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 contain 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."
| 16 |
Results of Operations
For the Years Ended March 31, 2025, 2024 and 2023
The following table summarizes the results of our operations during the fiscal years ended March 31, 2025 and 2024, respectively, and provides information regarding the dollar and percentage increase or (decrease) comparing fiscal 2025 against fiscal 2024.
For the Years Ended March 31,
| ||||||||||||||||||||||||
2025
|
2024
| |||||||||||||||||||||||
Amount
|
As %
of
Sales
|
Amount
|
As %
of
Sales
|
Amount
Increase
(Decrease)
|
Percentage
Increase
(Decrease)
| |||||||||||||||||||
Sales
|
$
|
5,044,297
|
100.0
|
%
|
$
|
9,380,985
|
100.0
|
%
|
$
|
(4,336,688
|
)
|
(46.2
|
)%
| |||||||||||
Cost of sales
|
3,631,578
|
72.0
|
%
|
6,841,136
|
72.9
|
%
|
(3,209,558
|
)
|
(46.9
|
)%
| ||||||||||||||
Gross profit
|
1,412,719
|
28.0
|
%
|
2,539,849
|
27.1
|
%
|
(1,127,130
|
)
|
(44.4
|
)%
| ||||||||||||||
Operating expenses
| ||||||||||||||||||||||||
General and administrative expenses
|
2,190,852
|
43.4
|
%
|
1,148,172
|
12.2
|
%
|
1,042,680
|
90.8
|
%
| |||||||||||||||
Professional fees
|
2,110,047
|
41.8
|
%
|
2,907,676
|
31.0
|
%
|
(797,629
|
)
|
(27.4
|
)%
| ||||||||||||||
Salaries and compensations
|
580,907
|
11.5
|
%
|
812,388
|
8.7
|
%
|
(231,481
|
)
|
(28.5
|
)%
| ||||||||||||||
Total operating expenses
|
4,881,806
|
96.8
|
%
|
4,868,236
|
51.9
|
%
|
13,570
|
0.3
|
%
| |||||||||||||||
(Loss) income from operations
|
(3,469,087
|
)
|
(68.8
|
)%
|
(2,328,387
|
)
|
(24.8
|
)%
|
(1,140,700
|
)
|
49.0
|
%
| ||||||||||||
Other income (expenses)
| ||||||||||||||||||||||||
Interest expense, net
|
(4,951,064
|
)
|
(98.2
|
)%
|
(5,835,449
|
)
|
(62.2
|
)%
|
884,385
|
(15.2
|
)%
| |||||||||||||
Accretion interest
|
-
|
(0.0
|
)%
|
(285,625
|
)
|
(3.0
|
)%
|
285,625
|
(100.0
|
)%
| ||||||||||||||
Impairment loss on property, plant and equipment
|
(4,695,912
|
)
|
(93.1
|
)%
|
(49,784
|
)
|
(0.5
|
)%
|
(4,646,128
|
)
|
9,332.6
|
%
| ||||||||||||
Change in fair value on warrants
|
(1,835,817
|
)
|
(36.4
|
)%
|
1,536,494
|
16.4
|
%
|
(3,372,311
|
)
|
(219.5
|
)%
| |||||||||||||
Change in fair value on convertible debenture
|
(329,949
|
)
|
(6.5
|
)%
|
367,663
|
3.9
|
%
|
(697,612
|
)
|
(189.7
|
)%
| |||||||||||||
Gain on disposal of properties
|
-
|
0.0
|
%
|
8,614,079
|
91.8
|
%
|
(8,614,079
|
)
|
(100.0
|
)%
| ||||||||||||||
Loss on acquisition deposit
|
-
|
0.0
|
%
|
(336,892
|
)
|
(3.6
|
)%
|
336,892
|
(100.0
|
)%
| ||||||||||||||
Loss on disposal of subsidiaries
|
(368,608
|
)
|
(7.3
|
)%
|
(163,405
|
)
|
(1.7
|
)%
|
(205,203
|
)
|
125.6
|
%
| ||||||||||||
Other income
|
4,986
|
0.1
|
%
|
22,764
|
0.2
|
%
|
(17,778
|
)
|
(78.1
|
)%
| ||||||||||||||
Total other expenses
|
(12,176,364
|
)
|
(241.4
|
)%
|
3,869,845
|
41.3
|
%
|
(16,046,209
|
)
|
(414.6
|
)%
| |||||||||||||
(Loss) income before income taxes
|
(15,645,451
|
)
|
(310.2
|
)%
|
1,541,458
|
16.4
|
%
|
(17,186,909
|
)
|
(1,115.0
|
)%
| |||||||||||||
(Provision) credit for income taxes
|
(100,902
|
)
|
(2.0
|
)%
|
(574,209
|
)
|
(6.1
|
)%
|
473,307
|
82.4
|
%
| |||||||||||||
Net (loss) income
|
$
|
(15,746,353
|
)
|
(312.2
|
)%
|
967,249
|
10.3
|
%
|
(16,713,602
|
)
|
(1,728.0
|
)%
| ||||||||||||
| 17 |
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 on property, plant and equipment
|
(49,784
|
)
|
(0.5
|
)%
|
-
|
-
|
(49,784
|
)
|
N/A
| |||||||||||||||
Change in fair value on warrants
|
1,536,494
|
16.4
|
%
|
(1,565,570
|
)
|
(18.6
|
)%
|
3,102,064
|
(198.1
|
)%
| ||||||||||||||
Change in fair value on convertible debenture
|
367,663
|
3.9
|
%
|
(157,010
|
)
|
(1.9
|
)%
|
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
|
)%
|
8,734,602
|
(179.5
|
)%
| ||||||||||||||
Income (loss) before income taxes
|
1,541,458
|
16.4
|
%
|
(4,433,972
|
)
|
(52.6
|
)%
|
5,975,430
|
(134.8
|
)%
| ||||||||||||||
(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
|
)%
|
4,539,357
|
(127.1
|
)%
| |||||||||||||
Revenues
Revenues decreased by $4.3 million, or 46.2%, to approximately $5.0 million in fiscal 2025 from approximately $9.4 million in fiscal 2024. The decrease in revenue was principally due to decrease of rent revenue of $5.2 million in fiscal 2025, with a stable tuition revenue in fiscal 2025. In fiscal 2025, the Company had $1.1 million revenue generated from sale of products.
| 18 |
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.
Revenue by Type
For the Year Ended March 31,
| ||||||||||||||||||||||||
2025
|
2024
| |||||||||||||||||||||||
Revenue category
|
Revenue
|
% of total
Revenue
|
Revenue
|
% of total
Revenue
|
Amount
Increase
(Decrease)
|
Percentage
Increase
(Decrease)
| ||||||||||||||||||
Rent revenue
|
$
|
2,796,853
|
55.4
|
%
|
$
|
8,019,186
|
85.5
|
%
|
$
|
(5,222,333
|
)
|
(65.1
|
)%
| |||||||||||
Tuition revenue
|
1,184,355
|
23.5
|
%
|
1,361,799
|
14.5
|
%
|
(177,444
|
)
|
(13.0
|
)%
| ||||||||||||||
Sales of products
|
1,063,089
|
21.1
|
%
|
-
|
-
|
%
|
1,063,089
|
N/A
| ||||||||||||||||
Total
|
$
|
5,044,297
|
100.0
|
%
|
$
|
9,380,985
|
100.0
|
%
|
$
|
(4,336,688
|
)
|
(46.2
|
)%
| |||||||||||
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
|
%
| |||||||||||||||
Total
|
$
|
9,380,985
|
100.0
|
%
|
$
|
8,432,511
|
100.0
|
%
|
$
|
948,474
|
11.2
|
%
| ||||||||||||
Rent revenue
Revenue from rent decreased by $5.2 million, or 65.1%, from $8.0 million in fiscal 2024 to $2.8 million in fiscal 2025. The decrease in rent revenue was mainly due to 1) two subsidiaries which hold two rental office buildings have been disposed to third parties in December 2024, and only 5 months rental income was recorded by the Company, and 2) two office buildings located at 95 and 105 Moatfield have been taken over by the receivership on August 27, 2024 and only 5 months rental income was recorded by the Company.
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 from other subsidiaries generally decreased in fiscal 2024 due to economic downward post to pandemic.
| 19 |
Tuition revenue
Revenue from tuition income decreased by $0.2 million, or 13.0%, from $1.4 million in fiscal 2024 to $1.2 million in fiscal 2025. The total tuition income was slightly decreased for fiscal 2025. However, the tuition income from Toronto ESchool increased by $0.1 million in fiscal 2025, and the tuition income from Max the Mut College of Animation ("MTM") decreased by $0.3 million in fiscal 2025, and tuition revenue from other educational subsidiaries, including Lowell Academy, Toronto Art Academy and Conbridge are all decreased slightly in fiscal 2025. The decrease of tuition revenue from MTM was mainly due to decrease of student's numbers consistent with the strict international student policy in Canada.
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 Animation ("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.
For our subsidiary Max the Mutt College of Animation, the college had total enrollment of 125 students in 2025, which includes 89 domestic students and 36 international students. 134 students in 2024, which includes 43 domestic students and 91 international students. Benefit from the reputation over its 27 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 2026.
The number of students enrolled in our online learning platform in Toronto ESchool was 360, 313, and 357 for fiscal 2025, fiscal 2024 and fiscal 2023, respectively. These students enrolled in a total of 500 courses, 424 courses, and 504 courses in fiscal 2025, fiscal 2024 and fiscal 2023, respectively. The average fee for each course was $795, $735, and $584 for fiscal 2025, fiscal 2024 and fiscal 2023, respectively.
Sales of products
We purchase and sell a variety of health and wellness nutritional products via one of subsidiary at Guangdong China. These products are distributed exclusively within China through wholesale distributors, physical retail stores, and official online channels. In fiscal year 2025, we generated approximately $1.1 million revenue from this new business line.
Gross profit
Our gross profit decreased by $1.1 million, or 44.4%, to $1.4 million in fiscal 2025 from $2.5 million in fiscal 2024. Gross margin was 28.0% in fiscal 2025, as compared with 27.1% in fiscal 2024. The increase of 0.9% in the gross profit margin was primarily attributable to the higher (2.3%) gross profit margin for our education service segment due to the increase of efficiency of the operation and teaching system. Also, the gross profit margin for our new business segment of sales of products is much lower than other segments because of the nature of business. The gross profit margin for rental business is consistent with prior years. The gross profit margin for education service income is increased by 2.3% due to lower staffing costs.
Our gross profit decreased by $1.2 million, or 32.5%, to $2.5 million in fiscal 2024 from $3.8 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.
| 20 |
Our cost and gross profit by revenue types are as follows:
For the year ended March 31, 2025
|
For the year ended March 31, 2024
| ||||||||||||||||||||||||||||||||||||
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
|
$
|
2,191,587
|
$
|
605,266
|
21.6
|
%
|
$
|
6,325,094
|
$
|
1,694,092
|
21.1
|
%
|
$
|
(4,133,507
|
)
|
$
|
(1,088,826
|
)
|
0.5
|
%
| |||||||||||||||||
Education business
|
421,049
|
763,306
|
64.4
|
%
|
516,042
|
845,757
|
62.1
|
%
|
(94,993
|
)
|
(82,451
|
)
|
2.3
|
%
| |||||||||||||||||||||||
Sale of products
|
1,018,942
|
44,147
|
4.2
|
%
|
-
|
-
|
-
|
1,018,942
|
44,147
|
4.2
|
%
| ||||||||||||||||||||||||||
Total
|
$
|
3,631,578
|
$
|
1,412,719
|
28.0
|
%
|
$
|
6,841,136
|
$
|
2,539,849
|
27.1
|
%
|
$
|
(3,209,558
|
)
|
$
|
(1,127,130
|
)
|
0.9
|
%
| |||||||||||||||||
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
|
)%
| ||||||||||||||||||
Cost of revenue for our rental business decreased by $4.1 million from $6.3 million in fiscal 2024 to $2.2 million in fiscal 2025. Gross margin slightly increased from 21.1% in fiscal 2024 to 21.6% in fiscal 2025, but the gross margin of rental business is consistent. The decrease of cost of revenue is consistent with the decrease of the revenue.
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 education program decreased from $516,042 in fiscal 2024 to $421,049 in fiscal 2025, and gross profit decreased from $845,757 in fiscal 2024 to $763,306 in fiscal 2025. Our gross margin increased from 62.1% in fiscal 2024 to 64.4% in fiscal 2025. The increase in gross margin was mainly due to sharing of staffing costs among different subsidiaries. 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.
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 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.
During the year, we launched a new business segment focused on the distribution of health and wellness nutritional products. This segment generated cost of sales of approximately $1.0 million and delivered a gross margin of 4.2% for the period. The comparatively low gross margin is consistent with the inherent economics of the nutritional product distribution industry, which typically operates on high-volume, low-margin models driven by competitive pricing, standardized product offerings, and limited differentiation in the wholesale and retail channels. As the segment remains in its early stage, margins also reflect limited scale efficiencies and initial market-entry pricing strategies. Management expects margin performance to improve gradually as the Company expands its product portfolio, strengthens supplier relationships, and increases sales volumes.
| 21 |
General and administrative expenses
Our general and administrative expenses primarily include office expenses, travel expenses, commission expenses, insurance expenses, and depreciation and amortization expenses. General and administrative expenses increased by $1,042,680, or 90.8%, from $1,148,172 in fiscal 2024 to $2,190,852 in fiscal 2025. The increase was mainly due to an increase of $1.5 million on amortization (i) derecognized two subsidiaries with two rental buildings to third parties in December 2024, and (ii) the take over by a receivership for two offices rental properties in August 2024 and 7 months amortization expenses (approximately $1.1 million) were recorded in general and administrative expenses instead of cost of rental income since the receivership take over. The Company has been consistently implementing initiatives to reduce its general and administrative expenses as part of its broader strategy to streamline operations and improve profitability. Throughout the period, management undertook targeted cost-cutting measures, including headcount optimization, renegotiation of vendor contracts, tighter discretionary-spending controls, and consolidation of non-core functions. Our general and administrative expenses represented 43.4% and 12.2% of our total revenue for fiscal 2025 and 2024, respectively.
Our general and administrative expenses primarily include office expenses, travel expenses, commission expenses, 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 the decrease of our office expenses, travel expenses, commission expense and insurance, although there was an increase of $1.1 million on amortization (i) from two buildings transferred from assets held for sales to used property 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. The increase of amortization was offset by our general and administrative expenses represented 12.2% and 14.6% of our total revenue for fiscal 2024 and 2023, respectively.
Professional fees
Our professional fees decreased by $797,629, or 27.4%, from $2,907,676 in fiscal 2024 to $2,110,047 in fiscal 2025, representing 41.8% and 31.0% of our total revenue for fiscal 2025 and fiscal 2024, respectively. The decrease was mainly due to a total of $1.4 million consulting fee settled by our common shares in fiscal 2025 and 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 $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.
Salaries and compensations
Our salaries and compensations decreased by $231,481 or 28.5%, from $812,388 in fiscal 2024 to $580,907 in fiscal 2025, representing 11.5% and 8.7% of our total revenue for fiscal 2025 and 2024, 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 decreased by $324,288 or 28.5%, from $1,136,676 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.
Interest expense, net
Our interest expense decreased by $884,385, from $5.8 million in fiscal 2024 to $5.0 million in fiscal 2025. The decrease was mainly due to derecognize two subsidiaries with two rental buildings to third parties in December 2024 and no interest expenses to be paid on these two buildings since January 2025.
Our interest expense increased by $2.9 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 2
nd
mortgage with principal balance of $6.7 million in the middle of fiscal 2023.
| 22 |
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 2025, we recorded impairment loss of $4,695,912 for the property and equipment at 13995291 Canada due to the receivership on 95-105 Moatfield Drive on August 27, 2024.
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.
During fiscal 2025, all outstanding Series A warrants were converted into common shares in accordance with their contractual terms. Upon conversion, the Company remeasured the fair value of the underlying common shares at the conversion date and recognized a non-cash loss of $1,835,817. This loss reflects the difference between the carrying amount of the warrants prior to conversion and the fair value of the common shares issued.
Loss on convertible debenture valuation
In fiscal 2025, we recorded loss of $329,949 on change in fair value of a convertible note with a debt component and the embedded derivative components issued in October 2024 and February 2025. In October 2024, approximately 1.0 million convertible notes were arranged with the investors, and in February 2025, approximately 1.5 million convertible notes were arranged. We assessed the fair value of the convertible notes and its embedded derivative components as of March 31, 2025.
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.
Other income
We had other income of $4,986, $22,764 and $23,605 in fiscal 2025, 2024 and 2023, respectively, mainly from interest income.
(Loss) income before income taxes
We had loss before income taxes of approximately $15.6 million in fiscal 2025, as compared to income before income taxes of approximately $1.5 million in fiscal 2024. The decrease of income before income taxes was primarily attributable to a loss of $0.4 million on disposal of two subsidiaries, an impairment loss of $4.7 million, and a loss of $2.2 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 in year 2025.
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 properties, a gain of $1.9 million on fair value assessment on warrants and embedded derivative components with the convertible notes before the conversion, which was partly offset by the increased other expenses as discussed above.
Recovery for current and deferred income taxes
We had $960 provision of current income tax in fiscal 2025 due to losses positions, as compared to no provision of current income tax in fiscal 2024 as we had loss before tax. We also had a deferred income tax expense of $99,942 in fiscal 2025.
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, and a deferred income tax recovery of $797,096 in fiscal 2023.
| 23 |
Net (loss) income
We had net loss of $15,746,353 and net income of $967,249 for fiscal 2025 and fiscal 2024 respectively. The decrease of net income was primarily attributable to a gross margin profit of 1.4 million, interest expenses of 5.0 million, a loss of $0.4 million on disposal of two subsidiaries, impairment loss of $4.7 million on property and equipment, loss of $2.2 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 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 properties, gain of $1.9 million on fair value assessment on warrants and embedded derivative components with the convertible notes before the conversion, which was partly offset by the increased other expenses as discussed above.
Cash Flows
For the Years Ended March 31, 2025, 2024 and 2023
The following table sets forth summary of our cash flows for the periods indicated:
For the Years Ended March 31,
| ||||||||||||
2025
|
2024
|
2023
| ||||||||||
Net cash (used in) provided by operating activities
|
$
|
(2,968,384
|
)
|
$
|
(4,103,676
|
)
|
$
|
335,919
| ||||
Net cash provided by (used in) investing activities
|
14,509,784
|
13,078,314
|
(63,413,359
|
)
| ||||||||
Net cash (used in) provided by financing activities
|
(11,306,183
|
)
|
(9,478,590
|
)
|
63,871,642
| |||||||
Effect of exchange rate change on cash
|
(436,454
|
)
|
(14,585
|
)
|
(312,010
|
)
| ||||||
Net (decrease) increase in cash
|
(201,237
|
)
|
(518,537
|
)
|
482,192
| |||||||
Cash and restricted cash, beginning of year
|
773,344
|
1,291,881
|
809,689
| |||||||||
Cash and restricted cash, end of year
|
$
|
572,107
|
$
|
773,344
|
$
|
1,291,881
| ||||||
Operating Activities
Net cash used in operating activities was approximately $3.0 million in fiscal 2025, compared to cash used in operating activities of approximately $4.1 million in fiscal 2024. The decrease in net cash used in operating activities was primarily attributable to the following factors:
ï‚·
|
Prepayments and other current assets decreased by approximately $0.5 million in fiscal 2025, compared with a decrease of approximately $0.9 million in fiscal 2024. The increase was mainly due to the payments made by Visionary USA to start its business in USA in fiscal 2025.
|
ï‚·
|
Deferred revenue decreased by approximately $0.8 million in fiscal 2025 compared with a decrease of approximately $0.4 million in fiscal 2024. The decrease was mainly due to a decrease in student enrollments in fiscal 2024.
|
ï‚·
|
Accounts receivable decreased by approximately $1.1 million in fiscal 2025, compared with a decrease of approximately $0.07 million in fiscal 2024. The decrease was mainly due to higher accounts receivable from our new business segment - sales of products at our Guangdong subsidiary.
|
Plus:
| |
ï‚·
|
We had net loss of $4.8 million in fiscal 2025, after the adjustments of all non-cash items, compared to a net loss of $3.7 million in fiscal 2024, after the adjustments of all non-cash items.
|
Net cash used in operating activities was approximately $4.1 million in fiscal 2024, compared to net 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:
ï‚·
|
Prepayments and other current assets decreased by approximately $0.9 million in fiscal 2024, compared with a decrease 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.
|
ï‚·
|
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:
| |
ï‚·
|
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 $0.8 million in fiscal 2023, after the adjustments of all non-cash items.
|
| 24 |
Investing Activities
Net cash provided by investing activities was approximately $14.5 million in fiscal 2025, compared to net cash provided by investing activities of $13.1 million in fiscal 2024. The increase in net cash provided by investing activities was primarily attributable to the proceed from disposal of office buildings for approximately $15.1 million, which is partly offset by a net cash outflow on a deposit of long-term investment of $0.2 million and cash transfer to related parties of $0.3 million.
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, which is partly offset by a net cash outflow from the writing off of the deposits of $0.4 million made on a property in New York State, as well as the payments made to acquire a vacant land for approximately $1.3 million.
Financing Activities
Net cash used in financing activities was approximately $11.3 million in fiscal 2025, compared to net cash used in financing activities of approximately $9.5 million in fiscal 2024. The increase in net cash used in financing activities in fiscal 2025 was primarily attributable to recognized mortgages of approximately $13.6 million in connection with the disposal of two subsidiaries in December 2024, partly offset by a net cash inflow from the convertible notes of approximately $2.0 million
.
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 addition, our formerly 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. In May 2023, we settled our convertible notes of $1.5 million with embedded convertible feature by exchange of common stocks. At the same time, we have cash provided by our financing activities. When we converted our Series B warrants by conversion of our common stocks, we obtained subscription proceeds of approximately $1.7 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, 2025, we had outstanding loans totaling approximately $41.4 million from banks in Canada and approximately $4.2 million from private lenders. Ms. Zhou, the formerly 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, 2025, we had cash and cash equivalents of approximately $0.3 million. Our current assets were approximately $3.8 million, and our current liabilities were approximately $58.3 million, including $41.4 million mortgages in default from Bank of China, $4.2 million of a short-term private mortgage, and $6.9 million liabilities from accounts payable and accrued liabilities, which resulted in a negative working capital of $54.5 million. Total shareholders' equity as of March 31, 2025 was approximately $5.2 million.
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 $67.7 million. Total shareholders' equity as of March 31, 2024 was approximately $17.8 million.
| 25 |
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.
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 formerly 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, 2025 and 2024, the details of all bank loans are as follows:
March 31, 
|
March 31,
| |||||||
2025
|
2024
| |||||||
HSBC Bank
|
$
|
-
|
$
|
11,027,234
| ||||
Bank of China ("BOC") (1)
|
41,354,239
|
43,990,600
| ||||||
Private mortgage at 95 Moatfield (2)
|
3,477,500
|
3,693,000
| ||||||
Private mortgage at 200/260 Town Centre - (see note 8)
|
-
|
2,954,400
| ||||||
Private mortgage for Bethune (3)
|
765,050
|
812,460
| ||||||
Less: unamortized financing cost
|
-
|
(54,253
|
)
| |||||
45,596,789
|
62,423,441
| |||||||
Less: current portion of bank loans
|
(45,596,789
|
)
|
(62,423,441
|
)
| ||||
Total
|
$
|
-
|
$
|
-
| ||||
(1)
|
In connection with the purchase of two office buildings at 95/105 Moatfield Dr. at the cost of $65.3 million (C$93.9 million) on September 23, 2022, one of the Company's subsidiaries, 13995291 Canada obtained a bank loan of $41.7 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, 2025 and 2024, 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. On August 27, 2024, the buildings were taken over by a receivership appointed by the Ontario Superior Court, which was initiated by BOC due to default of the loan. The Company is expecting to obtain external financing fund in February 2026 to pay off the default loan from BOC.
|
| 26 |
(2)
|
On February 10, 2023, the Company entered a private mortgage agreement with an unrelated party for a proceed of $3.48 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 February 16, 2025 on February 16, 2024 for a fixed interest rate of 18% per annum. The interest rate after the conclusion of the Extended Term shall be adjusted to 16% per annum. Extensions may not exceed December 31, 2025. The interest is paid/payable on monthly basis and the principal is payable at matured date or the early termination date. The loan at default when the buildings were taken over by the Receivership on August 27, 2025. The Company is expecting to obtain external financing fund in February 2026 to pay off this default loan.
|
(3)
|
On December 15, 2023, the Company purchased 100% share in Bethune from an 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 $1,215,734 (C$1,748,000) and a mortgage with a principal balance of $765,050 (C$1,100,000) from an unrelated individual. The mortgage has an open term as of March 31, 2025, with a fixed interest rate of 10% per annum on the principal balance of $695,500 (C$1,000,000) and a fixed interest of 15% per annum on the principal balance of $69,550 (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 $nil million and $1.3 million for fiscal 2025 and 2024, respectively.
Contractual Obligations
As of March 31, 2025, our contractual obligations consisted of the following:
Contractual Obligations
|
Total
|
Less than 1 year
|
1-3 years
|
3-5 years
|
More than 5 years
| ||||||||||||||||
Repayment of other loan payable
|
$
|
508,621
|
$
|
508,621
|
$
|
-
|
$
|
-
|
$
|
-
| |||||||||||
Repayment of bank loans
|
45,596,789
|
45,596,789
|
-
|
-
|
-
| ||||||||||||||||
Total
|
$
|
46,105,410
|
$
|
46,105,410
|
$
|
-
|
$
|
-
|
$
|
-
| |||||||||||
Off-balance Sheet Commitments and Arrangements
There were no off-balance sheet arrangements for the years ended March 31, 2025 and 2024, 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
|
Formerly Controlling shareholder of the Company, ceased on April 15, 2023, Director of the Company
| |
Kelly Xu
|
Operation manager and minority shareholder of Lowell
| |
Katy Liu
|
Employee of the Company
| |
XiYong Hou
|
Employee of the Company
| |
HuiMin Luo
|
Employee of the Company
| |
JunFeng Li
|
Operation manager and minority shareholder of Yuanjian Trillion (GuangZhou) Health Industry Investment Co., Ltd
| |
Changleshuang Biotechnology (Guangzhou) Limited ("Changleshuang")
|
49% non-controlling shareholder of Guangzhou Yuanjian
The payable to Changleshuang Biotechnology (Guangzhou) Co., Ltd. of is for the purchase of products such as probiotics, prebiotics, collagen-fixed beverages, composite prebiotic beverages, Kangweili "Good Nutrition Time," and Kangweili undenatured collagen special dietary tablets from Changleshuang (Guangzhou) Co., Ltd. The settlement period for all the aforementioned products is 8 months, with a maximum of 18 months, and no interest will be charged within this 18-month period.
|
| 27 |
(1) Due from related party
As of March 31, 2025 and 2024, due from related party consists of the following:
March 31,
|
March 31,
| |||||||
2025
|
2024
| |||||||
Due from Xu Kelly (Lowell Academy)
|
$
|
-
|
$
|
76,888
| ||||
XiYong Hou
|
433,507
|
-
| ||||||
Total
|
$
|
433,507
|
$
|
76,888
| ||||
The Company has a receivable balance from two minority interest shareholders due to the acquisition of Lowell Academy
in 2022
, 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, 2025 and 2024, Lowell Academy is not a subsidiary of the Company.
(2) Due to related parties
March 31,
|
March 31,
| |||||||
Name
|
2025
|
2024
| ||||||
Ms. Fan Zhou (a)
|
$
|
164,885
|
$
|
3,872
| ||||
Katy Liu (b)
|
229,706
|
322,768
| ||||||
HuiMin Luo (c)
|
97,273
|
-
| ||||||
JunFeng Li (d)
|
11,262
|
-
| ||||||
Total
|
$
|
503,126
|
$
|
326,640
| ||||
(a)
|
The balance represented unsecured, due on demand and interest free borrowings between the Company and the
formerly
controlling shareholder, Ms. Fan Zhou. Ms. Fan Zhou ceased to be the Controlling shareholder on April 15, 2024 and transferred all her equity interest of the Company to another individual who is related to Ms. Fan Zhou.
|
(b)
|
On April 1, 2023, the Company entered a two-year loan agreement with one employee, and agreed to pay back the principal balance of $229,706 (C$330,275) plus the accrued interest of 64,258 (C$87,000) at the maturity date. As at March 31, 2025, the balance of 229,706 was outstanding with an interest rate of 20% annual after the maturity date.
|
(c)
|
The balance represented unsecured, due on demand and interest free borrowings between the Company and Ms. Huimin Luo.
|
(d)
The balance represented unsecured, due on demand and interest free borrowings between the Company and Mr. JunFeng Li.
(3) Related party transactions with Changleshuang
March 31,
|
March 31,
| |||||||
2025
|
2024
| |||||||
Accounts payable - RP
|
$
|
1,086,445
|
$
|
-
| ||||
Cost of products
|
$
|
980,915
|
$
|
-
| ||||
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, 2025, we continued to optimize and acquire assets in the education and related business. Below are some major activities:
On September 5, 2025, the Company's wholly owned subsidiary, 13995291 Canada Inc., entered into a Cooperation Development Agreement with CHANG MANGKORE GROUP SDN BHD.
On September 18, 2025, a cooperation agreement was signed with Qianxin Bocheng (Jiangsu) Technology Development Co., Ltd. for high-end medical aesthetics projects, market expansion, and capital investment, strategically supporting the growth of emerging industries.
| 28 |
On September 19, 2025, a cooperation agreement was signed with Alto Plus Ltd. for AI education in entrepreneurship education, youth financial literacy education, and arts education. This initiative promotes the application of artificial intelligence in traditional education sectors, enhancing educational value and quality.
On September 22, 2025, a cooperation agreement was signed with Jiangsu Yike Regenerative Medicine Technology Co., Ltd. to establish an exclusive partnership in high-end medical aesthetics and cellular repair technologies. This collaboration provides the Company with world-class patented medical aesthetics products and cellular repair technologies, jointly building an internationally renowned brand for high-end medical aesthetics and cellular repair applications.
On October 10, 2025, a partnership was established with Anhui WeiKang KangLing Medical Technology Co., Ltd. to jointly build Canada's first "Anti-Aging and High-End Medical Aesthetics International Wellness Center" in Toronto.
On October 20, 2025, the Company signed an Equity Financing Agreement with Hong Kong Zhaoxu Capital, intending to raise USD 6,000,000 in equity financing, to be used for the Company's development and operations.
On November 5, 2025, the Company signed a Debt-to-Equity Conversion Agreement with UP Street Limited, intending to raise USD 1,000,000 in financing, to be used for the Company's development and operations.
On November 17, 2025, the Company signed an Equity Financing Agreement with SGCI Hong Kong Limited, intending to raise USD 5,000,000 in equity financing, to be used for the Company's development and operations.
On December 13, 2025, the Company signed a Loan Agreement with LEONITE FUND 1, LP, intending to borrow CAD 40,000,000, to be used for the repayment of the loan from Bank of China.
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.
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, 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.
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.
| 29 |
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.
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 November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income (Subtopic 220-40): Disaggregation of Income Statement Expenses." This pronouncement introduces new disclosure requirements aimed at enhancing transparency in financial reporting by requiring disaggregation of specific income statement expense captions. Under the new guidance, entities are required to disclose a breakdown of certain expense categories, such as: employee compensation; depreciation; amortization, and other material components. The disaggregated information can be presented either on the face of the income statement or in the notes to the financial statements, often using a tabular format. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. In January 2025, the FASB issued ASU 2025-01, which revises the effective date of ASU 2024-03 (on disclosures about disaggregation of income statement expenses) "to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027." Entities within the ASU's scope are permitted to early adopt the ASU. The Company is currently evaluating the impact of this standard on its financial statement disclosures.
| 30 |
In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. ASU 2025-03 clarifies the guidance to determine the accounting acquirer in a business combination that is affected primarily by exchanging equity interests, when the legal acquiree is a variable interest entity that meets the definition of a business. ASU 2025-03 requires entities to consider the same factors in ASC 805, Business Combinations, required for determining which entity is the accounting acquirer in other acquisition transactions. ASU 2025-03 is effective for the Company's annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-03 is required to be applied on a prospective basis to any acquisition transaction that occurs after the initial application date. The Company does not expect a material effect on its consolidated financial statements upon adoption.
In May 2025, the FASB issued ASU 2025-04, Compensation-Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606). ASU 2025-04 revises the definition of the term performance condition for share-based consideration payable to a customer to incorporate conditions that are based on the volume or monetary amount of a customer's purchases or potential purchases. ASU 2025-04 also eliminates the policy election to account for forfeitures as they occur for awards with service conditions. ASU 2025-04 also clarifies that ASC 606 variable consideration guidance does not apply to share-based payments to customers; instead, vesting probability should be assessed solely under ASC 718, Compensation-Stock Compensation. ASU 2025-04 is effective for the Company's annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-04 may be applied on either a modified retrospective basis or on a retrospective basis. The Company is currently assessing the impact this standard will have on the Company's Consolidated Financial Statements.
In July 2025, the FASB issued ASU 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets. ASU 2025-05 amends ASC 326, Financial Instruments-Credit Losses, and introduces a practical expedient available for all entities and an accounting policy election available for all entities, other than public business entities, that elect the practical expedient. These changes apply to the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue Recognition. Under the practical expedient, entities may assume that current conditions as of the balance sheet date remain unchanged for the remaining life of the asset when developing reasonable and supportable forecasts. This simplifies the estimation process for short-term financial assets. ASU 2025-05 is effective for the Company's annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-05 should be applied on a prospective basis. The Company does not expect a material effect on its consolidated financial statements upon adoption.
In August 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other (Topic 350) - Internal-Use Software (Subtopic 350-40): Targeted Improvements. This ASU provides clarifications and targeted improvements to the accounting for internal-use software, including enhanced guidance on the identification of software development activities, capitalization of implementation costs, and accounting for subsequent upgrades and maintenance. ASU 2025-06 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years, with early adoption permitted. The Company does not expect a material effect on its consolidated financial statements upon adoption.
In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Scope Clarifications and Share-Based Payments from Customers. This ASU refines the scope of derivative accounting to exclude certain contracts that contain terms or underlying variables specific to one party's operations and clarifies the accounting for share-based payments received from customers as consideration in revenue arrangements. ASU 2025-07 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years, with early adoption permitted. The Company does not expect a material effect on its consolidated financial statements upon adoption.
In October 2025, the FASB issued ASU 2025-08, Financial Instruments - Credit Losses (Topic 326): Simplifications for Measuring Credit Losses on Financial Assets. This ASU provides targeted simplifications to the accounting for credit losses under Topic 326, including streamlined guidance for measuring expected credit losses on trade receivables from non-public counterparties and simplified impairment assessment for certain low-risk financial assets. ASU 2025-08 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years, with early adoption permitted. The Company does not expect a material effect on its consolidated financial statements upon adoption.
In November 2025, the FASB issued ASU 2025-09, Leases (Topic 842): Enhanced Disclosures for Lessees. This ASU enhances the disclosure requirements for lessees by requiring additional qualitative and quantitative information about lease terms, variable lease payments, and the impact of leases on the Company's financial position and results of operations. ASU 2025-09 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years, with early adoption permitted. The Company does not expect a material effect on its consolidated financial statements upon adoption.
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.
| 31 |
VIII. Directors, Senior Management and Employees
(I) Directors and Senior Management
As of the date of this report, the information of the company's directors and senior management is as follows:
Name of Director/Senior Management
|
Age
|
Position/Title
| ||
Fan Zhou
|
Chairman of the Board
| |||
Kealey Donald M
|
Vice Chairman of the Board
| |||
Jun Huang
|
Managing Director & Co-CEO
| |||
William T. Chai
|
Independent Director
| |||
Simon Lung Lung Tang
|
Independent Director
| |||
Zhong Chen
|
Independent Director
| |||
Charles Yongjun Fu
|
Non-Executive Director & VP
| |||
Jie Luo
|
Independent Director
| |||
Zongjiang He
|
Independent Director
| |||
Xiyong Hou
|
CEO
| |||
Katy Sheulan Liu
|
CFO
|
1. Biographical Information of Certain Directors and Executive Officers
ï‚·
Mr. William T. Chai
:
Has been a member of the board of directors, Chairman of the Audit Committee, member of the Nominating and Corporate Governance Committee, and member of the Compensation Committee since November 22, 2022, and was elected Chairman of the board of directors on February 6, 2024. He has over 35 years of experience in commercial investment, venture capital, fund management, and financing. Over the past five years, he has served as one of the founding partners of the Global Call to Action Against Poverty (a non-profit organization and global network), which cooperates with the United Nations and the World Health Organization to support people in striving for justice, eliminating poverty, and inequality. He also serves as a senior advisor to the Global Innovation Center (a global think tank) and a director of Alpha Ring International Co., Ltd. in California, USA (a company providing software, industrial engineering, and green energy optical products and services). He holds a Bachelor of Electrical Engineering degree from National Cheng Kung University in Taiwan, a Master of Systems Engineering degree from Arizona State University, an EMBA degree in Business Administration from National Chengchi University in Taiwan, and an Honorary Doctorate in Management from the International Federation of Public Welfare.
ï‚·
Mr. Kealey Donald M
:
Has been a director of the company, Vice Chairman of the board of directors, member of the Audit Committee, member of the Compensation Committee, and member of the Nominating Committee since March 22, 2024, and previously served as Chairman of the board of directors from November 2022 to June 2023. He has over 30 years of experience in the business and advocacy fields. Since 2007, he has served as President of K&A Company in Mississauga, Toronto, Canada (a public policy and business management company), and has actively participated in prescription drug reform, smoke-free legislation, cannabis regulation, and cross-border healthcare initiatives. From February 2004 to September 2007, he served as Chief Executive Officer of the Ontario Pharmacists Association (Canada's largest professional organization of pharmacists). From June 1999 to February 2004, he served as General Manager of Atomic Energy of Canada Limited (AECL), leading the CANDU technology team in Asia (especially China and Eastern Europe), assisting in engaging with governments operating or constructing CANDU nuclear reactors, and integrating healthcare system delivery with projects in Qinshan, China and Cernavoda, Romania. He serves on the Advisory Board of the School of Pharmacy at the University of Waterloo, and on the boards of directors of multiple for-profit and non-profit organizations, including the Canada India Foundation, the Jamaica Disaster Relief and Resilience Initiative in Jamaica, the global social network CITIZN, Wounds Canada, and Resilient Kids Canada, as well as a director of Canadian Hospital Development Group CHG Inc. He graduated from St. Jerome's College at the University of Waterloo and studied at Kent State University in Ohio and Queen's University in Kingston, Ontario.
ï‚·
Mr. Jun Huang, Managing Director & Co-CEO, Doctorate Degree
:
Possesses profound expertise and
extensive experience in finance, compliance, and corporate management. Previously served as Deputy Managing Director of ComplianceOne Consulting Limited from May 2022 to present. From August 2022 to December 2024, he held the position of Chief Advisor at Dragon Rise Group Holdings Limited (HK. 06829).
ï‚·
Mr. Xiyong Hou, CEO, Master Degree
:
Holds the distinction of a Senior International Financial Manager in the United States. A renowned practical education expert from Canada, with over 30 years of experience in international education, overseas studies, immigration, and technology enterprise management. He has secured funding and managed several Canadian high schools, colleges, and overseas study and immigration companies. Established multiple education and technology enterprises, serving as Chairman and President of these companies. Well-versed in international mergers and acquisitions, has international investment experience, and excels in team management and corporate culture development. Possesses strong organizational and leadership skills. Has been received by national leaders in recognition of his outstanding achievements.
| 32 |
•
Ms. Katy Liu, CFO, Bachelor Degree
:
Bachelor of York University. Senior International Financial Manager (SIFM). Rich experience in financial management, accounting, and internal control. Former CFO of the Canadian Opera for 15 years and CFO of the Gardiner Ceramic Museum for 17 years. Recipient of the Queen's Diamond Jubilee Medal in 2012 and the prestigious Platinum Jubilee of Elizabeth II in 2022.
(II) Board Diversity
As of the date of this annual report, the board diversity information is as follows:
Board Diversity Matrix
|
Details
|
Country of Principal Executive Office
|
Canada
|
Foreign Private Issuer
|
Yes
|
Disclosure Prohibited by National Law
|
No
|
Total Number of Directors
| |
Gender Identity - Female
| |
Gender Identity - Male
| |
Gender Identity - Non-Binary
| |
Gender Identity - Not Disclosed
| |
Ethnic Background - Individuals Underrepresented in the National Jurisdiction
| |
Ethnic Background - LGBTQ+
| |
Ethnic Background - Not Disclosed
|
(III) Family Relationships
There are no family relationships between directors and senior management.
(IV) Arrangements
The company is not aware of any arrangements between shareholders regarding the nomination or approval of directors or senior management.
(V) Term of Office
Each director serves until their successor is elected and qualifies, or until their death, resignation, or removal. The board of directors appoints the company's senior management, and each senior management serves until their successor is appointed and qualifies, or until their death, resignation, or removal.
(VI) Involvement in Certain Legal Proceedings
Over the past ten years, none of the company's directors or senior management have been involved in the following events:
ï‚·
Filed a petition under federal or any state bankruptcy law, or had a receiver, financial agent, or similar officer appointed for their business or property by a court, or if a partnership of which they were a general partner within two years before the petition filing, or a company or business association of which they were a senior management within two years before the petition filing, experienced the above situations;
ï‚·
Convicted in a criminal proceeding or became the subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
ï‚·
Subject to an order, judgment, or decree of any court of competent jurisdiction that has not been subsequently vacated, suspended, or terminated, permanently or temporarily enjoining them from engaging in the following activities: 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 affiliate of any of the foregoing, or acting as an investment advisor, underwriter, securities broker, or dealer, or as an affiliate, 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 the foregoing activities; engaging in any type of business practice; 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 commodity laws;
ï‚·
Subject to an order, judgment, or decree of any federal or state authority that has not been subsequently vacated, suspended, or terminated, prohibiting, suspending, or restricting them from engaging in any of the activities described in item 3.i above for more than 60 days, or prohibiting them from associating with persons engaged in the foregoing activities;
| 33 |
ï‚·
Found by a court of competent jurisdiction in a civil proceeding or by the SEC to have violated any federal or state securities law, and the judgement in such civil proceeding or the finding by the SEC has not been subsequently vacated, suspended, or terminated.
ï‚·
Found by a court of competent jurisdiction in a civil proceeding or by the Commodity Futures Trading Commission to have violated any federal commodity law, and the judgment in such civil proceeding or the finding by the Commodity Futures Trading Commission has not been subsequently vacated, suspended, or terminated;
ï‚·
Subject to or involved in any federal or state judicial or administrative order, judgment, decree, or finding that has not been subsequently vacated, suspended, or terminated, alleging a violation of: any federal or state securities or commodity law or regulation; any law or regulation regarding financial institutions or insurance companies, including but not limited to temporary or permanent injunctions, restitution orders, civil penalties, or temporary or permanent cease-and-desist orders, removal orders, or prohibitions; any law or regulation prohibiting mail fraud, wire fraud, or fraud in connection with any business entity;
ï‚·
Subject to or involved in any sanction or order of any self-regulatory organization (as defined in Section 3 (a)(26) of the Exchange Act), any registered entity (as defined in Section 1 (a)(29) of the Commodity Exchange Act), or any similar exchange, association, entity, or organization having disciplinary authority over its members or persons associated with its members, and the sanction or order has not been subsequently vacated, suspended, or terminated.
(VII) Director Independence
ï‚·
In accordance with the rules of Nasdaq Stock Market, LLC, seven directors of the company meet the definition of "independent", and the board of directors has determined that the following directors have no direct or indirect material relationship with the company and are "independent" directors: Ms. Fan Zhou, Mr. Kealey Donald M, Mr. William T Chai, Mr. Simon Lung Lung Tang, Mr. Zhong Chen, Mr. Jie Luo, and Mr. Zongjiang He. A material relationship is a relationship that the board of directors believes could reasonably be expected to interfere with a director's independent judgment.
(VIII) Code of Ethics and Business Conduct
The board of directors has adopted a Code of Ethics and Business Conduct applicable to directors, senior management, and other employees. The policies in the Code are designed to ensure that directors, senior management, and employees comply not only with the letter but also the spirit of applicable laws and regulations. The company expects directors, senior management, and employees to exercise good judgment, adhere to these standards in their daily work, and comply with all applicable policies and procedures in their business relationships with the company. No amendments or waivers to the Code of Ethics for any senior management were made during fiscal year 2022. The Code of Ethics will be updated as needed.
(IX) Compensation
1. Compensation Discussion and Analysis
This section describes the objectives and philosophy of the company's executive compensation arrangements, as well as the application of this philosophy in executive compensation arrangements, and also analyzes the compensation design and the board of directors' proposed decisions on executive compensation. In determining executive compensation arrangements, the Compensation Committee considers the following objectives: (1) retaining executives critical to the company's success and enhancing shareholder value; (2) providing fair and competitive compensation; (3) aligning the interests of management with those of shareholders; (4) rewarding based on individual performance and the company's overall business performance.
2. Benchmarking
The Compensation Committee is responsible for handling compensation-related matters, including benchmarking. In designing, formulating, reviewing, and making recommendations on all executive compensation arrangements, the Compensation Committee considers various factors. The Compensation Committee does not intend to position executive compensation to reflect a single percentile for each executive in the industry, but rather considers factors such as the relative complexity of the executive's role within the organization, the executive's performance and future development potential, and compensation fairness when determining the compensation level for each executive.
3. Elements of Compensation
Executive compensation in any year mainly consists of two parts: (1) Base salary; (2) Long-term incentives in the form of stock options
.
ï‚·
Base Salary
:
Recognizes the executive's value to the company based on their role, skills, performance, contributions, leadership, and potential within the company. It is crucial for attracting and retaining executive talent in the company's competitive talent market. Executives' base salaries are expected to be reviewed annually, and any changes to base salaries are typically based on an evaluation of the executive's performance, consideration of compensation levels of executives at similar companies, and a review of the company's overall performance and the executive's role in it.
| 34 |
ï‚·
Amended and Restated 2024 Restricted Stock Plan:
On November 11, 2024, the board of directors
approved the "Amended and Restated 2023 Restricted Stock Plan" (hereinafter referred to as the "2023 Plan") previously approved on May 9, 2023. The plan aims to promote the interests of the company and shareholders by providing a way to attract, retain, and motivate service providers of the company, its subsidiaries, and affiliated companies, whose judgment, initiative, and efforts are crucial to the company's continued success, growth, and development. The plan is administered by the Compensation Committee or another committee designated by the board of directors (which may include the entire board of directors).
4. Risks Associated with Compensation Policies and Practices
In overseeing and managing executive compensation plans, the Compensation Committee considers the risks associated with compensation policies and practices. The potential risks associated with compensation policies and compensation incentives are considered annually during the review and whenever the Compensation Committee deems necessary. The company's executive compensation policies and practices are designed to align management incentives with the long-term interests of the company and shareholders, and in each case, the company seeks an appropriate balance between risk and reward. Practices aimed at avoiding inappropriate or excessive risk include: (1) Financial controls that establish limits and authorizations in areas such as capital expenditures and operating expenditures to mitigate risk-taking that may affect compensation; (2) Balancing base salary and variable compensation elements; (3) Diversifying compensation through short-term and long-term plans
.
5. Compensation Governance
The Compensation Committee intends to review director compensation annually, with reference to various reports on current trends in director compensation and compensation data for directors of public companies of comparable size. The CEO is expected to review the compensation of senior management for the previous year and compare it with industry standards obtained through public disclosures and surveys. The board of directors expects the CEO to make compensation recommendations to the Compensation Committee, which will review and comment on the compensation proposals before making recommendations to the board of directors. The Compensation Committee consists of independent directors, and its responsibilities are to formulate and make recommendations to the directors on matters related to director and executive compensation. For specific responsibilities, refer to the "Section 6.B Compensation - Compensation Governance" section of this annual report.
Summary of Executive Compensation
The following is a summary disclosure of compensation paid to executives for the year ended March 31, 2025 (since national law does not require disclosure of individual-level compensation and the company has not publicly disclosed such information):
(in thousands of US dollars)
|
All Executives
| |||
Base Salary
|
166,920
| |||
Bonus
|
-
| |||
Additional Benefit Expenses
|
-
| |||
Total Cash Compensation
|
166,920
| |||
Executive Compensation Agreements
ï‚·
Xiyong Hou - Chief Executive Officer:
The employment agreement with the Chief Executive Officer became effective on September 2, 2024, and his CEO tenure became effective on September 2, 2024. Under the agreement, Xiyong Hou's annual base salary is $83,460. The agreement is an at-will termination agreement, and Xiyong Hou is required to provide four weeks' notice of resignation to the company. The agreement also includes non-solicitation, confidentiality, and non-competition clauses
.
ï‚·
Katy Liu - CFO
:
The employment agreement with the CFO became effective on January 6, 2025, and her CFO tenure will become effective on December 31, 2026. Under the agreement, Katy Liu's annual base salary is $83,460. The agreement is an at-will termination agreement, and Katy Liu is required to provide four weeks' notice of resignation to the company. The agreement also includes non-solicitation, confidentiality, and non-competition clauses.
Stock Option Plans and Stock Options
ï‚·
Shares Issued for Services:
On January 21, 2025, pursuant to the Amended and restated 2024 Restricted Stock Plan adopted on November 11, 2024, the company issued a total of 645,238 common shares to certain directors, employees, and consultants as service awards.
Director Compensation for Fiscal Year 2025
For the fiscal year ended March 31, 2025, the company paid a total of $nil in cash for service fees to 9 directors.
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Pension Benefits
The company does not have a defined benefit pension plan or any other plan that provides retirement benefits or similar benefits.
Employment Termination and Change of Control Benefits
For details of employment termination and change of control benefits for directors and senior management, refer to the "Executive Compensation Agreements" section above.
C. Board Operations
Board of Directors
The company is in full compliance with Nasdaq's governance requirements, with seven of its nine directors qualifying as independent under Nasdaq Stock Market Listing Rule 5605 (a)(2) and Section 10A-3 of the Exchange Act. Directors are elected by shareholders at the annual general meeting each year. Directors are formally elected and appointed by shareholders at the Annual General Meeting (AGM). Currently, the board of directors is responsible for evaluating the necessary skills, expertise, independence, and other factors of potential director candidates, and plans to delegate this responsibility to the Nominating Committee in the future.
The board of directors is responsible for appointing the company's senior management.
Board Committees
The board of directors has established four committees: the Audit Committee, the Compensation Committee, the Nominating Committee, and the Investment Committee, each of which operates in accordance with charters approved by the board of directors. In addition, the company has an informal Strategic Advisory Committee to support the board of directors in formulating strategies, achieving goals, and analyzing opportunities.
Audit Committee
The Audit Committee consists of 3 directors who meet the independence requirements of Nasdaq listing rules and the Exchange Act, one of whom qualifies as an "Audit Committee Financial Expert" as defined by SEC rules and possesses the financial expertise required by Nasdaq listing rules. The Audit Committee is responsible for overseeing the company's accounting and financial reporting processes and the audit of financial statements. Its main responsibilities include:
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Selecting the independent registered public accounting firm and pre-approving all audit and non-audit services that may be provided by it;
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Reviewing with the independent registered public accounting firm the issues and difficulties encountered during the audit and the management's response measures, and approving all related party transactions as defined in Item 404 of Regulation S-K;
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Discussing the annual audited financial statements with management and the independent registered public accounting firm;
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Reviewing and re-evaluating the adequacy of the Audit Committee Charter annually;
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Holding separate meetings with management and the independent registered public accounting firm on a regular basis;
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Reporting to the full board of directors on a regular basis;
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Reviewing the adequacy and effectiveness of the company's accounting and internal control policies and procedures, as well as measures to monitor and control significant financial risks;
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Other matters entrusted by the board of directors from time to time.
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Compensation Committee
The Compensation Committee consists of 3 directors who meet the independence requirements, assisting the board of directors in reviewing and approving the compensation structure of directors and senior management (including various forms of compensation). When discussing the compensation of a particular executive, that executive may not attend the relevant committee meeting. Its main responsibilities include:
Reviewing and approving the overall compensation package of the most senior executives for the board of directors;
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Approving and overseeing the overall compensation package of non-most senior executives;
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Reviewing and recommending director compensation to the board of directors;
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Regularly reviewing and approving any long-term incentive compensation or equity plans;
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Selecting compensation consultants, legal counsel, or other advisors (considering all factors related to their independence from management);
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Overseeing arrangements related to annual bonuses, employee pension plans, and benefit plans.
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Nominating Committee
The Nominating Committee consists of 3 directors who meet the independence requirements, responsible for overseeing the nomination of board of director candidates. Candidates may be recommended by committee members, management, shareholders, investment banks, and other parties.
Investment Committee
The Investment Committee consists of 3 directors who meet the independence requirements, responsible for reviewing and formulating the company's investment strategies and plans, approving significant investment matters, overseeing the implementation of investment decisions and risk control, and evaluating investment performance. It is responsible for providing professional investment advice to the board of directors and ensuring that the company's investment activities are in line with the overall strategic goals and risk-bearing capacity.
D. Employee Information
As of the date of this report, the company has approximately 64 full-time employees, with good employee relations. The distribution of employees by function is as follows:
Function
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Number of Full-time Employees
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Management
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Finance
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Information Technology
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Marketing and Promotion
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Human Resources
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Teaching and Research
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Education Services
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Total
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Management regards employees as the core asset of the company's development. The company's policy is to maximize employees' potential through training and development, providing on-the-job training in various aspects of the marketing solutions industry to keep up with the latest industry developments. Employee training and development aim to provide employees with the knowledge and skills required to perform their job responsibilities and enhance their work capabilities.
The company does not recruit employees through recruitment agencies and has a fair and effective recruitment policy. It usually recruits personnel who meet the following conditions: (a) appropriate technical and personal skills; (b) relevant academic background; (c) work experience that meets the company's current and future needs, ensuring that the recruited employees have the qualifications and capabilities to be competent for the work.
The company has always maintained good working relationships with employees. As of the date of this annual report, no employees are members of any trade union, and there are no labor disputes involving the company.
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The company usually provides employees with compensation in the form of fixed salaries and discretionary bonuses based on company performance, and has an annual performance evaluation system as the basis for salary adjustments, bonus payments, and promotions.
No employees are subject to collective bargaining agreements.
E. Equity Holdings
Shares
The shareholdings of directors and executive officers are detailed in Item 7 below.
Options, Warrants and Other Convertible Securities
As of March 31, 2025, no director or executive officer holds stock options or other securities convertible into the Company's common stock. On January 21, 2025, pursuant to the Amended and Restated 2024 Restricted Stock Plan adopted on November 11, 2024, the Company issued an aggregate of 645,238 shares of common stock to certain directors, employees and consultants as service awards.
F. Disclosure of Issuer's Actions to Recover Erroneously Awarded Compensation
Not applicable.