 Common Shares issued and outstanding. In connection with the offering, the Company's common shares began trading on the NASDAQ under the symbol "VEDU."

Acquisition of Griggs International Academy China Co. Ltd.

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 offering United States K-12 diploma programs and services of Griggs International Academy USA at four locations in China.. 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. This transaction closed on July 29, 2022.

On July 19, 2022, the Company signed a purchase agreement with the two principal shareholders of Griggs China to purchase their 1,000 shares for a total consideration of $50,000. The two shareholders will retain 10% of the dividend rights of the Company's Griggs Program in exchange for the sale of their ordinary shares, and the Company guaranteed to pay an annual minimum of $20,000 and $10,000, respectively, to the two shareholders as a retainer if no dividend is to be declared. The payment of the retainer commences September 1, 2022 and remains in effect until August 31, 2032. After completing this transaction, the Company will own 100% of Griggs China.

About Visionary Education Technology Holdings Group Inc.

Visionary Education Technology Holdings Group Inc., headquartered in Markham, Canada, is a private education provider located in Canada 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: [email protected]

Ascent Investors Relations LLC
Tina Xiao
President
Phone: +1 917-609-0333
Email: [email protected]

VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP INC.
CONSOLIDATED BALANCE SHEETS
(IN U.S. DOLLARS)

	March 31,		March 31,
	2022		2021
ASSETS
CURRENT ASSETS
Cash	$	741,868	$	1,190,616
Short-term investments		56,021		–
Accounts receivable, net		1,653		183,690
Accounts receivable - related party		–		286,272
Prepaid and other receivable		179,647		81,522
Inventories		–		839,390
Due from related parties		432,676		3,104,042
Loan receivable - current		131,036		–
Related parties loan receivable - current		–		105,898
Total current assets		1,542,901		5,791,430

Restricted cash – non-current		67,821		–
Property, plant and equipment, net		23,240,470		4,469,767
Right of use assets		958,477		35,445
Intangible assets, net		1,082,061		428,061
Acquisition deposits		7,364,241		2,496,790
Goodwill		1,030,399		–
Loan receivable		–		127,232
Deferred offering cost		940,214		–
Related parties loan receivable – non-current		–		318,377
TOTAL ASSETS	$	36,226,584	$	13,667,102

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	$	278,544	$	50,198
Accrued liabilities		1,465,318		120,149
Other tax payable		1,435,045		1,020,329
Due to related parties		7,219,022		1,471,191
Deferred revenue		532,520		201,169
Lease liability - current		211,600		16,150
Bank loans - current		542,264		172,629
Income tax payable		1,598,153		1,116,024
Total current liabilities		13,282,466		4,167,839

Deferred tax liabilities		243,762		33,627
Lease liability, non-current		746,877		19,295
Bank loans, non-current		18,278,316		6,214,428
TOTAL LIABILITIES		32,551,421		10,435,189

Commitments

EQUITY
Common shares, no par value, unlimited shares authorized, 35,000,000 issued and outstanding*		–		–
Additional paid-in capital		665,985		665,985
Retained earnings		2,587,747		2,577,998
Accumulated other comprehensive income		185,179		163,295
Total shareholders' equity attributable to the Company		3,438,911		3,407,278

Noncontrolling interest		236,252		(175,365)
Total shareholders' equity		3,675,163		3,231,913

TOTAL LIABILITIES AND EQUITY	$	36,226,584	$	13,667,102


	*	Retroactively restated for effect of recapitalization

VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP INC.
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(IN U.S. DOLLARS)

	For the Years Ended March 31,
	2022		2021

Revenue – rent	$	2,298,198	$	674,898
Revenue – tuition		669,442		358,241
Revenue – construction		8,117		78,219
Revenue – sales of land		2,272,704		6,613,863
Total Revenues		5,248,461		7,725,221

Cost of revenue – rent		1,322,188		256,981
Cost of revenue – tuition		319,913		124,762
Cost of revenue – construction		4,663		19,529
Cost of revenue – sales of land		990,261		3,058,175
Total cost of revenues		2,637,025		3,459,447

Gross Profit		2,611,436		4,265,774

Operating expenses:
General and administrative expenses		437,278		132,224
Professional fees		350,636		211,517
Salaries		792,546		193,247
Total operating expenses		1,580,460		536,988

Income from operations		1,030,976		3,728,786

Other (expense) income
Interest expense		(906,398)		(141,690)
Impairment loss		(379,165)		–
Government subsidies		490,171		84,657
Other income		20,709		245,019
Total other (expense) income, net		(774,683)		187,986

Income before income taxes		256,293		3,916,772
Provision for income taxes - current		(312,767)		(1,003,126)
Net (loss) income		(56,474)		2,913,646
Less: net loss (income) attributable to noncontrolling interest		66,223		(46,789)
Net income attributable to Visionary Education Technology Holdings Group		9,749		2,866,857

Other comprehensive income:
Foreign currency translation gain		26,333		164,684
Comprehensive (loss) income		(30,141)		3,078,330
Less: comprehensive loss (income) attributable to noncontrolling interest		61,774		(23,626)
Comprehensive income attributable to Visionary Education Technology Holdings Group	$	31,633	$	3,054,704

Earnings Per share
Basic and diluted	$	(0.00)	$	0.08

Weighted Average Shares Outstanding*
Basic and diluted		35,000,000		35,000,000

* Retroactively restated for effect of recapitalization

VISIONARY EDUCATION TECHNOLOGY HOLDINGS GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN U.S. DOLLARS)

	For the Years Ended March 31,
	2022		2021

Cash flows from operating activities:
Net (loss) income	$	(56,474)	$	2,913,646
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		494,729		53,763
Gain recognized on government subsidy		22,883		(45,450)
Impairment loss on intangible assets and goodwill		379,165		–
Changes in operating assets and liabilities:
Accounts receivable		202,741		(174,982)
Accounts receivable from related party		167,550		(272,700)
Inventories		842,346		2,686,597
Prepayments and other current assets		(97,322)		(77,657)
Due from related party		2,114,745		(2,692,545)
Accounts payables		227,370		37,367
Accrued liabilities		854,071		114,453
Other tax payable		406,999		877,215
Deferred revenue		329,113		9,796
Taxes payable		473,607		1,010,214
Net cash provided by operating activities		6,361,523		4,439,717

Cash flows from investing activities:
Acquisition of business		(471,550)		(151,500)
Acquisition deposit		(17,016,884)		(2,378,418)
Purchase additional shares from NCI		–		(31,808)
Loan advance to related parties		425,770		(377,785)
Refund of land deposit		52,668		–
Short-term investment		(55,860)		–
Loan advance to unrelated parties		(2,979)		(121,200)
Acquisition deposits		(7,215,396)		–
Net cash used in investing activities		(24,284,231)		(3,060,711)

Cash flows from financing activities:
Proceeds from bank loan		85,909		136,350
Proceeds from mortgage		12,768,000		6,060,000
Finance costs on mortgage		(49,928)		(30,300)
Deferred offering costs		(451,049)		–
Repayment of mortgage		(469,921)		(2,565,470)
Proceeds (Repayment) of shareholder advance		5,652,248		(3,995,358)
Net cash provided by (used in) financing activities		17,535,259		(394,778)

Effect of exchange rate changes on cash		6,522		96,528
Net increase (decrease) in cash		(380,927)		1,080,756
Cash and restricted cash, beginning of the year		1,190,616		109,860
Cash and restricted cash, end of the year	$	809,689	$	1,190,616

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for income tax	$	–	$	–
Cash paid for interest	$	906,398	$	117,708