BetterU Education Corp. — Audit Report / Information 2020

Jan 21, 2021

betterU Education Corp. Consolidated Financial Statements March 31, 2020 and 2019 (Presented in Canadian Dollars)

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Independent Auditor’s Report

To the Shareholders of BetterU Education Corp.

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of BetterU Education Corp. (the "Company"), which comprise the consolidated statement of financial position as at March 31, 2020, and the consolidated statement of comprehensive loss, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at March 31, 2020, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards.

Basis of Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to note 2 in the consolidated financial statements, which indicates that the Company had a working capital deficiency of $5,788,572 as at March 31, 2020, as well as a history of losses and negative cash flows from operations. As stated in note 2, these events or conditions, along with other matters as set forth in note 2, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Matter – Comparative Information

The consolidated financial statements of the Company for the year ended March 31, 2019 were audited by other auditors who expressed an unmodified opinion on those statements on October 21, 2019.

Other Information

Management is responsible for the other information. The other information comprises Management's Discussion and Analysis.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

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In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged With Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

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• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor's report is Steven Olsthoorn.

DNTW Toronto LLP

December 9, 2020 Toronto, Ontario

Chartered Professional Accountants Licensed Public Accountants

betterU Education Corp. Consolidated Statements of Financial Position As at March 31, 2020 and 2019

(In Canadian dollars)

As at March 31, 2020 and 2019 (In Canadian dollars)
		March 31,	March 31,
	Note	2020	2019
		$	$
Assets
Current assets
Cash		3,576	3,169
Accounts and other receivables		13,882	70,083
Prepaid expenses	4	2,528	744,094
Due from shareholders	5	-	35,942
		19,986	853,288
Non-current assets
Property and equipment	6	8,509	34,233
Right-of-use asset	7	15,032	-
		23,541	34,233
		43,527	887,521
Liabilities
Current liabilities
Accounts payable and accrued liabilities	8	2,748,957	2,268,654
Lease obligation	9	15,032	-
Promissory notes	10	2,979,626	2,529,647
Bank loan	11	40,032	40,032
Convertible debentures	12	24,911	-
		5,808,558	4,838,333
Non-current Liabilities
Convertible debentures	12	-	25,573
		5,808,558	4,863,906
Equity (deficiency)
Share capital	13	15,459,945	14,634,165
Contributed surplus	13	785,997	676,706
Equity portion of debt instruments		3,088	3,088
Accumulated other comprehensive loss		(270,026)	(278,021)
Deficit		(22,557,900)	(19,848,484)
Equity attributable to owners of the parent		(6,578,896)	(4,812,546)
Non-controllinginterest		813,865	836,161
		(5,765,031)	(3,976,385)
		43,527	887,521

(See accompanying notes)

Approved by the Board:

"Bradley Loiselle" Director "Anthony Keenan" Director

betterU Education Corp. Consolidated Statements of Comprehensive Loss Years ended March 31, 2020 and 2019

(in Canadian dollars, except shares and per share data)

Revenues Operating expenses Contractors Salaries and wages Rent and premises Advertising and promotion Professional fees Travel Other general and administrative costs Bank charges Amortization Net impairment loss from contract assets Stock based compensation Loss from operations Other income (expense) Finance expense Foreign exchangegain(loss) Net loss Exchange differences on translatingoperations Comprehensive loss Net loss attributable to: Non-controlling interest Owners of theparent Net loss per share Basic and fully diluted Weighted average number of outstanding shares Basic and fully diluted	March 31, 2020 March 31, 2019
	$ $
	1,692 44,930
	250,901 - 209,230 1,677,114 49,025 157,410 759,958 2,188,767 762,788 501,980 146,142 144,342 157,815 115,340 3,357 7,304 28,163 9,159 - 2,813,035 31,591 304,432
	2,398,970 7,918,883
	(2,397,278) (7,873,953) (334,428) (364,814) (6) (347)
	(334,434) (365,161)
	(2,731,712) (8,239,115) 7,995 (81,666)
	(2,723,717) (8,320,781)
	(22,296) (1,461,544) (2,709,416) (6,777,570)
	(2,731,712) (8,239,114)
	($0.04) ($0.11) 74,759,674 59,674,281

(See accompanying notes)

betterU Education Corp. Consolidated Statements of Cash Flows Years ended March 31, 2020 and 2019

(In Canadian dollars)

Note Cash provided by (used in): Operating activities Net loss Adjusted for the following non-cash items: Amortization Revaluation of convertible debentures Accrued interest Stock-based compensation Loss on disposal of property and equipment Net impairment loss on contract assets Changes in non-cash working capital items: Accounts receivable Prepaid expenses Accountspayable and accrued liabilities Cash used in operating activities Investing activities Proceeds on disposal of property and equipment Purchase of property and equipment Receipt/(Payment) of amount due to shareholder Leasepayments Cash used in investing activities Financing activities Repayment of bank loans Repayment of promissory notes Proceeds from issuance of promissory notes Proceeds from Equity financing Share issuance costs Cashprovided by financing activities Exchange differences on translating operations Increase(decrease)in cash and cash equivalents Cash and cash equivalents,beginningofperiod Cash and cash equivalents,end ofperiod Supplementary Cash Flow Information Income taxes paid Interest paid Promissory notes settled in private placements (See accompanying notes)	March 31, 2020 March 31, 2019
	$ (2,731,712) (8,239,114) 28,163 9,159 (662) (635) 333,257 266,916 31,591 304,432 (1,890) - - 2,882,920
	(2,341,254) (4,776,322) 56,201 (47,925) 741,566 (403,650) 606,245 1,194,645
	(937,242) (4,033,252)
	22,000 - - (3,715) - (1,989) (24,000) -
	(2,000) (5,704)
	- (15,012) (3,000) - 103,173 1,260,000 837,500 2,559,169 (6,020) -
	931,653 3,804,157
	7,995 (81,666) 407 (316,465)
	3,169 319,634
	3,576 3,169
	2020 2019
	- - 3,000 - 72,000 -

betterU Education Corp.

Consolidated Statements of Changes in Shareholders' Equity (Deficiency) Years ended March 31, 2020 and 2019

(In Canadian dollars and shares)

Years ended March 31, 2020 and 2019 (In Canadian dollars and shares)
						Accumulated		Total
		Number			Equity	other		attributable
		of common	Share	Contributed	component on	comprehensive		to owners of	Non-controlling	Equity
	Note	shares	capital	surplus	debt instruments	income (loss)	Deficit	parent	interest	(deficiency)
Balance at April 1, 2018		57,682,642	$12,074,996	372,274	$3,088	($196,355)	($13,070,914)	($816,911)	$2,297,705	$1,480,794
Equity financing - June 4, 2018		1,623,376	1,250,000	-	-	-	-	$1,250,000	-	1,250,000
Equity financing - Nov 13, 2018		118,710	56,981	-	-	-	-	$56,981	-	56,981
Options & Warrants Excercised		20,833	9,188	-	-	-	-	$9,188	-	9,188
Share issuance costs			(7,000)	-	-	-	-	($7,000)	-	(7,000)
Equity financing - Jan 17, 2019		2,976,190	1,250,000	-	-	-	-	$1,250,000	-	1,250,000
Stock-based compensation			-	304,432	-	-	-	$304,432	-	304,432
Net loss			-	-	-	-	(6,777,570)	($6,777,570)	(1,461,544)	(8,239,114)
Exchange differences on translatingoperations			-	-	-	(81,666)	-	($81,666)	-	(81,666)
Balance at March 31, 2019		62,421,751	14,634,165	$676,706	$3,088	**($278,021) **	($19,848,484)	($4,812,546)	$836,161	($3,976,385)
Balance at April 1, 2019		62,421,751	$14,634,165	676,706	$3,088	($278,021)	($19,848,484)	($4,812,546)	$836,161	($3,976,385)
Equity financing - July 3, 2019		10,000,000	500,000	-	-	-	-	$500,000	-	500,000
Equity financing - August 2, 2019		5,850,000	409,500	-	-	-	-	$409,500	-	409,500
Share issuance cost			(6,020)	-	-	-	-	($6,020)	-	(6,020)
Stock-based compensation			-	31,591	-	-	-	$31,591	-	31,591
Reallocation for Warrants			(77,700)	77,700	-	-	-	-	-	-
Net loss			-	-	-	-	(2,709,416)	($2,709,416)	(22,296)	(2,731,712)
Exchange differences on translatingoperations			-	-	-	7,995	-	$7,995	-	7,995
Balance at March 31, 2020		78,271,751	15,459,945	$785,997	$3,088	**($270,026) **	($22,557,900)	($6,578,896)	$813,865	($5,765,031)

(See accompanying notes)

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019 (Presented in Canadian Dollars)

1. DESCRIPTION OF BUSINESS

betterU Education Corp. (“betterU” or “the Company”), is the parent Company of SkillsDox Inc. (“SkillsDox”). The Company provides a technology gateway and marketplace for online education in emerging markets. betterU aggregates online learning from quality content vendors, including universities, colleges and corporations from around the world and makes that content available to students in emerging markets through its marketplace.

betterU was formed by way of an amalgamation pursuant to the Business Corporations Act of British Columbia. The Company’s shares trade on the TSX Venture Exchange (the “Exchange”) under the trading symbol “BTRU”.

2. BASIS OF PREPARATION

Statement of compliance

These consolidated financial statements were prepared in accordance with International Financial Reporting Standards (“IFRS”) and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations prevailing at March 31, 2020.

The Board of Directors approved these consolidated financial statements for issuance on December 9, 2020.

Going concern

These consolidated financial statements have been prepared on a going concern basis in accordance with International Financial Reporting Standards (“IFRS”). This assumes the Company will be able to continue operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business.

As at March 31, 2020, the Company had cash of $3,576 and a working capital deficiency of $5,788,572 and had used cash of $937,242 in its operating activities for the year ended March 31, 2020. The Company incurred a comprehensive loss of $2,723,717 for the year ended March 31, 2020 and as of that date had an accumulated deficit of $22,557,900. The Company has liabilities of $5,808,558 that are due in the next 12 months. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

The Company’s ability to continue as a going concern is dependent upon the ability to generate positive cash flow and the ability to execute its business plan, including funding operating losses, as well as securing future sources of financing. If the funding were not to occur, then the Company will have to rely on the short-term funding to bridge operational funding gaps.

If the going concern assumption was not appropriate for these financial statements, significant adjustments to the carrying values of assets and liabilities, reported expenses and statement of financial position classifications would result. These adjustments would be material.

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019 (Presented in Canadian Dollars)

2. BASIS OF PREPARATION – C ont’d.

Basis of measurement

These statements have been prepared on a historical cost basis except for derivative financial liabilities, which are measured at fair value. Historical cost is generally based upon the fair value of the consideration given in exchange for goods and services. The expenses within the consolidated statements of comprehensive loss are presented by nature.

Basis of consolidation

These consolidated financial statements include the financial statements of betterU Education Corp., SkillsDox Inc. (“SKC”), SkillsDox India Private Limited (“SKI”), and 9194495 Canada Inc. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases.

The Company owns 100% of each of the above subsidiaries, with the exception of SKI, which it has a 49.5% interest in.

The Company controls an investee if the Company has: (i) power over the investee; (ii) exposure, or rights, to variable returns from its involvement with the investee; and (iii) the ability to use its power over the investee to affect its returns.

When the Company has less than a majority of the voting or similar rights of an investee, the Company considers all relevant facts and circumstances in assessing whether it has power over an investee, including but not limited to: (i) the contractual arrangement with the other vote holders of the investee; (ii) rights arising from other contractual arrangements; and (iii) the Company’s potential voting rights.

The Company re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in comprehensive income (loss) from the date that the Company gains control until the date that the Company ceases to control the subsidiary.

The financial statements of the subsidiaries are prepared for the same reporting period as the Company’s reporting period using consistent accounting policies. All inter-company account balances and transactions have been eliminated upon consolidation.

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019 (Presented in Canadian Dollars)

2. BASIS OF PREPARATION – Cont’d.

Critical accounting estimates and judgments

The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. The estimates and assumptions that have a significant risk of causing a material change to the carrying amounts of assets and liabilities within the next financial year are addressed below. Actual results could differ from these estimates.

The significant areas of judgment considered by management in preparing these consolidated financial statements are as follows:

(i) Going concern

Management has made an assessment of the Company’s ability to continue as a going concern and the consolidated financial statements continue to be prepared on a going concern basis. However, management does not believe the Company has sufficient cash on hand to meet the Company’s operating expenditures beyond March 31, 2020 which may cast significant doubt upon the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

(ii) Control of subsidiaries

The Company consolidates subsidiaries when it obtains control. The Company has a 49.5% interest in SKI. The Company has concluded that it has control over SKI by virtue of its ownership interest and its authority to manage the strategic and operational decisions of SKI. Management has determined that SKI depends on the Company for critical services including technology, human resources, marketing, finance and accounting management, and business development. A change in this conclusion would have a significant impact on the presentation of the consolidated financial statements of the Company.

(iii) Recognition of deferred tax assets

Deferred tax assets are recognized in respect of tax losses and other temporary differences to the extent it is probable that taxable income will be available against which the losses can be utilized. Management has determined that future realization of its deferred income tax assets did not meet the threshold of being probable, and as such, has not recognized any deferred income tax assets in the consolidated statement of financial position. In making this determination, management must make assumptions and judgments about the Company’s future performance including estimated revenues, expenses and profitability for tax purposes.

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019 (Presented in Canadian Dollars)

1. BASIS OF PREPARATION – Cont’d.

Critical accounting estimates and judgments – Cont’d.

The significant areas of estimation uncertainty considered by management in preparing these consolidated financial statements are as follows:

(iv) Stock-based compensation expense

The Company uses the Black-Scholes option pricing model to determine the fair value of options in order to calculate stock-based compensation expense. The Black-Scholes model involves six key inputs to determine the fair value of an option: risk-free interest rate, exercise price, market price at the date of issue, expected dividend yield, expected life, and expected volatility. Certain of the inputs are estimates that involve considerable judgment and are or could be affected by significant factors that are out of the Company’s control. The Company is also required to estimate the future forfeiture rate of options based on historical information in its calculation of stock-based compensation expense.

(v) Warrants

The Company uses the Black-Scholes option pricing model to calculate the value of warrants issued as part of the Company’s private placements. The Black-Scholes model requires six key inputs to determine a value for a warrant: risk free interest rate, exercise price, market price at date of issue, expected dividend yield, expected life and expected volatility. Certain of the inputs are estimates which involve considerable judgment and are, or could be, affected by significant factors that are out of the Company’s control.

(vi) Financial liabilities

Financial liabilities that contain equity components or embedded derivatives require management to estimate the value allocated to each of the components. These estimates involve use of financial models such as present value calculations or the Black-Scholes model. Key inputs such as market interest, volatility and term to maturity are used, which are subjective estimates, for which there may be a range of acceptable values.

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019 (Presented in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies used in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented.

Revenue recognition

Revenue is recognized at the fair value of consideration received or receivable and is reduced for estimated customer returns and allowances. Revenue from the sale of goods is recognized when all the following conditions have been satisfied:

• the Company has transferred to the buyer the significant risks and rewards of ownership of the goods;

• the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

• the amount of revenue can be measured reliably;

• it is probable that the economic benefits associated with the transaction will flow to the entity; and

• the costs incurred or to be incurred in respect of the transaction can be measured reliably

Revenue from a contract to provide services is recognized by reference to the stage of completion of the contract as the services are rendered. Revenue earned but not yet billed is recorded as unbilled receivables. Deposits received in advance of revenue earned are recorded as deferred revenue.

Foreign currency

These consolidated financial statements are presented in Canadian Dollars, which is the Company’s functional and presentation currency. The functional currency for the Indian subsidiary is Indian Rupees, being the currency of the primary economic environment in which that subsidiary operates.

Items included in the financial statements of each entity are measured using their respective functional currencies and foreign currency transactions are initially recorded in the functional currency of each entity by applying the exchange rate ruling at the date of the transaction. At the end of each reporting period monetary items are re-translated using the closing rate. All exchange gains and losses are included in other comprehensive loss in the consolidated financial statements. Non-monetary items measured in terms of historical cost are translated at the exchange rate at the date of the transaction and non-monetary items measured in terms of fair value are translated at the exchange rate at the date when the fair value was determined.

At the end of each reporting period the results and financial position of the subsidiary are translated into the Company’s presentation currency. Assets and liabilities are translated at the closing rate. Revenues and expenses are translated using the average rate for the reporting period, as an approximation to the exchange rate at the date of each transaction. All exchange gains and losses on translation are included in other comprehensive loss and accumulated in the exchange differences on translating operations.

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019

(Presented in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES – Cont’d.

Property and equipment

Property and equipment is measured at cost less accumulated amortization and impairment losses. Amortization is provided using the following terms and method:

Computer equipment	Declining balance	- 55%
Furniture and fixtures	Declining balance	- 20%
Computer software	Declining balance	- 100%

An asset’s residual value, useful life and amortization method are reviewed each financial year and adjusted if appropriate. When parts of an item of equipment have different useful lives, they are accounted for as separate items (major components) of equipment.

Gains and losses on disposal of an item of equipment are determined by comparing the proceeds from disposal with the carrying amount of the equipment and are recognized in profit or loss.

Impairment of long-lived assets

Long-lived assets are reviewed for impairment at each statement of financial position date or whenever events or changes in circumstances indicate that the carrying amount of an asset exceeds its recoverable amount. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the cash-generating unit, or "CGU"). The recoverable amount of an asset or a CGU is the higher of its fair value, less costs to sell, and its value in use. If the carrying amount of an asset exceeds its recoverable amount, an impairment charge is recognized immediately in profit or loss by the amount by which the carrying amount of the asset exceeds the recoverable amount.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the lesser of the revised estimate of recoverable amount, and the carrying amount that would have been recorded had no impairment loss been recognized previously.

Income taxes

The Company uses the asset-liability method to account for income taxes. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities for accounting purposes, and their respective tax bases. Deferred income tax assets and liabilities are measured using tax rates that have been enacted or substantively enacted applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in statutory tax rates is recognized in profit or loss in the year of change. Deferred income tax assets are recorded when their recoverability is considered probable and are reviewed at the end of each reporting period.

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019

(Presented in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES – Cont’d.

Leases

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost and is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. The lease liability is subsequently measured at amortized cost using the effective interest method.

The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less.

Share-based compensation

The Company has an employee stock option plan. The Company measures equity settled share-based payments based on their fair value at the grant date and recognizes compensation expense over the vesting period based on the Company’s estimate of equity instruments that will eventually vest. Expected forfeitures are estimated at the date of grant and subsequently adjusted if further information indicates actual forfeitures may vary from the original estimate. The impact of the revision of the original estimate is recognized in profit or loss such that the cumulative expense reflects the revised estimate. For stock options granted to non-employees the compensation expense is measured at the fair value of the goods and services received except where the fair value cannot be estimated in which case it is measured at the fair value of the equity instruments granted. The fair value of share-based compensation to non-employees is periodically re-measured until counterparty performance is complete, and any change therein is recognized over the period and in the same manner as if the Company had paid cash instead of paying with or using equity instruments. Consideration paid by employees or non-employees on the exercise of stock options is recorded as share capital and the related share-based compensation is transferred from contributed surplus to share capital.

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019

(Presented in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES – Cont’d.

Loss per share

The Company presents basic and diluted earnings per share data for its common shares. Basic earnings per share is calculated by dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined by adjusting the profit or loss attributable to common shareholders and the weighted average number of common shares outstanding, adjusted for the effects of all dilutive potential common shares, which comprise convertible debentures, warrants, and stock options.

Financial instruments

Financial assets

The Company initially recognizes financial assets at fair value on the date that they originate. All financial assets are recognized initially on the date at which the Company becomes a party to the contractual provisions of the instrument. The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Company is recognized as a separate asset or liability.

Subsequently, the Company measures all its financial assets at amortized cost. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

Financial liabilities

The Company initially recognizes financial liabilities at fair value on the date that they originate. All financial liabilities are recognized initially on the date at which the Company becomes a party to the contractual provisions of the instrument. The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire.

Subsequently, the Company measures all its financial liabilities, except for embedded derivatives, at amortized cost. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019

(Presented in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES – Cont’d.

Financial instruments – Cont’d.

Classification of financial instruments

The Company classifies its financial assets and liabilities depending on the purpose for which the financial instruments were acquired, their characteristics, and management intent as outlined below:

Cash and cash equivalents Accounts and other receivables Due from shareholders Accounts payable and accrued liabilities Promissory notes Bank loan Convertible debentures	Classification Amortized cost Amortized cost Amortized cost Amortized cost Amortized cost Amortized cost Fair value through profit or loss

Transaction costs

Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

Segment reporting

Management has determined the operating segments based on the information regularly reviewed for the purposes of decision making, allocating resources and assessing performance by the Company’s chief operating decision makers, which are the Chief Executive Officer and the Chief Financial Officer.

The Company evaluates the financial performance of its operating segments primarily based on net income before interest, income taxes, and depreciation and amortization.

Changes in accounting policies

The Company has adopted the following new and revised standards, along with any consequential amendments, effective April 1, 2019. These changes were made in accordance with the applicable transitional provisions.

IFRS 16 Leases (“IFRS 16”)

Effective April 1, 2019, the Company has adopted IFRS 16, Leases . IFRS 16 was issued in January 2016 replacing the previous leasing standard, International Accounting Standard (“IAS”) 17, Leases , and related interpretations. The new standard requires lessees to recognize right-of-use assets and lease liabilities for most leases and recognize the associated expenses to amortization and interest expense, respectively.

betterU Education Corp.

Notes to the Consolidated Financial Statements March 31, 2020 and 2019

(Presented in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES – Cont’d.

Changes in accounting policies – Cont’d.

The Company has applied IFRS 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under IAS 17. The Company used the following exemptions.

• The election is being taken to not reassess whether a contract is or contains a lease at the date of initial application, and instead to only apply IFRS 16 to contract that were in the scope of IAS 17;

• The election is being taken to rely on the IAS 37 assessment of whether leases are onerous instead of performing an impairment review;

• The election is being taken to exclude leases for which the term ends within 12 months from September 1, 2019. The Company recognizes the lease payments associated with these leases as an operating expense on a straight-line basis over the lease term.

The following table reconciles the aggregate future minimum lease payments.

Future minimum annual lease payments as at March 31, 2019	$	402,920
Reduction of lease commitment for cancellation of office lease		(362,920)
Adjusted future minimum annual lease payments as at March 31, 2019		40,000
Discount at effective interest rate of 8%		(2,419)
Net lease liabilities and right-of-use asset as at April 1,2019		37,581

4. PREPAID EXPENSES

Prepaid expenses are comprised of the following:

		2020		2019
Prepaid marketing services	$	-	$	641,302
Prepaid consulting services		-		93,750
Advances to employees		-		2,027
Share advance		-		(10,000)
Prepaid rent		2,528		17,015
	$	2,528	$	744,094

5. DUE FROM SHAREHOLDERS

As at March 31, 2020 the amount due to the Company by certain shareholders of the Company was $Nil (March 31, 2019 - $35,942). See note 15 for a description of the settlement of this loan.

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019

(Presented in Canadian Dollars)

6. PROPERTY AND EQUIPMENT

The following is a continuity of property and equipment:

Cost	2020	2019
Balance – beginning of year	88,439	84,677
Additions	-	3,762
Disposals	(20,610)	-
Balance – end ofyear	67,829	88,439
Accumulated Amortization	2020	2019
Balance – beginning of year	54,206	45,000
Disposals	(500)	-
Amortization	5,614	9,206
Balance – end ofyear	59,320	54,206
Carrying Value	2020	2019
Balance – end ofyear	8,509	34,233

7. RIGHT-OF-USE ASSET

The following is a continuity of the right-of-use asset:

Cost	2020	2019
Balance – beginning of year	-		-
Additions	37,581		-
Disposals	-		-
Balance – end ofyear	37,581		-
Accumulated Amortization	2020	2019
Balance – beginning of year	-		-
Amortization	22,549		-
Balance – end ofyear	22,549		-
Carrying Value	2020	2019
Balance – end ofyear	15,032		-

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019

(Presented in Canadian Dollars)

8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities are comprised of the following:

		2020		2019
Trade payables	$	1,884,547	$	1,232,194
Accrued liabilities		402,152		554,778
Government remittancespayable		462,258		481,682
	$	2,748,957	$	2,268,654

9. LEASE OBLIGATION

The Company leases its office space under a lease agreement ending November 30, 2020, which has been capitalized using a discount rate of 8% per annum. The following is a continuity of activity in leases during the year.

The recognition of the below lease under the adoption of IFRS 16 on April 1, 2019 is described in note 3.

		2020		2019
Balance – beginning of year	$	-	$	-
Lease recognized		37,581		-
Payments made		(24,000)		-
Interest expense		1,451		-
Balance – end ofyear	$	15,032	$	-

The Company is committed to minimum lease payments as follows:

Less than 1 year	$	15,032
Between 1 and 5 years		-
More than 5years		-
	$	15,032

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019 (Presented in Canadian Dollars)

10. PROMISSORY NOTES

The following is a summary of the promissory notes outstanding:

				31-Mar-20	31-Mar-20	31-Mar-20
Promissory Notes - Secured	Start Date	Maturity date	Annual Interest	Paid-in Principal	Accrued Interest	Total OS
Lender A	04-Oct-17	20-Oct-20	15.0%	500,000 $	208,027 $	708,027 $
Lender B	17-Aug-18	31-Oct-18	15.0%	386,150 $	105,847 $	491,997 $
Lender B	15-Oct-18	31-Oct-18	15.0%	101,050 $	23,665 $	124,715 $
Lender C	21-Aug-18	31-Oct-18	33.6%	250,000 $	63,033 $	313,033 $
				1,237,200 $	400,572 $	1,637,772 $
Promissory Notes - Unsecured	Start Date	Maturity date	Annual Interest	Paid-in Principal	Accrued Interest	Total OS
Lender D	25-Sep-14	25-Sep-15	8%	250,000 $	110,000 $	360,000 $
Lender E	25-Aug-16	24-Feb-17	10%	100,000 $	35,999 $	135,999 $
Lender F	31-Jan-17	01-Apr-17	10%	25,000 $	7,910 $	32,910 $
Lender F	09-Feb-17	10-Apr-17	10%	75,000 $	23,547 $	98,547 $
Lender G	04-Jul-18	03-Aug-18	12%	100,000 $	20,910 $	120,910 $
Lender H	25-Jul-18	28-Dec-18	0%	25,000 $	- $	25,000 $
Lender H	14-Dec-18	None	0%	90,000 $	- $	90,000 $
Lender I	25-Jul-18	None	12%	25,000 $	5,055 $	30,055 $
Lender I	28-Nov-18	None	12%	2,500 $	102 $	2,602 $
Lender I	21-Nov-18	None	12%	10,000 $	1,630 $	11,630 $
Lender J	28-Jun-18	None	0%	25,000 $	- $	25,000 $
Lender J	10-Oct-18	None	0%	50,000 $	- $	50,000 $
Lender J	01-Nov-18	None	0%	25,000 $	- $	25,000 $
Lender J	30-Nov-18	None	12%	50,000 $	8,005 $	58,005 $
Lender J	14-Dec-18	None	0%	90,000 $	- $	90,000 $
Lender J	21-Dec-18	None	0%	25,000 $	- $	25,000 $
Lender K	09-Nov-18	None	10%	34,723 $	4,833 $	39,556 $
Lender K	10-May-19	None	10%	50,000 $	4,466 $	54,466 $
Lender K	29-Oct-19	None	10%	3,942 $	166 $	4,108 $
Lender K	21-Nov-19	None	8%	25,000 $	718 $	25,718 $
Lender K	29-Jan-20	None	8%	25,000 $	340 $	25,340 $
Lender L	28-Jan-20	None	0%	7,500 $	- $	7,500 $
Lender M	01-Jan-20	None	0%	4,508 $	- $	4,508 $
				1,118,173 $	223,681 $	1,341,854 $

Promissory Notes – Secured

Lender A

On October 4, 2017 the Company obtained a 3-year term loan from Runway Finance Group Inc. in the amount of $300,000 for working capital purposes. Interest applies at the rate of 15% per annum with an additional facility organization fee of $9,000. On November 23, 2017 the Company entered into an amendment of the original term loan agreement and received an additional amount of $200,000 making the total loan $500,000. Interest applies at the rate of 15% per annum with an additional facility organization fee of $6,000. As additional consideration for such advance, the Company issued 625,000 common share purchase warrants to the lender exercisable for a period of two years from the loan dates at a price of $0.80. As at March 31, 2020 the loan remains past due and the outstanding balance plus accrued interest amounts to $708,027 (March 31, 2019 - $609,724) is reflected as a current liability.

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019 (Presented in Canadian Dollars)

10. PROMISSORY NOTES – Cont’d.

Lender A - Continued

On May 24, 2018 the Company obtained another short-term loan from Runway Finance Group Inc., for additional amount of $350,000 with a maturity date of July 24, 2018. Interest applies at the rate of 15% per annum with an additional facility organization fee of $17,500. As additional consideration for such advance, the Company issued 437,500 common share purchase warrants to the lender exercisable for a period of two years from the loan dates at a price of $0.80.

On August 10, 2018 the credit agreement between betterU and Runway Finance Group Inc. for the outstanding loan of $850,000 principal plus interest was assigned to Ranger Direct Lending Fund, plc in place of Runway Finance Group Inc, subject to all other terms and conditions of the original agreement.

Lender B

On August 17, 2018 M&N Lee Holdings Ltd. acquired from Ranger Direct Lending Fund, plc, paying Ranger the outstanding principal balance of $350,000 plus accrued interest of $13,000. On September 12, 2018 the Company entered into a new credit agreement with M&N Lee Holdings Ltd, recognizing the $363,000 paid by M&N to Ranger as paid-in principal to the Company with an effective date of August 17, 2018 and an amended maturity date of October 31, 2018. Interest applies at the rate of 15% per annum with an additional facility organization fee of $10,000 and closing costs of $13,150. As additional consideration for such advance, the Company issued 453,500 common share purchase warrants to the lender exercisable for a period of one year from the loan dates at a price of $0.80.

On October 15, 2018 Company obtained an additional loan from M&N Lee Holdings Ltd. In the amount of $100,000. Interest applies at the rate of 15% per annum with an additional facility organization fee of $1,000 and closing costs of $50. This loan was made as an extension of the original agreement supported by all the same terms and conditions.

As at March 31, 2020 the loans remain past due, with an outstanding balance plus accrued interest totaling $616,712 (March 31, 2019 - $531,087), and are reflected as a current liability.

Lender C

On August 21, 2018 the Company obtained a short-term loan from Venbridge Ltd. in the amount of $250,000 for working capital purposes with a maturity date of October 31, 2018. Interest applies at the rate of 2.30% per month, compounded monthly. Company agreed to pay Venbridge a commitment fee of $2,000, a placement fee of $8,750, and legal fees of $2,901 by way of deduction from the principal amount of the loan.

On May 10, 2019 another lender (Lender K) paid Venbridge $50,000 in interest. As at March 31, 2020 the loan remains past due and the outstanding balance plus accrued interest amounts to $313,033 (March 31, 2019 - $293,139), and is reflected as a current liability.

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019 (Presented in Canadian Dollars)

1. PROMISSORY NOTES – Cont’d.

Promissory Notes – Unsecured

Lender D

On September 25, 2014 SkillsDox obtained a loan for working capital purposes, for a total amount of $250,000, with a maturity date of September 25, 2015. Interest is to be paid on the loan monthly commencing no later than November 1, 2014 and is to be calculated at a rate of 8% per annum. On September 25, 2015, both parties agreed to extend the maturity on the loan to some point in the future, which is yet to be determined, at which point the full principal and remaining interest is to be paid on maturity. As at March 31, 2020 the loan remains unpaid and the outstanding balance plus accrued interest amounts to $360,000 (March 31, 2019 - $340,000), and is reflected as a current liability.

Lender E

On August 25, 2016 SkillsDox obtained a short-term loan in the amount of $100,000 for working capital purposes, with a maturity date of the earlier of February 25, 2017 and the date of the RTO transaction between betterU and SkillsDox on March 3, 2017. Interest applies at a rate of 10% per annum to be paid on maturity of the loan. On February 26, 2017 the loan was extended until the earlier of six months from February 26, 2017 and the completion of the next financing by the Company with all payments postponed until that time, subject to all other terms and conditions of the original agreement. As at March 31, 2020 the loan remains past due and the outstanding balance plus accrued interest amounts to $135,999 (March 31, 2019 - $125,972), and is reflected as a current liability.

Lender F

On January 31, 2017 SkillsDox obtained a short-term loan from a related party (see note 15) in the amount of $25,000 for working capital purposes, with a maturity date of the earlier of April 1, 2017 and the date of the RTO transaction between betterU and SkillsDox on March 3, 2017. Interest applies at a rate of 10% per annum to be paid on maturity of the loan. On April 1, 2017 the loan was extended until the earlier of five months from April 1, 2017 and the completion of the next financing by the Company with all payments postponed until that time, subject to all other terms and conditions of the original agreement. As at March 31, 2020 the loan remains past due and the outstanding balance plus accrued interest amounts to $32,910 (March 31, 2019 – $30,403), and is reflected as a current liability.

On February 9, 2017 SkillsDox obtained a short-term loan from a related party (see note 15) in the amount of $75,000 for working capital purposes, with a maturity date of the earlier of April 10, 2017 and the date of the RTO transaction between betterU and SkillsDox on March 3, 2017. Interest applies at a rate of 10% per annum to be paid on maturity of the loan. On April 10, 2017 the loan was extended until the earlier of five months from April 10, 2017 and the completion of the next financing by the Company with all payments postponed until that time, subject to all other terms and conditions of the original agreement. As at March 31, 2020 the loan remains past due and the outstanding balance plus accrued interest amounts to $98,547 (March 31, 2019 - $91,026), and is reflected as a current liability.

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019 (Presented in Canadian Dollars)

10. PROMISSORY NOTES – Cont’d.

Lender G

On July 4, 2018 the Company obtained a short-term loan in the amount of $100,000 for working capital purposes at an interest rate of 12% per annum, with a maturity of 30 days from the date of loan or closing of proposed private placement. As at March 31, 2020 the loan remains past due and the outstanding balance plus accrued interest amounts to $120,910 (March 31, 2019 - $108,877), and is reflected as a current liability.

Lender H

On July 25, 2018 the Company obtained an interest free short-term loan of $25,000 for working capital purposes with a maturity date of December 28, 2018. As at March 31, 2020 the loan remains past due and the outstanding balance of $25,000 (March 31, 2019 - $25,000), and is reflected as a current liability.

On December 14, 2018, the Company obtained an interest free short-term loan of $90,000 for working capital purposes with a maturity date of December 28, 2018. As at March 31, 2020 the loan remains past due and the outstanding balance of $90,000 (March 31, 2019 - $90,000), and is reflected as a current liability.

Lender I

On July 25, 2018 the Company obtained a short-term loan in the amount of $25,000 for working capital purposes at an interest rate of 12% per annum. As at March 31, 2020 the loan remains past due and the outstanding balance plus accrued interest amounts to $30,055 (March 31, 2019 - $25,000), and is reflected as a current liability.

On November 21, 2018 the Company obtained a short-term loan in the amount of $10,000 for working capital purposes at an interest rate of 12% per annum, with a maturity of 120 days from the date of loan or closing of proposed private placement. As at March 31, 2020 the loan remains past due and the outstanding balance plus accrued interest amounts to $11,630 (March 31, 2019 - $10,000), and is reflected as a current liability.

On November 28, 2019, the Company obtained a short-term loan in the amount of $2,500 for working capital purposes at an interest rate of 12% per annum. As at March 31, 2020, the loan remains past due and the outstanding balance plus accrued interest amounts to $2,602 (March 31, 2019 - $Nil) and is reflected as a current liability.

Lender J

During the period of June 28, 2018 to December 21, 2018 the Company obtained short term loans totalling to $265,000 for working capital purposes. As at March 31, 2020 the loans remain unpaid and the outstanding balance plus accrued interest amounts to $273,005 (March 31, 2019 - $266,989), and is reflected as a current liability.

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019 (Presented in Canadian Dollars)

10. PROMISSORY NOTES – Cont’d.

Lender K

During the period of November 9, 2019 to January 29, 2020 the Company obtained short-term loans totalling to $138,664 from a related party (see note 15) for working capital purposes at an interest rate of 10% per annum. As at March 31, 2020 the loans remain unpaid and the outstanding balance plus accrued interest amounts to $149,185 (March 31, 2019 - $35,941), and are reflected as a current liability. Included in the above loans is $50,000 advanced on May 10, 2019, which the Company obtained to partially repay accrued interest to Venbridge Ltd. (see Loan C above).

Lender L

On January 28, 2020 the Company obtained an interest-free short-term loan of $7,500 from a related party (see note 15) for working capital purposes. As at March 31, 2020 the loan remains unpaid and the outstanding balance amounts to $7,500, and is reflected as a current liability.

Lender M

On January 1, 2020 the Company obtained an interest-free short-term loan of $4,508 from a related party (see note 15) for working capital purposes. As at March 31, 2020 the loan remains unpaid and the outstanding balance amounts to $4,508, and is reflected as a current liability

11. BANK LOAN

On June 27, 2013 the Company obtained a loan of $150,000 from the Business Development Bank of Canada (“BDC”) for working capital purposes, with a maturity date of April 27, 2019. The loan was to be paid off over a period of 60 months commencing in May 2014. Monthly payments are blended installments of principal of $2,502 plus interest. Interest is calculated based on BDC’s floating base rate, which was 5% at March 31, 2019 plus 3%. The loan is guaranteed by the founders of the Company. In June 2015, BDC approved the postponement of nine months of principal repayments which resulted in the maturity date being extended to January 27, 2020. The current amount outstanding for the bank loan as on March 31, 2020 was $40,032 (March 31, 2019 - $40,032).

BDC has filed a claim against the Company to recover the outstanding balance.

12.

CONVERTIBLE DEBENTURES

On June 30, 2015, SkillsDox India Private Limited (“SKI”) signed two agreements with BCCL. One is the Debenture Agreement (“DBA”), and the other is the Advertising Agreement (“AA”). The AA sets up media credits which can be used by SKI on a 90% discount basis, meaning that SKI can place 150 Crore, or approximately $30,000,000, in media spend with the Times’ affiliates at their market rates, but would only be charged 15 Crore, or approximately $3,000,000, for that benefit. To date the Company has used 3.3% of the media credits. The usage of the media credits is subject to certain conditions precedent within the agreement which was not fully met as at March 31, 2019. As at March 31, 2019, management did not intend to use the unused media credits within the required time frame and therefore recorded an impairment loss of $2,813,035 in the consolidated statement of comprehensive loss.

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019 (Presented in Canadian Dollars)

12. CONVERTIBLE DEBENTURES – Cont’d.

The DBA has a term that runs from the closing date, on July 31, 2015, to the Longstop Date, on January 31, 2021. The DBA values the agreement at Rupees (“Rs”) 150,000,000, of which Rs 10,000 was immediately converted to shares, giving BCCL 50% share ownership in SKI. The remainder of the debenture (Rs 149,990,000) bears no interest.

The BCCL debenture has been recorded on the agreement’s effective date of July 31, 2015. The debenture and the holder’s conversion option have been classified and recognized together as equity. The holder’s redemption option has been classified and recognized as a derivative liability and has been valued using the Black-Scholes model, and subsequently is revalued each period, on a fair value through profit or loss basis. The liability was calculated using the Black-Scholes model using the following inputs:

Volatility:	14.85%
Interest:	1.94%
Expected life:	0.83 years

The proceeds received from the DBA were remitted to BCCL as the deposit on the AA. As a result, initial recognition of the debenture has been recorded as a deposit for $3,136,291 (the equivalent of Rs 150,000,000), $3,093,493 (the equivalent of Rs 147,950,000) has been recorded to equity and the balance of $42,798 (the equivalent of Rs 2,050,000) to liabilities. The total to date revaluation of the holder redemption at March 31, 2020 amounted to $17,887 resulting in a total liability balance of $24,911 at March 31, 2020 (March 31, 2019 - $25,573). BCCL can convert all or part of the DBA to common shares in SKI at the Longstop Date, or earlier in the case of an IPO or if a “Financial Investor” (as defined within the DBA) buys shares in SKI below a specified price. SKI will be required to redeem the DBA in three cases: An IPO, where BCCL decides not to convert 100% of its holdings; where SKI fails to meet certain performance conditions, BCCL can force a redemption in the amount of its choice, and where a Financial Investor buys in, BCCL can again force a redemption in the amount of its choice. Any conversion or redemption would take place at the “Minimum Price” per share, as defined, which is fixed for the term of the DBA. SKI has not met certain performance conditions at March 31, 2020.

The below table summarizes the recognition of the debentures.

	2020	2019
Convertible debentures	3,136,291	3,136,291
Less: equitycomponent	(3,093,493)	(3,093,493)
Liability component	42,798	42,798
Add: Revaluation	(17,887)	(17,225)
Balance – March 31	24,911	25,573

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019

(Presented in Canadian Dollars)

1. EQUITY

The Company has an unlimited number of voting common shares authorized and as at March 31, 2020, there were 78,271,751 (March 31, 2019 – 62,421,751) common shares issued and outstanding.

Share issuances during the year ended March 31, 2020

On July 3, 2019 the Company closed a non-brokered private placement for gross proceeds of $500,000 through the issuance of 10,000,000 units at a price of $0.05 per unit. Each unit consisted of one common share and a ½ warrant. Each full warrant is exercisable for two years at a price of $0.15 per share.

On August 2, 2019 the Company closed a second non-brokered private placement for gross proceeds of $409,500, through the issuance of 5,850,000 units at a price of $0.07 per unit. Each unit consists of one common share and one warrant. Each warrant is exercisable for two years at a price of $0.15 per share.

Share issuances during the year ended March 31, 2019

1. The Company entered into an agreement with HT Overseas Pte. Ltd., a wholly-owned subsidiary of HT Media Limited (“HT”), an Indian media conglomerate for $10,000,000 media investment that will be utilized over 2 years to provide betterU with advertising services in India. The proposed media investment will be made in eight equal tranches of $1,250,000. Each tranche shall result in HT receiving common shares in the capital of betterU from treasury, against the cash transfer of $1,250,000 by HT and in turn the Company will pay HT for the media credits. The shares shall be issued at a price equal to the volume weighted average price of the shares on the facilities of the Exchange, calculated by dividing the total value by the total volume of shares traded for the 30 days ending on the day which is one trading day prior to the date of issuance, or such higher price as the Exchange may require.

2. The Company closed second tranche of $1,250,000 with HT receiving 1,623,376 common shares of the Corporation at $0.77 per share on June 4, 2018. The Company in turn received use of $1,250,000 worth of the media investment which were used and expensed in fiscal 2019.

3. The Company closed third tranche of $1,250,000 with HT receiving 2,976,190 common shares of the Corporation at $0.42 per share on January 17, 2019. The Company in turn received use of $1,250,000 worth of the media investment, out of which $640,530 were used and expensed in fiscal 2019 and balance $609,496 are recognized as prepaid expenses.

4. The Company entered into an agreement with Agora Internet Relations Corp. (“Agora”) for online marketing, whereby Company will issue shares in the payment of services to be provided. Company issued 118,710 shares to Agora in payment of their service invoice of $56,981 at $0.48 per share.

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019 (Presented in Canadian Dollars)

13. EQUITY – Cont’d.

Stock option plan

The Company has an incentive stock option plan, which provides that the board of directors of the Company may from time to time, in its discretion, and in accordance with Exchange requirements, grant to directors, officers, employees and technical consultants to the Company, non-transferable options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed 10% of the outstanding common shares.

Such options will be exercisable typically for a period of up to 5 years from the date of grant, not to exceed 10 years. In connection with the foregoing, the number of common shares reserved for issuance to any individual director or officer will not exceed 10% of the issued and outstanding common shares and the number of common shares reserved for issuance to any one consultant in any twelve month period can not exceed 2% of the issued and outstanding common shares.

On April 29, 2019, the Company granted 500,000 options to a consultant with an exercise price of $0.10, and which would expire on April 29, 2020. Options were to vest entirely after 3 months, but were cancelled before vesting occurred.

On July 1, 2019 the Company granted 500,000 stock options to a consultant, with an exercise price of $0.15, and which have an expiry date of July 1, 2021. The options vested entirely on the date of grant.

Stock-based compensation is recorded as an increase to contributed surplus and is transferred to share capital when the underlying options are exercised. The stock-based compensation expense recorded for the year ended March 31, 2020 was $31,591 (2019 - $304,432).

A summary of the Company’s stock options and changes during the periods is presented below:

	2020 2019
	Number of options Weighted average exercise price($) Number of options Weighted average exercise price($)
Outstanding – beginning of year Granted Exercised Expired/forfeited	5,323,429 0.325 5,508,078 0.330 1,000,000 0.125 424,517 0.430 - - (12,500) 0.335 (2,031,000) 0.341 (596,666) 0.380
Outstanding– end ofyear	4,292,429 0.270 5,323,429 0.325
Exercisable – end ofyear	4,124,625 0.270 2,928,622 0.313

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019

(Presented in Canadian Dollars)

13. EQUITY – Cont’d.

Stock option plan – cont’d.

					Weighted
			Weighted		Average
	Options	Options	Average		Remaining
Year Issued	Outstanding	Exercisable	Exercise	Price	Contractual Life
2017	2,917,962	2,841,308	$	0.30	2.40
2018	835,950	744,800		0.22	2.44
2019	38,517	38,517		0.42	3.47
2020	500,000	500,000		0.15	1.25
	4,292,429	4,124,625	$	0.27	2.38

The fair value of the options granted is determined using the Black-Scholes options pricing model and the following assumptions were used:

	2020	2019
Risk-free interest rate	1.53%	1.5% to	2.3%
Expected life of options (in years)	2		3 to 4
Expected annualized volatility	158%		75%
Expected dividend yield	Nil		Nil
Weighted-average Black-Scholes value of each option	$0.022		$0.80

The expected volatility is based on the average historical volatility over the life of the option at betterU’s share price. The Company has not paid any cash dividends historically and has no plans to pay cash dividends in the foreseeable future. The risk-free interest rate is based on the yield of Canadian Benchmark Bonds with equivalent terms. The expected option life in years represents the period of time that options granted are expected to be outstanding based on historical options granted.

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019 (Presented in Canadian Dollars)

13. EQUITY – Cont’d.

Warrants

Each warrant entitles the holder to purchase one common share of the Company. A summary of the warrants outstanding as at March 31, 2020 and the changes during the period is presented below:

	2020 2019
	Number of warrants Weighted average exercise price($) Number of warrants Weighted average exercise price($)
Outstanding – beginning of year Issued Exercised Expired	8,334,749 0.75 9,805,518 0.76 10,963,401 0.15 891,000 0.80 - - (8,333) 0.60 (7,897,249) 0.80 (2,353,436) 0.80
Outstanding– end ofyear	11,400,901 0.18 8,334,749 0.75

• 10,963,401 warrants issued during the year in connection with private placements, have an expiry of 2 years. The exercise price of the warrants is $0.15 per share.

					Weighted
					Average
			Weighted		Remaining
		Warrants	Average		Contractual
	Year Issued	Outstanding	Exercise	Price	Life
2019		437,500	$	0.80	0.17
2020		10,963,401		0.15	1.25
		11,400,901	$	0.18	1.21

The fair value of warrants issued is determined using the Black-Scholes options pricing model and the following assumptions were used:

	2020	2019
Risk-free interest rate	1.64%	1.5% to	2.3%
Expected life of options (in years)	2		2
Expected annualized volatility	158%		75%
Expected dividend yield	Nil		Nil
Weighted-average Black-Scholes value of each warrant	$0.007		$0.00

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019 (Presented in Canadian Dollars)

1. EQUITY – Cont’d.

The expected volatility is based on the average historical volatility over the life of the warrants at the Company’s share price. The Company has not paid any cash dividends historically and has no plans to pay cash dividends in the foreseeable future. The risk-free interest rate is based on the yield of Canadian Benchmark Bonds with equivalent terms. The expected warrant life in years represents the period of time that the warrants are expected to be outstanding based on historical warrants issued. The total value (net of share issuance costs) assigned to the purchase warrants was $77,700.

14. EARNINGS PER SHARE

Net income (loss) per common share represents net income (loss) attributable to common shareholders divided by the weighted average number of voting and non-voting common shares ("common shares") outstanding during the period.

Diluted income (loss) per common share is calculated by dividing the applicable net income (loss) by the sum of the weighted average number of common shares outstanding and all additional common shares that would have been outstanding if potentially dilutive common shares had been issued during the period.

Numerator:		2019		2018
Net loss attributable to owners of theparent	$	(2,709,416)	$	(6,777,570)
Denominator:		2019		2018
Weighted average number common shares
outstanding– basic and diluted		74,759,674		59,674,281
Lossper share:		2019		2018
Basic and diluted	$	(0.04)	$	(0.11)

For all the periods presented, diluted loss per share equals basic loss per share due to the anti-dilutive effect of options and warrants. The outstanding number and type of securities that could potentially dilute basic net loss per share in the future but that were not included in the computation of diluted net loss per share because to do so would have reduced the loss per share (anti-dilutive) for the periods presented are as follows:

	2020	2019
Common shares outstanding	78,271,751	62,421,751
Stock options outstanding	4,292,429	5,323,429
Warrants outstanding	11,400,901	8,334,749
	93,965,081	76,079,929

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019 (Presented in Canadian Dollars)

15. RELATED PARTY TRANSACTIONS

The following transactions have occurred in the normal course of operations:

• a) In July 2014, the Company entered into a consulting services agreement with Anthony Keenan, a director of the Company. The agreement is for services rendered as a professional services consultant and board member to the Company at a rate of $7,000 per month. $393,174 remains in accounts payable and accrued liabilities on the consolidated statement of financial position as at March 31, 2020 (at March 31, 2019 - $279,524). The amounts are non-interest bearing and due on demand.

• b) On March 31, 2020, the Company and the CEO settled a previous loan of $200,000 to the Loiselle Family Trust, which was advanced on March 6, 2017, and was interest bearing at the rate of 1% per annum. This loan was settled against an interest-free loan from the CEO of $170,000 that was outstanding, as well as contractor fees payable. At the time of the settlement, the net amount of the loans plus accrued interest was $35,942, which were deducted against the CEO’s unpaid compensation for the year ended March 31, 2020. The net balance of the loans as at March 31, 2019 was $35,015.

• c) Included in accounts payable and accrued liabilities is $207,150 due to the CEO for salaries and contractor fees payable as at March 31, 2020 (2019 - $Nil).

• d) Included in note 10 are loans received from directors (lenders K, L, and M) as well as loans from corporations with directors in common with the Company (lenders E and F). Interest accrued on these loans totaled $30,577 for the year ended March 31, 2020 (2019 - $1,370).

• e) The Company’s landlord under the office lease capitalized in notes 7 and 9, is a corporation controlled by a director of the Company.

16. KEY MANAGEMENT PERSONNEL AND DIRECTOR COMPENSATION

Key management personnel are those individuals having authority and responsibility for planning, directing and controlling the activities of the Company and are defined as the Chief Officers of the Company and the Company’s Board of Directors. The Company’s compensation program is administered by the Board of Directors and specifically provides for total compensation for executive officers, which is a combination of base salary, performance-based incentives and benefit programs that reflect aggregated competitive pay in light of business achievement, fulfillment of individual objectives and overall job performance. Directors, executive officers and employees may participate in the Company’s stock option plans (Note 13).

During the year ended March 31, 2020 compensation to management and directors was $381,636 (2019 - $319,523).

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019 (Presented in Canadian Dollars)

17. INCOME TAXES

The impact of differences between the Company's reported income tax expense and the expense that would otherwise result from the application of statutory tax rates is as follows:

	2020	2019
Net loss	(2,731,712)	(8,239,114)
Corporate tax rate	26.5%	26.5%
Expected tax recovery	(723,904)	(2,183,365)
Non-deductible expenses and other	(35,565)	117,663
Different tax rates applied in overseas jurisdictions	(1,561)	(3,307)
Unrecognized tax benefits of non-capital losses	761,030	2,069,009
Income tax expense	-	-

The company’s income tax provision is calculated at the federal and provincial combined rate of 26.5% for income earned in Canada and at 30% for overseas jurisdictions under the Indian Direct Taxes Code.

The components of deferred tax are as follows:

	2020	2019
Non-capital losses	5,832,000	5,072,000
Financing fees	87,000	153,000
Less: amount not recognized	(5,919,000)	(5,225,000)
	-	-

The consolidated entity has unused non-capital losses of approximately $21,858,000, respectively, which may be carried forward and applied to reduce taxable income of future years, and expire as follows:

2040	2,864,000
2039	7,700,000
2038	4,383,000
2037	683,000
2036	445,000
2035	1,540,000
2034	1,055,000
2033	907,000
2032	481,000
2027	176,000
2026	328,000
2025	122,000
2024	826,000
2023	348,000

The Company has not recognized the future tax benefit of these losses.

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019 (Presented in Canadian Dollars)

18. FINANCIAL INSTRUMENTS

IFRS 7 - Financial Instruments: Disclosures (“IFRS 7”) requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. IFRS 7 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. There are three levels of the fair value hierarchy as follows:

Level 1:Values based upon unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2:Values based upon quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability.

Level 3:Values based upon prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

The fair value of assets and liabilities measured on a recurring basis include cash and cash equivalents and derivative financial liabilities determined based on level 2 and level 3 inputs.

Carrying values and fair values

The Company’s financial instruments include cash, accounts and other receivables, due from shareholders, accounts payable and accrued liabilities, promissory notes, bank loan, and convertible debentures. The fair value of these instruments approximate their carrying values due to the short-term nature of these instruments.

Credit risk

Credit risk is the risk of loss associated with a counter party’s inability to fulfil its payment obligations. The Company’s maximum exposure to credit risk is $17,458 (March 31, 2019 - $109,194) representing the sum of the Company's cash, accounts and other receivable balances and due from shareholders. The Company performs ongoing credit evaluations of its content providers and reviews the collectability of its trade receivables in order to mitigate any possible credit losses. In addition, the majority of sales transactions are paid through online debit transactions which mitigates the majority of credit risk from trade receivables. Bad debts expense for the years ended March 31, 2020 and 2019 was $Nil. There have been no changes to the Company’s credit risk management policies since March 31, 2019.

Interest rate risk

Interest rate risk arises from the possibility that changes in interest rates will affect the fair value or future cash flows from financial instruments. The Company is exposed to interest rate risk on its BDC bank loan which is based on a floating base rate plus a premium of 3% (see note 11). Based on the interest rate on the BDC loan as at June 30, 2018, a 1% increase/decrease in interest rates would result in a decrease/increase in net loss attributable to common shareholders of less than $1,000. There have been no changes to the Company’s interest rate risk management policies since March 31, 2019.

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019 (Presented in Canadian Dollars)

18. FINANCIAL INSTRUMENTS – Cont’d.

Foreign currency risk

Commencing in fiscal 2015 the Company began to operate internationally with a subsidiary in India, and is therefore subject to foreign currency risk. The Company reports its financial results in Canadian dollars. Most of the Company’s revenues are transacted in Indian rupees, and the Company incurs expenses in both Canadian dollars and Indian rupees. To date, the Company has not used foreign currency forward contracts or other hedging strategies to manage its foreign currency exposure. During the year ended March 31, 2020, the Company recorded foreign exchange losses of $6 (year ended March 31, 2019 – foreign exchange loss of $347).

A 10% strengthening of the Indian rupee against the Canadian dollar would have increased net losses from operations and increased the other comprehensive loss (“OCI”) by the amounts shown below. A weakening of the Canadian dollar would have the opposite effect as reflected below for the years ended March 31, 2020 and 2019. There have been no changes to the Company’s foreign currency risk management policies since March 31, 2019.

March 31, 2020	March 31, 2020	March	31, 2019
Net loss	OCI	Net loss	OCI
($27,003)	($4,459)	($27,888)	($292,308)

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company currently settles all of its financial obligations out of cash and cash equivalents. The ability to do so relies on the Company collecting its accounts receivable in a timely manner and by maintaining sufficient cash and cash equivalents in excess of anticipated needs. Cash and amounts receivable to meet financial obligations as at March 31, 2020 is $17,458 (March 31, 2019 – $109,194). The Company’s ability to settle its financial obligations are also dependent on the Company’s ability to secure additional financing (see note 2 going concern). There have been no changes to the Company’s liquidity risk management policies since March 31, 2019.

As at March 31, 2020, the Company has liabilities which are due as follows:

Carrying Value	Maturity Analysis
	Less than 1 year Greater than 1year Total
Accounts payable 2,748,957 Lease obligation 15,032 Promissory notes 2,979,626 Bank loan 40,032 Convertible debentures 24,911	2,748,957 - 2,748,957 15,032 - 15,032 2,979,626 - 2,979,626 40,032 - 40,032 24,911 - 24,911
5,808,558	5,808,558 - 5,808,558

betterU Education Corp. Notes to the Consolidated Financial Statements March 31, 2020 and 2019

(Presented in Canadian Dollars)

18. FINANCIAL INSTRUMENTS – Cont’d.

As at March 31, 2019, the Company has liabilities which are due as follows:

Carrying Value	Maturity Analysis
	Less than 1 year Greater than 1year Total
Accounts payable 2,268,654 Promissory notes 2,529,647 Bank loan 40,032 Convertible debentures 25,573	2,268,654 - 2,268,654 2,529,647 - 2,529,647 40,032 - 40,032 25,573 - 25,573
4,863,906	4,863,906 - 4,863,906

19. SEGMENTED INFORMATION

IFRS 8 Operating Segments defines an operating segment as (a) a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), (b) whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance and (c) for which discrete financial information is available. For management purposes the Company’s activities are attributable to a single operating segment. Consequently, the Company does not present any operating segment information.

The Company operates in one segment, offering on-line education from which 100% of the revenue is generated. The chief operating decision maker has been identified as the management team including the Chief Executive Officer and the Chief Financial Officer. Internal financial reporting is provided to and evaluated by the management team based on this one operating segment.

100% of revenues for the year ended March 31, 2020 were generated in India (year ended March 31, 2019 100% in India). Over 93% of the property and equipment was located within Canada as at March 31, 2020 and 2019 and the balance was held within the Company's Indian office. The amounts recorded under the debenture agreement and advertising agreement with BCCL as detailed in note 12, are held in the Company's Indian office.

20. CAPITAL MANAGEMENT

The Company includes the following in its managed capital:

	2020	2019
Equity attributable to owners of the parent	(6,578,896)	(4,812,546)
Convertible debentures	24,911	25,573
Bank loan	40,032	40,032
Promissorynotes	2,979,626	2,529,647
	(3,534,327)	(2,217,294)

Notes to the Consolidated Financial Statements March 31, 2020 and 2019

betterU Education Corp.

(Presented in Canadian Dollars)

20. CAPITAL MANAGEMENT – Cont’d.

The Company’s objective is to maintain a sufficient capital base so as to maintain investor, creditor and customer confidence and to sustain future development of the business and provide the ability to continue as a going concern. Management defines capital as the Company’s equity attributable to shareholders of the parent and debt instruments. The Board of Directors does not establish quantitative return on capital criteria for management. The Company currently has not paid any dividends to its shareholders. The Company is not subject to any externally mandated capital requirements.

21. SUBSEQUENT EVENTS

Loans

On May 5, 2020, SkillsDox obtained a Canada Emergency Business Account (“CEBA”) loan of $40,000 from the Government of Canada. Similarly, on June 16, 2020, BetterU also received a CEBA loan of $40,000.

CEBA loans are unsecured, non-interest bearing, and are due on December 31, 2022. If the loans are repaid prior to the due date, each loan is eligible for a forgiveness of $10,000.

Leases

In June 2020, the Company and its landlord mutually agreed to the cancellation of the office lease referred to in notes 7, 9, and 15 (e). There was no penalty or break fee incurred as part of the cancellation.

COVID-19

On January 30, 2020, the World Health Organization declared the coronavirus outbreak ("COVID19") a "Public Health Emergency of International Concern" and on March 11, 2020, declared COVID-19 a pandemic. The outbreak of COVID-19 has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments and the impact they will have on the Company's financial position or on its ability to continue as a going concern.

Trading Suspension

On September 28, 2020, the TSX Venture Exchange suspended trading on BetterU’s stock due to delays in filing the audited financial statements.