BetterU Education Corp. — Management Reports 2021

Jan 21, 2021

betterU Education Corp.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)

For the years ended March 31, 2020

Dated: December 9, 2020

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MANAGEMENT’S DISCUSSION AND ANALYSIS (“MD&A”) OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion and analysis of the Financial Condition and Results of Operations (“MD&A) of betterU Education Corp. (“betterU” or the “Company”) for the twelve months fiscal period ended March 31, 2020 and should be read in conjunction with the Company’s audited consolidated financial statements and notes for the twelve months ended March 31, 2020 as well as with the Company’s financial statements and notes for the twelve months ended March 31, 2019. All financial information has been prepared in accordance with International Financial Reporting Standards (“IFRS”). All monetary amounts are stated in Canadian dollars unless stated otherwise. Amounts presented for comparative purposes are for the twelve months ended March 31, 2020.

The information contained in this MD&A represents only a portion of current information available on betterU. Readers are encouraged to read this document together with news releases and other corporate information on the Company’s website at www.betterU.ca.

While the financial statements have been prepared on the basis of accounting principles applicable to a going concern, several adverse conditions and events cast substantial doubt upon the validity of this assumption at this time. The Company's continued existence is dependent upon its ability to secure additional financing and to attain profitable operations. Management is active in addressing these issues although there is no assurance that they will be successful. If the going concern assumption were not appropriate for these financial statements, adjustments might be necessary in the carrying values of assets and liabilities and the balance sheet classifications.

The effective date of this MD&A is December 9, 2020.

FORWARD-LOOKING INFORMATION

This MD&A contains certain forward-looking statements which may be based on forecasts of future results and estimates of amounts not yet determinable. These statements may involve, but are not limited to, comments relating to strategies, expectations, planned operations or future actions. Forward-looking statements are identified by the use of terms and phrases such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “will”, “would”, and similar terms and phrases, including references to assumptions.

Forward-looking statements, by their nature, are based on assumptions, including those described herein and are subject to risks and uncertainties that may cause actual results or events to differ materially from the results or events predicted in this discussion. The Company is subject to the risks outlined in the “Risk Factors” section of this MD&A. No assurance can be provided that the results or performance expressed in or implied by forward-looking statements within this MD&A will occur, or if they do, that any benefits may be derived from them. The Company does not undertake or accept any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in the Company’s expectations, except as prescribed by applicable securities laws.

COMPANY OVERVIEW AND BUSINESS DESCRIPTION

betterU is a technology gateway and marketplace for online education in emerging markets. The Company aggregates online learning from quality content vendors including universities, colleges and corporations from around the world and make that content available to students through the betterU platform. betterU’s offerings can be categorized into four broad functions: to complement school programs with flexible KG-12 programs preparing children for their next stage of education, to foster an exceptional educational environment by providing befitting skills that lead to a better career, to bridge the gap between one’s existing education and prospective job requirement by training them and lastly, to connect the end user to various job opportunities.

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betterU, formerly Open Gold Corp. (“Open Gold”), 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”.

On October 18, 2017 Company announced its continuance from Business Corporation Act (British Columbia) to the Canadian Business Corporation Act. The special resolution necessary for the Continuance was approved at the annual and special meeting of shareholders held on September 14, 2017. The certificate of continuance is dated October 13, 2017 .

With limited personal and financial resources, management was required to prioritized people to add the most to the future of the business. Focusing on the investment has been a key objective as it will provide the Company with all the necessary resources to grow and drive revenues.

RECENT DEVELOPMENTS AND SUBSEQUENT EVENTS

Financings

There has been an ongoing focus to obtain investment as the Company continues to build the business. With limited people resources, the Company has used the investments received to support operations, putting in place global partnerships, securing more value opportunities for the future growth of the Company and overall positioning the Company to be a global leader. See the Outlook section for more details to the efforts and value the Company has been building.

The Company raised additional funding through multiple rounds of private placements as detailed below:

• On July 3, 2019 the Company closed its non-brokered private placement to raise up to a maximum of $500,000 through the issuance of 10,000,000 units at a price of $0.05 per unit previously announced May 18 and June 4, 2019. The private placement was fully subscribed. Each unit consists of a Common share and a ½ warrant (“Unit”). Each full warrant can be exercised for two years at a price of $0.15. A finder’s fee of 7% in cash and 7% in warrants and can be exercised for 12 months at a price of $0.25 may be paid on a portion of the private placement (“Finders’ Warrants”).Finders’ fees of $6,020 were paid by the Company and 120,400 Finders’ Warrants were issued. The proceeds will be used for working capital purposes supporting the Company’s efforts towards revenue generation and closing of investments currently in the pipeline.

• On July 30, 2019 the Company closed another round of the non-brokered private placement having completed $409,500, issuing 5,850,000 Units at a deemed price of $0.07 per Unit. Each Unit consists of a Common share and a full warrant (“Unit”). Each full warrant can be exercised for two years at a price of $0.15. A finder’s fee of 7% in cash and 7% in warrants can be exercised for 12 months at a price of $0.15 may be paid on a portion of the private placement. The private placement has been closed so the Company can focus on current opportunities in the pipeline. The proceeds will be used for working capital purposes.

The consummation of any financing, as contemplated, remains subject to TSXV approval, and among other conditions of the TSXV’s approval, disinterested shareholder approval.

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OVERALL PERFORMANCE

During the twelve months ended March 31, 2020, the Company reported a comprehensive loss of $2,723,716 as compared to a comprehensive loss of $8,320,781 for the years ended March 31, 2019. The Company’s spending has been dedicated to developing the operational capacity, both within Canada and India, required to support its developing opportunities. This included the establishing of teams to support the Company’s customer service, business development, sales, programming, finance and marketing and much more. In addition, the Company continues to advance its technology infrastructure, strategic relationships with global academia, government organizations, corporations and sector skills councils in order to advance its presence, distribution and revenue opportunities in the Indian market. This drove significant spending associated with building the Company’s brand in India. More details around the efforts can be found under the Outlook section of this document.

SELECTED FISCAL YEAR INFORMATION

Statement of Operations Data Revenue Operating expenses Operating loss Other income (expense) Net loss Basic and diluted loss per share: Net loss from continuing operations Net loss Balance Sheet Data Total assets Total liabilities Cash dividends declared per share	Year ended Year ended 31-Mar-20 31-Mar-19
	$1,692 $44,930 2,398,970 7,918,883 (2,397,278) (7,873,953) (334,434) (365,161) (2,731,712) (8,239,114) ($0.04) ($0.11) ($0.04) ($0.11) As at As at 31-Mar-20 31-Mar-19
	$43,527 $887,520 $5,808,558 $4,863,906 nil nil

RESULTS OF OPERATIONS

The following discussion of the Company’s financial performance is based on the consolidated annual financial statements for the years ended March 31, 2020.

SUMMARY OF QUARTERLY RESULTS

The following table sets forth summary results of operations for the past eight quarters. The information for the fiscal period ended June 30, 2018 and the subsequent quarters has been taken from the unaudited consolidated financial statements that, in management’s opinion, have been prepared on a basis consistent with the audited consolidated financial statements for the fiscal year ended March 31, 2020.

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Quarterly Results

Quarterly Results
Revenue Operating expenses Operating loss Other income (expense) Net loss	30-Jun 30-Sep 31-Dec 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar 2018 2018 2018 2019 2019 2019 2019 2020 6,990 $ 7,529 $ 13,728 $ 16,683 $ 198 $ 400 $ 578 $ 516 $ 2,084,557 $ 1,432,573 $ 723,018 $ 3,678,734 $ 671,358 $ 415,216 $ 310,615 $ 1,001,781 $
	(2,077,567) (1,425,044) (709,290) (3,662,051) (671,160) (414,816) (310,037) (1,001,265)
	(54,545) (62,627) (157,923) (90,066) (80,177) (81,864) (98,297) (74,096)
	(2,132,112) (1,487,671) (867,214) (3,752,117) (751,337) (496,680) (408,334) (1,075,361)

SUMMARY OF RESULTS FOR THE YEAR ENDED MARCH 31, 2020, AS COMPARED TO THE YEAR ENDED MARCH 31, 2019

The following table sets forth a summary of results of operations from the Company’s consolidated financial statements for the year ended March 31, 2020, as compared to year ended March 31, 2019.

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	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)

During the year ended March 31, 2020, the Company reported a comprehensive loss of $2,731,712 as compared to a comprehensive loss of $8,239,114 for the year ended March 31, 2019. The Company’s spending has been dedicated to developing its online education gateway, building strategic relationships and its presence in the Indian marketplace, and building its operational infrastructure, all leading up to its educational gateway in India. The Company operates internationally through its subsidiary in India. The Company reports its financial results in Canadian dollars (CAD”) and converts foreign currency-denominated transactions related to the statement of income (loss) at the average exchange rates for the periods. As such, changes in the exchange rate between the 5

Indian Rupee and the Canadian dollar can have an impact on the reported results for each fiscal period. The average exchange rate for the year ended March 31, 2020 in terms of the Canadian dollar equivalent of one Rupee was CAD $0.019.

REVENUES

Revenue for the year ended March 31, 2020 was $1,692 as compared to $44,930 for the year ended March 31, 2019. Revenue in the year ended March 31, 2019 was generated principally from the Company’s market place which was launched into the Indian market in late 2016. The Company continues to focus on growing revenues through marketing initiatives, building key strategic relationships, as well as further developing its platform for its online gateway.

OPERATING EXPENSES

Operating expenses for the year ended March 31, 2020 was $2,398,970 compared to operating expenses of $7,918,883 for the year ended March 31, 2019. A summary of the key components of operating expenses has been provided below.

Salaries and wages

Salaries and wages for the year ended March 31, 2020 was $209,230 as compared to $1,677,114 for the year ended March 31, 2019.

Rent and premises

Rent and premises for the year ended March 31, 2020 was $49,025 as compared to $157,410 for the year ended March 31, 2019. Rent and premises relates to the offices in India and in Ottawa.

Advertising and promotion

Advertising and promotion for the year ended March 31, 2020 was $759,958 as compared to $2,188,767 for the year ended March 31, 2019. This spending primarily related to the Company’s speaking engagements, conferences, digital and promotional initiatives in support of its marketplace and efforts in India.

Professional Fees

Professional fees for the year ended March 31, 2020 was $762,788 as compared to $501,980 for the year ended March 31, 2019. Professional fees relate to audit, corporate and patent legal fees as well as consulting and advisory fees.

Travel

Travel expenses for the year ended March 31, 2020 was $146,142 as compared to $144,342 for the year ended March 31, 2019. These costs are associated with a combination of attendance at conferences and events to promote betterU, travel associated with setting up partnerships with educational institutions and ongoing development of strategic relationships.

Stock based compensation

Stock based compensation expenses for the year ended March 31, 2020 was $31,591 as compared to $304,432 for the year ended March 31, 2019. This relates to the expense in the period associated with the stock options granted to employees, consultants and directors from April 2019 to March 2020 during 2020.

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Finance expense

Finance expense for the year ended March 31, 2020 was $334,428 as compared to $364,814 for the year ended March 31, 2019. Finance expenses in the current period mainly relates to interest on new Promissory Notes including short term loans. Finance expense for the prior year’s period relates to the interest expense accretion on the convertible notes issued in 2015 and 2016 as well as interest on the Promissory Note.

Exchange differences on translating operations

At the end of each reporting period the results and financial position of the Indian 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.

During the year ended March 31, 2020 the Company recorded unrealized foreign exchange gain of $7,995 relating primarily to the translation of the Indian foreign operations into Canadian dollars.

Comprehensive loss

The comprehensive loss for the year ended March 31, 2020 was $2,723,716 as compared to $8,320,781 for the year ended March 31, 2019.

Loss per common share

Basic and diluted loss per common share: Weighted Average Number of Common Shares	Year endedYear ended 31-Mar-20 31-Mar-19
	$(0.04) $(0.11) 73,752,436 59,674,281

OUTLOOK

The following outlook is a much more detailed description of the Company and to the efforts and value the team has been putting together for the future of the world.

The Company’s would like to share the following outlook and the advancements that have been made including:

• Completed the development of the Enterprise ‘Service as a Software’ solution called Ready-To-Go to address onboarding, skilling and ongoing support of employees’ development.

• Completed and launched the beta skills development program which was successful and that resulted in a large USA staffing company becoming a client. betterU has continued to advance efforts with the client during the beta phase and working towards supporting their national teams.

• Launched the updated India platform to include all the advancements in the platform and refocused on Skills development

• Launch the European office in Ireland and the associated platform to support opportunities across Europe.

• Launched a national marketing campaign to promote Ready-To-Go 7

• Launched Work-Integrated Learning platform, that leverages Ready-To-Go for student skills development.

• Launched Ready-To-Go’s translation platform that takes any document and converts it to multiple languages to support global clients.

• Renegotiated content partner agreements to support the company’s new SaaS model.

• Curated and developed over 200 more topics to be added to the Ready-To-Go platform. This will enable more margins for the company and provide flexibility on client pricing.

• Launched a pilot Franchise model to support educators that have lost business due to COVID-19. betterU now has the structure to be able to support global scale and management of partners.

Ready-To-Go

betterU has been listening to the market and realized the solution over the last few months for one of the largest challenges it has been working to solve. Gone are the days of classroom learning for employees. Gone are the days of sitting in front of a computer for hours on end, trying to learn a new skill.

The market is fragmented and betterU is working to bring it together. It has take many months to develop and integrate the total solutions. It has been completed and the company has been focused on selling.

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The pivot in betterU’s business model has opened many opportunities not only in Canada, but in the USA, Europe, Africa and India. betterU has been approached by several governments and multiple corporations for which they have been developing proposals and building their sales pipeline.

While 2020 has been a changing year due to COVID-19, betterU has continued to focus on it’s core vision, while adapting and focusing on one channel, skills development.

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Skills development and the main reason NSDC had partnered with betterU was to help support over 150 million people get access to skills development programs. There were many challenges to accomplishing this, including:

• Access to the learning. Computers are not the primary point of access to content. In India and other emerging markets, mobile first has been key. 1[st] world nations have also been adopting mobile access as part of the everyday method of learning, yet for the most part the solutions are mobile friendly only, not mobile first. There is a huge different in terms of how content is delivered. Most corporations have invested in expensive learning management systems (LMS) or Content Management Systems (CMS) which in some cases have a mobile option. This is still problematic as for the most part does not effectively support delivery of the content since most LMS are designed to support heavy materials such as long videos (hrs) and other such rich content that makes it difficult to consume on a mobile device. Since many Corporates have invested already in these technologies, they are looking for easy solutions that can be rolled out across their workforce and pull in results can be integrated into what they already have. betterU has focused on simplicity.

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• Languages – Most global companies have people all over their country or the world and need to reach and support them in both easy and language. In India, Hindi is a primary language, followed by English. Other countries such as Japan would need content to be in Japanese. Ready-To-Go automatically translates the text content added into the platform to 20 languages. When a user in Hindi sets their preferences to Hindu and content made available to them in English is automatically converted. This enables employers to launch a program that can support global employees.

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Content Development - Most Human Resource departments are not well equipped to support the development of content required across their entire organization, so they depend on outside providers. The challenge that they have been running into is the number of providers that they need to work with to support their entire

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organization. Working with multiple providers, means employers must navigate how to integrate reports per employee from each content provider separately. They must take on costly subscription fees to accommodate the offering of the provider. They must deal with differences in learning, content development and overall quality. Having to integrate a dozen content providers can prove to be very challenges and HR departments spend more time managing partners and technology instead of building better people. betterU bring to employers all the content they would need, integrated into one solution. The employee experience is consistent and customized to each employee needs.

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Skills Gap – Employers have been struggling with how to determine the skills training their employees really need. In today’s current landscape, employers are throwing out a wide net of a lot of content that are included as part of the packages they purchase from multiple ed-techs in hopes that it addresses most of the skills needs of everyone. The challenge with this process is that companies are overpaying for content their employees do not need and their employees are getting distracted from content that is not for them.

The only way to truly determine what an employee needs is to assess them. A skill assessment across whatever the employer is looking for would determine the level of skill the employee is at and what specific content would be required. Most Ed-techs do not incorporate assessments that range across entire corporate roles or skills requirements. This is why employers do not know what to do when it comes to skills development. Edtechs are only selling them what they have to offer.

betterU has partnered with multiple global assessment partners providing access to over 600+ job role assessments and over 1000+ subject based assessments. These assessments are part of the Ready-To-Go platform to ensure employees only get content that is relevant to them. This will also save employers a lot of money, time and improve employee skills.

Affordability – Many employers are stuck with high costs from multiple providers and it becomes more difficult to convince them to change their current partnerships becomes of their already invested commitments. betterU is positioning their offering as an All-in-one solution for a low monthly cost of $19.95. This would include a monthly assessment, 4 skills that could be developed per month. betterU is able to provide pricing that is affordable due to the development of the system simplicity and content partner integration. This is a transformational opportunity that betterU is bringing to the market.

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Reporting – Ready-To-Go provides access to the data that employers and employees require in order to make informed decisions. This data is integrated into the Corporate’s HRIS or LMS technologies to simplify their access.

Easy of Solution – Many skills development platforms, LMS and other such technologies can be complicated, require dedicated resources and capacities to support the system, partners and employees. betterU’s ReadyTo-Go offering is easy. Despite the complexity of the backend, betterU has made the front-end as simple as possible so that employers can focus on employee results and improvements and not the technology or content.

Corporate Clients

As part of the Ready-To-Go, betterU has started introducing the product to corporates globally. The level of interest continues to grow with several Canadian, USA. Africa and India based companies currently under contractual discussions.

Corporate Platform:

betterU has developed a Corporate and enterprise platforms providing ongoing details of the company’s advancements, efforts, history and financial details to support shareholders and the public in better understanding the efforts being made in the development of betterU. All these platforms will be announced to the public over the upcoming weeks.

The Way Forward

It has been a difficult year for development, market pressures and disappointments with the former auditors resulting in the lengthy halt. Despite all the challenges, betterU has not stopped their efforts to move the business forward. The company continues to put in place the tools, resources and position itself for revenue and growth opportunities.

2020 will be a year of revenues, growth and market positioning focusing on the Ready-To-Go offering. In order to secure the larger funding, it has been important that betterU put in place more value generators and to demonstrate that leaders are seeing betterU as a partner of choice.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s objectives when managing its liquidity and capital structure are to generate sufficient cash to fund the Company’s operating and organic growth requirements. To date the Company has secured various equity and debt investments, including the equity financing.

The tables below set out the cash and cash equivalents and working capital of the Company at March 31, 2020 and March 31, 2019 as well as the cash flows during the years ended March 31, 2020 and March 31, 2019.

Cash and Cash Equivalents Working Capital	31-Mar-20 31-Mar-19 3,576 3,169 (5,788,572) (3,985,045)

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Cash used in operating activities	(937,242)	(4,033,252)
Investing activities
Proceeds on disposal of property and equipment	22,000	-
Purchase of property and equipment	-	(3,715)
Receipt/(Payment) of amount due to shareholder	-	(1,989)
Leasepayments	(24,000)	-
Cash used in investing activities	(2,000)	(5,704)
Financing activities
Repayment of bank loans	-	(15,012)
Repayment of promissory notes	(3,000)	-
Proceeds from issuance of promissory notes	103,173	1,260,000
Proceeds from Equity financing	837,500	2,559,169
Share issuance costs	(6,020)	-
Cashprovided by financing activities	931,653	3,804,157
Exchange differences on translating operations	7,995	(81,666)
Increase(decrease)in cash and cash equivalents	407	(316,465)

As at March 31, 2020, the Company had cash available of $3,576 as compared to $3,169 at March 31, 2019. The working capital deficit was $5,788,572 at March 31, 2020 as compared to a negative working capital of $1,136,575 at March 31, 2019. The change was mainly due to the cash used in financing operations during the current year’s quarter.

Operating activities

For the year ended March 31, 2020 the Company used cash in operating activities of $937,242 as compared to cash used of $4,033,252 for the year ended March 31, 2019.

Financing activities

Cash generated from financing activities for the year ended March 31, 2020 amounted to $931,653 as compared to cash generated from financing activities of $3,804,157 for the year ended March 31, 2019.

Financial Instruments

For carrying amounts of cash, trade accounts receivable, accounts payable and accrued liabilities and loans and borrowings, it is the opinion of the Company’s management that betterU is not exposed to significant interest or credit risk arising from these financial instruments. 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 $CAD. Most of the Company’s revenues are transacted in Indian Rupees, and the Company incurs expenses in both Canadian and Indian Rupees. The Company has not used foreign currency forward contracts or other hedging strategies to manage its foreign currency exposure at this time given that hedging the Indian Rupee is relatively expensive.

For further details on the debt and equity instruments issued and outstanding, please see the Notes to the Financial Statements.

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CAPITAL RESOURCES

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 shareholders’ equity 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’s authorized share capital is an unlimited number of common shares. As at March 31, 2020 there were 78,271,751 common shares were issued and outstanding; 11,287,501 common share purchase warrants outstanding; 4,640,208 stock options outstanding.

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 $5,808,558 of promissory notes and other debts 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.

OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

The Company has no off-balance sheet arrangements other than those as stated below and within the section titled “Related Party Transactions”.

The table below presents the Company’s contractual obligations at March 31, 2020:

Carrying Value	Maturity Analysis
	Less than 1 year Greater than 1 year 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

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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.

RISKS AND UNCERTAINTIES

The Company operates in a dynamic, rapidly changing environment that involves risks and uncertainties, and as a result, management expectations may not be realized for a number of reasons. An investment in betterU common shares is speculative and involves a high degree of risk and uncertainty. The Company is highly dependent on additional financing to continue operations and there is no certainty that it will be able to obtain such financing. The current global economic crises pose additional risks and uncertainties which may materially affect management’s expectations (see “Risk Factors” within Schedule A below)

CRITICAL ACCOUNTING ESTIMATES

The preparation of the 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. Significant estimates in the accompanying financial statements relate to the valuation of debt and equity instruments, asset impairments, accruals and provisions, unearned revenue, stockbased compensation and the estimated useful lives and valuation of property and equipment. Actual results could differ from these estimates. 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.

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Consolidation

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 manager the strategic and operational decisions of SKI.

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 are used.

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 the entities 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 income in the 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 Group’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 income and accumulated in the foreign currency translation reserve.

Impairment of financial assets

Financial assets, other than those classified at fair value through profit and loss, are assessed for indicators of impairment at the end of the reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

Provisions

Provisions are recognized when the Company has a present obligation, legal or constructive as a result of a previous event, if it is probable that the Company will be required to settle the obligation and a reliable estimate can be made of the obligation. The amount recognized is the best estimate of the expenditure required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligations. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate of the expected future cash flows.

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CHANGES IN ACCOUNTING POLICIES

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.

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

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SCHEDULE A RISK FACTORS

Risks Related to Market Conditions and Other External Factors

Volatile Market Price

The price of the Company’s Common Shares is likely to be significantly affected by short term changes in its financial condition or results of operations as reflected in its quarterly earnings reports. The market price for the Company’s Shares may be volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond the Resulting Issuer’s control, including the following:

• actual or anticipated fluctuations in the Resulting Issuer’s quarterly results of operations;

• recommendations by securities research analysts;

• changes in the economic performance or market valuations of companies in the industry;

• addition or departure of the executive officers and other key personnel;

• release or expiration of transfer restrictions on outstanding shares;

• sales or perceived sales of additional shares;

• significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving the Company or its competitors;

• operating and share price performance of other companies that investors deem comparable to the Company; and

• news reports relating to trends, concerns, technological or competitive developments, regulatory changes and other related issues in the Company’s industry or target markets.

Financial markets tend to experience significant price and volume fluctuations that tend to affect the market prices of equity securities of companies and that can be unrelated to the operating performance, underlying asset values or prospects of such companies. Accordingly, the market price of the shares may decline even if the Resulting Issuer’s operating results, underlying asset values or prospects have not changed. Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. There can be no assurance that continuing fluctuations in price and volume will not occur. If such increased levels of volatility and market turmoil continue, the Resulting Issuer’s operations could be adversely impacted and the trading price of the shares may be materially adversely affected.

As a result of any of these factors, the market price of the Common Shares at any given point in time may not accurately reflect the Resulting Issuer’s long term value. Securities class action litigation often has been brought against companies following periods of volatility in the market price of their securities. The Company may in the future be the target of similar litigation. Securities litigation could result in substantial costs and damages and divert management’s attention and resources.

Dilution to Common Shares

During the life of the Resulting Issuer’s outstanding Warrants, as well as options and other rights granted or assumed by the Resulting Issuer, if any, the holders are given an opportunity to profit from a rise in the market price of the Common Shares. The Resulting Issuer’s ability to obtain additional financing during the period such Warrants or rights are outstanding may be adversely affected and the existence of the Warrants or rights may have an adverse effect on the price of the Common Shares. The holders of Warrants, options and other rights of the Company may exercise such securities at a time when the Company would, in all likelihood, be able to obtain any needed capital by a new offering of securities on terms more favourable than those provided by the outstanding Warrants or rights.

The increase in the number of Common Shares in the market and the possibility of sales of such shares may have a depressive effect on the price of the Common Shares. In addition, as a result of such additional Common Shares, the voting power of the Resulting Issuer’s existing shareholders will be diluted.

Future Sales of Common Shares by Existing Shareholders

Sales of a large number of Common Shares in the public markets, or the potential for such sales, could decrease the trading price of the Common Shares and could impair the Resulting Issuer’s ability to raise capital through future sales of Common Shares.

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Risks Related to Our Business

Limited Operating History

The Company is a newly consolidated entity, having just completed the RTO transaction and without a long consolidated operating history. The success of the consolidated Company will be dependent on the managers of those operations to be successful in their attempts to gain new business. There can be no assurance that we will be successful in addressing these risks. In addition, our proposed management team has limited experience with public companies. Due to the significant and complex accounting and legal requirements applicable to public companies, the time and efforts of our management team may be diverted from operational matters and may require the recruitment of additional personnel solely or primarily to address these requirements.

Significant expenditures to support our growth strategy may include investments in our products and infrastructure, costs associated with the development of new products and software, costs associated to the expansion of our market reach through the establishment of new distribution channels, expected increase in sales and marketing expenses, and general and administrative costs. We expect that our operating expenses will continue to increase as we spend resources on growing our business, and if our revenue does not correspondingly increase, our operating results and financial condition will suffer. The amount of these expenditures is difficult to forecast accurately and cost overruns may occur. We cannot be certain of the timing and extent of revenue receipts and expense disbursements. To become profitable, we will have to generate sufficient revenue while controlling our costs and expenses. Accordingly, we cannot assure you that we will achieve profitability in the future, nor that, if we do become profitable, we will sustain profitability. Consequently, we cannot assure that we will generate positive cash flows from operating activities in the future or, if we do generate positive cash flows from operating activities, that they will be sustained.

No Guarantee of Brand Acceptance

Brand recognition and acceptance in the eLearning industry in emerging markets is critical to our success. Although we target content partners with established brand recognition in India and other content partners that we expect to have the best chance for success based on our expectations of future market demand, we cannot assure an investor that the eLearning programs offered by our targeted content partners through our gateway will be purchased by the eLearning community as quickly as anticipated or that they will achieve broad customer acceptance in India or other emerging markets.

The identification, development and availability of eLearning programs involve time, substantial costs and risks. Our inability, for technological or other reasons, to enhance, develop and introduce new content in a timely manner, or at all, in response to changing market conditions or customer requirements could have a material adverse effect on our operating results or could result in our offerings becoming obsolete. Our ability to compete successfully will depend in large measure on our ability to maintain an appropriately skilled staff and to adapt to technological changes and demand in the industry for a variety of eLearning content.

Dependence on Advertising

Our current business model and the ability to access customers for our eLearning content depends, to a certain degree, on our agreement with Bennett, Coleman & Co. Ltd. (the “Times of India”). The advertising and promotion of our offering to end-users in India is critical to our ability to gain end users of the eLearning programs we offer. We may not be able to secure the number of end user customers necessary to support our current business model. Any significant decrease in the number of end user customers due to a change in market conditions or other market pressures could have a material adverse effect on our operations, sales and operating results.

Competitive Industry

We are engaged in an industry that is highly competitive and rapidly evolving. No technology has been exclusively or commercially adopted as the industry standard for eLearning programs in emerging markets. Accordingly, both the nature of the competition and the scope of the business opportunities afforded by the market in which we compete are currently uncertain. Our competitors, including many new market entrants, may implement new technologies before we do. In addition, our competitors may deliver new products and solutions earlier, or provide more attractively priced, enhanced or better quality products and solutions than we do. Many of our competitors have greater name recognition, larger customer bases and significantly greater financial, technical, marketing, public relations, sales, distribution and other resources than us. We therefore cannot assure an investor that we will be able to compete effectively with these companies. We also expect that additional competition will develop, both from existing businesses in the eLearning delivery industry and from new entrants, as demand for eLearning products and services expands and as the market for these products and services becomes more established. Competition could result in price reductions, fewer customer orders and reduced gross margin. We cannot assure an investor that we will be able to successfully withstand competitive pressures.

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Inadequate Protection of Intellectual Property Rights

We rely on a combination of copyrights, trademarks, trade secrets, confidentiality procedures and contractual provisions to establish and protect our proprietary rights. We may enter into confidentiality and non-disclosure agreements with our employees, consultants, content providers, customers, potential customers and others to attempt to limit access to and distribution of our proprietary and confidential information, however it is possible that: (a) some or all of our confidentiality agreements will not be honoured; (b) third parties will independently develop equivalent technology; (c) disputes will arise with our strategic partners, customers or others concerning the ownership of intellectual property; (d) unauthorized disclosure of our know-how or trade secrets will occur; or (e) misappropriation of our property and confidential information, including technology, will nevertheless occur.

We cannot assure an investor that we will be successful in protecting or enforcing our rights protecting our confidential information, know-how, and other intellectual property rights, whether registrable or not, or that all such information and know-how is protectable. We have no registered patents or other proprietary or statutory protection for our current and proposed technology in any territory, other than certain trademark registrations and applications in Canada, the United States, Europe, India, China, Brazil, Africa, Hong Kong and Singapore. Given that our business model is predicated on generating revenues outside the United States and Canada, the lack of proprietary or statutory protection in those countries in which we expect to generate sales may have a material and adverse effect on our business and revenue prospects and may reduce the value of our business accordingly. No assurance can be given that any future applications for trademarks will be granted or, if granted, will be valid or enforceable. Our ability or failure to secure registered trademark protection in countries in which we carry or intend to carry on business may have a material and adverse effect on our ability to protect our brands, and to complete effectively.

To protect our intellectual property, we may become involved in litigation, which could result in substantial expenses, divert the attention of management, cause significant delays, materially disrupt the conduct of our business or adversely affect our revenue, financial condition and results of operations.

Key Personnel

Our success depends largely upon the continued services of our executive officers and other key employees, including, but not limited to our President and Chief Executive Officer, our Chief Technology Officer, and our Chief Financial Officer, for their industry expertise, operations experience with us and their working relationships with our key customers, existing shareholders and personnel. From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives, which could disrupt our business. If we are unable to attract and retain top talent, our ability to compete may be harmed. Our success is also highly dependent on our continuing ability to identify, hire, train, retain and motivate highly qualified personnel. Competition for highly skilled technical, research and development, management, sales and other employees is high in our industry, and we may not be successful in attracting and retaining such personnel. Failure to attract and retain qualified executive officers and other key employees could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.

Dependence on Subsidiaries

A substantial portion of our revenues will be generated through the operations of our Indian subsidiary, in which BCCL has a 50% ownership interest. Accordingly, we are dependent on the cash flows from our subsidiary to meet our obligations. The ability of our subsidiary to provide us with payments may be constrained by factors such as: the cash flows generated by operations, investment activities and financing activities; the level of taxation, particularly corporate profits and withholding taxes; and exchange controls in the foreign jurisdictions in which our subsidiaries operate. If we are unable to receive sufficient cash from our subsidiary, we may be required to incur indebtedness, raise funds in a public or private equity or debt offering, or sell some or all of our assets. There can be no assurance that any such financing will be available on satisfactory terms or that it will be sufficient. We may be subject to limitations on the repatriation of earnings in each of the countries where we, including our subsidiary, do business. There can be no assurance that arbitrary changes in exchange controls in each of the countries where we do business will not take place, which may adversely impact our ability to receive cash payments from our subsidiary and the ability of investors to recover their investment. Additionally, BCCL’s 50% ownership interest in Skillsdox India together with certain rights granted to BCCL pursuant to the terms of the BCCL Debenture, including the exercise of its right to appoint two directors to the board of our subsidiary, or 1/3 of the board members of the subsidiary (which right has not been exercised as of the date of this Filing Statement) could result in BCCL exerting influence over the operations of our subsidiary which may not be in the best interests of Betteru as a whole . There are no assurances that the interests of BetterU and the interests of BCCL will continue to be aligned.

Gross Margins

Our profit margins are expected to vary across courses sold through our BetterU marketplace. Our gross margin and operating margin percentages, as well as overall profitability, may be materially adversely impacted as a result of a shift in courses offered by content providers, geographic mix, changes in foreign exchange rates, price competition, or the introduction of new content, including those that have higher cost structures with flat or reduced pricing. We could be

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subject to unexpected developments late in a quarter, such as lower-than-anticipated demand for content, issues with new content delivery, an internal systems failure, or failure of platforms provided by our supply partners. As a result, our revenues are difficult to forecast and our quarterly operating results can fluctuate substantially until a large enough base of business is established.

Security of Customer Information

Our operations involve the storage and transmission of the confidential information of many of our customers, and security breaches could expose us to a risk of loss of this information, litigation, indemnity obligations and other liability. If our security measures are breached as a result of third party action, employee error, malfeasance or otherwise, and, as a result, someone obtains unauthorized access to BetterU’ customers’ data, including personally identifiable information regarding users, damage to our reputation is likely, our business may suffer and we could incur significant liability. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target, we may be unable to prevent these techniques or to implement adequate preventative measures. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed and we could lose potential sales and existing customers. Further, an actual or perceived security breach affecting one of our competitors or any other company that provides hosting services or delivers applications under a Software as a Service (SaaS) model occurs, even if no confidential information of our customers is compromised, may adversely affect the market perception of our security measures and we could lose potential sales and existing customers.

Reliance on Third Party Service Providers

We host our solution from data centers that we do not control, and do not currently have a backup hosting facility in case our third party data centers ceases to operate. Such facilities are vulnerable to damage or interruption from natural disasters, fires, power loss, telecommunications failures, water damage and similar events. They could also be subject to break-ins, computer viruses, sabotage, intentional acts of vandalism and other misconduct. The occurrence of a natural disaster or an act of terrorism, a decision to close these facilities without adequate notice or other unanticipated problems could result in lengthy interruptions, which would have a serious adverse impact on our business. Additionally, data centre agreements are generally of limited duration and are subject to early termination rights in certain circumstances, and providers of these data centers are generally under no obligation to renew such agreements with us on commercially reasonable terms, or at all.

Our business depends on the capacity, affordability, reliability and security of third-party internet service providers in emerging markets. We cannot be certain of renewal or non-termination of agreements we enter into, or that legislative or regulatory factors will not affect such agreements. Our results of operations could be materially adversely affected if we are unable to renew or extend our agreement with our current provider on acceptable terms, renew or extend our current agreement with our current provider at all, acquire similar capacity from other providers, or otherwise maintain or extend our footprint. Additionally, providers generally sell internet access to some of our competitors and could choose to grant those competitors preferential access or pricing.

Reliance on Cloud Servers

The delivery of our eLearning programs depends, in part, on a third party cloud based server which processes Internet requests from users. The business model is potentially vulnerable to any slowdowns, disruptions, system failures, breaches of security or other external factors that may negatively impact and affect our cloud based server. Any material adverse effect on the cloud server could adversely affect our operations, sales and operating results.

Network Disruptions, System Failures and Breaches of Security

Our operations rely, to a significant degree, on the efficient and uninterrupted operation of complex technology systems and networks, which are in some cases integrated with those of third parties. These systems and operations are vulnerable to damage, breakdown or interruption from events which are beyond our control, such as (a) fire, flood and other natural disasters; (b) power loss or telecommunications or data network failures; (c) improper or negligent operation of the systems by employees, or unauthorized physical or electronic access; and (d) interruptions to Internet system integrity generally as a result of attacks by computer hackers or viruses or other types of security breaches. Any such damage or interruption could cause significant disruption to our operations. This could be harmful to our business, financial condition and reputation and could deter current or potential customers from using our services. There can be no guarantee that our security measures in relation to our computer, communication and information systems will protect us from all potential breaches of security, and any such breach of security could have an adverse effect on our business, results of operations or financial condition.

Transfer Pricing

We expect to conduct business operations in various jurisdictions and through legal entities in various jurisdictions. We and certain of our subsidiaries will provide products and services to, and may from time to time undertake certain significant transactions with, other currently existing or new subsidiaries in different jurisdictions. The tax laws of these jurisdictions, including Canada, have detailed transfer pricing rules which require that all transactions with non-resident related parties

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be priced using arm’s length pricing principles and that contemporaneous documentation must exist to support such pricing. The taxation authorities in the jurisdictions where we carry on business could challenge our arm’s length related party transfer pricing policies. International transfer pricing is a subjective area of taxation and generally involves a significant degree of judgment. If any of these taxation authorities are successful in challenging our transfer pricing policies, our income tax expense may be adversely affected and we could also be subjected to interest and penalty charges. Any such increase in our income tax expense and related interest and penalties could have a significant impact on our future earnings and future cash flows.

Failure to Manage Growth

Failure to manage our growth successfully may adversely impact our operating results. Our ability to manage growth will require us to continue to build our operational, financial and management controls, human resource policies, and reporting systems and procedures. Our ability to manage our growth will also depend in large part upon a number of factors, including the ability for us to rapidly: (a) expand our internal and operational and financial controls significantly so that we can maintain control over operations; (b) attract and retain qualified technical personnel in order to continue to develop reliable and flexible products and provide services that respond to evolving customer needs; (c) develop support capacity for customers as sales increase; and (d) continue to build a network of content providers to create an expanding presence in the evolving marketplace for our products and services. We must also successfully implement our sales and marketing strategy, respond to competitive developments, and commercialize our products in a highly competitive environment. We cannot assure an investor that we have made adequate allowances for the costs and risks associated with the expansion of our service offerings, that our systems and procedures or controls will be adequate to support our operations, or that we will be able to offer and expand our service offerings successfully. There are limited numbers of people with the necessary training and skills to market our products or to provide our services. If we are unable to hire or re-allocate skilled employees in a timely manner, we might be unable to execute our business plans. We cannot assure an investor that we will be able to manage our growth or shifts in our business revenues effectively. An inability to achieve any of these objectives could harm our business, financial condition and results of operations. We are a relatively new business and there is no guarantee that we will be successful on the scale necessary to make us a commercially viable business.

Uncertain Financial and Geopolitical Climate and Downturn in Global Economy

Many of our users are directly affected by economic and geopolitical uncertainties. Some of our users have also reduced capital spending on technology products. Current and future conditions in the domestic and global economies remain uncertain. A slowdown in capital spending by users of our products, coupled with existing economic and geopolitical uncertainties globally, may affect our revenues. It is difficult to estimate the level of growth for either the economy as a whole or in various parts of the economy, including the markets in which we participate. The future direction of the overall domestic and global economies will have an impact on our overall performance. Worldwide economic conditions affecting the eLearning industry in which we compete are beyond our control. If these economic conditions decline, we may experience reduced demand and pricing pressure on our products which could harm our operating results. In addition, acts of terrorism and the outbreak of hostilities and armed conflicts between countries have created uncertainties that may affect the global economy and could have a material adverse effect on our business, operating results and financial condition. Global financial market and economic conditions can pose a significant threat to economic growth in almost all sectors and economies, causing a decline in consumer and business confidence, a reduction in credit availability and a dampening in business and household spending. As a result of the current global economic situation, we and our industry peers may have restricted access to capital and may suffer from increased borrowing costs. The lending capacity of all financial institutions has diminished and risk premiums have increased. As our ability to meet future capital requirements may depend upon our ability to borrow money from third parties or make additional offerings of securities in the future, our ability to do so may be limited by, among other factors, the overall state of capital markets and investor demand for investments in the technology industry, more precisely in the software development industry and our securities in particular. Economic conditions and other factors may also reduce the demand for software products or services from that forecasted and factors expected to support or increase demand may not have the effect expected. Any reduction in demand may have a material adverse effect on our financial results or condition.

Government Spending

Our market includes, in part, colleges and universities, other education providers, and, to a lesser extent, government agencies, each of which depends heavily on government funding. The recent worldwide recession has resulted in substantial declines in the tax revenues of many national, federal, provincial, state and local governments. Many of those governments could react to the decreases in revenue by cutting funding to those institutions, and our solutions for the education industry may not be a high enough priority expenditure for those institutions, resulting in our actual or expected financial condition and results of operations being materially affected.

Legal Approvals and Requirements

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We may be subject to laws and regulations affecting our domestic and international operations in a number of areas. These laws and regulations may affect our activities including, but not limited to, areas of labour, advertising, digital content, consumer protection, billing, e-commerce, promotions, quality of services, telecommunications, mobile communications and media, intellectual property ownership and infringement, tax, import and export requirements, anticorruption, foreign exchange controls and cash repatriation restrictions, data privacy requirements, anti-competition, environmental, health, and safety. Compliance with these laws, regulations and similar requirements may be onerous and expensive, and they may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance and doing business. Any such costs, which may rise in the future as a result of changes in these laws and regulations or in their interpretation could individually or in the aggregate make our products and services less attractive to our customers, delay the introduction of new products in one or more regions, or cause us to change or limit our business practices. We intend to implement policies and procedures designed to ensure compliance with applicable laws and regulations, but there can be no assurance that our employees, contractors, or agents will not violate such laws and regulations or our policies and procedures.

Dependence on the Internet

Delivery of eLearning content and services in emerging markets will depend upon the expansion of the Internet as a leading platform for communication and commerce. Usage of the Internet may be inhibited for a number of reasons. The Internet infrastructure may not be able to support the demands placed on it by continued growth and may lose its viability due to delays in the development or adoption of new equipment, standards and protocols to handle increased levels of Internet activity, security, reliability, cost, ease-of-use, accessibility and quality of service. In addition, concern about the transmission of confidential information over the Internet has been a significant barrier to electronic communications and commerce. Any well-publicized compromise of security could deter more people from using the Internet to transmit confidential information or conduct commercial transactions. The possibility that federal, state, provincial, local or foreign governments may adopt laws or regulations limiting the use of the Internet, or the use of information collected from communications or transactions over the Internet, or may seek to tax Internet commerce, could significantly reduce the use of the Internet. If the Internet does not continue to be a widespread communications medium and commercial marketplace, the demand for our products and services may be materially adversely affected.

Open Source Software

We use open source software in our solutions. Although we intend to monitor our use of open source software closely, the terms of many open source licenses have not been interpreted by courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to market our solution. In such event, we could be required to seek licenses from third parties in order to continue offering our solution, to reengineer our technology or to discontinue offering our solution in the event re-engineering cannot be accomplished on a timely basis, any of which could adversely affect our business, operating results and financial condition. We will also incorporate certain third party technologies into our solution and may desire to incorporate additional third party technologies in the future. Licenses to new third party technology may not be available to us on commercially reasonable terms, or at all.

Third Party Obligations

We may be exposed to third party credit risk through contractual arrangements with current or future content providers, customers and other parties. We intend to manage this credit risk by entering into agreements with only creditworthy entities and reviewing its exposure to individual entities on a regular basis. However, in the event such entities fail to meet their contractual obligations such failures may have a material adverse effect on our business, financial condition, results of operations and prospects.

Managing Acquisitions

In the future, we may pursue acquisitions of assets, products or businesses that we believe are complementary to our existing business and/or to enhance our market position or expand our product portfolio. There is a risk that we will not be able to identify suitable acquisition candidates available for sale at reasonable prices, complete any acquisition, or successfully integrate any acquired product or business into our operations. We are likely to face competition for acquisition candidates from other parties including those that have substantially greater available resources. Acquisitions may involve a number of other risks, including: (a) diversion of management’s attention; (b) disruption to our ongoing business; (c) failure to retain key acquired personnel; (d) difficulties in integrating acquired operations, technologies, products or personnel; (e) unanticipated expenses, events or circumstances; (f) assumption of disclosed and undisclosed liabilities; and (g) inappropriate valuation of the acquired in-process research and development, or the entire acquired business. If we do not successfully address these risks or any other problems encountered in connection with an acquisition, the acquisition could have a material adverse effect on our business, results of operations and financial condition. Problems with an acquired business could have a material adverse effect on our performance or our business as a whole. In addition, if we proceed with an acquisition, our available cash may be used to complete the transaction, diminishing our liquidity and capital resources, or shares may be issued which could cause significant dilution to existing shareholders.

Additional Capital Requirements

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We intend to continue to make investments to support the continued growth of our business and may require additional funds to respond to business challenges, including the need to expand sales and marketing activities; develop new features and modules to enhance existing solutions; enhance operating infrastructure; and acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds. If additional funds are raised through further issuances of equity or convertible debt securities, our existing shareholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of Common Shares. Any debt financing secured in the future could involve restrictive covenants relating to capital raising activities and other financial and operational matters, which might make it more difficult for us to obtain additional capital and to pursue business opportunities. No assurances can be provided that sufficient debt or equity financing will be available for necessary or desirable infrastructure expenditures or acquisitions or to cover losses, and accordingly, our ability to continue to support the growth of the business and to respond to business challenges could be significantly limited.

Taxes

We will be subject to taxes in Canada and numerous foreign jurisdictions. Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change. Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation. We are also subject to the examination of our tax returns and other tax matters by applicable tax authorities and governmental bodies. We intend to regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of its provision for taxes. There can be no assurance as to the outcome of these examinations. If our effective tax rates were to increase, or if the ultimate determination of our taxes owed is for an amount in excess of amounts previously accrued, our operating results, cash flows, and financial condition could be adversely affected.

Accounting Estimates

We will be required to make accounting estimates and judgments in the ordinary course of business. Such accounting estimates and judgments will affect the reported amounts of our assets and liabilities at the date of our financial statements and reports and the reported amounts of our operating results during the periods presented. Additionally, we will be required to interpret the accounting rules in existence as of the date of the financial statements and reports when the accounting rules are not specific to a particular event or transaction. If the underlying estimates are ultimately proven to be incorrect, or if auditors or regulators subsequently interpret our application of accounting rules differently, subsequent adjustments could have a material adverse effect on our operating results for the period or periods in which the change is identified. Additionally, subsequent adjustments could require us to restate our financial statements or reports. A restatement of our financial statements or reports could result in a material change in the price of our Common Shares.

Litigation

Our business is subject to the risk of litigation by employees, customers, consumers, suppliers, competitors, shareholders, government agencies, or others through private actions, class actions, administrative proceedings, regulatory actions or other litigation. The outcome of litigation, particularly class action lawsuits, regulatory actions and intellectual property claims, is difficult to assess or quantify. Plaintiffs in these types of lawsuits may seek recovery of very large or indeterminate amounts, and the magnitude of the potential loss relating to these lawsuits may remain unknown for substantial periods of time. In addition, certain of these lawsuits, if decided adversely to us or settled by us, may result in liability material to our financial statements as a whole or may negatively affect our operating results if changes to our business operations are required. The cost to defend future litigation may be significant. There also may be adverse publicity associated with litigation that could negatively affect customer perception of our business, regardless of whether the allegations are valid or whether we are ultimately found liable. As a result, litigation may adversely affect our business and financial condition.

Fluctuation of Revenue and Operating Results

Our revenue is difficult to forecast and is likely to fluctuate significantly from quarter to quarter. In addition, our operating results may not follow any past trends. The factors affecting our revenue and results, many of which are outside of our control, include: (a) competitive conditions in the industry, including strategic initiatives by us or our competitors, new products or services, product or service announcements and changes in pricing policy by us or our competitors; (b) market acceptance of our products and services; (c) our ability to maintain existing relationships and to create new relationships with content providers; (d) the length and variability of the sales cycles for our products; (e) strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy; (f) general weakening of the economy resulting in a decrease in the overall demand for eLearning programs; and/or (g) timing of content availability and content demand. Because our quarterly revenue may be dependent upon a relatively small number of transactions, even minor variations in the rate and timing of conversion of our sales prospects into revenue could cause us to plan or budget inaccurately, and those variations could adversely affect our financial results. Delays, reductions in the amount or cancellations of end-users’ purchases could adversely affect our business, results of operations and financial condition.

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Changes to Pricing Model

The intensely competitive market in which we conduct our business may require us to reduce our prices. If our competitors offer deep discounts on certain products or services in an effort to recapture or gain market share or to sell other products and services, we may be required to lower prices or offer other favourable terms to compete successfully. Any such changes would reduce our margins and could adversely affect our operating results.

Risks Related to Operations in India

Regulatory, Economic, Social and Political Uncertainties in India

A substantial portion of our business and employees are located in India, and we intend to continue to develop and expand our business in India. Consequently, our financial performance and the market price of the Common Shares will be affected by changes in exchange rates and controls, interest rates, changes in government policies, including taxation policies, social and civil unrest and other political, social and economic developments in or affecting India. The Government of India has exercised and continues to exercise significant influence over many aspects of the Indian economy. Since 1991, successive Indian governments have generally pursued policies of economic liberalization and financial sector reforms, including by significantly relaxing restrictions on the private sector. Nevertheless, the role of the Indian central and state governments in the Indian economy as producers, consumers and regulators has remained significant and we cannot assure you that such liberalization policies will continue. The present government has announced policies and taken initiatives that support the continued economic liberalization policies that have been pursued by previous governments. However, the rate of economic liberalization could change, and specific laws and policies affecting internet access and eLearning programs, foreign investments, currency exchange rates and other matters affecting investments in India could change as well. A significant change in India’s policy of economic liberalization and deregulation or any social or political uncertainties could adversely affect business and economic conditions in India generally and our business and prospects.

Dependence on Indian Market

As the domestic Indian market constitutes a significant source of our revenue, a slowdown in economic growth in India could cause our business to suffer. The performance and growth of our business are necessarily dependent on economic conditions prevalent in India, which may be materially and adversely affected by political instability or regional conflicts, a general rise in interest rates, inflation, economic slowdown elsewhere in the world or otherwise. The Indian economy also remains largely driven by the performance of the agriculture sector which depends on the quality of the monsoon which is difficult to predict. The Indian economy has grown significantly over the past few years. Any future slowdown in the Indian economy or a further increase in inflation could have a material adverse effect on the demand for our products and, as a result, on our financial condition and results of operations. India also faces major challenges in sustaining its growth, which include the need for substantial infrastructure development and improving access to healthcare and education. If India’s economic growth cannot be sustained or otherwise slows down significantly our business and prospects could be adversely affected.

Restrictions on Foreign Investments in India

India regulates ownership of Indian companies by foreigners. These regulations and restrictions may apply to acquisitions by us or our affiliates which are not resident in India, of shares in Indian companies or the provision of funding by us or any other entity to Indian companies within our group. For example, under its consolidated foreign direct investment policy and regulations, the Government of India and the Reserve Bank of India have set out requirements for foreign investments in India, including requirements with respect to downstream investments by Indian companies, owned or controlled by foreign entities, and the transfer of ownership or control of Indian companies in sectors with caps on foreign investment from resident Indian Persons or entities to foreigners. These requirements, which currently include restrictions on valuations, limits on foreign investment in certain sectors and may include prior approval from the Foreign Investment Promotion Board, may adversely affect our ability to make investments in India. There can be no assurance that we will be able to obtain any required approvals for future acquisitions or investments in India, or that we will be able to obtain such approvals on satisfactory terms. Further, foreign direct investment policy and regulations for foreign direct investment are reviewed and revised by the Government of India and the Reserve Bank of India from time to time. It is possible that the Government of India and the Reserve Bank of India may specify additional restrictions on foreign investment in India which may affect our ability to invest in India. There can be no assurance that we will be able to comply with such additional restrictions.

Competition Act

The Competition Act, 2002 (India), as amended, (the “Competition Act”), seeks to prevent practices that could have an appreciable adverse effect on competition. Under the Competition Act, any arrangement, understanding or action between enterprises, whether formal or informal, which causes or is likely to cause an appreciable adverse effect on competition is void and will be subject to substantial penalties. Any agreement that directly or indirectly determines purchase or sale prices, limits or controls production, or creates market sharing by way of geographical area or number of customers in the market

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is presumed to have an appreciable adverse effect on competition. The Competition Act contains provisions relating to the regulation of certain acquisitions, mergers or amalgamations which have an appreciable adverse effect on competition and regulations have been issued by the Competition Commission of India with respect to notification requirements for such combinations. The effect of the Competition Act on the business environment in India is unclear. If we or any member of our group, including Skillsdox India Private Ltd., are affected, directly or indirectly, by the application or interpretation of any provision of the Competition Act or any enforcement proceedings initiated by the Competition Commission of India or any other relevant authority under the Competition Act or any claim by any other party under the Competition Act or any adverse publicity that may be generated due to scrutiny or prosecution by the Competition Commission of India or any other relevant authority under the Competition Act, our business and financial performance may be materially and adversely affected.

Risks Related to all Foreign Operations

Risks Associated with Foreign Operations

We expect to derive a significant portion of our revenues from foreign operations. Going forward, we may not always be aware of all factors that may affect our business in foreign jurisdictions, which includes recent examples of countries that have restricted the prevalence of foreign technology companies. We cannot predict the effect of various factors in the countries in which our suppliers, other contractors and our customers are located, including, among others: (a) our cash flow is impacted by our use of different currencies and our exposure to various tax regimes, including being subject to taxation by more than one jurisdiction; (b) economic trends in international markets; (c) legal and regulatory changes, and our cost of compliance with such laws, including trade restrictions and tariffs and labour and employment laws; (d) increase in transportation costs or delays; (e) increase and volatility in labour costs; (f) political unrest, terrorism and economic instability; and (g) limitations on repatriation of earnings. Any of the foregoing or other factors associated with doing business abroad could have a material adverse effect on our business and financial condition.

Fluctuations in Foreign Currencies

We consolidate our financial results in Canadian dollars though our material subsidiary in India operates using local currency. Accordingly, we are exposed to foreign currency risks related to the consolidation of our financial results in Canadian dollars. We are also vulnerable to foreign currency fluctuations in the value of the Canadian dollar relative to other currencies, such as the Indian rupee, which may impact our financial position and results of operations. In addition, we are exposed to general market fluctuations of interest rates. Our primary exposure to movements in foreign currency exchange rates relates to non-US dollar denominated sales and operating expenses worldwide. Weakening of foreign currencies relative to the Canadian dollar adversely affects the Canadian dollar value of our foreign currency denominated sales and earnings, and generally leads us to raise international pricing, potentially reducing demand for our products. In some circumstances, for competitive or other reasons, we may decide not to raise local prices to fully offset the dollar’s strengthening, or at all, which would adversely affect the Canadian dollar value of our foreign currency denominated sales and earnings. Conversely, a strengthening of foreign currencies relative to the Canadian dollar, while generally beneficial to our foreign currency denominated sales and earnings could cause us to reduce international pricing and incur losses on our foreign currency derivative instruments, thereby limiting the benefit. We rarely use derivative instruments, such as foreign currency forward and option contracts, to hedge certain exposures to fluctuations in foreign currency exchange rates. When we do use such hedging activities, it may not offset any or more than a portion of the adverse financial effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place.

Other Risks

Unpredictability and Volatility of the Common Share Price

The market price of our Common Shares could fluctuate significantly as a result of many factors, including but not limited to the following: (a) economic and stock market conditions generally, and specifically as they may impact participants in the software development industry; (b) our earnings and results of operations and other developments affecting our businesses; (c) sales of our Common Shares into the market by the BetterU Securityholders and/or the Insiders; (d) changes in financial estimates and recommendations by securities analysts following our Common Shares; (e) earnings and other announcements by, and changes in market evaluations of, the software development industry; (f) changes in business or regulatory conditions affecting participants in the software development industry; (g) trading volume in our Common Shares; (h) additions or departures of key personnel; and (i) competitive pricing pressures in the software development industry. In addition, the financial markets have experienced significant price and volume fluctuations that have particularly affected the market prices of equity securities of companies and that have often been unrelated to the operating performance of such companies. Accordingly, the market price of our Common Shares may decline even if our operating results or prospects have not changed.

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Dividends

If we generate earnings in the foreseeable future, we expect that such earnings will be retained to finance growth, both organically and by acquisitions, if any, and, when appropriate, repay debt. Our directors will determine if and when dividends should be declared and paid in the future based on our financial position at the relevant time. Each of our Common Shares will entitle its holder to an equal share in any dividend declared and paid by us. We do not expect to pay any dividends in the foreseeable future. Investors seeking cash dividends should not purchase our Common Shares.

Concentration of Voting Power

Following the completion of the RTO, many of our Common Shares are concentrated in the hands of a few numbers of Shareholders, who are former shareholders of Skillsdox. As a result, these Shareholders will have a significant influence over the management and affairs of the Company and over all matters requiring shareholder approval, including the election of directors and significant corporate transactions, such as a business combination or other sale of the Company or its assets, for the foreseeable future.

In addition, this concentrated control may provide these Shareholders with the ability to prevent and deter takeover proposals from third parties. The concentration of voting power limits your ability to influence corporate matters and, as a result, we may take actions that Shareholders do not view as beneficial, including rejecting takeover proposals at a premium to the then-prevailing market price of our Common Shares. As a result, the market price of these Common Shares could be adversely affected.

Dilution and Future Sales of Common Shares

We may issue additional Common Shares in the future, which may dilute a Shareholder’s holding in the Company. Our articles will permit the issuance of an unlimited number of Common Shares, and shareholders will have no pre-emptive rights in connection with such further issuances. The directors of the Company have the discretion to determine if an issuance of Common Shares is warranted, the price at which such issuance is effected and the other terms of issue of Common Shares. Also, we may issue additional Common Shares upon the exercise of options to acquire Common Shares under the Stock Option Plan, which will result in further dilution to the Shareholders.

Discretion in the Use of Proceeds

Management will have discretion in the actual application of net proceeds received from financing activities in the Company’s best interest. Shareholders may not agree with the manner in which management chooses to allocate and spend the net proceeds of the Financing. The failure by management to apply these funds effectively could have a material adverse effect on our business. Additionally, we may not be successful in implementing our business strategies, and our actual capital expenditures and capital expenditure requirements may be materially different from forecasted expenditures described in this prospectus.

Future Sales of Common Shares by our Directors, officers or Principal Shareholders

Subject to compliance with applicable securities laws, our officers, directors, Principal Shareholders and their affiliates may sell some or all of their Common Shares in the future. No prediction can be made as to the effect, if any, such future sales of Common Shares will have on the market price of the Common Shares prevailing from time to time. However, the future sale of a substantial number of Common Shares by our officers, directors, Principal Shareholders and their affiliates, or the perception that such sales could occur, could adversely affect prevailing market prices for the Common Shares.

Shareholders may be released from restrictions in their respective Lock-Up Agreements

Our shareholders, including our Principal Shareholders, and our directors and officers who entered into Escrow Agreements in connection with the RTO may be released from restrictions in their respective Escrow Agreements, and may sell some or all of their Common Shares. No prediction can be made as to the effect, if any, that such future sales of Common Shares will have on the market price of the Common Shares prevailing from time to time. However, the future sale of a substantial number of Common Shares by shareholders and their affiliates, or the perception that such sales could occur, could adversely affect prevailing market prices for the Common Shares.

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